Annual
Report
SEPTEMBER 30, 2000
[TIP TURNER LOGO OMITTED]
--------------------------------------
TIP Target Select Equity Fund
--------------------------------------
<PAGE>
CONTENTS
--------------------------------------------------------------------------------
2 Total Returns and Fund Investment Review
4 Schedule of Investments
6 Statement of Assets and Liabilities
7 Statement of Operations
8 Statement of Changes in Net Assets
9 Financial Highlights
10 Notes to Financial Statements
14 Report of Independent Auditors
15 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 $50.
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, CLOVER CAPITAL MANAGEMENT COMPANY, INC., and PENN
CAPITAL MANAGEMENT COMPANY, INC. currently serve as sub-advisers to the TIP
Target Select Equity Fund. Clover Capital Management, based in Pittsford, New
York, was founded in 1984. Michael Edward Jones, managing director and one of
the firm's founders, will manage the portion of the fund's assets entrusted to
Clover. As of September 30, 2000, 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 219805, Kansas City, Missouri 64121-9805.
<PAGE>
TIP TARGET SELECT EQUITY FUND
<TABLE>
<CAPTION>
Calendar Annualized
TOTAL RETURN* YEAR TO DATE ONE-YEAR INCEPTION
PERIOD ENDED SEPTEMBER 30, 2000 RETURN RETURN TO DATE**
----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
TIP TARGET SELECT EQUITY FUND 21.60% 74.45% 53.50%
Russell 3000 Index 1.70 18.19 16.62
S&P 500 Composite Index (1.39) 13.28 16.86
Lipper Multi-Cap Growth Funds Classification 5.09 11.94 33.55
<FN>
**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.
</FN>
</TABLE>
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 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>
TIP TARGET SELECT EQUITY FUND
During the fiscal year ended September 30, 2000, the TIP Target Select
Equity Fund delivered a total return of 74.45%. This compares with a total
return of 18.19% for the fund's benchmark, the Russell 3000 Index.
The fund continues to benefit from its multi-manager approach, which
provides strong ideas from distinct segments of the market. Turner Investment
Partners focuses on growth stocks, with particular emphasis on technology
issues. Among the fund's top technology performers for fiscal 2000 were Applied
Micro Circuits, Corning, Genentech, i2 Technologies, MedImmune, and Sun
Microsystems.
Penn Capital Management Company employs a value-style investment approach,
seeking companies that combine below-market valuation levels and above-average
growth rates. The top performers from their portion of the portfolio included
Argosy Gaming, Chesapeake Energy, and Nabors Industries.
Looking ahead, we see strong potential in both the growth and value areas
of the market, particularly for companies that possess exceptional products and
services, and exceptional management teams.
Growth-oriented technology issues appear well positioned to continue their
long-term market leadership. But value oriented issues have done exceptionally
well during times of overall market weakness, and have seldom been more
compelling than in this time of sky-high price earnings ratios. Whatever
category is in the lead, we believe that our "best of the best" approach will
remain a valid way to pursue both market balance and long-term growth.
[LINE CHART OMITTED]
PLOT POINTS FOLLOWS:
TIP TARGET RUSSELL
SELECT EQUITY S&P 500 3000
FUND INDEX INDEX
12/31/97 10,000 10,000 10,000
sep 98 10,350 10,603 10,222
sep 99 18,634 13,550 12,912
sep 00 32,507 15,350 15,261
Annualized total returns
---------------------------
PAST SINCE
ONE YEAR INCEPTION
74.45% 53.50%
* These figures represent past performance, which 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. The inception date of the TIP Target Select Equity
Fund is January 1, 1998.
