TIP FUNDS, 485BPOS, 2000-01-27

TIP FUNDS
485BPOS, 2000-01-27

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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JANUARY 27, 2000

File No. 333-00641
File No. 811-07527

- --------------------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM N-1A

REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OF 1933 /X/
POST-EFFECTIVE AMENDMENT NO. 15

and

REGISTRATION STATEMENT UNDER
INVESTMENT COMPANY ACT OF 1940 /X/
AMENDMENT NO. 16

TIP FUNDS
------------------------

(Exact Name of Registrant as Specified in Charter)
c/o The CT Corporation System
2 Oliver Street
Boston, Massachusetts 02109
(Address of Principal Executive Offices, Zip Code)

Registrant's Telephone Number, including Area Code (610) 251-0268

(Name and Address of Agent for Service)

STEPHEN KNEELEY
TURNER INVESTMENT PARTNERS, INC.
1235 WESTLAKES DR., SUITE 350
BERWYN, PENNSYLVANIA 19312-2414

Copies to:

JAMES W. JENNINGS, ESQUIRE JOHN H. GRADY, JR., ESQUIRE
MORGAN, LEWIS & BOCKIUS LLP MORGAN, LEWIS & BOCKIUS LLP
1701 MARKET STREET 1701 MARKET STREET
PHILADELPHIA, PENNSYLVANIA 19103 PHILADELPHIA, PENNSYLVANIA 19103

TITLE OF SECURITIES BEING REGISTERED...UNITS OF BENEFICIAL INTEREST.

- --------------------------------------------------------------------------------
It is proposed that this filing become effective (check appropriate box):
__ immediately upon filing pursuant to paragraph (b)
__ on ______, 1999, pursuant to paragraph (b)
__ 60 days after filing pursuant to paragraph (a)
X on January 28, 2000 pursuant to paragraph (a) of Rule 485
- --
__ 75 days after filing pursuant to paragraph (a)(2)

- --------------------------------------------------------------------------------

<PAGE>

TURNER FUNDS

PROSPECTUS
JANUARY 31, 2000

TURNER LARGE CAP GROWTH EQUITY FUND
TURNER GROWTH EQUITY FUND
TURNER MIDCAP GROWTH FUND
TURNER SMALL CAP GROWTH FUND
TURNER MICRO CAP GROWTH FUND
TURNER TOP 20 FUND
TURNER TECHNOLOGY FUND
TURNER SHORT DURATION GOVERNMENT FUNDS
- ONE YEAR PORTFOLIO
TURNER SHORT DURATION GOVERNMENT FUNDS
- THREE YEAR PORTFOLIO
TURNER CORE HIGH QUALITY FIXED INCOME FUND

PORTFOLIOS OF THE TIP FUNDS

INVESTMENT ADVISER
TURNER INVESTMENT PARTNERS, INC.

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.

<PAGE>

HOW TO READ YOUR PROSPECTUS

TIP Funds is a mutual fund family that offers different classes of shares in
separate investment portfolios (Funds). The Funds have individual investment
goals and strategies. This prospectus gives you important information about the
Class I and Class II Shares of the Turner Funds that you should know before
investing. Please read this prospectus and keep it for future reference.

This prospectus has been arranged into different sections so that you can easily
review this important information. On the next page, there is some general
information you should know about the Funds. For more detailed information about
the Funds, please see:

PAGE
TURNER LARGE CAP GROWTH EQUITY FUND.........................................XXX
TURNER GROWTH EQUITY FUND...................................................XXX
TURNER MIDCAP GROWTH FUND...................................................XXX
TURNER SMALL CAP GROWTH FUND................................................XXX
TURNER MICRO CAP GROWTH FUND................................................XXX
TURNER TOP 20 FUND..........................................................XXX
TURNER TECHNOLOGY FUND......................................................XXX
TURNER SHORT DURATION GOVERNMENT FUNDS
- ONE YEAR PORTFOLIO...................................................XXX
TURNER SHORT DURATION GOVERNMENT FUNDS
- THREE YEAR PORTFOLIO.................................................XXX
TURNER CORE HIGH QUALITY FIXED INCOME FUND..................................XXX
INVESTMENTS AND PORTFOLIO MANAGEMENT........................................XXX
PURCHASING, SELLING AND EXCHANGING TURNER FUNDS.............................XXX
DIVIDENDS, DISTRIBUTIONS AND TAXES..........................................XXX
FINANCIAL HIGHLIGHTS........................................................XXX

TO OBTAIN MORE INFORMATION ABOUT TIP FUNDS, PLEASE REFER TO THE BACK COVER OF
THE PROSPECTUS.

2
<PAGE>

INFORMATION COMMON TO ALL FUNDS

Each Fund is a mutual fund. A mutual fund pools shareholders' money and, using
professional investment managers, invests it in securities.

Each Fund has its own investment goal and strategies for reaching that goal. The
Adviser invests Fund assets in a way that it believes will help each Fund
achieve its goal. Still, investing in the Funds involves risk and there is no
guarantee that a Fund will achieve its goal. The Adviser's judgments about the
markets, the economy, or companies may not anticipate actual market movements,
economic conditions or company performance, and these judgments may affect the
return on your investment. In fact, no matter how good a job the Adviser does,
you could lose money on your investment in the Funds, just as you could with
other investments. A Fund share is not a bank deposit and it is not insured or
guaranteed by the FDIC or any government agency.

The value of your investment in a Fund is based on the market prices of the
securities the Fund holds. These prices change daily due to economic and other
events that affect particular companies and other issuers. These price
movements, sometimes called volatility, may be greater or lesser depending on
the types of securities a Fund owns and the markets in which they trade. The
effect on a Fund's share price of a change in the value of a single security
will depend on how widely the Fund diversifies its holdings.

INITIAL PUBLIC OFFERINGS

A number of the Funds, including the Midcap, Small Cap, Micro Cap, Top 20 and
Technology Funds, participate in initial public offerings (IPOs). During 1999,
there were a large number of IPOs, and many of these IPOs were very successful.
The Funds participated in a number of these successful IPOs, and as a result,
these IPOs had a significant impact on the Fund's performance, expecially on
those Funds with lower asset levels. There is no guarantee that there will be as
many successful IPOs in the future, or that the Funds will continue to have
access to these successful IPOs. In addition, as Fund assets grow, the positive
impact of successful IPOs on Fund performance will decrease.

3
<PAGE>

TURNER LARGE CAP GROWTH EQUITY FUND

FUND SUMMARY

INVESTMENT GOAL Capital appreciation

INVESTMENT FOCUS Very large capitalization U.S.
common stocks

SHARE PRICE VOLATILITY Medium to high

PRINCIPAL INVESTMENT STRATEGY Attempts to identify very large
capitalization U.S. companies with
strong earnings growth potential

INVESTOR PROFILE Investors seeking long-term growth of
capital who can withstand the share
price volatility of equity investing

STRATEGY

The Turner Large Cap Growth Equity Fund invests primarily (at least 65% of its
assets) in common stocks and other equity securities of U.S. companies with very
large market capitalizations (I.E., over $10 billion) that Turner Investment
Partners believes have strong earnings growth potential. The Fund may also
purchase securities of smaller companies that offer growth potential. The Fund
will invest in securities of companies that are diversified across economic
sectors. Portfolio exposure is generally limited to a maximum of 2% in any
single issue. However, the Fund may hold up to two times of the Index weighting
of those securities that comprise between 1% and 5% of the Russell Top 200
Growth Index, and up to one and one-half times the Index weighting of those
securities that comprise more than 5% of the Index.

Due to its investment strategy, the Fund may buy and sell securities frequently.
This may result in higher transaction costs and additional capital gains tax
liabilities.

RISKS

Since it purchases equity securities, the Fund is subject to the risk that stock
prices will fall over short or extended periods of time. Historically, the
equity markets have moved in cycles, and the value of the Fund's equity
securities may fluctuate drastically from day to day. Individual companies may
report poor results or be negatively affected by industry and/or economic trends
and developments. The prices of securities issued by such companies may suffer a
decline in response. These factors contribute to price volatility, which is the
principal risk of investing in the Fund. In addition, the Fund is subject to the
risk that its principal market segment, large capitalization growth stocks, may
underperform compared to other market segments or to the equity markets as a
whole.

4
<PAGE>

PERFORMANCE INFORMATION

The bar chart and the performance table below illustrate the risks and
volatility of an investment in the Fund. Of course, the Fund's past performance
does not necessarily indicate how the Fund will perform in the future.

This bar chart shows changes in the performance of the Fund's Class I Shares
from year to year for two years.*

1998 45.22%
1999 55.71%

* THE PERFORMANCE INFORMATION SHOWN ABOVE IS BASED ON A CALENDAR YEAR.

BEST QUARTER WORST QUARTER
41.30% (8.19)%
(12/31/99) (9/30/98)

This table compares the Fund's average annual total returns for the periods
ended December 31, 1999, to those of the Russell Top 200 Growth Index and the
S&P 500 Index.

SINCE INCEPTION
1 YEAR (2/1/97)
- --------------------------------------------------------------------------------
TURNER LARGE CAP GROWTH EQUITY FUND 55.71% 44.24%
RUSSELL TOP 200 GROWTH INDEX 29.68% 33.65%
S&P 500 INDEX 21.05% 25.83%

WHAT IS AN INDEX?

An index measures the market price of a specific group of securities in a
particular market of securities in a market sector. You cannot invest directly
in an index. An index does not have an investment adviser and does not pay any
commissions or expenses. If an index had expenses, its performance would be
lower. The Russell Top 200 Growth Index is a widely-recognized,
capitalization-weighted (companies with larger market capitalizations have more
influence than those with smaller market capitalization) index of the 200
largest U.S. companies with higher growth rates and price-to-price book ratios.
The S&P 500 Index is a widely-recognized, market value-weighted index of 500
stocks designed to mimic the overall equity market's industry weightings.

5
<PAGE>

FUND FEES AND EXPENSES

THIS TABLE DESCRIBES THE FUND'S FEES AND EXPENSES THAT YOU MAY PAY IF YOU BUY
AND HOLD SHARES OF THE FUND.

ANNUAL FUND OPERATING EXPENSES (EXPENSES DEDUCTED FROM FUND ASSETS)

CLASS I SHARES
- -------------------------------------------------------------------------------
Investment Advisory Fees 0.75%
Distribution (12b-1) Fees None
Other Expenses 1.66%
-----
TOTAL ANNUAL FUND OPERATING EXPENSES 2.41%
Fee Waivers and Expense Reimbursements 1.41%
-----
NET TOTAL OPERATING EXPENSES 1.00%*
- -------------------------------------------------------------------------------

* The Fund's Adviser has contractually agreed to waive fees and to reimburse
expenses in order to keep total operating expenses from exceeding 1.00% for a
period of one year, or from exceeding 1.25% in any subsequent year. In addition,
the Fund has an arrangement with certain broker-dealers who have agreed to pay
certain fund expenses in return for the direction of a percentage of the Fund's
brokerage transactions. As a result of these arrangements, it is anticipated
that the Fund's expenses will be reduced. For more information about these fees,
see "Investment Adviser."

EXAMPLE

This Example is intended to help you compare the cost of investing in the Fund
with the cost of investing in other mutual funds. The Example assumes that you
invest $10,000 in the Fund for the time periods indicated. The Example also
assumes that each year your investment has a 5% return and Fund operating
expenses remain the same. Although your actual costs and returns might be
different, your approximate costs of investing $10,000 in the Fund would be:

<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
TURNER LARGE CAP GROWTH EQUITY FUND - CLASS I SHARES $102 $373 $665 $1,505
</TABLE>

6
<PAGE>

TURNER GROWTH EQUITY FUND

FUND SUMMARY

INVESTMENT GOAL Capital appreciation

INVESTMENT FOCUS U.S. common stocks

SHARE PRICE VOLATILITY Medium to high

PRINCIPAL INVESTMENT STRATEGY Attempts to identify reasonably priced
large- and mid-cap U.S. companies with
strong earnings growth potential

INVESTOR PROFILE Investors seeking long-term growth of
capital who can withstand the share
price volatility of equity investing

STRATEGY

The Turner Growth Equity Fund invests primarily (at least 65% of its assets) in
common stocks and other equity securities of U.S. companies with large and
medium capitalizations that Turner Investment Partners believes have strong
earnings growth potential and that are reasonably valued at the time of
purchase. The Fund will invest in securities of companies that are diversified
across economic sectors, and will attempt to maintain sector concentrations that
approximate those of its current benchmark, the Russell 1000 Growth Index.
Portfolio exposure is generally limited to a maximum of 2% in any single issue.
However, the Fund may hold up to two times the Index weighting of those
securities that comprise between 1% and 5% of the Russell 1000 Growth Index, and
up to one and one-half times the Index weighting of those securities that
comprise more than 5% of the Index.

Due to its investment strategy, the Fund may buy and sell securities frequently.
This may result in higher transaction costs and additional capital gains tax
liabilities.

RISKS

Since it purchases equity securities, the Fund is subject to the risk that stock
prices will fall over short or extended periods of time. Historically, the
equity markets have moved in cycles, and the value of the Fund's equity
securities may fluctuate drastically from day to day. Individual companies may
report poor results or be negatively affected by industry and/or economic trends
and developments. The prices of securities issued by such companies may suffer a
decline in response. These factors contribute to price volatility, which is the
principal risk of investing in the Fund. In addition, the Fund is subject to the
risk that its principal market segment, large and medium capitalization growth
stocks, may underperform compared to other market segments or to the equity
markets as a whole.

The medium capitalization companies the Fund invests in may be more vulnerable
to adverse business or economic events than larger, more established companies.
In particular, these mid-sized companies may have limited product lines, markets
and financial resources, and may depend upon a relatively small management
group.

7
<PAGE>

PERFORMANCE INFORMATION

This bar chart shows changes in the performance of the Fund's Class I Shares
from year to year for seven years.*

1993 15.38%
1994 (6.73)%
1995 29.96%
1996 19.23%
1997 31.36%
1998 38.07%
1999 53.60%

* THE PERFORMANCE INFORMATION SHOWN ABOVE IS BASED ON A CALENDAR YEAR.

BEST QUARTER WORST QUARTER
39.67% (8.85)%
(12/31/99) (9/30/98)

This table compares the Fund's average annual total returns for the periods
ended December 31, 1999, to those of the Russell 1000 Growth Index and the S&P
500 Index.

SINCE INCEPTION
1 YEAR 5 YEARS (3/11/92)
- -------------------------------------------------------------------------------
TURNER GROWTH EQUITY FUND 53.60% 33.98% 23.68%
RUSSELL 1000 GROWTH INDEX 33.16% 34.21% 22.08%
S&P 500 INDEX 21.05% 28.56% 20.51%

WHAT IS AN INDEX?

An index measures the market price of a specific group of securities in a
particular market of securities in a market sector. You cannot invest directly
in an index. An index does not have an investment adviser and does not pay any
commissions or expenses. If an index had expenses, its performance would be
lower. The Russell 1000 Growth Index is a widely-recognized,
capitalization-weighted (companies with larger market capitalizations have more
influence than those with smaller market capitalization) index of the 1000
largest U.S. companies with higher growth rates and price-to-book ratios. The
S&P 500 Index is a widely-recognized, market value-weighted index of 500 stocks
designed to mimic the overall equity market's industry weightings.

8
<PAGE>

FUND FEES AND EXPENSES

THIS TABLE DESCRIBES THE FUND'S FEES AND EXPENSES THAT YOU MAY PAY IF YOU BUY
AND HOLD SHARES OF THE FUND.

ANNUAL FUND OPERATING EXPENSES (EXPENSES DEDUCTED FROM FUND ASSETS)

CLASS I SHARES
- --------------------------------------------------------------------------------
Investment Advisory Fees 0.75%
Distribution (12b-1) Fees None
Other Expenses 0.25%
-----
TOTAL ANNUAL FUND OPERATING EXPENSES 1.00%*
- --------------------------------------------------------------------------------

* Total Operating Expenses have been restated to reflect current expenses. The
Fund's Adviser has contractually agreed to waive fees and to reimburse expenses
in order to keep total operating expenses from exceeding 1.00% for a period of
one year, or from exceeding 1.25% in any subsequent year. In addition, the Fund
has an arrangement with certain broker-dealers who have agreed to pay certain
fund expenses in return for the direction of a percentage of the Fund's
brokerage transactions. As a result of these arrangements, it is anticipated
that the Fund's expenses will be reduced. For more information about these fees,
see "Investment Adviser."

EXAMPLE

<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
TURNER GROWTH EQUITY FUND - CLASS I SHARES $102 $318 $552 $1,225
</TABLE>

9
<PAGE>

TURNER MIDCAP GROWTH FUND

FUND SUMMARY

INVESTMENT GOAL Capital appreciation

INVESTMENT FOCUS Mid-cap U.S. common stocks

SHARE PRICE VOLATILITY High

PRINCIPAL INVESTMENT STRATEGY Attempts to identify medium
capitalization U.S. companies
with strong earnings growth potential

INVESTOR PROFILE Investors seeking long-term growth of
capital who can withstand the share
price volatility of equity investing

STRATEGY

The Turner Midcap Growth Fund invests primarily (at least 65% of its assets) in
common stocks and other equity securities of U.S. companies with medium market
capitalizations (I.E., between $1 billion and $10 billion) that Turner
Investment Partners believes have strong earnings growth potential. The Fund
will invest in securities of companies that are diversified across economic
sectors, and will attempt to maintain sector concentrations that approximate
those of its current benchmark, the Russell Midcap Growth Index. Portfolio
exposure is generally limited to a maximum of 2% in any single issue. However,
the Fund may hold up to two times the Index weighting of those securities that
comprise between 1% and 5% of the Russell Midcap Growth Index, and up to one and
one-half times the Index weighting of those securities that comprise more than
5% of the Index.

Due to its investment strategy, the Fund may buy and sell securities frequently.
This may result in higher transaction costs and additional capital gains tax
liabilities.

RISKS

Since it purchases equity securities, the Fund is subject to the risk that stock
prices will fall over short or extended periods of time. Historically, the
equity markets have moved in cycles, and the value of the Fund's equity
securities may fluctuate drastically from day to day. Individual companies may
report poor results or be negatively affected by industry and/or economic trends
and developments. The prices of securities issued by such companies may suffer a
decline in response. These factors contribute to price volatility, which is the
principal risk of investing in the Fund. In addition, the Fund is subject to the
risk that its principal market segment, medium capitalization growth stocks, may
underperform compared to other market segments or to the equity markets as a
whole.

The medium capitalization companies the Fund invests in may be more vulnerable
to adverse business or economic events than larger, more established companies.
In particular, these mid-size companies may have limited product lines, markets
and financial resources, and may depend upon a relatively small management
group.

10
<PAGE>

PERFORMANCE INFORMATION

This bar chart shows changes in the performance of the Fund's Class I Shares
from year to year for three years.*

1997 40.56%
1998 26.52%
1999 125.45%

* THE PERFORMANCE INFORMATION SHOWN ABOVE IS BASED ON A CALENDAR YEAR.

BEST QUARTER WORST QUARTER
54.63% (16.65)%
(12/31/99) (9/30/98)

This table compares the Fund's average annual total returns for the periods
ended December 31, 1999, to those of the Russell Midcap Growth Index.

SINCE INCEPTION
1 YEAR (10/1/96)
- ---------------------------------------------------------------------------
TURNER MIDCAP GROWTH FUND 125.45% 54.87%
RUSSELL MIDCAP GROWTH INDEX 51.29% 28.29%

WHAT IS AN INDEX?

An index measures the market price of a specific group of securities in a
particular market of securities in a market sector. You cannot invest directly
in an index. An index does not have an investment adviser and does not pay any
commissions or expenses. If an index had expenses, its performance would be
lower. The Russell Midcap Growth Index is a widely-recognized,
capitalization-weighted (companies with larger market capitalizations have more
influence than those with smaller market capitalizations) index of the 800
smallest U.S. companies out of the 1,000 largest companies with higher growth
rates and price-to-book ratios.

11
<PAGE>

FUND FEES AND EXPENSES

THIS TABLE DESCRIBES THE FUND'S FEES AND EXPENSES THAT YOU MAY PAY IF YOU BUY
AND HOLD SHARES OF THE FUND.

ANNUAL FUND OPERATING EXPENSES (EXPENSES DEDUCTED FROM FUND ASSETS)

CLASS I SHARES
- -------------------------------------------------------------------------------
Investment Advisory Fees 0.75%
Distribution (12b-1) Fees None
Other Expenses 0.50%
----
TOTAL ANNUAL FUND OPERATING EXPENSES 1.25*%
----
- -------------------------------------------------------------------------------

* The Fund's Adviser has contractually agreed to waive fees and to reimburse
expenses in order to keep total operating expenses from exceeding 1.25% for a
period of one year, or from exceeding 1.75% in any subsequent year. In addition,
the Fund has an arrangement with certain broker-dealers who have agreed to pay
certain fund expenses in return for the direction of a percentage of the Fund's
brokerage transactions. As a result of these arrangements, it is anticipated
that the Fund's expenses will be reduced. For more information about these fees,
see "Investment Adviser."

EXAMPLE

This Example is intended to help you compare the cost of investing in the Fund
with the cost of investing in other mutual funds. The Example assumes that you
invest $10,000 in the Fund for the time periods indicated. The Example also
assumes that each year your investment has a 5% return and Fund expenses remain
the same. Although your actual costs and returns might be different, your
approximate costs of investing $10,000 in the Fund would be:

<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
TURNER MIDCAP GROWTH FUND - CLASS I SHARES $127 $397 $686 $1,511
</TABLE>

12
<PAGE>

TURNER SMALL CAP GROWTH FUND

FUND SUMMARY

INVESTMENT GOAL Capital appreciation

INVESTMENT FOCUS Small cap U.S. common stocks

SHARE PRICE VOLATILITY High

PRINCIPAL INVESTMENT STRATEGY Attempts to identify small cap U.S.
companies with strong earnings growth
potential

INVESTOR PROFILE Investors seeking long-term growth of
capital who can withstand the share
price volatility of small cap equity
investing

STRATEGY

The Turner Small Cap Growth Fund invests primarily (at least 65% of its assets)
in common stocks and other equity securities of U.S. companies with small market
capitalizations (I.E., under $2 billion) that Turner Investment Partners
believes have strong earnings growth potential. The Fund will invest in
securities of companies that are diversified across economic sectors, and will
attempt to maintain sector concentrations that approximate those of its current
benchmark, the Russell 2000 Growth Index. Portfolio exposure is generally
limited to a maximum of 2% in any single issue. However, the Fund may hold up to
two times the Index weighting of those securities that comprise between 1% and
5% of the Russell 2000 Growth Index, and up to one and one-half times the Index
weighting of those securities that comprise more than 5% of the Index.

Due to its investment strategy, the Fund may buy and sell securities frequently.
This may result in higher transaction costs and additional capital gains tax
liabilities.

RISKS

Since it purchases equity securities, the Fund is subject to the risk that stock
prices will fall over short or extended periods of time. Historically, the
equity markets have moved in cycles, and the value of the Fund's equity
securities may fluctuate drastically from day to day. Individual companies may
report poor results or be negatively affected by industry and/or economic trends
and developments. The prices of securities issued by such companies may suffer a
decline in response. These factors contribute to price volatility, which is the
principal risk of investing in the Fund. In addition, the Fund is subject to the
risk that its principal market segment, small cap U.S. growth stocks, may
underperform compared to other market segments or to the equity markets as a
whole.

The smaller capitalization companies the Fund invests in may be more vulnerable
to adverse business or economic events than larger, more established companies.
In particular, these small companies may have limited product lines, markets and
financial resources, and may depend upon a relatively small management group.
Therefore, small cap stocks may be more volatile than those of larger companies.
These securities may be traded over the counter or listed on an exchange and may
or may not pay dividends.

13
<PAGE>

PERFORMANCE INFORMATION

This bar chart shows changes in the performance of the Fund's Class I Shares
from year to year for five years.*

1995 68.16%
1996 28.85%
1997 14.75%
1998 8.53%
1999 85.04%

* THE PERFORMANCE INFORMATION SHOWN ABOVE IS BASED ON A CALENDAR YEAR.

BEST QUARTER WORST QUARTER
44.57% (24.30)%
(12/31/99) (9/30/98)

This table compares the Fund's average annual total returns for the periods
ended December 31, 1999, to those of the Russell 2000 Growth Index.

SINCE INCEPTION
1 YEAR 5 YEARS (2/7/94)
- -------------------------------------------------------------------------------
TURNER SMALL CAP GROWTH FUND 85.04% 37.94% 33.44%
RUSSELL 2000 GROWTH INDEX 43.09% 18.99% 14.89%

WHAT IS AN INDEX?

An index measures the market price of a specific group of securities in a
particular market of securities in a market sector. You cannot invest directly
in an index. An index does not have an investment adviser and does not pay any
commissions or expenses. If an index had expenses, its performance would be
lower. The Russell 2000 Growth Index is a widely-recognized,
capitalization-weighted (companies with larger market capitalizations have more
influence than those with smaller market capitalizations) index of the 2000
smallest U.S. companies out of the 3000 largest U.S. companies with higher
growth rates and price-to-book ratios.

14
<PAGE>

FUND FEES AND EXPENSES

THIS TABLE DESCRIBES THE FUND'S FEES AND EXPENSES THAT YOU MAY PAY IF YOU BUY
AND HOLD SHARES OF THE FUND.

ANNUAL FUND OPERATING EXPENSES (EXPENSES DEDUCTED FROM FUND ASSETS)

CLASS I SHARES
- -----------------------------------------------------------------------------
Investment Advisory Fees 1.00%
Distribution (12b-1) Fees None
Other Expenses 0.31%
-----
TOTAL ANNUAL FUND OPERATING EXPENSES 1.31%
Fee Waivers and Expense Reimbursements 0.06%
-----
NET TOTAL OPERATING EXPENSES 1.25%*
- -----------------------------------------------------------------------------

EXAMPLE

This Example is intended to help you compare the cost of investing in the Fund
with the cost of investing in other mutual funds. The Example assumes that you
invest $10,000 in the Fund for the time periods indicated. The Example also
assumes that each year your investment has a 5% return and Fund expenses remain
the same. Although your actual costs and returns might be different, your
approximate costs of investing $10,000 in the Fund would be:

1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
TURNER SMALL CAP GROWTH FUND - CLASS I SHARES $127 $409 $713 $1,578
</TABLE>

15
<PAGE>

TURNER MICRO CAP GROWTH FUND

FUND SUMMARY

INVESTMENT GOAL Capital appreciation

INVESTMENT FOCUS Micro cap U.S. common stocks

SHARE PRICE VOLATILITY Very high

PRINCIPAL INVESTMENT STRATEGY Attempts to identify micro cap U.S.
companies with strong earnings growth
potential

INVESTOR PROFILE Investors seeking long-term growth of
capital who can withstand the share
price volatility of micro cap equity
investing

STRATEGY

The Turner Micro Cap Growth Fund invests primarily (at least 65% of its assets)
in common stocks and other equity securities of U.S. companies with very small
market capitalizations (I.E., under $500 million) that Turner Investment
Partners believes have strong earnings growth potential. The Fund will invest in
securities of companies that are diversified across economic sectors. Portfolio
exposure is generally limited to a maximum 2% at the time of purchase.

Due to its investment strategy, the Fund may buy and sell securities frequently.
This may result in higher transaction costs and additional capital gains tax
liabilities.

RISKS

Since it purchases equity securities, the Fund is subject to the risk that stock
prices will fall over short or extended periods of time. Historically, the
equity markets have moved in cycles, and the value of the Fund's equity
securities may fluctuate drastically from day to day. Individual companies may
report poor results or be negatively affected by industry and/or economic trends
and developments. The prices of securities issued by such companies may suffer a
decline in response. These factors contribute to price volatility, which is the
principal risk of investing in the Fund. In addition, the Fund is subject to the
risk that its principal market segment, U.S. micro capitalization growth stocks,
may underperform compared to other market segments or to the equity markets as a
whole.

The micro capitalization companies the Fund invests in may be more vulnerable to
adverse business or economic events than larger, more established companies. In
particular, these very small companies may have limited product lines, markets
and financial resources, and may depend upon a relatively small management
group. Micro cap stocks also tend to be traded only in the over the counter
market, and may not be as liquid as larger capitalization stocks. As a result,
the prices of the micro cap stocks owned by the Fund will be very volatile, and
the price movements of the Fund's shares will reflect that volatility.

16
<PAGE>

PERFORMANCE INFORMATION

This bar chart shows changes in the performance of the Fund's Class I Shares for
one year.*

1999 144.39%

* THE PERFORMANCE INFORMATION SHOWN ABOVE IS BASED ON A CALENDAR YEAR. THE
FUND'S PREDECESSOR, THE ALPHA SELECT TURNER MICRO CAP GROWTH FUND, COMMENCED
OPERATIONS ON MARCH 1, 1998. THE FUND BECAME PART OF THE TIP FUNDS IN 1999.

BEST QUARTER WORST QUARTER
60.84% 3.89%
(12/31/99) (3/31/99)

This table compares the Fund's average annual total returns for the periods
ended December 31, 1999, to those of the Russell 2000 Growth Index.

SINCE INCEPTION
1 YEAR (3/1/98)
- --------------------------------------------------------------------------
TURNER MICRO CAP GROWTH FUND 144.39% 94.15%
RUSSELL 2000 GROWTH INDEX 43.09% 17.69%

WHAT IS AN INDEX?

An index measures the market price of a specific group of securities in a
particular market of securities in a market sector. You cannot invest directly
in an index. An index does not have an investment adviser and does not pay any
commissions or expenses. If an index had expenses, its performance would be
lower. The Russell 2000 Growth Index is a widely-recognized,
capitalization-weighted (companies with larger market capitalizations have more
influence than those with smaller market capitalization) index of the 2000
smallest U.S. companies out of the 3000 largest U.S. companies with higher
growth rates and price-to-book ratios.

17
<PAGE>

FUND FEES AND EXPENSES

THIS TABLE DESCRIBES THE FUND'S FEES AND EXPENSES THAT YOU MAY PAY IF YOU BUY
AND HOLD SHARES OF THE FUND.

ANNUAL FUND OPERATING EXPENSES (EXPENSES DEDUCTED FROM FUND ASSETS)

CLASS I SHARES
- -------------------------------------------------------------------------------
Investment Advisory Fees 1.00%
Distribution (12b-1) Fees None
Other Expenses 1.86%
-----
TOTAL ANNUAL FUND OPERATING EXPENSES 2.86%
Fee Waivers and Expense Reimbursements 1.61%
-----
NET TOTAL OPERATING EXPENSES 1.25%*

EXAMPLE

This Example is intended to help you compare the cost of investing in the Fund
with the cost of investing in other mutual funds. The Example assumes that you
invest $10,000 in the Fund for the time periods indicated. The Example also
assumes that each year your investment has a 5% return and Fund expenses remain
the same. Although your actual costs and returns might be different, your
approximate costs of investing $10,000 in the Fund would be:

1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
TURNER MICRO CAP GROWTH FUND - CLASS I SHARES $127 $504 $910 $2,065
</TABLE>

18
<PAGE>

TURNER TOP 20 FUND

FUND SUMMARY

INVESTMENT GOAL Long-term capital appreciation

INVESTMENT FOCUS U.S. common stocks

SHARE PRICE VOLATILITY Very high

PRINCIPAL INVESTMENT STRATEGY Attempts to identify U.S. companies with
strong earnings growth potential

INVESTOR PROFILE Investors seeking long-term growth of
capital who can withstand the share price
volatility of equity investing

STRATEGY

The Turner Top 20 Fund invests substantially all (at least 80%) of its assets in
common stocks and other equity securities of companies, regardless of their
market capitalization, that Turner Investment Partners believes have strong
earnings growth potential. A number of portfolio managers manage the Fund by
selecting stocks in different sectors and capitalization ranges under the
supervision of Robert Turner. The Fund's portfolio will contain a total of 15-25
stocks representing Turner's favorite investment ideas. By investing in
different sectors and capitalization ranges, Turner seeks to reduce the Fund's
overall level of volatility. Ideally, when one sector or capitalization range is
out of favor, the other ranges will offer a counterbalancing influence.

Due to its investment strategy, the Fund may buy and sell securities frequently.
This may result in higher transaction costs and additional capital gains tax
liabilities.

RISKS

Since it purchases equity securities, the Fund is subject to the risk that stock
prices will fall over short or extended periods of time. Historically, the
equity markets have moved in cycles, and the value of the Fund's equity
securities may fluctuate drastically from day to day. Individual companies may
report poor results or be negatively affected by industry and/or economic trends
and developments. The prices of securities issued by such companies may suffer a
decline in response. These factors contribute to price volatility, which is the
principal risk of investing in the Fund. In addition, the Fund is subject to the
risk that its principal market segment, U.S. growth stocks, may underperform
compared to other market segments or to the equity markets as a whole.

The smaller capitalization and micro capitalization companies the Fund invests
in may be more vulnerable to adverse business or economic events than larger,
more established companies. In particular, these small companies may have
limited product lines, markets and financial resources, and may depend upon a
relatively small management group. Micro cap stocks also tend to be traded only
in the over the counter market, and may not be as liquid as larger

19
<PAGE>

capitalization stocks. Small cap securities may be traded over the counter or
listed on an exchange and may or may not pay dividends. Therefore, small cap and
micro cap stocks may be very volatile and the price movements of the Fund's
shares may reflect that volatility.

The Fund is non-diversified, which means that it may invest in the securities of
fewer issuers than a diversified Fund. As a result, the Fund may be more
susceptible to a single adverse economic or regulatory occurrence affecting one
or more of these issuers, and may experience increased volatility due to its
investments in those securities.

PERFORMANCE INFORMATION

The Turner Top 20 Fund commenced operations on July 1, 1999. Since the Fund does
not have a full calendar year of performance, performance results have not been
provided.

The Fund will compare its performance to that of the S&P 500 Index. The S&P 500
Index is a widely-recognized, market value-weighted (higher market value stocks
have more influence than lower market value stocks) index of 500 stocks designed
to mimic the overall equity market's industry weightings.

FUND FEES AND EXPENSES

THIS TABLE DESCRIBES THE FUND'S FEES AND EXPENSES THAT YOU MAY PAY IF YOU BUY
AND HOLD SHARES OF THE FUND.

ANNUAL FUND OPERATING EXPENSES (EXPENSES DEDUCTED FROM FUND ASSETS)

CLASS I SHARES
- --------------------------------------------------------------------------------
Investment Advisory Fees 1.10%*
Distribution (12b-1) Fees None
Other Expenses 1.45%
-----
TOTAL ANNUAL FUND OPERATING EXPENSES 2.55%
Fee Waivers and Expense Reimbursements 1.20%
-----
NET TOTAL OPERATING EXPENSES 1.35%**

- --------------------------------------------------------------------------------
* The advisory fee is subject to a performance adjustment based on the Fund's
performance relative to the performance of the S&P 500 Index.
** The Fund's Adviser has contractually agreed to waive fees and to reimburse
expenses in order to keep other expenses from exceeding 0.25%. As a result, the
Adviser's contractual agreement will keep total operating expenses from
exceeding 1.35% for a period of one year, or from exceeding 1.85% in any
subsequent year. In addition, the Fund has an arrangement with certain
broker-dealers who have agreed to pay certain Fund expenses in return for the
direction of a percentage of the Fund's brokerage transactions. As a result of
these arrangements, it is anticipated that the Fund's expenses will be reduced.
For more information about these fees, see "Investment Adviser."

20
<PAGE>

EXAMPLE

This Example is intended to help you compare the cost of investing in the Fund
with the cost of investing in other mutual funds. The Example assumes that you
invest $10,000 in the Fund for the time periods indicated and that you sell your
shares at the end of the period. The Example also assumes that each year your
investment has a 5% return and Fund expenses remain the same. Although your
actual costs and returns might be different, your approximate costs of investing
$10,000 in the Fund would be:

<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
TURNER TOP 20 FUND - CLASS I SHARES $137 $535 $962 $2,174
</TABLE>

21
<PAGE>

TURNER TECHNOLOGY FUND

FUND SUMMARY

INVESTMENT GOAL Long-term capital appreciation

INVESTMENT FOCUS Common stocks of technology companies

SHARE PRICE VOLATILITY Very high

PRINCIPAL INVESTMENT STRATEGY Attempts to identify technology
companies with strong earnings growth
potential

INVESTOR PROFILE Investors seeking long-term growth of
capital who can withstand the share
price volatility of technology-focused
equity investing

STRATEGY

The Turner Technology Fund invests substantially all (at least 80%) of its
assets in common stocks of companies that develop new technologies and that may
experience exceptional growth in sales and earnings driven by technology-related
products and services. Stock selection will not be based on company size, but
rather on an assessment of a company's fundamental prospects. The Fund's
holdings will be concentrated in the technology sector, and will range from
small companies developing new technologies to large, established firms with a
history of developing and marketing such technologies. These companies may
include companies that develop, produce or distribute products or services in
the computer, semiconductor, electronics, communications, health care and
biotechnology sectors.

Due to its investment strategy, the Fund may buy and sell securities frequently.
This may result in higher transaction costs and additional capital gains tax
liabilities.

RISKS

The smaller capitalization and micro capitalization companies the Fund invests
in may be more vulnerable to adverse business or economic events than larger,
more established companies. In particular, these small companies may have
limited product lines, markets and financial resources, and may depend upon a
relatively small management group. Micro cap stocks also tend to be traded only
in the over-the-counter market, and may not be as liquid as larger
capitalization stocks. Small cap securities may be traded over the counter or

22
<PAGE>

listed on an exchange and may or may not pay dividends. Therefore, small cap and
micro cap stocks may be very volatile, and the price movements of the Fund's
shares may reflect that volatility.

In addition, the Fund is subject to the risk that its principal market segment,
technology stocks, may underperform compared to other market segments or to the
equity markets as a whole. The competitive pressures of advancing technology and
the number of companies and product offerings which continue to expand could
cause technology companies to become increasingly sensitive to short product
cycles and aggressive pricing. To the extent that the Fund's investments are
concentrated in issuers conducting business in the same industry, the Fund is
subject to legislative or regulatory changes, adverse market conditions and/or
increased competition affecting that industry.

PERFORMANCE INFORMATION

The Turner Technology Fund commenced operations on July 1, 1999. Since the Fund
does not have a full calendar year of performance, performance results have not
been provided.

The Fund will compare its performance to that of the Pacific Stock Exchange
Technology 100 Index. The Pacific Stock Exchange Technology 100 Index is a
widely-recognized, price weighted index of the top 100 U.S. technology
companies.

FUND FEES AND EXPENSES

THIS TABLE DESCRIBES THE FUND'S FEES AND EXPENSES THAT YOU MAY PAY IF YOU BUY
AND HOLD SHARES OF THE FUND.

ANNUAL FUND OPERATING EXPENSES (EXPENSES DEDUCTED FROM FUND ASSETS)

CLASS I SHARES
- ------------------------------------------------------------------------------
Investment Advisory Fees 1.10%*
Distribution (12b-1) Fees None
Other Expenses 2.79%
-----
TOTAL ANNUAL FUND OPERATING EXPENSES 3.89%
Fee Waivers and Expense Reimbursements 2.54%
-----
NET TOTAL OPERATING EXPENSES 1.35%**

- -------------------------------------------------------------------------------
* The advisory fee is subject to a performance adjustment based on the Fund's
performance relative to the performance of the Pacific Stock Exchange
Technology 100.
** The Fund's Adviser has contractually agreed to waive fees and to reimburse
expenses in order to keep other expenses from exceeding 0.25%. As a result, the
Adviser's contractual agreement will keep total operating expenses from
exceeding 1.35% for a period of one year, or from exceeding 1.85% in any
subsequent year. In addition, the Fund has an arrangement with certain
broker-dealers who have agreed to pay certain Fund expenses in return for the
direction of a percentage of the Fund's brokerage transactions. As a result of
these arrangements, it is anticipated that the Fund's expenses will be reduced.
For more information about these fees, see "Investment Adviser."

23
<PAGE>

EXAMPLE

This Example is intended to help you compare the cost of investing in the Fund
with the cost of investing in other mutual funds. The Example assumes that you
invest $10,000 in the Fund for the time periods indicated and that you sell your
shares at the end of the period. The Example also assumes that each year your
investment has a 5% return and Fund expenses remain the same. Although your
actual costs and returns might be different, your approximate costs of investing
$10,000 in the Fund would be:

<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
TURNER TECHNOLOGY FUND - CLASS I SHARES $137 $533 $954 $2,128
</TABLE>

24
<PAGE>

TURNER SHORT DURATION GOVERNMENT FUNDS - ONE YEAR PORTFOLIO

FUND SUMMARY

INVESTMENT GOAL Total return consistent with the
preservation of capital

INVESTMENT FOCUS Fixed income securities issued or
guaranteed by the U.S. government

SHARE PRICE VOLATILITY Low

PRINCIPAL INVESTMENT STRATEGY Attempts to identify U.S. government
securities that are attractively priced

INVESTOR PROFILE Investors seeking current income with a
very limited amount of share price
volatility

STRATEGY

The Turner Short Duration Government Funds - One Year Portfolio invests
primarily (at least 65% of its assets) in debt securities issued or guaranteed
by the U.S. government, its agencies or instrumentalities, including
mortgage-backed securities issued by agencies such as Fannie Mae or the
Government National Mortgage Association (GNMA). In selecting investments for
the Fund, Turner Investment Partners chooses U.S. government obligations that
are attractively priced relative to the market or to similar instruments. In
addition, Turner considers the "effective duration" of the Fund's entire
portfolio when selecting securities. Effective duration is a measure of a
security's price volatility or the risk associated with changes in interest
rates. Although Turner manages interest rate risk by maintaining an effective
duration that is comparable to or less than that of one-year U.S. Treasury
bills, the Fund may invest in securities with any maturity or duration.

Due to its investment strategy, the Fund may buy and sell securities frequently.
This may result in higher transaction costs and additional capital gains tax
liabilities.

RISKS

The prices of the Fund's fixed income securities respond to economic
developments, particularly interest rate changes, as well as to perceptions
about the creditworthiness of individual issuers, including governments.
Generally, the Fund's fixed income securities will decrease in value if interest
rates rise and vice versa, and the volatility of lower rated securities is even
greater than that of higher rated securities. Also, longer-term securities are
generally more volatile, so the average maturity or duration of these securities
affects risk. In addition, the Fund is subject to the risk that its principal
market segment, short duration U.S. government securities, may underperform
compared to other market segments or to the fixed income markets as a whole.

25
<PAGE>

backed by the U.S. Treasury, while others are backed solely by the ability of
the agency to borrow from the U.S. Treasury or by the agency's own resources.

Mortgage-backed securities are fixed income securities representing an interest
in a pool of underlying mortgage loans. They are sensitive to changes in
interest rates, but may respond to these changes differently from other fixed
income securities due to the possibility of prepayment of the underlying
mortgage loans. As a result, it may not be possible to determine in advance the
actual maturity date or average life of a mortgage-backed security. Rising
interest rates tend to discourage refinancings, with the result that the average
life and volatility of the security will increase, exacerbating its decrease in
market price. When interest rates fall, however, mortgage-backed securities may
not gain as much in market value because of the expectation of additional
mortgage prepayments that must be reinvested at lower interest rates. Prepayment
risk may make it difficult to calculate the average maturity of the Fund's of
mortgage-backed securities and, therefore, to assess the volatility risk of the
Fund.

PERFORMANCE INFORMATION

The performance of Class I and Class II Shares will differ due to differences in
expenses. This bar chart shows changes in the performance of the Fund's Class I
Shares from year to year for five years.*

1995 7.61%
1996 6.41%
1997 6.30%
1998 5.84%
1999 5.41%

* THE PERFORMANCE INFORMATION SHOWN ABOVE IS BASED ON A CALENDAR YEAR. THE FIRST
FOUR YEARS OF PERFORMANCE SHOWN IS FOR THE ALPHA SELECT TURNER SHORT DURATION
GOVERNMENT FUNDS-ONE YEAR PORTFOLIO, THE FUND'S PREDECESSOR. THE FUND BECAME
PART OF THE TIP FUNDS IN 1999.

BEST QUARTER WORST QUARTER
2.04% 1.11%
(12/31/95) (6/30/99)

26
<PAGE>

This table compares the Fund's average annual total returns for Class I and
Class II Shares for the periods ended December 31, 1999, to those of the Merrill
Lynch Three-Month Treasury Bill Index.

<TABLE>
<CAPTION>
SINCE
1 YEAR 5 YEARS INCEPTION
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
TURNER SHORT DURATION GOVERNMENT FUNDS - ONE YEAR PORTFOLIO
- CLASS I SHARES 5.41% 6.31% 6.04%*
TURNER SHORT DURATION GOVERNMENT FUNDS - ONE YEAR PORTFOLIO
- CLASS II SHARES 5.40% N/A 5.23%**
MERRILL LYNCH THREE-MONTH TREASURY BILL INDEX 4.84% 5.35% 5.22%***
</TABLE>

* The inception date for Class I Shares is March 1, 1994.
** The inception date for Class II Shares is February 27, 1998.
*** The calculation date for the Index is March 1, 1994.

WHAT IS AN INDEX?

FUND FEES AND EXPENSES

THIS TABLE DESCRIBES THE FUND'S FEES AND EXPENSES THAT YOU MAY PAY IF YOU BUY
AND HOLD SHARES OF THE FUND.

ANNUAL FUND OPERATING EXPENSES (EXPENSES DEDUCTED FROM FUND ASSETS)

CLASS I SHARES CLASS II SHARES
- --------------------------------------------------------------------------------
Investment Advisory Fees 0.25% 0.25%
Distribution (12b-1) Fees None None
Other Expenses 6.28% 6.53%
----- -----
TOTAL ANNUAL FUND OPERATING EXPENSES 6.53% 6.78%
Fee Waivers and Expense Reimbursements 6.17% 6.17%
----- -----
NET TOTAL OPERATING EXPENSES 0.36%* 0.61%*
- -------------------------------------------------------------------------------

* The Fund's Adviser has contractually agreed to waive fees and to reimburse
expenses in order to keep total operating expenses of the Class I and Class II
Shares from exceeding 0.36% and 0.61%, respectively, for a period of one year,
or from exceeding 0.86% and 1.11%, respectively, in any subsequent year. For
more information about these fees, see "Investment Adviser" and "Distribution of
Fund Shares."

27
<PAGE>

EXAMPLE

This Example is intended to help you compare the cost of investing in the Fund
with the cost of investing in other mutual funds. The Example assumes that you
invest $10,000 in the Fund for the time periods indicated. The Example also
assumes that each year your investment has a 5% return and Fund expenses remain
the same. Although your actual costs and returns might be different, your
approximate costs of investing $10,000 in the Fund would be:

<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
TURNER SHORT DURATION GOVERNMENT FUNDS
- ONE YEAR PORTFOLIO - CLASS I SHARES $37 $225 $432 $1,037
TURNER SHORT DURATION GOVERNMENT FUNDS
- ONE YEAR PORTFOLIO - CLASS II SHARES $62 $304 $568 $1,336
</TABLE>

28
<PAGE>

TURNER SHORT DURATION GOVERNMENT FUNDS - THREE YEAR PORTFOLIO

FUND SUMMARY

INVESTMENT GOAL Total return consistent with the
preservation of capital

INVESTMENT FOCUS Fixed income securities issued or
guaranteed by the U.S. government

SHARE PRICE VOLATILITY Low to medium

PRINCIPAL INVESTMENT STRATEGY Attempts to identify U.S. government
securities that are attractively priced

INVESTOR PROFILE Investors seeking current income with
a limited amount of share price
volatility

STRATEGY

The Turner Short Duration Government Funds - Three Year Portfolio invests
primarily (at least 65% of its assets) in debt securities issued or guaranteed
by the U.S. government, its agencies or instrumentalities, including
mortgage-backed securities issued by agencies such as Fannie Mae or the
Government National Mortgage Association (GNMA). In selecting investments for
the Fund, Turner Investment Partners chooses U.S. government obligations that
are attractively priced relative to the market or to similar instruments. Turner
considers the "effective duration" of the Fund's entire portfolio when selecting
securities. Effective duration is a measure of a security's price volatility or
the risk associated with changes in interest rates. Although Turner manages
interest rate risk by maintaining an effective duration that is comparable to or
less than that of three-year U.S. Treasury notes, the Fund may invest in
securities with any maturity.

Due to its investment strategy, the Fund may buy and sell securities frequently.
This may result in higher transaction costs and additional capital gains tax
liabilities.

RISKS

29
<PAGE>

backed by the U.S. Treasury, while others are backed solely by the ability of
the agency to borrow from the U.S. Treasury or by the agency's own resources.

Mortgage-backed securities are fixed income securities representing an interest
in a pool of underlying mortgage loans. They are sensitive to changes in
interest rates, but may respond to these changes differently from other fixed
income securities due to the possibility of prepayment of the underlying
mortgage loans. As a result, it may not be possible to determine in advance the
actual maturity date or average life of a mortgage-backed security. Rising
interest rates tend to discourage refinancings, with the result that the average
life and volatility of the security will increase, exacerbating its decrease in
market price. When interest rates fall, however, mortgage-backed securities may
not gain as much in market value because of the expectation of additional
mortgage prepayments that must be reinvested at lower interest rates. Prepayment
risk may make it difficult to calculate the average maturity of the Fund's
mortgage-backed securities and, therefore, to assess the volatility risk of the
Fund.

PERFORMANCE INFORMATION

1995 11.18%
1996 5.26%
1997 6.92%
1998 6.93%
1999 2.75%

* THE PERFORMANCE INFORMATION SHOWN ABOVE IS BASED ON A CALENDAR YEAR. THE FIRST
FOUR YEARS OF PERFORMANCE SHOWN IS FOR THE ALPHA SELECT TURNER SHORT DURATION
GOVERNMENT FUNDS - THREE YEAR PORTFOLIO, THE FUND'S PREDECESSOR.
THE FUND BECAME PART OF THE TIP FUNDS IN 1999.

BEST QUARTER WORST QUARTER
3.24% 0.40%
(3/31/95) (3/31/96)

30
<PAGE>

This table compares the Fund's average annual total returns for Class I Shares
for the periods ended December 31, 1999, to those of the Lehman Brothers 1-3
Year U.S. Government Bond Index.

<TABLE>
<CAPTION>
1 YEAR 5 YEARS SINCE INCEPTION
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
TURNER SHORT DURATION GOVERNMENT FUNDS - THREE YEAR PORTFOLIO
- CLASS I SHARES 2.75% 6.57% 5.85%*
TURNER SHORT DURATION GOVERNMENT FUNDS - THREE YEAR PORTFOLIO
- CLASS II SHARES N/A N/A 6.29%**
LEHMAN BROTHERS 1-3 YEAR U.S. GOVERNMENT BOND INDEX 2.96% 6.47% 5.79%***
</TABLE>

* The inception date for Class I Shares is March 1, 1994.
** The inception date for Class II Shares is April 28, 1999.
*** The calculation date for the Index is March 1, 1994.

WHAT IS AN INDEX?

FUND FEES AND EXPENSES

THIS TABLE DESCRIBES THE FUND'S FEES AND EXPENSES THAT YOU MAY PAY IF YOU BUY
AND HOLD SHARES OF THE FUND.

ANNUAL FUND OPERATING EXPENSES (EXPENSES DEDUCTED FROM FUND ASSETS)

<TABLE>
<CAPTION>
CLASS I SHARES CLASS II SHARES
- ------------------------------------------------------------------------------------------------
<S> <C> <C>
Investment Advisory Fees 0.25% 0.25%
Distribution (12b-1) Fees None None
Other Expenses 0.70%* 0.95%*
---- ----
TOTAL ANNUAL FUND OPERATING EXPENSES 0.95% 1.20%
Fee Waivers and Expense Reimbursements 0.59% 0.59%
----- ----
NET TOTAL OPERATING EXPENSES 0.36%** 0.61%**
</TABLE>

- --------------------------------------------------------------------------------
* Other Expenses have been restated to reflect current expenses.
** The Fund's Adviser has contractually agreed to waive fees and to reimburse
expenses in order to keep total operating expenses of the Class I and Class II
Shares from exceeding 0.36% and 0.61%, respectively, for a period of one year,
or from exceeding 0.86% and 1.11%, respectively, in any subsequent year. For
more information about these fees, see "Investment Adviser" and "Distribution of
Fund Shares."

31
<PAGE>

EXAMPLE

This Example is intended to help you compare the cost of investing in the Fund
with the cost of investing in other mutual funds. The Example assumes that you
invest $10,000 in the Fund for the time periods indicated. The Example also
assumes that each year your investment has a 5% return and Fund expenses remain
the same. Although your actual costs and returns might be different, your
approximate costs of investing $10,000 in the Fund would be:

1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
TURNER SHORT DURATION GOVERNMENT FUNDS
- THREE YEAR PORTFOLIO - CLASS I SHARES $37 $225 $432 $1,037
TURNER SHORT DURATION GOVERNMENT FUNDS
- THREE YEAR PORTFOLIO - CLASS II SHARES $62 $304 $568 $1,336
</TABLE>

32
<PAGE>

TURNER CORE HIGH QUALITY FIXED INCOME FUND

FUND SUMMARY

INVESTMENT GOAL Current income and capital
appreciation

INVESTMENT FOCUS Investment grade U.S. corporate and
government bonds

SHARE PRICE VOLATILITY Medium

PRINCIPAL INVESTMENT STRATEGY Attempts to identify quality fixed
income securities with intermediate
maturities

INVESTOR PROFILE Investors who are seeking current
income and capital appreciation and
who are willing to accept principal
risk

STRATEGY

The Turner Core High Quality Fixed Income Fund invests primarily (at least 65%
of its assets) in investment grade fixed income securities, including U.S.
government securities, corporate debt securities, mortgage-backed securities,
asset-backed securities, and short-term obligations. Turner Investment Partners
will allocate the Fund's assets among these market sectors based on its analysis
of historical data, yield trends and credit ratings. In selecting investments
for the Fund, Turner chooses securities with intermediate durations that are
attractively priced and that offer competitive yields. Typically, the Fund's
average duration will be between three and six years (although the Fund may hold
securities with longer or shorter durations).

RISKS

The prices of the Fund's fixed income securities respond to economic
developments, particularly interest rate changes, as well as to perceptions
about the creditworthiness of individual issuers, including governments.
Generally, the Fund's fixed income securities will decrease in value if interest
rates rise and vice versa, and the volatility of lower rated securities is even
greater than that of higher rated securities. Also, longer-term securities are
generally more volatile, so the average maturity or duration of these securities
affects risk. In addition, the Fund is subject to the risk that its principal
market segment, U.S. fixed income securities, may underperform compared to other
market segments or to the fixed income markets as a whole.

Although the Fund's U.S. government securities are considered to be among the
safest investments, they are not guaranteed against price movements due to
changing interest rates. Obligations issued by some U.S. government agencies are
backed by the U.S. Treasury, while others are backed solely by the ability of
the agency to borrow from the U.S. Treasury or by the agency's own resources.

33
<PAGE>

interest rates tend to discourage refinancings, with the result that the average
life and volatility of the security will increase, exacerbating its decrease in
market price. When interest rates fall, however, mortgage-backed securities may
not gain as much in market value because of the expectation of additional
mortgage prepayments that must be reinvested at lower interest rates. Prepayment
risk may make it difficult to calculate the average maturity of the Fund's
mortgage-backed securities and, therefore, to assess the volatility risk of the
Fund.

PERFORMANCE INFORMATION

The Turner Core High Quality Fixed Income Fund commenced operations on July 1,
1999. Since the Fund does not have a full calendar year of performance,
performance results have not been provided.

The Fund will compare its performance to that of the Lehman Aggregate Bond
Index. The Lehman Aggregate Bond Index is a widely-recognized market
value-weighted (higher market value stocks have more influence than lower market
value stocks) index of U.S. government obligations, corporate debt securities,
and AAA rated mortgage-backed securities. All securities in the index are rated
investment grade (BBB) or higher, with maturities of at least one year.

FUND FEES AND EXPENSES

THIS TABLE DESCRIBES THE FUND'S FEES AND EXPENSES THAT YOU MAY PAY IF YOU BUY
AND HOLD SHARES OF THE FUND.

ANNUAL FUND OPERATING EXPENSES (EXPENSES DEDUCTED FROM FUND ASSETS)

CLASS I SHARES
- -----------------------------------------------------------------------------
Investment Advisory Fees 0.50%
Distribution (12b-1) Fees None
Other Expenses 1.49%
-----
TOTAL ANNUAL FUND OPERATING EXPENSES 1.99%
Fee Waivers and Expense Reimbursements 1.54%
-----
NET TOTAL OPERATING EXPENSES 0.45%*
- ----------------------------------------------------------------------------
* The Fund's Adviser has contractually agreed to waive fees and to reimburse
expenses in order to keep total operating expenses from exceeding 0.45% for a
period of one year, or from exceeding 1.00% in any subsequent year. For more
information about these fees, see "Investment Adviser."

EXAMPLE

This Example is intended to help you compare the cost of investing in the Fund
with the cost of investing in other mutual funds. The Example assumes that you
invest $10,000 in the Fund for the time periods indicated. The Example also
assumes that each year your investment has a 5% return and Fund expenses remain
the same. Although your actual costs and returns might be different, your
approximate costs of investing $10,000 in the Fund would be:

<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
TURNER CORE HIGH QUALITY FIXED INCOME FUND - CLASS I SHARES $46 $265 $504 $1,203
</TABLE>

34
<PAGE>
INVESTMENTS AND PORTFOLIO MANAGEMENT

THE FUNDS' OTHER INVESTMENTS

In addition to the investments and strategies described in this prospectus, each
Fund also may invest in other securities, use other strategies and engage in
other investment practices. These investments and strategies, as well as those
described in this prospectus, are described in detail in our Statement of
Additional Information (SAI). Of course, there is no guarantee that any Fund
will achieve its investment goal.

The investments and strategies described throughout this prospectus are those
that the Funds use under normal conditions. During unusual economic or market
conditions, or for temporary defensive or liquidity purposes, each Fund may
invest up to 100% of its assets in cash, repurchase agreements and short-term
obligations that would not ordinarily be consistent with the Funds' objectives.
A Fund will do so only if the Adviser believes that the risk of loss outweighs
the opportunity for gains.

INVESTMENT ADVISER

Turner Investment Partners, Inc., an SEC-registered adviser, serves as the
Adviser to each Fund. As the Funds' Adviser, Turner makes investment decisions
for the Funds and continuously reviews, supervises and administers the Funds'
investment programs. The Adviser also ensures compliance with the Funds'
investment policies and guidelines.

As of December 31, 1999, Turner had approximately $5.6 billion in assets under
management. For its services during the most recent fiscal year, Turner received
investment advisory fees (after waivers and reimbursements) of:

TURNER GROWTH EQUITY FUND 0.75%
TURNER MIDCAP GROWTH FUND 0.75%
TURNER SMALL CAP GROWTH FUND 0.96%

For its services during the most recent fiscal year, Turner received no advisory
fees, and waived/reimbursed expenses of:

TURNER LARGE CAP GROWTH EQUITY FUND 0.66%
TURNER MICRO CAP GROWTH FUND 0.96%
TURNER SHORT DURATION GOVERNMENT FUNDS - ONE YEAR PORTFOLIO 6.28%
TURNER SHORT DURATION GOVERNMENT FUNDS - THREE YEAR PORTFOLIO 0.81%
TURNER CORE HIGH QUALITY FIXED INCOME FUND 1.04%

Turner is entitled to receive base investment advisory fees from the following
Funds as set forth below:

TURNER TOP 20 FUND 1.10%
TURNER TECHNOLOGY FUND 1.10%

However, these fees may be higher or lower depending on a Fund's performance
relative to a benchmark. If a Fund outperforms its benchmark by a set amount,
Turner will receive higher advisory fees. Conversely, if a Fund underperforms
its benchmark by the same amount, Turner will receive lower advisory fees. The
Funds' SAI contains detailed information about each Fund's benchmark, as well as
any possible performance-based adjustments to Turner's fees. These

35
<PAGE>

performance-based adjustments will take effect after the Funds have been in
operation for more than one year.

For the period from July 1, 1999 through September 30, 1999, Turner received no
advisory fees, and waived/reimbursed expenses of:

TURNER TOP 20 FUND 0.10%
TURNER TECHNOLOGY FUND 1.44%

TURNER'S EQUITY INVESTMENT PHILOSOPHY

Turner believes earnings expectations drive stock prices. Turner invests in
companies with strong earnings dynamics, and sells those with deteriorating
earnings prospects. Turner believes forecasts for market timing and sector
rotation are unreliable, and introduce an unacceptable level of risk. As a
result, all portfolios are fully invested and attempt to maintain sector
weightings that are neutral to diversified against those of a benchmark index,
since Turner believes it is imprudent to be overly-invested in any individual
security. This allows Turner's stock selection process to be the primary
determinant of performance.

PORTFOLIO MANAGERS

The Large Cap Growth Equity Fund is managed by a committee comprised of Robert
Turner, John Hammerschmidt and Mark Turner. The Growth Equity Fund is managed by
a committee comprised of Robert Turner, John Hammerschmidt, Mark Turner and
Chris McHugh. The Midcap Growth and Top 20 Funds are managed by a committee
comprised of Chris McHugh, Bill McVail and Robert Turner. The Small Cap Growth
Fund is managed by a committee comprised of Bill McVail, Chris McHugh and Frank
Sustersic. The Micro Cap Growth Fund is managed by a committee comprised of
Frank Sustersic, Bill McVail and Chris Perry. The Technology Fund is managed by
a committee comprised of Robert Turner, Chris McHugh and Robb Parlanti. The
Short Duration Government Funds - One Year Portfolio, Short Duration Government
Funds - Three Year Portfolio, and Core High Quality Fixed Income Fund are
managed by a committee comprised of James Midanek, Robb Parlanti and Kathy Dull.
The background of each committee member is set forth below.

Robert E. Turner is a member of the committees which manage the Large Cap Growth
Equity, Growth Equity, Midcap Growth, Top 20, and Technology Funds, as set forth
above. Mr. Turner, CFA, Chairman and Chief Investment Officer of the Adviser, is
lead manager of the Large Cap Growth Equity, Growth Equity, Top 20, and
Technology Funds and co-manager of the Midcap Growth Fund. Mr. Turner founded
Turner Investment Partners, Inc. in 1990. Prior to 1990, he was Senior
Investment Manager with Meridian Investment Company. He has 17 years of
investment experience.

John Hammerschmidt is a member of the committees which manage the Large Cap
Growth Equity and Growth Equity Funds, as set forth above. Mr. Hammerschmidt,
Senior Equity Portfolio Manager of the Adviser, is co-manager of the Large Cap
Growth Equity and Growth Equity Funds. Mr. Hammerschmidt joined the Adviser in
1992. Prior to 1992, he was Vice President in Government Securities Trading at
S.G. Warburg. He has 15 years of investment experience.

