ANNUAL
REPORT
SEPTEMBER 30, 2000
[GRAPHIC OMITTED]
[GRAPHIC OMITTED]
1-800-224-6312
<PAGE>
CONTENTS
--------------------------------------------------------------------------------
2 Letter to Shareholders
3 Management's Discussion of Performance
5 Financial Statements
10 Notes to Financial Statements
13 Report of Independent Auditors
14 Notice to Shareholders
TIP FUNDS
--------------------------------------------------------------------------------
The TIP Funds offers a series of 19 no-load mutual funds to retail and
institutional investors. The minimum initial investment in the Penn Capital
Select Financial Services Fund is $2,500.
Penn Capital Management, Inc., based in Cherry Hill, N.J., serves as the
investment advisor to two and Sub-Advisor to one of the TIP Funds. The firm,
founded in 1987, invests more that $700 million in fixed-income and equity
portfolios on behalf of individuals and institutions. Penn Capital Management
manages the Penn Capital Select Financial Services Fund. A separate investment
firm manages the other mutual funds in theTIP Funds family.
Penn Capital Management Company, Inc. also manages the Penn Capital
Strategic High Yield Bond Fund a mutual fund in the TIP Funds family.
SHAREHOLDER SERVICES
--------------------------------------------------------------------------------
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, 1-888-TIP-7654. Or they may write to TIP
Funds, Box 219805, Kansas City, Missouri 64121-9805.
<PAGE>
TO OUR SHAREHOLDERS:
--------------------------------------------------------------------------------
The Penn Capital Select Financial Services Fund seeks to generate long term
capital appreciation. The Fund invests primarily in common stocks and other
equity securities of U.S. financial services companies that the Fund believes
have above average growth potential or that are undervalued. The Fund also
invests in financial services companies that are potential merger or acquisition
targets.
The Fund commenced operations on October 20, 1997 and has total net assets of
$392,380 as of September 30, 2000. Since its inception, the Fund posted an
annualized total return of 9.89% compared to a negative 2.56% for the NASDAQ
Bank Index. For the period October 1, 1999 through September 30, 2000, the Fund
posted a total return of 12.86% compared to 8.65% for the NASDAQ Bank Index.
I want to personally thank our shareholders for their confidence in us. While I
am disappointed with the total assets of the Fund, I am confident that our
investment style and experience will continue to justify your decision to
entrust your assets to us, and encourage others to do the same.
Sincerely,
/S/Richard A. Hocker
Richard A. Hocker
CHIEF INVESTMENT OFFICER
PENN CAPITAL MANAGEMENT COMPANY, INC.
2
<PAGE>
MANAGEMENT'S DISCUSSION OF PERFORMANCE
PENN CAPITAL SELECT FINANCIAL SERVICES FUND
--------------------------------------------------------------------------------
MARKET REVIEW
The Financial Services sector is finishing the year strong after a beginning
marked with uncertainty. This strength has been reflected in our Penn Financial
Services Fund, which returned 17% for the third quarter of 2000. These returns
helped to boost Penn's performance to a 12.86% return for the fiscal year ending
September 30, 2000. These returns compare very favorably with the Fund's
benchmark, the NASDAQ Bank Index, which ended the year only up 8.65%.
The underperformance of the Financial Services sector in the beginning of the
year appeared to be due to credit quality and interest rate concerns as well as
inflation worries caused by higher energy prices. The sector was also out of
favor with investors, who chose to invest more money into technology stocks.
During the latter part of the year, however, the financial services sector began
to turn around. One of the reasons for this turnaround has been the
disappointing performance of technology stocks, which has left investors looking
for more traditional opportunities. We have thus seen a large amount of money
roll out of technology stocks and into the financial services sector.
Consolidations, along with this new inflow of money, have been a main driver of
this sector and they are predicted to increase moving into 2001. One example of
this merger and acquisition trend is Bank United. Bank United is a holding in
Penn's Financial Services Fund and was recently acquired by Washington Mutual.