3
<PAGE>
SCHEDULE OF INVESTMENTS TIP FUNDS
September 30, 2000
Market
TIP TARGET SELECT Value
EQUITY FUND Shares (000)
Market
Value
Shares (000)
--------------------------------------------------------------------------------
COMMON STOCKS--98.6%
APPAREL/TEXTILES--0.7%
Dan River, Cl A* 7,645 $ 33
------
BROADCASTING, NEWSPAPERS & ADVERTISING--8.0%
Gilat Satellite Networks Ltd.* 900 69
Pegasus Communications* 2,305 111
Sinclair Broadcast Group, Cl A* 3,350 37
Sirius Satellite Radio* 1,630 86
XM Satellite Radio Holdings,
Cl A* 1,325 57
------
360
------
COMPUTERS & SERVICES--15.4%
Brocade Communications System* 750 177
Redback Networks* 1,020 167
Sun Microsystems* 1,360 159
Veritas Software* 1,360 193
------
Total Computers & Services 696
------
DRUGS--3.2%
MedImmune* 1,840 142
------
ELECTRONIC & OTHER ELECTRICAL EQUIPMENT--2.6%
Celestica* 1,680 116
------
FIBER OPTICS--5.7%
Corning 410 122
Sycamore Networks* 1,250 135
------
257
------
HEALTHCARE--2.6%
Caremark Rx* 10,370 117
------
HOTELS & AMUSEMENT SERVICES--2.3%
Argosy Gaming* 4,130 75
Isle of Capri Casinos* 1,800 28
------
103
------
Market
Value
Shares (000)
--------------------------------------------------------------------------------
INTERNET SERVICES--13.7%
America Online* 3,630 $ 195
Ariba* 900 129
Commerce One* 1,860 146
VeriSign* 720 146
------
616
------
MEDICAL LABS & TESTING SERVICES--2.2%
Laboratory Corporation of
America Holdings* 837 100
------
MEDICAL PRODUCTS & SERVICES--4.6%
Genentech* 770 143
Kensey Nash* 4,945 64
------
207
------
NETWORKING PRODUCTS & SERVICES--9.8%
Cisco Systems* 4,250 235
Corvis* 1,110 68
Juniper Networks* 640 140
------
443
------
PETROLEUM/FUEL PRODUCTS & SERVICES--7.5%
Chesapeake Energy* 4,250 31
Grey Wolf* 18,000 103
Nabors Industries* 1,750 92
Patterson Energy* 3,275 113
------
339
------
SEMICONDUCTORS/INSTRUMENTS--5.9%
Applied Micro Circuits* 480 99
Broadcom, Cl A* 680 166
------
265
------
SOFTWARE & PROGRAMMING--7.5%
i2 Technologies* 1,060 198
Siebel Systems* 1,260 140
------
338
------
4
<PAGE>
SCHEDULE OF INVESTMENTS TIP FUNDS
September 30, 2000
Shares/ MARKET
TIP TARGET SELECT FACE AMOUNT VALUE
EQUITYFUND (Concluded) (000) (000)
--------------------------------------------------------------------------------
TELEPHONES & TELECOMMUNICATIONS--6.9%
AirGate PCS* 1,000 $ 45
Microcell Telecommunications* 3,090 90
Nortel Networks 2,520 150
Powertel* 325 25
------
310
------
TOTAL COMMON STOCKS
(Cost $3,961) 4,442
------
REPURCHASE AGREEMENT--0.2%
Morgan Stanley,
6.300%, dated 09/29/00,
matures 10/02/00,
repurchase price $10,339
(collateralized by
U.S. Treasury Note,
par value $10,318,
9.875%, 11/15/15,
market value $10,596) $ 10 10
------
TOTAL REPURCHASE AGREEMENT
(Cost $10) 10
------
TOTAL INVESTMENTS--98.8%
(Cost $3,971) 4,452
------
OTHER ASSETS AND LIABILITIES, NET--1.2% 54
------
$4,506
======
*NON-INCOME PRODUCING SECURITY
CL -- CLASS
LTD. -- LIMITED
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL
STATEMENTS.