36
<PAGE>

Mark Turner is a member of the committees which manage the Large Cap Equity
Growth and Growth Equity Funds, as set forth above. Mr. Turner, Chairman of the
Adviser, is co-manager of the Growth Equity Fund and Large Cap Growth Equity
Fund. Mr. Turner co-founded Turner Investment Partners, Inc. in 1990. Prior to
1990, he was Vice President and Senior Portfolio Manager with First Maryland
Asset Management. He has 16 years of investment experience.

Christopher K. McHugh is a member of the committees which manage the Midcap
Growth, Small Cap Growth, Top 20 and Technology Funds, as set forth above. Mr.
McHugh, Equity Portfolio Manager of the Adviser, is the lead manager of the
Midcap Growth Fund and co-manager of the Growth Equity, Small Cap Growth, Top 20
and Technology Funds. Mr. McHugh joined the Adviser in 1990. Prior to 1990, he
was a Performance Specialist with Provident Capital Management. He has 12 years
of investment experience.

Bill McVail is a member of the committees which manage the Small Cap Growth,
Midcap Growth, Micro Cap Growth and Top 20 Funds, as set forth above. Mr.
McVail, Senior Equity Portfolio Manager of the Adviser, is the lead manager of
the Small Cap Growth Fund and co-manager of the Midcap Growth, Micro Cap Growth
and Top 20 Funds. Mr. McVail joined the Adviser in 1998. Prior to 1998, he was
Portfolio Manager at PNC Equity Advisers. He has 12 years of investment
experience.

Frank L. Sustersic is a member of the committees which manage the Micro Cap and
Small Cap Growth Funds, as set forth above. Mr. Sustersic, a Senior Equity
Portfolio Manager of the Adviser, serves as lead manager of the Micro Cap Growth
Fund and co-manager of the Small Cap Growth Fund. Mr. Sustersic joined Turner in
1994. Mr. Sustersic has 9 years of investment experience.

Chris Perry is a member of the committee which manages the Micro Cap Growth
Fund, as set forth above. Mr. Perry, Senior Security Analyst of the Adviser, is
co-manager of the Micro Cap Growth Fund. Mr. Perry joined the Adviser in 1998.
Prior to 1998, he was a Research Analyst with Pennsylvania Merchant Group. He
has 9 years of investment experience.

James L. Midanek is a member of the committee which manages the Short Duration
Government Funds - One Year Portfolio, Short Duration Government Funds - Three
Year Portfolio, and Core High Quality Fixed Income Fund. Mr. Midanek, Chief
Investment Officer-Fixed Income, joined the Adviser in 1997. Prior to 1997, he
was Chief Investment Officer of Solon Asset Management, L.P., which he founded
in 1989, and Portfolio Manager of the Short Duration Government Funds. From 1992
to 1994, Mr. Midanek was Chief Investment Officer to the Fixed Income Group of
Montgomery Asset Management, L.P., where he managed four institutional fixed
income funds. Mr. Midanek has 19 years of investment experience.

Robb J. Parlanti is a member of the committees which manage the Technology and
Fixed Income Funds, as set forth above. Mr. Parlanti, CFA, Senior Portfolio
Manager of the Adviser, is co-manager of the Technology and Fixed Income Funds.
Mr. Parlanti joined the Adviser in 1993. Prior to 1993, he was Assistant Vice
President and Portfolio Manager at PNC Bank. He has 13 years of investment
experience.

Kathleen A. Dull is a member of the committee which manages the Fixed Income
Fund, as set forth above. Ms. Dull, Senior Portfolio Manager of the Adviser, is
co-manager of the Fixed Income Fund. Ms. Dull joined the Adviser in 1997. Prior
to 1997, she was a Portfolio Associate at Solon Asset Management. She has 8
years of investment experience.

37
<PAGE>

TURNER'S PAST PERFORMANCE

Since January 1, 1998, Turner has managed some assets in a "top 20" style. In
this style, Turner's best investment ideas are combined in a single portfolio
consisting of 15-25 stocks. There is no limit on the capitalization of any
stock, and these portfolios have typically been invested across a broad range of
sectors and capitalizations.

The following table presents historical performance information for a composite
consisting of the Top 20 Fund and two discretionary "top 20" accounts that are
managed by Turner in a way that is equivalent in all material respects as to
objectives, policies and strategies to how Turner is managing the Top 20 Fund.
This table also compares the performance to that of the Standard & Poor's 500
Index. The computed rates of return include the impact of capital appreciation
as well as the reinvestment of interest and dividends. This data does not
indicate how the Top 20 Fund may perform in the future:

<TABLE>
<CAPTION>
FOURTH CALENDAR 12 MONTHS 1/1/98 (INCEPTION)
QUARTER 1999 ENDED 12/31/99 TO 12/31/99
<S> <C> <C> <C>
Composite Gross Performance 60.43% 235.07% 165.18%*
Composite Net Performance 60.25% 232.64% 162.60%*
S&P 500 Performance 14.88% 21.05% 24.75%
</TABLE>

* Annualized

THE MODIFIED BANK ADMINISTRATION INSTITUTE (BAI) METHOD IS USED TO COMPUTE A
TIME WEIGHTED RATE OF RETURN IN ACCORDANCE WITH STANDARDS SET BY THE ASSOCIATION
OF INVESTMENT MANAGEMENT AND RESEARCH (AIMR). THE PERFORMANCE FIGURES FOR THE
ADVISER'S ACCOUNTS DESCRIBED ABOVE ARE NET OF ADVISORY FEES AND EXPENSES. THE
EFFECT OF DEDUCTING FUND OPERATING EXPENSES ON ANNUALIZED PERFORMANCE, INCLUDING
THE COMPOUNDING EFFECT OVER TIME, MAY BE SUBSTANTIAL, AND WILL REDUCE THE
PERFORMANCE OF THE FUND.

ALL INFORMATION PRESENTED RELIES ON DATA SUPPLIED BY THE ADVISER AND STATISTICAL
SERVICES, REPORTS OR OTHER SOURCES BELIEVED BY THE TRUST TO BE RELIABLE. IT HAS
NOT BEEN INDEPENDENTLY VERIFIED OR AUDITED BY THE FUNDS.

38
<PAGE>

PURCHASING, SELLING AND EXCHANGING TURNER FUNDS

- --------------------------------------------------------------------------------

In order to open a new account, you must complete and mail the NEW ACCOUNT
APPLICATION that you receive with this prospectus.
- --------------------------------------------------------------------------------

All trades must be received by the Funds' Transfer Agent by 4:00 PM EST.

Your check must be made payable to the Turner Funds or wires must be sent to the
instructions listed below.

Each fund's minimum initial investment is $2,500 with minimum subsequent
purchases of $50.

* PURCHASE, SELL OR EXCHANGE FUND SHARES BY PHONE. Call 1-800-224-6312 between
9:00 AM and 4:00 PM EST Monday through Friday and Press 3 to place a trade.

* PURCHASE, SELL OR EXCHANGE FUND SHARES BY MAIL. Shareholders can mail trade
requests to:

By regular mail By express or overnight mail

The Turner Funds The Turner Funds
P.O. Box 219805 c/o DST Systems Inc.
Kansas City, MO 64141-6805 330 W. 9th Street
Kansas City, MO 64105

* PURCHASE FUND SHARES BY WIRING FUNDS TO:
United Missouri Bank of Kansas NA
ABA #101000695
Account # 9870601168
Further Credit: name of fund, shareholder name and Turner Funds account number

CLOSING THE FUNDS TO NEW INVESTORS AT CERTAIN ASSET LEVELS

There are limits to the amount an investment adviser can effectively invest in
certain asset classes. Too many advisers try to manage more and more money
regardless of their capacity to find attractive investments. Turner Investment
Partners will not do this. Turner will close a Fund to most new investors once
assets under management reach certain specified levels. For the Small Cap Growth
Fund, that level has been reached and the Fund is currently closed to new
investors. Similarly, effective when the assets that Turner manages in its Micro
Cap Growth Equity Style, Midcap Growth Equity Style and the Growth Equity Style
(which includes the assets of each Fund) reach $385 million, $4.5 billion and
$9.3 billion, respectively, the Funds will be closed to new investors. Existing
shareholders of the Funds will be notified before any Fund is closed to new
investors.

Shareholders of the Funds as of the effective date for a Fund closing may
continue to make investments and may open additional accounts with the Funds,
provided the new accounts are registered in the same name or have the same
taxpayer identification or social security number assigned to them. In addition,
certain limited classes of new investors may also purchase shares of the Funds
after they are closed to new investors. See "Purchasing, Selling and Exchanging
Fund Shares."

<PAGE>

PURCHASING, SELLING AND EXCHANGING TURNER FUNDS

The Turner Funds are "no load" mutual funds, meaning you pay no sales charge
when purchasing shares of the Funds. The minimum initial investment is $2,500
and the minimum subsequent investment is $50. The Funds reserve the right to
waive the minimum initial investment.

This section tells you how to buy, sell (sometimes called "redeem") or exchange
shares of the Funds.

PURCHASING TURNER FUND SHARES

CHOOSING CLASS I OR CLASS II SHARES

Class I and Class II Shares have different expenses and other characteristics.

Class I Shares are for individual investors and for certain institutional
investors investing for their own or their customers' account.

Class II Shares are for individual investors who purchase shares through
financial institutions or intermediaries. Only the Turner Short Duration
Government Funds - One Year Portfolio and Turner Short Duration Government Funds
- - Three Year Portfolio offer Class II Shares.

CLASS I SHARES CLASS II SHARES
o NO SALES CHARGE o NO SALES CHARGE
o LOWER ANNUAL EXPENSES o HIGHER ANNUAL EXPENSES
o $2,500 MINIMUM INITIAL INVESTMENT o $2,500 MINIMUM INITIAL INVESTMENT

For some investors the minimum initial investment may be lower.

WHEN CAN YOU PURCHASE SHARES?

You may purchase shares on any day that the New York Stock Exchange is open for
business (a Business Day).

We may reject any purchase order if we determine that accepting the order would
not be in the best interests of the Funds or their shareholders.

To open an account:

o BY MAIL -- Please send your completed application, with a check payable to
the Turner Funds, to the address listed on this page. Your check must be in

40
<PAGE>

U.S. dollars and drawn on a bank located in the United States. We do not
accept third party checks, credit card checks or cash.

o BY WIRE -- Please call us at 1-800-224-6312 (option 3) to let us know that
you intend to make your initial investment by wire. You will be given an
account number and fax number to which you should send your completed New
Account Application. Once this is complete you will need to instruct your
bank to wire money to: United Missouri Bank of Kansas, N.A.; ABA
#10-10-00695; for Account Number 98-7060-116-8; Further Credit: [_________
Fund]. The shareholder's name and account number must be specified in the
wire.

SYSTEMATIC INVESTMENT PLAN

If you have a checking or savings account with a bank, you may purchase Class I
Shares automatically through regular deductions from your account. Please call
1-800-224-6312 for information regarding participating banks. With a $100
minimum initial investment, you may begin regularly scheduled investments once a
month.

WHO IS ELIGIBLE TO INVEST IN A FUND ONCE IT IS CLOSED TO NEW INVESTORS?

If you are a shareholder of a Fund when it closes to new investors, you will be
able to make additional investments in the Fund and reinvest your dividends and
capital gains distributions. Once a Fund is closed, you may open a new account
only if:

o your business or other organization is already a shareholder of the Fund
and you are opening an account for an employee benefit plan sponsored by
that organization or an affiliated organization;

o you are a current Fund trustee or officer, or an employee of Turner
Investment Partners, Inc. or a member of the immediate family of any of
these people; or

o you are a client of a financial adviser or planner who has client assets
invested in the TIP Funds as of the date of any proposed new investment in
the Fund.

HOW FUND PRICES ARE CALCULATED

The price per share (the offering price) will be the net asset value per share
(NAV) next determined after the Funds receive your purchase order. NAV for one
Fund share is the value of that share's portion of all of the net assets in the
Fund. The Funds' NAV is calculated once each Business Day at the
regularly-scheduled close of normal trading on the New York Stock Exchange
(normally, 4:00 p.m., Eastern time). So, for you to receive the current Business
Day's NAV, generally we must receive your purchase order before 4:00 p.m.,
Eastern time.

PURCHASING ADDITIONAL SHARES

o BY MAIL -- Please send your check payable to Turner Funds along with a
signed letter stating the name of the Turner Fund and your account number.

<PAGE>

o BY PHONE -- Current shareholders are eligible to purchase shares by phone
if they have requested that privilege by checking the appropriate box on
the New Account Application. Shareholders who have requested telephone
privileges can call 1-800-224-6312 (option 3) and give the Fund and account
number they would like to make a subsequent purchase into. They must then
instruct their bank to wire the money by following the instructions listed
on page 25.

ADDITIONAL INFORMATION

You may also buy shares through accounts with brokers and other institutions
that are authorized to place trades in Fund shares for customers. If you invest
through an authorized institution, you will have to follow its procedures, which
may be different from the procedures for investing directly. Your institution
may charge a fee for its services, in addition to the fees charged by the Funds.
You will also generally have to address your correspondence or questions
regarding the Funds to your institution.

SELLING TURNER FUND SHARES

If you own shares directly, you may sell your shares on any Business Day by
contacting us directly by mail or telephone. You may also sell your shares by
contacting your financial institution by mail or telephone. The sale price of
each share will be the next NAV determined after we receive your request.

You may sell shares by following procedures established when you opened your
account or accounts.

o BY MAIL - If you wish to redeem shares of the Turner Funds, you should send
us a letter with your name, Fund and account number and the amount of your
request. All letters must be signed by the owner(s) of the account. All
proceeds will be mailed or wired (depending on instructions given) to the
address or instructions given to us when the account was established. If
you would like the proceeds sent to either a different bank account or
address, a signature guarantee is required.

o BY PHONE -- When filling out a New Account Application shareholders are
given the opportunity to establish telephone redemption privileges. If
shareholders elect to take advantage of this privilege they will be able to
redeem shares of the Turner Funds by calling 1-800-224-6312 (option 3) and
informing one of our representatives.

SYSTEMATIC WITHDRAWAL PLAN

If you have at least $2,500 in your account, you may use the systematic
withdrawal plan. Under the plan you may arrange monthly, quarterly, semi-annual
or annual automatic withdrawals of at least $50 from any Fund. The proceeds of
each withdrawal will be mailed to you by check or, if you have a checking or
savings account with a bank, electronically transferred to your account. Please
call 1-800-224-6312 for information regarding banks that participate in the
Systematic Withdrawal Plan.

<PAGE>

SIGNATURE GUARANTEES

A signature guarantee is a widely accepted way to protect shareholders by
verifying the signature in certain circumstances including, (1) written requests
for redemptions in excess of $50,000; (2) all written requests to wire
redemption proceeds to a bank other than the bank previously designated on the
account application; and (3) redemption requests that provide that the
redemption proceeds should be sent to an address other than the address of
record or to a person other than the registered shareholder(s) for the account.
Signature guarantees can be obtained from any of the following institutions: a
national or state bank, a trust company, a federal savings and loan association,
or a broker-dealer that is a member of a national securities exchange. A
notarized signature is not sufficient.

REDEMPTIONS IN KIND

The Funds generally pay sale (redemption) proceeds in cash. However, under
unusual conditions that make the payment of cash unwise (and for the protection
of the Fund's remaining shareholders) the Funds might pay all or part of your
redemption proceeds in liquid securities with a market value equal to the
redemption price (redemption in kind). Although it is highly unlikely that your
shares would ever be redeemed in kind, you would probably have to pay brokerage
costs to sell the securities distributed to you, as well as taxes on any capital
gains from the sale as with any redemption.

RECEIVING YOUR MONEY

Normally, the Funds will send your sale proceeds within three Business Days
after they receive your request, but it may take up to seven days. Your proceeds
can be wired to your bank account (subject to a $10 wire fee) or sent to you by
check. IF YOU RECENTLY PURCHASED YOUR SHARES BY CHECK OR THROUGH ACH, REDEMPTION
PROCEEDS MAY NOT BE AVAILABLE UNTIL YOUR CHECK HAS CLEARED (WHICH MAY TAKE UP TO
15 DAYS FROM YOUR DATE OF PURCHASE).

EXCHANGING TURNER FUND SHARES

When you exchange shares, you are really selling your shares and buying other
Fund shares. So, your sale price and purchase price will be based on the NAV
next calculated after we receive your exchange request.

You may exchange your shares on any Business Day by contacting the Funds
directly by mail or telephone. You may also exchange shares through your
financial institution by mail or telephone. IF YOU RECENTLY PURCHASED SHARES BY
CHECK OR THROUGH ACH, YOU MAY NOT BE ABLE TO EXCHANGE YOUR SHARES UNTIL YOUR
CHECK HAS CLEARED (WHICH MAY TAKE UP TO 15 DAYS FROM YOUR DATE OF PURCHASE).
This exchange privilege may be changed or canceled at any time upon 60 days'
notice.

OTHER POLICIES:

FOR CUSTOMERS OF FINANCIAL INSTITUTIONS

If you purchase, sell or exchange Fund shares through a financial institution
(rather than directly from us), you may have to transmit your purchase, sale and
exchange requests to your financial

<PAGE>

institution at an earlier time for your transaction to become effective that
day. This allows the financial institution time to process your request and
transmit it to us. For more information about how to purchase, sell or exchange
Fund shares through your financial institution, you should contact your
financial institution directly.

TELEPHONE TRANSACTIONS

Purchasing, selling and exchanging Fund shares over the telephone is extremely
convenient, but not without risk. Although we have certain safeguards and
procedures to confirm the identity of callers and the authenticity of
instructions, we are not responsible for any losses or costs incurred by
following telephone instructions we reasonably believe to be genuine. If you or
your financial institution transact with us over the telephone, you will
generally bear the risk of any loss.

SUSPENSION OF YOUR RIGHT TO SELL YOUR SHARES

The Funds may suspend your right to sell your shares if the NYSE restricts
trading, the SEC declares an emergency or for other reasons. More information
about this is in the Funds' SAI.

INVOLUNTARY SALES OF YOUR SHARES

If your account balance drops below the required minimum of $1,000, you may be
required to sell your shares. You will always be given at least 60 days' written
notice to give you time to add to your account and avoid selling your shares.

DISTRIBUTION OF FUND SHARES

SEI Investments Distribution Co. (SIDCo.) is the distributor of the Funds.
SIDCo. receives no compensation for distributing the Funds' shares.

The Turner Short Duration Government Funds-One Year Portfolio and Turner Short
Duration Government Funds-Three Year Portfolio have adopted a shareholder
service plan for its Class II Shares that allows the Funds to pay service fees
for services provided to shareholders. Class II Shares are subject to
shareholder service fees of up to 0.25% of average daily net assets.

DIVIDENDS AND DISTRIBUTIONS

The Turner Large Cap Growth Equity, Turner Midcap Growth, Turner Small Cap
Growth, Turner Micro Cap Growth, Turner Top 20 and Turner Technology Funds
distribute their income annually as a dividend to shareholders. The Turner
Growth Equity Fund distributes its income quarterly as a dividend to
shareholders. The Turner Short Duration Government Funds - One Year Portfolio,
Turner Short Duration Government Funds - Three Year Portfolio and Turner Core
High Quality Fixed Income Fund declare their investment income daily and
distribute it monthly as a dividend to shareholders.

The Funds make distributions of capital gains, if any, at least annually. If you
own Fund shares on a Fund's record date, you will be entitled to receive the
distribution.

<PAGE>

You will receive dividends and distributions in the form of additional Fund
shares unless you elect to receive payment in cash. To elect cash payment, you
must notify the Funds in writing prior to the date of the distribution. Your
election will be effective for dividends and distributions paid after we receive
your written notice. To cancel your election, simply send the Funds written
notice.

45
<PAGE>

TAXES

PLEASE CONSULT YOUR TAX ADVISOR REGARDING YOUR SPECIFIC QUESTIONS ABOUT FEDERAL,
STATE AND LOCAL INCOME TAXES. Summarized below are some important tax issues
that affect the Funds and their shareholders. This summary is based on current
tax laws, which may change.

Each Fund will distribute substantially all of its income and capital gains, if
any. The dividends and distributions you receive may be subject to federal,
state and local taxation, depending upon your tax situation. Income
distributions are generally taxable at ordinary income tax rates. Capital gains
distributions are generally taxable at the rates applicable to long-term capital
gains. Distributions you receive from a Fund may be taxable whether or not you
reinvest them. EACH SALE OR EXCHANGE OF FUND FUND SHARES IS A TAXABLE EVENT.

More information about taxes is in the SAI.

<PAGE>

FINANCIAL HIGHLIGHTS

The tables that follow present performance information about Class I and Class
II Shares of the Funds. This information is intended to help you understand each
Fund's financial performance for the past five years, or, if shorter, the period
of each Fund's operation. Some of this information reflects financial
information for a single Fund share. The total returns in the table represent
the rate that you would have earned (or lost) on an investment in a Fund,
assuming you reinvested all of your dividends and distributions. These Financial
Highlights have been audited by Ernst & Young LLP, independent auditors whose
report, along with each Fund's financial statements, appears in the annual
report that accompanies our SAI. You can obtain the annual report, which
contains more performance information, at no charge by calling 1-800-224-6312.

<PAGE>

FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD

REALIZED
AND
NET UNREALIZED
ASSET NET GAINS DISTRIBUTIONS DISTRIBUTIONS
VALUE, INVESTMENT (LOSSES) FROM NET FROM RETURN NET ASSET
BEGINNING INCOME ON INVESTMENT CAPITAL OF VALUE END TOTAL
OF PERIOD (LOSS) INVESTMENTS INCOME GAINS CAPITAL OF PERIOD RETURN+
--------- ---------- ----------- ------------- ------------- ------- --------- -------

TURNER LARGE CAP GROWTH EQUITY FUND
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1999 $13.22 (0.08) 5.76 -- -- -- $18.90 42.97%
1998 $12.28 (0.01) 1.98 (0.01) (1.02) -- $13.22 17.26%
1997(1) $10.00 0.01 2.27 -- -- -- $12.28 22.80%
TURNER GROWTH EQUITY FUND
1999 $12.87 (0.05) 4.66 -- (1.60) -- $15.88 38.16%
1998 $16.64 (0.05) 1.10 -- (4.82) -- $12.87 10.71%
1997 $17.03 (0.03) 4.23 -- (4.59) -- $16.64 32.61%
1996(2) $14.97 0.02 2.91 (0.02) (0.85) -- $17.03 20.61%
1995 $12.46 0.10 2.52 (0.11) -- -- $14.97 21.15%
1994 $13.12 0.10 (0.66) (0.10) -- -- $12.46 (4.28)%
TURNER MIDCAP GROWTH FUND
1999 $13.87 (0.06) 11.72 -- -- -- $25.53 84.07%
1998 $14.22 (0.07) 0.22 -- (0.50) -- $13.87 1.24%
1997(3) $10.00 (0.03) 4.36 -- (0.11) -- $14.22 43.77%
TURNER SMALL CAP GROWTH FUND
1999 $21.49 (0.26) 12.97 -- -- -- $34.20 59.14%
1998 $26.35 (0.23) (4.19) -- (0.25) (0.19) $21.49 (16.90)%
1997 $23.13 (0.07) 3.80 -- (0.51) -- $26.35 16.64%
1996(2) $16.08 (0.08) 8.17 -- (1.04) -- $23.13 52.90%
1995 $10.90 (0.06) 5.24 -- -- -- $16.08 47.52%
1994(4) $10.00 (0.02) 0.92 -- -- -- $10.90 12.35%
TURNER MICRO CAP GROWTH FUND
1999(5) $ 9.88 (0.05) 11.26 -- -- -- $21.09 113.46%
1998(6) $10.00 (0.04) (0.08) -- -- -- $ 9.88 (1.20)%
TURNER TOP 20 FUND
1999(7) $10.00 (0.02) 4.01 -- -- -- $13.99 39.90%
TURNER TECHNOLOGY FUND
1999(7) $10.00 (0.02) 4.08 -- -- -- $14.06 40.60%

RATIO OF RATIO OF NET
NET EXPENSES RATIO OF RATIO OF INVESTMENT
TO AVERAGE NET NET EXPENSES RATIO OF NET EXPENSES INCOME (LOSS)
ASSETS TO AVERAGE INVESTMENT TO AVERAGE TO AVERAGE
NET (INCLUDING NET ASSETS INCOME NET ASSETS NET ASSETS
ASSETS END DIRECTED (INCLUDING (LOSS) (EXCLUDING (EXCLUDING PORTFOLIO
OF PERIOD BROKERAGE WAIVERS AND TO AVERAGE WAIVERS AND WAIVERS AND TURNOVER
(000) ARRANGEMENTS) REIMBURSEMENTS) NET ASSETS REIMBURSEMENTS) REIMBURSEMENTS) RATE
---------- ------------- --------------- ------------ --------------- --------------- ---------

TURNER LARGE CAP GROWTH EQUITY FUND (FORMERLY TURNER ULTRA LARGE CAP GROWTH FUND)
<C> <C> <C> <C> <C> <C> <C> <C>
1999 $ 8,459 1.00% 1.00% (0.47)% 2.41% (1.88)% 370.71%
1998 $ 4,328 1.00% 1.00% (0.10)% 7.70% (6.80)% 234.93%
1997(1) $ 701 1.00%* 1.00%* 0.20%* 26.45%* (25.25)% 346.47%
TURNER GROWTH EQUITY FUND
1999 $142,824 0.92% 0.96% (0.42)% 0.96% (0.42)% 328.26%
1998 $ 97,857 1.00% 1.04% (0.42)% 1.12% (0.50)% 249.58%
1997 $ 99,590 0.96% 1.02% (0.25)% 1.05% (0.28)% 178.21%
1996(2) $ 96,164 0.94%* 1.06%* 0.03%* 1.06%* 0.03%* 147.79%
1995 $115,819 0.94% 1.03% 0.69% 1.03% 0.69% 177.86%
1994 $112,959 0.95% 0.95% 0.86% 1.08% 0.73% 164.81%
TURNER MIDCAP GROWTH FUND
1999 $148,830 1.03% 1.08% (0.58)% 1.08% (0.58)% 290.79%
1998 $ 24,582 1.23% 1.34% (0.79)% 1.73% (1.18)% 304.29%
1997(3) $ 5,145 1.25%* 1.25%* (0.62)%* 7.96%* (7.33)%* 348.29%
TURNER SMALL CAP GROWTH FUND
1999 $254,077 1.25% 1.27% (1.00)% 1.31% (1.04)% 223.61%
1998 $147,534 1.25% 1.28% (0.99)% 1.41% (1.12)% 167.73%
1997 $153,462 1.24% 1.24% (0.84)% 1.33% (0.93)% 130.68%
1996(2) $ 67,425 1.25%* 1.25%* (0.88)%* 1.54%* (1.17)%* 149.00%
1995 $ 13,072 1.25% 1.25% (0.68)% 2.39% (1.82)% 183.49%
1994(4) $ 4,806 1.09%* 1.09%* (0.27)%* 4.32%* (3.50)%* 173.92%
TURNER MICRO CAP GROWTH FUND
1999(5) $ 12,963 0.90% 0.90% (0.47)% 2.86% (2.43)% 239.32%
1998(6) $ 2,843 1.25%* 1.25%* (0.64)%* 8.18%* (7.57)%* 128.53%
TURNER TOP 20 FUND
1999(7) $ 16,112 1.35%* 1.35%* (0.87)%* 2.55%* (2.07)%* 369.11%
TURNER TECHNOLOGY FUND
1999(7) $ 8,296 1.35%* 1.35%* (0.87)%* 3.89%* (3.41)%* 317.32%
</TABLE>

<PAGE>

FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD

NET
ASSET REALIZED AND
VALUE, UNREALIZED DISTRIBUTIONS DISTRIBUTIONS
BEGINNING NET GAINS FROM NET FROM NET ASSET
OF INVESTMENT (LOSSES) ON INVESTMENT CAPITAL VALUE END TOTAL
PERIOD INCOME INVESTMENTS INCOME GAINS OF PERIOD RETURN+
--------- ---------- ------------ ------------- ------------- --------- -------

TURNER SHORT DURATION GOVERNMENT FUNDS-ONE YEAR PORTFOLIO--CLASS I SHARES
<S> <C> <C> <C> <C> <C> <C> <C>
1999(8) $10.09 0.54 (0.02) (0.56) -- $10.05 5.34%
1998(9) $10.08 0.35 -- (0.33) (0.01) $10.09 3.50%
1998(10) $10.06 0.60 0.02 (0.60) -- $10.08 6.34%
1997 $10.03 0.60 0.03 (0.60) -- $10.06 6.32%
1996 $9.99 0.64 0.05 (0.65) -- $10.03 7.09%
1995(6) $10.00 0.53 (0.02) (0.52) -- $ 9.99 5.21%
TURNER SHORT DURATION GOVERNMENT FUNDS-ONE YEAR PORTFOLIO--CLASS II SHARES
1999(8) $10.11 0.47 0.02 (0.50) -- $10.10 5.00%
1998(11) $10.08 0.30 0.03 (0.30) -- $10.11 3.26%
TURNER SHORT DURATION GOVERNMENT FUNDS-THREE YEAR PORTFOLIO--CLASS I SHARES
1999(12) $10.25 0.55 (0.27) (0.55) (0.14) $ 9.84 2.89%
1998(9) $10.10 0.35 0.15 (0.34) (0.01) $10.25 5.09%
1998(10) $10.00 0.59 0.10 (0.59) -- $10.10 7.07%
1997 $10.04 0.58 (0.01) (0.59) (0.02) $10.00 5.45%
1996 $ 9.80 0.60 0.23 (0.59) -- $10.04 8.73%
1995(6) $10.00 0.61 (0.22) (0.59) -- $ 9.80 4.08%
TURNER SHORT DURATION GOVERNMENT FUNDS-THREE YEAR PORTFOLIO--CLASS II SHARES
1999(13) $ 9.95 0.68 (0.13) (0.70) -- $ 9.80 5.64%
TURNER CORE HIGH QUALITY FIXED INCOME FUND
1999(7) $10.00 0.14 (0.09) (0.14) -- $ 9.91 0.48%

RATIO OF NET
RATIO OF INVESTMENT
EXPENSES INCOME (LOSS)
RATIO OF NET TO AVERAGE TO AVERAGE AVERAGE
NET ASSETS RATIO OF INVESTMENT NET ASSETS NET ASSETS DEBT
END OF NET EXPENSES INCOME (EXCLUDING (EXCLUDING PER SHARE
PERIOD TO AVERAGE TO AVERAGE WAIVERS AND WAIVERS AND INTEREST DURING THE
(000) NET ASSETS NET ASSETS REIMBURSEMENTS) REIMBURSEMENTS) EXPENSE PERIOD(14)
---------- ------------ ------------ --------------- --------------- -------- ----------

TURNER SHORT DURATION GOVERNMENT FUNDS-ONE YEAR PORTFOLIO--CLASS I SHARES
<C> <C> <C> <C> <C> <C> <C> <C>
1999(8) $ 3,207 0.00% 5.50% 6.53% (1.03)% -- --
1998(9) $ 991 0.00%* 5.88%* 10.83%* (4.95)%* -- --
1998(10) $ 1,195 0.00% 5.97% 8.83% (2.86)% -- --
1997 $ 864 0.00% 5.91% 10.25% (4.34)% -- --
1996 $ 398 0.00% 6.46% 16.47% (10.01)% -- --
1995(6) $ 145 0.00% 5.74% 27.89% (22.15)% -- --
TURNER SHORT DURATION GOVERNMENT FUNDS-ONE YEAR PORTFOLIO--CLASS II SHARES
1999(8) $ 3,155 0.23% 5.13% 6.76% (1.40)% -- --
1998(11) -- 0.25%* 5.63%* 11.08%* (5.20)%* -- --
TURNER SHORT DURATION GOVERNMENT FUNDS-THREE YEAR PORTFOLIO--CLASS I SHARES
1999(12) $38,687 0.24% 6.21% 1.31% 5.14% -- --
1998(9) $12,015 0.24%* 5.84%* 1.49%* 4.59%* -- --
1998(10) $15,544 0.24% 5.85% 1.21% 4.88% -- --
1997 $17,809 0.24% 5.80% 1.21% 4.83% 0.02% $0.04
1996 $11,027 0.24% 6.18% 1.45% 4.97% 0.12% $0.28
1995(6) $ 7,065 0.15% 6.21% 1.18% 5.18% 0.04% $0.08
TURNER SHORT DURATION GOVERNMENT FUNDS-THREE YEAR PORTFOLIO--CLASS II SHARES
1999(13) $ 87 0.48%* 5.71%* 0.95%* 5.24%* -- --
TURNER CORE HIGH QUALITY FIXED INCOME FUND
1999(7) $10,009 0.45%* 5.67%* 1.99%* 4.13%* -- --

AVERAGE RATIO OF NET
DEBT AVERAGE
OUTSTANDING SHARES
DURING THE OUTSTANDING PORTFOLIO
PERIOD(14) DURING TURNOVER
(15) THE PERIOD RATE
----------- ------------ ---------

TURNER SHORT DURATION GOVERNMENT FUNDS-ONE YEAR PORTFOLIO--CLASS I SHARES
<C> <C> <C> <C>
1999(8) -- -- 154.33%
1998(9) -- -- 96.56%
1998(10) -- -- 68.80%
1997 -- -- 81.82%
1996 -- -- --
1995(6) -- -- --
TURNER SHORT DURATION GOVERNMENT FUNDS-ONE YEAR PORTFOLIO--CLASS II SHARES
1999(8) -- 154.33%
1998(11) -- -- 96.56%
TURNER SHORT DURATION GOVERNMENT FUNDS-THREE YEAR PORTFOLIO--CLASS I SHARES
1999(12) -- -- 257.98%
1998(9) -- -- 121.63%
1998(10) -- -- 197.03%
1997 $ 56,238 1,320,830 279.00%
1996 $256,115 901,238 251.00%
1995(6) $ 75,604 895,472 405.00%
TURNER SHORT DURATION GOVERNMENT FUNDS-THREE YEAR PORTFOLIO--CLASS II SHARES
1999(13) -- -- 257.98%
TURNER CORE HIGH QUALITY FIXED INCOME FUND
1999(7) -- -- 39.70%
</TABLE>

<PAGE>

* Annualized

+ Returns are for the period indicated and have not been annualized.

(1) Commenced operations on February 1, 1997.

(2) On April 19, 1996, the Board of Trustees of the Adviser Inner Circle Funds
voted to approve a tax-free reorganization of the Turner Funds. In
connection with the reorganization, the Funds changed their fiscal year end
from October 31 to September 30, effective September 30, 1996.

(3) Commenced operations on October 1, 1996.

(4) Commenced operations on February 7, 1994.

(5) On January 25, 1999 shareholders of the Alpha Select Turner Micro Cap
Growth Fund (the "Funds") approved a tax-free reorganization under which
all assets and liabilities of the Fund were transferred to the TIP Turner
Micro Cap Growth Fund.

(6) Commenced operations on March 1, 1998.

(7) Commenced operations on July 1, 1999. Amounts designated as "--" are either
$0 or have been rounded to $0. The accompanying notes are an integral part
of the financial statements.

(8) On May 24, 1999 shareholders of the Alpha Select Turner Short Duration
Government Funds-One Year Portfolio (the "Fund") approved a tax-free
reorganization under which all assets and liabilities of the Fund were
transferred to the TIP Turner Short Duration Government Funds-One Year
Portfolio.

(9) On November 10, 1997 the Board of Trustees of TIP Institutional Funds
(formerly, The Solon Funds) approved a change in the Turner Short Duration
Government Funds Three Year and One Year Portfolios' year end from February
28 to September 30, effective March 1, 1998.

(10) On January 22, 1998, shareholders of both the Three Year and One Year Funds
approved a change in the advisor from Solon Asset Management, L.P. to
Turner Investment Partners, Inc.

(11) Commenced operations on February 27, 1998

(12) On January 25, 1999 shareholders of the Alpha Select Turner Short Duration
Government Funds-Three Year Portfolio (the "Funds") approved a tax-free
reorganization under which all assets and liabilities of the Fund were
transferred to the TIP Turner Short Duration Government Funds-Three Year
Portfolio.

(13) Commenced operations on April 28, 1999.

(14) Average based upon amounts outstanding at each month end.

(15) There was no debt outstanding at the end of any period presented.

Amounts designated as "--" are either $0 or have been rounded to $0.

<PAGE>

TIP FUNDS

INVESTMENT ADVISER

Turner Investment Partners, Inc.
1235 Westlakes Drive, Suite 350
Berwyn, PA 19312

DISTRIBUTOR

SEI Investments Distribution Co.
One Freedom Valley Drive
Oaks, Pennsylvania 19456

LEGAL COUNSEL

Morgan, Lewis & Bockius LLP

More information about the Funds is available without charge through the
following:

STATEMENT OF ADDITIONAL INFORMATION (SAI)

The SAI dated January 31, 2000, includes detailed information about the Funds.
The SAI is on file with the SEC and is incorporated by reference into this
prospectus. This means that the SAI, for legal purposes, is a part of this
prospectus.

ANNUAL AND SEMI-ANNUAL REPORTS

These reports contain each Fund's holdings and contain information from the
Funds' managers about strategies, and recent market conditions and trends and
their impact on Fund performance. The reports also contain detailed financial
information about the Funds.

TO OBTAIN AN SAI, ANNUAL OR SEMI-ANNUAL REPORT, OR MORE INFORMATION:

BY TELEPHONE: Call 1-800-224-6312

BY MAIL: Write to us
P.O. Box 219805
Kansas City, MO 64141-6805

BY INTERNET: HTTP://WWW.TURNER-INVEST.COM

<PAGE>

FROM THE SEC: You can also obtain the SAI or the Annual and Semi-Annual reports,
as well as other information about TIP Funds, from the EDGAR Database on the
SEC's website ("http://www.sec.gov"). You may review and copy documents at the
SEC Public Reference Room in Washington, DC (for information on the operation of
the Public Reference Room, call 1-202-942-8090). You may request documents by
mail from the SEC, upon payment of a duplicating fee, by writing to: Securities
and Exchange Commission, Public Reference Section, Washington, DC 20549-0102.
You may also obtain this information, upon payment of a duplicating fee, by
e-mailing the SEC at the following address: [email protected].

The Funds' Investment Company Act registration number is 811-07527.

52
<PAGE>

TIP FUNDS

PROSPECTUS

JANUARY 31, 2000

TURNER FOCUSED LARGE CAP EQUITY FUND
TURNER INTERNATIONAL GROWTH FUND

INVESTMENT ADVISER
TURNER INVESTMENT PARTNERS, INC.

<PAGE>

HOW TO READ YOUR PROSPECTUS

TIP Funds is a mutual fund family that offers different classes of shares in
separate investment portfolios (Funds). The Funds have individual investment
goals and strategies. This prospectus gives you important information about the
TIP Funds that you should know before investing. Please read this prospectus and
keep it for future reference.

This prospectus has been arranged into different sections so that you can easily
review this important information. On the next page, there is some general
information you should know about risk and return that is common to each of the
Funds. For more detailed information about the Funds, please see:

PAGE
TURNER FOCUSED LARGE CAP EQUITY FUND.......................................XXX
TURNER INTERNATIONAL GROWTH FUND...........................................XXX
INVESTMENTS AND PORTFOLIO MANAGEMENT.......................................XXX
PURCHASING, SELLING AND EXCHANGING TURNER FUNDS............................XXX
DIVIDENDS, DISTRIBUTIONS AND TAXES.........................................XXX

TO OBTAIN MORE INFORMATION ABOUT TIP FUNDS, PLEASE REFER TO THE BACK COVER OF
THE PROSPECTUS.

2
<PAGE>

INFORMATION COMMON TO ALL FUNDS

Each Fund is a mutual fund. A mutual fund pools shareholders' money and, using
professional investment managers, invests it in securities.

3
<PAGE>

TURNER FOCUSED LARGE CAP EQUITY FUND

FUND SUMMARY

INVESTMENT GOAL Long-term capital appreciation

INVESTMENT FOCUS Large capitalization U.S. common stocks

SHARE PRICE VOLATILITY High

PRINCIPAL INVESTMENT STRATEGY Attempts to identify U.S. companies with
strong earnings growth potential

INVESTOR PROFILE Investors seeking long-term capital
appreciation who can withstand the share
price volatility of equity investing

STRATEGY

The Turner Focused Large Cap Equity Fund will buy and hold common stocks and
other equity securities of large capitalization companies that Turner Investment
Partners believes have strong earnings growth potential. The Fund will invest in
stocks of companies doing business in a variety of industries and will typically
hold between 15 and 25 stocks favored by Turner.

RISKS

4
<PAGE>

PERFORMANCE INFORMATION

As of January 31, 2000, the Fund had not yet commenced operations, and did not
have a performance history.

The Fund will compare its performance to that of the S&P 500 Index.

The S&P 500 Index is a widely-recognized, market value-weighted (higher market
value stocks have more influence than lower market value stocks) index of 500
stocks designed to mimic the overall equity market's industry weightings.

FUND FEES AND EXPENSES

THIS TABLE DESCRIBES THE FUND'S FEES AND EXPENSES THAT YOU MAY PAY IF YOU BUY
AND HOLD SHARES OF THE FUND.

ANNUAL FUND OPERATING EXPENSES (EXPENSES DEDUCTED FROM FUND ASSETS)

- --------------------------------------------------------------------------------
Investment Advisory Fees 1.00%*
Distribution (12b-1) Fees None
Other Expenses 0.50%**
----
TOTAL ANNUAL FUND OPERATING EXPENSES 1.50%
Fee Waivers and Expense Reimbursements 0.25%
----
NET TOTAL OPERATING EXPENSES 1.25%***
- -------------------------------------------------------------------------------
* The advisory fee is subject to a performance adjustment based on the Fund's
performance relative to the performance of the S&P 500 Index.
** Other Expenses are estimated for the current year.
*** The Fund's Adviser has contractually agreed to waive fees and to reimburse
expenses in order to keep other expenses from exceeding 0.25%. As a result, the
Adviser's contractual agreement will keep total operating expenses from
exceeding 1.25% for a period of one year from the date of the prospectus. The
Adviser has also agreed to waive fees and/or reimburse expenses to keep total
operating expenses from exceeding 1.50% in any subsequent year. In addition, the
Fund has an arrangement with certain broker-dealers who have agreed to pay
certain Fund expenses in return for the direction of a percentage of the Fund's
brokerage transactions. As a result of these arrangements, it is anticipated
that the Fund's expenses will be reduced. For more information about these fees,
see "Investment Adviser."

EXAMPLE

This Example is intended to help you compare the cost of investing in the Fund
with the cost of investing in other mutual funds. The Example assumes that you
invest $10,000 in the Fund for the time periods indicated and that you sell your
shares at the end of the period. The Example also assumes that each year your
investment has a 5% return, Fund operating expenses remain the same and you
reinvest all dividends and distributions. Although your actual costs and returns
might be different, your approximate costs of investing $10,000 in the Fund
would be:

1 YEAR 3 YEARS
TURNER FOCUSED LARGE CAP EQUITY FUND $127 $450

5
<PAGE>

TURNER INTERNATIONAL GROWTH FUND

FUND SUMMARY

INVESTMENT GOAL Long-term capital appreciation

INVESTMENT FOCUS ADRs and common stocks of foreign companies

SHARE PRICE VOLATILITY High

PRINCIPAL INVESTMENT STRATEGY Attempts to identify foreign companies with
strong earnings growth potential

INVESTOR PROFILE Investors seeking long-term growth of capital
who can withstand the share price volatility
of foreign companies

STRATEGY

The Turner International Growth Fund invests substantially all (at least 80%) of
its assets in American Depository Receipts (ADRs) and common stocks of larger,
more established companies located in developed foreign markets, including most
nations in western Europe and the more developed nations in the Pacific Basin
and Latin America. Turner Investment Partners selects areas for investment by
continuously analyzing a broad range of foreign markets in order to identify
specific country opportunities and to assess the level of return and degree of
risk that can be expected. Within countries, the Fund invests in companies
located in a variety of industries and business sectors that the Fund expects to
experience rising earnings growth and to benefit from global economic trends or
promising technologies or products. The Fund generally does not attempt to hedge
the effects of currency fluctuations on the Fund's investments on an on-going
basis.

RISKS

Since it purchases equity securities, the Fund is subject to the risk that stock
prices will fall over short or extended periods of time. Historically, the
equity markets have moved in cycles, and the value of the Fund's equity
securities may fluctuate drastically from day to day. Individual companies may
report poor results or be negatively affected by industry and/or economic trends
and developments. The prices of securities issued by such companies may suffer a
decline in response. In the case of foreign stocks, these fluctuations will
reflect international, economic and political events, as well as changes in
currency valuations relative to the U.S. dollars. These factors contribute to
price volatility, which is the principal risk of investing in the Fund. In
addition, the Fund is subject to the risk that its principal market segment,
foreign growth stocks, may under- perform compared to other market segments or
to the equity markets as a whole.

Investing in issuers located in foreign countries poses additional risks since
political and economic events unique to a country or region will affect those
markets and their issuers. These events will not necessarily affect the U.S.
economy or similar issuers located in the United States. In addition,
investments in foreign countries are generally denominated in a foreign
currency. As a result, changes in the value of those currencies compared to the
U.S. dollar may affect (positively or negatively) the value of a Fund's
investments. These currency movements may happen separately from and in response

6
<PAGE>

to events that do not otherwise affect the value of the security in the issuer's
home country. While ADRs are denominated in U.S. dollars, they are subject to
currency risk to the extent the underlying stocks are denominated in foreign
currencies.

PERFORMANCE INFORMATION

As of January 31, 2000, the Fund had not yet commenced operations, and did not
have a performance history.

The Fund will compare its performance to that of the MSCI EAFE Index.

The MSCI EAFE Index is a widely-recognized, capitalization-weighted (companies
with larger market capitalizations have more influence than those with smaller
market capitalizations) index of over 900 securities listed on the stock
exchanges in Europe, Australia and the Far East.

FUND FEES AND EXPENSES

THIS TABLE DESCRIBES THE FUND'S FEES AND EXPENSES THAT YOU MAY PAY IF YOU BUY
AND HOLD SHARES OF THE FUND.

ANNUAL FUND OPERATING EXPENSES (EXPENSES DEDUCTED FROM FUND ASSETS)

- --------------------------------------------------------------------------------
Investment Advisory Fees 1.00%*
Distribution and Service (12b-1) Fees None
Other Expenses 0.65%**
TOTAL ANNUAL FUND OPERATING EXPENSES 1.65%
Fee Waivers and Expense Reimbursements 0.25%
NET TOTAL OPERATING EXPENSES 1.40%***
- --------------------------------------------------------------------------------
* The advisory fee is subject to a performance adjustment based on the Fund's
performance relative to the performance of the MSCI EAFE Index.
** Other Expenses are estimated for the current fiscal year.
*** The Fund's Adviser has contractually agreed to waive fees and to reimburse
expenses in order to keep other expenses from exceeding 0.40%. As a result, the
Adviser's contractual agreement will keep total operating expenses from
exceeding 1.40% for a period of one year from the date of the prospectus. The
Adviser has also agreed to waive fees and/or reimburse expenses to keep total
operating expenses from exceeding 1.65% in any subsequent year. In addition, the
Fund has an arrangement with certain broker-dealers who have agreed to pay
certain Fund expenses in return for the direction of a percentage of the Fund's
brokerage transactions. As a result of these arrangements, it is anticipated
that the Fund's expenses will be reduced. For more information about these fees,
see "Investment Adviser."

7
<PAGE>

EXAMPLE

This Example is intended to help you compare the cost of investing in the Fund
with the cost of investing in other mutual funds. The Example assumes that you
invest $10,000 in the Fund for the time periods indicated and that you sell your
shares at the end of the period. The Example also assumes that each year your
investment has a 5% return, Fund operating expenses remain the same and you
reinvest all dividends and distributions. Although your actual costs and returns
might be different, your approximate costs of investing $10,000 in the Fund
would be:

1 YEAR 3 YEARS
TURNER INTERNATIONAL GROWTH FUND $143 $497

<PAGE>

THE FUNDS' OTHER INVESTMENTS

The investments and strategies described throughout this prospectus are those
that the Funds use under normal conditions. During unusual economic or market
conditions, or for temporary defensive or liquidity purposes, each Fund may
invest up to 100% of its assets in cash, repurchase agreements and short-term
obligations that would not ordinarily be consistent with the Fund's objectives.
A Fund will do so only if the Adviser believes that the risk of loss outweighs
the opportunity for gains.

INVESTMENT ADVISER

As of December 31, 1999, Turner had approximately $5.6 billion in assets under
management. For its services, Turner is entitled to receive base investment
advisory fees as follows:

TURNER FOCUSED LARGE CAP EQUITY FUND 1.00%
TURNER INTERNATIONAL GROWTH FUND 1.00%

TURNER'S EQUITY INVESTMENT PHILOSOPHY

Turner believes earnings expectations drive stock prices. Turner invests in
companies with strong earnings dynamics, and sells those with deteriorating
earnings prospects. Turner believes forecasts for market timing and sector
rotation are unreliable, and introduce an unacceptable level of risk. As a
result, all portfolios are fully invested and attempt to maintain sector
weightings that match those of a benchmark index, since Turner believes it is
imprudent to be overly-invested in any individual security. This allows Turner's
stock selection process to be the primary determinant of performance.

9
<PAGE>

PORTFOLIO MANAGERS

The Turner Focused Large Cap Equity Fund is managed by a committee comprised of
David Kovacs, Robert Turner and Mark Turner. The Turner International Growth
Fund is managed by a committee led by Mark Turner and co-managed by David
Kovacs.

Robert Turner is a member of the committee which manages the Turner Focused
Large Cap Equity Fund, as set forth above. Mr. Turner, CFA, Chairman and Chief
Investment Officer of the Adviser, founded Turner Investment Partners, Inc. in
1990. Prior to 1990, he was Senior Investment Manager with Meridian Investment
Company. He has 17 years of investment experience.

Mark Turner is a member of the committee which manages the Turner International
Growth Fund, as set forth above. Mr. Turner, President of the Adviser, is lead
manager of the Fund. Mr. Turner founded Turner Investment Partners, Inc. in
1990. Prior to 1990, he was Vice President and Senior Portfolio Manager with
First Maryland Asset Management. He has 16 years of investment experience.

David Kovacs is a member of the committees which manage the Turner Focused Large
Cap Equity and Turner International Growth Funds, as set forth above. Mr.
Kovacs, CFA, Senior Portfolio Manager, is co-manager to the Funds. Mr. Kovacs
joined the Adviser in 1998. Prior to 1998, he was a Director of Quantitative
Research and Investment Technology at Pilgrim Baxter & Associates. He has 10
years of investment experience.

<PAGE>

PURCHASING, SELLING AND EXCHANGING TURNER FUNDS

- --------------------------------------------------------------------------------

In order to open a new account, you must complete and mail the NEW ACCOUNT
APPLICATION that you receive with this prospectus.

All trades must be received by the Funds' Transfer Agent by 4:00 PM EST. Your
check must be made payable to the Turner Funds.

EACH FUND'S MINIMUM INITIAL INVESTMENT IS $2,500 WITH MINIMUM SUBSEQUENT
PURCHASES OF $50.
- --------------------------------------------------------------------------------

ONCE YOU ARE A SHAREHOLDER OF THE TURNER FUNDS YOU CAN DO THE FOLLOWING:
- --------------------------------------------------------------------------------

* Purchase, sell or exchange Fund shares by phone.

Call 1-800-224-6312 between 9:00 AM and 4:00 PM EST Monday through Friday and
press 3 to place a trade.
- --------------------------------------------------------------------------------

* Purchase, sell or exchange Fund shares by mail. Shareholders can mail trade
requests to:

Regular mail Express or overnight mail

The Turner Funds The Turner Funds
P.O. Box 219805 c/o DST Systems Inc.
Kansas City, MO 64141-6805 330 W. 9th Street
Kansas City, MO 64105
- --------------------------------------------------------------------------------

* Purchase Fund shares by wiring funds to:

United Missouri Bank of Kansas NA
ABA #101000695
Account # 9870601168
Further Credit: name of fund, shareholder name and Turner Funds account
number
- --------------------------------------------------------------------------------

<PAGE>

The Turner Funds are "no load" mutual funds, meaning you pay no sales charge
when purchasing shares of the Funds. The minimum initial investment is $2,500
and the subsequent investments are $50. The Funds reserve the right to waive the
minimum initial investment.

This section tells you how to buy, sell (sometimes called "redeem") or exchange
shares of the Funds.

PURCHASING TURNER FUNDS

WHEN CAN YOU PURCHASE SHARES?

You may purchase shares on any day that the New York Stock Exchange (NYSE) is
open for business (a Business Day).

We may reject any purchase order if they determine that accepting the order
would not be in the best interests of the Funds or their shareholders.

To open an account:

o BY MAIL -- Please send your completed application, with a check payable to
the Turner Funds, to the address listed on this page. Your check must be in
U.S. dollars and drawn on a bank located in the United States. We do not
accept third party checks, credit card checks or cash.

<PAGE>

SYSTEMATIC INVESTMENT PLAN

If you have a checking or savings account with a bank, you may purchase shares
automatically through regular deductions from your account. Please call
1-800-224-6312 for information regarding participating banks. With a $100
minimum initial investment, you may begin regularly scheduled investments once a
month.

HOW FUND PRICES ARE CALCULATED

The price per share (the offering price) will be the net asset value per share
(NAV) next determined after the Funds receive your purchase order. NAV for one
Fund share is the value of that share's portion of all of the net assets in the
Fund. The Funds' NAV is calculated once each Business Day at the
regularly-scheduled close of normal trading on the NYSE (normally, 4:00 p.m.,
Eastern time). So, for you to receive the current Business Day's NAV, generally
we must receive your purchase order before 4:00 p.m., Eastern time.

In calculating NAV, a Fund generally values its investment portfolio at market
price. If market prices are unavailable or a Fund thinks that they are
unreliable, fair value prices may be determined in good faith using methods
approved by the Board of Trustees. The Turner International Growth Fund holds
portfolio securities that are listed on foreign exchanges. These securities may
trade on weekends or other days when the Fund does not calculate NAV. As a
result, the NAV of the Fund's shares may change on days when you cannot purchase
or sell Fund shares.

PURCHASING ADDITIONAL SHARES

o BY MAIL -- Please send your check payable to Turner Funds along with a
signed letter stating the name of the Turner Fund and your account number.

o BY PHONE -- Current shareholders are eligible to purchase shares by phone
if they have requested that privilege by checking the appropriate box on
the New Account Application. Shareholders who have requested telephone
privileges can call 1-800-224-6312 (option 3) and give the Fund and account
number you would like to make a subsequent purchase into. You must then
instruct your bank to wire the money by following the instructions listed
on page 11.

ADDITIONAL INFORMATION

13
<PAGE>

SELLING TURNER FUND SHARES

Shareholders may sell shares by following procedures established when they
opened their account or accounts. If you have questions, call 1-800-224-6312. If
you own shares through an account with a broker or other institution, contact
that broker or institution to sell your shares. If you would like to sell
$50,000 or more of your shares, please notify us in writing and include a
signature guarantee.

SYSTEMATIC WITHDRAWAL PLAN

IF YOU HAVE AT LEAST $2,500 IN YOUR ACCOUNT, YOU MAY USE THE SYSTEMATIC
WITHDRAWAL PLAN. Under the plan you may arrange monthly, quarterly, semi-annual
or annual automatic withdrawals of at least $50 from any Fund. The proceeds of
each withdrawal will be mailed to you by check or, if you have a checking or
savings account with a bank, electronically transferred to your account. Please
call 1-800-224-6312 for information regarding banks that participate in the
Systematic Withdrawal Plan.

SIGNATURE GUARANTEES

14
<PAGE>

REDEMPTIONS IN KIND

RECEIVING YOUR MONEY

EXCHANGING FUND SHARES

OTHER POLICIES:

FOR CUSTOMERS OF FINANCIAL INSTITUTIONS

If you purchase, sell or exchange Fund shares through a financial institution
(rather than directly from us), you may have to transmit your purchase, sale and
exchange requests to your financial institution at an earlier time for your
transaction to become effective that day. This allows the financial institution
time to process your request and transmit it to us. For more information about
how to purchase, sell or exchange Fund shares through your financial
institution, you should contact your financial institution directly.

TELEPHONE TRANSACTIONS

15
<PAGE>

SUSPENSION OF YOUR RIGHT TO SELL YOUR SHARES

The Funds may suspend your right to sell your shares if the NYSE restricts
trading, the SEC declares an emergency or for other reasons. More information
about this is in the Funds' SAI.

INVOLUNTARY SALES OF YOUR SHARES

DISTRIBUTION OF FUND SHARES

SEI Investments Distribution Co. (SIDCo.) is the distributor of the Funds.
SIDCo. receives no compensation for distributing the Funds' shares.

DIVIDENDS AND DISTRIBUTIONS

The Turner Focused Large Cap Equity and Turner International Growth Funds
distribute their income annually as a dividend to shareholders.

The Funds make distributions of capital gains, if any, at least annually. If you
own Fund shares on a Fund's record date, you will be entitled to receive the
distribution.

16
<PAGE>

TAXES

EACH SALE OR EXCHANGE OF FUND SHARES IS A TAXABLE EVENT.

Some foreign governments levy withholding taxes against dividend and interest
income. Although in some countries a portion of these taxes is recoverable, the
non-recovered portion will reduce the income received from the securities
comprising the Turner International Growth Fund.

The Turner International Growth Fund may be able to pass along a tax credit for
foreign income taxes they pay. The Fund will notify you if it gives you the
credit.

MORE INFORMATION ABOUT TAXES IS IN THE SAI.

<PAGE>

TIP FUNDS

INVESTMENT ADVISER

Turner Investment Partners, Inc.
1235 Westlakes Drive, Suite 350
Berwyn, PA 19312

DISTRIBUTOR

SEI Investments Distribution Co.
One Freedom Valley Drive
Oaks, Pennsylvania 19456

LEGAL COUNSEL

Morgan, Lewis & Bockius LLP

More information about the Funds is available without charge through the
following:

STATEMENT OF ADDITIONAL INFORMATION (SAI)

ANNUAL AND SEMI-ANNUAL REPORTS

These reports will contain each Fund's holdings and contain information from the
Fund's managers about strategies, and recent market conditions and trends and
their impact on Fund performance. The reports will also contain detailed
financial information about the Funds.

TO OBTAIN AN SAI, ANNUAL OR SEMI-ANNUAL REPORT, OR MORE INFORMATION:

BY TELEPHONE: Call 1-800-224-6312

BY MAIL: Write to Turner Funds
P.O. Box 219805
Kansas City, MO 64141-6805

BY INTERNET: HTTP://WWW.TURNER-INVEST.COM

18
<PAGE>

The Funds' Investment Company Act registration number is 811-07527.

19
<PAGE>

TIP FUNDS

TRUSTED INSTITUTIONAL PARTNERS

PROSPECTUS
JANUARY 31, 2000

TIP TARGET SELECT EQUITY FUND

INVESTMENT ADVISER
TURNER INVESTMENT PARTNERS, INC.

1
<PAGE>

HOW TO READ YOUR PROSPECTUS

TIP Funds is a mutual fund family that offers different classes of shares in
separate investment portfolios (Fund). The Fund has individual investment goals
and strategies. This prospectus gives you important information about the Fund
that you should know before investing. Please read this prospectus and keep it
for future reference.

This prospectus has been arranged into different sections so that you can easily
review this important information. On the next page, there is some general
information you should know about risk and return of the Fund. For more detailed
information about the Fund, please see:

PAGE
----
TIP TARGET SELECT EQUITY FUND..........................................XXX
INVESTMENTS AND PORTFOLIO MANAGEMENT...................................XXX
PURCHASING, SELLING AND EXCHANGING TURNER FUNDS........................XXX
DIVIDENDS, DISTRIBUTIONS AND TAXES.....................................XXX
FINANCIAL HIGHLIGHTS...................................................XXX

TO OBTAIN MORE INFORMATION ABOUT TIP FUNDS, PLEASE REFER TO THE BACK COVER OF
THE PROSPECTUS.

<PAGE>

INFORMATION ABOUT THE FUND

The TIP Target Select Equity Fund is a mutual fund. A mutual fund pools
shareholders' money and, using professional investment managers, invests it in
securities.

The Fund has its own investment goal and strategies for reaching that goal. The
Adviser and Sub-Advisers invest Fund assets in a way that it believes will help
the Fund achieve its goal. Still, investing in the Fund involves risk and there
is no guarantee that the Fund will achieve its goal. The Adviser's and
Sub-Advisers' judgments about the markets, the economy, or companies may not
anticipate actual market movements, economic conditions or company performance,
and these judgments may affect the return on your investment. In fact, no matter
how good a job the Adviser and Sub-Advisers do, you could lose money on your
investment in the Fund, just as you could with other investments. A Fund share
is not a bank deposit and it is not insured or guaranteed by the FDIC or any
government agency.

The value of your investment in the Fund is based on the market prices of the
securities the Fund holds. These prices change daily due to economic and other
events that affect particular companies and other issuers. These price
movements, sometimes called volatility, may be greater or lesser depending on
the types of securities the Fund owns and the markets in which they trade. The
effect on the Fund's share price of a change in the value of a single security
will depend on how widely the Fund diversifies its holdings.

<PAGE>

TIP TARGET SELECT EQUITY FUND

FUND SUMMARY

<TABLE>
<S> <C>
INVESTMENT GOAL Long-term capital appreciation

INVESTMENT FOCUS Common stocks of U.S. issuers

SHARE PRICE VOLATILITY High

PRINCIPAL INVESTMENT STRATEGY Utilizing sub-advisers experienced in selecting
securities that have growth potential or that are
undervalued, the Fund invests in U.S. common stocks

INVESTOR PROFILE Investors who want capital appreciation but who can
tolerate the risks of investing in equity securities
</TABLE>

STRATEGY

The TIP Target Select Equity Fund invests primarily (at least 65% of its assets)
in common stocks and other equity securities of companies regardless of their
market capitalization. The Fund uses a multi-manager approach, relying upon a
number of sub-advisers with differing investment philosophies to manage portions
of the Fund's portfolio under the general supervision of Turner. In selecting
investments for the Fund, the Adviser and the Sub-Advisers typically choose
stocks of companies that have above-average growth potential or that have been
undervalued by the market. The Fund will invest in securities of companies
operating in a broad range of industries based on their growth potential or
their relatively attractive price.

Due to its investment strategy, the Fund may buy and sell securities frequently.
This may result in higher transaction costs and additional capital gains tax
liabilities.