This acquisition added nicely to our performance. This sector is also taking
advantage of a flat interest rate environment, which has spurred loan growth and
in turn increased bank revenues.
We are very optimistic about the future trends of this sector and we are
confident in our ability to outperform our benchmark moving forward into the
next year.
OUR INVESTMENT APPROACH
The Fund invests primarily in common stocks and other equity securities of U.S.
financial services companies, including banks, brokerage houses, insurance
companies and investment advisory companies, that the Fund believes have above
average growth potential or that are undervalued.
The Fund will hold a diversified portfolio of financial services companies with
strong fundaments, many of which the Fund believes hold the potential to be
acquired at a premium to their trading prices, measured at the time of their
original acquisition by the Fund. The Fund may also purchase shares of other
investment companies and foreign securities, and may purchase high yield
securities (otherwise known as "junk bonds"), as a means of seeking to generate
current income. Securities rated below investment grade will not constitute more
than 15% of the Fund's total assets.
3
<PAGE>
PENN CAPITAL FUNDS
September 30, 2000
COMPARISON OF CHANGE IN THE VALUE OF A $10,000 INVESTMENT
IN THE PENN CAPITAL SELECT FINANCIAL SERVICES FUND, VERSUS
THE NASDAQ BANK INDEX
[GRAPHIC OMITTED]
[PLOT POINTS FOLLOW:]
One Annualized
Year Inception to
Return Date
------ ------------
12.86% 9.89%
Penn Cap NASDAQ
-------- -------
10/31/97 $10,000 $10,000
9/30/98 10,302 9,138
9/30/99 11,293 9,059
9/30/00 12,745 9,842
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 Penn Capital Select Financial Services Fund began operations on
October 20, 1997.
4
<PAGE>
SCHEDULE OF INVESTMENTS PENN CAPITAL FUNDS
September 30, 2000
PENN CAPITAL SELECT Value
FINANCIAL SERVICES FUND Shares (000)
--------------------------------------------------------------------------------
COMMON STOCKS (97.7%)
BANKS (62.0%)
Astoria Financial 451 $ 17
Banc One 250 10
Bank of America 150 8
Bank of New York 150 8
Bank United, Cl A 75 4
Bankunited Financial, Cl A* 250 2
CCBT Financial 165 3
Chase Manhattan 340 16
Coastal Bancorp 660 12
Cullen/Frost Bankers 250 8
Deutsche Bank, Sponsored ADR 200 17
First Union 375 12
Fleet Boston Financial 192 8
Mellon Financial 260 12
National Penn Bancshares 734 14
North Fork Bancorp 525 11
Peoples Bank 145 3
PNC Financial Services Group 240 16
Seacoast Banking of Florida, Cl A 475 12
Summit Bancorp 330 11
Suntrust Banks 117 6
United Bankshares 185 4
Webster Financial 178 5
Wells Fargo 350 16
Westamerica Bancorp 250 8
---
243
---
FINANCIAL SERVICES (27.3%)
Alliance Capital Management
Holdings 185 9
American Express 150 9
Capital One Financial 195 14
Citigroup 397 21
Fannie Mae 220 16
Legg Mason 135 8
Neuberger Berman 300 18
T. Rowe Price Associates 250 12
---
107
---
Value
Shares (000)
--------------------------------------------------------------------------------
INSURANCE (8.4%)
American International Group 164 $ 16
Metlife* 650 17
----
33
----
TOTAL COMMON STOCKS
(Cost $326) 383
----
CASH EQUIVALENTS (1.5%)
SEI Daily Income Trust Money
Market Portfolio
6.500%, 3,099 3
SEI Daily Income Trust Prime
Obligation Portfolio
6.470%, 3,099 3
----
TOTAL CASH EQUIVALENTS
(Cost $6) 6
----
TOTAL INVESTMENTS (99.2%)
(Cost $332) 389
----
OTHER ASSETS AND LIABILITIES, NET (0.8%) 3
----
TOTAL NET ASSETS (100.0%) $392
====
*NON-INCOME PRODUCING SECURITY
ADR -- AMERICAN DEPOSITORY RECEIPT
CL -- CLASS
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
5
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES (000) PENN CAPITAL FUNDS
September 30, 2000
<TABLE>
<CAPTION>
PENN CAPITAL SELECT
FINANCIAL SERVICES FUND
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Assets:
Investment Securities at Value (Cost $332).................................. $ 389
Cash........................................................................ 48
Receivable for Investment Securities Sold .................................. 31
Receivable from Investment Adviser ......................................... 15
Other Prepaid Expenses...................................................... 9
------------------------------------------------------------------------------------------------------------------------------------
Total Assets ............................................................ 492
------------------------------------------------------------------------------------------------------------------------------------
Liabilities:
Accrued Expenses ........................................................... 20
Payable for Investment Securities Purchased................................. 80
------------------------------------------------------------------------------------------------------------------------------------
Total Liabilities ....................................................... 100
------------------------------------------------------------------------------------------------------------------------------------
Net Assets:
Portfolio shares (unlimited authorization--no par value) based on
35,149 outstanding shares of beneficial interest ........................ 372