5
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES (000) TIP FUNDS
September 30, 2000
TIP TARGET SELECT
EQUITY FUND
--------------------------------------------------------------------------------
Assets:
Investment Securities at Value (Cost $3,971) ....................... $ 4,452
Receivable for Investment Securities Sold........................... 279
Capital Shares Sold Receivable...................................... 10
Receivable Due from Adviser......................................... 19
Other Assets........................................................ 6
--------------------------------------------------------------------------------
Total Assets...................................................... 4,766
--------------------------------------------------------------------------------
Liabilities:
Payable for Investment Securities Purchased ........................ 240
Accrued Expenses.................................................... 20
--------------------------------------------------------------------------------
Total liabilities ................................................ 260
--------------------------------------------------------------------------------
Net Assets:
Portfolio capital (unlimited authorization-no par value) based on
206,290 outstanding shares of beneficial interest ................ 3,013
Accumulated Net Realized Gain on Investments........................ 1,012
Net Unrealized Appreciation on Investments.......................... 481
--------------------------------------------------------------------------------
Total Net Assets ................................................. $ 4,506
================================================================================
--------------------------------------------------------------------------------
Net Asset Value, Offering and Redemption Price Per Share .............. $ 21.84
--------------------------------------------------------------------------------
The accompanying notes are an integral part of the financial statements.
6
<PAGE>
STATEMENT OF OPERATIONS (000) TIP FUNDS
For the Year Ended September 30, 2000
TIP TARGET SELECT
EQUITY FUND
--------------------------------------------------------------------------------
Investment Income:
Dividends ....................................................... $ 21
Interest ........................................................ 5
--------------------------------------------------------------------------------
Total Investment Income........................................ 26
--------------------------------------------------------------------------------
Expenses:
Investment Advisory Fees ........................................ 37
Investment Advisory Fee Waiver .................................. (37)
Administrator Fees .............................................. 65
Transfer Agent Fees ............................................. 33
Professional Fees ............................................... 22
Amortization of Deferred Organizational Costs ................... 16
Custodian Fees .................................................. 14
Registration Fees ............................................... 11
Printing Fees ................................................... 10
Trustee Fees .................................................... 3
Insurance and Other Fees ........................................ --
--------------------------------------------------------------------------------
Total Expenses ................................................ 174
Less: Reimbursement by Adviser................................... (113)
Directed Brokerage...................................... (16)
--------------------------------------------------------------------------------
Net Expenses .................................................. 45
--------------------------------------------------------------------------------
Net Investment Loss ........................................ (19)
--------------------------------------------------------------------------------
Net Realized Gain From Securities Sold .......................... 1,089
Net Unrealized Appreciation on Investments....................... 425
--------------------------------------------------------------------------------
Net Realized and Unrealized Gain on Investments ................. 1,514
--------------------------------------------------------------------------------
Net Increase in Net Assets Resulting From Operations ............$1,495
--------------------------------------------------------------------------------
Amounts designated as "--" are either $0 or have been rounded to $0.
The accompanying notes are an integral part of the financial statements.