RISKS

<PAGE>

The Fund's investment approach, with its emphasis on stocks in a variety of
capitalization ranges, is expected to offer potentially higher returns and a
higher level of volatility relative to equity funds that invest solely in large
cap companies. In addition, because the Fund does not employ a specific "growth"
or "value" discipline, the Fund can be expected to perform differently than
funds that employ a specific investment style.

The Fund is non-diversified, which means that it may invest in the securities of
fewer issuers than a diversified fund. As a result, the Fund may be more
susceptible to a single adverse economic or regulatory occurrence affecting one
or more of these issuers, and may experience increased volatility due to its
investments in those securities.

PERFORMANCE INFORMATION

This bar chart shows changes in the performance of the Fund's Shares from year
to year for two years.*

1998 25.45%
1999 113.07%

* THE PERFORMANCE INFORMATION SHOWN ABOVE IS BASED ON A CALENDAR YEAR.

BEST QUARTER WORST QUARTER
------------ -------------
43.45% (17.08)%
(12/31/99) (9/30/98)

This table compares the Fund's average annual total returns for the periods
ended December 31, 1999, to those of the Russell 3000 Index.

SINCE INCEPTION
1 YEAR (1/1/98)
- --------------------------------------------------------------------------
TIP TARGET SELECT EQUITY FUND 113.07% 63.50%
RUSSELL 3000 INDEX 20.90% 22.51%

<PAGE>

WHAT IS AN INDEX?

FUND FEES AND EXPENSES

THIS TABLE DESCRIBES THE FUND'S FEES AND EXPENSES THAT YOU MAY PAY IF YOU BUY
AND HOLD SHARES OF THE FUND.

ANNUAL FUND OPERATING EXPENSES (EXPENSES DEDUCTED FROM FUND ASSETS)

- --------------------------------------------------------------------------------
Investment Advisory Fees 1.05%
Distribution (12b-1) Fees None
Other Expenses 9.14%
TOTAL ANNUAL FUND OPERATING EXPENSES 10.19%
Fee Waivers and Expense Reimbursements 8.89%
NET TOTAL OPERATING EXPENSES 1.30%*

- --------------------------------------------------------------------------------
* The Fund's Adviser has contractually agreed to waive fees and to reimburse
expenses in order to keep total operating expenses from exceeding 1.30% for a
period of one year, or from exceeding 1.80% in any subsequent year. In addition,
the Fund has an arrangement with certain broker-dealers who have agreed to pay
certain fund expenses in return for the direction of a percentage of the Fund's
brokerage transactions. As a result of these arrangements, it is anticipated
that the Fund's expenses will be reduced. For more information about these fees,
see "Investment Adviser."
- --------------------------------------------------------------------------------

EXAMPLE

This Example is intended to help you compare the cost of investing in the Fund
with the cost of investing in other mutual funds. The Example assumes that you
invest $10,000 in the Fund for the time periods indicated. The Example also
assumes that each year your investment has a 5% return and Fund expenses remain
the same. Although your actual costs and returns might be different, your
approximate costs of investing $10,000 in the Fund would be:

<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
TIP TARGET SELECT EQUITY FUND $132 $520 $936 $2,120
</TABLE>

<PAGE>

THE FUND'S OTHER INVESTMENTS

In addition to the investments and strategies described in this prospectus, the
Fund also may invest in other securities, use other strategies and engage in
other investment practices. These investments and strategies, as well as those
described in this prospectus, are described in detail in our Statement of
Additional Information (SAI). Of course, there is no guarantee that the Fund
will achieve its investment goal.

The investments and strategies described throughout this prospectus are those
that the Fund uses under normal conditions. During unusual economic or market
conditions, or for temporary defensive or liquidity purposes, the Fund may
invest up to 100% of its assets in cash, repurchase agreements and short-term
obligations that would not ordinarily be consistent with the Fund's objectives.
The Fund will do so only if the Adviser believes that the risk of loss outweighs
the opportunity for gains.

INVESTMENT ADVISER

Turner Investment Partners, Inc., an SEC-registered adviser, serves as the
Adviser to the Fund. As the Fund's Adviser, Turner makes investment decisions
for the Fund and continuously reviews, supervises and administers the Fund's
investment programs. The Adviser also ensures compliance with the Fund's
investment policies and guidelines.

As of December 31, 1999, Turner had approximately $5.6 billion in assets under
management. For its services during the most recent fiscal year, Turner received
no investment advisory fees and waived/reimbursed expenses of 7.84%. Turner
pays a portion of this fee to the Fund's sub-advisers.

PORTFOLIO MANAGERS

Robert E. Turner is a Trustee of the Trust and will be responsible for
monitoring the day-to-day activity of the investment managers. In addition, Mr.
Turner will act as portfolio manager of the portion of the assets of the Fund
managed by Turner Investment Partners. Mr. Turner is also Chairman and Chief
Investment Officer of Turner Investment Partners, Inc. He has held this position
since the founding of Turner Investment Partners, Inc. in 1990. He has 18 years
of investment experience.

Chartwell Investment Partners manages a portion of the assets of the Fund. Wynn
Jessup, founder of Chartwell Investment Partners, and Chairman and President of
Chartwell Dividend and Income Fund, serves as portfolio manager to the TIP
Target Select Equity Fund. Mr. Jessup has over 31 years of investment
experience.

Penn Capital Management Company, Inc. manages a portion of the assets of the
Fund. Richard Hocker, founder of Penn Capital Management, Inc., serves as
portfolio manager to the TIP Target Select Equity Fund. Prior to founding Penn
Capital in 1987, Mr. Hocker was a shareholder and Senior Portfolio Manager of
Delaware Investment Advisers, and investment management firm. He has over 36
years of investment experience.

<PAGE>

Clover Capital Management, Inc. manages a portion of the assets of the Fund.
Michael Jones, co-founder and Managing Director of Clover Capital, serves as
portfolio manager to the TIP Target Select Equity Fund. Mr. Jones has over 20
years of investment experience.

8
<PAGE>

PURCHASING, SELLING AND EXCHANGING TIP FUNDS

IN ORDER TO OPEN A NEW ACCOUNT, YOU MUST COMPLETE AND MAIL THE NEW ACCOUNT
APPLICATION THAT YOU RECEIVE WITH THIS PROSPECTUS.
- --------------------------------------------------------------------------------

All trades must be received by the Fund's Transfer Agent by 4:00 PM EST.

Your check must be made payable to the TIP Funds.

The fund's minimum initial investment is $2,500 with minimum subsequent
purchases of $50.

ONCE YOU ARE A SHAREHOLDER OF THE TIP FUNDS YOU CAN DO THE FOLLOWING:

* PURCHASE, SELL OR EXCHANGE FUND SHARES BY PHONE. Call 1-800-224-6312 between
9:00 AM and 4:00 PM EST Monday through Friday and press 3 to place a trade.

* PURCHASE, SELL OR EXCHANGE FUND SHARES BY MAIL. Shareholders can mail trade
requests to:

By regular mail By express or overnight mail

TIP Funds TIP Funds
P.O. Box 219805 c/o DST Systems Inc.
Kansas City, MO 64141-6805 330 W. 9th Street
Kansas City, MO 64105

* PURCHASE FUND SHARES BY WIRING FUNDS TO:
United Missouri Bank of Kansas NA
ABA #101000695
Account # 9870601168
Further Credit: name of fund, shareholder name and TIP Funds account number
- --------------------------------------------------------------------------------

<PAGE>

The TIP Target Select Equity Fund is a "no load" mutual fund, meaning you pay no
sales charge when purchasing shares of the Fund. The minimum initial investment
is $2,500 and the subsequent investments are $50. The Fund reserves the right to
waive the minimum initial investment.

This section tells you how to buy, sell (sometimes called "redeem") or exchange
shares of the Fund.

PURCHASING TIP FUND SHARES

WHEN CAN YOU PURCHASE SHARES?

You may purchase shares on any day that the New York Stock Exchange (NYSE) is
open for business (a Business Day).

We may reject any purchase order if we determine that accepting the order would
not be in the best interests of the Fund or its shareholders.

To open an account:

o BY MAIL -- Please send your completed application, with a check payable to
TIP Funds, to the address listed on this page. Your check must be in U.S.
dollars and drawn on a bank located in the United States.
We do not accept third party checks, credit card checks or cash.

o BY WIRE -- Please call us at 1-800-224-6312 (option 3) to let us know that
you intend to make your initial investment by wire. You will be given an
account number and fax number to which you should send your completed New
Account Application. Once this is complete you will need to instruct your
bank to wire money to: United Missouri Bank of Kansas, N.A.; ABA
#10-10-00695; for Account Number 98-7060-116-8; Further Credit: [TIP Target
Select Equity Fund]. The shareholder's name and account number must be
specified in the wire.

SYSTEMATIC INVESTMENT PLAN

10
<PAGE>

HOW FUND PRICES ARE CALCULATED

The price per share (the offering price) will be the net asset value per share
(NAV) next determined after the Fund receives your purchase order. NAV for one
Fund share is the value of that share's portion of all of the net assets in the
Fund. The Fund's NAV is calculated once each Business Day at the
regularly-scheduled close of normal trading on the NYSE (normally, 4:00 p.m.,
Eastern time). So, for you to receive the current Business Day's NAV, generally
we must receive your purchase order before 4:00 p.m., Eastern time.

PURCHASING ADDITIONAL SHARES

o BY MAIL -- Please send your check payable to TIP Funds along with a signed
letter stating the name of the TIP Target Select Equity Fund and your
account number.

ADDITIONAL INFORMATION

You may also buy shares through accounts with brokers and other institutions
that are authorized to place trades in Fund shares for customers. If you invest
through an authorized institution, you will have to follow its procedures, which
may be different from the procedures for investing directly. Your institution
may charge a fee for its services, in addition to the fees charged by the Fund.
You will also generally have to address your correspondence or questions
regarding the Fund to your institution.

SELLING TIP FUNDS

You may sell shares by following procedures established when you opened your
account or accounts. If you have questions, call 1-800-224-6312. If you own
shares through an account with a broker or other institution, contact that
broker or institution to sell your shares. If you would like to sell $50,000 or
more of your shares, please notify us in writing and include a signature
guarantee.

11
<PAGE>

o BY MAIL - If you wish to redeem shares of the TIP Target Select Equity
Fund, you should send us a letter with your name, Fund and account number
and the amount of your request. All letters must be signed by the owner(s)
of the account. All proceeds will be mailed or wired (depending on
instructions given) to the address or instructions given to us when the
account was established. If you would like the proceeds sent to either a
different bank account or address, a signature guarantee is required.

o BY PHONE -- When filling out a New Account Application shareholders are
given the opportunity to establish telephone redemption privileges. If
shareholders elect to take advantage of this privilege they will be able to
redeem shares of the TIP Funds by calling 1-800-224-6312 (option 3) and
informing one of our representatives.

SYSTEMATIC WITHDRAWAL PLAN

If you have at least $2,500 in your account, you may use the systematic
withdrawal plan. Under the plan you may arrange monthly, quarterly, semi-annual
or annual automatic withdrawals of at least $100 from the Fund. The proceeds of
each withdrawal will be mailed to you by check or, if you have a checking or
savings account with a bank, electronically transferred to your account. Please
call 1-800-224-6312 for information regarding banks that participate in the
Systematic Withdrawal Plan.

SIGNATURE GUARANTEES

REDEMPTIONS IN KIND

The Fund generally pays sale (redemption) proceeds in cash. However, under
unusual conditions that make the payment of cash unwise (and for the protection
of the Fund's remaining shareholders) the Fund might pay all or part of your
redemption proceeds in liquid securities with a market value equal to the
redemption price (redemption in kind). Although it is highly unlikely that your
shares would ever be redeemed in kind, you would probably have to pay brokerage
costs to sell the securities distributed to you, as well as taxes on any capital
gains from the sale as with any redemption.

12
<PAGE>

RECEIVING YOUR MONEY

Normally, the Fund will send your sale proceeds within three Business Days after
they receive your request, but it may take up to seven days. Your proceeds can
be wired to your bank account (subject to a $10 wire fee) or sent to you by
check. IF YOU RECENTLY PURCHASED YOUR SHARES BY CHECK OR THROUGH ACH, REDEMPTION
PROCEEDS MAY NOT BE AVAILABLE UNTIL YOUR CHECK HAS CLEARED (WHICH MAY TAKE UP TO
15 DAYS FROM YOUR DATE OF PURCHASE).

EXCHANGING FUND SHARES

You may exchange your shares on any Business Day by contacting the Fund directly
by mail or telephone. You may also exchange shares through your financial
institution by mail or telephone. IF YOU RECENTLY PURCHASED SHARES BY CHECK OR
THROUGH ACH, YOU MAY NOT BE ABLE TO EXCHANGE YOUR SHARES UNTIL YOUR CHECK HAS
CLEARED (WHICH MAY TAKE UP TO 15 DAYS FROM YOUR DATE OF PURCHASE). This exchange
privilege may be changed or canceled at any time upon 60 days' notice.

OTHER POLICIES:

FOR CUSTOMERS OF FINANCIAL INSTITUTIONS

TELEPHONE TRANSACTIONS

SUSPENSION OF YOUR RIGHT TO SELL YOUR SHARES

The Fund may suspend your right to sell your shares if the NYSE restricts
trading, the SEC declares an emergency or for other reasons. More information
about this is in the Fund's SAI.

13
<PAGE>

INVOLUNTARY SALES OF YOUR SHARES

DISTRIBUTION OF FUND SHARES

SEI Investments Distribution Co. (SIDCo.) is the distributor of the Fund.
SIDCo. receives no compensation for distributing the Fund's shares.

DIVIDENDS AND DISTRIBUTIONS

The TIP Target Select Equity Fund distributes its investment income quarterly as
a dividend to shareholders. The Fund makes distributions of capital gains, if
any, at least annually.

If you own Fund shares on the Fund's record date, you will be entitled to
receive the distribution.

You will receive dividends and distributions in the form of additional Fund
shares unless you elect to receive payment in cash. To elect cash payment, you
must notify the Fund in writing prior to the date of the distribution. Your
election will be effective for dividends and distributions paid after we receive
your written notice. To cancel your election, simply send the Fund written
notice.

<PAGE>

TAXES

PLEASE CONSULT YOUR TAX ADVISOR REGARDING YOUR SPECIFIC QUESTIONS ABOUT FEDERAL,
STATE AND LOCAL INCOME TAXES. Summarized below are some important tax issues
that affect the Fund and its shareholders. This summary is based on current tax
laws, which may change.

The Fund will distribute substantially all of its income and capital gains, if
any. The dividends and distributions you receive may be subject to federal,
state and local taxation, depending upon your tax situation. Income
distributions are generally taxable at ordinary income tax rates. Capital gains
distributions are generally taxable at the rates applicable to long-term capital
gains. Distributions you receive from the Fund may be taxable whether or not you
reinvest them. EACH SALE OR EXCHANGE OF FUND SHARES IS A TAXABLE EVENT.

More information about taxes is in the SAI.

<PAGE>

FINANCIAL HIGHLIGHTS

The table that follows presents performance information about shares of the
Fund. This information is intended to help you understand the Fund's financial
performance for the past five years, or, if shorter, the period of the Fund's
operations. Some of this information reflects financial information for a single
Fund share. The total returns in the table represent the rate that you would
have earned (or lost) on an investment in the Fund, assuming you reinvested all
of your dividends and distributions. These Financial Highlights have been
audited by Ernst & Young LLP, independent auditors whose report, along with the
Fund's financial statements, appears in the annual report that accompanies our
SAI. You can obtain the annual report, which contains more performance
information, at no charge by calling 1-800-224-6312.

16
<PAGE>

FINANCIAL HIGHLIGHTS

NET REALIZED NET
ASSET NET AND DISTRIBUTIONS DISTRIBUTIONS ASSET
VALUE INVESTMENT UNREALIZED FROM NET FROM VALUE
BEGINNING INCOME GAINS ON INVESTMENT CAPITAL END TOTAL
OF PERIOD (LOSS) INVESTMENTS INCOME GAINS OF PERIOD RETURN(1)
- ------------------------------------------------------------------------------------------------------------------------------------

TIP TARGET SELECT EQUITY FUND
<S> <C> <C> <C> <C> <C> <C> <C>
1999 $10.34 (0.07) 7.80 -- (0.90) $17.17 80.04%

1998(2) $10.00 -- 0.35 (0.01) -- $10.34 3.50%

RATIO OF NET
RATIO OF NET RATIO OF INVESTMENT
NET INVESTMENT EXPENSES INCOME (LOSS)
ASSETS RATIO INCOME TO AVERAGE TO AVERAGE
END OF EXPENSES (LOSS) NET ASSETS NET ASSETS PORTFOLIO
OF PERIOD TO AVERAGE TO AVERAGE (EXCLUDING (EXCLUDING TURNOVER
(000) NET ASSETS NET ASSETS WAIVERS) WAIVERS) RATE
- --------------------------------------------------------------------------------------------------------------------

TIP TARGET
<C> <C> <C> <C> <C> <C> <C>
1999 $1,839 1.30% (0.56)% 10.19% (9.45)% 1,279.40%

1998(2) $ 966 1.30%* 0.02%* 18.76%* (17.44)%* 803.02%
</TABLE>

* ANNUALIZED

(1) RETURNS ARE FOR THE PERIOD INDICATED AND HAVE NOT BEEN ANNUALIZED.

(2) COMMENCED OPERATIONS ON JANUARY 1, 1998.

AMOUNTS DESIGNATED AS "--" ARE EITHER $0 OR HAVE BEEN ROUNDED TO $0.

17
<PAGE>

TIP FUNDS

INVESTMENT ADVISER

Turner Investment Partners, Inc.
1235 Westlakes Drive, Suite 350
Berwyn, PA 19312

DISTRIBUTOR

SEI Investments Distribution Co.
One Freedom Valley Drive
Oaks, Pennsylvania 19456

LEGAL COUNSEL

Morgan, Lewis & Bockius LLP

More information about the Fund is available without charge through the
following:

STATEMENT OF ADDITIONAL INFORMATION (SAI)

The SAI dated January 31, 2000, includes detailed information about the Fund.
The SAI is on file with the SEC and is incorporated by reference into this
prospectus. This means that the SAI, for legal purposes, is a part of this
prospectus.

ANNUAL AND SEMI-ANNUAL REPORTS

These reports contain the Fund's holdings and contain information from the
Fund's managers about strategies, and recent market conditions and trends and
their impact on Fund performance. The reports also contain detailed financial
information about the Fund.

TO OBTAIN AN SAI, ANNUAL OR SEMI-ANNUAL REPORT, OR MORE INFORMATION:

BY TELEPHONE: Call 1-800-224-6312

BY MAIL: Write to TIP Funds
P.O. Box 219805
Kansas City, MO 64141-6805

BY INTERNET: HTTP://WWW.TURNER-INVEST.COM

18
<PAGE>

The Funds' Investment Company Act registration number is 811-07527.

19
<PAGE>

TIP FUNDS

PROSPECTUS

JANUARY 31, 2000

CLOVER SMALL CAP VALUE FUND
CLOVER EQUITY VALUE FUND
CLOVER MAX CAP VALUE FUND
CLOVER FIXED INCOME FUND

INVESTMENT ADVISER
CLOVER CAPITAL MANAGEMENT, INC.

TIP FUNDS

INVESTMENT ADVISER

Clover Capital Management, Inc.
11 Tobey Village Office Park
Pittsford, NY 14534

DISTRIBUTOR

CCM Securities, Inc.

LEGAL COUNSEL

Morgan, Lewis & Bockius LLP

More information about the Funds is available without charge through the
following:

STATEMENT OF ADDITIONAL INFORMATION (SAI)

ANNUAL AND SEMI-ANNUAL REPORTS

These reports will contain each Fund's holdings and contain information from
each Fund's managers about strategies, and recent market conditions and trends
and their impact on Fund performance. The reports will also contain detailed
financial information about the Funds.

TO OBTAIN AN SAI, ANNUAL OR SEMI-ANNUAL REPORT, OR MORE INFORMATION:

BY TELEPHONE: Call 1-800-224-6312

BY MAIL: Write to the Clover Funds
P.O. Box 219805
Kansas City, MO 64141-6805

The Funds' Investment Company Act registration number is 811-07527.

1
<PAGE>

HOW TO READ YOUR PROSPECTUS

TIP Funds is a mutual fund family that offers different classes of shares in
separate investment portfolios (Funds). The Funds have individual investment
goals and strategies. This prospectus gives you important information about the
Funds that you should know before investing. Please read this prospectus and
keep it for future reference.

This prospectus has been arranged into different sections so that you can easily
review this important information. On the next page, there is some general
information you should know about risk and return that is common to each of the
Funds. For more detailed information about the Funds, please see:

PAGE
----
CLOVER SMALL CAP VALUE FUND............................................XXX
CLOVER EQUITY VALUE FUND...............................................XXX
CLOVER MAX CAP VALUE FUND..............................................XXX
CLOVER FIXED INCOME FUND...............................................XXX
INVESTMENTS AND PORTFOLIO MANAGEMENT...................................XXX
PURCHASING, SELLING AND EXCHANGING CLOVER FUNDS........................XXX
DIVIDENDS, DISTRIBUTIONS AND TAXES.....................................XXX
FINANCIAL HIGHLIGHTS...................................................XXX

TO OBTAIN MORE INFORMATION ABOUT TIP FUNDS, PLEASE REFER TO THE BACK COVER OF
THE PROSPECTUS.

<PAGE>

INFORMATION COMMON TO ALL FUNDS

Each Fund is a mutual fund. A mutual fund pools shareholders' money and, using
professional investment managers, invests it in securities.

<PAGE>

CLOVER SMALL CAP VALUE FUND

FUND SUMMARY

<TABLE>
<S> <C>
INVESTMENT GOAL Long-term total return

INVESTMENT FOCUS Small cap U.S. common stocks

SHARE PRICE VOLATILITY Medium to high

PRINCIPAL INVESTMENT STRATEGY Attempts to identify undervalued small cap U.S. companies

INVESTOR PROFILE Investors seeking long-term total return who can
withstand the share price volatility of small cap
investing
</TABLE>

STRATEGY

The Clover Small Cap Value Fund invests primarily (at least 75% of its assets)
in common stocks and other equity securities of U.S. companies with small market
capitalizations (I.E., under $750 million) that Clover Capital Management
believes are undervalued relative to the market or to their historical
valuation, including companies whose stock is out-of-favor with many investors.
The Fund will invest in securities of companies operating in a broad range of
industries based primarily on value characteristics such as price-cash flow,
price-earnings and price-book value ratios.

RISKS

Since it purchases equity securities, the Fund is subject to the risk that stock
prices will fall over short or extended periods of time. Historically, the
equity markets have moved in cycles, and the value of the Fund's equity
securities may fluctuate drastically from day to day. Individual companies may
report poor results or be negatively affected by industry and/or economic trends
and developments. The prices of securities issued by such companies may suffer a
decline in response. These factors contribute to price volatility, which is the
principal risk of investing in the Fund. In addition, the Fund is subject to the
risk that its principal market segment, small capitalization value stocks, may
underperform compared to other market segments or to the equity markets as a
whole.

The out-of-favor and undervalued companies the Fund invests in may be more
vulnerable to negative investor sentiment, adverse business or economic events
than larger, more growth-oriented companies. In addition, the performance of the
stocks which comprise the Fund do not necessarily track major market indices.

<PAGE>

PERFORMANCE INFORMATION

This bar chart shows changes in the performance of the Fund's shares from year
to year for three years.*

1997 15.47%
1998 2.01%
1999 29.57%

* THE PERFORMANCE INFORMATION SHOWN ABOVE IS BASED ON A CALENDAR YEAR.

BEST QUARTER WORST QUARTER
------------ -------------
26.61% (19.03)%
(6/30/99) (9/30/98)

This table compares the Fund's average annual total returns for the periods
ended December 31, 1999, to those of the Russell 2000 Index.

SINCE INCEPTION
1 YEAR (2/28/96)
- -----------------------------------------------------------------------------
CLOVER SMALL CAP VALUE FUND 29.57% 17.80%
RUSSELL 2000 INDEX 21.26% 13.69%*

* The calculation date for the Index is February 29, 1996.

WHAT IS AN INDEX?

5
<PAGE>

FUND FEES AND EXPENSES

THIS TABLE DESCRIBES THE FUND'S FEES AND EXPENSES THAT YOU MAY PAY IF YOU BUY
AND HOLD SHARES OF THE FUND.

ANNUAL FUND OPERATING EXPENSES (EXPENSES DEDUCTED FROM FUND ASSETS)

- --------------------------------------------------------------------------------
Investment Advisory Fees 0.85%
Distribution (12b-1) Fees None
Other Expenses 0.87%
------
TOTAL ANNUAL FUND OPERATING EXPENSES 1.72%
Fee Waivers and Expense Reimbursements 0.32%
------
NET TOTAL OPERATING EXPENSES 1.40%*

EXAMPLE

This Example is intended to help you compare the cost of investing in the Fund
with the cost of investing in other mutual funds. The Example assumes that you
invest $10,000 in the Fund for the time periods indicated. The Example also
assumes that each year your investment has a 5% return and Fund expenses remain
the same. Although your actual costs and returns might be different, your
approximate costs of investing $10,000 in the Fund would be:

<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
CLOVER SMALL CAP VALUE FUND $143 $512 $908 $2,037
</TABLE>

<PAGE>

CLOVER EQUITY VALUE FUND

FUND SUMMARY

<TABLE>
<S> <C>
INVESTMENT GOAL Long-term total return

INVESTMENT FOCUS U.S. equity securities

SHARE PRICE VOLATILITY Medium to high

PRINCIPAL INVESTMENT STRATEGY Attempts to identify U.S. equity securities that are
undervalued relative to the market or historic valuations

INVESTOR PROFILE Investors seeking long-term total return who can
withstand the share price volatility of equity investing
</TABLE>

STRATEGY

The Clover Equity Value Fund invests primarily (at least 70% of its assets) in
common stocks and other equity securities of U.S. companies with medium and
small market capitalizations (I.E., generally $500 million to $5 billion) that
Clover Capital Management believes are undervalued relative to the market or
their historic valuation, including companies whose stock is out-of-favor with
many investors. The Fund will invest in securities of companies operating in a
broad range of industries based primarily on value characteristics such as
price-cash flow, price-earnings and price-book value ratios.

RISKS

The small and medium capitalization companies the Fund invests in may be more
vulnerable to adverse business or economic events than larger, more established
companies. In particular, these small and mid-size companies may have limited
product lines, markets and financial resources, and may depend upon a relatively
small management group. Therefore, small and mid cap stocks may be more volatile
than those of larger companies. These securities may be traded over the counter
or listed on an exchange and may or may not pay dividends.

7
<PAGE>

PERFORMANCE INFORMATION

This bar chart shows changes in the performance of the Fund's shares from year
to year for eight years.*

1992 7.33%
1993 12.53%
1994 16.03%
1995 21.40%
1996 22.87%
1997 17.54%
1998 (1.47)%
1999 4.27%

* THE PERFORMANCE INFORMATION SHOWN ABOVE IS BASED ON A CALENDAR YEAR.

BEST QUARTER WORST QUARTER
------------ -------------
15.64% (14.28)%
(6/30/99) (9/30/98)

This table compares the Fund's average annual total returns for the periods
ended December 31, 1999, to those of the S&P 400 Mid-Cap Index.

SINCE INCEPTION
1 YEAR 5 YEARS (12/6/91)
- -------------------------------------------------------------------------------
CLOVER EQUITY VALUE FUND 4.27% 12.49% 13.00%
S&P 400 MID-CAP INDEX 14.72% 23.05% 16.81%*

* The calculation date for the Index is December 31, 1991.

WHAT IS AN INDEX?

An index measures the market price of a specific group of securities in a
particular market of securities in a market sector. You cannot invest directly
in an index. An index does not have an investment adviser and does not pay any
commissions or expenses. If an index had expenses, its performance would be
lower. The S&P 400 Mid-Cap Index is a widely-recognized, capitalization-weighted
(companies with larger market capitalizations have more influence than those
with smaller market capitalizations) index of 400 domestic mid cap stocks chosen
for market size, liquidity, and industry group representation.

8
<PAGE>

FUND FEES AND EXPENSES

THIS TABLE DESCRIBES THE FUND'S FEES AND EXPENSES THAT YOU MAY PAY IF YOU BUY
AND HOLD SHARES OF THE FUND.

ANNUAL FUND OPERATING EXPENSES (EXPENSES DEDUCTED FROM FUND ASSETS)

- --------------------------------------------------------------------------------
Investment Advisory Fees 0.74%
Distribution (12b-1) Fees None
Other Expenses 0.36%
-----
TOTAL ANNUAL FUND OPERATING EXPENSES 1.10%

EXAMPLE

This Example is intended to help you compare the cost of investing in the Fund
with the cost of investing in other mutual funds. The Example assumes that you
invest $10,000 in the Fund for the time periods indicated. The Example also
assumes that each year your investment has a 5% return and Fund expenses remain
the same. Although your actual costs and returns might be different, your
approximate costs of investing $10,000 in the Fund would be:

<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
CLOVER EQUITY VALUE FUND $112 $350 $606 $1,340
</TABLE>

<PAGE>

CLOVER MAX CAP VALUE FUND

FUND SUMMARY

<TABLE>

<S> <C>
INVESTMENT GOAL Long-term total return

INVESTMENT FOCUS Large capitalization U.S. common stocks

SHARE PRICE VOLATILITY Medium

PRINCIPAL INVESTMENT STRATEGY Attempts to identify large capitalization U.S. companies
with low valuations and attractive dividend yields
relative to the market or to their own trading history

INVESTOR PROFILE Investors seeking long-term total return who can
withstand the share price volatility of equity investing
</TABLE>

STRATEGY

The Clover Max Cap Value Fund invests primarily (at least 75% of its assets) in
common stocks and other equity securities of U.S. companies with large market
capitalizations (I.E., generally averaging over $10 billion) that Clover Capital
Management believes have low valuations and attractive dividend yields relative
to the market or to their own trading history, including companies whose stock
is out-of-favor with investors. Clover Capital Management will typically screen
the stocks of the 500 largest U.S. companies (based on market capitalization)
for those with the highest dividend yields. The Fund will invest in securities
of companies operating in a broad range of industries based primarily on value
characteristics such as price-cash flow, dividend yield, price-earnings and
price-book value ratios.

RISKS

Since it purchases equity securities, the Fund is subject to the risk that stock
prices will fall over short or extended periods of time. Historically, the
equity markets have moved in cycles, and the value of the Fund's equity
securities may fluctuate drastically from day to day. Individual companies may
report poor results or be negatively affected by industry and/or economic trends
and developments. The prices of securities issued by such companies may suffer a
decline in response. These factors contribute to price volatility, which is the
principal risk of investing in the Fund. In addition, the Fund is subject to the
risk that its principal market segment, large capitalization value stocks, may
underperform compared to other market segments or to the equity markets as a
whole.

The out-of-favor and undervalued companies the Fund invests in may be more
vulnerable to negative investor sentiment, adverse business or economic events
than more growth-oriented companies. In addition, the performance of the stocks
which comprise the Fund do not necessarily track major market indices.

10
<PAGE>

PERFORMANCE INFORMATION

This bar chart shows changes in the performance of the Fund's shares from year
to year for two years.*

1998 13.68%
1999 13.75%

* THE PERFORMANCE INFORMATION SHOWN ABOVE IS BASED ON A CALENDAR YEAR.

BEST QUARTER WORST QUARTER
------------ -------------
23.03% (12.77)%
(12/31/98) (9/30/98)

This table compares the Fund's average annual total returns for the periods
ended December 31, 1999, to those of the S&P 500 Index.

SINCE INCEPTION
1 YEAR (10/31/97)
- ------------------------------------------------------------------------
CLOVER MAX CAP VALUE FUND 13.75% 13.20%
S&P 500 INDEX 21.04% 26.23%*

* The calculation date for the Index is October 31, 1997.

WHAT IS AN INDEX?

An index measures the market price of a specific group of securities in a
particular market of securities in a market sector. You cannot invest directly
in an index. An index does not have an investment adviser and does not pay any
commissions or expenses. If an index had expenses, its performance would be
lower. The S&P 500 Index is a widely-recognized, market value-weighted (higher
market value stocks have more influence than lower market value stocks) index of
500 stocks designed to mimic the overall equity market's industry weightings.
Most, but not all, large capitalization stocks are in the index. There are also
some small capitalization stocks in the index. Stocks included in the index are
mostly NYSE listed companies, with some AMEX and Nasdaq Stock Market stocks.

11
<PAGE>

FUND FEES AND EXPENSES

THIS TABLE DESCRIBES THE FUND'S FEES AND EXPENSES THAT YOU MAY PAY IF YOU BUY
AND HOLD SHARES OF THE FUND.

ANNUAL FUND OPERATING EXPENSES (EXPENSES DEDUCTED FROM FUND ASSETS)

- --------------------------------------------------------------------------------
Investment Advisory Fees 0.74%
Distribution (12b-1) Fees None
Other Expenses 3.39%
-----
TOTAL ANNUAL FUND OPERATING EXPENSES 4.13%
Fee Waivers and Expense Reimbursements 3.18%
-----
NET TOTAL OPERATING EXPENSES 0.95%*

EXAMPLE

This Example is intended to help you compare the cost of investing in the Fund
with the cost of investing in other mutual funds. The Example assumes that you
invest $10,000 in the Fund for the time periods indicated. The Example also
assumes that each year your investment has a 5% return and Fund expenses remain
the same. Although your actual costs and returns might be different, your
approximate costs of investing $10,000 in the Fund would be:

<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
CLOVER MAX CAP VALUE FUND $97 $552 $1,044 $2,461
</TABLE>

<PAGE>

CLOVER FIXED INCOME FUND

FUND SUMMARY

<TABLE>
<S> <C>
INVESTMENT GOAL High current income

INVESTMENT FOCUS Fixed income obligations of U.S. issuers

SHARE PRICE VOLATILITY Low to medium

PRINCIPAL INVESTMENT STRATEGY Attempts to identify investment-grade U.S. government and
corporate securities that offer income potential

INVESTOR PROFILE Investors seeking high current income who can withstand
some modest share price volatility
</TABLE>

STRATEGY

The Clover Fixed Income Fund invests primarily (at least 70% of its assets) in
U.S. government obligations and other investment grade fixed income securities,
including corporate debt obligations and mortgage- and asset-backed securities.
In selecting investments for the Fund, Clover Capital Management chooses fixed
income securities of issuers that it believes will offer attractive income
potential with an acceptable level of risk. Clover will invest in fixed income
obligations of different types and maturities depending on its current
assessment of the relative market values of the sectors in which the Fund
invests. Clover does not attempt to forecast interest rate changes. The Fund's
average weighted maturity will typically be between seven and nine years.

RISKS

The prices of the Fund's fixed income securities respond to economic
developments, particularly interest rate changes, as well as to perceptions
about the creditworthiness of individual issuers, including governments.
Generally, the Fund's fixed income securities will decrease in value if interest
rates rise and vice versa, and the volatility of lower rated securities is even
greater than that of higher rated securities. Also, longer-term securities are
generally more volatile, so the average maturity or duration of these securities
affects risk. In addition, the Fund is subject to the risk that its principal
market segment, fixed income securities, may underperform compared to other
market segments or to the fixed income markets as a whole.

<PAGE>

discourage refinancings, with the result that the average life and volatility of
the security will increase, exacerbating its decrease in market price. When
interest rates fall, however, mortgage-backed securities may not gain as much in
market value because of the exception of additional mortgage prepayments that
must be reinvested at lower interest rates. Prepayment risk may make it
difficult to calculate the average maturity of the Fund's mortgage-backed
securities and, therefore, to assess the volatility risk of the Fund.

PERFORMANCE INFORMATION

This bar chart shows changes in the performance of the Fund's shares from year
to year for eight years.*

1992 7.37%
1993 11.42%
1994 (2.83)%
1995 17.96%
1996 4.40%
1997 9.57%
1998 7.88%
1999 (1.94)%

* THE PERFORMANCE INFORMATION SHOWN ABOVE IS BASED ON A CALENDAR YEAR.

BEST QUARTER WORST QUARTER
------------ -------------
5.85% (2.27)%
(6/30/95) (3/31/94)

This table compares the Fund's average annual total returns for the periods
ended December 31, 1999, to those of the Merrill Lynch U.S. Domestic Master Bond
Index.

<TABLE>
<CAPTION>
SINCE INCEPTION
1 YEAR 5 YEARS (12/6/91)
- ------------------------------------------------------------------------------------------
<S> <C> <C> <C>
CLOVER FIXED INCOME FUND (1.94)% 7.38% 6.78%
MERRILL LYNCH U.S. DOMESTIC MASTER BOND INDEX (0.96)% 7.74% 6.62%*
</TABLE>

* The calculation date for the Index is December 31, 1991.

WHAT IS AN INDEX?

14
<PAGE>

FUND FEES AND EXPENSES

THIS TABLE DESCRIBES THE FUND'S FEES AND EXPENSES THAT YOU MAY PAY IF YOU BUY
AND HOLD SHARES OF THE FUND.

ANNUAL FUND OPERATING EXPENSES (EXPENSES DEDUCTED FROM FUND ASSETS)

- --------------------------------------------------------------------------------
Investment Advisory Fees 0.45%
Distribution (12b-1) Fees None
Other Expenses 0.52%
----
TOTAL ANNUAL FUND OPERATING EXPENSES 0.97%
Fee Waivers and Expense Reimbursements 0.22%
----
NET TOTAL OPERATING EXPENSES 0.75%*

EXAMPLE

This Example is intended to help you compare the cost of investing in the Fund
with the cost of investing in other mutual funds. The Example assumes that you
invest $10,000 in the Fund for the time periods indicated. The Example also
assumes that each year your investment has a 5% return and Fund expenses remain
the same. Although your actual costs and returns might be different, your
approximate costs of investing $10,000 in the Fund would be:

<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
CLOVER FIXED INCOME FUND $77 $288 $517 $1,181
</TABLE>

<PAGE>

THE FUNDS' OTHER INVESTMENTS

The investments and strategies described throughout this prospectus are those
that the Funds use under normal conditions. During unusual economic or market
conditions, or for temporary defensive or liquidity purposes, each Fund may
invest up to 100% of its assets in cash, repurchase agreements and short-term
obligations that would not ordinarily be consistent with the Fund's objectives.
A Fund will do so only if the Adviser believes that the risk of loss outweighs
the opportunity for gains.

INVESTMENT ADVISER

Clover Capital Management, Inc., an SEC-registered adviser, serves as the
Adviser to each Fund. As the Funds' Adviser, Clover makes investment decisions
for the Funds and continuously reviews, supervises and administers the Funds'
investment programs. The Adviser also ensures compliance with the Funds'
investment policies and guidelines.

As of December 31, 1999, Clover had approximately $1.4 billion in assets under
management. For its services during the most recent fiscal year, Clover received
investment advisory fees (after waivers and reimbursements) of:

CLOVER SMALL CAP VALUE FUND 0.53%
COVER EQUITY VALUE FUND 0.74%
CLOVER FIXED INCOME FUND 0.24%

For its services during the most recent fiscal year, Clover received no advisory
fees, and waived/reimbursed expenses of:

CLOVER MAX CAP VALUE FUND 2.44%

PORTFOLIO MANAGERS

The Small Cap Value Fund is managed by a committee of research professionals led
by Michael E. Jones and Lawrence R. Creatura. The Equity Value Fund is managed
by a committee of research professionals led by Michael E. Jones and Matthew P.
Kaufler. The Max Cap Value Fund is managed by a committee of research
professionals led by Lawrence R. Creatura and Paul W. Spindler. The Fixed Income
Fund is managed by a committee of research professionals led by Richard J.
Huxley and Paul W. Spindler. The background of each committee member is set
forth below.

Michael E. Jones is a member of the committee which manages the Equity Value and
Small Cap Value Funds. Mr. Jones, CFA, is a co-founder and Managing Director of
Clover Capital. He has over 20 years of investment experience.

<PAGE>

Lawrence R. Creatura is a member of the committee which manages the Max Cap
Value and Small Cap Value Funds, as set forth above. Mr. Creatura, CFA, joined
Clover Capital in 1994 and is a Vice President of Investments of Clover Capital.
Prior to his current position, he was a Laser Systems Engineer/Researcher for
Laser Surge, Inc. He has 5 years of investment experience.

Paul W. Spindler is a member of the committee which manages the Max Cap Value
and Fixed Income Funds. Mr. Spindler, CFA, joined Clover Capital in 1988 and is
a Vice President of Investments of Clover Capital. He has over 11 years of
investment experience

Richard J. Huxley is a member of the committee which manages the Fixed Income
Fund. Mr. Huxley joined Clover Capital in 1986 and is the Executive Vice
President and Fixed Income Manager for Clover Capital. He has over 20 years of
investment experience.

Matthew P. Kaufler is a member of the committee which manages the Equity Value
Fund, as set forth above. Mr. Kaufler, CFA, Senior Vice President and Portfolio
Manager, joined Clover Capital in 1991. Prior to his current position, he was
Assistant VP and Portfolio Manager at Chase Manhattan. He has 15 years of
investment experience.

17
<PAGE>

PURCHASING, SELLING AND EXCHANGING CLOVER FUNDS

All trades must be received by the Funds' Transfer Agent by 4:00 PM EST. Your
check must be made payable to the Clover Funds.

EACH FUND'S MINIMUM INITIAL INVESTMENT IS $2,500 ($2,000 FOR IRAS). THE MINIMUM
SUBSEQUENT INVESTMENT IS $500.
- --------------------------------------------------------------------------------

ONCE YOU ARE A SHAREHOLDER OF THE CLOVER FUNDS YOU CAN DO THE FOLLOWING:

* PURCHASE, SELL OR EXCHANGE FUND SHARES BY PHONE. Call 1-800-224-6312 between
9:00 AM and 4:00 PM EST Monday through Friday and press 3 to place a trade.

* PURCHASE, SELL OR EXCHANGE FUND SHARES BY MAIL. Shareholders can mail trade
requests to:

By regular mail By express or overnight mail

The Clover Funds The Clover Funds
P.O. Box 219805 c/o DST Systems Inc.
Kansas City, MO 64141-6805 330 W. 9th Street
Kansas City, MO 64105

* PURCHASE FUND SHARES BY WIRING FUNDS TO:
United Missouri Bank of Kansas NA
ABA #101000695
Account # 9870601168
Further Credit: name of fund, shareholder name and Clover Funds account
number
- --------------------------------------------------------------------------------

<PAGE>

PURCHASING, SELLING AND EXCHANGING CLOVER FUNDS

The Clover Funds are "no load" mutual funds, meaning you pay no sales charge
when purchasing shares of the Funds. The minimum initial investment is $2,500
and the subsequent investments are $500. The Funds reserve the right to waive
the minimum initial investment.

This section tells you how to buy, sell (sometimes called "redeem") or exchange
shares of the Funds.

PURCHASING CLOVER FUND SHARES

WHEN CAN YOU PURCHASE SHARES?

You may purchase shares on any day that the New York Stock Exchange (NYSE) is
open for business (a Business Day).

We may reject any purchase order if we determine that accepting the order would
not be in the best interests of the Clover Funds or their shareholders.

TO OPEN AN ACCOUNT:
o BY MAIL -- Please send your completed application, with a check payable to
the Clover Funds, to the address listed on this page. Your check must be in
U.S. dollars and drawn on a bank located in the United States. We do not
accept third party checks, credit card checks or cash.

SYSTEMATIC INVESTMENT PLAN

If you have a checking or savings account with certain banks, you may purchase
shares automatically through regular deductions from your account. Please call
1-800-224-6312 for information regarding participating banks. With a $100
minimum initial investment, you may begin regularly scheduled investments once a
month.

19
<PAGE>

HOW FUND PRICES ARE CALCULATED

The price per share (the offering price) will be the net asset value per share
(NAV) next determined after the Funds receive your purchase order. NAV for one
Fund share is the value of that share's portion of all of the net assets in the
Fund. The Funds' NAV is calculated once each Business Day at the
regularly-scheduled close of normal trading on the NYSE (normally, 4:00 p.m.,
Eastern time). So, for you to receive the current Business Day's NAV, generally
we must receive your purchase order before 4:00 p.m., Eastern time.

PURCHASING ADDITIONAL SHARES

o BY MAIL -- Please send your check payable to Clover Funds along with a
signed letter stating the name of the Clover Fund and your account number.

ADDITIONAL INFORMATION

SELLING CLOVER FUND SHARES

The sale price of each share will be the next NAV determined after we receive
your request.

<PAGE>

o BY MAIL - If you wish to redeem shares of the Clover Funds, you should send
us a letter with your name, Fund and account number and the amount of your
request. All letters must be signed by the owner(s) of the account. All
proceeds will be mailed or wired (depending on instructions given) to the
address or instructions given to us when the account was established. If
you would like the proceeds sent to either a different bank account or
address, a signature guarantee is required.

o BY PHONE -- When filling out a New Account Application shareholders are
given the opportunity to establish telephone redemption privileges. If
shareholders elect to take advantage of this privilege they will be able to
redeem shares of the Clover Funds by calling 1-800-224-6312 (option 3) and
informing one of our representatives.

SYSTEMATIC WITHDRAWAL PLAN

IF YOU HAVE AT LEAST $2,500 IN YOUR ACCOUNT, YOU MAY USE THE SYSTEMATIC
WITHDRAWAL PLAN. Under the plan you may arrange monthly, quarterly, semi-annual
or annual automatic withdrawals of at least $100 from any Fund. The proceeds of
each withdrawal will be mailed to you by check or, if you have a checking or
savings account with a bank, electronically transferred to your account. Please
call 1-800-224-6312 for information regarding banks that participate in the
Systematic Withdrawal Plan.

SIGNATURE GUARANTEES

REDEMPTIONS IN KIND

The Funds generally pay sale (redemption) proceeds in cash. However, under
unusual conditions that make the payment of cash unwise (and for the protection
of the Funds' remaining shareholders) the Funds might pay all or part of your
redemption proceeds in liquid securities with a market value equal to the
redemption price (redemption in kind). Although it is highly unlikely that your
shares would ever be redeemed in kind, you would probably have to pay brokerage
costs to sell the securities distributed to you, as well as taxes on any capital
gains from the sale as with any redemption.

RECEIVING YOUR MONEY

<PAGE>

EXCHANGING FUND SHARES

OTHER POLICIES:

FOR CUSTOMERS OF FINANCIAL INSTITUTIONS

TELEPHONE TRANSACTIONS

SUSPENSION OF YOUR RIGHT TO SELL YOUR SHARES

The Funds may suspend your right to sell your shares if the NYSE restricts
trading, the SEC declares an emergency or for other reasons. More information
about this is in the Funds' SAI.

INVOLUNTARY SALES OF YOUR SHARES

22
<PAGE>

DISTRIBUTION OF FUND SHARES

CCM Securities, Inc. ("CCM Securities") is the distributor of the Funds. CCM
Securities receives no compensation for distributing the Funds' shares.

DIVIDENDS AND DISTRIBUTIONS

The Clover Small Cap Value, Clover Equity Value and Clover Max Cap Value Funds
distribute their income quarterly as a dividend to shareholders. The Clover
Fixed Income Fund declares its investment income daily and distributes it
monthly as a dividend to shareholders.

The Funds make distributions of capital gains, if any, at least annually.

If you own Fund shares on a Fund's record date, you will be entitled to receive
the distribution.

<PAGE>

TAXES

EACH SALE OR EXCHANGE OF FUND SHARES IS A TAXABLE EVENT.

MORE INFORMATION ABOUT TAXES IS IN THE SAI.

24
<PAGE>

FINANCIAL HIGHLIGHTS

The tables that follow present performance information about each Fund. This
information is intended to help you understand each Fund's financial performance
for the past five years, or, if shorter, the period of each Fund's operation.
Some of this information reflects financial information for a single Fund share.
The total returns in the table represent the rate that you would have earned (or
lost) on an investment in a Fund, assuming you reinvested all of your dividends
and distributions. These Financial Highlights have been audited by Ernst & Young
LLP, independent auditors whose report, along with each Fund's financial
statements, appears in the annual report that accompanies our Statement of
Additional Information. You can obtain the annual report, which contains more
performance information, at no charge by calling 1-800-224-6312.

25
<PAGE>

FINANCIAL HIGHLIGHTS

CLOVER FUNDS

FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD

NET REALIZED AND NET
ASSET NET UNREALIZED DISTRIBUTIONS DISTRIBUTIONS ASSET
VALUE INVESTMENT GAINS OR FROM NET FROM VALUE
BEGINNING INCOME (LOSSES) ON INVESTMENT CAPITAL END TOTAL
OF PERIOD (LOSS) INVESTMENTS INCOME GAINS OF PERIOD RETURN+
- ---------------------------------------------------------------------------------------------------------------------------------

CLOVER SMALL CAP VALUE FUND
<S> <C> <C> <C> <C> <C> <C> <C>
1999 $11.49 (0.01) 2.48 -- (0.25) $13.71 21.82%
1998 $15.94 (0.06) (3.22) -- (1.17) $11.49 (21.25)%
1997(1) $10.87 (0.04) 5.24 -- (0.13) $15.94 48.23%
1996(2) $10.00 0.02 0.88 (0.03) -- $10.87 8.97%

CLOVER EQUITY VALUE FUND
1999 $15.85 0.21 0.74 (0.21) (0.67) $15.92 6.13%
1998 $18.99 0.15 (1.12) (0.15) (2.02) $15.85 (6.00)%
1997(1) $16.20 0.18 3.54 (0.18) (0.75) $18.99 23.86%
1996 $15.29 0.19 2.15 (0.22) (1.21) $16.20 16.47%
1995 $13.74 0.24 2.46 (0.22) (0.93) $15.29 21.25%
1994 $11.94 0.08 2.01 (0.08) (0.21) $13.74 17.80%

CLOVER MAX CAP VALUE FUND
1999 $9.21 0.13 2.27 (0.13) (0.05) $11.43 26.17%
1998(3) $10.00 0.15 (0.79) (0.15) -- $ 9.21 (6.52)%

CLOVER FIXED INCOME FUND
1999 $10.41 0.53 (0.71) (0.53) (0.20) $ 9.50 (1.78)%
1998 $ 9.92 0.57 0.51 (0.57) (0.02) $10.41 11.32%
1997(1) $ 9.85 0.54 0.16 (0.54) (0.09) $ 9.92 7.43%
1996 $ 9.89 0.59 0.01 (0.59) (0.05) $ 9.85 6.26%
1995 $ 9.14 0.58 0.77 (0.58) (0.02) $ 9.89 15.27%
1994 $10.85 0.57 (0.92) (0.57) (0.79) $ 9.14 (3.54)%

<CAPTION>
RATIO OF NET
RATIO OF INVESTMENT
RATIO OF NET EXPENSES INCOME (LOSS)
NET INVESTMENT TO AVERAGE TO AVERAGE
ASSETS RATIO INCOME NET ASSETS NET ASSETS
ENDED OF EXPENSES OR (LOSS) (EXCLUDING (EXCLUDING PORTFOLIO
OF PERIOD TO AVERAGE TO AVERAGE WAIVERS AND WAIVERS AND TURNOVER
(000) NET ASSETS NET ASSETS REIMBURSEMENTS) REIMBURSEMENTS) RATE
- --------------------------------------------------------------------------------------------------------------------------

CLOVER SMALL CAP VALUE FUND
<S> <C> <C> <C> <C> <C> <C>
1999 $ 16,494 1.40% (0.10)% 1.72% (0.42)% 79.93%
1998 $ 15,662 1.40% (0.50)% 1.84% (0.94)% 70.02%
1997(1) $ 15,279 1.40%* (0.64)%* 2.43%* (1.67)%* 59.03%
1996(2) $ 4,495 1.40%* (0.03)%* 5.29%* (3.92)%* 14.17%

CLOVER EQUITY VALUE FUND
1999 $ 59,602 0.95% 1.21% 0.95% 1.21% 98.85%
1998 $ 90,806 1.10% 0.82% 1.12% 0.80% 42.10%
1997(1) $117,859 1.10%* 1.18%* 1.15%* 1.13%* 51.64%
1996 $ 85,050 1.10% 1.32% 1.21% 1.21% 51.36%
1995 $ 51,647 1.10% 1.82% 1.20% 1.72% 84.76%
1994 $ 25,249 1.14% 0.71% 1.30% 0.55% 58.44%

CLOVER MAX CAP VALUE FUND
1999 $ 2,725 0.95% 1.20% 4.13% (1.98)% 92.26%
1998(3) $ 1,776 0.95%* 1.82%* 11.40%* (8.63)%* 62.71%

CLOVER FIXED INCOME FUND
1999 $ 32,729 0.75% 5.40% 0.97% 5.18% 28.47%
1998 $ 33,375 0.75% 5.67% 0.99% 5.43% 27.07%
1997(1) $ 23,677 0.75%* 6.03%* 1.02%* 5.76%* 11.83%
1996 $ 19,731 0.80% 6.00% 1.11% 5.69% 24.52%
1995 $ 14,685 0.80% 6.13% 1.40% 5.53% 35.84%
1994 $ 9,762 0.80% 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.

<PAGE>

PROSPECTUS
JANUARY 31, 2000

[LOGO]

PENN CAPITAL MANAGEMENT

PENN CAPITAL FUNDS

PORTFOLIO OF THE
TIP FUNDS

PENN CAPITAL STRATEGIC HIGH YIELD BOND FUND

CLASS I SHARES
CLASS II SHARES

INVESTMENT ADVISER:
PENN CAPITAL MANAGEMENT COMPANY, INC.

<PAGE>

HOW TO READ YOUR PROSPECTUS

TIP Funds is a mutual fund family that offers different classes of shares in
separate investment portfolios (Funds). The Fund has individual investment goals
and strategies. This prospectus gives you important information about the Class
I and Class II Shares of the Fund that you should know before investing. Please
read this prospectus and keep it for future reference.

This prospectus has been arranged into different sections so that you can easily
review this important information. On the next page, there is some general
information you should know about risk and return of the Fund. For more detailed
information about the Fund, please see:

PAGE
----
PENN CAPITAL STRATEGIC HIGH YIELD BOND FUND............................XXX
INVESTMENTS AND PORTFOLIO MANAGEMENT...................................XXX
PURCHASING, SELLING AND EXCHANGING PENN CAPITAL FUNDS..................XXX
DIVIDENDS, DISTRIBUTIONS AND TAXES.....................................XXX
FINANCIAL HIGHLIGHTS...................................................XXX

TO OBTAIN MORE INFORMATION ABOUT TIP FUNDS, PLEASE REFER TO THE BACK COVER OF
THE PROSPECTUS.

<PAGE>

INFORMATION ABOUT THE FUND

The Penn Capital Strategic High Yield Bond Fund is a mutual fund. A mutual fund
pools shareholders' money and, using professional investment managers, invests
it in securities.

The Fund has its own investment goal and strategies for reaching that goal. The
Adviser invests Fund assets in a way that it believes will help the Fund achieve
its goal. Still, investing in the Fund involves risk and there is no guarantee
that the Fund will achieve its goal. The Adviser's judgments about the markets,
the economy, or companies may not anticipate actual market movements, economic
conditions or company performance, and these judgments may affect the return on
your investment. In fact, no matter how good a job the Adviser does, you could
lose money on your investment in the Fund, just as you could with other
investments. A Fund share is not a bank deposit and it is not insured or
guaranteed by the FDIC or any government agency.

<PAGE>

PENN CAPITAL STRATEGIC HIGH YIELD BOND FUND

FUND SUMMARY

<TABLE>
<S> <C>
INVESTMENT GOAL High current income and capital appreciation

INVESTMENT FOCUS High yield "junk" bonds and other high yield securities

SHARE PRICE VOLATILITY High

PRINCIPAL INVESTMENT STRATEGY Attempts to identify high yield "junk" bonds and other
high yield securities with capital appreciation potential

INVESTOR PROFILE Investors seeking high current income and long-term
growth of capital who can withstand the share price
volatility or risk of high yield "junk" bond investing
</TABLE>

STRATEGY

The Penn Capital Strategic High Yield Bond Fund invests primarily (at least 65%
of its assets) in fixed income securities rated below investment grade ("junk"
bonds). In selecting investments for the Fund, Penn Capital Management chooses
securities that offer high current yields as well as capital appreciation
potential, including preferred stocks, convertible securities, zero coupon
obligations, payment-in-kind bonds, and variable rate securities. The Fund's
average weighted maturity may vary, and will generally be ten years or less. The
Fund will typically invest in securities rated BB+/Ba1 or lower, and may
purchase unrated securities and securities rated in the lowest ratings
categories.

RISKS

The prices of the Fund's fixed income securities respond to economic
developments, including interest rate changes, as well as to perceptions about
the creditworthiness of individual issuers. Since the value of securities with
longer maturities will fluctuate more in response to interest rate changes, this
risk is greater for long-term debt securities than for short-term debt
securities. Fixed income securities, regardless of credit quality, experience
price volatility, especially in response to interest rate changes. Generally,
the Fund's fixed income securities will decrease in value if interest rates rise
and vice versa, and the volatility of lower rated securities is even greater
than that of higher rated securities. Also, longer-term securities are generally
more volatile, so the average maturity or duration of these securities affects
risk. However, high yield "junk" bonds generally are less sensitive to interest
rate changes.

"Junk" bonds involve greater risks of default or downgrade and are more volatile
than investment grade securities. Junk bonds involve greater risk of price
declines than investment grade securities due to actual or perceived changes in
an issuer's creditworthiness. In addition, issuers of junk bonds may be more
susceptible than other issuers to economic downturns. Junk bonds are subject to
the risk that the issuer may not be able to pay interest or dividends and
ultimately to repay principal upon maturity. Discontinuation of these payments
could substantially adversely affect the market price of the security.

<PAGE>

The Fund is subject to the risk that its particular market segment, high yield
securities, may underperform compared to other market segments or to the fixed
income markets as a whole.

PERFORMANCE INFORMATION

The performance of Class I and Class II Shares will differ due to differences in
expenses. This bar chart shows changes in the performance of the Fund's Class I
Shares for one year.*

1999 14.56%

* THE PERFORMANCE INFORMATION SHOWN ABOVE IS BASED ON A CALENDAR YEAR. THE
FUND'S PREDECESSOR, THE ALPHA SELECT PENN CAPITAL STRATEGIC HIGH YIELD BOND FUND
COMMENCED OPERATIONS ON MARCH 1, 1998. THE FUND BECAME PART OF THE TIP FUNDS IN
1999.

BEST QUARTER WORST QUARTER
------------ -------------
7.19% (1.12)%
(12/31/99) (9/30/99)

This table compares the Fund's average annual total returns for the periods
ended December 31, 1999, to those of the C.S. First Boston High Yield Index.

SINCE INCEPTION
1 YEAR (3/1/98)
- --------------------------------------------------------------------------------
PENN CAPITAL STRATEGIC HIGH YIELD BOND FUND 14.56% 4.29%
C.S. FIRST BOSTON HIGH YIELD INDEX 3.31% 0.75%*

* The calculation date for the Index is February 28, 1998.

WHAT IS AN INDEX?

An index measures the market price of a specific group of securities in a
particular market of securities in a market sector. You cannot invest directly
in an index. An index does not have an investment adviser and does not pay any
commissions or expenses. If an index had expenses, its performance would be
lower. The C.S. First Boston High Yield Index is an unmanaged portfolio
constructed to mirror the public high yield debt market (revisions to the index
are effected weekly). The index has several modules representing differences
sectors of the high yield market including a cash paying module, a zero coupon
module, a pay in-kind module, and a defaulted bond module. The index is a fully
invested index, which includes reinvestment of income.

5
<PAGE>

FUND FEES AND EXPENSES

THIS TABLE DESCRIBES THE FUND'S FEES AND EXPENSES THAT YOU MAY PAY IF YOU BUY
AND HOLD SHARES OF THE FUND.

ANNUAL FUND OPERATING EXPENSES (EXPENSES DEDUCTED FROM FUND ASSETS)

<TABLE>
<CAPTION>
CLASS I SHARES CLASS II SHARES
- ----------------------------------------------------------------------------------------
<S> <C> <C>
Investment Advisory Fees 0.55% 0.55%
Distribution (12b-1) Fees None None
Other Expenses 0.59% 0.84%
----- -----
TOTAL ANNUAL FUND OPERATING EXPENSES 1.14% 1.39%
Fee Waivers and Expense Reimbursements 0.46% 0.46%
----- -----
NET TOTAL OPERATING EXPENSES 0.68%* 0.93%*
</TABLE>

- --------------------------------------------------------------------------------

* The Fund's Adviser has contractually agreed to waive fees and to reimburse
expenses in order to keep total operating expenses of the Class I and Class II
Shares from exceeding 0.68% and 0.93%, respectively, for a period of one year,
renewable at the end of each fiscal year. For more information about these fees,
see "Investment Adviser" and "Distribution of Fund Shares."

EXAMPLE

This Example is intended to help you compare the cost of investing in the Fund
with the cost of investing in other mutual funds. The Example assumes that you
invest $10,000 in the Fund for the time periods indicated. The Example also
assumes that each year your investment has a 5% return and Fund expenses remain
the same. Although your actual costs and returns might be different, your
approximate costs of investing $10,000 in the Fund would be:

<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
PENN CAPITAL STRATEGIC HIGH YIELD BOND FUND - CLASS I SHARES $69 $317 $583 $1,345
PENN CAPITAL STRATEGIC HIGH YIELD BOND FUND - CLASS II SHARES $95 $395 $717 $1,629
</TABLE>

<PAGE>

THE FUND'S OTHER INVESTMENTS

INVESTMENT ADVISER

Penn Capital Management Company, Inc., an SEC-registered adviser, serves as the
Adviser to the Fund. As the Fund's Adviser, Penn Capital makes investment
decisions for the Fund and continuously reviews, supervises and administers the
Fund's investment programs. The Adviser also ensures compliance with the Fund's
investment policies and guidelines.

As of December 31, 1999, Penn Capital had approximately $450 million in assets
under management. For its services during the most recent fiscal year, Penn
Capital received investment advisory fees (after waivers and reimbursements) of:

PENN CAPITAL STRATEGIC HIGH YIELD BOND FUND 0.09%

PORTFOLIO MANAGERS

The Penn Capital Strategic High Yield Bond Fund is managed by a team consisting
of certain principals of Penn Capital, including co-managers Richard A. Hocker
and Kathleen A. News.

Prior to founding Penn Capital in 1987, Mr. Hocker was a shareholder and Senior
Portfolio Manager of Delaware Investment Advisers, an investment management
firm. He has over 26 years of investment experience.