Undistributed Net Investment Income......................................... 4
Accumulated Net Realized Loss on Investments .............................. (41)
Net Unrealized Appreciation of Investments ................................ 57
------------------------------------------------------------------------------------------------------------------------------------
Total Net Assets ........................................................ $ 392
====================================================================================================================================
Net Asset Value, Offering Price, and Redemption Price Per Share .............. $11.16
====================================================================================================================================
</TABLE>
The accompanying notes are an integral part of the financial statements.
6
<PAGE>
STATEMENT OF OPERATIONS (000) PENN CAPITAL FUNDS
September 30, 2000
<TABLE>
<CAPTION>
PENN CAPITAL SELECT
FINANCIAL SERVICES FUND
------------------------------------------------------------------------------------------------------------------------------------
<S> <C>
Investment Income:
Interest .................................................................. $ 1
Dividends................................................................... 10
------------------------------------------------------------------------------------------------------------------------------------
Total Investment Income.................................................. 11
------------------------------------------------------------------------------------------------------------------------------------
Expenses:
Investment Advisory Fees ................................................... 3
Investment Advisory Fee Waiver ............................................ (3)
Administration Fees ....................................................... 65
Custodian Fees ............................................................ 1
Transfer Agent Fees ....................................................... 19
Professional Fees ......................................................... 18
Trustee Fees .............................................................. 2
Registration Fees ......................................................... 10
Pricing Fees .............................................................. --
Printing Fees ............................................................. 10
Amortization of Deferred Organizational Costs.............................. 6
Insurance and Other Fees .................................................. --
------------------------------------------------------------------------------------------------------------------------------------
Total Expenses .......................................................... 131
------------------------------------------------------------------------------------------------------------------------------------
Less: Reimbursements by Adviser............................................ (127)
------------------------------------------------------------------------------------------------------------------------------------
Total Net Expenses ...................................................... 4
------------------------------------------------------------------------------------------------------------------------------------
Net Investment Income ............................................... 7
------------------------------------------------------------------------------------------------------------------------------------
Net Realized Loss From Securities Sold .................................... (21)
Net Unrealized Appreciation
of Investment Securities ................................................ 65
------------------------------------------------------------------------------------------------------------------------------------
Net Realized and Unrealized Gain
on Investments ................................................... 44
------------------------------------------------------------------------------------------------------------------------------------
Net Increase in Net Assets Resulting
From Operations ........................................................ $51
====================================================================================================================================
</TABLE>
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) PENN CAPITAL FUNDS
For the Years Ended September 30,
<TABLE>
<CAPTION>
PENN CAPITAL SELECT
FINANCIAL SERVICES FUND
-------------------------
2000 1999
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Investment Activities:
Net Investment Income ................................................... $ 7 $ 8
Net Realized Loss on Securities Sold..................................... (21) (5)
Net Unrealized Appreciation of
Investment Securities ................................................. 65 114
------------------------------------------------------------------------------------------------------------------------------------
Net Increase in Net Assets Resulting
from Operations ..................................................... 51 117