7
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS (000) TIP FUNDS
For the Years Ended September 30,
<TABLE>
<CAPTION>
TIP TARGET
SELECT EQUITY FUND
----------------------------------
2000 1999
--------------------------------------------------------------------------------------------------------------------
Investment Activities:
<S> <C> <C>
Net Investment Loss ................................................ $ (19) $ (7)
Net Realized Gain From Securities Sold ............................ 1,089 603
Net Unrealized Appreciation on Investments......................... 425 158
--------------------------------------------------------------------------------------------------------------------
Net Increase in Net Assets Resulting from Operations ............ 1,495 754
--------------------------------------------------------------------------------------------------------------------
Distributions to Shareholders:
Realized Capital Gains ............................................ (640) (83)
--------------------------------------------------------------------------------------------------------------------
Total Distributions............................................... (640) (83)
Capital Share Transactions:
Proceeds from Shares Issued ....................................... 2,749 473
Proceeds from Shares Issued in Lieu of Cash Distributions ......... 624 83
Cost of Shares Redeemed ........................................... (1,561) (354)
--------------------------------------------------------------------------------------------------------------------
Increase in Net Assets From Capital Share Transactions .......... 1,812 202
--------------------------------------------------------------------------------------------------------------------
Total Increase in Net Assets .................................... 2,667 873
--------------------------------------------------------------------------------------------------------------------
Net Assets:
Beginning of Year ............................................... 1,839 966
--------------------------------------------------------------------------------------------------------------------
End of Year (1) ................................................. $4,506 $1,839
--------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------------
Shares Issued and Redeemed:
Issued ............................................................ 135 33
Issued in Lieu of Cash Distributions .............................. 39 8
Redeemed .......................................................... (75) (27)
--------------------------------------------------------------------------------------------------------------------
Net Increase in Capital Shares ..................................... 99 14
--------------------------------------------------------------------------------------------------------------------
<FN>
(1) Includes undistributed net investment loss and/or distributions in excess
of net investment income (000) of $0 and $(3) as of September 30, 2000
and September 30, 1999, respectively.
</FN>
</TABLE>
The accompanying notes are an integral part of the financial statements.
8
<PAGE>
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS TIP FUNDS
For a Share Outstanding Throughout Each Period
Net Net Net
Asset Realized and Distributions Distributions Asset Assets
Value Net Unrealized from Net from Value End
Beginning Investment Gains on Investment Capital End Total of Period
of Period Loss Investments Income Gains of Period Return+ (000)
---------- ---------- ------------ ------------- ------------- --------- ------- ---------
-----------------------------
TIP Target Select Equity Fund
-----------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
2000 $17.17 $(0.06) $10.74 -- $(6.01) $21.84 74.45% $4,506
1999 10.34 (0.07) 7.80 -- (0.90) 17.17 80.04 1,839
1998(1) 10.00 -- 0.35 $(0.01) -- 10.34 3.50 966
</TABLE>
<TABLE>
<CAPTION>
Ratio of Net
Investment
Ratio of Net Ratio of Income
Expenses Expenses Ratio of Net (Loss) to
to Average to Average Investment Average
Ratio of Net Net Assets Net Assets Income Net Assets
Expenses (Inclusive of (Excluding (Loss) (Excluding Portfolio
to Average Waivers and Waivers and to Average Waivers and Turnover
Net Assets* Reimbursements) Reimbursements) Net Assets Reimbursements) Rate
------------ --------------- --------------- ----------- --------------- ---------
-----------------------------
TIP Target Select Equity Fund
-----------------------------
<S> <C> <C> <C> <C> <C> <C>
2000 1.30% 1.77% 6.06% (1.02)% (5.31)% 1,081.55%
1999 1.30 1.30 10.19 (0.56) (9.45) 1,279.40
1998(1) 1.30 1.30 18.76 0.02 (17.44) 803.02
<FN>
*Inclusive of directed brokerage arrangements, waivers, and reimbursements.
+Returns are for the period indicated and have not been annualized.
(1) Commenced operations on January 1, 1998. All ratios for the period have been annualized.
</FN>
</TABLE>
Amounts designated as "--" are either $0 or have been rounded to $0.
The accompanying notes are an integral part of the financial statements.
9
<PAGE>
NOTES TO FINANCIAL STATEMENTS TIP FUNDS
September 30, 2000
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
are 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 issuers.
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. Subject to
the foregoing, other securities for which market quotations are not readily
available are valued at fair value as determined in good faith by the Board
of Trustees.
FEDERAL INCOME TAXES -- It is the Fund's intention to continue 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.
10
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Continued) TIP FUNDS
September 30, 2000
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. Distributions 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. Accordingly, the TIP Target Select
Equity Fund reclassified $21,419 from accumulated net realized gain on
investments to undistributed net investment income during the fiscal year
ended September 30, 2000. Use of Estimates -- The preparation of financial
statements in conformity with accounting principles generally accepted in
the United States 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.