Ms. News, a co-founder of Penn Capital, serves as Managing Director of Penn
Capital and co-portfolio manager of the Strategic High Yield Fund. Ms. News has
over 21 years of investment experience at both Penn Capital and Delaware
Investment Advisers, including over 11 years managing high yield portfolios.

7
<PAGE>

PURCHASING, SELLING AND EXCHANGING PENN CAPITAL FUNDS

IN ORDER TO OPEN A NEW ACCOUNT, YOU MUST COMPLETE AND MAIL THE NEW ACCOUNT
APPLICATION THAT YOU RECEIVE WITH THIS PROSPECTUS.

All trades must be received by the Fund's Transfer Agent by 4:00 PM EST. Your
check must be made payable to the Penn Capital Funds.

The Fund's Class I Shares minimum initial investment is $100,000 with minimum
subsequent investments of $5,000.

The Fund's Class II Shares minimum initial investment is $10,000 with minimum
subsequent investments of $1,000.

Once you are a shareholder of the Penn Capital Funds you can do the following:
- --------------------------------------------------------------------------------

* PURCHASE, SELL OR EXCHANGE FUND SHARES BY PHONE. Call 1-800-224-6312 between
9:00 AM and 4:00 PM EST Monday through Friday and press 3 to place a trade.

* PURCHASE, SELL OR EXCHANGE FUND SHARES BY MAIL. Shareholders can mail trade
requests to:

By regular mail By express or overnight mail

The Penn Capital Funds The Penn Capital Funds
P.O. Box 219805 c/o DST Systems Inc.
Kansas City, MO 64141-6805 330 W. 9th Street
Kansas City, MO 64105

* PURCHASE FUND SHARES BY WIRING FUNDS TO:

United Missouri Bank of Kansas NA
ABA #101000695
Account #9870601168
Further Credit: name of fund, shareholder name and Penn Capital Funds
account number
- --------------------------------------------------------------------------------

<PAGE>

The Penn Capital Strategic High Yield Bond Fund is a "no load" mutual fund,
meaning you pay no sales charge when purchasing shares of the Fund. The Fund's
Class I Shares minimum initial investment is $100,000, with minimum subsequent
investments of $5,000. The Fund's Class II Shares minimum initial investment is
$10,000, with minimum subsequent investments of $1,000. The Fund reserves the
right to waive the minimum initial investment.

This section tells you how to buy, sell (sometimes called "redeem") or exchange
shares of the Fund.

PURCHASING PENN CAPITAL FUNDS

CHOOSING CLASS I OR CLASS II SHARES

Class I and Class II Shares have different expenses and other characteristics.

Class I Shares are for individual investors and for certain institutional
investors investing for their own or their customers' account.

Class II Shares are for individual investors who purchase shares through
financial institutions or intermediaries.

CLASS I SHARES CLASS II SHARES
o NO SALES CHARGE o NO SALES CHARGE
o LOWER ANNUAL EXPENSES o HIGHER ANNUAL EXPENSES
o $100,000 MINIMUM INITIAL INVESTMENT o $10,000 MINIMUM INITIAL INVESTMENT

For some investors the minimum initial investment may be lower.

WHEN CAN YOU PURCHASE SHARES?

You may purchase shares on any day that the New York Stock Exchange (NYSE) is
open for business (a Business Day).

TO OPEN AN ACCOUNT:

We may reject any purchase order if we determine that accepting the order would
not be in the best interests of the Fund or its shareholders.

o BY MAIL -- Please send your completed application, with a check payable to
the Penn Capital Funds, to the address listed on this page. Your check must
be in U.S. dollars and drawn on a bank located in the United States. We do
not accept third party checks, credit card checks or cash.

o BY WIRE -- Please call the Fund at 1-800-224-6312 (option 3) to let us know
that you intend to make your initial investment by wire. You will be given
an account number and fax number to which you should send your completed
New Account Application. Once this is complete you will need to instruct
your bank to wire money to: United Missouri Bank of Kansas, N.A.; ABA
#10-10-00695; for Account Number 98-7060-116-8; Further Credit: [Penn

<PAGE>

Capital Strategic High Yield Bond Fund]. The shareholder's name and account
number must be specified in the wire.

HOW FUND PRICES ARE CALCULATED

PURCHASING ADDITIONAL SHARES

o BY MAIL -- Please send your check payable to Penn Capital Funds along with
a signed letter stating the name of the Penn Capital Strategic High Yield
Bond Fund and your account number.

ADDITIONAL INFORMATION

You may also buy shares through accounts with brokers and other institutions
that are authorized to place trades in Fund shares for customers. If you invest
through an authorized institution, you will have to follow its procedures, which
may be different from the procedures for investing directly. Your institution
may charge a fee for its services, in addition to the fees charged by the Fund.
You will also generally have to address your correspondence or questions
regarding the Fund to your institution.

SELLING PENN CAPITAL FUND SHARES

You may sell Class I or Class II Shares by following the procedures established
when you opened your account or accounts. If you have questions, call
1-800-224-6312. If you own shares through an account with a broker or other
institution, contact that broker or institution to sell your shares. If you
would like to sell $50,000 or more of your shares, please notify us in writing
and include a signature guarantee.

<PAGE>

o BY MAIL - If you wish to redeem shares of the Penn Capital Funds, you
should send us a letter with your name, Fund and account number and the
amount of your request. All letters must be signed by the owner(s) of the
account. All proceeds will be mailed or wired (depending on instructions
given) to the address or instructions given to us when the account was
established.

o BY PHONE -- When filling out a New Account Application shareholders are
given the opportunity to establish telephone redemption privileges. If
shareholders elect to take advantage of this privilege they will be able to
redeem shares of the Penn Capital Funds by calling 1-800-224-6312 (option
3) and informing one of our representatives.

REDEMPTIONS IN KIND

RECEIVING YOUR MONEY

Normally, the Fund will send your sale proceeds within three Business Days after
it receives your request, but it may take up to seven days. Your proceeds can be
wired to your bank account (subject to a $10 wire fee) or sent to you by check.
IF YOU RECENTLY PURCHASED YOUR SHARES BY CHECK OR THROUGH ACH, REDEMPTION
PROCEEDS MAY NOT BE AVAILABLE UNTIL YOUR CHECK HAS CLEARED (WHICH MAY TAKE UP TO
15 DAYS FROM YOUR DATE OF PURCHASE).

EXCHANGING FUND SHARES

You may exchange your shares on any Business Day by contacting the Fund directly
by mail or telephone. You may also exchange shares through your financial
institution by mail or telephone. Exchange requests must be for an amount of at
least $1,000. IF YOU RECENTLY PURCHASED SHARES BY CHECK OR THROUGH ACH, YOU MAY
NOT BE ABLE TO EXCHANGE YOUR SHARES UNTIL YOUR CHECK HAS CLEARED (WHICH MAY TAKE
UP TO 15 DAYS FROM YOUR DATE OF PURCHASE). This exchange privilege may be
changed or canceled at any time upon 60 days' notice.

11
<PAGE>

OTHER POLICIES:

FOR CUSTOMERS OF FINANCIAL INSTITUTIONS

If you purchase, sell or exchange Fund shares through a financial institution
(rather than directly from the Fund), you may have to transmit your purchase,
sale and exchange requests to your financial institution at an earlier time for
your transaction to become effective that day. This allows the financial
institution time to process your request and transmit it to us. For more
information about how to purchase, sell or exchange Fund shares through your
financial institution, you should contact your financial institution directly.

TELEPHONE TRANSACTIONS

SUSPENSION OF YOUR RIGHT TO SELL YOUR SHARES

The Fund may suspend your right to sell your shares if the NYSE restricts
trading, the SEC declares an emergency or for other reasons. More information
about this is in the Fund's SAI.

INVOLUNTARY SALES OF YOUR SHARES

DISTRIBUTION OF FUND SHARES

SEI Investments Distribution Co. (SIDCo.) is the distributor of the Fund.
SIDCo. receives no compensation for distributing the Fund's shares.

The Penn Capital Strategic High Yield Bond Fund has adopted a shareholder
service plan for its Class II Shares that allows the Fund to pay service fees
for services provided to shareholders. For Class II Shares, shareholder service
fees, as a percentage of average daily net assets, may be up to 0.25%.

12
<PAGE>

DIVIDENDS AND DISTRIBUTIONS

The Penn Capital Strategic High Yield Bond Fund declares its net investment
income daily and distributes it monthly as a dividend to shareholders. The Fund
makes distributions of capital gains, if any, at least annually.

If you own Fund shares on the Fund's record date, you will be entitled to
receive the distribution.

<PAGE>

TAXES

PLEASE CONSULT YOUR TAX ADVISOR REGARDING YOUR SPECIFIC QUESTIONS ABOUT FEDERAL,
STATE AND LOCAL INCOME TAXES. Summarized below are some important tax issues
that affect the Fund and its shareholders. This summary is based on current tax
laws, which may change.

EACH SALE OR EXCHANGE OF FUND SHARES IS A TAXABLE EVENT.

MORE INFORMATION ABOUT TAXES IS IN THE SAI.

<PAGE>

FINANCIAL HIGHLIGHTS

The table that follows presents performance information about Class I and Class
II Shares of the Fund. This information is intended to help you understand the
Fund's financial performance for the past five years, or, if shorter, the period
of the Fund's operations. Some of this information reflects financial
information for a single Fund share. The total returns in the table represent
the rate that you would have earned (or lost) on an investment in the Fund,
assuming you reinvested all of your dividends and distributions. These Financial
Highlights have been audited by Ernst & Young LLP, independent auditors whose
report, along with the Fund's financial statements, appears in the annual report
that accompanies our SAI. You can obtain the annual report, which contains more
performance information, at no charge by calling 1-800-224-6312.

<PAGE>

FINANCIAL HIGHLIGHTS
PENN CAPITAL FUNDS
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD

REALIZED
NET AND NET
ASSET UNREALIZED DISTRIBUTIONS DISTRIBUTIONS ASSET
VALUE NET LOSS FROM NET FROM VALUE
BEGINNING INVESTMENT ON INVESTMENT CAPITAL END TOTAL
OF PERIOD INCOME INVESTMENTS INCOME GAINS OF PERIOD RETURN(1)
- --------------------------------------------------------------------------------------------------------------------------------

PENN CAPITAL STRATEGIC HIGH YIELD BOND FUND
<S> <C> <C> <C> <C> <C> <C> <C>
1999(3) $ 8.91 0.83 (0.09) (0.83) -- $8.82 8.65%
1998(2) $10.00 0.37 (1.09) (0.37) -- $8.91 (7.23)%

RATIO OF NET
RATIO OF INVESTMENT
EXPENSES INCOME (LOSS) TO
NET RATIO OF NET TO AVERAGE AVERAGE
ASSETS RATIO INVESTMENT NET ASSETS NET ASSETS
END OF EXPENSES INCOME (EXCLUDING (EXCLUDING PORTFOLIO
OF PERIOD TO AVERAGE TO AVERAGE WAIVERS AND WAIVERS AND TURNOVER
(000) NET ASSETS NET ASSETS REIMBURSEMENTS) REIMBURSEMENTS) RATE
- ----------------------------------------------------------------------------------------------------------------

PENN CAPITAL STRATEGIC HIGH YIELD BOND FUND
<C> <C> <C> <C> <C> <C> <C>
1999(3) $41,922 0.68% 9.11% 1.14% 8.65% 96.98%
1998(2) $17,842 0.68%* 10.04%* 2.09%* 8.63%* 29.19%
</TABLE>

* Annualized

(1) RETURNS ARE FOR THE PERIOD INDICATED AND HAVE NOT BEEN ANNUALIZED.

(2) COMMENCED OPERATIONS ON MARCH 1, 1998.

(3) ON JANUARY 25, 1999, SHAREHOLDERS OF THE ALPHA SELECT PENN CAPITAL HIGH
YIELD BOND FUND (THE "FUND") APPROVED A TAX-FREE REORGANIZATION UNDER WHICH
ALL ASSETS AND LIABILITIES OF THE FUND WERE TRANSFERRED TO THE TIP PENN
CAPITAL HIGH YIELD BOND FUND.

AMOUNTS DESIGNATED AT "--" ARE EITHER $0 OR HAVE BEEN ROUNDED TO $0.

<PAGE>

TIP FUNDS

INVESTMENT ADVISER

Penn Capital Management Company, Inc.
52 Haddonfield - Berlin Road
Suite 1000
Cherry Hill, NJ 08034

DISTRIBUTOR

SEI Investments Distribution Co.

LEGAL COUNSEL

Morgan, Lewis & Bockius LLP

More information about the Fund is available without charge through the
following:

STATEMENT OF ADDITIONAL INFORMATION (SAI)

ANNUAL AND SEMI-ANNUAL REPORTS

TO OBTAIN AN SAI, ANNUAL OR SEMI-ANNUAL REPORT, OR MORE INFORMATION:

BY TELEPHONE: Call 1-800-224-6312

BY MAIL: Write to Penn Capital Funds
P.O. Box 219805
Kansas City, MO 64141-6805

<PAGE>

The Fund's Investment Company Act registration number is 811-07527.

18
<PAGE>

PROSPECTUS

JANUARY 31, 2000

[LOGO]

PENN CAPITAL MANAGEMENT

PENN CAPITAL FUNDS

PENN CAPITAL SELECT FINANCIAL SERVICES FUND

INVESTMENT ADVISER:
PENN CAPITAL MANAGEMENT COMPANY, INC.

<PAGE>

HOW TO READ YOUR PROSPECTUS

TIP Funds is a mutual fund family that offers different classes of shares in
separate investment portfolios (Funds). The Fund has individual investment goals
and strategies. This prospectus gives you important information about the Fund
that you should know before investing. Please read this prospectus and keep it
for future reference.

This prospectus has been arranged into different sections so that you can easily
review this important information. On the next page, there is some general
information you should know about risk and return of the Fund. For more detailed
information about the Fund, please see:

PAGE
PENN CAPITAL SELECT FINANCIAL SERVICES FUND..................................XXX
INVESTMENTS AND PORTFOLIO MANAGEMENT.........................................XXX
PURCHASING, SELLING AND EXCHANGING PENN CAPITAL FUNDS........................XXX
DIVIDENDS, DISTRIBUTIONS AND TAXES...........................................XXX
FINANCIAL HIGHLIGHTS.........................................................XXX

TO OBTAIN MORE INFORMATION ABOUT TIP FUNDS, PLEASE REFER TO THE BACK COVER OF
THE PROSPECTUS.

2
<PAGE>

INFORMATION ABOUT THE FUND

The Penn Capital Select Financial Services Fund is a mutual fund. A mutual fund
pools shareholders' money and, using professional investment managers, invests
it in securities.

3
<PAGE>

PENN CAPITAL SELECT FINANCIAL SERVICES FUND

FUND SUMMARY

INVESTMENT GOAL Long-term capital appreciation

INVESTMENT FOCUS Common stocks of U.S. financial services
firms

SHARE PRICE VOLATILITY High

PRINCIPAL INVESTMENT STRATEGY Attempts to identify quality U.S.
financial services firms

INVESTOR PROFILE Investors who want capital appreciation
and who can withstand the risks of equity
and financial sector investing

STRATEGY

The Penn Capital Select Financial Services Fund will concentrate its investments
(and will invest at least 65% of its assets) in common stocks and other equity
securities of U.S. financial services companies, including banks, brokerage
houses, insurance companies and investment advisory companies, that Penn Capital
Management believes have above average growth potential or that are undervalued.
Penn Capital also invests in financial services companies that it believes to be
potential merger or acquisition targets.

Due to its investment strategy, the Fund may buy and sell securities frequently.
This may result in higher transaction costs and additional capital gains tax
liabilities.

RISKS

Since the Fund's investments are concentrated in the banking industry and the
financial services sector, it is subject to the risk that the banking industry
and the financial services sector will underperform the broader market, as well
as the risk that issuers in that sector will be impacted by market conditions,
legislative or regulatory changes, or competition. The Fund may also be more
susceptible to changes in interest rates and other market and economic factors
that affect financial services firms, including the effect of interest rate
changes on the share prices of those financial service firms. In addition, if
Penn Capital incorrectly predicts that a company will be involved in a merger or
other transaction, the Fund may lose any premium it paid for these stocks, and
ultimately may realize a lower return than if the company is not involved in a
merger or acquisition transaction.

4
<PAGE>

PERFORMANCE INFORMATION

This bar chart shows changes in the performance of the Fund's shares from year
to year for two years.*

1998 (5.81)%
1999 (4.27)%

* THE PERFORMANCE INFORMATION SHOWN ABOVE IS BASED ON A CALENDAR YEAR.

BEST QUARTER WORST QUARTER
11.87% (19.29)%
(12/31/98) (9/30/98)

This table compares the Fund's average annual total returns for the periods
ended December 31, 1999, to those of the NASDAQ Bank Index.

SINCE INCEPTION
1 YEAR (10/20/97)
- --------------------------------------------------------------------------------
PENN CAPITAL SELECT FINANCIAL SERVICES FUND (4.27)% 6.28%
NASDAQ BANK INDEX (5.80)% (3.92)%*

* The calculation date for the Index is October 31, 1997.

WHAT IS AN INDEX?

An index measures the market price of a specific group of securities in a
particular market of securities in a market sector. You cannot invest directly
in an index. An index does not have an investment adviser and does not pay any
commissions or expenses. If an index had expenses, its performance would be
lower. The NASDAQ Bank Index is a capitalization-weighted index designed to
measure the performance of all NASDAQ stocks in the banking sector, which
consists of 344 stocks. The Index is unmanaged and reflects the reinvestment of
dividends.

5
<PAGE>

FUND FEES AND EXPENSES

THIS TABLE DESCRIBES THE FUND'S FEES AND EXPENSES THAT YOU MAY PAY IF YOU BUY
AND HOLD SHARES OF THE FUND.

ANNUAL FUND OPERATING EXPENSES (EXPENSES DEDUCTED FROM FUND ASSETS)

- --------------------------------------------------------------------------------
Investment Advisory Fees 1.00%
Distribution (12b-1) Fees None
Other Expenses 13.54%
-----
TOTAL ANNUAL FUND OPERATING EXPENSES 14.54%
Fee Waivers and Expense Reimbursements 13.14%
-----
NET TOTAL OPERATING EXPENSES 1.40%*
- --------------------------------------------------------------------------------
* The Fund's Adviser has contractually agreed to waive fees and to reimburse
expenses in order to keep total operating expenses from exceeding 1.40%. For
more information about these fees, see "Investment Adviser."

EXAMPLE

This Example is intended to help you compare the cost of investing in the Fund
with the cost of investing in other mutual funds. The Example assumes that you
invest $10,000 in the Fund for the time periods indicated. The Example also
assumes that each year your investment has a 5% return and Fund expenses remain
the same. Although your actual costs and returns might be different, your
approximate costs of investing $10,000 in the Fund would be:

<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
PENN CAPITAL SELECT FINANCIAL SERVICES FUND $143 $443 $766 $1,680
</TABLE>

6
<PAGE>

INVESTMENTS AND PORTFOLIO MANAGEMENT

THE FUND'S OTHER INVESTMENTS

INVESTMENT ADVISER

As of December 31, 1999, Penn Capital had approximately $450 million in assets
under management. For its services during the most recent fiscal year, Penn
Capital received no investment advisory fees and waived/reimbursed expenses of:

PENN CAPITAL SELECT FINANCIAL SERVICES FUND 12.14%

PORTFOLIO MANAGERS

The Penn Capital Select Financial Services Fund is managed by Richard Hocker and
Scott D. Schumacher.

Mr. Schumacher, a Senior Analyst who joined Penn Capital in 1987, has 12 years
of investment experience.

7
<PAGE>

PURCHASING, SELLING AND EXCHANGING PENN CAPITAL FUNDS

All trades must be received by the Fund's Transfer Agent by 4:00 PM EST. Your
check must be made payable to the Penn Capital Funds.

THE FUND'S MINIMUM INITIAL INVESTMENT IS $2,500 ($2,000 FOR IRAS) WITH A MINIMUM
SUBSEQUENT INVESTMENT OF $500.

Once you are a shareholder of the Penn Capital Funds you can do the following:

* PURCHASE, SELL OR EXCHANGE FUND SHARES BY PHONE. Call 1-800-224-6312 between
9:00 AM and 4:00 PM EST Monday through Friday and press 3 to place a trade.

* PURCHASE, SELL OR EXCHANGE FUND SHARES BY MAIL. Shareholders can mail trade
requests to:

By regular mail By express or overnight mail

The Penn Capital Funds The Penn Capital Funds
P.O. Box 219805 c/o DST Systems Inc.
Kansas City, MO 64141-6805 330 W. 9th Street
Kansas City, MO 64105

* PURCHASE FUND SHARES BY WIRING FUNDS TO:

United Missouri Bank of Kansas NA
ABA #101000695
Account # 9870601168
Further Credit: name of fund, shareholder name and Penn Capital Funds account
number
- --------------------------------------------------------------------------------

8
<PAGE>

PURCHASING, SELLING AND EXCHANGING PENN CAPITAL FUNDS

The Penn Capital Select Financial Services Fund is a "no load" mutual fund,
meaning you pay no sales charge when purchasing shares of the Fund. The minimum
initial investment is $2,500 ($2,000 for IRAs) and the subsequent investments
are $500. The Fund reserves the right to waive the minimum initial investment.

This section tells you how to buy, sell (sometimes called "redeem") or exchange
shares of the Fund.

For some investors the minimum initial investment may be lower.

PURCHASING PENN CAPITAL FUNDS

WHEN CAN YOU PURCHASE SHARES?

You may purchase shares on any day that the New York Stock Exchange (NYSE) is
open for business (a Business Day).

TO OPEN AN ACCOUNT:

We may reject any purchase order if we determine that accepting the order would
not be in the best interests of the Fund or its shareholders.

o BY WIRE -- Please call us at 1-800-224-6312 (option 3) to let us know that
you intend to make your initial investment by wire. You will be given an
account number and fax number to which you should send your completed New
Account Application. Once this is complete you will need to instruct your
bank to wire money to: United Missouri Bank of Kansas, N.A.; ABA
#10-10-00695; for Account Number 98-7060-116-8; Further Credit: [Penn
Capital Select Financial Services Fund]. The shareholder's name and account
number must be specified in the wire.

9
<PAGE>

SYSTEMATIC INVESTMENT PLAN

HOW FUND PRICES ARE CALCULATED

PURCHASING ADDITIONAL SHARES

o BY MAIL -- Please send your check payable to Penn Capital Funds along with
a signed letter stating the name of the Penn Capital Select Financial
Services Fund and your account number.

ADDITIONAL INFORMATION

You may also buy shares through accounts with brokers and other institutions
that are authorized to place trades in Fund shares for customers. If you invest
through an authorized institution, you will have to follow its procedures, which
may be different from the procedures for investing directly. Your institution
may charge a fee for its services, in addition to the fees charged by the Fund.
You will also generally have to address your correspondence or questions
regarding the Fund to your institution.

10
<PAGE>

SELLING PENN CAPITAL FUND SHARES

o BY PHONE -- When filling out a New Account Application shareholders are
given the opportunity to establish telephone redemption privileges. If
shareholders elect to take advantage of this privilege they will be able to
redeem shares of the Penn Capital Funds by calling 1-800-224-6312 (option
3) and informing one of our representatives.

SIGNATURE GUARANTEES

SYSTEMATIC WITHDRAWAL PLAN

IF YOU HAVE AT LEAST $2,500 IN YOUR ACCOUNT, YOU MAY USE THE SYSTEMATIC
WITHDRAWAL PLAN. Under the plan you may arrange monthly, quarterly, semi-annual
or annual automatic withdrawals of at least $100 from the Fund. The proceeds of
each withdrawal will be mailed to you by check or, if you have a checking or
savings account with a bank, electronically transferred to your account. Please
call 1-800-224-6312 for information regarding banks that participate in the
Systematic Withdrawal Plan.

11
<PAGE>

REDEMPTIONS IN KIND

RECEIVING YOUR MONEY

EXCHANGING FUND SHARES

You may exchange your shares on any Business Day by contacting the Fund directly
by mail or telephone. You may also exchange shares through your financial
institution by mail or telephone. Exchange requests must be for an amount of at
least $1,000. IF YOU RECENTLY PURCHASED SHARES BY CHECK OR THROUGH ACH, YOU MAY
NOT BE ABLE TO EXCHANGE YOUR SHARES UNTIL YOUR CHECK HAS CLEARED (WHICH MAY TAKE
UP TO 15 DAYS FROM YOUR DATE OF PURCHASE). This exchange privilege may be
changed or canceled at any time upon 60 days' notice.

OTHER POLICIES:

FOR CUSTOMERS OF FINANCIAL INSTITUTIONS

12
<PAGE>

TELEPHONE TRANSACTIONS

SUSPENSION OF YOUR RIGHT TO SELL YOUR SHARES

The Fund may suspend your right to sell your shares if the NYSE restricts
trading, the SEC declares an emergency or for other reasons. More information
about this is in the Fund's SAI.

INVOLUNTARY SALES OF YOUR SHARES

DISTRIBUTION OF FUND SHARES

SEI Investments Distribution Co. (SIDCo.) is the distributor of the Fund. SIDCo.
receives no compensation for distributing the Fund's shares.

DIVIDENDS AND DISTRIBUTIONS

The Penn Capital Select Financial Services Fund distributes its investment
income at least once annually as a dividend to shareholders. The Fund makes
distributions of capital gains, if any, at least annually.

If you own Fund shares on the Fund's record date, you will be entitled to
receive the distribution.

13
<PAGE>

TAXES

PLEASE CONSULT YOUR TAX ADVISOR REGARDING YOUR SPECIFIC QUESTIONS ABOUT FEDERAL,
STATE AND LOCAL INCOME TAXES. Summarized below are some important tax issues
that affect the Fund and its shareholders. This summary is based on current tax
laws, which may change.

EACH SALE OR EXCHANGE OF FUND SHARES IS A TAXABLE EVENT.

MORE INFORMATION ABOUT TAXES IS IN THE SAI.

<PAGE>

PENN CAPITAL FUNDS FINANCIAL HIGHLIGHTS

The table that follows presents performance information about the Fund. This
information is intended to help you understand the Fund's financial performance
for the past five years, or, if shorter, the period of the Fund's operations.
Some of this information reflects financial information for a single Fund share.
The total returns in the table represent the rate that you would have earned (or
lost) on an investment in the Fund, assuming you reinvested all of your
dividends and distributions. These Financial Highlights have been audited by
Ernst & Young LLP, independent auditors whose report, along with the Fund's
financial statements, appears in the annual report that accompanies our SAI. You
can obtain the annual report, which contains more performance information, at no
charge by calling 1-800-224-6312.

<PAGE>

Financial Highlights
Penn Capital Funds
For a Share Outstanding Throughout Each Period

RATIO
REALIZED OF
NET AND NET NET EXPENSES
ASSET UNREALIZED DISTRIBUTIONS DISTRIBUTIONS ASSET ASSETS TO
VALUE NET GAINS FROM NET FROM VALUE END AVERAGE
BEGINNING INVESTMENT ON INVESTMENT CAPITAL END TOTAL OF PERIOD NET
OF PERIOD INCOME INVESTMENTS INCOME GAINS OF PERIOD RETURN(1) (000) ASSETS
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PENN CAPITAL SELECT FINANCIAL SERVICES FUND
1999 $10.50 0.23 0.79 (0.09) (0.69) $10.74 9.62% $305 1.40%
1998(2) $10.00 0.07 0.64 (0.01) (0.20) $10.50 6.81% $703 1.40%*
</TABLE>

RATIO OF NET
RATIO OF INVESTMENT
NET RATIO OF INCOME
INVESTMENT EXPENSES (LOSS) TO
INCOME TO AVERAGE AVERAGE
TO NET ASSETS NET ASSETS
AVERAGE (EXCLUDING (EXCLUDING PORTFOLIO
NET WAIVERS AND WAIVERS AND TURNOVER
ASSETS REIMBURSEMENT) REIMBURSEMENTS) RATE
- -----------------------------------------------------------------------
<S> <C> <C> <C> <C>
PENN CAPITAL SELECT FINANCIAL SERVICES FUND
1999 1.17% 14.54% (11.97)% 114.1%
1998(2) 0.68%* 29.22%* (27.14)%* 174.8%
</TABLE>

* ANNUALIZED
(1) RETURNS ARE FOR THE PERIOD INDICATED AND HAVE NOT BEEN ANNUALIZED.
(2) COMMENCED OPERATIONS ON OCTOBER 20, 1997.

<PAGE>

TIP FUNDS

INVESTMENT ADVISER

Penn Capital Management Company, Inc.
52 Haddonfield - Berlin Road
Suite 1000
Cherry Hill, NJ 08034

DISTRIBUTOR

SEI Investments Distribution Co.

LEGAL COUNSEL

Morgan, Lewis & Bockius LLP

More information about the Fund is available without charge through the
following:

STATEMENT OF ADDITIONAL INFORMATION (SAI)

ANNUAL AND SEMI-ANNUAL REPORTS

TO OBTAIN AN SAI, ANNUAL OR SEMI-ANNUAL REPORT, OR MORE INFORMATION:

BY TELEPHONE: Call 1-800-224-6312

BY MAIL: Write to Penn Capital Funds
P.O. Box 219805
Kansas City, MO 64141-6805

17
<PAGE>

The Funds' Investment Company Act registration number is 811-07527.

18
<PAGE>

TIP FUNDS

PROSPECTUS

JANUARY 31, 2000

PENN CAPITAL VALUE PLUS FUND

INVESTMENT ADVISER
PENN CAPITAL MANAGEMENT COMPANY, INC.

<PAGE>

HOW TO READ YOUR PROSPECTUS

TIP Funds is a mutual fund family that offers different classes of shares in
separate investment portfolios (Funds). The Fund has individual investment goals
and strategies. This prospectus gives you important information about the shares
of the Fund that you should know before investing. Please read this prospectus
and keep it for future reference.

This prospectus has been arranged into different sections so that you can easily
review this important information. On the next page, there is some general
information you should know about risk and return of the Fund. For more detailed
information about the Fund, please see:

PAGE
PENN CAPITAL VALUE PLUS FUND................................................XXX
INVESTMENTS AND PORTFOLIO MANAGEMENT........................................XXX
PURCHASING, SELLING AND EXCHANGING PENN CAPITAL FUNDS.......................XXX
DIVIDENDS, DISTRIBUTIONS AND TAXES..........................................XXX

TO OBTAIN MORE INFORMATION ABOUT TIP FUNDS, PLEASE REFER TO THE BACK COVER OF
THE PROSPECTUS.

2
<PAGE>

INFORMATION ABOUT THE FUND

The Penn Capital Value Plus Fund is a mutual fund. A mutual fund pools
shareholders' money and, using professional investment managers, invests it in
securities.

3
<PAGE>

PENN CAPITAL VALUE PLUS FUND

FUND SUMMARY

INVESTMENT GOAL Capital appreciation and above average
income

INVESTMENT FOCUS Large and small cap U.S. common stocks and
high yield "junk" bonds

SHARE PRICE VOLATILITY High

PRINCIPAL INVESTMENT STRATEGY Attempts to identify undervalued small cap
and large cap U.S. companies and high yield
"junk" bonds with income and capital
appreciation potential

INVESTOR PROFILE Investors seeking long-term growth
of capital who can withstand the share
price volatility of equity and high yield
"junk" bond investing

STRATEGY

The Penn Capital Value Plus Fund invests primarily (at least 65% of its assets)
in large and small capitalization common stocks and other equity securities of
U.S. companies. The Fund also invests in fixed income obligations (principally
"junk" bonds). In selecting investments for the Fund, Penn Capital Management
chooses stocks of companies that have low-price earnings ratios relative to the
market. The Fund will invest in high yield "junk" bonds to generate income. The
Fund will invest in a number of industries and issuers, but may invest in a
relatively high percentage of its assets in a single industry.

RISKS

Since it purchases equity securities, the Fund is subject to the risk that stock
prices will fall over short or extended periods of time. Since the value of
securities with longer maturities will fluctuate more in response to interest
rate changes, this risk is greater for long-term debt securities than for
short-term debt securities. Fixed income securities, regardless of credit
quality, experience price volatility, especially in response to interest rate
changes. Historically, the equity markets have moved in cycles, and the value of
the Fund's equity securities may fluctuate drastically from day to day.
Individual companies may report poor results or be negatively affected by
industry and/or economic trends and developments. The prices of securities
issued by such companies may suffer a decline in response. These factors
contribute to price volatility, which is the principal risk of investing in the
Fund.

The smaller capitalization companies the Fund invests in may be more vulnerable
to adverse business or economic events than larger, more established companies.
In particular, these small companies may have limited product lines, markets and
financial resources, and may depend upon a relatively small management group.
Micro cap stocks also tend to be traded only in the over-the-counter market, and
may not be as liquid as larger capitalization stocks. As a result, the prices of
the micro cap stocks owned by the Fund will be very volatile, and the price
movements of the Fund's shares will reflect that volatility.

4
<PAGE>

The prices of the Fund's fixed income securities respond to economic
developments, including interest rate changes, as well as to perceptions about
the creditworthiness of individual issuers. Generally, the Fund's fixed income
securities will decrease in value if interest rates rise and vice versa, and the
volatility of lower rated securities is even greater than that of higher rated
securities. Also, longer-term securities are generally more volatile, so the
average maturity or duration of these securities affects risk.

The Fund is subject to the risk that its principal market segment, equity
securities, may underperform compared to other market segments or to the equity
markets as a whole.

PERFORMANCE INFORMATION

As of January 31, 2000, the Fund had not yet commenced operations, and did not
have a performance history.

5
<PAGE>

FUND FEES AND EXPENSES

THIS TABLE DESCRIBES THE FUND'S FEES AND EXPENSES THAT YOU MAY PAY IF YOU BUY
AND HOLD SHARES OF THE FUND.

ANNUAL FUND OPERATING EXPENSES (EXPENSES DEDUCTED FROM FUND ASSETS)

- ------------------------------------------------------------------------------
Investment Advisory Fees 1.00%
Distribution (12b-1) Fees None
Other Expenses 0.70%*
-------
TOTAL ANNUAL FUND OPERATING EXPENSES 1.70%
Fee Waivers and Expense Reimbursements 0.30%
-------
NET TOTAL OPERATING EXPENSES 1.40%**
- ------------------------------------------------------------------------------
* Other Expenses are estimated for the current year.
** The Fund's Adviser has contractually agreed to waive fees and to reimburse
expenses in order to keep total operating expenses from exceeding 1.40% for a
period of one year, renewable at the end of each fiscal year. For more
information about these fees, see "Investment Adviser."

EXAMPLE

This Example is intended to help you compare the cost of investing in the Fund
with the cost of investing in other mutual funds. The Example assumes that you
invest $10,000 in the Fund for the time periods indicated. The Example also
assumes that each year your investment has a 5% return and Fund expenses remain
the same. Although your actual costs and returns might be different, your
approximate costs of investing $10,000 in the Fund would be:

1 YEAR 3 YEARS
PENN CAPITAL VALUE PLUS FUND $143 $506

6
<PAGE>

THE FUND'S OTHER INVESTMENTS

INVESTMENT ADVISER

As of December 31, 1999, Penn Capital had approximately $450 million in assets
under management. For its services during the most recent fiscal year, Penn
Capital is entitled to investment advisory fees as follows:

PENN CAPITAL VALUE PLUS FUND 1.00%

PORTFOLIO MANAGERS

The Penn Capital Value Plus Fund is managed by Richard Hocker and Scott D.
Schumacher.

Mr. Schumacher, a Senior Analyst who joined Penn Capital in 1987, has 12 years
of investment experience.

<PAGE>

PURCHASING, SELLING AND EXCHANGING PENN CAPITAL FUNDS

- --------------------------------------------------------------------------------

In order to open a new account, you must complete and mail the NEW ACCOUNT
APPLICATION that you receive with this prospectus.

All trades must be received by the Fund's Transfer Agent by 4:00 PM EST. Your
check must be made payable to the Penn Capital Funds.

THE FUND'S MINIMUM INITIAL INVESTMENT IS $2,500 WITH A MINIMUM SUBSEQUENT
INVESTMENT OF $500.
- --------------------------------------------------------------------------------

ONCE YOU ARE A SHAREHOLDER OF THE PENN CAPITAL FUNDS YOU CAN DO THE FOLLOWING:
- --------------------------------------------------------------------------------

* Purchase, sell or exchange Fund shares by phone.

Call 1-800-224-6312 between 9:00 AM and 4:00 PM EST Monday through Friday and
press 3 to place a trade.
- --------------------------------------------------------------------------------

* Purchase, sell or exchange Fund shares by mail. Shareholders can mail trade
requests to:

Regular mail Express or overnight mail

The Penn Capital Funds The Penn Capital Funds
P.O. Box 219805 c/o DST Systems Inc.
Kansas City, MO 64141-6805 330 W. 9th Street
Kansas City, MO 64105
- --------------------------------------------------------------------------------

* Purchase Fund shares by wiring funds to:

United Missouri Bank of Kansas NA
ABA #101000695
Account #9870601168
Further Credit: name of fund, shareholder name and Penn Capital Funds account
number
- --------------------------------------------------------------------------------

8
<PAGE>

The Penn Capital Value Plus Fund is a "no load" mutual fund, meaning you pay no
sales charge when purchasing shares of the Fund. The minimum initial investment
is $2,500 and the subsequent investments are $500. The Fund reserves the right
to waive the minimum initial investment.

For some investors the minimum initial investment may be lower.

This section tells you how to buy, sell (sometimes called "redeem") or exchange
shares of the Fund.

PURCHASING PENN CAPITAL FUNDS

WHEN CAN YOU PURCHASE SHARES?

You may purchase shares on any day that the New York Stock Exchange (NYSE) is
open for business (a Business Day).

TO OPEN AN ACCOUNT:

We may reject any purchase order if they determine that accepting the order
would not be in the best interests of the Fund or its shareholders.

o BY WIRE -- Please call us at 1-800-224-6312 (option 3) to let us know that
you intend to make your initial investment by wire. You will be given an
account number and fax number to which you should send your completed New
Account Application. Once this is complete you will need to instruct your
bank to wire money to: United Missouri Bank of Kansas, N.A.; ABA
#10-10-00695; for Account Number 98-7060-116-8; Further Credit: [Penn
Capital Value Plus Fund]. The shareholder's name and account number must be
specified in the wire.

9
<PAGE>

SYSTEMATIC INVESTMENT PLAN

HOW FUND PRICES ARE CALCULATED

In calculating NAV, the Fund generally values its investment portfolio at market
price. If market prices are unavailable or the Fund thinks that they are
unreliable, fair value prices may be determined in good faith using methods
approved by the Board of Trustees. The Fund may hold portfolio securities that
are listed on foreign exchanges. These securities may trade on weekends or other
days when the Fund does not calculate NAV. As a result, the NAV of this Fund's
shares may change on days when you cannot purchase or sell Fund shares.

PURCHASING ADDITIONAL SHARES

o BY MAIL -- Please send your check payable to Penn Capital Funds along with
a signed letter stating the name of the Penn Capital Value Plus Fund and
your account number.

o BY PHONE -- Current shareholders are eligible to purchase shares by phone
if they have requested that privilege by checking the appropriate box on
the New Account Application. Shareholders who have requested telephone
privileges can call 1-800-224-6312 (option 3) and give the Fund and account
number you would like to make a subsequent purchase into. You must then
instruct your bank to wire the money by following the instructions listed
on page 8.

ADDITIONAL INFORMATION

You may also buy shares through accounts with brokers and other institutions
that are authorized to place trades in Fund shares for customers. If you invest
through an authorized institution, you will have to follow its procedures, which
may be different from the procedures for investing directly. Your institution
may charge a fee for its services, in addition to the fees charged by the Fund.
You will also generally have to address your correspondence or questions
regarding the Fund to your institution.

10
<PAGE>

SELLING PENN CAPITAL FUND SHARES

o BY PHONE -- When filling out a New Account Application shareholders are
given the opportunity to establish telephone redemption privileges. If
shareholders elect to take advantage of this privilege they will be able to
redeem shares of the Penn Capital Funds by calling 1-800-224-6312 (option
3) and informing one of our representatives.

SIGNATURE GUARANTEES

SYSTEMATIC WITHDRAWAL PLAN

IF YOU HAVE AT LEAST $2,500 IN YOUR ACCOUNT, YOU MAY USE THE SYSTEMATIC
WITHDRAWAL PLAN. Under the plan you may arrange monthly, quarterly, semi-annual
or annual automatic withdrawals of at least $100 from the Fund. The proceeds of
each withdrawal will be mailed to you by check or, if you have a checking or
savings account with a bank, electronically transferred to your account. Please
call 1-800-224-6312 for information regarding banks that participate in the
Systematic Withdrawal Plan.

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<PAGE>

REDEMPTIONS IN KIND

RECEIVING YOUR MONEY

EXCHANGING FUND SHARES

OTHER POLICIES:

FOR CUSTOMERS OF FINANCIAL INSTITUTIONS

TELEPHONE TRANSACTIONS

12
<PAGE>

SUSPENSION OF YOUR RIGHT TO SELL YOUR SHARES

The Fund may suspend your right to sell your shares if the NYSE restricts
trading, the SEC declares an emergency or for other reasons. More information
about this is in the Fund's SAI.

INVOLUNTARY SALES OF YOUR SHARES

DISTRIBUTION OF FUND SHARES

SEI Investments Distribution Co. (SIDCo.) is the distributor of the Fund. SIDCo.
receives no compensation for distributing the Fund's shares.

DIVIDENDS AND DISTRIBUTIONS

The Penn Capital Value Plus Fund distributes its investment income at least once
annually as a dividend to shareholders. The Fund makes distributions of capital
gains, if any, at least annually.

If you own Fund shares on the Fund's record date, you will be entitled to
receive the distribution.

13
<PAGE>

TAXES

PLEASE CONSULT YOUR TAX ADVISOR REGARDING YOUR SPECIFIC QUESTIONS ABOUT FEDERAL,
STATE AND LOCAL INCOME TAXES. Summarized below are some important tax issues
that affect the Fund and its shareholders. This summary is based on current tax
laws, which may change.

EACH SALE OR EXCHANGE OF FUND SHARES IS A TAXABLE EVENT.

MORE INFORMATION ABOUT TAXES IS IN THE SAI.

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<PAGE>

TIP FUNDS

INVESTMENT ADVISER

Penn Capital Management Company, Inc.
52 Haddonfield - Berlin Road
Suite 1000
Cherry Hill, NJ 08034

DISTRIBUTOR

SEI Investments Distribution Co.

LEGAL COUNSEL

Morgan, Lewis & Bockius LLP

More information about the Fund is available without charge through the
following:

STATEMENT OF ADDITIONAL INFORMATION (SAI)

ANNUAL AND SEMI-ANNUAL REPORTS

TO OBTAIN AN SAI, ANNUAL OR SEMI-ANNUAL REPORT, OR MORE INFORMATION:

BY TELEPHONE: Call 1-800-224-6312

BY MAIL: Write to Penn Capital Funds
P.O. Box 219805
Kansas City, MO 64141-6805

15
<PAGE>

TIP Funds' Investment Company Act registration number is 811-07527.

16
<PAGE>

TIP FUNDS

TURNER LARGE CAP GROWTH EQUITY FUND
TURNER GROWTH EQUITY FUND
TURNER MIDCAP GROWTH FUND
TURNER SMALL CAP GROWTH FUND
TURNER MICRO CAP GROWTH FUND
TURNER FOCUSED LARGE CAP EQUITY FUND
TURNER TOP 20 FUND
TURNER TECHNOLOGY FUND
TURNER INTERNATIONAL GROWTH FUND
TURNER SHORT DURATION GOVERNMENT FUNDS-ONE YEAR PORTFOLIO
TURNER SHORT DURATION GOVERNMENT FUNDS-THREE YEAR PORTFOLIO
TURNER CORE HIGH QUALITY FIXED INCOME FUND
TIP TARGET SELECT EQUITY FUND

INVESTMENT ADVISER:
TURNER INVESTMENT PARTNERS, INC.

This Statement of Additional Information is not a prospectus and relates only to
the Turner Large Cap Growth Equity Fund ("Large Cap Fund"), Turner Growth Equity
Fund ("Growth Equity Fund"), Turner Midcap Growth Fund ("Midcap Fund"), Turner
Small Cap Growth Fund ("Small Cap Fund"), Turner Micro Cap Growth Fund ("Micro
Cap Fund"), Turner Focused Large Cap Equity Fund ("Focused Fund"), Turner Top 20
Fund ("Top 20 Fund"), Turner Technology Fund ("Technology Fund"), Turner
International Growth Fund ("International Fund"), Turner Short Duration
Government Funds - One Year Fund ("One Year Portfolio"), Turner Short Duration
Government Funds-Three Year Portfolio ("Three Year Portfolio"), Turner Core High
Quality Fixed Income Fund ("Fixed Income Fund"), and the TIP Target Select
Equity Fund ("Target Select Fund") (each a "Fund" and, together, the "Funds").
It is intended to provide additional information regarding the activities and
operations of the TIP Funds (the "Trust") and should be read in conjunction with
the Funds' Prospectuses dated January 31, 2000. The Prospectuses may be obtained
without charge by calling 1-800-224-6312.

TABLE OF CONTENTS
THE TRUST ...................................................................S-2
INVESTMENT OBJECTIVES........................................................S-2
INVESTMENT POLICIES..........................................................S-3
DESCRIPTION OF PERMITTED INVESTMENTS AND RISK FACTORS........................S-9
INVESTMENT LIMITATIONS......................................................S-23
THE ADVISER.................................................................S-25
THE ADMINISTRATOR...........................................................S-28
DISTRIBUTION AND SHAREHOLDER SERVICES.......................................S-30
TRUSTEES AND OFFICERS OF THE TRUST..........................................S-30
COMPUTATION OF YIELD AND TOTAL RETURN.......................................S-33
PURCHASE AND REDEMPTION OF SHARES...........................................S-35
DETERMINATION OF NET ASSET VALUE............................................S-36
TAXES.......................................................................S-36
PORTFOLIO TRANSACTIONS......................................................S-39
VOTING......................................................................S-42
DESCRIPTION OF SHARES.......................................................S-43
SHAREHOLDER LIABILITY.......................................................S-43
LIMITATION OF TRUSTEES' LIABILITY...........................................S-43
5% SHAREHOLDERS.............................................................S-43
CUSTODIAN...................................................................S-48
EXPERTS.....................................................................S-48
LEGAL COUNSEL...............................................................S-48
FINANCIAL STATEMENTS........................................................S-48
APPENDIX.....................................................................A-1

January 31, 2000

<PAGE>

THE TRUST

This Statement of Additional Information relates only to the Turner Large Cap
Growth Equity Fund ("Large Cap Fund"), Turner Growth Equity Fund ("Growth Equity
Fund"), Turner Midcap Growth Fund ("Midcap Fund"), Turner Small Cap Growth Fund
("Small Cap Fund"), Turner Micro Cap Growth Fund ("Micro Cap Fund"), Turner
Focused Large Cap Equity Fund ("Focused Fund"), Turner Top 20 Fund ("Top 20
Fund"), Turner Technology Fund ("Technology Fund"), Turner International Growth
Fund ("International Growth Fund"), Turner Short Duration Government Funds-One
Year Portfolio ("One Year Portfolio"), Turner Short Duration Government
Funds-Three Year Portfolio ("Three Year Portfolio"), Turner Core High Quality
Fixed Income Fund, ("Fixed Income Fund"), and TIP Target Select Equity Fund
("Target Select Fund"), (each a "Fund" and, together the "Funds"). Each is a
separate series of TIP Funds (formerly, Turner Funds) (the "Trust"), an open-end
management investment company established as a Massachusetts business trust
under a Declaration of Trust dated January 26, 1996, and amended on February 21,
1997, which consists of both diversified and non-diversified Funds. The
Declaration of Trust permits the Trust to offer separate series of units of
beneficial interest (the "shares") and separate classes of funds. Each portfolio
is a separate mutual fund and each share of each portfolio represents an equal
proportionate interest in that portfolio. Shareholders may purchase shares in
the One Year Portfolio or the Three Year Portfolio through two separate classes,
Class I and Class II, which provide for variations in distribution costs,
transfer agent fees, voting rights and dividends. All other Funds in the Trust
offer only Class I Shares. Except for differences between the Class I Shares and
the Class II Shares pertaining to distribution and shareholder servicing, voting
rights, dividends and transfer agent expenses, each share of each series
represents an equal proportionate interest in that series. Please see
"Description of Shares" for more information.

On January 29, 1999, the Micro Cap Fund and the Three Year Portfolio acquired
all of the assets and liabilities of the Alpha Select Turner Micro Cap Growth
Fund and the Alpha Select Turner Short Duration Government Funds-Three Year
Portfolio, respectively. On June 30, 1999, the One Year Portfolio acquired all
of the assets and liabilities of the Alpha Select Turner Short Duration
Government Funds - One Year Portfolio. Historical information presented for
those Funds relates to the Alpha Select Funds. The Trust also offers shares in
the Clover Max Cap Value Fund, Clover Equity Value Fund, Clover Small Cap Value
Fund, Clover Fixed Income Fund, Penn Capital Select Financial Services Fund,
Penn Capital Strategic High Yield Bond Fund, and Penn Capital Value Plus Fund.
Capitalized terms not defined herein are defined in the Prospectus offering
shares of the Funds.

INVESTMENT OBJECTIVES

TURNER LARGE CAP GROWTH EQUITY FUND -- The Large Cap Fund seeks capital
appreciation.

TURNER GROWTH EQUITY FUND -- The Growth Equity Fund seeks capital appreciation.

TURNER MIDCAP GROWTH FUND -- The Midcap Fund seeks capital appreciation.

TURNER SMALL CAP GROWTH FUND -- The Small Cap Fund seeks capital appreciation.

TURNER MICRO CAP GROWTH FUND -- The Micro Cap Fund seeks capital appreciation.

S-2
<PAGE>

TURNER FOCUSED LARGE CAP EQUITY FUND -- The Focused Fund seeks long-term capital
appreciation.

TURNER TOP 20 FUND -- The Top 20 Fund seeks long-term capital appreciation.

TURNER TECHNOLOGY FUND -- The Technology Fund seeks long-term capital
appreciation.

TURNER INTERNATIONAL GROWTH FUND -- The International Fund seeks long-term
capital appreciation.

TURNER SHORT DURATION GOVERNMENT FUNDS-ONE YEAR PORTFOLIO & TURNER SHORT
DURATION GOVERNMENT FUNDS-THREE YEAR PORTFOLIO -- The investment objective of
each Fund is to provide maximum total return consistent with preservation of
capital and prudent investment management. Under normal circumstances, the One
Year Portfolio seeks to maintain an average effective duration comparable to or
less than that of one-year U.S. Treasury bills. The Three Year Portfolio seeks
to maintain an average effective duration comparable to or less than that of
three-year U.S. Treasury notes. Effective duration is an indicator of a
security's price volatility or risk associated with changes in interest rates.
Because the Turner Investment Partners, Inc. (the "Adviser") seeks to manage
interest rate risk by limiting effective duration, each Fund may invest in
securities of any maturity.

TURNER CORE HIGH QUALITY FIXED INCOME FUND -- The Fixed Income Fund seeks total
return through current income and capital appreciation.

TIP TARGET SELECT EQUITY FUND -- The Target Select Fund seeks long term growth
of capital primarily from investment in U.S. equity securities.

There can be no assurance that any Fund will achieve its investment objective.

INVESTMENT POLICIES

TURNER LARGE CAP GROWTH EQUITY FUND--The Large Cap Fund invests primarily (and,
under normal conditions, at least 65% of its total assets) in a diversified
portfolio of common stocks of issuers that, at the time of purchase, have market
capitalizations in excess of $10 billion that the Adviser, believes to have
strong earnings growth potential. The Fund seeks to purchase securities that are
well diversified across economic sectors. The Russell 200 Growth Index is the
Fund's current benchmark. Any remaining assets may be invested in securities
issued by smaller capitalization companies, warrants and rights to purchase
common stocks, and they may invest up to 10% of its total assets in American
Depository Receipts "ADRs"). The Fund will only purchase securities that are
traded on registered exchanges or the over-the-counter market in the United
States. The Fund may purchase shares of other investment companies and foreign
securities.

TURNER GROWTH EQUITY FUND--The Growth Equity Fund invests as fully as
practicable (and, under normal conditions, at least 65% of its total assets) in
a portfolio of common stocks that the Adviser believes to have potential for
strong growth in earnings and to be reasonably valued at the time of purchase.
The Fund seeks to purchase securities that are well diversified across economic
sectors and to maintain sector concentrations that approximate the economic
sector weightings of the

S-3

<PAGE>

Russell 1000 Growth Index (or such other appropriate index selected by the
Adviser). The Fund may invest in warrants and rights to purchase common stocks,
and may invest up to 10% of its total assets in ADRs. The Fund will only
purchase securities that are traded on registered exchanges or the
over-the-counter market in the United States.

TURNER MIDCAP GROWTH FUND--The Midcap Fund invests primarily (and, under normal
conditions, at least 65% of its total assets) in a diversified portfolio of
common stocks of issuers that, at the time of purchase, have market
capitalizations between $1 billion and $8 billion that the Adviser believes to
have strong earnings growth potential. The Fund seeks to purchase securities
that are well diversified across economic sectors and to maintain sector
concentrations that approximate the economic sector weightings comprising the
Russell Midcap Growth Index (or such other appropriate index selected by the
Adviser). Any remaining assets may be invested in securities issued by smaller
capitalization companies and larger capitalization companies, warrants and
rights to purchase common stocks, and it may invest up to 10% of its total
assets in ADRs. The Fund will only purchase securities that are traded on
registered exchanges or the over-the-counter market in the United States. The
Fund may purchase shares of other investment companies.

TURNER SMALL CAP GROWTH FUND--The Small Cap Fund invests primarily (and, under
normal conditions, at least 65% of its total assets) in a diversified portfolio
of common stocks of issuers with market capitalizations of not more than $2
billion that the Adviser believes to have strong earnings growth potential.
Under normal market conditions, the Fund will maintain a weighted average market
capitalization of less than $2 billion. The Fund seeks to purchase securities
that are well diversified across economic sectors and to maintain sector
concentrations that approximate the economic sector weightings comprising the
Russell 2000 Growth Index (or such other appropriate index selected by the
Adviser). The Fund may invest in warrants and rights to purchase common stocks,
and may invest up to 10% of its total assets in ADRs. The Fund will only
purchase securities that are traded on registered exchanges or the
over-the-counter market in the United States.

TURNER MICRO CAP GROWTH FUND -- The Micro Cap Fund invests primarily (and, under
normal conditions, at least 65% of its total assets) in a diversified portfolio
of common stocks of issuers with market capitalizations of not more than $500
million that the Adviser believes to have strong earnings growth potential.
Under normal market conditions, the Fund will maintain a weighted average market
capitalization of less than $350 million. The Fund will not hold securities with
market capitalizations over $1 billion. The Fund seeks to purchase securities
that are well diversified across economic sectors. The Russell 2000 Growth Index
is the Fund's current benchmark. The Micro Cap Fund will typically invest in
companies whose market capitalizations, at the time of purchase, are $350
million or under. The Fund may invest in warrants and rights to purchase common
stocks, and may invest up to 10% of its total assets in micro cap stocks of
foreign issuers and in ADRs.

The Micro Cap Fund invests in some of the smallest, most dynamic publicly-traded
companies. These emerging growth companies are typically in the early stages of
a long-term development cycle. In many cases, these companies offer unique
products, services or technologies and often serve special or expanding market
niches. Because of their small size, and less frequent trading activity, the
companies represented in the Fund's portfolio may be overlooked or not closely
followed by investors. Accordingly, their prices may rise either as a result of
improved business fundamentals, particularly when earnings grow faster than
general expectations, or as more investors

S-4

<PAGE>

appreciate the full extent of a company's underlying business potential. Thus in
the opinion of the Fund's Adviser, they offer substantial appreciation potential
for meeting retirement and other long-term goals.

The Fund's share price can move up and down significantly, even over short
periods of time, due to the volatile nature of micro capitalization stocks. To
manage risk and improve liquidity, Turner expects to invest in numerous small,
publicly traded companies, representing a broad cross-section of U.S.
industries.

TURNER FOCUSED LARGE CAP EQUITY FUND--The Focused Fund invests primarily (and,
under normal conditions, at least 80% of its total assets) in a portfolio of
common stocks of issuers that, at the time of purchase, have market
capitalizations in excess of $5 billion that the Adviser, believes to have
strong earnings growth potential. Any remaining assets may be invested in
securities issued by smaller capitalization companies, warrants and rights to
purchase common stocks, convertible and preferred stocks, and in ADRs. The Fund
will generally purchase securities that are traded on registered exchanges or
the over-the-counter market in the United States. The Fund may also purchase
shares of other investment companies and foreign securities. The Fund's overall
portfolio will contain a total of 15-30 stocks of Turner's best large
capitalization ideas.

TURNER TOP 20 FUND--The Top 20 Fund invests primarily (and, under normal
conditions, at least 80% of its total assets) in a portfolio of common stocks of
issuers with a variety of sectors and market capitalizations that the Adviser
believes to have strong earnings growth potential. Any remaining assets may be
invested in warrants and rights to purchase common stocks, convertible and
preferred stocks, and ADRs. The Fund will generally purchase securities that are
traded on registered exchanges or the over-the-counter market in the United
States. The Fund may also purchase shares of other investment companies and
foreign securities.

TURNER TECHNOLOGY FUND -- The Technology Fund invests primarily (and, under
normal conditions, at least 80% of its total assets) in a portfolio of common
stocks of technology companies. The Fund may invest in warrants and rights to
purchase common stocks, convertible and preferred stocks, stocks of foreign
issuers and ADRs.

The Fund invests in dynamic, publicly-traded technology companies. These
emerging growth companies are typically in the early stages of a long-term
development cycle. In many cases, these companies offer unique products,
services or technologies and often serve special or expanding market niches.
Because of their small size and less frequent trading activity, the small
technology companies represented in the Fund's portfolio may be overlooked or
not closely followed by investors. Accordingly, their prices may rise either as
a result of improved business fundamentals, particularly when earnings grow
faster than general expectations, or as more investors appreciate the full
extent of a company's underlying business potential. The Adviser will seek to
capture these price increases. Most of the technology companies that the Fund
will invest in will be located in the U.S.

The Fund's share price can move up and down significantly, even over short
periods of time, due to the volatile nature of many technology stocks. To manage
risk and improve liquidity, Turner expects to invest in numerous publicly traded
companies, representing a broad cross-section of U.S. and foreign technology
companies.

S-5

<PAGE>

TURNER INTERNATIONAL GROWTH FUND -- The International Fund seeks to provide
long-term capital appreciation by investing primarily in a diversified portfolio
of ADRs and equity securities of non-U.S. issuers.

Under normal circumstances, at least 80% of the International Fund's assets will
be invested in ADRs and equity securities of non-U.S. issuers located in at
least three countries other than the United States. Most of the securities that
the Fund will invest in will be located in Europe and other developed foreign
countries.

Certain securities of non-U.S. issuers purchased by the Fund will be listed on
recognized foreign exchanges, but securities generally will be purchased in
over-the-counter markets, on U.S.-registered exchanges, or in the form of
sponsored or unsponsored ADRs traded on registered exchanges or NASDAQ, or
sponsored or unsponsored European Depositary Receipts ("EDRs"), Continental
Depositary Receipts ("CDRs") or Global Depositary Receipts ("GDRs"). The Fund
expects its investments to emphasize large, intermediate and small
capitalization companies.

The Fund may also invest in warrants and rights to purchase common stocks,
convertible and preferred stocks, and securities of other investment companies.
Although permitted to do so, the Fund does not currently intend to invest in
securities issued by passive foreign investment companies or to engage in
securities lending.

TURNER SHORT DURATION GOVERNMENT FUNDS -- ONE YEAR PORTFOLIO & TURNER SHORT
DURATION GOVERNMENT FUNDS -- THREE YEAR PORTFOLIO (TOGETHER, THE "SHORT DURATION
FUNDS") -- Under normal market conditions, each Fund invests at least 65% of the
value of its total assets in obligations either issued or guaranteed by the U.S.
Government, its agencies or instrumentalities ("U.S. Government securities").
Certain of the obligations, including U.S. Treasury bills, notes and bonds and
mortgage-related securities of the Government National Mortgage Association
("GNMA"), are issued or guaranteed by the U.S. Government. Other securities
issued by U.S. Government agencies or instrumentalities are supported only by
the credit of the agency or instrumentality, such as those issued by the Federal
Home Loan Bank, while others, such as those issued by Fannie Mae and the Student
Loan Marketing Association, have an additional line of credit with the U.S.
Treasury.

The balance of each Fund's assets may be invested in cash and high grade debt
securities, shares of other investment companies, including privately issued
mortgage-related securities and general obligation bonds and notes of various
states and their political subdivisions, rated within the three highest grades
assigned by Standard and Poor's Corporation ("S&P") (AAA, AA or A), Moody's
Investor Services ("Moody's") (Aaa, Aa or A), or Fitch Investor Services, Inc.
("Fitch") (AAA, AA or A), or, if unrated by S&P, Moody's and/or Fitch, judged by
the Adviser to be of comparable quality. A further description of S&P's, Moody's
and Fitch's ratings is included in the Appendix to the Statement of Additional
Information.

The relative proportions of the Funds' net assets invested in the different
types of permissible investments will vary from time to time depending upon the
Adviser's assessment of the relative market value of the sectors in which the
Funds invest. In addition, the Funds may purchase securities that are trading at
a discount from par when the Adviser believes there is a potential for capital
appreciation.

S-6

<PAGE>

The Short Duration Funds may enter into forward commitments or purchase
securities on a when issued basis, and may invest in variable or floating rate
obligations.

TURNER CORE HIGH QUALITY FIXED INCOME FUND--The Fixed Income Fund invests as
fully as practicable (and, under normal conditions, at least 65% of its total
assets) in a portfolio of fixed income securities of varying levels of quality
and maturity, that, in the Adviser's opinion, are undervalued in the market. To
determine a security's fair market value, the Adviser will focus on the yield
and credit quality of particular securities based upon third-party evaluations
of quality as well as the Adviser's own research and analysis of the issuer. The
Adviser will attempt to diversify the Fund's holdings across the yield curve by
holding short, intermediate and long-term securities. Normally, the Fund will
maintain a dollar-weighted average portfolio duration that approximates the
average duration range of the Fund's benchmark index, the Lehman Brothers
Aggregate Bond Index (currently 4.5 years). Duration is a measure of the
expected life of a fixed income security on a cash flow basis.