------------------------------------------------------------------------------------------------------------------------------------
Distributions to Shareholders:
Net Investment Income ................................................... (9) (6)
Realized Capital Gains .................................................. (15) (47)
------------------------------------------------------------------------------------------------------------------------------------
Total Distributions ................................................... (24) (53)
------------------------------------------------------------------------------------------------------------------------------------
Capital Share Transactions:
Proceeds from Shares Issued ............................................. 70 18
Shares Issued in Lieu of Cash Distributions.............................. 24 53
Cost of Shares Redeemed.................................................. (34) (533)
------------------------------------------------------------------------------------------------------------------------------------
Increase (Decrease) in Net Assets From
Capital Share Transactions............................................. 60 (462)
------------------------------------------------------------------------------------------------------------------------------------
Total Increase (Decrease) in Net Assets ............................... 87 (398)
------------------------------------------------------------------------------------------------------------------------------------
Net Assets:
Beginning of Period.................................................... 305 703
------------------------------------------------------------------------------------------------------------------------------------
End of Period(1)....................................................... $392 $305
====================================================================================================================================
Shares Issued and Redeemed:
Issued .................................................................. 8 1
Issued in Lieu of Cash Distributions..................................... 2 5
Redeemed................................................................. (4) (45)
------------------------------------------------------------------------------------------------------------------------------------
Net Increase (Decrease) in Share Transactions............................ 6 (39)
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Includes undistributed net investment income (000) of $3 and $6, as of
September 30, 2000, and September 30, 1999, respectively.
The accompanying notes are an integral part of the financial statements.
8
<PAGE>
FINANCIAL HIGHLIGHTS PENN CAPITAL FUNDS
For a Share Outstanding Throughout Each Period
<TABLE>
<CAPTION>
Net Realized and Net Net Ratio of Net
Asset Unrealized Distributions Asset Assets Ratio Investment
Value Net Gains ------------------- Value End of Expenses Income
Beginning Investment on Investment Capital End Total of Period to Average to Average
of Period Income Investments Income Gains of Period Return+ (000) Net Assets Net Assets
-------------------------------------------------------------------------------------------------------------------------
-------------------------------------------
PENN CAPITAL SELECT FINANCIAL SERVICES FUND
-------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
2000 $10.74 $0.20 $1.05 $(0.31) $(0.52) $11.16 12.86% $392 1.40% 2.00%
1999 10.50 0.23 0.79 (0.09) (0.69) 10.74 9.62 305 1.40 1.17
1998(1) 10.00 0.07 0.64 (0.01) (0.20) 10.50 6.81 703 1.40 0.68
</TABLE>
<TABLE>
<CAPTION>
Ratio of Net
Ratio of Investment
Expenses Income (Loss) to
to Average Average
Net Assets Net Assets
(Excluding (Excluding Portfolio
Waivers and Waivers and Turnover
Reimbursements) Reimbursements) Rate
-------------------------------------------------------
-------------------------------------------
PENN CAPITAL SELECT FINANCIAL SERVICES FUND
-------------------------------------------
<S> <C> <C> <C>
2000 41.09% (37.69)% 49.67%
1999 14.54* (11.97) 114.10
1998(1) 29.22 (27.14) 174.80
</TABLE>
+ Returns are for the period indicated and have not been annualized.
(1) Commenced operations on October 20, 1997. All ratios are for the period and
have been annualized.
The accompanying notes are an integral part of the financial statements.
9
<PAGE>
NOTES TO FINANCIAL STATEMENTS PENN CAPITAL 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 Penn Capital Select Financial Services Fund, (the "Fund"). The
financial statements of the remaining portfolios are presented separately. The
assets of the Fund are segregated, and a shareholder's interest is limited to
the fund in which shares are held. The Fund's prospectus provides a description
of the Fund's investment objectives, policies, and strategies.
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 quotations are not readily
available or securities whose market quotations do not reflect market
value, 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.
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.
DISTRIBUTIONS TO SHAREHOLDERS -- Distributions from net investment income
are declared and paid to Shareholders at least annually. 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.