The Tip Target Select Equity Fund had directed certain portfolio trades to
brokers who paid a portion of its expenses. For the year ended September 30,
2000, the Fund's expenses were reduced by $16,378 under this arrangement.
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.
11
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Concluded) TIP FUNDS
September 30, 2000
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.
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 two Sub-Advisers -- 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, 2000, Clover Capital
Management did not manage any assets of the Fund. On February 22, 2000,
Chartwell Investment Partners resigned as a sub-adviser to 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 year ended September 30, 2000, are as
follows (000):
TIP TARGET
SELECT EQUITY FUND
------------------
Purchases ......................... $38,119
Sales ............................. 36,975
At September 30, 2000, the total cost of securities and net realized gains or
losses on securities sold for Federal income tax purposes was not materially
different from amounts reported for financial reporting purposes. The aggregate
gross unrealized appreciation and depreciation for securities held by the Fund
at September 30, 2000, is as follows (000):
TIP Target
Select Equity Fund
------------------
Aggregate gross unrealized appreciation $698
Aggregate gross unrealized depreciation (217)
----
Net unrealized appreciation ............. $481
====
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
12
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Concluded) TIP FUNDS
September 30, 2000
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, 2000.
8. SUBSEQUENT EVENT (UNAUDITED):
On October 19, 2000, the shareholders of the TIP Target Select Equity Fund (the
"Portfolio") approved a tax-free reorganization under which all of the assets
and liabilities of the Portfolio will be transferred to the Alpha Select Funds
Target Select Equity Fund. The results of the voting were as follows:
FOR 120,167 95.50% of 57.95% of
shares voted shares outstanding
AGAINST 1,814 1.44% of 0.87% of
shares voted shares outstanding
ABSTAIN 3,847 3.05% of 1.85% of
shares voted shares outstanding
13
<PAGE>
REPORT OF INDEPENDENT AUDITORS
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 (the "Fund"), including the schedule of
investments, as of September 30, 2000, and the related statement of operations
for the year then ended, the statements of changes in net assets for each of the
two years in the period then ended 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 auditing standards generally accepted
in the United States. 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, 2000, 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, 2000, the results of
its operations for the year then ended, the changes in its net assets for each
of the two years in the period then ended and its financial highlights each of
the periods indicated therein, in conformity with accounting principles
generally accepted in the United States.
Philadelphia, Pennsylvania /s/ERNST & YOUNG LLP
November 10, 2000
14
<PAGE>
NOTICE TO SHAREHOLDERS
OF
TIP TARGET SELECT FUNDS
(UNAUDITED)
For shareholders that do not have a September 30, 2000 tax year end, this notice
is for informational purposes only. For shareholders with a September 30, 2000,
please consult your tax advisor as to the pertinence of this notice. For the
fiscal year ended September 30, 2000, 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 .................... 3.31% 96.69% 0.00%
TOTAL QUALIFYING
PORTFOLIO DISTRIBUTIONS DIVIDENDS (1)
--------- ------------- -------------
TIP Target Select Equity Fund .................... 100.00% 1.27%
<FN>
-------------
(1) Qualifying dividends represent dividends which qualify for the corporate
dividends received deduction and is reflected as a percentage of "Ordinary
Income Distributors".
</FN>
</TABLE>
15
<PAGE>
TRUST
TIP Funds
P.O. Box 219805
Kansas City, MO 64121-9805
INVESTMENT ADVISER
Turner Investment Partners, Inc.
SUB-ADVISERS
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]
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 DISTRIB-
UTED TO OTHERS ONLY IF PRECEDED OR ACCOMPANIED BY A
PROSPECTUS, WHICH CONTAINS DETAILED INFORMATION.
TIP-F-007-03