For example, assuming a portfolio duration of eight years, an increase in
interest rates of 1%, a parallel shift in the yield curve, and no change in the
spread relationships among securities, the value of the portfolio would decline
8%. Using the same assumptions, if interest rates decrease 1%, the value of the
portfolio would increase 8%. The Adviser considers duration an accurate measure
of a security's expected life and sensitivity to interest rate changes. The
Adviser may increase or decrease this average weighted duration when, in the
Adviser's opinion, market conditions warrant.

The Fund will purchase the following types of securities if, at the time of
purchase, such securities either have been classified as investment grade by a
nationally recognized statistical rating organization ("NRSRO") or are
determined by the Adviser to be of comparable quality: (i) obligations issued or
guaranteed as to principal and interest by the U.S. Government or its agencies
or instrumentalities ("U.S. Government securities"); (ii) corporate bonds and
debentures of U.S. and foreign issuers rated in one of the four highest rating
categories; (iii) privately issued mortgage-backed securities rated in the
highest rating category; (iv) asset-backed securities rated in the two highest
rating categories; (v) receipts evidencing separately traded interest and
principal component parts of U.S. Government obligations ("Receipts"); (vi)
commercial paper rated in one of the two highest rating categories; (vii)
obligations of U.S. commercial banks and savings and loan institutions that have
net assets of at least $500 million as of the end of their most recent fiscal
year ("bank obligations"); (viii) obligations issued or guaranteed by the
government of Canada; (ix) obligations of supranational entities rated in one of
the four highest rating categories; (x) loan participations; (xi) repurchase
agreements involving any of the foregoing securities; and (xii) shares of other
investment companies. Investment grade bonds include securities rated BBB by S&P
or Baa by Moody's, which may be regarded as having speculative characteristics
as to repayment of principal. If a security is downgraded to below investment
grade, the Adviser will review the situation and take appropriate action.
Securities rated below investment grade will not constitute more than 5% of the
Fund's total assets.

TIP TARGET SELECT EQUITY FUND -- The Adviser and Sub-Advisers of the Target
Select Fund will each invest in a maximum of 20 equity securities and as few as
10 that they believe have the greatest return potential. Such a focused
security-selection process permits each manager to act on only the investment
ideas that they think are their strongest ones. The intent is to avoid diluting
performance

S-7
<PAGE>

by owning too many securities, so that the positive contributions of winning
investments will prove substantial.

The Fund is designed to provide an investment that combines the investment
expertise and best investment ideas of four outstanding money-management firms.
The Adviser and Sub-Advisers will manage a portion of the Fund's portfolio on a
day-to-day basis. Assets for investment will be allocated to each manager by the
Fund's Board of Trustees, based on the recommendation of the Adviser. The
expectation is that the allocations will result in a portfolio invested in a
variety of equity securities with differing capitalizations and valuations,
chosen by differing investment strategies.

The Fund intends to invest primarily (and, under normal circumstances, at least
65% of its total assets) in equity securities of companies that are
headquartered in the United States or do business both in the United States and
abroad. Those securities, however, will be traded principally in the United
States equity market. Selection of equity securities will not be restricted by
market capitalization, and the Fund's Adviser and Sub-Advisers will employ their
own proprietary investment processes in managing assets.

Any remaining assets of the Fund may be invested in securities of foreign
issuers, shares of other investment companies, ADRs and real estate investment
trusts ("REITs"). The Fund may also invest up to 15% of its net assets in
illiquid securities, invest up to 25% of its total assets in convertible
securities, including convertible securities rated below investment grade,
purchase unregistered securities that are eligible for re-sale pursuant to Rule
144A under the Securities Act, and purchase fixed income securities, including
securities rated below investment grade. In addition, the Fund may effect short
sales, purchase securities on a when-issued basis, and may enter into futures
and options transactions. Debt securities rated below investment grade, I.E.,
rated lower than BBB by S&P and/or Baa by Moody's or unrated securities of
comparable quality, are also known as "junk bonds." The maximum percentage of
the Fund's assets that may be invested in securities rated below investment
grade is 25%.

Under normal circumstances, the Adviser and each of the Sub-Advisers may invest
a portion of the assets under its management in the money market instruments
described below in order to maintain liquidity, or if securities meeting the
Fund's investment objective and policies are not otherwise reasonably available
for purchase, provided that such Instruments do not exceed 25% of the Fund's
total assets. For temporary defensive purposes during periods when the Adviser
determines that market conditions warrant, the Adviser and each Sub-Adviser may
invest up to 100% of the assets under their management in money market
instruments and in cash.

GENERAL INVESTMENT POLICIES

Each Fund may purchase securities on a when-issued basis and borrow money.

Each Fund may enter into futures and options transactions.

Each Fund may invest up to 15% (10% for the Short Duration Funds) of its net
assets in illiquid securities.

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Each Fund, except the Large Cap, Midcap and Short Duration Funds, may purchase
convertible securities.

Each Fund may enter into repurchase agreements.

Each Fund may purchase fixed income securities, including variable and floating
rate instruments and zero coupon securities.

Each Fund may purchase Rule 144A securities and other restricted securities.

Each Fund may purchase obligations of supranational entities.

Each Fund may, for temporary defensive purposes, invest up to 100% of its total
assets in money market instruments (including U.S. Government securities, bank
obligations, commercial paper rated in the highest rating category by an NRSRO,
repurchase agreements involving the foregoing securities), shares of money
market investment companies and cash.

DESCRIPTION OF PERMITTED INVESTMENTS AND RISK FACTORS

AMERICAN DEPOSITARY RECEIPTS ("ADRS")

ADRs are securities, typically issued by a U.S. financial institution (a
"depositary"), that evidence ownership interests in a security or a pool of
securities issued by a foreign issuer and deposited with the depositary. ADRs
may be available through "sponsored" or "unsponsored" facilities. A sponsored
facility is established jointly by the issuer of the security underlying the
receipt and a depositary, whereas an unsponsored facility may be established by
a depositary without participation by the issuer of the underlying security.
Holders of unsponsored depositary receipts generally bear all the costs of the
unsponsored facility. The depositary of an unsponsored facility frequently is
under no obligation to distribute shareholder communications received from the
issuer of the deposited security or to pass through, to the holders of the
receipts, voting rights with respect to the deposited securities.

ASSET-BACKED SECURITIES

Asset-backed securities are secured by non-mortgage assets such as company
receivables, truck and auto loans, leases and credit card receivables. Such
securities are generally issued as pass-through certificates, which represent
undivided fractional ownership interests in the underlying pools of assets. Such
securities also may be debt instruments, which are also known as collateralized
obligations and are generally issued as the debt of a special purpose entity,
such as a trust, organized solely for the purpose of owning such assets and
issuing such debt.

BORROWING

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Funds may be required to liquidate portfolio securities at a time when it would
be disadvantageous to do so in order to make payments with respect to any
borrowing. The Funds may be required to segregate liquid assets in an amount
sufficient to meet their obligations in connection with such borrowings. In an
interest rate arbitrage transaction, a Fund borrows money at one interest rate
and lends the proceeds at another, higher interest rate. These transactions
involve a number of risks, including the risk that the borrower will fail or
otherwise become insolvent or that there will be a significant change in
prevailing interest rates.

CONVERTIBLE SECURITIES

Convertible securities are corporate securities that are exchangeable for a set
number of another security at a prestated price. Convertible securities
typically have characteristics of both fixed income and equity securities.
Because of the conversion feature, the market value of a convertible security
tends to move with the market value of the underlying stock. The value of a
convertible security is also affected by prevailing interest rates, the credit
quality of the issuer and any call provisions.

DERIVATIVES

Derivatives are securities that derive their value from other securities,
financial instruments or indices. The following are considered derivative
securities: options on futures, futures, options (E.G., puts and calls), swap
agreements, mortgage-backed securities (E.G., collateralized mortgage
obligations ("CMOs"), real estate mortgage investment conduits ("REMICs"),
interest-only ("IOs") and principal-only ("POs"), when issued securities and
forward commitments, floating and variable rate securities, convertible
securities, "stripped" U.S. Treasury securities (E.G., Receipts and separately
traded registered interested and principal securities ("STRIPs"), privately
issued stripped securities (E.G., TGRs, TRs, and CATs). See elsewhere in the
"Description of Permitted Investments" for discussions of these various
instruments.

EQUITY SECURITIES

Equity securities include common stocks, preferred stocks, warrants, rights to
acquire common or preferred stocks, and securities convertible into or
exchangeable for common stocks. Investments in equity securities in general are
subject to market risks that may cause their prices to fluctuate over time. The
value of securities convertible into equity securities, such as warrants or
convertible debt, is also affected by prevailing interest rates, the credit
quality of the issuer and any call provision. Fluctuations in the value of
equity securities in which an equity Fund invests will cause the net asset value
of the Fund to fluctuate. An investment in an equity Fund may be more suitable
for long-term investors who can bear the risk of short-term principal
fluctuations.

FIXED INCOME SECURITIES

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as a result of changes in interest rates. Changes by recognized agencies in the
rating of any fixed income security and in the ability of an issuer to make
payments of interest and principal also affect the value of these investments.
Changes in the value of these securities will not necessarily affect cash income
derived from these securities, but will affect the investing Fund's net asset
value.

Investment grade bonds include securities rated BBB by S&P or Baa by Moody's,
which may be regarded as having speculative characteristics as to repayment of
principal. If a security is downgraded, the Adviser will review the situation
and take appropriate action.

FUTURES CONTRACTS AND OPTIONS ON FUTURES CONTRACTS

Futures contracts provide for the future sale by one party and purchase by
another party of a specified amount of a specific security at a specified future
time and at a specified price. An option on a futures contract gives the
purchaser the right, in exchange for a premium, to assume a position in a
futures contract at a specified exercise price during the term of the option. A
Fund may use futures contracts and related options for BONA FIDE hedging
purposes, to offset changes in the value of securities held or expected to be
acquired or be disposed of, to minimize fluctuations in foreign currencies, or
to gain exposure to a particular market or instrument. A Fund will minimize the
risk that it will be unable to close out a futures contract by only entering
into futures contracts which are traded on national futures exchanges. In
addition, a Fund will only sell covered futures contracts and options on futures
contracts.

Stock and bond index futures are futures contracts for various stock and bond
indices that are traded on registered securities exchanges. Stock and bond index
futures contracts obligate the seller to deliver (and the purchaser to take) an
amount of cash equal to a specific dollar amount times the difference between
the value of a specific stock or bond index at the close of the last trading day
of the contract and the price at which the agreement is made.

Stock and bond index futures contracts are bilateral agreements pursuant to
which two parties agree to take or make delivery of an amount of cash equal to a
specified dollar amount times the difference between the stock or bond index
value at the close of trading of the contract and the price at which the futures
contract is originally struck. No physical delivery of the stocks or bonds
comprising the Index is made; generally contracts are closed out prior to the
expiration date of the contracts.

No price is paid upon entering into futures contracts. Instead, a Fund would be
required to deposit an amount of cash or U.S. Treasury securities known as
"initial margin." Subsequent payments, called "variation margin," to and from
the broker, would be made on a daily basis as the value of the futures position
varies (a process known as "marking to market"). The margin is in the nature of
a performance bond or good-faith deposit on a futures contract.

There are risks associated with these activities, including the following: (1)
the success of a hedging strategy may depend on an ability to predict movements
in the prices of individual securities, fluctuations in markets and movements in
interest rates; (2) there may be an imperfect or no correlation between the
changes in market value of the securities held by the Fund and the prices of
futures and options on futures; (3) there may not be a liquid secondary market
for a futures contract or option; (4) trading restrictions or limitations may be
imposed by an exchange; and (5) government regulations may restrict trading in
futures contracts and futures options.

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A Fund may enter into futures contracts and options on futures contracts traded
on an exchange regulated by the Commodities Futures Trading Commission ("CFTC"),
as long as, to the extent that such transactions are not for "bona fide hedging
purposes," the aggregate initial margin and premiums on such positions
(excluding the amount by which such options are in the money) do not exceed 5%
of a Fund's net assets. A Fund may buy and sell futures contracts and related
options to manage its exposure to changing interest rates and securities prices.
Some strategies reduce a Fund's exposure to price fluctuations, while others
tend to increase its market exposure. Futures and options on futures can be
volatile instruments and involve certain risks that could negatively impact a
Fund's return.

In order to avoid leveraging and related risks, when a Fund purchases futures
contracts, it will collateralize its position by depositing an amount of cash or
liquid securities, equal to the market value of the futures positions held, less
margin deposits, in a segregated account with its custodian. Collateral equal to
the current market value of the futures position will be marked to market on a
daily basis.

ILLIQUID SECURITIES

Illiquid securities are securities that cannot be disposed of within seven
business days at approximately the price at which they are being carried on the
Fund's books. Illiquid securities include demand instruments with demand notice
periods exceeding seven days, securities for which there is no active secondary
market, and repurchase agreements with durations or maturities over seven days
in length.

INVESTMENT COMPANY SHARES

Each Fund may invest in shares of other investment companies, to the extent
permitted by applicable law and subject to certain restrictions. These
investment companies typically incur fees that are separate from those fees
incurred directly by the Fund. A Fund's purchase of such investment company
securities results in the layering of expenses, such that shareholders would
indirectly bear a proportionate share of the operating expenses of such
investment companies, including advisory fees, in addition to paying Fund
expenses. Under applicable regulations, a Fund is prohibited from acquiring the
securities of another investment company if, as a result of such acquisition:
(1) the Fund owns more than 3% of the total voting stock of the other company;
(2) securities issued by any one investment company represent more than 5% of
the Fund's total assets; or (3) securities (other than treasury stock) issued by
all investment companies represent more than 10% of the total assets of the
Fund. See also "Investment Limitations."

LEVERAGING

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exceeds the interest that a Fund will have to pay, the Fund's net income will be
greater than if leveraging were not used. Conversely, if the income from the
assets retained with borrowed funds is not sufficient to cover the cost of
leveraging, the net income of the Fund will be less than if leveraging were not
used, and therefore the amount available for distribution to stockholders as
dividends will be reduced. Because the Securities and Exchange Commission (the
"SEC") staff believes both reverse repurchase agreements and dollar roll
transactions are collateralized borrowings, the SEC staff believes that they
create leverage, which is a speculative factor. The requirement that such
transactions be fully collateralized by assets segregated by the Fund's
Custodian does impose a practical limit on the leverage created by such
transactions. The Adviser will not use leverage if as a result the effective
duration of the portfolios of the Three Year Portfolio would not be comparable
or less than that of a three-year U.S. Treasury note, respectively.

LOWER-RATED SECURITIES

Lower-rated securities are lower-rated bonds commonly referred to as "junk
bonds" or high-yield securities. These securities are rated lower than Baa by
Moody's and/or lower than BBB by S&P. The Funds may invest in securities rated
in the lowest ratings categories established by Moody's or by S&P. These ratings
indicate that the obligations are speculative and may be in default. In
addition, the Funds may invest in unrated securities of comparable quality
subject to the restrictions stated in the Funds' Prospectus.

CERTAIN RISK FACTORS RELATING TO HIGH-YIELD, HIGH-RISK SECURITIES

The descriptions below are intended to supplement the discussion in the
Prospectus.

GROWTH OF HIGH-YIELD, HIGH-RISK BOND MARKET

The widespread expansion of government, consumer and corporate debt within the
U.S. economy has made the corporate sector more vulnerable to economic downturns
or increased interest rates. Further, an economic downturn could severely
disrupt the market for lower rated bonds and adversely affect the value of
outstanding bonds and the ability of the issuers to repay principal and
interest. The market for lower-rated securities may be less active, causing
market price volatility and limited liquidity in the secondary market. This may
limit the Funds' ability to sell such securities at their market value. In
addition, the market for these securities may be adversely affected by
legislative and regulatory developments. Credit quality in the junk bond market
can change suddenly and unexpectedly, and even recently issued credit ratings
may not fully reflect the actual risks imposed by a particular security.

SENSITIVITY TO INTEREST RATE AND ECONOMIC CHANGES

Lower rated bonds are somewhat sensitive to adverse economic changes and
corporate developments. During an economic down turn or substantial period of
rising interest rates, highly leveraged issuers may experience financial stress
that would adversely affect their ability to service their principal and
interest payment obligations, to meet projected business goals, and to obtain
additional financing. If the issuer of a bond defaulted on its obligations to
pay interest or principal or entered into bankruptcy proceedings, the Funds may
incur losses or expenses in seeking recovery

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of amounts owed to it. In addition, periods of economic uncertainty and change
can be expected to result in increased volatility of market prices of high-yield
bonds and the Funds' net asset values.

PAYMENT EXPECTATIONS

High-yield, high-risk bonds may contain redemption or call provisions. If an
issuer exercised these provisions in a declining interest rate market, the Funds
would have to replace the securities with a lower yielding security, resulting
in a decreased return for investors. Conversely, a high-yield, high-risk bond's
value will decrease in a rising interest rate market, as will the value of the
Funds' assets. If the Funds experience significant unexpected net redemptions,
this may force them to sell high-yield, high-risk bonds without regard to their
investment merits, thereby decreasing the asset base upon which expenses can be
spread and possibly reducing the Funds' rates of return.

LIQUIDITY AND VALUATION

There may be little trading in the secondary market for particular bonds, which
may affect adversely the Funds' ability to value accurately or dispose of such
bonds. Adverse publicity and investor perception, whether or not based on
fundamental analysis, may decrease the values and liquidity of high-yield,
high-risk bonds, especially in a thin market.

TAXES

The Funds may purchase debt securities (such as zero-coupon, pay-in-kind or
other types of securities) that contain original issue discounts. Original issue
discount that accrues in a taxable year is treated as earned by each Fund and
therefore is subject to the distribution requirements of the tax code even
though the such Fund has not received any interest payments on such obligations
during that period. Because the original issue discount earned by the Funds in a
taxable year may not be represented by cash income, the Funds may have to
dispose of other securities and use the proceeds to make distributions to
shareholders.

MONEY MARKET INSTRUMENTS

Money market securities are high-quality, dollar-denominated, short-term debt
instruments. They consist of: (i) bankers' acceptances, certificates of
deposits, notes and time deposits of highly-rated U.S. banks and U.S. branches
of foreign banks; (ii) U.S. Treasury obligations and obligations issued or
guaranteed by the agencies and instrumentalities of the U.S. Government;
(iii) high-quality commercial paper issued by U.S. and foreign corporations;
(iv) debt obligations with a maturity of one year or less issued by corporations
with outstanding high-quality commercial paper ratings; and (v) repurchase
agreements involving any of the foregoing obligations entered into with
highly-rated banks and broker-dealers.

MORTGAGE-BACKED SECURITIES

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prepayment of mortgages underlying mortgage-backed securities can be expected to
accelerate. Prepayment of mortgages which underlie securities purchased at a
premium often results in capital losses, while prepayment of mortgages purchased
at a discount often results in capital gains. Because of these unpredictable
prepayment characteristics, it is often not possible to predict accurately the
average life or realized yield of a particular issue.

PRIVATE PASS-THROUGH SECURITIES: These are mortgage-backed securities issued by
a non-governmental entity, such as a trust. While they are generally structured
with one or more types of credit enhancement, private pass-through securities
typically lack a guarantee by an entity having the credit status of a
governmental agency or instrumentality.

CMOS: CMOs are debt obligations of multiclass pass-through certificates issued
by agencies or instrumentalities of the U.S. Government or by private
originators or investors in mortgage loans. In a CMO, series of bonds or
certificates are usually issued in multiple classes. Principal and interest paid
on the underlying mortgage assets may be allocated among the several classes of
a series of a CMO in a variety of ways. Each class of a CMO is issued with a
specific fixed or floating coupon rate and has a stated maturity or final
distribution date.

REMICS: A REMIC is a CMO that qualifies for special tax treatment under the Code
and invests in certain mortgages principally secured by interests in real
property. Guaranteed REMIC pass-through certificates ("REMIC Certificates")
issued by Fannie Mae or FHLMC represent beneficial ownership interests in a
REMIC trust consisting principally or mortgage loans or Fannie Mae, FHLMC or
GNMA-guaranteed mortgage pass-through certificates.

STRIPPED MORTGAGE-BACKED SECURITIES ("SMBS"): SMBs are usually structured with
two classes that receive specified proportions of the monthly interest and
principal payments from a pool of mortgage securities. One class may receive all
of the interest payments, while the other class may receive all of the principal
payments. SMBs are extremely sensitive to changes in interest rates because of
the impact thereon of prepayment of principal on the underlying mortgage
securities. The market for SMBs is not as fully developed as other markets; SMBs
therefore may be illiquid.

NON-DIVERSIFICATION

The Target Select, Top 20 and Focused Funds are a non-diversified companies, as
defined in the Investment Company Act of 1940, as amended (the "1940 Act"),
which means that a relatively high percentage of assets of each Fund may be
invested in the obligations of a limited number of issuers. Although the Adviser
or the Sub-Advisers generally do not intend to invest more than 5% of a

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Fund's assets in any single issuer (with the exception of securities which are
issued or guaranteed by a national government), the value of the shares of each
Fund may be more susceptible to a single economic, political or regulatory
occurrence than the shares of a diversified investment company would be. The
Funds intend to satisfy the diversification requirements necessary to qualify as
a regulated investment company under the Internal Revenue Code of 1986, as
amended (the "Code"), which requires that each Fund be diversified (I.E., not
invest more than 5% of its assets in the securities in any one issuer) as to 50%
of its assets.

OBLIGATIONS OF SUPRANATIONAL ENTITIES

Obligations of supranational entities are obligations of entities established
through the joint participation of several governments, such as the Asian
Development Bank, the Inter-American Development Bank, International Bank of
Reconstruction and Development (World Bank), African Development Bank, European
Economic Community, European Investment Bank and the Nordic Investment Bank.

OPTIONS

A put option gives the purchaser of the option the right to sell, and the writer
of the option the obligation to buy, the underlying security at any time during
the option period. A call option gives the purchaser of the option the right to
buy, and the writer of the option the obligation to sell, the underlying
security at any time during the option period. The premium paid to the writer is
the consideration for undertaking the obligations under the option contract. The
initial purchase (sale) of an option contract is an "opening transaction." In
order to close out an option position, a Fund may enter into a "closing
transaction," which is simply the sale (purchase) of an option contract on the
same security with the same exercise price and expiration date as the option
contract originally opened. If a Fund is unable to effect a closing purchase
transaction with respect to an option it has written, it will not be able to
sell the underlying security until the option expires or the Fund delivers the
security upon exercise.

A Fund may purchase put and call options to protect against a decline in the
market value of the securities in its portfolio or to anticipate an increase in
the market value of securities that the Fund may seek to purchase in the future.
A Fund purchasing put and call options pays a premium therefor. If price
movements in the underlying securities are such that exercise of the options
would not be profitable for a Fund, loss of the premium paid may be offset by an
increase in the value of the Fund's securities or by a decrease in the cost of
acquisition of securities by the Fund.

A Fund may write covered call options as a means of increasing the yield on its
portfolio and as a means of providing limited protection against decreases in
its market value. When a Fund sells an option, if the underlying securities do
not increase or decrease to a price level that would make the exercise of the
option profitable to the holder thereof, the option generally will expire
without being exercised and the Fund will realized as profit the premium
received for such option. When a call option written by a Fund is exercised, the
Fund will be required to sell the underlying securities to the option holder at
the strike price, and will not participate in any increase in the price of such
securities above the strike price. When a put option written by a Fund is
exercised, the Fund will be required to purchase the underlying securities at
the strike price, which may be in excess of the market value of such securities.

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A Fund may purchase and write options on an exchange or over the counter. Over
the counter options ("OTC options") differ from exchange-traded options in
several respects. They are transacted directly with dealers and not with a
clearing corporation, and therefore entail the risk of non-performance by the
dealer. OTC options are available for a greater variety of securities and for a
wider range of expiration dates and exercise prices than are available for
exchange-traded options. Because OTC options are not traded on an exchange,
pricing is done normally by reference to information from a market maker. It is
the position of the SEC that OTC options are generally illiquid.

A Fund may purchase and write put and call options on foreign currencies (traded
on U.S. and foreign exchanges or over-the-counter markets) to manage its
exposure to exchange rates. Call options on foreign currency written by a Fund
will be "covered," which means that the Fund will own an equal amount of the
underlying foreign currency. With respect to put options on foreign currency
written by a Fund, the Fund will establish a segregated account with its
Custodian consisting of cash or liquid, high grade debt securities in an amount
equal to the amount the Fund would be required to pay upon exercise of the put.

A Fund may purchase and write put and call options on indices and enter into
related closing transactions. Put and call options on indices are similar to
options on securities except that options on an index give the holder the right
to receive, upon exercise of the option, an amount of cash if the closing level
of the underlying index is greater than (or less than, in the case of puts) the
exercise price of the option. This amount of cash is equal to the difference
between the closing price of the index and the exercise price of the option,
expressed in dollars multiplied by a specified number. Thus, unlike options on
individual securities, all settlements are in cash, and gain or loss depends on
price movements in the particular market represented by the index generally,
rather than the price movements in individual securities. A Fund may choose to
terminate an option position by entering into a closing transaction. The ability
of a Fund to enter into closing transactions depends upon the existence of a
liquid secondary market for such transactions.

All options written on indices must be covered. When a Fund writes an option on
an index, it will establish a segregated account containing cash or liquid
securities with its custodian in an amount at least equal to the market value of
the option and will maintain the account while the option is open or will
otherwise cover the transaction.

Each Short Duration Fund will not engage in transactions involving interest rate
futures contracts for speculation but only as a hedge against changes in the
market values of debt securities held or intended to be purchased by the Fund
and where the transactions are appropriate to reduce the Fund's interest rate
risks. There can be no assurance that hedging transactions will be successful. A
Fund also could be exposed to risks if it could not close out its futures or
options positions because of any illiquid secondary market.

Futures and options have effective durations which, in general, are closely
related to the effective duration of the securities which underlie them. Holding
purchased futures or call option positions (backed by segregated cash or other
liquid securities) will lengthen the duration of a Short Duration Fund's
portfolio.

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RISK FACTORS: Risks associated with options transactions include: (1) the
success of a hedging strategy may depend on an ability to predict movements in
the prices of individual securities, fluctuations in markets and movements in
interest rates; (2) there may be an imperfect correlation between the movement
in prices of options and the securities underlying them; (3) there may not be a
liquid secondary market for options; and (4) while a Fund will receive a premium
when it writes covered call options, it may not participate fully in a rise in
the market value of the underlying security.

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PORTFOLIO TURNOVER

An annual portfolio turnover rate in excess of 100% may result from the
Adviser's investment strategy. Portfolio turnover rates in excess of 100% may
result in higher transaction costs, including increased brokerage commissions,
and higher levels of taxable capital gain.

RECEIPTS

Receipts are sold as zero coupon securities, which means that they are sold at a
substantial discount and redeemed at face value at their maturity date without
interim cash payments of interest or principal. This discount is accreted over
the life of the security, and such accretion will constitute the income earned
on a security for both accounting and tax purposes. Because of these features,
such securities may be subject to greater interest rate volatility than interest
paying investments.

REITS

The Funds may invest in REITs, which pool investors' funds for investment in
income producing commercial real estate or real estate related loans or
interests.

A REIT is not taxed on income distributed to its shareholders or unitholders if
it complies with regulatory requirements relating to its organization,
ownership, assets and income, and with a regulatory requirement that it
distribute to its shareholders or unitholders at least 95% of its taxable income
for each taxable year. Generally, REITs can be classified as Equity REITs,
Mortgage REITs and Hybrid REITs. Equity REITs invest the majority of their
assets directly in real property and derive their income primarily from rents
and capital gains from appreciation realized through property sales. Mortgage
REITs invest the majority of their assets in real estate mortgages and derive
their income primarily from interest payments. Hybrid REITs combine the
characteristics of both Equity and Mortgage REITs. A shareholder in a Fund
should realize that by investing in REITs indirectly through the Fund, he or she
will bear not only his or her proportionate share of the expenses of the Fund,
but also indirectly, similar expenses of underlying REITs.

A Fund may be subject to certain risks associated with the direct investments of
the REITs. REITs may be affected by changes in the of their underlying
properties and by defaults by borrowers or tenants. Mortgage REITs may be
affected by the quality of the credit extended. Furthermore, REITs are dependent
on specialized management skills. Some REITs may have limited diversification
and may be subject to risks inherent in financing a limited number of
properties. REITs depend generally on their ability to generate cash flow to
make distributions to shareholders or unitholders, and may be subject to
defaults by borrowers and to self-liquidations. In addition, the performance of
a REIT may be affected by its failure to qualify for tax-free pass-through of
income under the Code or its failure to maintain exemption from registration
under the 1940 Act.

REPURCHASE AGREEMENTS

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more than seven) from the date of purchase. The resale price reflects the
purchase price plus an agreed upon market rate of interest which is unrelated to
the coupon rate or maturity of the underlying security. A repurchase agreement
involves the obligation of the seller to pay the agreed upon price, which
obligation is in effect secured by the value of the underlying security.

Repurchase agreements are considered to be loans by a Fund for purposes of its
investment limitations. The repurchase agreements entered into by a Fund will
provide that the underlying security at all times shall have a value at least
equal to 102% of the resale price stated in the agreement (the Adviser monitors
compliance with this requirement). Under all repurchase agreements entered into
by a Fund, the Trust's Custodian or its agent must take possession of the
underlying collateral. However, if the seller defaults, the Fund could realize a
loss on the sale of the underlying security to the extent that the proceeds of
sale, including accrued interest, are less than the resale price provided in the
agreement including interest. In addition, even though the Bankruptcy Code
provides protection for most repurchase agreements, if the seller should be
involved in bankruptcy or insolvency proceedings, a Fund may incur delay and
costs in selling the underlying security or may suffer a loss of principal and
interest if the Fund is treated as an unsecured creditor and is required to
return the underlying security to the seller's estate.

REVERSE DOLLAR ROLL TRANSACTIONS

Each Short Duration Fund may enter into reverse dollar roll transactions, which
involve a purchase by a Fund of an eligible security from a financial
institution concurrently with an agreement by the Fund to resell a similar
security to the institution at a later date at an agreed-upon price. Reverse
dollar roll transactions are fully collateralized in a manner similar to loans
of the Fund's portfolio securities.

REVERSE REPURCHASE AGREEMENT AND DOLLAR ROLL TRANSACTIONS

A reverse repurchase agreement involves a sale by a Fund of securities that it
holds to a bank, broker-dealer or other financial institution concurrently with
an agreement by the Fund to repurchase the same securities at an agreed-upon
price and date. A dollar roll transaction involves a sale by a Fund of an
eligible security to a financial institution concurrently with an agreement by
the Fund to repurchase a similar eligible security from the institution at a
later date at an agreed-upon price. Each Fund will fully collateralize its
reverse repurchase agreements and dollar roll transactions in an amount at least
equal to the Fund's obligations under the reverse repurchase agreement or dollar
roll transaction by cash or other liquid securities that the Fund's custodian
segregates from other Fund assets.

RIGHTS

Rights give existing shareholders of a corporation the right, but not the
obligation, to buy shares of the corporation at a given price, usually below the
offering price, during a specified period.

RULE 144A SECURITIES

S-20
<PAGE>

exemption, and, as a result, may not be as liquid as exchange-traded securities
since they may only be resold to certain qualified institutional investors. Due
to the relatively limited size of this institutional market, these securities
may affect the Fund's liquidity to the extent that qualified institutional
buyers become, for a time, uninterested in purchasing such securities.
Nevertheless, Rule 144A securities may be treated as liquid securities pursuant
to guidelines adopted by the Trust's Board of Trustees.

SECURITIES LENDING

In order to generate additional income, a Fund may lend its securities pursuant
to agreements requiring that the loan be continuously secured by collateral
consisting of cash or securities of the U.S. Government or its agencies equal to
at least 100% of the market value of the loaned securities. A Fund continues to
receive interest on the loaned securities while simultaneously earning interest
on the investment of cash collateral. Collateral is marked to market daily.
There may be risks of delay in recovery of the securities or even loss of rights
in the collateral should the borrower of the securities fail financially or
become insolvent.

SECURITIES OF FOREIGN ISSUERS

The Funds may invest in securities of foreign issuers with a strong U.S. trading
presence and in sponsored and unsponsored ADRs. Investments in the securities of
foreign issuers may subject the Funds to investment risks that differ in some
respects from those related to investments in securities of U.S. issuers. Such
risks include future adverse political and economic developments, possible
imposition of withholding taxes on income, possible seizure, nationalization or
expropriation of foreign deposits, possible establishment of exchange controls
or taxation at the source or greater fluctuation in value due to changes in
exchange rates. Foreign issuers of securities often engage in business practices
different from those of domestic issuers of similar securities, and there may be
less information publicly available about foreign issuers. In addition, foreign
issuers are, generally speaking, subject to less government supervision and
regulation than are those in the United States. Investments in securities of
foreign issuers are frequently denominated in foreign currencies and the value
of a Fund's assets measured in U.S. dollars may be affected favorably or
unfavorably by changes in currency rates and in exchange control regulations,
and the Funds may incur costs in connection with conversions between various
currencies. Moreover, investments in emerging market nations may be considered
speculative, and there may be a greater potential for nationalization,
expropriation or adverse diplomatic developments (including war) or other events
which could adversely effect the economies of such countries or investments in
such countries.

SHORT SALES

A short sale is "against the box" if at all times during which the short
position is open, a Fund owns at least an equal amount of the securities or
securities convertible into, or exchangeable without further consideration for,
securities of the same issue as the securities that are sold short.

S-21
<PAGE>

U.S. GOVERNMENT AGENCY OBLIGATIONS

Certain Federal agencies, such as the GNMA, have been established as
instrumentalities of the United States Government to supervise and finance
certain types of activities. Issues of these agencies, while not direct
obligations of the United States Government, are either backed by the full faith
and credit of the United States (E.G., GNMA securities) or supported by the
issuing agencies' right to borrow from the Treasury. The issues of other
agencies are supported by the credit of the instrumentality (E.G., Fannie Mae
securities).

U.S. GOVERNMENT SECURITIES

U.S. Government Securities are bills, notes and bonds issued by the U.S.
Government and backed by the full faith and credit of the United States.

U.S. TREASURY OBLIGATIONS

U.S. Treasury Obligations are bills, notes and bonds issued by the U.S.
Treasury, and separately traded interest and principal component parts of such
obligations that are transferable through the Federal book-entry system known as
Separately Traded Registered Interested and Principal Securities ("STRIPS") and
Coupon Under Book Entry Safekeeping ("CUBES").

VARIABLE AND FLOATING RATE INSTRUMENTS

Certain obligations may carry variable or floating rates of interest, and may
involve a conditional or unconditional demand feature. Such instruments bear
interest at rates which are not fixed, but which vary with changes in specified
market rates or indices. The interest rates on these securities may be reset
daily, weekly, quarterly or some other reset period, and may have a floor or
ceiling on interest rate changes. There is a risk that the current interest rate
on such obligations may not accurately reflect existing market interest rates. A
demand instrument with a demand notice exceeding seven days may be considered
illiquid if there is no secondary market for such security.

WARRANTS

Warrants are instruments giving holders the right, but not the obligation, to
buy equity or fixed income securities of a company at a given price during a
specified period.

WHEN-ISSUED AND DELAYED DELIVERY SECURITIES

When-issued or delayed delivery securities are subject to market fluctuations
due to changes in market interest rates and it is possible that the market value
at the time of settlement could be higher or lower than the purchase price if
the general level of interest rates has changed. Although a Fund generally
purchases securities on a when-issued or forward commitment basis with the
intention of actually acquiring securities for its investment portfolio, a Fund
may dispose of a when-issued security or forward commitment prior to settlement
if it deems appropriate.

S-22
<PAGE>

YEAR 2000

The Trust and its service providers do not appear to have been adversely
affected by computer problems related to the transition to the year 2000.
However, there remains a risk that such problems could arise or be discovered in
the future. Year 2000 related problems also may negatively affect issuers whose
securities the Trust purchases, which could have an impact on the value of your
investment.

ZERO COUPON SECURITIES

Zero coupon obligations are debt securities that do not bear any interest, but
instead are issued at a deep discount from par. The value of a zero coupon
obligation increases over time to reflect the interest accredit. Such
obligations will not result in the payment of interest until maturity, and will
have greater price volatility than similar securities that are issued at par and
pay interest periodically.

INVESTMENT LIMITATIONS

FUNDAMENTAL POLICIES

The following investment limitations are fundamental policies of each Fund which
cannot be changed with respect to a Fund without the consent of the holders of a
majority of that Fund's outstanding shares. The term "majority of the
outstanding shares" means the vote of (i) 67% or more of a Fund's shares present
at a meeting, if more than 50% of the outstanding shares of a Fund are present
or represented by proxy, or (ii) more than 50% of a Fund's outstanding shares,
whichever is less.

No Fund may:

1. (i) Purchase securities of any issuer (except securities issued or
guaranteed by the United States Government, its agencies or
instrumentalities and repurchase agreements involving such securities) if,
as a result, more than 5% of the total assets of the Fund would be invested
in the securities of such issuer; or (ii) acquire more than 10% of the
outstanding voting securities of any one issuer. This restriction applies
to 75% of each Fund's total assets and does not apply to the Top 20,
Focused and Target Select Funds.

2. Purchase any securities which would cause 25% or more of the total assets
of the Fund to be invested in the securities of one or more issuers
conducting their principal business activities in the same industry,
provided that this limitation does not apply to investments in obligations
issued or guaranteed by the U.S. Government or its agencies and
instrumentalities and repurchase agreements involving such securities. This
limitation does not apply to the Technology Fund.

3. Borrow money in an amount exceeding 33 1/3% of the value of its total
assets, provided that, for purposes of this limitation, investment
strategies which either obligate the Fund to purchase securities or require
the Fund to segregate assets are not considered to be borrowings. Asset
coverage of at least 300% is required for all borrowings, except where the
Fund has borrowed money for temporary purposes in amounts not exceeding 5%
of its total assets. Each Fund will not purchase securities while its
borrowings exceed 5% of its total assets.

S-23
<PAGE>

4. Make loans if, as a result, more than 33 1/3% of its total assets would be
lent to other parties, except that each Fund may (i) purchase or hold debt
instruments in accordance with its investment objective and policies; (ii)
enter into repurchase agreements; and (iii) lend its securities.

5. Purchase or sell real estate, physical commodities, or commodities
contracts, except that each Fund may purchase (i) marketable securities
issued by companies which own or invest in real estate (including REITs),
commodities, or commodities contracts; and (ii) commodities contracts
relating to financial instruments, such as financial futures contracts and
options on such contracts.

6. Issue senior securities as defined in the 1940 Act except as permitted by
rule, regulation or order of the SEC.

7. Act as an underwriter of securities of other issuers except as it may be
deemed an underwriter in selling a portfolio security.

8. Invest in interests in oil, gas, or other mineral exploration or
development programs and oil, gas or mineral leases.

The foregoing percentages (except with respect to the limitation on borrowing)
will apply at the time of the purchase of a security and shall not be considered
violated unless an excess or deficiency occurs immediately after or as a result
of a purchase of such security.

NON-FUNDAMENTAL POLICIES

The following investment limitations are non-fundamental policies of each Fund
and may be changed with respect to a Fund by the Board of Trustees.

No Fund may:

1. Pledge, mortgage or hypothecate assets except to secure borrowings
permitted by the Fund's fundamental limitation on borrowing.

2. Invest in companies for the purpose of exercising control.

3. Purchase securities on margin or effect short sales, except that each Fund
may (i) obtain short-term credits as necessary for the clearance of
security transactions; (ii) provide initial and variation margin payments
in connection with transactions involving futures contracts and options on
such contracts; and (iii) make short sales "against the box" or in
compliance with the SEC's position regarding the asset segregation
requirements imposed by Section 18 of the 1940 Act.

4. Invest its assets in securities of any investment company, except as
permitted by the 1940 Act.

S-24
<PAGE>

5. Purchase or hold illiquid securities, I.E., securities that cannot be
disposed of for their approximate carrying value in seven days or less
(which term includes repurchase agreements and time deposits maturing in
more than seven days) if, in the aggregate, more than 15% of its net assets
would be invested in illiquid securities.

In addition, each Fund will invest no more than 5% of its net assets in short
sales, unregistered securities, futures contracts, options and investment
company securities. Unregistered securities sold in reliance on the exemption
from registration in Section 4(2) of the 1933 Act and securities exempt from
registration on re-sale pursuant to Rule 144A of the 1933 Act may be treated as
liquid securities under procedures adopted by the Board of Trustees.

THE ADVISER

Turner Investment Partners, Inc., 1235 Westlakes Drive, Suite 350, Berwyn,
Pennsylvania 19312, is a professional investment management firm founded in
March, 1990. Robert E. Turner is the Chairman and controlling shareholder of the
Adviser. As of December 31, 1999, the Adviser had discretionary management
authority with respect to approximately $5.61 billion of assets. The Adviser has
provided investment advisory services to investment companies since 1992.

The Adviser serves as the investment adviser for each Fund under an investment
advisory agreement (the "Advisory Agreement"). Under the Advisory Agreement, the
Adviser makes the investment decisions for the assets of each Fund and
continuously reviews, supervises and administers each Fund's investment program,
subject to the supervision of, and policies established by, the Trustees of the
Trust. The Adviser makes recommendations to the Trustees with respect to the
appropriate allocation of assets to each of the Target Select Fund's
Sub-Advisers, and directly manages assets of the Fund not allocated to the
Sub-Advisers.

The Advisory Agreement provides that the Adviser shall not be protected against
any liability to the Trust or its shareholders by reason of willful misfeasance,
bad faith or gross negligence on its part in the performance of its duties or
from reckless disregard of its obligations or duties thereunder.

The Advisory Agreement provides that if, for any fiscal year, the ratio of
expenses of any Fund (including amounts payable to the Adviser but excluding
interest, taxes, brokerage, litigation, and other extraordinary expenses)
exceeds limitations established by any state in which the shares of the Fund are
registered, the Adviser will bear the amount of such excess. The Adviser will
not be required to bear expenses of any Fund to an extent which would result in
the Fund's inability to qualify as a regulated investment company under
provisions of the Code.

The continuance of the Advisory Agreement as to any Fund after the first two
years must be specifically approved at least annually (i) by the vote of the
Trustees or by a vote of the shareholders of that Fund, and (ii) by the vote of
a majority of the Trustees who are not parties to the Advisory Agreement or
"interested persons" of any party thereto, cast in person at a meeting called
for the purpose of voting on such approval. The Advisory Agreement will
terminate automatically in the event of its assignment, and is terminable at any
time without penalty by the Trustees of the Trust or, with respect to any Fund,
by a majority of the outstanding shares of that Fund, on not less than 30 days'
nor more than 60 days' written notice to the Adviser, or by the Adviser on 90
days' written notice to the Trust.

S-25
<PAGE>

For the fiscal years ended September 30, 1997, 1998, and 1999 the Funds paid
(had reimbursed) the following advisory fees:

Advisory Fees Paid Advisory Fees Waived
-------------------------------------------- -------------------------------------------
1997 1998 1999 1997 1998 1999
-------------- -------------- -------------- ------------- ------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Large Cap Fund $ 0 ($79,930) $ (49,999) $ 2,281 $ 15,530 $56,778
- --------------------------- -------------- -------------- -------------- ------------- ------------- ---------------
Growth Equity Fund $694,046 $ 664,499 $ 987,424 $24,250 $ 76,793 $ 0
- --------------------------- -------------- -------------- -------------- ------------- ------------- ---------------
Midcap Fund $ 0 $ 92,465 $ 521,612 $13,244 $ 42,799 $ 2,444
- --------------------------- -------------- -------------- -------------- ------------- ------------- ---------------
Small Cap Fund $762,604 $1,458,689 $1,940,749 $73,594 $226,626 $66,830
- --------------------------- -------------- -------------- -------------- ------------- ------------- ---------------
Micro Cap Fund * $ (97,006) $ (63,745) * $ 16,354 $67,820
- --------------------------- -------------- -------------- -------------- ------------- ------------- ---------------
Focused Fund * * * * * *
- --------------------------- -------------- -------------- -------------- ------------- ------------- ---------------
Top 20 Fund * * $ 7,100 * * $18,763
- --------------------------- -------------- -------------- -------------- ------------- ------------- ---------------
Technology Fund * * $ (6,578) * * $12,267
- --------------------------- -------------- -------------- -------------- ------------- ------------- ---------------
International Fund * * * * * *
- --------------------------- -------------- -------------- -------------- ------------- ------------- ---------------
One Year Portfolio Fiscal Year Fiscal ($116,124) Fiscal Year Fiscal $ 4,624
Ended 2/28/98 Period Ended Ended Period
($94,700) 9/30/98 2/28/98 Ended
($67,178) $2,792 9/30/98
$1,596
- --------------------------- -------------- -------------- -------------- ------------- ------------- ---------------
Three Year Portfolio Fiscal Year Fiscal ($165,234) Fiscal Year Fiscal $50,673
Ended 2/28/98 Period Ended Ended Period
($117,540) 9/30/98 2/28/98 Ended
($80,828) $41,761 9/30/98
$20,056
- --------------------------- -------------- -------------- -------------- ------------- ------------- ---------------
Fixed Income Fund * * ($15,843) * * $12,322
- --------------------------- -------------- -------------- -------------- ------------- ------------- ---------------
Target Select Fund * ($47,875) ($104,563) * $6,656 $13,999
- --------------------------- -------------- -------------- -------------- ------------- ------------- ---------------
</TABLE>

* Not in operation during the period.

As described in the prospectus, the Focused Large Cap, Top 20, Technology and
International Growth Funds are subject to base investment advisory fees that may
be adjusted if a Fund out- or under-performs a stated benchmark. Set forth below
is information about the advisory fee arrangements of these Funds:

- --------------------- ------------------ ------------------ ------------------ ------------------ ------------------
FUND BENCHMARK REQUIRED EXCESS BASE ADVISORY FEE HIGHEST POSSIBLE LOWEST POSSIBLE
PERFORMANCE ADVISORY FEE ADVISORY FEE
- --------------------- ------------------ ------------------ ------------------ ------------------ ------------------
<S> <C> <C> <C> <C> <C>
Focused S&P 500 Index +/- 2.5% 1.00% 1.30% .70%
Fund
- --------------------- ------------------ ------------------ ------------------ ------------------ ------------------
</TABLE>

S-26
<PAGE>

<TABLE>

<CAPTION>
- --------------------- ------------------ ------------------ ------------------ ------------------ ------------------
<S> <C> <C> <C> <C> <C>
Top 20 Fund S&P 500 Index +/- 2.5% 1.10% 1.50% .70%
- --------------------- ------------------ ------------------ ------------------ ------------------ ------------------
Technology Fund PSE Technology +/- 2.0% 1.10% 1.50% .70%
Index
- --------------------- ------------------ ------------------ ------------------ ------------------ ------------------
International MSCI EAFE Index +/- 2.0% 1.00% 1.30% .70%
Fund
- --------------------- ------------------ ------------------ ------------------ ------------------ ------------------
</TABLE>

The performance adjustment works as follows: If the Top 20 Fund outperforms the
S&P 500 Index by more than 2.5%, Turner's advisory fees will increase from 1.10%
to 1.50%. If, however, the Fund underperforms its benchmark by 2.5%, Turner's
advisory fees would go down to 0.70%. These performance-based fees will only be
charged once a Fund has been in operation for at least one year, and will comply
with all applicable SEC rules.

THE SUB-ADVISERS

The Target Select Fund currently has three Sub-Advisers -- Clover Capital
Management, Inc., Penn Capital Management Company, Inc., and Chartwell
Investment Partners (each a "Sub-Adviser" and collectively, the "Sub-Advisers").
Each Sub-Adviser will manage a portion of the Fund's assets, which allocation is
determined by the Trustees upon the recommendation of the Adviser. Each
Sub-Adviser makes the investment decisions for the assets of the Fund allocated
to it, and continuously reviews, supervises and administers a separate
investment program, subject to the supervision of, and policies established by,
the Trustees of the Trust. 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 0.80% of the average daily net
assets of the Fund allocated to it. Currently, the Adviser and each Sub-Adviser
has been allocated assets in the range of 15-30% of the Fund's total assets.

CLOVER CAPITAL MANAGEMENT, INC. ("Clover Capital"), 11 Tobey Village Office
Park, Pittsford, New York 14354, is a professional investment management firm
founded in 1984 by Michael Edward Jones, CFA, and Geoffrey Harold Rosenberger,
CFA, who are Managing Directors of Clover Capital and who control all of Clover
Capital's outstanding voting stock. Michael Jones, Managing Director of Clover
Capital, is the portfolio manager of the portion of the Fund's assets managed by
Clover Capital. As of December 31, 1999, Clover Capital had discretionary
management authority with respect to approximately $1.4 billion of assets. In
addition to sub-advising the Fund and the Clover Funds, separate investment
portfolios of the Trust, Clover provides advisory services to pension plans,
religious and educational endowments, corporations, 401(k) plans, profit sharing
plans, individual investors and trusts and estates. For the fiscal year ended
September 30, 1999, Clover received investment sub-advisory fees of 0.00%.

PENN CAPITAL MANAGEMENT COMPANY, INC. ("Penn Capital"), 52 Haddonfield-Berlin
Road, Suite 1000, Cherry Hill, New Jersey 08034, is a professional investment
management firm founded in 1987 and registered as an investment adviser under
the Investment Advisers Act. Richard A. Hocker is a founding partner and Chief
Investment Officer of Penn Capital and portfolio manager of the portion of the
assets of the Fund managed by Penn Capital, an investment management firm that
manages the investment portfolios of institutions and high net worth
individuals. As of December 31, 1999, Penn Capital had assets under management
of approximately $450 million. Penn Capital

S-27
<PAGE>

employs a staff of 17 and manages monies in a variety of investment styles
through either separate account management or one of its private investment
funds. In addition, Penn Capital serves as investment adviser to the Penn
Capital Funds, three separate portfolios of the Trust. For the fiscal year ended
September 30, 1999, Penn Capital received investment subadvisory fees of 0.00%.

CHARTWELL INVESTMENT PARTNERS ("Chartwell"), 1235 Westlakes Drive, Suite 330,
Berwyn, Pennsylvania 19312, is a professional investment management firm founded
in 1997 and registered as an investment adviser under the Investment Advisers
Act. Chartwell was founded by a team of experienced investment professionals who
had been employees of Delaware Management Company of Philadelphia, Pennsylvania.
The portion of the assets of the Fund managed by Chartwell will be managed by a
team of investment professionals with extensive investment experience. The
portion of the assets of the Fund managed by Chartwell will be managed by a team
of investment professionals with extensive investment experience. Chartwell
currently manages approximately $3.7 billion in assets for institutional
clients. For the fiscal year ended September 30, 1999, Chartwell received
investment sub-advisory fees of 0.00%.

THE ADMINISTRATOR

The Trust and SEI Investments Mutual Funds Services (the "Administrator") have
entered into an administration agreement (the "Administration Agreement"). The
Administration Agreement provides that the Administrator shall not be liable for
any error of judgment or mistake of law or for any loss suffered by the Trust in
connection with the matters to which the Administration Agreement relates,
except a loss resulting from willful misfeasance, bad faith or gross negligence
on the part of the Administrator in the performance of its duties or from
reckless disregard by it of its duties and obligations thereunder. The
Administration Agreement shall remain in effect for a period of three (3) years
after the effective date of the agreement and shall continue in effect for
successive periods of one (1) year unless terminated by either party on not less
than 90 days' prior written notice to the other party.

The continuance of the Administration Agreement must be specifically approved at
least annually (i) by the vote of a majority of the Trustees or by the vote of a
majority of the outstanding voting securities of the Fund, and (ii) by the vote
of a majority of the Trustees of the Trust who are not parties to the
Administration Agreement or an "interested person" (as that term is defined in
the 1940 Act) of any party thereto, cast in person at a meting called for the
purpose of voting on such approval. The Administration Agreement is terminable
at any time as to any Fund without penalty by the Trustees of the Trust, by a
vote of a majority of the outstanding shares of the Fund or by the Manager on
not less than 30 days' nor more than 60 days' written notice.

The Administrator, a Massachusetts business trust, has its principal business
offices at Oaks, Pennsylvania 19456. SEI Investments Management Corporation
("SIMC"), a wholly-owned subsidiary of SEI Investments Company ("SEI
Investments"), is the owner of all beneficial interest in the Administrator. SEI
Investments and its subsidiaries and affiliates, including the Administrator,
are leading providers of funds evaluation services, trust accounting systems,
and brokerage and information services to financial institutions, institutional
investors, and money managers. The Administrator and its affiliates also serve
as administrator or sub-administrator to the following other mutual funds: The
Achievement Funds Trust, The Advisors' Inner Circle Fund, Alpha Select Funds,
Amerindo Funds, Inc., The Arbor Fund, ARK Funds, Armada Funds, Bishop

S-28
<PAGE>

Street Funds, Boston 1784 Funds(R), CNI Charter Funds, CUFUND, The Expedition
Funds, First American Funds, Inc., First American Investment Funds, Inc., First
American Strategy Funds, Inc., HighMark Funds, Huntington Funds, The Nevis Fund,
Inc., Oak Associates Funds, The Parkstone Advantage Fund, The PBHG Funds, Inc.,
PBHG Insurance Series Fund, Inc., The Pillar Funds, SEI Asset Allocation Trust,
SEI Daily Income Trust, SEI Index Funds, SEI Institutional International Trust,
SEI Institutional Investments Trust, SEI Institutional Managed Trust, SEI Liquid
Asset Trust, SEI Tax Exempt Trust, STI Classic Funds, STI Classic Variable
Trust, and UAM Funds, Inc. II.

For the fiscal years ended September 30, 1997, 1998, and 1999 the Funds paid the
following administrative fees (net of waivers):

---------------------------------------------------------
Administrative Fees Paid
---------------------------------------------------------
1997 1998 1999
- -------------------------------- ------------------ ------------------- ------------------
<S> <C> <C> <C>
Large Cap Fund $ 3,057 $ 31,129 $ 65,307
- -------------------------------- ------------------ ------------------- ------------------
Growth Equity Fund $110,759 $114,049 $117,203
- -------------------------------- ------------------ ------------------- ------------------
Midcap Fund $ 9,404 $ 46,823 $ 70,403
- -------------------------------- ------------------ ------------------- ------------------
Small Cap Fund $ 98,104 $181,597 $175,795
- -------------------------------- ------------------ ------------------- ------------------
Micro Cap Fund * $ 42,470 $ 68,309
- -------------------------------- ------------------ ------------------- ------------------
Focused Fund * * *
- -------------------------------- ------------------ ------------------- ------------------
Top 20 Fund * * $ 6,411
- -------------------------------- ------------------ ------------------- ------------------
Technology Fund * * $ 6,411
- -------------------------------- ------------------ ------------------- ------------------
International Fund * * *
- -------------------------------- ------------------ ------------------- ------------------
One Year Portfolio Fiscal Year Fiscal Period $ 16,902
Ended 2/28/98 Ended 9/30/98
$802 $510
- -------------------------------- ------------------ ------------------- ------------------
Three Year Portfolio Fiscal Year Fiscal Period $ 46,462
Ended 2/28/98 Ended 9/30/98
$11,964 $6,418
- -------------------------------- ------------------ ------------------- ------------------
Fixed Income Fund * * $ 6,411
- -------------------------------- ------------------ ------------------- ------------------
Target Select Fund * $ 0 $ 85,433
- -------------------------------- ------------------ ------------------- ------------------
</TABLE>

* Not in operation during the period.

DISTRIBUTION AND SHAREHOLDER SERVICES

SEI Investments Distribution Co. (the "Distributor"), a wholly-owned subsidiary
of SEI Investments, and the Trust are parties to a distribution agreement (the
"Distribution Agreement") with respect to shares of the Funds. The Distributor
receives no compensation for distribution of shares of the Funds.

The Distribution Agreement shall remain in effect for a period of two years
after the effective date of the agreement and is renewable annually. The
Distribution Agreement may be terminated by the

S-29
<PAGE>

Distributor, by a majority vote of the Trustees who are not interested persons
and have no financial interest in the Distribution Agreement or by a majority
vote of the outstanding securities of the Trust upon not more than 60 days'
written notice by either party or upon assignment by the Distributor.

The Short Duration Funds have adopted a shareholder service plan for Shares (the
"Class II Service Plan") under which firms, including the Distributor, that
provide shareholder and administrative services may receive compensation
therefore. Under the Class II Service Plan, the Distributor may provide those
services itself, or may enter into arrangements under which third parties
provide such services and are compensated by the Distributor. Under such
arrangements, the Distributor may retain as profit any difference between the
fee it receives and the amount it pays such third parties. In addition, the
Funds may enter into such arrangements directly. Under the Class II Service
Plan, the Distributor is entitled to receive a fee at an annual rate of up to
0.25% of each Fund's average daily net assets attributable to Class II Shares
that are subject to the arrangement in return for provision of a broad range of
shareholder and administrative services, including: maintaining client accounts;
arranging for bank wires; responding to client inquiries concerning services
provided for investments; changing dividend options; account designations and
addresses; providing sub-accounting; providing information on share positions to
clients; forwarding shareholder communications to clients; processing purchase,
exchange and redemption orders; and processing dividend payments.

TRUSTEES AND OFFICERS OF THE TRUST

The management and affairs of the Trust are supervised by the Trustees under the
laws of the Commonwealth of Massachusetts. The Trustees have approved contracts
under which, as described above, certain companies provide essential management
services to the Trust. The Trustees and executive officers of the Trust and
their principal occupations for the last five years are set forth below. Each
may have held other positions with the named companies during that period. The
Trust pays the fees for unaffiliated Trustees.

The Trustees and Executive Officers of the Trust, their respective dates of
birth, and their principal occupations for the last five years are set forth
below. Each may have held other positions with the named companies during that
period. Unless otherwise noted, the business address of each Trustee and each
Executive Officer is SEI Investments Company, Oaks, Pennsylvania 19456. Certain
officers of the Trust also serve as officers of some or all of the following:
The Achievement Funds Trust, The Advisors' Inner Circle Fund, Alpha Select
Funds, The Arbor Fund, ARK Funds, Armada Funds, Bishop Street Funds, Boston 1784
Funds(R), CNI Charter Funds, CUFUND, The Expedition Funds, First American Funds,
Inc., First American Investment Funds, Inc., First American Strategy Funds,
Inc., HighMark Funds, Huntington Funds, The Nevis Fund, Inc., Oak Associates
Funds, The Parkstone Advantage Fund, The Parkstone Group of Funds, The PBHG
Funds, Inc., PBHG Insurance Series Fund, Inc., The Pillar Funds, SEI Asset
Allocation Trust, SEI Daily Income Trust, SEI Index Funds, SEI Institutional
International Trust, SEI Institutional Investments Trust, SEI Institutional
Managed Trust, SEI Liquid Asset Trust, SEI Tax Exempt Trust, STI Classic Funds
and STI Classic Variable Trust, each of which is an open-end management
investment company managed by SEI Investments Mutual Funds Services or its
affiliates and distributed by SEI Investments Distribution Co.

S-30
<PAGE>

ROBERT E. TURNER (DOB 11/26/56) - Trustee* - Chairman and Chief Investment
Officer of Turner Investment Partners, Inc. ("Turner"), since 1990.

RICHARD A. HOCKER (DOB 07/21/46) - Trustee* - CEO and Chairman of the Board of
Covenant Bank, 1988-1997. Director of Bedminister Bioconversion Corporation,
since 1988. Chief Investment Officer and Senior Vice President of Penn Capital
Management Co., Inc., since 1987.

MICHAEL E. JONES (DOB 12/24/54) - Trustee* - Senior Vice President, Investment
Adviser and Portfolio Manager with Clover Capital Management Inc., since 1984.
Principal of CCM Securities Inc.

ALFRED C. SALVATO (DOB 01/09/58) - Trustee** - Treasurer, Thomas Jefferson
University Health Care Pension Fund, since 1995, and Assistant Treasurer,
1988-1995.

JANET F. SANSONE (DOB 08/11/45) - Trustee** - Corporate Vice President of Human
Resources of Frontier Corporation (telecommunications company), retired.

JOHN T. WHOLIHAN (DOB 12/12/37) - Trustee** - Professor, Loyola Marymount
University, since 1984.

STEPHEN J. KNEELEY (DOB 02/09/63) - President and Chief Executive Officer -
Chief Operating Officer of Turner, since 1990.

JANET RADER ROTE (DOB 08/24/60) - Vice President and Assistant Secretary -
Director of Compliance of Turner, since 1992.

EDWARD T. SEARLE (DOB 04/03/54) - Vice President and Assistant Secretary -
Employed by SEI Investments since August 1999. Vice President and Assistant
Secretary of the Administrator and Distributor since December 1999. Associate at
Drinker Biddle & Reath LLP, 1998-1999. Associate at Ballard, Andrews &
Ingersoll, LLP, 1995-1998.

TODD B. CIPPERMAN (DOB 02/14/66) - Vice President and Assistant Secretary - Vice
President and Assistant Secretary of SEI, the administrator and distributor
since 1995. Associate, Dewey Ballantine, 1994-1995. Associate, Winston and
Strawn, 1991-1994.

KEVIN P. ROBINS (DOB 04/15/61) - Vice President, Assistant Secretary - Senior
Vice President, General Counsel and Assistant Secretary of SEI, Senior Vice
President, General Counsel and Secretary of the Administrator and Distributor
since 1994. Vice President and Assistant Secretary of SEI, the Administrator and
Distributor 1992-1994.

ROBERT DELLACROCE (DOB 12/17/63) - Controller and Chief Accounting Officer -
Director, Funds Administration and Accounting of SEI since 1994. Senior Audit
Manager, Arthur Andersen LLP, 1986-1994.

LYDIA A. GAVALIS (DOB 06/05/64) - Vice President and Assistant Secretary - vice
President and Assistant Secretary of the Manager and the Distributor since 1998.
Assistant General Counsel and Director of Arbitration, Philadelphia Stock
Exchange, 1989-1998.

S-31
<PAGE>

JAMES W. JENNINGS (DOB 01/15/37) - Secretary - Partner, Morgan, Lewis & Bockius
LLP, counsel to the Trust, Turner, the Administrator and Distributor.

JOHN H. GRADY, JR. (DOB 06/01/61) - Assistant Secretary - 1701 Market Street,
Philadelphia, Pennsylvania 19103, Partner, Morgan, Lewis & Bockius LLP, Counsel
to the Trust, Turner, the Administrator and the Distributor.

EDWARD B. BAER (DOB 09/27/68) - Assistant Secretary - 1701 Market Street,
Philadelphia, Pennsylvania 19103, Associate, Morgan, Lewis & Bockius LLP,
Counsel to the Trust, Turner, the Administrator and the Distributor, since 1995.

-------------------------------

The following table exhibits Trustee compensation for the fiscal year ended
September 30, 1999.