10
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Continued) PENN CAPITAL FUNDS
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 .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 on $2 billion. There is a minimum
annual fee of $65,000 payable to the Administrator for services rendered to the
Fund under the Administration Agreement. The administrator may, at its sole
discretion waive all or a portion of its fees.
DST Systems, Inc., (the "Transfer Agent") serves as the transfer agent and
dividend disbursing agent for the Fund under a transfer agency agreement with
the Trust.
The Trust and the Distributor are parties to a Distribution Agreement dated
April 28, 1996. The Distributor receives no fees for its distribution services
under this agreement.
5. INVESTMENT ADVISORY AGREEMENT:
The Trust and Penn Capital Management Company, Inc. (the "Adviser") are parties
to an Investment Advisory Agreement, under which the Adviser receives an annual
fee equal to 1.00% of the average daily net assets of the Fund. The Adviser has
voluntarily agreed to waive all or a portion of its fees and to reimburse
expenses of the Fund in order to limit its total operating expenses (as a
percentage of average daily net assets on an annualized basis) to not more than
1.40%. Fee waivers and expense reimbursements are voluntary and may be
terminated at any time.
11
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Concluded) PENN CAPITAL FUNDS
September 30, 2000
6. INVESTMENT TRANSACTIONS:
The total cost of security purchases and the proceeds from security sales, other
than short-term investments, for the period ended September 30, 2000, are as
follows:
PENN CAPITAL SELECT
FINANCIAL SERVICES FUND
(000)
-----------------------
Purchases ................... $219
Sales ....................... $151
At September 30, 2000, the total cost of securities for Federal income tax
purposes was $337,236. The aggregate gross unrealized appreciation and
depreciation for securities held by the Fund at September 30, 2000, are as
follows:
PENN CAPITAL SELECT
FINANCIAL SERVICES FUND
(000)
-----------------------
Aggregate gross unrealized
appreciation ............. $ 66
Aggregate gross unrealized
depreciation ............. (9)
----
Book net unrealized appreciation 57
Less: Tax basis adjustments . (5)
----
Tax net unrealized appreciation $ 52
====
12
<PAGE>
REPORT OF INDEPENDENT AUDITORS PENN CAPITAL FUNDS
TO THE SHAREHOLDERS AND BOARD OF TRUSTEES
TIP FUNDS -- PENN CAPITAL SELECT FINANCIAL SERVICES FUND
We have audited the accompanying statement of assets and liabilities of the
TIP Funds - Penn Capital Select Financial Services 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 t he 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 -- Penn Capital Select Financial Services 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 for each of the periods indicated therein, in conformity with
accounting principles generally accepted in the United States.
/S/Ernst & Young LLP
Philadelphia, Pennsylvania
November 10, 2000
13
<PAGE>
NOTICE TO SHAREHOLDERS
OF
TIP PENN CAP SELECT FUND
(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
taxable year end, 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 Funds - Penn Capital Select
Financial Services Fund ............. 0.00% 100.00% 0.00%
</TABLE>
TOTAL QUALIFYING
PORTFOLIO DISTRIBUTIONS DIVIDENDS (1)
--------- ------------- -------------
TIP Funds - Penn Capital Select
Financial Services Fund ............. 100.00% 28.40%
-------------
(1) Qualifying dividends represent dividends which qualify for the corporate
dividends received deduction and are reflected as a percentage of "Ordinary
Income Distributions".
14
<PAGE>
TRUST
TIP Funds
P.O. Box 219805
Kansas City, MO 64121-9805
INVESTMENT ADVISER
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
To open an account, receive account information, make inquiries, or request
literture:
1-800-224-6312
THIS REPORT WAS PREPARED FOR SHAREHOLDERS IN THE PENN CAPITAL FUNDS. IT MAY BE
DISTRIBUTED TO OTHERS ONLY IF PRECEDED OR ACCOMPANIED BY A PROSPECTUS, WHICH
CONTAINS DETAILED INFORMATION.
PEN-F-005-0300
<PAGE>