<TABLE>
<CAPTION>
- -------------------------------- ---------------------- ------------------ -------------- --------------------------
Aggregate Pension or Estimated Total Compensation From
Compensation From Retirement Annual Registrant and Fund
Name of Person, Registrant for the Benefits Accrued Benefits Complex Paid to Trustees
Position Fiscal Year Ended as Part of Fund Upon for the Fiscal Year
September 30, 1999 Expenses Retirement Ended September 30, 1999
- -------------------------------- ---------------------- ------------------ -------------- --------------------------
<S> <C> <C> <C> <C>
Robert Turner* $0 N/A N/A $0 for service on two
Boards
- -------------------------------- ---------------------- ------------------ -------------- --------------------------
Richard A. Hocker* $0 N/A N/A $0 for service on one
Board
- -------------------------------- ---------------------- ------------------ -------------- --------------------------
Michael E. Jones* $0 N/A N/A $0 for service on one
Board
- -------------------------------- ---------------------- ------------------ -------------- --------------------------
Alfred C. Salvato** $8,000 N/A N/A $14,000 for service on
two Boards
- -------------------------------- ---------------------- ------------------ -------------- --------------------------
Janet F. Sansone** $9,775 N/A N/A $9,775 for service on
one Board
- -------------------------------- ---------------------- ------------------ -------------- --------------------------
John T. Wholihan** $10,538 N/A N/A $10,538 for service on
one Board
- -------------------------------- ---------------------- ------------------ -------------- --------------------------
</TABLE>

* Messrs. Robert Turner, Richard Hocker and Michael Jones are Trustees who may
be deemed to be "interested persons" of the Trust as the term is defined in the
1940 Act. The Trust pays fees only to the Trustees who are not interested
persons of the Trust. Compensation of Officers and interested persons of the
Trust is paid by the adviser or the manager.
** Member of the Audit Committee.

The Trustees and Officers of the Trust own less than 1% of the outstanding
shares of the Trust.

S-32
<PAGE>

COMPUTATION OF YIELD AND TOTAL RETURN

From time to time the Trust may advertise yield and total return of the Funds.
These figures will be based on historical earnings and are not intended to
indicate future performance. No representation can be made concerning actual
future yields or returns. The yield of a Fund refers to the annualized income
generated by an investment in the Fund over a specified 30-day period. The yield
is calculated by assuming that the income generated by the investment during
that 30-day period is generated in each period over one year and is shown as a
percentage of the investment. In particular, yield will be calculated according
to the following formula:

Yield = 2[((a-b)/cd + 1)(6) - 1] where a = dividends and interest earned during
the period; b ' expenses accrued for the period (net of reimbursement); c = the
current daily number of shares outstanding during the period that were entitled
to receive dividends; and d = the maximum offering price per share on the last
day of the period.

Based on the foregoing, the 30-day yield for the Funds for the 30-day period
ended September 30, 1999 were as follows:

----------------------------------- ----------------------- -----------------------
Fund Class 30-Day Yield
----------------------------------- ----------------------- -----------------------
<S> <C> <C>
Large Cap Fund Class I 0.00%
----------------------------------- ----------------------- -----------------------
Growth Equity Fund Class I 0.00%
----------------------------------- ----------------------- -----------------------
Midcap Fund Class I 0.00%
----------------------------------- ----------------------- -----------------------
Small Cap Fund Class I 0.00%
----------------------------------- ----------------------- -----------------------
Micro Cap Fund Class I 0.00%
----------------------------------- ----------------------- -----------------------
Focused Fund Class I *
----------------------------------- ----------------------- -----------------------
Top 20 Fund Class I 0.00%
----------------------------------- ----------------------- -----------------------
Technology Fund Class I 0.00%
----------------------------------- ----------------------- -----------------------
International Fund Class I *
----------------------------------- ----------------------- -----------------------
One Year Portfolio Class I 5.30%
----------------------------------- ----------------------- -----------------------
One Year Portfolio Class II 5.04%
----------------------------------- ----------------------- -----------------------
Three Year Portfolio Class I 5.85%
----------------------------------- ----------------------- -----------------------
Three Year Portfolio Class II 5.62%
----------------------------------- ----------------------- -----------------------
Fixed Income Fund Class I 5.96%
----------------------------------- ----------------------- -----------------------
Target Select Fund Class I 0.00%
----------------------------------- ----------------------- -----------------------
</TABLE>

*Not in operation during the period.

S-33
<PAGE>

following formula: P (1 + T)(n) = ERV, where P = a hypothetical initial payment
of $1,000; T = average annual total return; n = number of years; and ERV =
ending redeemable value, as of the end of the designated time period, of a
hypothetical $1,000 payment made at the beginning of the designated time period.

Based on the foregoing, the average annual total return for the Funds from
inception through September 30, 1999, and for the one and five year periods
ended September 30, 1999, were as follows:

<TABLE>
<CAPTION>
- -------------------------- ------------- ------------------------------------------------------
Average Annual Total Return
------------------------------------------------------
Class One Year Five Year Since Inception
- -------------------------- ------------- ---------------- ------------------ ------------------
<S> <C> <C> <C> <C>
Large Cap Fund Class I 42.97% * 31.15%
- -------------------------- ------------- ---------------- ------------------ ------------------
Growth Equity Fund Class I 38.16% 24.63% 19.17%
- -------------------------- ------------- ---------------- ------------------ ------------------
Midcap Fund Class I 84.07% * 38.93%
- -------------------------- ------------- ---------------- ------------------ ------------------
Small Cap Fund Class I 59.14% 29.26% 26.63%
- -------------------------- ------------- ---------------- ------------------ ------------------
Micro Cap Fund Class I 113.46% * 59.94%
- -------------------------- ------------- ---------------- ------------------ ------------------
Focused Fund Class I * * *
- -------------------------- ------------- ---------------- ------------------ ------------------
Top 20 Fund Class I * * 39.90%**
- -------------------------- ------------- ---------------- ------------------ ------------------
Technology Fund Class I * * 40.60%**
- -------------------------- ------------- ---------------- ------------------ ------------------
International Fund Class I * * *
- -------------------------- ------------- ---------------- ------------------ ------------------
One Year Portfolio Class I 5.34% 6.33% 6.08%
- -------------------------- ------------- ---------------- ------------------ ------------------
One Year Portfolio Class II 5.00% * 5.22%
- -------------------------- ------------- ---------------- ------------------ ------------------
Three Year Portfolio Class I 2.89% 6.56% 6.02%
- -------------------------- ------------- ---------------- ------------------ ------------------
Three Year Portfolio Class II * * 5.64%**
- -------------------------- ------------- ---------------- ------------------ ------------------
Fixed Income Fund Class I * * 0.48%**
- -------------------------- ------------- ---------------- ------------------ ------------------
Target Select Fund Class I 80.04% * 42.77%
- -------------------------- ------------- ---------------- ------------------ ------------------
</TABLE>

*Not in operation during the period.

**These returns have not been annualized.

PURCHASE AND REDEMPTION OF SHARES

Purchases and redemptions may be made through the DST, 330 West 9th Street,
Kansas City, Missouri 64105, (the "Transfer Agent") on days when the New York
Stock Exchange is open for business. Currently, the weekdays on which the Fund
is closed for business are: New Year's Day, Martin Luther King, Jr. Day,
Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor Day,
Thanksgiving Day and Christmas Day. Shares of each Fund are offered on a
continuous basis.

It is currently the Trust's policy to pay all redemptions in cash. The Trust
retains the right, however, to alter this policy to provide for redemptions in
whole or in part by a distribution in-

S-34
<PAGE>

kind of securities held by a Fund in lieu of cash. Shareholders may incur
brokerage charges on the sale of any such securities so received in payment of
redemptions.

The Trust reserves the right to suspend the right of redemption and/or to
postpone the date of payment upon redemption for any period on which trading on
the New York Stock Exchange is restricted, or during the existence of an
emergency (as determined by the SEC by rule or regulation) as a result of which
disposal or valuation of a Fund's securities is not reasonably practicable, or
for such other periods as the SEC has by order permitted. The Trust also
reserves the right to suspend sales of shares of any Fund for any period during
which the New York Stock Exchange, the Adviser, the Administrator, the Transfer
Agent and/or the Custodian are not open for business.

DETERMINATION OF NET ASSET VALUE

The securities of each Fund are valued by the Administrator. The Administrator
may use an independent pricing service to obtain valuations of securities. The
pricing service relies primarily on prices of actual market transactions as well
as on trade quotations obtained from third parties. However, the pricing service
may use a matrix system to determine valuations of fixed income securities. This
system considers such factors as security prices, yields, maturities, call
features, ratings and developments relating to specific securities in arriving
at valuations. The procedures used by the pricing service and its valuation are
reviewed by the officers of the Trust under the general supervision of the
Trustees.

If there is no readily ascertainable market value for a security, the
Administrator will make a good faith determination as to the "fair value" of the
security.

Some Funds may hold portfolio securities that are listed on foreign exchanges.
These securities may trade on weekends or other days when the Funds do not
calculate NAV. As a result, the value of these investments may change on days
when you cannot purchase or sell Fund shares.

Securities with remaining maturities of 60 days or less will be valued by the
amortized cost method, which involves valuing a security at its cost on the date
of purchase and thereafter (absent unusual circumstances) assuming a constant
amortization of maturity of any discount or premium, regardless of the impact of
fluctuations in general market rates of interest on the value of the instrument.
While this method provides certainty in valuation, it may result in periods
during which value, as determined by this method, is higher or lower than the
price the Trust would receive if it sold the instrument.

TAXES

The following is only a summary of certain tax considerations generally
affecting the Funds and their shareholders, and is not intended as a substitute
for careful tax planning. Shareholders are urged to consult their tax advisors
with specific reference to their own tax situations, including their state and
local tax liabilities.

S-35
<PAGE>

FEDERAL INCOME TAX

The following is only a summary of certain additional federal tax considerations
generally affecting the Funds and their shareholders that are not discussed in
the Funds' Prospectus. No attempt is made to present a detailed explanation of
the federal, state or local tax treatment of the Funds or their shareholders and
the discussion here and in the Funds' Prospectus is not intended as a substitute
for careful tax planning.

The discussion of federal income tax consequences is based on the Code and the
regulations issued thereunder as in effect on the date of this Statement of
Additional Information. New legislation, as well as administrative changes or
court decisions, may significantly change the conclusions expressed herein, and
may have a retroactive effect with respect to the transactions contemplated
herein.

Each Fund intends to qualify as a "regulated investment company" ("RIC") as
defined under Subchapter M of the Code. By following such a policy, each Fund
expects to eliminate or reduce to a nominal amount the federal taxes to which it
may be subject.

In order to qualify for treatment as a RIC under the Code, each Fund must
distribute annually to its shareholders at least the sum of 90% of its net
interest income excludable from gross income plus 90% of its investment company
taxable income (generally, net investment income plus net short-term capital
gain) ("Distribution Requirement") and also must meet several additional
requirements. Among these requirements are the following: (i) at least 90% of
the Fund's gross income each taxable year must be derived from dividends,
interest, payments with respect to securities loans, gains from the sale or
other disposition of stock or securities, or certain other income (including
gains from options, futures or forward contracts); (ii) at the close of each
quarter of the Fund's taxable year, at least 50% of the value of its total
assets must be represented by cash and cash items, U.S. Government securities,
securities of other RICs and other securities, with such other securities
limited, in respect to any one issuer, to an amount that does not exceed 5% of
the value of the Fund's assets and that does not represent more than 10% of the
outstanding voting securities of such issuer; and (iii) at the close of each
quarter of the Fund's taxable year, not more than 25% of the value of its assets
may be invested in securities (other than U.S. Government securities or the
securities of other RICs) of any one issuer, or of two or more issuers which are
engaged in the same, similar or related trades or business if the Fund owns at
least 20% of the voting power of such issuers.

Notwithstanding the Distribution Requirement described above, which requires
only that the Fund distribute at least 90% of its annual investment company
taxable income and does not require any minimum distribution of net capital gain
(the excess of net long-term capital gain over net short-term capital loss), the
Funds will be subject to a nondeductible 4% federal excise tax to the extent it
fails to distribute by the end of any calendar year 98% of its ordinary income
for that year and 98% of its capital gain net income (the excess of short- and
long-term capital gains over short-and long-term capital losses) for the
one-year period ending on October 31 of that year, plus certain other amounts.

Each Fund intends to make sufficient distributions to avoid liability for the
federal excise tax. A Fund may in certain circumstances be required to liquidate
Fund investments in order to make sufficient distributions to avoid federal
excise tax liability at a time when the investment advisor

S-36
<PAGE>

might not otherwise have chosen to do so, and liquidation of investments in such
circumstances may affect the ability of a Fund to satisfy the requirements for
qualification as a RIC.

Any gain or loss recognized on a sale, exchange or redemption of shares of a
Fund by a shareholder who is not a dealer in securities will generally, for
individual shareholders, be treated as a long-term capital gain or loss if the
shares have been held for more than one year, and otherwise will be treated as
short-term capital gain or loss. However, if shares on which a shareholder has
received a net capital gain distribution are subsequently sold, exchanged or
redeemed and such shares have been held for six months or less, any loss
recognized will be treated as a long-term capital loss to the extent of the net
capital gain distribution. Long-term capital gains are currently taxed at a
maximum rate of 20% and short-term capital gains are currently taxed at ordinary
income tax rates.

In certain cases, a Fund will be required to withhold, and remit to the United
States Treasury, 31% of any distributions paid to a shareholder who (1) has
failed to provide a correct taxpayer identification number, (2) is subject to
backup withholding by the Internal Revenue Service, or (3) has not certified to
that Fund that such shareholder is not subject to backup withholding.

If any Fund fails to qualify as a RIC for any taxable year, it will be taxable
at regular corporate rates. In such an event, all distributions (including
capital gains distributions) will be taxable as ordinary dividends to the extent
of the Fund's current and accumulated earnings and profits, and such
distributions may generally be eligible for the corporate dividends-received
deduction.

Funds may, in certain circumstances involving tax-free reorganizations, accept
securities that are appropriate investments as payment for Fund shares (an
"In-Kind Purchase"). An In-Kind Purchase may result in adverse tax consequences
under certain circumstances to either the investors transferring securities for
shares (an "In-Kind Investors") or to investors who acquire shares of the Fund
after a transfer ("new shareholders"). As a result of an In-Kind Purchase, the
Funds may acquire securities that have appreciated in value or depreciated in
value from the date they were acquired. If appreciated securities were to be
sold after an In-Kind Purchase, the amount of the gain would be taxable to new
shareholders as well as to In-Kind Investors. The effect of this for new
shareholders would be to tax them on a distribution that represents a return of
the purchase price of their shares rather than an increase in the value of their
investment. The effect on In-Kind Investors would be to reduce their potential
liability for tax on capital gains by spreading it over a larger asset base. The
opposite may occur if the Funds acquire securities having an unrealized capital
loss. In that case, In-Kind Investors will be unable to utilize the loss to
offset gains, but, because an In-Kind Purchase will not result in any gains, the
inability of In-Kind Investors to utilize unrealized losses will have no
immediate tax effect. For new shareholders, to the extent that unrealized losses
are realized by the Funds, new shareholders may benefit by any reduction in net
tax liability attributable to the losses. The Adviser cannot predict whether
securities acquired in any In-Kind Purchase will have unrealized gains or losses
on the date of the In-Kind Purchase. Consistent with its duties as investment
adviser, the Adviser will, however, take tax consequences to investors into
account when making decisions to sell portfolio assets, including the impact of
realized capital gains on shareholders of the Funds.

S-37
<PAGE>

The Funds may use a tax management technique known as "highest in, first out."
Using this technique, the portfolio holdings that have experienced the smallest
gain or largest loss are sold first in an effort to minimize capital gains and
enhance after-tax returns.

STATE TAXES

No Fund is liable for any income or franchise tax in Massachusetts if it
qualifies as a RIC for federal income tax purposes. Distributions by any Fund to
shareholders and the ownership of shares may be subject to state and local
taxes.

PORTFOLIO TRANSACTIONS

The Adviser is authorized to select brokers and dealers to effect securities
transactions for the Funds. The Adviser will seek to obtain the most favorable
net results by taking into account various factors, including price, commission,
if any, size of the transactions and difficulty of executions, the firm's
general execution and operational facilities and the firm's risk in positioning
the securities involved. While the Adviser generally seeks reasonably
competitive spreads or commissions, a Fund will not necessarily be paying the
lowest spread or commission available. The Adviser seeks to select brokers or
dealers that offer a Fund best price and execution or other services which are
of benefit to the Fund.

The Adviser may, consistent with the interests of the Funds, select brokers on
the basis of the research services they provide to the Adviser. Such services
may include analyses of the business or prospects of a company, industry or
economic sector, or statistical and pricing services. Information so received by
the Adviser will be in addition to and not in lieu of the services required to
be performed by the Adviser under the Advisory Agreement. If, in the judgment of
the Adviser, a Fund or other accounts managed by the Adviser will be benefitted
by supplemental research services, the Adviser is authorized to pay brokerage
commissions to a broker furnishing such services which are in excess of
commissions which another broker may have charged for effecting the same
transaction. These research services include advice, either directly or through
publications or writings, as to the value of securities, the advisability of
investing in, purchasing or selling securities, and the availability of
securities or purchasers or sellers of securities; furnishing of analyses and
reports concerning issuers, securities or industries; providing information on
economic factors and trends; assisting in determining portfolio strategy;
providing computer software used in security analyses; and providing portfolio
performance evaluation and technical market analyses. The expenses of the
Adviser will not necessarily be reduced as a result of the receipt of such
supplemental information, such services may not be used exclusively, or at all,
with respect to a Fund or account generating the brokerage, and there can be no
guarantee that the Adviser will find all of such services of value in advising
that Fund.

It is expected that the Funds may execute brokerage or other agency transactions
through the Distributor, which is a registered broker-dealer, for a commission
in conformity with the 1940

S-38
<PAGE>

Act, the Securities Exchange Act of 1934 and rules promulgated by the SEC. Under
these provisions, the Distributor is permitted to receive and retain
compensation for effecting portfolio transactions for a Fund on an exchange if a
written contract is in effect between the Trust and the Distributor expressly
permitting the Distributor to receive and retain such compensation. These rules
further require that commissions paid to the Distributor by a Fund for exchange
transactions not exceed "usual and customary" brokerage commissions. The rules
define "usual and customary" commissions to include amounts which are
"reasonable and fair compared to the commission, fee or other remuneration
received or to be received by other brokers in connection with comparable
transactions involving similar securities being purchased or sold on a
securities exchange during a comparable period of time." The Trustees, including
those who are not "interested persons" of the Trust, have adopted procedures for
evaluating the reasonableness of commissions paid to the Distributor and will
review these procedures periodically.

Because no Fund markets its shares through intermediary brokers or dealers, it
is not the Funds' practice to allocate brokerage or principal business on the
basis of sales of its shares which may be made through such firms. However, the
Adviser may place portfolio orders with qualified broker-dealers who recommend a
Fund's shares to clients, and may, when a number of brokers and dealers can
provide best net results on a particular transaction, consider such
recommendations by a broker or dealer in selecting among broker-dealers.

For the fiscal years ended September 30, 1997, 1998, and 1999 the Funds'
portfolio turnover rates were as follows:

<TABLE>
<CAPTION>
- --------------------------------- ----------------------------------------------------------------------------------
Portfolio Turnover Rate
----------------------------------------------------------------------------------
1997 1998 1999
- --------------------------------- --------------------------- -------------------------- ---------------------------
<S> <C> <C> <C>
Large Cap Fund 346.47% 234.93% 370.71%
- --------------------------------- --------------------------- -------------------------- ---------------------------
Growth Equity Fund 178.21% 249.58% 328.26%
- --------------------------------- --------------------------- -------------------------- ---------------------------
Midcap Fund 348.29% 304.29% 290.79%
- --------------------------------- --------------------------- -------------------------- ---------------------------
Small Cap Fund 130.68% 167.73% 223.61%
- --------------------------------- --------------------------- -------------------------- ---------------------------
Micro Cap Fund * 128.53% 239.32%
- --------------------------------- --------------------------- -------------------------- ---------------------------
Focused Fund * * *
- --------------------------------- --------------------------- -------------------------- ---------------------------
Top 20 Fund * * 369.11%
- --------------------------------- --------------------------- -------------------------- ---------------------------
Technology Fund * * 317.32%
- --------------------------------- --------------------------- -------------------------- ---------------------------
International Fund * * *
- --------------------------------- --------------------------- -------------------------- ---------------------------
One Year Portfolio - For the Fiscal Year For the Fiscal Period 154.33%
Class I Shares Ended 2/28/98 Ended 9/30/98
68.80% 96.56%
- --------------------------------- --------------------------- -------------------------- ---------------------------
One Year Portfolio - * * 154.33%
Class II Shares
- --------------------------------- --------------------------- -------------------------- ---------------------------

S-39
<PAGE>

<CAPTION>
- --------------------------------- --------------------------- -------------------------- ---------------------------
Three Year Portfolio - For the Fiscal Year For the Fiscal Period 257.98%
Class I Shares Ended 2/28/98 Ended 9/30/98
197.03% 121.63%
- --------------------------------- --------------------------- -------------------------- ---------------------------
<S> <C> <C> <C>
Three Year Portfolio - * * 257.98%
Class II Shares
- --------------------------------- --------------------------- -------------------------- ---------------------------
Fixed Income Fund * * 39.70%
- --------------------------------- --------------------------- -------------------------- ---------------------------
Target Select Fund * 803.02% 1,279.40%
- --------------------------------- --------------------------- -------------------------- ---------------------------
</TABLE>

* Not in operation during the period.
Amounts designated as "--" are either $0 or have been rounded to $0.

The brokerage commissions paid for each Fund for the fiscal years ended
September 30, 1997, 1998, and 1999 were as follows:

<TABLE>
<CAPTION>
- ------------------------------- -----------------------------------------------------------
Total Dollar Amount of Brokerage Commissions Paid
-----------------------------------------------------------
1997 1998 1999
- ------------------------------- ------------------- ------------------- -------------------
<S> <C> <C> <C>
Large Cap Fund $ 2,586 $ 10,622 $43,087
- ------------------------------- ------------------- ------------------- -------------------
Growth Equity Fund $335,291 $464,404 $671,953
- ------------------------------- ------------------- ------------------- -------------------
Midcap Fund $ 17,029 $123,834 $352,280
- ------------------------------- ------------------- ------------------- -------------------
Small Cap Fund $235,029 $465,825 $546,802
- ------------------------------- ------------------- ------------------- -------------------
Micro Cap Fund * $ 6,974 $ 36,683
- ------------------------------- ------------------- ------------------- -------------------
Focused Fund * * *
- ------------------------------- ------------------- ------------------- -------------------
Top 20 Fund * * $ 57,574
- ------------------------------- ------------------- ------------------- -------------------
Technology Fund * * $ 13,527
- ------------------------------- ------------------- ------------------- -------------------
International Fund * * *
- ------------------------------- ------------------- ------------------- -------------------
One Year Portfolio N/A N/A $ 69
- ------------------------------- ------------------- ------------------- -------------------
Three Year Portfolio N/A N/A $ 141
- ------------------------------- ------------------- ------------------- -------------------
Fixed Income Fund * * $ 64
- ------------------------------- ------------------- ------------------- -------------------
Target Select Fund * $ 13,856 $ 28,450
- ------------------------------- ------------------- ------------------- -------------------
</TABLE>

*Not in operation during the period.

S-40
<PAGE>

The total amount of securities of each Broker/Dealer held by each Fund for the
fiscal year ended September 30, 1999 were as follows:

- --------------------------------- ------------------------- --------------------------- ---------------------------
TOTAL AMOUNT OF
SECURITIES HELD BY EACH
FUND NAME OF BROKER/DEALER FUND TYPE OF SECURITY
- --------------------------------- ------------------------- --------------------------- ---------------------------
<S> <C> <C> <C>
Large Cap Fund Morgan Stanley $ 76,151.24 Repurchase Agreement
- --------------------------------- ------------------------- --------------------------- ---------------------------
Growth Fund Morgan Stanley $ 2,713,821.44 Repurchase Agreement
Goldman Sachs $ 703,940.00 Common Stock
- --------------------------------- ------------------------- --------------------------- ---------------------------
Midcap Fund J.P. Morgan $ 4,451,363.63 Repurchase Agreement
Lehman Brothers $ 1,509,127.50 Common Stock
- --------------------------------- ------------------------- --------------------------- ---------------------------
Small Cap Fund J. P. Morgan $ 12,767,113.96 Repurchase Agreement
Hambrecht and Quist $ 3,220.576.88 Common Stock
Legg Mason Inc. $ 1,263,163.13 Common Stock
Raymond James Fin. Corp. $ 1,026,980.63 Common Stock
- --------------------------------- ------------------------- --------------------------- ---------------------------
Micro Cap Fund Morgan Stanley $ 413,708.25 Repurchase Agreement
- --------------------------------- ------------------------- --------------------------- ---------------------------
</TABLE>

VOTING

Each share held entitles the shareholder of record to one vote for each dollar
invested. In other words, each shareholder of record is entitled to one vote for
each dollar of net asset value of the shares held on the record date for the
meeting. Shares issued by each Fund have no preemptive, conversion, or
subscription rights. Each whole share shall be entitled to one vote and each
fractional share shall be entitled to a proportionate fractional vote. Each
Fund, as a separate series of the Trust, votes separately on matters affecting
only that Fund. Voting rights are not cumulative. Shareholders of each Class of
each Fund will vote separately on matters pertaining solely to that Fund or that
Class. As a Massachusetts business trust, the Trust is not required to hold
annual meetings of shareholders, but approval will be sought for certain changes
in the operation of the Trust and for the election of Trustees under certain
circumstances.

In addition, a Trustee may be removed by the remaining Trustees or by
shareholders at a special meeting called upon written request of shareholders
owning at least 10% of the outstanding shares of the Trust. In the event that
such a meeting is requested, the Trust will provide appropriate assistance and
information to the shareholders requesting the meeting.

Where the Trust's Prospectuses or Statements of Additional Information state
that an investment limitation or a fundamental policy may not be changed without
shareholder approval, such approval means the vote of (1) 67% or more of the
affected Fund's shares present at a meeting if the holders of more than 50% of
the outstanding shares of the Fund are present or represented by proxy, or (ii)
more than 50% of the affected Fund's outstanding shares, whichever is less.

S-41
<PAGE>

DESCRIPTION OF SHARES

The Declaration of Trust authorizes the issuance of an unlimited number of
portfolios and shares of each portfolio. Each share of a portfolio represents an
equal proportionate interest in that portfolio with each other share. Shares are
entitled upon liquidation to a PRO RATA share in the net assets of the
portfolio, after taking into account additional distribution and shareholder
servicing expenses attributable to the Class II Shares. Shareholders have no
preemptive rights. The Declaration of Trust provides that the Trustees of the
Trust may create additional series of shares or separate classes of funds. All
consideration received by the Trust for shares of any portfolio or separate
class and all assets in which such consideration is invested would belong to
that portfolio or separate class and would be subject to the liabilities related
thereto. Share certificates representing shares will not be issued.

SHAREHOLDER LIABILITY

The Trust is an entity of the type commonly known as a "Massachusetts business
trust." Under Massachusetts law, shareholders of such a trust could, under
certain circumstances, be held personally liable as partners for the obligations
of the trust. Even if, however, the Trust were held to be a partnership, the
possibility of the shareholders' incurring financial loss for that reason
appears remote because the Trust's Declaration of Trust contains an express
disclaimer of shareholder liability for obligations of the Trust, and requires
that notice of such disclaimer be given in each agreement, obligation or
instrument entered into or executed by or on behalf of the Trust or the
Trustees, and because the Declaration of Trust provides for indemnification out
of the Trust property for any shareholder held personally liable for the
obligations of the Trust.

LIMITATION OF TRUSTEES' LIABILITY

The Declaration of Trust provides that a Trustee shall be liable only for his
own willful defaults and, if reasonable care has been exercised in the selection
of officers, agents, employees or investment advisers, shall not be liable for
any neglect or wrongdoing of any such person. The Declaration of Trust also
provides that the Trust will indemnify its Trustees and officers against
liabilities and expenses incurred in connection with actual or threatened
litigation in which they may be involved because of their offices with the Trust
unless it is determined in the manner provided in the Declaration of Trust that
they have not acted in good faith in the reasonable belief that their actions
were in the best interests of the Trust. However, nothing in the Declaration of
Trust shall protect or indemnify a Trustee against any liability for his willful
misfeasance, bad faith, gross negligence or reckless disregard of his duties.

5% SHAREHOLDERS

As of January 3, 2000, the following persons were the only persons who were
record owners (or to the knowledge of the Trust, beneficial owners) of 5% or
more of the shares of the Portfolios. The Trust believes that most of the shares
referred to below were held by the persons indicated in accounts for their
fiduciary, agency, or custodial customers.

S-42
<PAGE>

PERCENTAGE
NAME AND ADDRESS NUMBER OF OF FUND'S
FUND OF BENEFICIAL OWNER SHARES SHARES
<S> <C> <C> <C>
Turner Large Cap Growth Equity Charles Schwab & Co. Inc. 326,965.2330 23.50%
Fund Attn: Mutual Funds/Team S
4500 Cherry Creek Dr. S Fl 3
Denver, CO 80209

Connecticut General Life Insurance Co. 897,202.2430 64.49%
Attn: Carmen Rivera - H19B
280 Trumbull Street
Hartford, CT 06103-3509

Turner Growth Equity Fund Saxon & Co. TTEE 650,412.9000 5.53%
FBO C/F
Duane Morris & Heckscher LLP
A/C# 20-35-002-1029077
P.O. Box 7780-1888
Philadelphia, PA 19182-0001

Retirement Plan for Employees of 906,465.6020 7.71%
Bridgeport Hospital
C/O People's Bank Trust Dept.
850 Main Street 13th Fl
Bridgeport, CT 06604-4917

Charles Schwab & Co. Inc. 2,057,015.3710 17.50%
Attn: Mutual Funds/Team S
4500 Cherry Creek Dr. S Fl 3
Denver, CO 80209

First Union National Bank 4,379,385.6290 37.26%
FBO Sheet Metal Workers Local #19
Annuity Self Directed Fund
A/C# 1546002697
CMG NC-1157
1525 W. WT Harris Blvd.
Charlotte, NC 28262-8522

Turner Midcap Growth Fund Charles Schwab & Co. Inc. 3,837,971.6920 41.82%
Attn: Mutual Funds/Team S
4500 Cherry Creek Dr. S Fl. 3
Denver, CO 80209

Copeland Associates 696,786.5820 7.59%
Smith Barney Corporate Trust Co.
2 Tower Center Blvd., Box 1063
East Brunswick, NJ 08816-3155

Turner Small Cap Growth Fund Charles Schwab & Co. Inc. 5,208,084.2850 56.95%
Attn: Mutual Funds/Team S
4500 Cherry Creek Dr. S Fl. 3
Denver, CO 80209

S-43
<PAGE>

<CAPTION>
<S> <C> <C> <C>
Turner Micro Cap Growth Charles Schwab & Co. Inc. 562,123.9250 29.24%
Institutional Class Attn: Mutual Funds/Team S
4500 Cherry Creek Dr. S Fl 3
Denver, CO 80209

Donaldson Lufkin Jenrette 123,944.9990 6.45%
SECS Corp.
Pershing Division
P. O. Box 2052
Jersey City, NJ 07399

National Investors Services Corp. 410,344.6040 21.35%
FBBO Our Customers
55 Water Street, Floor 12
New York, NY 10041-3299

Turner Top 20 Fund Charles Schwab & Co Inc. 1,305,403.5240 40.36%
Attn: Mutual Funds/Team S
4500 Cherry Creek Dr. S Fl. 3
Denver, CO, 80209

National Investors Services Corp 198,893.0500 6.15%
FBBO Our Customers
55 Water Street, Fl. 12
New York, NY 10041-1299

Turner Technology Fund Charles Schwab and Co. Inc 794,322.0860 52.04%
Attn: Mutual Funds/ Team S
4500 Cherry Creek Dr. S., Fl. 3
Denver, CO 80209

National Investors Services Corp 210,006.4770 13.76%
FBBO Our Customers
55 Water St. Fl 32
New York, NY, 10041-3299

Turner Short Duration Charles Schwab & Co. Inc. 432,182.9190 91.84%
Government Funds - One Year Attn: Mutual Funds/Team S
Portfolio Class I 4500 Cherry Creek Dr. S Fl. 3
Denver, CO 80209

Turner Short Duration NFSC FBBO # 179-397470 43,944.8840 6.69%
Government Funds-One Year Utah Festival Opera Company
Portfolio-Class II 59 S 100 W
Logan, UT, 84321-4515

NFSC FBBO # 379-070386 54,422.7980 8.28%
BSA Utah National Parks Council
250 W 500 N
Provo, UT, 84501-2819

S-44
<PAGE>

<CAPTION>
<S> <C> <C> <C>
NFSC FBBO #379-536272 89,197.2250 13.58%
UTA/ATO
Malecker S. Booths
PO Box 30810
Salt Lake City, UT, 84130-0820

NFSC Cort Brambled Brent HA 110,215.6880 16.77%
C. Bramble/D. Hales/J. Jensen TTS
U/A 12/15/1993
PO Box 30810
Salt Lake City, UT, 84130-0830

NFSC FBBO #379-503940 79,558.2560 12.11%
C. Bramble D B Hales Jay E JE
C. Bramble/D. Hales/J. Jensen TTS
U/A 12/15/1993
P.O. Box 30810
Salt Lake City, UT, 84130-0830

Turner Short Duration Turner Investment Partners 844,278.8210 21.18%
Government Funds-Three Year FBO Teamsters Local #837
Portfolio-Class I Attn: Bob Gunning
12275 Townsend Rd.
Philadelphia, PA, 19154-1204

First Union National Bank Trust 1,976,308.6850 49.57%
FBO Sheet Metal Workers #19
A/C #1546002688
CHGJ64 NC1151
1525 West WT Harris Blvd.
Charlotte, NC, 28262

Bryn Mawr 861,246.7990 21.60%
Attn: Jerry Berenson
101 N. Merion Ave
Bryn Mawr, PA, 19010-2899

Charles Schwab & Co. 236,351.4490 5.93%
101 Montgomery St
San Francisco, CA, 94104-4122

Turner Short Duration NFSC FBBO #379-503916 35,264.1030 14.42%
Government Funds-Three Year Curt Brambled Brent MA
Portfolio-Class II C. Bramble/D. Hales/J. Jensen TTS
U/A 12/15/1993
PO Box 30810
Salt Lake City, UT, 84130-0810

NFSC FBBO #379-503940 24,782.2720 10.13%
C. Bramble, D.B. Hales, Jay E. JE
C. Bramble/D. Hales/J. Jensen TTS
U/A 12/15/1993
PO Box 30810
Salt Lake City, UT, 84130-0810

S-45
<PAGE>

<CAPTION>
<S> <C> <C> <C>
NFSC FBBO #379-527793 115,823.4120 47.35%
B.H. Bastian Foundation
Bruce Bastian/Brent Erkelens
U/A 02/19/1999
51 W. Center St. #755
Orem, UT, 84057-4605

NFSC FBBO #379-536172 44,855.9670 18.34%
UYA/ATU
N. Halecker S. Booths
PO Box 30810
Salt Lake City, UT, 84130-0810

Turner Core High Quality Fixed Oxford Foundation Inc. 259,563.6740 25.30%
Income Fund 2 S. Decatur St.
Strasburg, PA, 17579-1403

Banc of America Securities LLC 765,207.4200 74.60%
Attn: Mutual Funds-4th Floor
808-96071-16
600 Montgomery St
San Francisco, CA, 94131-2702

TIP Target Select Equity Fund Charles Schwab & Co. Inc. 23,811.6980 16.27%
Attn: Mutual Funds/Team S
4500 Cherry Creek Dr. S Fl 3
Denver, CO 80209

Carolyn Turner TR 45,257.0300 30.92%
U/A Robert E. Turner Jr., Trust
9 Horseshoe Lane
Paoli, PA 19301-1909

Robert & Carolyn Turner Foundation 23,954.2260 16.36%
9 Horseshoe Lane
Paoli, PA 19301-1909
</TABLE>

S-46
<PAGE>

CUSTODIAN

First Union National Bank, Broad and Chestnut Streets, P.O. Box 7618,
Philadelphia, Pennsylvania 19101 acts as the custodian (the "Custodian") of the
Trust. The Custodian holds cash, securities and other assets of the Trust as
required by the 1940 Act.

EXPERTS

The financial statements incorporated by reference into this Statement of
Additional Information and the Financial Highlights included in the prospectuses
have been audited by Ernst & Young LLP, 2001 Market Street, Philadelphia,
Pennsylvania 19103, independent auditors, as indicated by their report, with
respect thereto, and are included herein in reliance on their report given on
their authority as experts in accounting and auditing.

LEGAL COUNSEL

Morgan, Lewis & Bockius LLP, 1701 Market Street, Philadelphia, Pennsylvania
19103, serves as counsel to the Trust.

FINANCIAL STATEMENTS

The Trust's financial statements for the fiscal year ended September 30, 1999,
including notes thereto and the report of Ernst & Young LLP thereon, are herein
incorporated by reference. A copy of the 1999 Annual Report must accompany the
delivery of this Statement of Additional Information.

S-47

<PAGE>

APPENDIX

The following descriptions are summaries of published ratings.

DESCRIPTION OF CORPORATE BOND RATINGS

Bonds rated AAA have the highest rating S&P assigns to a debt obligation. Such a
rating indicates an extremely strong capacity to pay principal and interest.
Bonds rated AA by S&P also qualify as high-quality debt obligations. Capacity to
pay principal and interest is very strong, and differs from AAA issues only in
small degree. Debt rated A by S&P has a strong capacity to pay interest and
repay principal although it is somewhat more susceptible to the adverse effects
of changes in circumstances and economic conditions than debt in higher rated
categories.

Bonds rated BBB by S&P are considered as medium-grade obligations (i.e., they
are neither highly protected nor poorly secured). Interest payments and
principal security appear adequate for the present but certain protective
elements may be lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment characteristics and in
fact have speculative characteristics as well.

Bonds rated Aaa by Moody's are judged to be of the best quality. They carry the
smallest degree of investment risk and are generally referred to as "gilt
edged." Interest payments are protected by a large, or an exceptionally stable,
margin and principal is secure. While the various protective elements are likely
to change, such changes as can be visualized are most unlikely to impair the
fundamentally strong position of such issues. Bonds rated Aa by Moody's are
judged by Moody's to be of high quality by all standards. Together with bonds
rated Aaa, they comprise what are generally known as high-grade bonds. They are
rated lower than the best bonds because margins of protection may not be as
large as in Aaa securities or fluctuation of protective elements may be of
greater amplitude or there may be other elements present which make the
long-term risk appear somewhat larger than in Aaa securities."

Bonds rated A by Moody's possess many favorable investment attributes and are to
be considered as upper-medium grade obligations. Factors giving security to
principal and interest are considered adequate, but elements may be present
which suggest a susceptibility to impairment sometime in the future. Debt rated
Baa by Moody's is regarded as having an adequate capacity to pay interest and
repay principal. Whereas it normally exhibits adequate protection parameters,
adverse economic conditions or changing circumstances are more likely to lead to
a weakened capacity to pay interest and repay principal for debt in this
category than in higher rated categories.

A-1
<PAGE>

Because bonds rated in the AAA and AA categories are not significantly
vulnerable to foreseeable future developments, short-term debt of these issuers
is generally rated F-1+. Bonds rated A by Fitch are considered to be investment
grade and of high credit quality. The obligor's ability to pay interest and
repay principal is considered to be strong, but may be more vulnerable to
adverse changes in economic conditions and circumstances than bonds with higher
ratings. Bonds rated BBB by Fitch are considered to be investment grade and of
satisfactory credit quality. The obligor's ability to pay interest and repay
principal is considered to be adequate. Adverse changes in economic conditions
and circumstances, however, are more likely to have adverse impact on these
bonds, and therefore impair timely payment. The likelihood that the ratings of
these bonds will fall below investment grade is higher than for bonds with
higher ratings.

Bonds rated AAA by Duff are judged by Duff to be of the highest credit quality,
with negligible risk factors being only slightly more than for risk-free U.S.
Treasury debt. Bonds rated AA by Duff are judged by Duff to be of high credit
quality with strong protection factors and risk that is modest but that may vary
slightly from time to time because of economic conditions. Bonds rated A by Duff
are judged by Duff to have average but adequate protection factors. However,
risk factors are more variable and greater in periods of economic stress. Bonds
rated BBB by Duff are judged by Duff as having below average protection factors
but still considered sufficient for prudent investment, with considerable
variability in risk during economic cycles.

Obligations rated AAA by IBCA have the lowest expectation of investment risk.
Capacity for timely repayment of principal and interest is substantial, such
that adverse changes in business, economic or financial conditions are unlikely
to increase investment risk significantly. Obligations for which there is a very
low expectation of investment risk are rated AA by IBCA. Capacity for timely
repayment of principal and interest is substantial. Adverse changes in business,
economic or financial conditions may increase investment risk albeit not very
significantly. Obligations for which there is a low expectation on investment
risk are rated A by IBCA. Capacity for timely repayment of principal and
interest is strong, although adverse changes in business, economic or financial
conditions may lead to increased investment risk. Obligations for which there is
currently a low expectation of investment risk are rated BBB by IBCA. Capacity
for timely repayment of principal and interest is adequate, although adverse
changes in business, economic or financial conditions are more likely to lead to
increased investment risk than for obligations in higher categories.

DESCRIPTION OF COMMERCIAL PAPER RATINGS

Commercial paper rated A by S&P is regarded by S&P as having the greatest
capacity for timely payment. Issues rated A are further refined by use of the
numbers 1, 1 +, and 2 to indicate the relative degree of safety. Issues rated
A-1+ are those with an "overwhelming degree" of credit protection. Those rated
A-1, the highest rating category, reflect a "very strong" degree of safety
regarding timely payment. Those rated A-2, the second highest rating category,
reflect a satisfactory degree of safety regarding timely payment but not as high
as A-1.

Commercial paper issues rated Prime-1 or Prime-2 by Moody's are judged by
Moody's to be of "superior" quality and "strong" quality respectively on the
basis of relative repayment capacity.

A-2
<PAGE>

F-1+ (Exceptionally Strong) is the highest commercial paper rating Fitch
assigns; paper rated F-1+ is regarded as having the strongest degree of
assurance for timely payment. Paper rated F-1 (Very Strong) reflects an
assurance of timely payment only slightly less in degree than paper rated F-1+.
The rating F-2 (Good) reflects a satisfactory degree of assurance for timely
payment, but the margin of safety is not as great as for issues rated F-1+ or
F-1.

The rating Duff-1 is the highest commercial paper rating assigned by Duff. Paper
rated Duff-1 is regarded as having very high certainty of timely payment with
excellent liquidity factors which are supported by good fundamental protection
factors. Risk factors are minor. Duff has incorporated gradations of 1+ and 1-
to assist investors in recognizing quality differences within this highest tier.
Paper rated Duff-1+ has the highest certainty of timely payment, with
outstanding short-term liquidity and safety just below risk-free U.S. Treasury
short-term obligations. Paper rated Duff-1- has high certainty of timely payment
with strong liquidity factors which are supported by good fundamental protection
factors. Risk factors are very small. Paper rated Duff-2 is regarded as having
good certainty of timely payment, good access to capital markets (although
ongoing funding may enlarge total financing requirements) and sound liquidity
factors and company fundamentals. Risk factors are small.

The designation A1, the highest rating by IBCA, indicates that the obligation is
supported by a strong capacity for timely repayment. Those obligations rated A1+
are supported by the highest capacity for timely repayment. Obligations rated
A2, the second highest rating, are supported by a satisfactory capacity for
timely repayment, although such capacity may be susceptible to adverse changes
in business, economic or financial conditions.

A-3
<PAGE>

TIP FUNDS

FUNDS:
CLOVER SMALL CAP VALUE FUND
CLOVER EQUITY VALUE FUND
CLOVER MAX CAP VALUE FUND
CLOVER FIXED INCOME FUND

INVESTMENT ADVISER:
CLOVER CAPITAL MANAGEMENT, INC.

This Statement of Additional Information is not a prospectus and relates only to
the Clover Small Cap Value Fund (the "Small Cap Value Fund"), Clover Equity
Value Fund (the "Equity Value Fund"), Clover Max Cap Value Fund (the "Max Cap
Value Fund"), and Clover Fixed Income Fund (the "Fixed Income Fund") (each a
"Fund" and, together, the "Funds"). It is intended to provide additional
information regarding the activities and operations of the TIP Funds (the
"Trust") and should be read in conjunction with the Funds' Prospectus dated
January 31, 2000. The Prospectus may be obtained without charge by calling
1-800-224-6312.

TABLE OF CONTENTS

THE TRUST ...................................................................S-2
INVESTMENT OBJECTIVES........................................................S-2
INVESTMENT POLICIES..........................................................S-2
DESCRIPTION OF PERMITTED INVESTMENTS.........................................S-6
INVESTMENT LIMITATIONS......................................................S-18
THE ADVISER.................................................................S-20
THE ADMINISTRATOR...........................................................S-22
THE DISTRIBUTOR.............................................................S-23
TRUSTEES AND OFFICERS OF THE TRUST..........................................S-24
COMPUTATION OF YIELD AND TOTAL RETURN.......................................S-27
PURCHASE AND REDEMPTION OF SHARES...........................................S-28
DETERMINATION OF NET ASSET..................................................S-29
TAXES.......................................................................S-29
PORTFOLIO TRANSACTIONS......................................................S-31
DESCRIPTION OF SHARES.......................................................S-34
SHAREHOLDER LIABILITY.......................................................S-35
LIMITATION OF TRUSTEES' LIABILITY...........................................S-35
5% SHAREHOLDERS.............................................................S-36
CUSTODIAN...................................................................S-37
EXPERTS.....................................................................S-37
LEGAL COUNSEL...............................................................S-37
FINANCIAL STATEMENTS........................................................S-38
APPENDIX.....................................................................A-1

January 31, 2000

<PAGE>

THE TRUST THE TRUST

This Statement of Additional Information relates only to the Clover Small Cap
Value Fund (the "Small Cap Value Fund"), Clover Equity Value Fund (the AEquity
Value Fund"), Clover Max Cap Value Fund (the "Max Cap Value Fund"), and Clover
Fixed Income Fund (the "Fixed Income Fund") (each a "Fund" and, together, the
"Funds"). Each Fund is a separate series of the TIP Funds (the "Trust"), a
diversified, open-end management investment company established as a
Massachusetts business trust under a Declaration of Trust dated January 26,
1996, as amended on February 21, 1997. The Declaration of Trust permits the
Trust to offer separate series ("portfolios") of shares of beneficial interest
("shares"). Each portfolio is a separate mutual fund, and each share of each
portfolio represents an equal proportionate interest in that portfolio. The
Trust also offers shares in the Turner Large Cap Growth Equity Fund, Turner
Growth Equity Fund, Turner Midcap Growth Fund, Turner Small Cap Growth Fund,
Turner Micro Cap Growth Fund, Turner Focused Large Cap Equity Fund, Turner Top
20, Turner Technology, Turner International Growth Fund, Turner Short Duration
Government Funds-One Year Portfolio, Turner Short Duration Government
Funds-Three Year Portfolio, Turner Core High Quality Fixed Income Fund, TIP
Target Select Equity Fund, Penn Capital Strategic High Yield Bond Fund, Penn
Capital Select Financial Services Fund, and Penn Capital Value Plus Fund.
Capitalized terms not defined herein are defined in the Prospectus offering
shares of the Funds.

INVESTMENT OBJECTIVES

SMALL CAP VALUE FUND -- The Small Cap Value Fund seeks long-term total return.

EQUITY VALUE FUND -- The Equity Value Fund seeks long-term total return.

MAX CAP VALUE FUND -- The Max Cap Value Fund seeks long-term total return.

FIXED INCOME FUND -- The Fixed Income Fund seeks a high level of income
consistent with reasonable risk to capital.

There can be no assurance that any Fund will achieve its investment objective.

INVESTMENT POLICIES

SMALL CAP VALUE FUND

Under normal market conditions, the Small Cap Value Fund invests at least 75%
and up to 100% of its total assets in a diversified portfolio of equity
securities of U.S. issuers that have market capitalizations of $750 million or
less at the time of purchase, including common stocks, warrants and rights to
subscribe to common stocks, equity interests issued by real estate investment
trusts ("REITs"), and both debt securities and preferred stocks convertible into
common stocks. The Small Cap Value Fund may invest in such convertible debt
securities without regard to their term or rating and may, from time to time,
invest in corporate debt securities rated below investment grade, I.E.,

S-2
<PAGE>

rated lower than BBB by Standard & Poors Corporation ("S&P"), Baa by Moody's
Investors Service Inc. ("Moody's"), or unrated securities of comparable quality
as determined by Clover Capital Management, Inc. (the "Adviser").

The Adviser employs database screening techniques to search the universe of
domestic public companies for stocks trading in the bottom 20% of valuation
parameters such as stock price-to-book value, price-to-cash flow,
price-to-earnings and price-to-sales. From these stocks the Adviser selects a
diversified group of securities for investment by utilizing additional screening
and selection strategies to identify the companies that the Adviser believes are
more financially stable. In addition, the Fund may include holdings in issuers
that may not have been identified during the initial screening process but that
the Adviser has identified using its value-oriented fundamental research
techniques. In addition, the Fund may invest up to 10% of its net assets in
American Depositary Receipts ("ADRs").

All of the equity securities (including ADRs) in which the Fund invests are
traded on registered exchanges or the over-the-counter market in the United
States or Canada.

Any remaining assets may be invested in (i) the equity securities described
above of U.S. issuers that have market capitalizations exceeding $750 million at
the time of purchase, and (ii) Money Market Instruments.

EQUITY VALUE FUND

The Equity Value Fund will invest primarily in equity securities that the
Adviser believes to be undervalued relative to the market or their historic
valuation. The Adviser uses several valuation criteria to determine if a
security is undervalued, including price-to-earnings ratios, price-to-cash flow
ratios, price-to-sales ratios, and price-to-book value ratios. In addition, the
Adviser examines "hidden values" that are not obvious in a company's financial
reports, focusing on finding the current asset values or current transfer values
of assets held by the company.

Under normal market conditions, the Equity Value Fund invests at least 70% and
up to 100% of its net assets in a diversified portfolio of equity securities,
including common stocks, both debt securities and preferred stocks convertible
into common stocks, and ADRs (up to 20% of the Equity Value Fund's net assets).
In addition to these equity securities, the Fund may also invest up to 5% of its
net assets in each of warrants and rights to purchase common stocks, and up to
10% of its net assets in REITs. Assets of the Fund not invested in the equity
securities described above may be invested in non-convertible fixed income
securities and Money Market Instruments as described below.

All of the equity securities (including ADRs) in which the Fund invests are
traded on registered exchanges or the over-the-counter market in the United
States or Canada.

During periods when, or under circumstances where, the Adviser believes that the
return on such securities may equal or exceed the return on equity securities,
the Fund may invest up to 25% of its net assets in non-convertible fixed income
securities consisting of corporate debt securities and obligations issued or

S-3
<PAGE>

guaranteed as to principal and interest by the U.S. Government or its agencies
or instrumentalities. The Fund may invest in such securities without regard to
their term or rating and may, from time to time, invest in corporate debt
securities rated below investment grade, I.E., rated lower than BBB by S&P
and/or Baa by Moody's, or unrated securities of comparable quality as determined
by the Adviser.

Under normal circumstances, up to 30% of the Equity Value Fund's assets may be
invested in Money Market Instruments in order to maintain liquidity, or if the
Adviser determines that securities meeting the Fund's investment objective and
policies are not otherwise reasonably available for purchase.

MAX CAP VALUE FUND

The Max Cap Value Fund invests primarily in large-capitalization equities with
low valuations based on measures such as price-to-book value and price-to-cash
flow. The Adviser will attempt to acquire securities that have attractive
dividend yields relative to the market average and/or their own trading history.

The Max Cap Value Fund invests at least 75% of its assets in a diversified
portfolio chosen from the 500 largest capitalization equities (generally over
$10 billion) where the stock price is low relative to book value and cash flow
as compared to the average large capitalization stock. The Adviser evaluates
these large-capitalization domestic companies and searches for stocks valued in
the lowest third based on price to book value and price to cash flow. From these
candidates, the companies with adequate financial strength and higher dividend
yields are chosen for investment. The Adviser may also choose stocks whose
primary attractive feature is a current dividend yield which is high relative to
the stocks' historic yield range.

Up to 25% of the Max Cap Value Fund's assets may be invested in
attractively-valued companies whose market capitalizations fall below the top
500 (I.E., below $5 billion). In addition, up to 10% of the Fund may be invested
in ADRs whose market capitalizations fall among the top 100 in available ADRs.

During periods when, or under circumstances where, the Adviser believes that the
return on non-convertible fixed income securities may equal or exceed the return
on equity securities, the Fund may invest up to 25% of its net assets in
non-convertible fixed income securities consisting of corporate debt securities
and obligations issued or guaranteed as to principal and interest by the U.S.
Government or its agencies or instrumentalities. The Fund may invest in such
securities without regard to their term or rating and may, from time to time,
invest in corporate debt securities rated below investment grade, I.E., rated
lower than BBB by S&P and/or Baa by Moody's or in unrated securities of
comparable quality as determined by the Adviser. Such high-yield, high-risk
securities are also known as "junk bonds". The Fund's exposure to junk bonds,
including convertible securities rated below investment grade, will not exceed
25% of its total assets.

S-4
<PAGE>

Under normal circumstances, up to 25% of the Max Cap Value Fund's assets may be
invested in the Money Market Instruments described below in order to maintain
liquidity, or if the Adviser determines that securities meeting the Fund's
investment objective and policies are not otherwise reasonably available for
purchase. For temporary defensive purposes during periods when the Adviser
determines that market conditions warrant, the Fund may invest up to 100% of its
assets in Money Market Instruments and in cash.

FIXED INCOME FUND

Under normal market conditions, the Fixed Income Fund invests at least 70% of
its net assets in the following fixed income securities: (i) obligations issued
or guaranteed as to principal and interest by the U.S. Government, its agencies
or instrumentalities ("U.S. Government Securities"); (ii) corporate bonds and
debentures rated in one of the four highest rating categories; and (iii)
mortgage-backed securities that are collateralized mortgage obligations ("CMOs")
or real estate mortgage investment conduits ("REMICs") rated in one of the two
highest rating categories. The Fund will invest in such corporate bonds and
debentures, CMOs or REMICs only if, at the time of purchase, the security either
has the requisite rating from S&P or Moody's or is unrated but of comparable
quality as determined by the Adviser. Governmental private guarantees do not
extend to the securities' value, which is likely to vary inversely with
fluctuations in interest rates.

The Fund may invest its remaining assets in the following securities: (i) Money
Market Instruments, (ii) asset-backed securities rated A or higher by S&P or
Moody's; (iii) debt securities rated below investment grade, but not lower than
B- by S&P or B3 by Moody's, or if unrated, determined by the Adviser to be of
comparable quality at the time of purchase (up to 15% of the Fund's net assets,
including downgraded securities); (iv) debt securities convertible into common
stocks (up to 10% of the Fund's net assets); (v) U.S. dollar denominated fixed
income securities issued by foreign corporations or issued or guaranteed by
foreign governments, their political subdivisions, agencies or
instrumentalities; and (vi) U.S. dollar denominated obligations of supranational
entities traded in the United States. For additional information on corporate
bond ratings, see the Appendix.

The relative proportions of the Fund's net assets invested in the different
types of permissible investments will vary from time to time depending upon the
Adviser's assessment of the relative market value of the sectors in which the
Fund invests. In addition, the Fund may purchase securities that are trading at
a discount from par when the Adviser believes there is a potential for capital
appreciation. The Adviser does not seek to achieve the Fund's investment
objective by forecasting changes in the interest rate environment.

In the event any security owned by the Fund is downgraded below the rating
categories set forth above, the Adviser will review the situation and determine
whether to retain or dispose of the security.

The Fund may enter into forward commitments or purchase securities on a
when-issued basis, and may invest in variable or floating rate obligations.

S-5
<PAGE>

The Fund expects to maintain a dollar-weighted average portfolio maturity of
five to ten years.

GENERAL INVESTMENT POLICIES

Each Fund may purchase securities on a when-issued basis.

Each Fund may enter into futures and options transactions.

Each Fund may invest up to 15% of its net assets in illiquid securities.

Each Fund may purchase convertible securities.

Each Fund may borrow money.

Each Fund may enter into Repurchase Agreements.

The Small Cap Value, Equity Value and Max Cap Value Funds may invest in shares
of other investment companies.

For temporary defensive purposes during periods when the Adviser determines that
market conditions warrant, each Fund may invest up to 100% of its assets in
Money Market Instruments and in cash.

DESCRIPTION OF PERMITTED INVESTMENTS AND RISK FACTORS

AMERICAN DEPOSITARY RECEIPTS ("ADRS")

ASSET-BACKED SECURITIES

Asset-backed securities are secured by non-mortgage assets such as company
receivables, truck and auto loans, leases and credit card receivables. Such

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securities are generally issued as pass-through certificates, which represent
undivided fractional ownership interests in the underlying pools of assets. Such
securities also may be debt instruments, which are also known as collateralized
obligations and are generally issued as the debt of a special purpose entity,
such as a trust, organized solely for the purpose of owning such assets and
issuing such debt.

Asset-backed securities are not issued or guaranteed by the U.S. Government, its
agencies or instrumentalities; however, the payment of principal and interest on
such obligations may be guaranteed up to certain amounts and for a certain
period by a letter of credit issued by a financial institution (such as a bank
or insurance company) unaffiliated with the issuers of such securities. The
purchase of asset-backed securities raises risk considerations peculiar to the
financing of the instruments underlying such securities. For example, there is a
risk that another party could acquire an interest in the obligations superior to
that of the holders of the asset-backed securities. There also is the
possibility that recoveries on repossessed collateral may not, in some cases, be
available to support payments on those securities. Asset-backed securities
entail prepayment risk, which may vary depending on the type of asset, but is
generally less than the prepayment risk associated with mortgage-backed
securities. In addition, credit card receivables are unsecured obligations of
card holders.

CONVERTIBLE SECURITIES

Convertible securities are corporate securities that are exchangeable for a set
number of another security at a prestated price. Convertible securities
typically have characteristics of both fixed income and equity securities.
Because of the conversion feature, the market value of a convertible security
tends to move with the market value of the underlying stock particularly when
the value of the underlying stock moves toward the conversion ratio. The value
of a convertible security is also affected by prevailing interest rates, the
credit quality of the issuer and any call provisions.

DERIVATIVES

Derivatives are securities that derive their value from other securities,
financial instruments or indices. The following are considered derivative
securities: options on futures, futures, options (E.G., puts and calls), swap
agreements, mortgage-backed securities (E.G., CMOs, REMICs, interest-only
(AIO's) and principal-only (APO's)), when-issued securities and forward
commitments, floating and variable rate securities, convertible securities,
"stripped" U.S. Treasury securities (E.G., Receipts and separately traded
registered interested and principal securities ("STRIPS")), privately issued
stripped securities (E.G., TGRs, TRs, and CATs). See elsewhere in the
ADescription of Permitted Investments' for discussions of these various
instruments.

EQUITY SECURITIES

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<PAGE>

subject to market risks that may cause their prices to fluctuate over time. The
value of securities convertible into equity securities, such as warrants or
convertible debt, is also affected by prevailing interest rates, the credit
quality of the issuer and any call provision. Fluctuations in the value of
equity securities in which an equity Fund invests will cause the net asset value
of the Fund to fluctuate. An investment in an equity Fund may be more suitable
for long-term investors who can bear the risk of short-term principal
fluctuations.

FIXED INCOME SECURITIES

The market value of fixed income investments will change in response to interest
rate changes and other factors. During periods of falling interest rates, the
values of outstanding fixed income securities generally rise. Conversely, during
periods of rising interest rates, the values of such securities generally
decline. Moreover, while securities with longer maturities tend to produce
higher yields, the prices of longer maturity securities are also subject to
greater market fluctuations as a result of changes in interest rates. Changes by
recognized agencies in the rating of any fixed income security and in the
ability of an issuer to make payments of interest and principal also affect the
value of these investments. Changes in the value of these securities will not
necessarily affect cash income derived from these securities, but will affect
the investing Fund's net asset value.

FOREIGN SECURITIES

Investments in securities of foreign companies or governments can be more
volatile than investments in U.S. companies or governments. Diplomatic,
political, or economic developments, including nationalization or appropriation,
could affect investments in foreign countries. Foreign securities markets
generally have less trading volume and less liquidity than U.S. markets. In
addition, the value of securities denominated in foreign currencies, and of
dividends from such securities, can change significantly when foreign currencies
strengthen or weaken relative to the U.S. dollar. Foreign companies or
governments generally are not subject to uniform accounting, auditing, and
financial reporting standards comparable to those applicable to domestic U.S.
companies or governments. Transaction costs are generally higher than those in
the U.S. and expenses for custodial arrangements of foreign securities may be
somewhat greater than typical expenses for custodial arrangements of similar
U.S. securities. Some foreign governments levy withholding taxes against
dividend and interest income. Although in some countries a portion of these
taxes are recoverable, the non-recovered portion of these taxes will reduce the
income received from the securities comprising the portfolio.

FUTURES CONTRACTS AND OPTIONS ON FUTURES CONTRACTS

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futures contract at a specified exercise price during the term of the option. A
Fund may use futures contracts and related options for BONA FIDE hedging
purposes, to offset changes in the value of securities held or expected to be
acquired or be disposed of, to minimize fluctuations in foreign currencies, or
to gain exposure to a particular market or instrument. A Fund will minimize the
risk that it will be unable to close out a futures contract by only entering
into futures contracts which are traded on national futures exchanges. In
addition, a Fund will only sell covered futures contracts and options on futures
contracts.

No price is paid upon entering into futures contracts. Instead, a Fund would be
required to deposit an amount of cash or U.S. Treasury securities known as
Ainitial margin. Subsequent payments, called "variation margin", to and from
the broker, would be made on a daily basis as the value of the futures position
varies (a process known as "marking to market"). The margin is in the nature of
a performance bond or good-faith deposit on a futures contract.

There are risks associated with these activities, including the following: (1)
the success of a hedging strategy may depend on an ability to predict movements
in the prices of individual securities, fluctuations in markets and movements in
interest rates; (2) there may be an imperfect or no correlation between the
changes in market value of the securities held by a Fund and the prices of
futures and options on futures; (3) there may not be a liquid secondary market
for a futures contract or option; (4) trading restrictions or limitations may be
imposed by an exchange; and (5) government regulations may restrict trading in
futures contracts and futures options.

S-9
<PAGE>

In order to avoid leveraging and related risks, when a Fund purchases futures
contracts, it will collateralize its position by depositing an amount of cash or
liquid securities equal to the market value of the futures positions held, less
margin deposits, in a segregated account with its custodian. Collateral equal to
the current market value of the futures position will be marked to market on a
daily basis.

ILLIQUID SECURITIES

INVESTMENT COMPANY SHARES

JUNK BONDS

Bonds rated below investment grade are often referred to as "junk bonds." Such
securities involve greater risk of default or price declines than investment
grade securities due to changes in the issuer's creditworthiness and the outlook
for economic growth. The market for these securities may be less active, causing
market price volatility and limited liquidity in the secondary market. This may
limit a Fund's ability to sell such securities at their market value. In
addition, the market for these securities may also be adversely affected by
legislative and regulatory developments. Credit quality in the junk bond market
can change suddenly and unexpectedly, and even recently-issued credit ratings
may not fully reflect the actual risks imposed by a particular security.

MONEY MARKET INSTRUMENTS

Money Market securities are high-quality, dollar-denominated, short-term debt
instruments. They consist of: (i) bankers' acceptances, certificates of
deposits, notes and time deposits of highly-rated U.S. banks and U.S. branches
of foreign banks; (ii) U.S. Treasury obligations and obligations issued or

S-10
<PAGE>

guaranteed by the agencies and instrumentalities of the U.S. Government; (iii)
high-quality commercial paper issued by U.S. and foreign corporations; (iv) debt
obligations with a maturity of one year or less issued by corporations with
outstanding high-quality commercial paper ratings; and (v) repurchase agreements
involving any of the foregoing obligations entered into with highly-rated banks
and broker-dealers.

MORTGAGE- AND ASSET-BACKED SECURITIES

Mortgage-backed securities are instruments that entitle the holder to a share of
all interest and principal payments from mortgages underlying the security. The
mortgages backing these securities include conventional fifteen- and thirty-year
fixed rate mortgages, graduated payment mortgages, adjustable rate mortgages,
and balloon mortgages. During periods of declining interest rates, prepayment of
mortgages underlying mortgage-backed securities can be expected to accelerate.
Prepayment of mortgages which underlie securities purchased at a premium often
results in capital losses, while prepayment of mortgages purchased at a discount
often results in capital gains. Because of these unpredictable prepayment
characteristics, it is often not possible to predict accurately the average life
or realized yield of a particular issue.

GOVERNMENT PASS-THROUGH SECURITIES: These are securities that are issued or
guaranteed by a U.S. Government agency representing an interest in a pool of
mortgage loans. The primary issuers or guarantors of these mortgage-backed
securities are the Government National Mortgage Association ("GNMA"), Fannie Mae
and the Federal Home Loan Mortgage Corporation ("FHLMC"). Fannie Mae and FHLMC
obligations are not backed by the full faith and credit of the U.S. Government
as GNMA certificates are, but Fannie Mae and FHLMC securities are supported by
the instrumentalities' right to borrow from the U.S. Treasury. GNMA, Fannie Mae
and FHLMC each guarantee timely distributions of interest to certificate
holders. GNMA and Fannie Mae also each guarantee timely distributions of
scheduled principal. FHLMC has in the past guaranteed only the ultimate
collection of principal of the underlying mortgage loan; however, FHLMC now
issues mortgage-backed securities (FHLMC Gold PCS) which also guarantee timely
payment of monthly principal reductions. Government and private guarantees do
not extend to the securities' value, which is likely to vary inversely with
fluctuations in interest rates.

PRIVATE PASS-THROUGH SECURITIES: These are mortgage-backed securities issued by
a non-governmental entity, such as a trust. These securities include CMOs and
REMICs that are rated in one of the top two rating categories. While they are
generally structured with one or more types of credit enhancement, private
pass-through securities typically lack a guarantee by an entity having the
credit status of a governmental agency or instrumentality.

S-11
<PAGE>

as a "tranche," is issued with a specific fixed or floating coupon rate and has
a stated maturity or final distribution date. Principal payments on the
underlying mortgage assets may cause CMOs to be retired substantially earlier
than their stated maturities or final distribution dates, resulting in a loss of
all or part of any premium paid.

REMICS: REMICs, which were authorized under the Tax Reform Act of 1986, are
private entities formed for the purpose of holding a fixed pool of mortgages
secured by an interest in real property. REMICs are similar to CMOs in that they
issue multiple classes of securities. A REMIC is a CMO that qualifies for
special tax treatment under the Code and invests in certain mortgages
principally secured by interests in real property. Investors may purchase
beneficial interests in REMICs, which are known as "regular" interests, or
"residual" interests. Guaranteed REMIC pass-through certificates ("REMIC
Certificates") issued by Fannie Mae or FHLMC represent beneficial ownership
interests in a REMIC trust consisting principally of mortgage loans or Fannie
Mae, FHLMC or GNMA-guaranteed mortgage pass-through certificates. For FHLMC
REMIC Certificates, FHLMC guarantees the timely payment of interest, and also
guarantees the payment of principal as payments are required to be made on the
underlying mortgage participation certificates. Fannie Mae REMIC Certificates
are issued and guaranteed as to timely distribution of principal and interest by
Fannie Mae.

PARALLEL PAY SECURITIES; PAC BONDS: Parallel pay CMOs and REMICs are structured
to provide payments of principal on each payment date to more than one class.
These simultaneous payments are taken into account in calculating the stated
maturity date or final distribution date of each class, which must be retired by
its stated maturity date or final distribution date, but may be retired earlier.
Planned Amortization Class CMOs ("PAC Bonds") generally require payments of a
specified amount of principal on each payment date. PAC Bonds are always
parallel pay CMOs with the required principal payment on such securities having
the highest priority after interest has been paid to all classes.

STRIPPED MORTGAGE-BACKED SECURITIES ("SMBS"): SMBs are usually structured with
two classes that receive specified proportions of the monthly interest and
principal payments from a pool of mortgage securities. One class may receive all
of the interest payments and is thus termed an IO, while the other class may
receive all of the principal payments and is thus termed the principal-only
class PO. The value of IOs tends to increase as rates rise and decrease as rates
fall; the opposite is true of POs. SMBs are extremely sensitive to changes in
interest rates because of the impact thereon of prepayment of principal on the
underlying mortgage securities. The market for SMBs is not as fully developed as
other markets; SMBs therefore may be illiquid.

ADDITIONAL RISK FACTORS: Due to the possibility of prepayments of the underlying
mortgage instruments, mortgage-backed securities generally do not have a known
maturity. In the absence of a known maturity, market participants generally
refer to an estimated average life. An average life estimate is a function of an
assumption regarding anticipated prepayment patterns, based upon current
interest rates, current conditions in the relevant housing markets and other
factors. The assumption is necessarily subjective, and thus different market
participants can produce different average life estimates with regard to the
same security. There can be no assurance that estimated average life will be a
security's actual average life.

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<PAGE>

OBLIGATIONS OF SUPRANATIONAL AGENCIES

The Fixed Income Fund may purchase obligations of supranational agencies.
Currently, the Fund only intends to invest in obligations issued or guaranteed
by the Asian Development Bank, Inter-American Development Bank, International
Bank for Reconstruction and Development (World Bank), African Development Bank,
European Coal and Steel Community, European Economic Community, European
Investment Bank and Nordic Investment Bank.

OPTIONS

A put option on a security gives the purchaser of the option the right to sell,
and the writer of the option the obligation to buy, the underlying security at
any time during the option period. A call option on a security gives the
purchaser of the option the right to buy, and the writer of the option the
obligation to sell, the underlying security at any time during the option
period. The premium paid to the writer is the consideration for undertaking the
obligations under the option contract. The initial purchase (sale) of an option
contract is an "opening transaction." In order to close out an option position,
a Fund may enter into a "closing transaction," which is simply the sale
(purchase) of an option contract on the same security with the same exercise
price and expiration date as the option contract originally opened. If a Fund is
unable to effect a closing purchase transaction with respect to an option it has
written, it will not be able to sell the underlying security until the option
expires or the Fund delivers the security upon exercise.

A Fund may purchase put and call options to protect against a decline in the
market of the securities in its portfolio or to anticipate an increase in the
market of securities that the Fund may seek to purchase in the future. A Fund
purchasing put and call options pays a premium therefore. If price movements in
the underlying securities are such that exercise of the options would not be
profitable for a Fund, loss of the premium paid may be offset by an increase in
the value of the Fund's securities or by a decrease in the cost of acquisition
of securities by the Fund.

A Fund may write covered call options as a means of increasing its yield and as
a means of providing limited protection against decreases in its market value.
When a Fund sells an option, if the underlying securities do not increase or
decrease to a price level that would make the exercise of the option profitable
to the holder thereof, the option generally will expire without being exercised
and the Fund will realize as profit the premium received for such option. When a
call option written by a Fund is exercised, the Fund will be required to sell
the underlying securities to the option holder at the strike price, and will not
participate in any increase in the price of such securities above the strike
price. When a put option written by a Fund is exercised, the Fund will be
required to purchase the underlying securities at the strike price, which may be
in excess of the market value of such securities.

S-13
<PAGE>

wider range of expiration dates and exercise prices than are available for
exchange-traded options. Because OTC options are not traded on an exchange,
pricing is done normally by reference to information from a market maker. It is
the position of the Securities and Exchange Commission (the "SEC") that OTC
options are generally illiquid.

A Fund may purchase and write put and call options on foreign currencies (traded
on U.S. and foreign exchanges or over-the-counter markets) to manage its
exposure to exchange rates. Call options on foreign currency written by a Fund
will be "covered," which means that the Fund will own an equal amount of the
underlying foreign currency. With respect to put options on foreign currency
written by a Fund, the Fund will establish a segregated account with its
Custodian consisting of cash or liquid, high-grade debt securities in an amount
equal to the amount the Fund would be required to pay upon exercise of the put.

All options written on securities or indices must be covered. When a Fund writes
an option on an index or a security, it will establish a segregated account
containing cash or liquid securities with its custodian in an amount at least
equal to the market value of the option and will maintain the account while the
option is open or will otherwise cover the transaction.

PORTFOLIO TURNOVER

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REITS

The Funds may invest in REITs, which pool investors' funds for investment in
income-producing commercial real estate or real-estate related loans or
interests.

A Fund may be subject to certain risks associated with the direct investments of
the REITs. REITs may be affected by changes in the value of their underlying
properties and by defaults by borrowers or tenants. Mortgage REITs may be
affected by the quality of the credit extended. Furthermore, REITs are dependent
on specialized management skills. Some REITs may have limited diversification
and may be subject to risks inherent in financing a limited number of
properties. REITs depend generally on their ability to generate cash flow to
make distributions to shareholders or unitholders, and may be subject to
defaults by borrowers and to self-liquidations. In addition, the performance of
a REIT may be affected by its failure to qualify for tax-free pass-through of
income under the Code or its failure to maintain exemption from registration
under the Investment Company Act of 1940, as amended (the "1940 Act").

REPURCHASE AGREEMENTS

Repurchase agreements are agreements by which a Fund obtains a security and
simultaneously commits to return the security to the seller (a member bank of
the Federal Reserve System or primary securities dealer as recognized by the
Federal Reserve Bank of New York) at an agreed-upon price (including principal
and interest) on an agreed-upon date within a number of days (usually not more
than seven) from the date of purchase. The resale price reflects the purchase
price plus an agreed-upon market rate of interest which is unrelated to the
coupon rate or maturity of the underlying security. A repurchase agreement
involves the obligation of the seller to pay the agreed-upon price, which
obligation is in effect secured by the value of the underlying security.

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<PAGE>

loss on the sale of the underlying security to the extent that the proceeds of
sale, including accrued interest, are less than the resale price provided in the
agreement including interest. In addition, even though the Bankruptcy Code
provides protection for most repurchase agreements, if the seller should be
involved in bankruptcy or insolvency proceedings, a Fund may incur delay and
costs in selling the underlying security or may suffer a loss of principal and
interest if the Fund is treated as an unsecured creditor and is required to
return the underlying security to the seller's estate.

SECURITIES OF FOREIGN ISSUERS

The Fixed Income Fund may invest in U.S. dollar-denominated fixed income
securities of foreign issuers which are traded in the United States. In
addition, the Equity Value Fund may invest in ADRs and securities issued by
issuers located in Canada. These instruments may subject the Fund to investment
risks that differ in some respects from those related to investments in
obligations of U.S. domestic issuers. Such risks include future adverse
political and economic developments, the possible imposition of withholding
taxes on interest or other income, possible seizure, nationalization, or
expropriation of foreign deposits, the possible establishment of exchange
controls or taxation at the source, greater fluctuations in value due to changes
in exchange rates, or the adoption of other foreign governmental restrictions
which might adversely affect the payment of principal and interest on such
obligations. Foreign issuers of securities or obligations are often subject to
accounting treatment and engage in business practices different from those
respecting domestic issuers of similar securities or obligations. Foreign
branches of U.S. banks and foreign banks may be subject to less stringent
reserve requirements than those applicable to domestic branches of U.S. banks.

U.S. GOVERNMENT AGENCY OBLIGATIONS

U.S. GOVERNMENT SECURITIES

U.S. Government Securities are bills, notes and bonds issued by the U.S.
Government are securities backed by the full faith and credit of the United
States.

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U.S. TREASURY OBLIGATIONS

U.S. Treasury Obligations are bills, notes and bonds issued by the U.S.
Treasury, and separately-traded interest and principal component parts of such
obligations that are transferable through the Federal book-entry system known as
STRIPS and Coupon Under Book Entry Safekeeping ("CUBES") are some types of U.S.
Treasury Securities.

VARIABLE OR FLOATING-RATE INSTRUMENTS

The Fixed Income Fund may invest in variable- or floating-rate instruments which
may involve a demand feature and may include variable-amount master demand notes
which may or may not be backed by bank letters of credit. The holder of an
instrument with a demand feature may tender the instrument back to the issuer at
par prior to maturity. A variable-amount master demand note is issued pursuant
to a written agreement between the issuer and the holder, its amount may be
increased by the holder or decreased by the holder or issuer, it is payable on
demand, and the rate of interest varies based upon an agreed formula. The
quality of the underlying credit must, in the opinion of the Adviser, be
equivalent to the long-term bond or commercial paper ratings applicable to
permitted investments for the Fixed Income Fund. The Adviser will monitor on an
ongoing basis the earnings power, cash flow and liquidity ratios of the issuers
of such instruments and will similarly monitor the ability of an issuer of a
demand instrument to pay principal and interest on demand.

WARRANTS

Warrants are instruments giving holders the right, but not the obligation, to
buy equity or fixed income securities of a company at a given price during a
specified period.

WHEN-ISSUED AND DELAYED-DELIVERY SECURITIES

When-issued or delayed-delivery securities are subject to market fluctuations
due to changes in market interest rates, and it is possible that the market at
the time of settlement could be higher or lower than the purchase price if the
general level of interest rates has changed. Although a Fund generally purchases
securities on a when-issued or forward commitment basis with the intention of
actually acquiring securities for its investment portfolio, a Fund may dispose
of a when-issued security or forward commitment prior to settlement if it deems
appropriate.

YEAR 2000

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ZERO COUPON SECURITIES

Zero coupon obligations are debt securities that do not bear any interest, but
instead are issued at a deep discount from par. The value of a zero coupon
obligation increases over time to reflect the interest accrued. Such obligations
will not result in the payment of interest until maturity, and will have greater
price volatility than similar securities that are issued at par and pay interest
periodically.

INVESTMENT LIMITATIONS

FUNDAMENTAL POLICIES

The following investment limitations (and those set forth in the Prospectus) are
fundamental policies of each Fund which cannot be changed with respect to a Fund
without the consent of the holders of a majority of that Fund's outstanding
shares. The term "majority of the outstanding shares" means the vote of (i) 67%
or more of a Fund's shares present at a meeting, if more than 50% of the
outstanding shares of a Fund are present or represented by proxy, or (ii) more
than 50% of a Fund's outstanding shares, whichever is less.

No Fund may:

1. (i) Purchase securities of any issuer (except securities issued or
guaranteed by the United States Government, its agencies or
instrumentalities and repurchase agreements involving such securities)
if, as a result, more than 5% of the total assets of the Fund would be
invested in the securities of such issuer; or (ii) acquire more than
10% of the outstanding voting securities of any one issuer. This
restriction applies to 75% of each Fund's total assets.

2. Purchase any securities which would cause 25% or more of the total
assets of the Fund to be invested in the securities of one or more
issuers conducting their principal business activities in the same
industry, provided that this limitation does not apply to investments
in obligations issued or guaranteed by the U.S. Government or its
agencies and instrumentalities and repurchase agreements involving such
securities.

3. Borrow money in an amount exceeding 33 1/3% of the value of its total
assets, provided that, for purposes of this limitation, investment
strategies which either obligate the fund to purchase securities or
require a Fund to segregate assets are not considered to be borrowings.
Asset coverage of at least 300% is required for all borrowings, except
where a Fund has borrowed money for temporary purposes in amounts not
exceeding 5% of its total assets. A Fund will not purchase securities
while its borrowings exceed 5% of its total assets.

4. Make loans if, as a result, more than 33 1/3% of its total assets would
be lent to other parties, except that each Fund may (i) purchase or
hold debt instruments in accordance with its investment objective and
policies; (ii) enter into repurchase agreements; and (iii) lend its
securities.

S-18
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estate investment trusts), commodities, or commodities contracts; and
(ii) commodities contracts relating to financial instruments, such as
financial futures contracts and options on such contracts.

6. Issue senior securities (as defined in the 1940 Act)) except as
permitted by rule, regulation or order of the SEC.

7. Act as an underwriter of securities of other issuers except as it may
be deemed an underwriter in selling a portfolio security.

8. Invest in interests in oil, gas, or other mineral exploration or
development programs and oil, gas or mineral leases.

NON-FUNDAMENTAL POLICIES

The following investment limitations are non-fundamental policies of each Fund
and may be changed with respect to a Fund by the Board of Trustees.

No Fund may:

1. Pledge, mortgage or hypothecate assets except to secure borrowings
permitted by the Fund's fundamental limitation on borrowing.

2. Invest in companies for the purpose of exercising control.

3. Purchase securities on margin or effect short sales, except that each
Fund may (i) obtain short-term credits as necessary for the clearance
of security transactions; (ii) provide initial and variation margin
payments in connection with transactions involving futures contracts
and options on such contracts; and (iii) make short sales "against the
box" or in compliance with the SEC's position regarding the asset
segregation requirements imposed by Section 18 of the 1940 Act.

4. Invest its assets in securities of any investment company, except as
permitted by the 1940 Act.

5. Purchase or hold illiquid securities, I.E., securities that cannot be
disposed of for their approximate carrying value in seven days or less
(which term includes repurchase agreements and time deposits maturing
in more than seven days) if, in the aggregate, more than 15% of its net
assets would be invested in illiquid securities.

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THE ADVISER

Clover Capital Management, Inc. (the "Adviser"), 11 Tobey Village Office Park,
Pittsford, New York 14534, is a professional investment management firm founded
in 1984 by Michael Edward Jones, CFA, and Geoffrey Harold Rosenberger, CFA, who
are Managing Directors of the Adviser and who control all of the Adviser's
outstanding voting stock. As of September 30, 1999 the Adviser had discretionary
management authority with respect to approximately $1.4 billion of assets. In
addition to advising the Funds, the Adviser provides advisory services to
pension plans, religious and educational endowments, corporations, 401(k) plans,
profit sharing plans, individual investors and trusts and estates.

The Adviser serves as each Fund's investment adviser under an investment
advisory agreement (the "Advisory Agreement") with the Fund. Under the Advisory
Agreement, the Adviser makes the investment decisions for the assets of each
Fund and continuously reviews, supervises and administers each Fund's investment
program, subject to the supervision of, and policies established by, the
Trustees of the Fund.

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For the fiscal period ended September 30, 1997, and for the fiscal years ended
September 30, 1998 and 1999, the Funds paid (had reimbursed) the following
advisory fees:

<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------
Advisory Fees Paid Advisory Fees Waived/Reimbursed
---------------------------------------------------------------------------------
1997* 1998 1999 1997* 1998 1999
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Small Cap Value Fund $0 $67,667 $83,625 $66,598** $71,495 $51,187
- ----------------------------------------------------------------------------------------------------------------
Equity Value Fund $642,434 $840,958 $567,313 $47,047 $25,280 $0
- ----------------------------------------------------------------------------------------------------------------
Max Cap Value Fund *** ($121,203) $61,747 *** $9,208 $80,247
- ----------------------------------------------------------------------------------------------------------------
Fixed Income Fund $35,551 $62,671 $78,440 $55,083 $68,554 $72,100
- ----------------------------------------------------------------------------------------------------------------
</TABLE>

*On June 25, 1997, the Small Cap Value Fund, the Equity Value Fund, and the
Fixed Income Fund acquired the assets of the Clover Capital Small Cap Value,
Clover Capital Equity Value, and Clover Capital Fixed Income Portfolios,
respectively, of The Advisors' Inner Circle Fund.

**Does not include reimbursement of fees by the Adviser in the amount of $14,145
with respect to the Clover Capital Small Cap Value Portfolio for the fiscal
period of 1997.

***Not in operation during the period.

THE ADMINISTRATOR

The continuance of the Administration Agreement must be specifically approved at
least annually (i) by the vote of a majority of the Trustees or by the vote of a
majority of the outstanding voting securities of the Fund, and (ii) by the vote
of a majority of the Trustees of the Trust who are not parties to the
Administration Agreement or an "interested person" (as that term is defined in
the 1940 Act) of any party thereto, cast in person at a meeting called for the
purpose of voting on such approval. The Administration Agreement is terminable

S-21
<PAGE>

at any time as to any Fund without penalty by the Trustees of the Trust, by a
vote of a majority of the outstanding shares of the Fund or by the Manager on
not less than 30 days' nor more than 60 days' written notice.

The Administrator, a Delaware business trust, has its principal business offices
at Oaks, Pennsylvania 19456. SEI Investments Management Corporation ("SIMC"), a
wholly-owned subsidiary of SEI Investments Company ("SEI Investments"), is the
owner of all beneficial interest in the Administrator. SEI Investments and its
subsidiaries and affiliates, including the Administrator, are leading providers
of funds evaluation services, trust accounting systems, and brokerage and
information services to financial institutions, investors, and money managers.
The Administrator and its affiliates also serve as administrator or
sub-administrator to the following other mutual funds: The Achievement Funds
Trust, The Advisors' Inner Circle Fund, Alpha Select Funds, Amerindo Funds,
Inc., The Arbor Funds, ARK Funds, Armada Funds, Bishop Street Funds, Boston 1784
Funds(R), CNI Charter Funds, CUFUND, The Expedition Funds, First American Funds,
Inc., First American Investment Funds, Inc., First American Strategy Funds,
Inc., HighMark Funds, The Nevis Funds, Huntington Funds, The Parkstone Advantage
Fund, Oak Associates Funds, The PBHG Funds, Inc., PBHG Insurance Series Fund,
Inc., The Pillar Funds, SEI Asset Allocation Trust, SEI Daily Income Trust, SEI
Index Funds, SEI Investments Trust, SEI International Trust, SEI Managed Trust,
SEI Liquid Asset Trust, STI Classic Funds, SEI Tax Exempt Trust, STI Classic
Variable Trust, and UAM Funds, Inc. II.

For the fiscal period ended September 30, 1997, and for the fiscal years ended
September 30, 1998 and 1999, the Funds paid the following administrative fees:

Administrative Fees Paid
-----------------------------------------------
1997* 1998 1999
- --------------------------------------------------------------------------------
Small Cap Value Fund $52,438 $75,000 $67,459
- --------------------------------------------------------------------------------
Equity Value Fund $159,591 $132,060 $77,230
- --------------------------------------------------------------------------------
Max Cap Value Fund ** $68,013 $67,459
- --------------------------------------------------------------------------------
Fixed Income Fund $52,438 $75,000 $67,499
- --------------------------------------------------------------------------------

* On June 25, 1997,the Small Cap Value Fund, the Equity Value Fund, and
the Fixed Income Fund acquired the assets of the Clover Capital Small Cap Value,
Clover Capital Equity Value, and Clover Capital Fixed Income Portfolios,
respectively, of The Advisors" Inner Circle Fund.
** Not in operation during the period.

THE DISTRIBUTOR

CCM Securities, Inc. (the "Distributor"), a wholly-owned subsidiary of Clover
Capital Management, and the Trust are parties to a distribution agreement (the
"Distribution Agreement"). The Distributor receives no compensation for
distribution of shares of the Funds.

S-22
<PAGE>

The Distribution Agreement shall remain in effect for a period of two years
after the effective date of the agreement and is renewable annually. The
Distribution Agreement may be terminated by the Distributor or by the Trust, by
a majority vote of the Trustees who are not interested persons and have no
financial interest in the Distribution Agreement or by a majority vote of the
outstanding securities of the Trust upon not more than 60 days' written notice
by either party or upon assignment by the Distributor.

TRUSTEES AND OFFICERS OF THE TRUST

The Trustees and Executive Officers of the Trust, their respective dates of
birth, and their principal occupations for the last five years are set forth
below. Each may have held other positions with named companies during that
period. Unless otherwise noted, the business address of each Trustee and each
Executive Officer as it relates to the Trust is SEI Investments Company, Oaks,
Pennsylvania 19456. Certain officers of the Trust also serve as officers of some
or all of the following: The Achievement Funds Trust, The Advisors' Inner Circle
Fund, Alpha Select Funds, Amerindo Funds, Inc., The Arbor Fund, ARK Funds,
Bishop Street Funds, Boston 1784 Funds(R), CNI Charter Funds, CUFUND, The
Expedition Funds, First American Funds, Inc., First American Investment Funds,
Inc., First American Strategy Funds, Inc, HighMark Funds, Huntington Funds, The
Nevis Fund, Inc. Oak Associates Funds, The Parkstone Advantage Fund, The PBHG
Funds, Inc., PBHG Insurance Series Fund, Inc., The Pillar Funds, SEI Asset
Allocation Trust, SEI Daily Income Trust, SEI Index Funds, SEI Investments
Trust, SEI Managed Trust, SEI International Trust, SEI Liquid Asset Trust, SEI
Tax Exempt Trust, STI Classic Funds, and STI Classic Variable Trust, each of
which is an open-end management investment company managed by SEI Investments
Mutual Fund Services or its affiliates.

ROBERT E. TURNER (DOB 11/26/56) - Trustee* - Chairman and Chief Investment
Officer of Turner Investment Partners, Inc., since 1990.

MICHAEL E. JONES (DOB 12/24/54) - Trustee* - Senior Vice President, Investment
Adviser and Portfolio Manager with Clover Capital Management, Inc. (the
"Adviser"), since 1984. Principal of CCM Securities Inc.

S-23
<PAGE>

ALFRED C. SALVATO (DOB 01/09/58) - Trustee** - Treasurer, Thomas Jefferson
University Health Care Pension Fund, since 1995, and Assistant Treasurer,
1988-1995.

JANET F. SANSONE (DOB 08/11/45) - Trustee** - Corporate Vice President of Human
Resources of Frontier Corporation (telecommunications company), retired.

JOHN T. WHOLIHAN (DOB 12/12/37) - Trustee** - Professor, Loyola Marymount
University, since 1984.

STEPHEN J. KNEELEY (DOB 02/09/63) - President and Chief Executive Officer -
Chief Operating Officer of Turner Investment Partners, Inc., since 1990.

JANET RADER ROTE (DOB 08/24/60) - Vice President and Assistant Secretary -
Director of Operations and Compliance of Turner Investment Partners, Inc., since
1992.

TODD B. CIPPERMAN (DOB 02/14/66) - Vice President and Assistant Secretary - Vice
President and Assistant Secretary of SEI, the Administrator since 1995.
Associate, Dewey Ballantine (law firm), 1994-1995. Associate, Winston and
Strawn, 1991-1994.

KEVIN P. ROBINS (DOB 04/15/61) - Vice President, Assistant Secretary - Senior
Vice President, General Counsel and Assistant Secretary of SEI, Senior Vice
President, General Counsel and Secretary of the Administrator since 1994. Vice
President and Assistant Secretary of SEI Investments, the Administrator
1992-1994. Associate, Morgan, Lewis & Bockius LLP, 1988-1992.

ROBERT DELLACROCE (DOB 12/17/63) - Controller and Chief Accounting Officer -
Director, Funds Administration and Accounting - Director, Funds Administration
and Accounting of SEI Investments since 1994. Senior Audit Manager, Arthur
Andersen LLP, 1986-1994.

LYDIA A. GAVALIS (DOB 06/05/64) - Vice President and Assistant Secretary - Vice
President and Assistant Secretary of the Administrator since 1998. Assistant
General Counsel and Director of Arbitration, Philadelphia Stock Exchange,
1989-1998.

KATHY HEILIG (DOB 12/21/58) - Vice President and Assistant Secretary - Treasurer
of SEI Investments Company since 1997; Assistant Controller of SEI Investment
since 1995; Vice President of SEI Investments since 1991; Director of Taxes of
SEI Investments Company 1987 to 1991. Tax Manager, Arthur Anderson LLP prior to
1987.

S-24
<PAGE>

JAMES W. JENNINGS (DOB 01/15/37) - Secretary - Partner, Morgan, Lewis & Bockius
LLP, Counsel to the Trust and the Administrator.

JOHN H. GRADY, JR. (DOB 06/01/61) - Assistant Secretary - 1701 Market Street,
Philadelphia, Pennsylvania 19103, Partner, Morgan, Lewis & Bockius LLP, Counsel
to the Trust and the Administrator.

EDWARD B. BAER (DOB 09/27/68) - Assistant Secretary - 1701 Market Street,
Philadelphia, Pennsylvania 19103, Associate, Morgan, Lewis & Bockius LLP,
Counsel to the Trust and the Administrator since 1995.

The following table exhibits Trustee compensation for the fiscal year ended
September 30, 1999.

<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------
Name of Person, Aggregate Pension or Estimated Annual Total Compensation
Position Compensation From Retirement Benefits Benefits Upon From Registrant and
Registrant for the Accrued as Part of Retirement Fund Complex Paid
Fiscal Year Ended Fund Expenses to Trustees for the
September 30, 1999 Fiscal Year Ended
September 30, 1999
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Robert Turner* $0 N/A N/A $0 for service on
two Boards
- ---------------------------------------------------------------------------------------------------------------------
Richard A. Hocker* $0 N/A N/A $0 for service on
one Board
- ---------------------------------------------------------------------------------------------------------------------
Michael E. Jones* $0 N/A N/A $0 for service on
one Board
- ---------------------------------------------------------------------------------------------------------------------
Alfred C. Salvato** $8,000 N/A N/A $14,000 for service
on two Boards
- ---------------------------------------------------------------------------------------------------------------------
Janet F. Sansone** $9,775 N/A N/A $9,775 for service
on one Board
- ---------------------------------------------------------------------------------------------------------------------
John T. Wholihan** $10,538 N/A N/A $10,538 for service
on one Board
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>

S-25
<PAGE>

** Member of the Audit Committee.

The Trustees and Officers of the Trust own less than 1% of the outstanding
shares of the Trust.

COMPUTATION OF YIELD AND TOTAL RETURN

Yield = 2[((a-b)/cd + 1(6) - 1] where a = dividends and interest earned during
the period; b = expenses accrued for the period (net of reimbursement); c = the
current daily number of shares outstanding during the period that were entitled
to receive dividends; and d = the maximum offering price per share on the last
day of the period.

Based on the foregoing, the 30-day yield for the Funds for the 30-day period
ended September 30, 1999 were as follows:

Fund 30-Day Yield
-------------------------------------------------
Small Cap Value Fund 0.00%
-------------------------------------------------
Equity Value Fund 0.85%
-------------------------------------------------
Max Cap Value Fund 1.14%
-------------------------------------------------
Fixed Income Fund 5.88%
-------------------------------------------------

The total return of a Fund refers to the average compounded rate of return to a
hypothetical investment for designated time periods (including but not limited
to, the period from which the Fund commenced operations through the specified
date), assuming that the entire investment is redeemed at the end of each
period. In particular, total return will be calculated according to the
following formula: P (1 + T)(n) = ERV, where P = a hypothetical initial payment
of $1,000; T = average annual total return; n = number of years; and ERV =
ending

S-26
<PAGE>

redeemable , as of the end of the designated time period, of a hypothetical
$1,000 payment made at the beginning of the designated time period.

Based on the foregoing, the average annual total return for the Funds from
inception through September 30, 1999, and for the one and five year periods
ended September 30, 1999, were as follows:

Average Annual Total Return
-------------------------------------------------
One Year Five Year Since Inception
- --------------------------------------------------------------------------------
Small Cap Value Fund 21.82% * 13.02%
- --------------------------------------------------------------------------------
Equity Value Fund 6.13% 11.93% 12.51%
- --------------------------------------------------------------------------------
Max Cap Value Fund 26.17% * 9.00%
- --------------------------------------------------------------------------------
Fixed Income Fund (1.78)% 7.49% 7.06%
- --------------------------------------------------------------------------------
* Not in operation for this period.

PURCHASE AND REDEMPTION OF SHARES

Purchases and redemptions may be made through the Transfer Agent on days when
the New York Stock Exchange is open for business. Currently, the weekdays on
which the Fund is closed for business are: New Year"s Day, Martin Luther King,
Jr. Day, Presidents" Day, Good Friday, Memorial Day, Independence Day, Labor
Day, Thanksgiving Day and Christmas Day. Shares of each Fund are offered on a
continuous basis.

It is currently the Trust's policy to pay all redemptions in cash. The Trust
retains the right, however, to alter this policy to provide for redemptions in
whole or in part by a distribution in-kind of securities held by a Fund in lieu
of cash. Shareholders may incur brokerage charges on the sale of any such
securities so received in payment of redemptions.

S-27
<PAGE>

DETERMINATION OF NET ASSET VALUE

The securities of each Fund are valued by the Administrator. The Administrator
may use an independent pricing service to obtain valuations of securities. The
pricing service relies primarily on prices of actual market transactions as well
as on trade quotations obtained from third parties. However, the pricing service
may use a matrix system to determine valuations of fixed income securities. This
system considers such factors as security prices, yields, maturities, call
features, ratings and developments relating to specific securities in arriving
at valuations. The procedures used by the pricing service and its valuations are
reviewed by the officers of the Trust under the general supervision of the
Trustees.

Securities with remaining maturities of 60 days or less will be valued by the
amortized cost method, which involves valuing a security at its cost on the date
of purchase and thereafter (absent unusual circumstances) assuming a constant
amortization to maturity of any discount or premium, regardless of the impact of
fluctuations in general market rates of interest on the value of the instrument.
While this method provides certainty in valuation, it may result in periods
during which value, as determined by this method, is higher or lower than the
price the Trust would receive if it sold the instrument.

If there is no readily ascertainable market value for a security, the
Administrator will make a good faith determination as to the "fair value" of the
security.

TAXES

FEDERAL INCOME TAX

The following discussion of federal income tax consequences is based on the Code
and the regulations issued thereunder as in effect on the date of this Statement
of Additional Information. New legislation, as well as administrative changes or
court decisions, may significantly change the conclusions expressed herein, and
may have a retroactive effect with respect to the transactions contemplated
herein.

S-28
<PAGE>

In order to qualify for treatment as a RIC under the Code, each Fund must
distribute annually to its shareholders at least the sum of 90% of its net
interest income excludable from gross income plus 90% of its investment company
taxable income (generally, net investment income plus net short-term capital
gain) ("Distribution Requirement") and also must meet several additional
requirements. Among these requirements are the following: (i) at least 90% of
the Fund's gross income each taxable year must be derived from dividends,
interest, payments with respect to securities loans, gains from the sale or
other disposition of stock or securities, or certain other income (including
gains from options, futures or forward contracts); (ii) at the close of each
quarter of the Fund's taxable year, at least 50% of the value of its total
assets must be represented by cash and cash items, U.S. Government securities,
securities of other RICs and other securities, with such other securities
limited, in respect to any one issuer, to an amount that does not exceed 5% of
the of the Fund's assets and that does not represent more than 10% of the
outstanding voting securities of such issuer; and (iii) at the close of each
quarter of the Fund's taxable year, not more than 25% of the of its assets may
be invested in securities (other than U.S. Government securities or the
securities of other RICs) of any one issuer, or of two or more issuers which are
engaged in the same, similar or related trades or business if the Fund owns at
least 20% of the voting power of such issuers.

Notwithstanding the Distribution Requirement described above, which requires
only that the Fund distribute at least 90% of its annual investment company
taxable income and does not require any minimum distribution of net capital gain
(the excess of net long-term capital gain over net short-term capital loss),
each Fund will be subject to a nondeductible 4% federal excise tax to the extent
it fails to distribute by the end of any calendar year 98% of its ordinary
income for that year and 98% of its capital gain net income (the excess of
short- and long-term capital gains over short-and long-term capital losses) for
the one-year period ending on October 31 of that year, plus certain other
amounts.

Any gain or loss recognized on a sale, exchange or redemption of shares of a
Fund by a shareholder who is not a dealer in securities will generally, for
individual shareholders, be treated as a long-term capital gain or loss if the
shares have been held for more than one year, and otherwise will be treated as
short-term capital gain or loss. However, if shares on which a shareholder has
received a net capital gain distribution are subsequently sold, exchanged or
redeemed and such shares have been held for six months or less, any loss
recognized will be treated as a long-term capital loss to the extent of the net
capital gain distribution. Long-term capital gains are currently taxed at a
maximum rate of 20%, and short-term capital gains are currently taxed at
ordinary income tax rates.

If any Fund fails to qualify as a RIC for any taxable year, it will be taxable
at regular corporate rates. In such an event, all distributions (including

S-29
<PAGE>

capital gains distributions) will be taxable as ordinary dividends to the extent
of the Fund's current and accumulated earnings and profits, and such
distributions will generally be eligible for the corporate dividends-received
deduction.

STATE TAXES

PORTFOLIO TRANSACTIONS

S-30
<PAGE>

The money market instruments in which the Funds invest are traded primarily in
the over-the-counter market. Bonds and debentures are usually traded
over-the-counter, but may be traded on an exchange. Where possible, the Adviser
will deal directly with the dealers who make a market in the securities involved
except in those circumstances where better prices and execution are available
elsewhere. Such dealers usually are acting as principal for their own account.
On occasion, securities may be purchased directly from the issuer. Money market
instruments are generally traded on a net basis and do not normally involve
either brokerage commissions or transfer taxes. The cost of executing portfolio
securities transactions of the Funds will primarily consist of dealer spreads
and underwriting commissions.

Although it is not expected that the Funds will do so, the Funds may execute
brokerage or other agency transactions through the Distributor, which, although
a registered broker-dealer, is limited to the sale of shares of mutual funds,
for a commission in conformity with the 1940 Act, the Securities Exchange Act of
1934 and rules promulgated by the SEC. Under these provisions, an affiliated
distributor is permitted to receive and retain compensation for effecting
portfolio transactions for a Fund on an exchange if a written contract is in
effect between the Trust and an affiliated distributor expressly permitting the
distributor to receive and retain such compensation. These rules further require
that commissions paid to an affiliated distributor by a Fund for exchange
transactions not exceed "usual and customary" brokerage commissions. The rules
define "usual and customary" commissions to include amounts which are
"reasonable and fair compared to the commission, fee or other remuneration
received or to be received by other brokers in connection with comparable
transactions involving similar securities being purchased or sold on a
securities exchange during a comparable period of time." The Trustees, including
those who are not "interested persons" of the Trust, have adopted procedures for

S-31
<PAGE>

evaluating the reasonableness of commissions paid to an affiliated distributor,
and will review these procedures periodically.

For the fiscal year ended October 31, 1996, the Clover Capital Equity Value
Portfolio paid SEI Investments Distribution Co.("SIDCO"), prior Distributor of
the Portfolios, brokerage commissions in the aggregate amount of $2,339.29. For
the fiscal year ended October 31, 1996, the commissions the Equity Value
Portfolio paid to SIDCO represented 2% of the aggregate brokerage commissions
which were paid on transactions that represented 62% of the aggregate dollar
amount of transactions that incurred commissions paid by that Portfolio during
such period. For the fiscal year ended October 31, 1996, the Clover Capital
Fixed Income Portfolio paid SIDCO brokerage commissions in the aggregate amount
of $225.03. For the fiscal year ended October 31, 1996, the commission the Fixed
Income Portfolio paid to SIDCO represented 100% of the aggregate brokerage
commissions which were paid on transactions that represented 100% of the
aggregate dollar amount of transactions that incurred commissions paid by the
Portfolio during such period.

For the fiscal period ended September 30, 1997, and for the fiscal years ended
September 30, 1998 and 1999, the Funds paid aggregate brokerage commissions as
follows:

- -----------------------------------------------------------------------------
Fund 1997 1998 1999
- -----------------------------------------------------------------------------
Small Cap Value Fund $62,804 $66,282 $59,725
- -----------------------------------------------------------------------------
Equity Value Fund $189,818 $212,062 $366,744
- -----------------------------------------------------------------------------
Max Cap Value Fund * $4,519 $6,173
- -----------------------------------------------------------------------------
Fixed Income Fund $0 $-- $838
- -----------------------------------------------------------------------------

* Not in operation during the period.
Amounts designated as "--" are either $0 or have been rounded to $0.

The total amount of securities of the Broker/Dealer held by each Fund for the
fiscal year ended September 30, 1999, are as follows:

S-32
<PAGE>

<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------
TOTAL AMOUNT OF
NAME OF SECURITIES HELD BY
FUND BROKER/DEALER EACH BROKER/DEALER TYPE OF SECURITY
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Small Cap Value Fund Morgan Stanley $1,027,107.38 Repurchase Agreement
- ---------------------------------------------------------------------------------------------------------
Equity Value Fund Morgan Stanley $4,418,635.63 Repurchase Agreement
- ---------------------------------------------------------------------------------------------------------
Max Cap Value Fund Morgan Stanley $ 105,985.77 Repurchase Agreement

Charles Schwab $ 12,632.81 Common Stock
- ---------------------------------------------------------------------------------------------------------
Fixed Income Fund Morgan Stanley $1,485,715.84 Repurchase Agreement
- ---------------------------------------------------------------------------------------------------------
</TABLE>

For the fiscal year ended September 30, 1998 and 1999, the Funds' portfolio
turnover rates were as follows:

- -------------------------------------------------------------------------
Portfolio Turnover Rate
-----------------------------
FUND 1998 1999
- -------------------------------------------------------------------------
Small Cap Value Fund 70.02% 79.93%
- -------------------------------------------------------------------------
Equity Value Fund 42.10% 98.85%
- -------------------------------------------------------------------------
Max Cap Value Fund 62.71% 92.26%
- -------------------------------------------------------------------------
Fixed Income Fund 27.07% 28.47%
- -------------------------------------------------------------------------

DESCRIPTION OF SHARES

Each share held entitles the Shareholder of record to one vote for each dollar
invested. In other words, each shareholder of record is entitled to one vote for
each dollar of net asset value of the shares held on the record date for the
meeting. Shares issued by each Fund have no preemptive, conversion, or
subscription rights. Each whole share shall be entitled to one vote and each
fractional share shall be entitled to a proportionate fractional vote. Each
Fund, as a separate series of the Trust, votes separately on matters affecting
only that Fund. Voting rights are not cumulative. Shareholders of each Class of
each Fund will vote separately on matters pertaining solely to that Fund or that
Class. As a Delaware business trust, the Trust is not required to hold annual
meetings of Shareholders, but approval will be sought for certain changes in the
operation of the Trust and for the election of Trustees under certain
circumstances.

In addition, a Trustee may be removed by the remaining Trustees or by
Shareholders at a special meeting called upon written request of Shareholders

S-33
<PAGE>

owning at least 10% of the outstanding shares of the Trust. In the event that
such a meeting is requested, the Trust will provide appropriate assistance and
information to the Shareholders requesting the meeting.

SHAREHOLDER LIABILITY

LIMITATION OF TRUSTEES' LIABILITY

5% SHAREHOLDERS

S-34
<PAGE>

NUMBER PERCENTAGE OF
FUND NAME AND ADDRESS OF BENEFICIAL OWNER OF SHARES FUND'S SHARES
---- ------------------------------------ --------- -------------
<S> <C> <C> <C>
Clover Small Cap REHO & Co 88,535.56 6.72%
Value Fund Attn: Mutual Funds 8th Floor
PO Box 1377
Buffalo, NY 14240-1377

Clover Capital Management Inc. 98,306.90 7.46%
Employee 401K Savings &
Deferred Profit Sharing Plan
11 Tobey Village Office Park
Pittsford, NY 14534

Clover Equity Value Fund National Financial Services Corp 301,936.37 7.67%
For the Exclusive Benefit of our
Customers
Attn: Mutual Funds 5th Floor
200 Liberty Street
1 World Financial Center
New York, NY 10281-1003

Clover Max Cap Value Fund REHO & Co. 48,502.98 16.57%
C/O Manufacturers & Traders
TR Co.
P.O. Box 1377
Buffalo, NY 14240-1377

Charles Schwab & Co., Inc.
Attn: Mutual Funds/Team S 49,755.94 17.00%
4500 Cherry Creek Dr. S Fl 3
Denver, CO 80209

Clover Capital Management Inc. 32,890.58 11.24%
Employee 401K Savings &
Deferred Profit Sharing Plan
11 Tobey Village Office Park
Pittsford, NY 14534

</TABLE>

S-35
<PAGE>

NUMBER PERCENTAGE OF
FUND NAME AND ADDRESS OF BENEFICIAL OWNER OF SHARES FUND'S SHARES
---- ------------------------------------ --------- -------------
<S> <C> <C> <C>
Clover Fixed Income Fund Clover Capital Management Inc. 232,916.61 6.54%
Employee 401K Savings &
Deferred Profit Sharing Plan
11 Tobey Village Office Park
Pittsford, NY 14534

REHO & Co. 662,062.95 6.54%
C/O Manufacturers & Traders
TR Co.
P.O. Box 1377
Buffalo, NY 14240-1377

Charles Schwab & Co. Inc. 776,985.52 21.80%
Attn: Mutual Funds/Team S
4500 Cherry Creek Dr. S Fl 3
Denver, CO 80209
</TABLE>

CUSTODIAN

EXPERTS

The financial statements incorporated by reference into this Statement of
Additional Information and the Financial Highlights included in the prospectuses
have been audited by Ernst & Young LLP, 2001 Market Street, Philadelphia,
Pennsylvania, 19103, independent auditors, as indicated by their report, with
respect thereto, and are included herein in reliance upon the authority of said
firm as experts in giving said report.

LEGAL COUNSEL

Morgan, Lewis & Bockius LLP, serves as counsel to the Trust.

FINANCIAL STATEMENTS

S-36
<PAGE>

APPENDIX

The following descriptions are summaries of published ratings.

DESCRIPTION OF CORPORATE BOND RATINGS

Debt rated BB, B, CCC, CC and C is regarded as having predominately speculative
characteristics with respect to capacity to pay interest and repay principal in
accordance with the terms of the obligation. BB indicates the least degree of
speculation and C the highest degree of speculation. While such debt will likely
have some quality and protective characteristics, these are outweighed by large
uncertainties of major risk exposures to adverse conditions.

The rating CI is reserved for income bonds on which no interest is being paid.

Debt rated D is in default, and payment of interest and/or repayment of
principal is in arrears.

Bonds rated Aaa by Moody's are judged to be of the best quality. They carry the
smallest degree of investment risk and are generally referred to as "gilt
edged". Interest payments are protected by a large, or an exceptionally stable,
margin and principal is secure. While the various protective elements are likely
to change, such changes as can be visualized are most unlikely to impair the
fundamentally strong position of such issues. Bonds rated Aa by Moody's are
judged by Moody's to be of high quality by all standards. Together with bonds
rated Aaa, they comprise what are generally known as high-grade bonds. They are
rated lower than the best bonds because margins of protection may not be as
large as in Aaa securities or fluctuation of protective elements may be of
greater amplitude or there may be other elements present which make the
long-term risk appear somewhat larger than in Aaa securities.

A-1
<PAGE>

adverse economic conditions or changing circumstances are more likely to lead to
a weakened capacity to pay interest and repay principal for debt in this
category than in higher rated categories.

Bonds which are rated Ba are judged to have speculative elements; their future
cannot be considered as well-assured. Often the protection of interest and
principal payments may be very moderate and thereby not well safeguarded during
both good and bad times over the future. Uncertainty of position characterizes
bonds in this class.

Bonds which are rated B generally lack characteristics of the desirable
investment. Assurance of interest and principal payments or of maintenance of
other terms of the contract over any long period of time may be small.

Bonds which are rated Caa are of poor standing. Such issues may be in default or
there may be present elements of danger with respect to principal or interest.

Bonds which are rated Ca represent obligations which are speculative in a high
degree. Such issues are often in default or have other marked shortcomings.

Bonds which are rated C are the lowest rated class of bonds and issues so rated
can be regarded as having extremely poor prospects of ever attaining any real
investment standing.

Fitch uses plus and minus signs with a rating symbol to indicate the relative
position of a credit within the rating category. Plus and minus signs, however,
are not used in the AAA category. Bonds rated AAA by Fitch are considered to be
investment grade and of the highest credit quality. The obligor has an
exceptionally strong ability to pay interest and repay principal, which is
unlikely to be affected by reasonably foreseeable events. Bonds rated AA by
Fitch are considered to be investment grade and of very high credit quality. The
obligor's ability to pay interest and repay principal is very strong, although
not quite as strong as bonds rated AAA. Because bonds rated in the AAA and AA
categories are not significantly vulnerable to foreseeable future developments,
short-term debt of these issuers is generally rated F-1+. Bonds rated A by Fitch
are considered to be investment grade and of high credit quality. The obligor's
ability to pay interest and repay principal is considered to be strong, but may
be more vulnerable to adverse changes in economic conditions and circumstances
than bonds with higher ratings. Bonds rated BBB by Fitch are considered to be
investment grade and of satisfactory credit quality. The obligor's ability to
pay interest and repay principal is considered to be adequate. Adverse changes
in economic conditions and circumstances, however, are more likely to have
adverse impact on these bonds, and therefore impair timely payment. The
likelihood that the ratings of these bonds will fall below investment grade is
higher than for bonds with higher ratings.

A-2
<PAGE>

rated BBB by Duff are judged by Duff as having below average protection factors
but still considered sufficient for prudent investment, with considerable
variability in risk during economic cycles.

DESCRIPTION OF COMMERCIAL PAPER RATINGS

Commercial paper issues rated Prime-1 or Prime-2 by Moody's are judged by
Moody's to be of "superior" quality and "strong" quality respectively on the
basis of relative repayment capacity.

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good certainty of timely payment, good access to capital markets (although
ongoing funding may enlarge total financing requirements) and sound liquidity
factors and company fundamentals. Risk factors are small.

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TIP FUNDS

PENN CAPITAL SELECT FINANCIAL SERVICES FUND
PENN CAPITAL STRATEGIC HIGH YIELD BOND FUND
PENN CAPITAL VALUE PLUS FUND

INVESTMENT ADVISER:
PENN CAPITAL MANAGEMENT COMPANY, INC.

This Statement of Additional Information is not a prospectus and relates only to
the Penn Capital Select Financial Services Fund (the "Select Financial Services
Fund"), Penn Capital Strategic High Yield Bond Fund (the "Strategic High Yield
Fund"), and Penn Capital Value Plus Fund (the "Value Plus Fund") (each a "Fund"
and, together, the "Funds"). It is intended to provide additional information
regarding the activities and operations of the TIP Funds (the "Trust"), and
should be read in conjunction with the Funds' Prospectuses dated January 31,
2000. The Prospectus may be obtained without charge by calling 1-800-224-6312.

TABLE OF CONTENTS
THE TRUST ..................................................................S-2
INVESTMENT OBJECTIVES.......................................................S-2
INVESTMENT POLICIES.........................................................S-3
DESCRIPTION OF PERMITTED INVESTMENTS AND RISK FACTORS.......................S-6
INVESTMENT LIMITATIONS.....................................................S-23
THE ADVISER................................................................S-25
THE ADMINISTRATOR..........................................................S-27
DISTRIBUTION AND SHAREHOLDER SERVICING.....................................S-28
TRUSTEES AND OFFICERS OF THE TRUST.........................................S-29
COMPUTATION OF YIELD AND TOTAL RETURN......................................S-32
PURCHASE AND REDEMPTION OF SHARES..........................................S-34
DETERMINATION OF NET ASSET VALUE...........................................S-34
TAXES......................................................................S-35
PORTFOLIO TRANSACTIONS.....................................................S-37
DESCRIPTION OF SHARES......................................................S-40
SHAREHOLDER LIABILITY......................................................S-41
LIMITATION OF TRUSTEES' LIABILITY..........................................S-41
5% SHAREHOLDERS............................................................S-42
CUSTODIAN..................................................................S-43
EXPERTS ...................................................................S-43
LEGAL COUNSEL..............................................................S-43
FINANCIAL INFORMATION......................................................S-43
APPENDIX....................................................................A-1

January 31, 2000

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THE TRUST

This Statement of Additional Information relates only to the Penn Capital Select
Financial Services Fund (the "Select Financial Services Fund"), Penn Capital
Strategic High Yield Bond Fund (the "Strategic High Yield Fund") and Penn
Capital Value Plus Fund (the "Value Plus Fund") (each a "Fund" and, together,
the "Funds"). Each Fund is a separate, diversified series of the TIP Funds
(formerly, Turner Funds) (the "Trust"), an open-end management investment
company established as a Massachusetts business trust under a Declaration of
Trust dated January 26, 1996, and amended on February 21, 1997. On January 25,
1999, the High Yield Bond Fund acquired all of the assets and liabilities of the
Alpha Select Penn Capital High Yield Bond Fund. Historical information presented
for those Funds relates to the Alpha Select Funds. The Declaration of Trust
permits the Trust to offer separate series ("portfolios") of shares of
beneficial interest ("shares"). Each portfolio is a separate mutual fund, and
each share of each portfolio represents an equal proportionate interest in that
portfolio. Shareholders may purchase shares in the Strategic High Yield Bond
Fund through two separate classes, Class I and Class II, which provide for
variations in distribution costs, tranfer agent fees, voting rights and
dividends. All other Funds in the Trust offer only Class I Shares. Except for
the differences between the Class I Shares and Class II Shares pertaining to
distribution and shareholder servicing, voting rights, dividends and transfer
agent expenses, each share of each series represents an equal proportionate
interest in that series. See "Description of Shares." The Trust also offers
shares of the Turner Large Cap Growth Equity Fund, Turner Growth Equity Fund,
Turner Midcap Growth Fund, Turner Small Cap Growth Fund, Turner Micro Cap Growth
Fund, Turner Focused Large Cap Equity Fund, Turner Top 20, Turner Technology,
Turner International Growth Fund, Turner Short Duration Government Funds-One
Year, Turner Short Duration Government Funds-Three Year Portfolio, Turner Core
High Quality Fixed Income Fund, TIP Target Select Equity Fund, Clover Max Cap
Value Fund, Clover Equity Value Fund, Clover Small Cap Value Fund, and Clover
Fixed Income Fund. Capitalized terms not defined herein are defined in the
Prospectus offering shares of the Funds.

INVESTMENT OBJECTIVES

PENN CAPITAL SELECT FINANCIAL SERVICES FUND -- The Select Financial Services
Fund seeks to generate long term capital appreciation.

PENN CAPITAL STRATEGIC HIGH YIELD BOND FUND -- The Strategic High Yield Fund
seeks to maximize income through high current yield and, as a secondary
objective, to produce above average capital appreciation.

PENN CAPITAL VALUE PLUS FUND -- The Value Plus Fund seeks to achieve capital
appreciation and above average income with less risk than the average risk of
the S&P 500 Index.

There can be no assurance that any Fund will achieve its investment objective.

INVESTMENT POLICIES

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PENN CAPITAL SELECT FINANCIAL SERVICES FUND

The Select Financial Services Fund invests primarily (and, under normal
conditions, at least 65% of its total assets) in the equity securities of
companies principally engaged in the banking industry and the financial services
sector. At least 25% (and up to 100%) of the Fund's total assets will be
invested in issuers in the banking industry. To the extent its investments are
concentrated in the banking industry, the Fund is subject to the risks
associated with that industry, including sensitivity to interest rate changes
and potentially adverse legislative and regulatory changes. Examples of
companies in the banking industry include commercial and industrial banks,
savings and loan associations and their holding companies. Examples of companies
in the financial services sector include investment advisers, brokerage
companies, insurance companies, real estate and leasing companies, and companies
that span across these segments.

Generally speaking, the Fund will hold a diversified portfolio of companies with
strong fundamentals, many of which Penn Capital Management Company, Inc. ("Penn
Capital") 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
(takeover candidates). Any remaining assets may be invested in equity securities
and fixed income securities, warrants and rights to purchase common stocks, and
in ADRs. The Fund may also purchase shares of other investment companies and
foreign securities, and may purchase high yield, high risk securities (otherwise
known as "junk bonds") as a means of seeking to generate current income.

The Fund may invest in non-rated securities or in securities rated in the lowest
ratings categories established by the Standard & Poor's Corporation ("S&P")
and/or Moody's Investors Service, Inc. ("Moody's"). Securities rated below
investment grade will not constitute more than 15% of the Select Financial
Services Fund's total assets.

The Fund may invest in repurchase agreements, participate in a securities
lending program, which entails a risk of loss should a borrower fail
financially, and purchase Rule 144A securities.

S-3
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The Fund may invest in certain instruments such as certain types of mortgage
securities and when-issued securities, and may, to a limited extent, borrow
money and utilize leveraging techniques. These investments and techniques, along
with certain transactions involving futures, options, forwards and swaps,
require the Fund to segregate some or all of its cash or liquid securities to
cover its obligations pursuant to such instruments or techniques. As asset
segregation reaches certain levels, the Fund may lose flexibility in managing
its investments properly, responding to shareholder redemption request, or
meeting other obligations and may be forced to sell other securities that it
wanted to retain or to realize unintended gains or losses.

The Fund may also invest in federal, state and municipal government obligations,
investment grade corporate bonds, foreign securities, including emerging market
securities, zero coupon, pay-in-kind and deferred payment bonds, variable and
floating rate securities, money market instruments, shares of other investment
companies and cash equivalents, and may invest up to 20% of its assets in ADRs.

The Fund may, although it has no present intention to do so, invest a portion of
its assets in derivatives, including futures, options, forwards and swaps.
Futures contracts, options, options on futures contracts, forwards and swaps
entail certain costs and risks, including imperfect correlation between the
value of the securities held by the Fund and the value of the particular
derivative instrument, and the risk that the Fund could not close out a futures
or options position when it would be most advantageous to do so.

The Fund may invest up to 15% of its net assets in illiquid securities, and for
temporary defensive purposes, may invest up to 100% of its total assets in money
market instruments (including U.S. Government securities, bank obligations,
commercial paper rated in the highest rating category by a nationally recognized
statistical rating organization ("NRSRO") and shares of money market investment
companies and may hold a portion of its assets in cash.

PENN CAPITAL STRATEGIC HIGH YIELD BOND FUND

The Strategic High Yield Fund invests primarily (and, under normal conditions,
at least 65% of its total assets) in a diversified portfolio of high yield
securities (otherwise known as "junk bonds"). Securities and other financial
instruments of issuers that may or may not be paying interest on a current basis
and that are currently experiencing financial difficulties including,
potentially, companies which are undergoing or are likely to undergo financial
restructuring or liquidation, both under and outside of Federal Bankruptcy Code
proceedings, are also included in the high yield universe and may be acquired by
the Fund. The Fund invests primarily in publicly traded securities, and, to a
lesser extent, privately placed restricted securities and other financial
instruments for which there is a more limited trading market.

The Adviser believes that the market for high yield securities is relatively
inefficient compared to other securities due to the limited availability of
information on such securities, the lack of extensive institutional research
coverage of and market making activity with respect to many issuers of such
securities, the complexity and difficulty of evaluation of such securities, and
the limited liquidity, at times, of such securities. The Adviser intends to
exploit these inefficiencies using its knowledge and experience in the high
yield market. The Adviser seeks to reduce risk through diversification, credit
analysis and attention to current developments and trends in both the economy
and financial markets.

The Fund will invest primarily in securities rated BB+ or Ba1 or lower by S&P
and/or Moody's, and may invest in non-rated securities and in securities rated
in the lowest rating

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category established by S&P and/or Moody's. Securities in the lowest ratings
categories may be in default. See Appendix A for a discussion of these ratings.
Any remaining assets may be invested in equity securities and investment grade
fixed income securities. In addition, the Fund may engage in short sales against
the box.

PENN CAPITAL VALUE PLUS FUND

The Value Plus Fund invests primarily (and, under normal conditions, at least
65% of its total assets) in a diversified portfolio of equity securities that
may or may not pay dividends but whose main contribution to total return is
intended from capital appreciation. The "value" equity securities the Fund will
purchase will tend to have a low price to earnings ratio relative to the
securities market prices. The Fund will invest any remaining assets in
fixed-income securities, cash and money market instruments, and may invest up to
35% of its assets in high yield securities.

The Fund seeks to provide, through a combination of income and capital
appreciation, a total return consistent with a reasonable level of risk by
investing in value equity securities and in fixed income obligations, including
high yield securities. The Fund strives to secure a current yield appreciably
higher than the average dividend yield of the companies comprising the S&P 500
Index. Typically, portfolios with high current income also exhibit less
volatility and superior returns in down markets. The Fund actively seeks
opportunity and value in all parts of a company's capital structure, including
common and preferred stocks, as well as investment grade and high yield
corporate and convertible bonds. Typically, one-third of the Fund's assets will
be invested in large cap value equity securities (I.E., securities of issuers
with market capitalizations of over $1 billion), one third in small cap value
equity securities (I.E., securities of issuers with market capitalizations of
less than $1 billion) and one third in bonds (primarily high yield securities)
in order to generate interest income. The Fund's exposure to junk bonds will not
exceed 35% of its total assets.

The Fund will invest primarily in publicly-traded securities, yet will maintain
the right to purchase private securities for which there is a more limited
trading market. The Fund generally seeks diversity both in terms of industries
and issuers, but may invest relatively high proportions of its assets in a
single industry or issuer. The Fund will also from time to time invest in the
securities of companies engaged in an initial public offering.

The fixed income investments of the Fund consist primarily, but not exclusively,
of cash paying, high yield corporate bonds. The Fund may invest in non-rated
securities or in securities rated in the lowest ratings categories established
by S&P and/or Moody's. See Appendix A for a discussion of the these ratings.

The Fund may participate in a securities lending program, which entails a risk
of loss should a borrower fail financially. The Fund may purchase Rule 144A
securities. The Fund may invest in certain instruments such as certain types of
mortgage securities and when-issued securities, and may, to a limited extent,
borrow money and utilize leveraging

S-5
<PAGE>

techniques. These investments and techniques, along with certain transactions
involving futures, options, forwards and swaps, require a Fund to segregate some
or all of its cash or liquid securities to cover its obligations pursuant to
such instruments or techniques. As asset segregation reaches certain levels, the
Fund may lose flexibility in managing its investments properly, responding to
shareholder redemption request, or meeting other obligations and may be forced
to sell other securities that it wanted to retain or to realize unintended gains
or losses.

Investments in floating rate securities (floaters) and inverse floating rate
securities (inverse floaters) and mortgage-backed securities (mortgage
securities), including principal-only and interest-only stripped mortgage-backed
securities (SMBs), may be highly sensitive to interest rate changes, and highly
sensitive to the rate of principal payments (including prepayments on underlying
mortgage assets).

DESCRIPTION OF PERMITTED INVESTMENTS AND RISK FACTORS

The following is a description of permitted investments for the Funds:

AMERICAN DEPOSITARY RECEIPTS ("ADRS")

S-6
<PAGE>

ASSET-BACKED SECURITIES

BORROWING

The Funds may borrow money equal to 5% of their total assets for temporary
purposes to meet redemptions or to pay dividends. Borrowing may exaggerate
changes in the net asset value of a Fund's shares and in the return on the
Fund's portfolio. Although the principal of any borrowing will be fixed, a
Fund's assets may change in value during the time the borrowing is outstanding.
A Fund may be required to liquidate portfolio securities at a time when it would
be disadvantageous to do so in order to make payments with respect to any
borrowing. The Funds may be required to segregate liquid assets in an amount
sufficient to meet their obligations in connection with such borrowings. In
addition, the Strategic High Yield Fund may borrow to leverage its portfolio.
Such borrowings may take the form of a margin account or a conventional bank
borrowings in connection with securities purchases or interest rate arbitrage
transactions. In an interest rate arbitrage transaction, the Fund borrows money
at one interest rate and lends the proceeds at another, higher interest rate.
These transactions involve a number of risks, including the risk that the
borrower will fail or otherwise become insolvent or that there will be a
significant change in prevailing interest rates.

CONVERTIBLE SECURITIES

EQUITY SECURITIES

S-7
<PAGE>

the credit quality of the issuer and any call provision. Fluctuations in the
value of equity securities in which an equity Fund invests will cause the net
asset value of the Fund to fluctuate. An investment in an equity Fund may be
more suitable for long-term investors who can bear the risk of short-term
principal fluctuations.

FIXED INCOME SECURITIES

FORWARD FOREIGN CURRENCY CONTRACTS

A forward contract involves an obligation to purchase or sell a specific
currency amount at a future date, agreed upon by the parties, at a price set at
the time of the contract. A Fund may also enter into a contract to sell, for a
fixed amount of U.S. dollars or other appropriate currency, the amount of
foreign currency approximating the value of some or all of a Fund's securities
denominated in such foreign currency.

FUTURES CONTRACTS AND OPTIONS ON FUTURES CONTRACTS

S-8
<PAGE>

traded on national futures exchanges. In addition, a Fund will only sell covered
futures contracts and options on futures contracts.

No price is paid upon entering into futures contracts. Instead, a Fund would be
required to deposit an amount of cash or U.S. Treasury securities known as
"initial margin." Subsequent payments, called "variation margin, " to and from
the broker, would be made on a daily basis as the value of the futures position
varies (a process known as "marking to market"). The margin is in the nature of
a performance bond or good-faith deposit on a futures contract.

There are risks associated with these activities, including the following: (1)
the success of a hedging strategy may depend on an ability to predict movements
in the prices of individual securities, fluctuations in markets and movements in
interest rates; (2) there may be an imperfect or no correlation between the
changes in market value of the securities held by a Fund and the prices of
futures and options on futures; (3) there may not be a liquid secondary market
for a futures contract or option; (4) trading restrictions or limitations may be
imposed by an exchange; and (5) government regulations may restrict trading in
futures contracts and futures options.

S-9
<PAGE>

HIGH YIELD FOREIGN SOVEREIGN DEBT SECURITIES

Investing in fixed and floating rate high yield foreign sovereign debt
securities will expose the Strategic High Yield Fund to the direct or indirect
consequences of political, social or economic changes in the countries that
issue the securities. The ability and willingness of sovereign obligers in
developing and emerging market countries or the governmental authorities that
control repayment of their external debt to pay principal and interest on such
debt when due may depend on general economic and political conditions within the
relevant country. Countries such as those in which the Fund may invest have
historically experienced, and may continue to experience, high rates of
inflation, high interest rates, exchange rate or trade difficulties and extreme
poverty and unemployment. Many of these countries are also characterized by
political uncertainty or instability.

ILLIQUID SECURITIES

Illiquid securities are securities that cannot be disposed of within seven
business days at approximately the price at which they are being carried on a
Fund's books. Illiquid securities include demand instruments with demand notice
periods exceeding seven days, securities for which there is no active secondary
market, and repurchase agreements with durations or maturities over seven days
in length.

INVESTMENT COMPANY SHARES

Each Fund may invest in shares of other investment companies, to the extent
permitted by applicable law. These investment companies typically incur fees
that are separate from those fees incurred directly by the Fund. A Fund's
purchase of such investment company securities results in the layering of
expenses, such that shareholders would indirectly bear a proportionate share of
the operating expenses of such investment companies, including advisory fees, in
addition to paying Fund expenses. Under applicable regulations, a Fund is
prohibited from acquiring the securities of another investment company if, as a
result of such acquisition: (1) the Fund owns more than 3% of the total voting
stock of the other company; (2) securities issued by any one investment company
represent more than 5% of the Fund's total assets; or (3) securities (other than
treasury stock) issued by all investment companies represent more than 10% of
the total assets of the Fund. See also "Investment Limitations."

LEVERAGING

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Leveraging a Fund creates an opportunity for increased net income, but, at the
same time, creates special risk considerations. For example, leveraging may
exaggerate changes in the net asset value of a Fund's shares and in the yield on
the Fund's portfolio. Although the principal of such borrowings will be fixed, a
Fund's assets may change in value during the time the borrowing is outstanding.
Leveraging creates interest expenses for a Fund which could exceed the income
from the assets retained. To the extent the income derived from securities
purchased with borrowed funds exceeds the interest that a Fund will have to pay,
the Fund's net income will be greater than if leveraging were not used.
Conversely, if the income from the assets retained with borrowed funds is not
sufficient to cover the cost of leveraging, the net income of the Fund will be
less than if leveraging were not used, and therefore the amount available for
distribution to stockholders as dividends will be reduced. Because the
Securities and Exchange Commission (the "SEC") staff believes both reverse
repurchase agreements and dollar roll transactions are collateralized
borrowings, the SEC staff believes that they create leverage, which is a
speculative factor. The requirement that such transactions be fully
collateralized by assets segregated by the Fund's Custodian does impose a
practical limit on the leverage created by such transactions.

LOAN PARTICIPATIONS AND ASSIGNMENTS

Loan participations are interests in loans to corporations or governments which
are administered by the lending bank or agent for a syndicate member
("intermediary bank"). In a loan participation, the borrower will be deemed to
be the issuer of the participation interest, except to the extent the Strategic
High Yield Fund derives its rights from the intermediary bank. Because the
intermediary bank does not guarantee a loan participation in any way, a loan
participation is subject to the credit risks generally associated with the
underlying borrower. In the event of the bankruptcy or insolvency of the
borrower, a loan participation may be subject to certain defenses that can be
asserted by such borrower as a result of improper conduct by the intermediary
bank. In addition, in the event the underlying borrower fails to pay principal
and interest when due, the Fund may be subject to delays, expenses and risks
that are greater than those that would have been involved if the Fund had
purchased a direct obligation of such borrower. Under the terms of a loan
participation, the Fund may be regarded as a creditor of the intermediary bank
(rather than of the underlying borrower) so that the Fund may also be subject to
the risk that the intermediary bank may become insolvent.

Loan assignments are investments in assignments of all or a portion of certain
loans from third parties. When a Fund purchases assignments from lenders it will
acquire direct rights against the borrower on the loan. Since assignments are
arranged through private negotiations between potential assignees and assignors,
however, the rights and obligations acquired by the Fund may differ from, and be
more limited than, those held by the assigning lender. Loan participations and
assignments may be considered liquid, as determined by the Fund's adviser based
on criteria approved by the Board of Trustees.

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<PAGE>

LOWER-RATED SECURITIES

Lower-rated securities are lower-rated bonds commonly referred to as "junk
bonds" or high-yield securities. These securities are rated lower than Baa3 by
Moody's and/or lower than BBB- by S&P. The Funds may invest in securities rated
in the lowest ratings categories established by Moody's or by S&P. These ratings
indicate that the obligations are speculative and may be in default. In
addition, the Funds may invest in unrated securities of comparable quality
subject to the restrictions stated in the Funds' Prospectus.

CERTAIN RISK FACTORS RELATING TO HIGH-YIELD, HIGH-RISK SECURITIES

The descriptions below are intended to supplement the discussion in the
Prospectus.

GROWTH OF HIGH-YIELD, HIGH-RISK BOND MARKET

SENSITIVITY TO INTEREST RATE AND ECONOMIC CHANGES

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<PAGE>

PAYMENT EXPECTATIONS

LIQUIDITY AND VALUATION

TAXES

MONEY MARKET INSTRUMENTS

Money market securities are high-quality, dollar-denominated, short-term debt
instruments. They consist of: (i) bankers' acceptances, certificates of
deposits, notes and time deposits of highly-rated U.S. banks and U.S. branches
of foreign banks; (ii) U.S. Treasury obligations and obligations issued or
guaranteed by the agencies and instrumentalities of the U.S. Government; (iii)
high-quality commercial paper issued by U.S. and foreign corporations; (iv) debt
obligations with a maturity of one year or less issued by corporations with
outstanding high-quality commercial paper ratings; and (v) repurchase agreements
involving any of the foregoing obligations entered into with highly-rated banks
and broker-dealers.

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<PAGE>

MORTGAGE- AND ASSET-BACKED SECURITIES

The Funds may invest in mortgage-backed securities and asset-backed securities.
Two principal types of mortgage-backed securities are collateralized mortgage
obligations ("CMOs") and real estate mortgage investment conduits ("REMICs"),
which are rated in one of the top two categories by S&P or Moody's. CMOs are
securities collateralized by mortgages, mortgage pass-throughs, mortgage
pay-through bonds (bonds representing an interest in a pool of mortgages where
the cash flow generated from the mortgage collateral pool is dedicated to bond
repayment), and mortgage-backed bonds (general obligations of the issuers
payable out of the issuers' general funds and additionally secured by a first
lien on a pool of single family detached properties). CMOs typically are issued
with a number of classes or series which have different maturities and which are
retired using cash flow from underlying collateral according to a specified
plan.

Investors purchasing such CMOs in the shortest maturities receive or are
credited with their pro rata portion of the scheduled payments of interest and
principal on the underlying mortgages plus all unscheduled prepayments of
principal up to a predetermined portion of the total CMO obligation. Until that
portion of such CMO obligation is repaid, investors in the longer maturities
receive interest only. Accordingly, the CMOs in the longer maturity series are
less likely than other mortgage pass-throughs to be prepaid prior to their
stated maturity. Although some of the mortgages underlying CMOs may be supported
by various types of insurance, and some CMOs may be backed by GNMA certificates
or other mortgage pass-throughs issued or guaranteed by U.S. Government agencies
or instrumentalities, the CMOs themselves are not generally guaranteed.

REMICs, which were authorized under the Tax Reform Act of 1986, are private
entities formed for the purpose of holding a fixed pool of mortgages secured by
an interest in real property. REMICs are similar to CMOs in that they issue
multiple classes of securities.

In addition to mortgage-backed securities, the Funds may invest in securities
secured by asset-backed securities including company receivables, truck and auto
loans, leases, and credit card receivables. These issues may be traded
over-the-counter and typically have a short-intermediate maturity structure
depending on the paydown characteristics of the underlying financial assets
which are passed through to the security holder.

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<PAGE>

payments on those securities. Asset-backed securities entail prepayment risk,
which may vary depending on the type of asset, but is generally less than the
prepayment risk associated with mortgage-backed securities. In addition, credit
card receivables are unsecured obligations of card holders.

PORTFOLIO TURNOVER

An annual portfolio turnover rate in excess of 100% may result from the
Adviser's investment strategy or from prevailing market conditions. Portfolio
turnover rates in excess of 100% may result in higher transaction costs,
including increased brokerage commissions, and higher levels of taxable capital
gain.

OBLIGATIONS OF SUPRANATIONAL AGENCIES

The Funds may purchase obligations of supranational agencies. Currently, the
Funds only intend to invest in obligations issued or guaranteed by the Asian
Development Bank, Inter-American Development Bank, International Bank for
Reconstruction and Development (World Bank), African Development Bank, European
Coal and Steel Community, European Economic Community, European Investment Bank
and Nordic Investment Bank.

OPTIONS

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A Fund may write covered call options as a means of increasing the yield on its
fund and as a means of providing limited protection against decreases in its
market value. When a Fund sells an option, if the underlying securities do not
increase or decrease to a price level that would make the exercise of the option
profitable to the holder thereof, the option generally will expire without being
exercised and the Fund will realized as profit the premium received for such
option. When a call option written by a Fund is exercised, the Fund will be
required to sell the underlying securities to the option holder at the strike
price, and will not participate in any increase in the price of such securities
above the strike price. When a put option written by a Fund is exercised, the
Fund will be required to purchase the underlying securities at the strike price,
which may be in excess of the market value of such securities.

A Fund may purchase and write options on an exchange or over-the-counter.
Over-the-counter options ("OTC options") differ from exchange-traded options in
several respects. They are transacted directly with dealers and not with a
clearing corporation, and therefore entail the risk of non-performance by the
dealer. OTC options are available for a greater variety of securities and for a
wider range of expiration dates and exercise prices than are available for
exchange-traded options. Because OTC options are not traded on an exchange,
pricing is done normally by reference to information from a market maker. It is
the position of the SEC that OTC options are generally illiquid.

A Fund may purchase and write put and call options on foreign currencies (traded
on U.S. and foreign exchanges or over-the-counter markets) to manage its
exposure to exchange rates. Call options on foreign currency written by a Fund
will be "covered," which means that the Fund will own an equal amount of the
underlying foreign currency. With respect to put options on foreign currency
written by a Fund, the Fund will establish a segregated account with its
Custodian consisting of cash or liquid securities in an amount equal to the
amount the Fund would be required to pay upon exercise of the put.

All options written on securities or indices must be covered. When a Fund writes
an option on an index or a security, it will establish a segregated account
containing cash or liquid

S-16
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securities with its custodian in an amount at least equal to the market value of
the option and will maintain the account while the option is open or will
otherwise cover the transaction.

REITS

The Funds may invest in real estate investment trusts ("REITs"), which pool
investors' funds for investment in income producing commercial real estate or
real estate related loans or interests.

A REIT is not taxed on income distributed to its shareholders or unitholders if
it complies with regulatory requirements relating to its organization,
ownership, assets and income, and with a regulatory requirement that it
distribute to its shareholders or unitholders at least 95% of its taxable income
for each taxable year. Generally, REITs can be classified as Equity REITs,
Mortgage REITs and Hybrid REITs. Equity REITs invest the majority of their
assets directly in real property and derive their income primarily from rents
and capital gains from appreciation realized through property sales. Mortgage
REITs invest the majority of their assets in real estate mortgages and derive
their income primarily from interest payments. Hybrid REITs combine the
characteristics of both Equity and Mortgage REITs. Shareholders in the Funds
should realize that by investing in REITs indirectly through the Funds, he or
she will bear not only his or her proportionate share of the expenses of the
Fund, but also indirectly, similar expenses of underlying REITs.

S-17
<PAGE>

REPURCHASE AGREEMENTS

Repurchase agreements are agreements by which a Fund obtains a security and
simultaneously commits to return the security to the seller (a member bank of
the Federal Reserve System or primary securities dealer as recognized by the
Federal Reserve Bank of New York) at an agreed upon price (including principal
and interest) on an agreed upon date within a number of days (usually not more
than seven) from the date of purchase. The resale price reflects the purchase
price plus an agreed upon market rate of interest which is unrelated to the
coupon rate or maturity of the underlying security. A repurchase agreement
involves the obligation of the seller to pay the agreed upon price, which
obligation is in effect secured by the value of the underlying security.

Repurchase agreements are considered to be loans by a Fund for purposes of its
investment limitations. The repurchase agreements entered into by a Fund will
provide that the underlying security at all times shall have a value at least
equal to 102% of the resale price stated in the agreement (the Adviser monitors
compliance with this requirement). Under all repurchase agreements entered into
by a Fund, the Trust's Custodian or its agent must take actual or constructive
possession of the underlying collateral. However, if the seller defaults, a Fund
could realize a loss on the sale of the underlying security to the extent that
the proceeds of sale, including accrued interest, are less than the resale price
provided in the agreement including interest. In addition, even though the
Bankruptcy Code provides protection for most repurchase agreements, if the
seller should be involved in bankruptcy or insolvency proceedings, a Fund may
incur delay and costs in selling the underlying security or may suffer a loss of
principal and interest if the Fund is treated as an unsecured creditor and is
required to return the underlying security to the seller's estate.

RULE 144A SECURITIES

Rule 144A securities are securities exempt from registration on resale pursuant
to Rule 144A under the 1933 Act. Rule 144A securities are traded in the
institutional market pursuant to this registration exemption, and, as a result,
may not be as liquid as exchange-traded securities since they may only be resold
to certain qualified institutional investors. Due to the relatively limited size
of this institutional market, these securities may affect a Fund's liquidity to
the extent that qualified institutional buyers become, for a time, uninterested
in purchasing such securities. Nevertheless, Rule 144A securities may be treated
as liquid securities pursuant to guidelines adopted by the Trust's Board of
Trustees.

SECURITIES LENDING

In order to generate additional income, a Fund may lend securities which it owns
pursuant to agreements requiring that the loan be continuously secured by
collateral consisting of cash or securities of the U.S. Government or its
agencies equal to at least 100% of the market value of the loaned securities. A
Fund continues to receive interest on the loaned

S-18
<PAGE>

securities while simultaneously earning interest on the investment of cash
collateral. Collateral is marked to market daily. There may be risks of delay in
recovery of the securities or even loss of rights in the collateral should the
borrower of the securities fail financially or become insolvent.

SECURITIES OF FOREIGN ISSUERS

The Funds may invest in securities of foreign issuers. In addition, the Funds
may invest in American Depositary Receipts. These instruments may subject a Fund
to investment risks that differ in some respects from those related to
investments in obligations of U.S. domestic issuers. These include risks of
adverse political and economic developments (including possible governmental
seizure or nationalization of assets), the possible imposition of exchange
controls or other governmental restrictions, less uniformity in accounting and
reporting requirements, the possibility that there will be less information on
such securities and their issuers available to the public, the difficulty of
obtaining or enforcing court judgments abroad, restrictions on foreign
investments in other jurisdictions, difficulties in effecting repatriation of
capital invested abroad and difficulties in transaction settlements and the
effect of delay on shareholder equity. Foreign securities may be subject to
foreign taxes, and may be less marketable than comparable U.S. securities. The
value of a Fund's investments denominated in foreign currencies will depend on
the relative strengths of those currencies and the U.S. dollars, and the Fund
may be affected favorably or unfavorably by changes in the exchange rates or
exchange control regulations between foreign currencies and the U.S. dollar.
Changes in foreign currency exchange rates also may affect the value of
dividends and interest earned, gains and losses realized on the sale of
securities and net investment income and gains if any, to be distributed to
shareholders by a Fund. Foreign branches of U.S. banks and foreign banks may be
subject to less stringent reserve requirements than those applicable to domestic
branches of U.S. banks. Furthermore, emerging market countries may have less
stable political environments than more developed countries. Also, it may be
more difficult to obtain a judgment in a court outside the United States.

SHORT SALES

A short sale is "against the box" if at all times during which the short
position is open, the Fund owns at least an equal amount of the securities or
securities convertible into, or exchangeable without further consideration for,
securities of the same issue as the securities that are sold short.

SWAPS, CAPS, FLOORS AND COLLARS

S-19
<PAGE>

In a typical interest rate swap, one party agrees to make regular payments equal
to a floating interest rate times a "notional principal amount," in return for
payments equal to a fixed rate times the same amount, for a specific period of
time. If a swap agreement provides for payment in different currencies, the
parties might agree to exchange the notional principal amount as well. Swaps may
also depend on other prices or rates, such as the value of an index or mortgage
prepayment rates.

In a typical cap or floor agreement, the buyer of an interest rate cap obtains
the right to receive payments to the extent that a specific interest rate
exceeds an agreed-upon level, while the seller of an interest rate floor is
obligated to make payments to the extent that a specified interest rate falls
below an agreed-upon level. An interest rate collar combines elements of buying
a cap and selling a floor. In swap agreements, if a Fund agrees to exchange
payments in dollars for payments in foreign currency, the swap agreement would
tend to decrease the Fund's exposure to U.S. interest rates and increase its
exposure to foreign currency and interest rates. Caps and floors have an effect
similar to buying or writing options. Depending on how they are used, swap
agreements may increase or decrease the overall volatility of a Fund's
investment and their share price and yield.

Swap agreements are sophisticated hedging instruments that typically involve a
small investment of cash relative to the magnitude of risk assumed. As a result,
swaps can be highly volatile and have a considerable impact on a Fund's
performance.

Swap agreements are subject to risks related to the counterparty's ability to
perform, and may decline in value if the counterparty's creditworthiness
deteriorates. A Fund may also suffer losses if it is unable to terminate
outstanding swap agreements or reduce its exposure through offsetting
transactions. Any obligation a Fund may have under these types of arrangements
will be covered by setting aside cash or liquid securities in a segregated
account. A Fund will enter into swaps only with counterparties believed to be
creditworthy.

VARIABLE AND FLOATING RATE INSTRUMENTS

U.S. GOVERNMENT AGENCY OBLIGATIONS

S-20
<PAGE>

Certain Federal agencies, such as the Government National Mortgage Association
("GNMA"), have been established as instrumentalities of the United States
Government to supervise and finance certain types of activities. Issues of these
agencies, while not direct obligations of the United States Government, are
either backed by the full faith and credit of the United States (E.G., GNMA
securities) or supported by the issuing agencies' right to borrow from the
Treasury. The issues of other agencies are supported by the credit of the
instrumentality (E.G., Fannie Mae securities).

U.S. GOVERNMENT SECURITIES

U.S. Government Securities are bills, notes and bonds issued by the U.S.
Government and are securities backed by the full faith and credit of the United
States.

U.S. TREASURY OBLIGATIONS

U.S. TREASURY RECEIPTS

U.S. Treasury receipts are interests in separately traded interest and principal
component parts of U.S. Treasury obligations that are issued by banks or
brokerage firms and are created by depositing U.S. Treasury obligations into a
special account at a custodian bank. The custodian holds the interest and
principal payments for the benefit of the registered owners of the certificates
of receipts. The custodian arranges for the issuance of the certificates or
receipts evidencing ownership and maintains the register.

VARIABLE OR FLOATING RATE INSTRUMENTS

The Funds may invest in variable or floating rate instruments which may involve
a demand feature and may include variable amount master demand notes which may
or may not be backed by bank letters of credit. Such instruments bear interest
at rates which are not fixed, but which vary with changes in specified market
rates or indices. The interest rates on these securities may be reset daily,
weekly, quarterly or some other reset period, and may have a floor or ceiling on
interest rate changes. There is a risk that the current interest rate on such
obligations may not accurately reflect existing market interest rates. A demand
instrument with a demand notice exceeding seven days may be considered illiquid
if there is no secondary market for such security.

The holder of an instrument with a demand feature may tender the instrument back
to the issuer at par prior to maturity. A variable amount master demand note is
issued pursuant

S-21
<PAGE>

to a written agreement between the issuer and the holder, its amount may be
increased by the holder or decreased by the holder or issuer, it is payable on
demand, and the rate of interest varies based upon an agreed formula. The
quality of the underlying credit must, in the opinion of the Adviser, be
equivalent to the long-term bond or commercial paper ratings applicable to
permitted investments for the Funds. The Adviser will monitor on an ongoing
basis the earnings power, cash flow and liquidity ratios of the issuers of such
instruments and will similarly monitor the ability of an issuer of a demand
instrument to pay principal and interest on demand.

WARRANTS

Warrants are instruments giving holders the right, but not the obligation, to
buy equity or fixed income securities of a company at a given price during a
specified period.

WHEN-ISSUED AND DELAYED DELIVERY SECURITIES

When-issued or delayed delivery transactions involve the purchase of an
instrument with payment and delivery taking place in the future. Delivery of and
payment for these securities may occur a month or more after the date of the
purchase commitment. The Fund will maintain with the Custodian a separate
account with liquid securities or cash in an amount at least equal to these
commitments. The interest rate realized on these securities is fixed as of the
purchase date, and no interest accrues to a Fund before settlement.

YEAR 2000

ZERO COUPON, PAY-IN-KIND AND DEFERRED PAYMENT SECURITIES

S-22
<PAGE>

Zero coupon obligations are debt securities that do not bear any interest, but
instead are issued at a deep discount from par. The value of a zero coupon
obligation increases over time to reflect the interest accredited. Upon
maturity, the holder is entitled to receive the par value of the security. While
interest payments are not made on such securities, holders of such securities
are deemed to have received "phantom income" annually. Because a Fund will
distribute its "phantom income" to shareholders, to the extent that shareholders
elect to receive dividends in cash rather than reinvesting such dividends in
additional shares, a Fund will have fewer assets with which to purchase income
producing securities. In the event of adverse market conditions, zero coupon,
pay-in-kind and deferred payment securities may be subject to greater
fluctuations in value and may be less liquid than comparably rated securities
paying cash interest at regular interest payment periods.

INVESTMENT LIMITATIONS

FUNDAMENTAL POLICIES

The following investment limitations (and those set forth in the Prospectus) are
fundamental policies of each Fund which cannot be changed with respect to a Fund
without the consent of the holders of a majority of that Fund's outstanding
shares. The term "majority of the outstanding shares" means the vote of (i) 67%
or more of a Fund's shares present at a meeting, if more than 50% of the
outstanding shares of the Fund are present or represented by proxy, or (ii) more
than 50% of the Fund's outstanding shares, whichever is less.

No Fund may:

2. Purchase any securities which would cause 25% or more of the total assets
of the Fund to be invested in the securities of one or more issuers
conducting their principal business activities in the same industry. This
limitation does not apply to obligations issued or guaranteed by the U.S.
Government or its agencies and instrumentalities and repurchase agreements
involving such securities. This limitation does not apply to the Select
Financial Services Fund.

3. Borrow money in an amount exceeding 33 1/3% of the value of its total
assets, provided that, for purposes of this limitation, investment
strategies which either

S-23
<PAGE>

obligate a Fund to purchase securities or require the Fund to segregate
assets are not considered to be borrowings. Asset coverage of at least 300%
is required for all borrowings, except where the Fund has borrowed money
for temporary purposes in amounts not exceeding 5% of its total assets. The
Fund will not purchase securities while its borrowings exceed 5% of its
total assets.

5. Purchase or sell real estate, physical commodities, or commodities
contracts, except that each Fund may purchase (i) marketable securities
issued by companies which own or invest in real estate (including real
estate investment trusts), commodities, or commodities contracts; and (ii)
commodities contracts relating to financial instruments, such as financial
futures contracts and options on such contracts.

6. Issue senior securities (as defined in the 1940 Act) except as permitted by
rule, regulation or order of the SEC.

7. Act as an underwriter of securities of other issuers except as it may be
deemed an underwriter in selling a portfolio security.

8. Invest in interests in oil, gas, or other mineral exploration or
development programs and oil, gas or mineral leases.

The foregoing percentages will apply at the time of the purchase of a security
and shall not be considered violated unless an excess or deficiency occurs
immediately after or as a result of a purchase of such security.

NON-FUNDAMENTAL POLICIES

The following investment limitations are non-fundamental policies of each Fund
and may be changed with respect to a Fund by the Board of Trustees.

No Fund may:

1. Pledge, mortgage or hypothecate assets except to secure borrowings
permitted by the Fund's fundamental limitation on borrowing.

2. Invest in companies for the purpose of exercising control.

S-24
<PAGE>

4. Invest its assets in securities of any investment company, except as
permitted by the 1940 Act.

Unregistered securities sold in reliance on the exemption from registration in
Section 4(2) of the 1933 Act and securities exempt from registration on re-sale
pursuant to Rule 144A of the 1933 Act may be treated as liquid securities under
procedures adopted by the Board of Trustees. Rule 144A securities are securities
that are traded in the institutional market pursuant to an exemption from
registration. Rule 144A securities may not be as liquid as exchange-traded
securities since they may only be resold to certain qualified institutional
buyers.

THE ADVISER

Penn Capital Management Company, Inc. ("Penn Capital" or the "Adviser"), 52
Haddonfield-Berlin Road, Suite 1000, Cherry Hill, New Jersey 08034, is a
professional investment management firm founded in 1987 and registered as an
investment adviser under the Investment Advisers Act. Richard A. Hocker is a
founding partner and Chief Investment Officer of the Adviser, an investment
management firm that manages the investment portfolios of institutions and high
net worth individuals and which currently has assets under management of
approximately $450 million. The Adviser employs a staff of 18 and manages monies
in a variety of investment styles through either separate account management or
one of its private investment funds.

The Adviser serves as the investment adviser for the Fund under an investment
advisory agreement (the "Advisory Agreement"). Under the Advisory Agreement, the
Adviser makes the investment decisions for the assets of the Fund and
continuously reviews, supervises and administers the Fund's investment programs,
subject to the supervision of, and policies established by, the Trustees of the
Trust.

S-25
<PAGE>

The Advisory Agreement provides that the Adviser shall not be liable for any
error of judgment or mistake of law or for any loss arising out of any
investment or for any act or omission in carrying out its duties, but shall not
be protected against any liability to the Trust or its shareholders by reason of
willful misfeasance, bad faith or gross negligence on its part in the
performance of its duties or from reckless disregard of its obligations or
duties thereunder (except as provided under provisions of applicable law).

The Advisory Agreement provides that if, for any fiscal year, the ratio of
expenses of any Fund (including amounts payable to the Adviser but excluding
interest, taxes, brokerage, litigation, and other extraordinary expenses)
exceeds applicable limitations, the Adviser will bear the amount of such excess.
The Adviser will not be required to bear expenses of any Fund to an extent which
would result in the Fund's inability to qualify as a regulated investment
company under provisions of the Internal Revenue Code of 1986, as amended (the
"Code").

For the fiscal years ended September 30, 1997, 1998, and 1999 the Funds paid
(had reimbursed) the following advisory fees:

- --------------------------------------------------------------------------------------------------------
Advisory Fees Paid Advisory Fees Waived/Reimbursed
-------------------------------- --------------------------------
1997 1998 1999 1997 1998 1999
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Penn Capital Select * 6,305(1) $82,818 * $131,214(1) $ 6,822
Financial Services
Fund
- --------------------------------------------------------------------------------------------------------
Penn Capital * $39,982(2) $32,747 * $ 61,917(2) $170,247
Strategic High Yield
Bond Fund
- --------------------------------------------------------------------------------------------------------
Penn Capital Value * * * * * *
Plus Fund
- --------------------------------------------------------------------------------------------------------
</TABLE>

*Not in operation during the period.
(1) Commenced operations on October 20, 1997.
(2) Commenced operations on March 1, 1998.

S-26
<PAGE>

THE ADMINISTRATOR

The continuance of the Administration Agreement must be specifically approved at
least annually (i) by the vote of a majority of the Trustees or by the vote of a
majority of the outstanding voting securities of the Fund, and (ii) by the vote
of a majority of the Trustees of the Trust who are not parties to the
Administration Agreement or an "interested person" (as that term is defined in
the 1940 Act) of any party thereto, cast in person at a meeting called for the
purpose of voting on such approval. The Administration Agreement is terminable
at any time as to any Fund without penalty by the Trustees of the Trust, by a
vote of a majority of the outstanding shares of the Fund or by the Manager on
not less than 30 days' nor more than 60 days' written notice.

For the fiscal years ended September 30, 1997, 1998, and 1999 the Funds paid
(had reimbursed) the following administration fees:

- -------------------------------------------------------------------------------------------------------
Administration Fees Paid
----------------------------------------------------------
1997 1998 1999
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Select Financial Services Fund * $35,209(1) $67,440
- -------------------------------------------------------------------------------------------------------
Strategic High Yield Fund * $42,740(2) $68,309
- -------------------------------------------------------------------------------------------------------
Value Plus Fund * * *
- -------------------------------------------------------------------------------------------------------
</TABLE>

* Not in operation during this period.
(1) Commenced operations on October 20, 1997.
(2) Commenced operations on March 1, 1998.

S-27
<PAGE>

as administrator or sub-administrator to the following other mutual funds: The
Achievement Funds Trust, The Advisors' Inner Circle Fund, Alpha Select Funds,
Amerindo Funds, Inc., The Arbor Funds, ARK Funds, Armada Funds, Bishop Street
Funds, Boston 1784 Funds(R), CNI Charter Funds, CUFUND, The Expedition Funds,
First American Funds, Inc., First American Investment Funds, Inc., First
American Strategy Funds, Inc., HighMark Funds, The Nevis Funds, Huntington
Funds, Oak Associates Funds, The Parkstone Advantage Fund, The PBHG Funds, Inc.,
PBHG Insurance Series Fund, Inc., The Pillar Funds, SEI Asset Allocation Trust,
SEI Daily Income Trust, SEI Index Funds, SEI Institutional Investments Trust,
SEI Institutional International Trust, SEI Institutional Managed Trust, SEI
Liquid Asset Trust, STI Classic Funds, SEI Tax Exempt Trust, and STI Classic
Variable Trust, and UAM Funds, Inc. II.

DISTRIBUTION AND SHAREHOLDER SERVICING

SEI Investments Distribution Co. (the "Distributor"), a wholly-owned subsidiary
of SEI Investments, and the Trust are parties to a distribution agreement (the
"Distribution Agreement"). The Distributor receives no compensation for
distribution of shares of the Funds.

The Distribution Agreement shall remain in effect for a period of two years
after the effective date of the agreement and must be renewed annually
thereafter. The Distribution Agreement may be terminated by the Distributor or
by the Trust, by a majority vote of the Trustees who are not interested persons
and have no financial interest in the Distribution Agreement or by a majority
vote of the outstanding securities of the Trust upon not more than 60 days'
written notice by either party or upon assignment by the Distributor.

The Strategic High Yield Fund has adopted a shareholder service plan for its
Class II shares (the "Class II Service Plan") under which firms, including the
Distributor, that provide shareholder and administrative services may receive
compensation therefor. Under the Class II Service Plan, the Distributor may
provide those services itself, or may enter into arrangements under which third
parties provide such services and are compensated by the Distributor. Under such
arrangements, the Distributor may retain as profit any difference between the
fee it receives and the amount it pays such third parties. In addition, the Fund
may enter into such arrangements directly. Under the Class II Service Plan, the
Distributor is entitled to receive a fee at an annual rate of up to .25% of each
Fund's average daily net assets attributable to Class II shares that are subject
to the arrangement in return for provision of a broad range of shareholder and
administrative services, including: maintaining client accounts; arranging for
bank wires; responding to client inquiries concerning services provided for
investments; changing dividend options; account designations and addresses;
providing sub-accounting; providing information on share positions to clients;
forwarding shareholder communications to clients; processing purchase, exchange
and redemption orders; and processing dividend payments.

TRUSTEES AND OFFICERS OF THE TRUST

S-28
<PAGE>

The Trustees and Executive Officers of the Trust, their respective dates of
birth, and their principal occupations for the last five years are set forth
below. Each may have held other positions with the named companies during that
period. Unless otherwise noted, the business address of each Trustee and each
Executive Officer as it applies to the Trust is SEI Investments Company, Oaks,
Pennsylvania 19456. Certain officers of the Trust also serve as officers of some
or all of the following: The Achievement Funds Trust, The Advisors' Inner Circle
Fund, Alpha Select Funds, The Arbor Fund, ARK Funds, Armada Funds, Bishop Street
Funds, Boston 1784 Funds(R), CNI Charter Funds, CUFUND, The Expedition Funds,
First American Funds, Inc., First American Investment Funds, Inc., First
American Strategy Funds, Inc., HighMark Funds, Huntington Funds, The Nevis Fund,
Inc., Oak Associates Funds, The Parkstone Advantage Fund, The PBHG Funds, Inc.,
PBHG Insurance Series Fund, Inc., The Pillar Funds, SEI Asset Allocation Trust,
SEI Daily Income Trust, SEI Index Funds, SEI Institutional International Trust,
SEI Institutional Investments Trust, SEI Institutional Managed Trust, SEI Liquid
Asset Trust, SEI Tax Exempt Trust, STI Classic Funds, STI Classic Variable
Trust, and UAM Funds, Inc. II, each of which is an open-end management
investment company managed by SEI Investments Mutual Funds Services or its
affiliates.

ROBERT E. TURNER (DOB 11/26/56) - Trustee* - Chairman and Chief Investment
Officer of Turner Investment Partners, Inc. ("Turner"), since 1990.

MICHAEL E. JONES (DOB 12/24/54) - Trustee* - Senior Vice President, Investment
Adviser and Portfolio Manager with Clover Capital Management Inc., since 1984.
Principal of CCM Securities Inc., since 1997.

ALFRED C. SALVATO (DOB 01/09/58) - Trustee** - Treasurer, Thomas Jefferson
University Health Care Pension Fund, since 1995, and Assistant Treasurer,
1988-1995.

JANET F. SANSONE (DOB 08/11/45) - Trustee** - Corporate Vice President of Human
Resources of Frontier Corporation (telecommunications company), since 1993.

JOHN T. WHOLIHAN (DOB 12/12/37) - Trustee** - Professor, Loyola Marymount
University, since 1984.

S-29
<PAGE>

STEPHEN J. KNEELEY (DOB 02/09/63) - President and Chief Executive Officer -
Chief Operating Officer of Turner, since 1990.

JANET RADER ROTE (DOB 08/24/60) - Vice President and Assistant Secretary -
Director of Compliance of Turner, since 1992.

TODD B. CIPPERMAN (DOB 02/14/66) - Vice President and Assistant Secretary - Vice
President and Assistant Secretary of SEI, the Administrator and Distributor
since 1995. Associate, Dewey Ballantine, 1994-1995.

ROBERT DELLACROCE (DOB 12/17/63) - Controller and Chief Accounting Officer -
Director, Funds Administration and Accounting of SEI since 1994.

JAMES W. JENNINGS (DOB 01/15/37) - Secretary - Partner, Morgan, Lewis & Bockius
LLP, counsel to the Trust, Turner, the Administrator and Distributor.

EDWARD B. BAER (DOB 09/27/68) - Assistant Secretary -1701 Market Street,
Philadelphia, Pennsylvania 19103, Associate, Morgan, Lewis & Bockius LLP,
Counsel to the Trust, Turner, Administrator and Distributor, since 1995.

S-30
<PAGE>

The following table exhibits Trustee compensation for the fiscal year ended
September 30, 1999.

<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------
Aggregate Pension or Estimated Total Compensation From
Compensation From Retirement Annual Registrant and Fund Complex
Registrant for the Benefits Benefits Paid to Trustees for the
Name of Person, Fiscal Year Ended Accrued as Part Upon Fiscal Year Ended
Position September 30, 1999 of Fund Expenses Retirement September 30, 1999
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Robert Turner* $ 0 N/A N/A $ 0 for service on two
Boards
- ------------------------------------------------------------------------------------------------------------------
Richard A. Hocker* $ 0 N/A N/A $ 0 for service on one Board
- ------------------------------------------------------------------------------------------------------------------
Michael E. Jones* $ 0 N/A N/A $ 0 for service on one Board
- ------------------------------------------------------------------------------------------------------------------
Alfred C. Salvato** $8,000 N/A N/A $14,000 for service on two
Boards
- ------------------------------------------------------------------------------------------------------------------
Janet F. Sansone** $9,775 N/A N/A $ 9,775 for service on one
Board
- ------------------------------------------------------------------------------------------------------------------
John T. Wholihan** $10,538 N/A N/A $10,538 for service on one
Board
- ------------------------------------------------------------------------------------------------------------------
</TABLE>

* Messrs. Robert Turner, Richard Hocker and Michael Jones are Trustees who may
be deemed to be "interested persons" of the Trust as the term is defined in the
1940 Act. The Trust pays fees only to the Trustees are not interested persons of
the Trust. Compensation of Officers and interested persons of the Trust is paid
by the adviser or the manager.

** Member of the Audit Committee.

The Trustees and Officers of the Trust own less than 1% of the outstanding
shares of the Trust.

COMPUTATION OF YIELD AND TOTAL RETURN

Yield = 2[((a-b)/cd + 1)(6) - 1] where a = dividends and interest earned during
the period; b = expenses accrued for the period (net of reimbursement); c = the
current daily number of shares outstanding during the period that were entitled
to receive dividends; and d = the maximum offering price per share on the last
day of the period.

S-31
<PAGE>

Based on the foregoing, the 30-day yield for the Funds for the 30-day period
ended September 30, 1999 were as follows:

----------------------------------------------------------

Fund 30-Day Yield

----------------------------------------------------------

Penn Capital Strategic High Yield 8.72%
Fund
----------------------------------------------------------

Penn Capital Select Financial 1.19%
Services Fund
----------------------------------------------------------

Penn Capital Value Plus Fund $0
----------------------------------------------------------

Based on the foregoing, the average annual total return for the Funds from
inception through September 30, 1999, and for the one and five year periods
ended September 30, 1999, were as follows:

<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------
Average Annual Total Return
-------------------------------------------------------
One Year Five Year Since Inception
- -------------------------------------------------------------------------------------
<S> <C> <C> <C>
Penn Capital Strategic High 8.65% * 0.50%
Yield Fund
- -------------------------------------------------------------------------------------
Penn Capital Select 9.62% * 8.41%
Financial Services Fund
- -------------------------------------------------------------------------------------
Penn Capital Value Plus Fund * * *
- -------------------------------------------------------------------------------------
</TABLE>

S-32
<PAGE>

PURCHASE AND REDEMPTION OF SHARES

Purchases and redemptions may be made through the Transfer Agent on days when
the New York Stock Exchange is open for business. Currently, the weekdays on
which the Fund is closed for business are: New Year's Day, Martin Luther King,
Jr. Day, Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor
Day, Thanksgiving Day and Christmas Day. Shares of each Fund are offered on a
continuous basis.

DETERMINATION OF NET ASSET VALUE

The securities of each Fund are valued by the Administrator. The Administrator
may use an independent pricing service to obtain valuations of securities. The
pricing service relies primarily on prices of actual market transactions as well
as on trade quotations obtained from third parties. However, the pricing service
may use a matrix system to determine valuations of fixed income securities. This
system considers such factors as security prices, yields, maturities, call
features, ratings and developments relating to specific securities in arriving
at valuations. The procedures used by the pricing service and its valuations are
reviewed by the officers of the Trust under the general supervision of the
Trustees.

Securities with remaining maturities of 60 days or less will be valued by the
amortized cost method, which involves valuing a security at its cost on the date
of purchase and thereafter (absent unusual circumstances) assuming a constant
amortization to maturity of any discount or premium, regardless of the impact of
fluctuations in general market rates of interest on the value of the instrument.
While this method provides certainty in valuation, it may result in periods
during which value, as determined by this method, is higher or lower than the
price the Trust would receive if it sold the instrument.

S-33
<PAGE>

If there is no readily ascertainable market value for a security, the
Administrator will make a good faith determination as to the "fair value" of the
security.

TAXES

FEDERAL INCOME TAX

The discussion of federal income tax consequences is based on the Internal
Revenue Code of 1986, as amended (the "Code") and the regulations issued
thereunder as in effect on the date of this Statement of Additional Information.
New legislation, as well as administrative changes or court decisions, may
significantly change the conclusions expressed herein, and may have a
retroactive effect with respect to the transactions contemplated herein.

In order to qualify for treatment as a RIC under the Code, each Fund must
distribute annually to its shareholders at least the sum of 90% of its net
interest income excludable from gross income plus 90% of its investment company
taxable income (generally, net investment income plus net short-term capital
gain) ("Distribution Requirement") and also must meet several additional
requirements. Among these requirements are the following: (i) at least 90% of a
Fund's gross income each taxable year must be derived from dividends, interest,
payments with respect to securities loans, gains from the sale or other
disposition of stock or securities, or certain other income (including gains
from options, futures or forward contracts); (ii) at the close of each quarter
of the Fund's taxable year, at least 50% of the value of its total assets must
be represented by cash and cash items, U.S. Government securities, securities of
other RICs and other securities, with such other securities limited, in respect
to any one issuer, to an amount that does not exceed 5% of the value of the
Fund's assets and that does not represent more than 10% of the outstanding
voting securities of such issuer; and (iii) at the close of each quarter of the
Fund's taxable year, not more than 25% of the value of its assets may be
invested in securities (other than U.S.

S-34
<PAGE>

Government securities or the securities of other RICs) of any one issuer, or of
two or more issuers which are engaged in the same, similar or related trades or
business if the Fund owns at least 20% of the voting power of such issuer.

Notwithstanding the Distribution Requirement described above, which requires
only that a Fund distribute at least 90% of its annual investment company
taxable income and does not require any minimum distribution of net capital gain
(the excess of net long-term capital gain over net short-term capital loss),
each Fund will be subject to a nondeductible 4% federal excise tax to the extent
it fails to distribute 98% of its ordinary income for that year and 98% of its
capital gain net income (the excess of short- and long-term capital gains over
short-and long-term capital losses) for the one-year period ending on October 31
of that year, plus certain other amounts.

Any gain or loss recognized on a sale, exchange or redemption of shares of a
Fund by a shareholder who is not a dealer in securities will generally, for
individual shareholders, be treated as a long-term capital gain or loss if the
shares have been held for more than twelve months and otherwise will be treated
as short-term capital gain or loss. However, if shares on which a shareholder
has received a net capital gain distribution are subsequently sold, exchanged or
redeemed and such shares have been held for six months or less, any loss
recognized will be treated as a long-term capital loss to the extent of the net
capital gain distribution. Long-term capital gains are currently taxed at a
maximum rate of 20%, and short-term capital gains are currently taxed at
ordinary income tax rates.

In certain cases, a Fund will be required to withhold and remit to the United
States Treasury 31% of any distributions paid to a shareholder who (1) has
failed to provide a correct taxpayer identification number, (2) is subject to
backup withholding by the Internal Revenue Service, or (3) has not certified to
that Fund that such shareholder is not subject to backup withholding.

If any Fund fails to qualify as a RIC for any taxable year, it will be taxable
at regular corporate rates. In such an event, all distributions (including
capital gains distributions) will be taxable as ordinary dividends to the extent
of a Fund's current and accumulated earnings and profits, and such distributions
will generally be eligible for the corporate dividends-received deduction.

S-35
<PAGE>

amount of the gain would be taxable to new shareholders as well as to In-Kind
Investors. The effect of this for new shareholders would be to tax them on a
distribution that represents a return of the purchase price of their shares
rather than an increase in the value of their investment. The effect on In-Kind
Investors would be to reduce their potential liability for tax on capital gains
by spreading it over a larger asset base. The opposite may occur if the Funds
acquire securities having an unrealized capital loss. In that case, In-Kind
Investors will be unable to utilize the loss to offset gains, but, because an
In-Kind Purchase will not result in any gains, the inability of In-Kind
Investors to utilize unrealized losses will have no immediate tax effect. For
new shareholders, to the extent that unrealized losses are realized by the
Funds, new shareholders may benefit by any reduction in net tax liability
attributable to the losses. The Adviser cannot predict whether securities
acquired in any In-Kind Purchase will have unrealized gains or losses on the
date of the In-Kind Purchase. Consistent with its duties as investment adviser,
the Adviser will, however, take tax consequences to investors into account when
making decisions to sell portfolio assets, including the impact of realized
capital gains on shareholders of the Funds.

STATE TAXES

PORTFOLIO TRANSACTIONS

The Funds have no obligation to deal with any broker-dealer or group of
broker-dealers in the execution of transactions in portfolio securities. Subject
to policies established by the Trustees of the Funds, the Adviser is responsible
for placing the orders to execute transactions for the Funds. In placing orders,
it is the policy of the Adviser to seek to

S-36
<PAGE>

obtain the best net results taking into account such factors as price (including
the applicable dealer spread), the size, type and difficulty of the transaction
involved, the firm's general execution and operational facilities and the firm's
risk in positioning the securities involved. While the Adviser generally seeks
reasonably competitive spreads or commissions, the Funds will not necessarily be
paying the lowest spread or commission available.

The Adviser may, consistent with the interests of the Funds, select brokers on
the basis of the research services they provide to the Adviser. Such services
may include analyses of the business or prospects of a company, industry or
economic sector, or statistical and pricing services. Information so received by
the Adviser will be in addition to and not in lieu of the services required to
be performed by the Adviser under the Advisory Agreement. If, in the judgment of
the Adviser, a Fund or other accounts managed by the Adviser will be benefitted
by supplemental research services, the Adviser is authorized to pay brokerage
commissions to a broker furnishing such services which are in excess of
commissions which another broker may have charged for effecting the same
transaction. These research services include advice, either directly or through
publications or writings, as to the value of securities, the advisability of
investing in, purchasing or selling securities, and the availability of
securities or purchasers or sellers of securities; furnishing of analyses and
reports concerning issuers, securities or industries; providing information on
economic factors and trends; assisting in determining portfolio strategy;
providing computer software used in security analyses; and providing portfolio
performance evaluation and technical market analyses. The expenses of the
Adviser will not necessarily be reduced as a result of the receipt of such
supplemental information, such services may not be used exclusively, or at all,
with respect to the Fund or account generating the brokerage, and there can be
no guarantee that the Adviser will find all of such services of value in
advising that Fund.

Although they are not expected to do so, the Funds may execute brokerage or
other agency transactions through the Distributor for commissions in conformity
with the 1940 Act, the Securities Exchange Act of 1934 and rules promulgated by
the SEC. Under these provisions, the Distributor is permitted to receive and
retain compensation for

S-37
<PAGE>

effecting portfolio transactions for a Fund on an exchange if a written contract
is in effect between the Trust and the Distributor expressly permitting the
Distributor to receive and retain such compensation. These rules further require
that commissions paid to the Distributor by a Fund for exchange transactions not
exceed "usual and customary" brokerage commissions. The rules define "usual and
customary" commissions to include amounts which are "reasonable and fair
compared to the commission, fee or other remuneration received or to be received
by other brokers in connection with comparable transactions involving similar
securities being purchased or sold on a securities exchange during a comparable
period of time." The Trustees, including those who are not "interested persons"
of the Trust, have adopted procedures for evaluating the reasonableness of
commissions paid to the Distributor and will review these procedures
periodically.

For the fiscal period ended September 30, 1998, and for the fiscal year ended
September 30, 1999, the Funds paid aggregate brokerage commissions as follows:

================================================================================
Fund 1998 1999
================================================================================
Penn Capital Strategic High Yield $10,312 $20, 815
Bond Fund
- --------------------------------------------------------------------------------
Penn Capital Select Financial $3,187 $1,784
Services Fund
- --------------------------------------------------------------------------------
Penn Capital Value Plus Fund * *
================================================================================
*Not in operation during this period.

Total amount of securities of the Broker/Dealer held by each Fund for the fiscal
year ended September 30, 1999 are as follows:

S-38
<PAGE>

<TABLE>
<CAPTION>
========================================================================================================
TOTAL AMOUNT OF
SECURITIES HELD BY EACH
FUND NAME OF BROKER/DEALER BROKER/DEALER TYPE OF SECURITY
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Penn Capital Select Financial Raymond James Fin. Corp $3,887.81 Common Stock
Services Fund
- --------------------------------------------------------------------------------------------------------
Penn Capital Strategic High J.P. Morgan $4,353,692.70 Repurchase
Yield Bond Fund Agreement
========================================================================================================
</TABLE>

For the fiscal years ended September 30, 1998 and 1999 the Funds' portfolio
turnover rates were as follows:

<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------
Portfolio Turnover Rate
----------------------------------------------------------------
1998 1999
- --------------------------------------------------------------------------------------------------------
<S> <C> <C>
Penn Capital Select Financial 174.8% 114.1%
Services Fund
- --------------------------------------------------------------------------------------------------------
Penn Capital Strategic High Yield 21.19% 96.98%
Bond Fund
- --------------------------------------------------------------------------------------------------------
Penn Capital Value Plus Fund * *
- --------------------------------------------------------------------------------------------------------
</TABLE>

*Not in operation during the period.

DESCRIPTION OF SHARES

In addition, a Trustee may be removed by the remaining Trustees or by
Shareholders at a special meeting called upon written request of Shareholders
owning at least 10% of the outstanding shares of the Trust. In the event that
such a meeting is requested, the Trust will provide appropriate assistance and
information to the Shareholders requesting the meeting.

S-39
<PAGE>

to a pro rata share in the net assets of the portfolio. Shareholders have no
preemptive rights. All consideration received by the Trust for shares of any
portfolio and all assets in which such consideration is invested would belong to
that portfolio and would be subject to the liabilities related thereto. Share
certificates representing shares will not be issued.

SHAREHOLDER LIABILITY

LIMITATION OF TRUSTEES' LIABILITY

5% SHAREHOLDERS

S-40
<PAGE>

<TABLE>
<CAPTION>
PERCENTAGE OF
NAME AND ADDRESS NUMBER OF FUND'S SHARES
FUND OF BENEFICIAL OWNER SHARES
- ----------------------- ------------------- ----------- -------------
<S> <C> <C> <C>
Penn Capital Select Penn Capital Management 11,841.3470 38.95%
Financial Services Fund 52 Haddonfield Berlin Rd.,
Ste 1000
Cherry Hill, NJ 08034-3527

Rafik Gabriel 5,703.9250 18.76%
6423 Deep Dell Pl.
Los Angeles, CA 90068-2845

Charles Schwab & Co. Inc. 4,963.6810 16.33%
Attn: Mutual Funds/Team S
4500 Cherry Creek Dr. S Fl 3
Denver, CO 80209

Wendel & Co. 4,615.5960 15.18%
FBO #725000
P.O. Box 1066
Wall Street Station
New York, NY 10268-1066

Penn Capital Strategic High Batrus & Co. 241,844.1240 5.66%
Yield -- Class I c/o Bankers Trust Company
P.O. Box 9005
New York, NY 10087-9005

Central Maine Power 891,320.0130 20.85%
Company Pension Trust
The Bank of New York
c/o Magaly Formoso
1 Wall Street Ct Fl 12
New York, NY 10005-3302

First Union National Bank 633,955.6490 14.83%
FBO Jewish Federation
Acct. #1528004586
1525 W. WT Harris Blvd.
Charlotte, NC 28262-8522

Connelly Foundation 699,617.7530 16.37%
Attn: Lawrence T. Mangan
One Tower Bridge, Ste. 1450
West Conshohocken, PA 19428
</TABLE>

S-41
<PAGE>

<TABLE>
<S> <C> <C> <C>
First Union National Bank 691,044.8120 16.17%
Cash/Reinvest
Acct. #9888888863
1525 W. WT. Harris Blvd.
Charlotte, NC 28262-8522
</TABLE>

CUSTODIAN

EXPERTS

The financial statements incorporated by reference into this Statement of
Additional Information and the Financial Highlights included in the prospectuses
have been audited by Ernst & Young LLP, 2001 Market Street, Philadelphia,
Pennsylvania, 19103, independent auditors, as indicated by their report, with
respect thereto, and are included herein in reliance upon the authority of said
firm as experts in giving said report.

LEGAL COUNSEL

Morgan, Lewis & Bockius LLP, serves as counsel to the Trust.

FINANCIAL INFORMATION

S-42
<PAGE>

APPENDIX

DESCRIPTION OF CORPORATE BOND RATINGS

DESCRIPTION OF MOODY'S LONG-TERM RATINGS

AAA Bonds which are rated Aaa are judged to be of the best quality. They carry
the smallest degree of investment risk and are generally referred to as "gilt
edged." Interest payments are protected by a large or by an exceptionally stable
margin and principal is secure. While the various protective elements are likely
to change, such changes as can be visualized are most unlikely to impair the
fundamentally strong position of such issues.

AA Bonds which are rated Aa are judged to be of high quality by all standards.
Together with the Aaa group they comprise what are generally known as high-grade
bonds. They are rated lower than the best bonds because margins of protection
may not be as large as in Aaa securities or fluctuation of protective elements
may be of greater amplitude or there may be other elements present which make
the long-term risk appear somewhat larger than the Aaa securities.

A Bonds which are rated A possess many favorable investment attributes and are
to be considered as upper-medium grade obligations. Factors giving security to
principal and interest are considered adequate, but elements may be present
which suggest a susceptibility to impairment some time in the future.

BAA Bonds which are rated Baa are considered as medium-grade obligations (i.e.,
they are neither highly protected nor poorly secured). Interest payments and
principal security appear adequate for the present but certain protective
elements may be lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment characteristics and in
fact have speculative characteristics as well.

BA Bonds which are rated Ba are judged to have speculative elements; their
future cannot be considered as well-assured. Often the protection of interest
and principal payments may be very moderate and thereby not well safeguarded
during both good and bad times over the future. Uncertainty of position
characterizes bonds in this class.

B Bonds which are rated B generally lack characteristics of the desirable
investment. Assurance of interest and principal payments or of maintenance of
other terms of the contract over any long period of time may be small.

CAA Bonds which are rated Caa are of poor standing. Such issues may be in
default or there may be present elements of danger with respect to principal or
interest.

CA Bonds which are rated Ca represent obligations which are speculative in a
high degree. Such issues are often in default or have other marked shortcomings.

C Bonds which are rated C are the lowest rated class of bonds, and issues so
rated can be regarded as having extremely poor prospects of ever attaining any
real investment standing.

A-1
<PAGE>

DESCRIPTION OF STANDARD & POOR'S LONG-TERM RATINGS

INVESTMENT GRADE

AAA Debt rated 'AAA' has the highest rating assigned by S&P. Capacity to pay
interest and repay principal is extremely strong.

AA Debt rated 'AA' has a very strong capacity to pay interest and repay
principal and differs from the highest rated debt only in small degree.

A Debt rated 'A' has a strong capacity to pay interest and repay
principal, although it is somewhat more susceptible to adverse effects
of changes in circumstances and economic conditions than debt in
higher-rated categories.

BBB Debt rated 'BBB' is regarded as having an adequate capacity to pay
interest and repay principal. Whereas it normally exhibits adequate
protection parameters, adverse economic conditions or changing
circumstances are more likely to lead to a weakened capacity to pay
interest and repay principal for debt in this category than in higher
rated categories.

SPECULATIVE GRADE

Debt rated 'BB', 'B', 'CCC', 'CC', and 'C' is regarded as having predominantly
speculative characteristics with respect to capacity to pay interest and repay
principal. 'BB' indicates the least degree of speculation and 'C' the highest
degree of speculation. While such debt will likely have some quality and
protective characteristics, these are outweighed by large uncertainties or major
risk exposures to adverse conditions.

BB Debt rated 'BB' has less near-term vulnerability to default than other
speculative grade debt. However, it faces major ongoing uncertainties or
exposure to adverse business, financial, or economic conditions that
could lead to inadequate capacity to meet timely interest and principal
payments. The 'BB' rating category is also used for debt subordinated to
senior debt that is assigned an actual or implied 'BBB-' rating.

B Debt rate 'B' has greater vulnerability to default but presently has the
capacity to meet interest payments and principal repayments. Adverse
business, financial, or economic conditions would likely impair capacity
or willingness to pay interest and repay principal. The 'B' rating
category also is used for debt subordinated to senior debt that is
assigned an actual or implied 'BB' or 'BB-' rating.

CCC Debt rated 'CCC' has a current identifiable vulnerability to default,
and is dependent on favorable business, financial, and economic
conditions to meet timely payment of interest and repayment of
principal. In the event of adverse business, financial, or economic
conditions, it is not likely to have the capacity to pay interest and
repay principal. The 'CCC' rating category also is used for debt
subordinated to senior debt that is assigned an actual or implied 'B' or
'B-' rating.

CC The rating 'CC' is typically applied to debt subordinated to senior debt
which is assigned an actual or implied 'CCC' rating.

A-2
<PAGE>

C The rating 'C' is typically applied to debt subordinated to senior debt
which is assigned an actual or implied 'CCC-' debt rating. The 'C'
rating may be used to cover a situation where a bankruptcy petition has
been filed, but debt service payments are continued.

CI Debt rated 'CI' is reserved for income bonds on which no interest is
being paid.

D Debt is rated 'D' when the issue is in payment default, or the obligor
has filed for bankruptcy. The 'D' rating is used when interest or
principal payments are not made on the date due, even if the applicable
grace period has not expired, unless S&P believes that such payments
will be made during such grace period.

DESCRIPTION OF DUFF & PHELPS' LONG-TERM DEBT RATINGS

AAA Highest credit quality. The risk factors are negligible, being only
slightly more than for risk-free U.S. Treasury debt.

AA+ High credit quality. Protection factors are strong. Risk is modest but
may vary slightly from AA- time to time because of economic conditions.

A+ Protection factors are average but adequate. However, risk factors are
more variable and A- greater in periods of economic stress.

BBB+ Below average protection factors but still considered sufficient for
prudent investment. BBB- Considerable variability in risk during
economic cycles.

BB+ Below investment grade but deemed likely to meet obligations when due.
Present or BB prospective financial protection factors fluctuate
according to industry conditions or company BB- fortunes. Overall
quality may move up or down frequently within this category.

B+ Below investment grade and possessing risk that obligations will not be
met when due. B Financial protection factors will fluctuate widely
according to economic cycles, industry B- conditions and/or company
fortunes. Potential exists for frequent changes in the rating within
this category or into a higher or lower rating grade.

CCC Well below investment grade securities. Considerable uncertainty exists
as to timely payment of principal, interest or preferred dividends.
Protection factors are narrow and risk can be substantial with
unfavorable economic/industry conditions, and/or with unfavorable
company developments.

DD Defaulted debt obligations. Issuer failed to meet scheduled principal
and/or interest payments.

DP Preferred stock with dividend arrearages.

DESCRIPTION OF FITCH'S LONG-TERM RATINGS

A-3
<PAGE>

INVESTMENT GRADE BOND

AAA Bonds considered to be investment grade and of the highest credit
quality. The obligor has an exceptionally strong ability to pay interest
and repay principal, which is unlikely to be affected by reasonably
foreseeable events.

AA Bonds considered to be investment grade and of very high credit quality.
The obligor's ability to pay interest and repay principal is very
strong, although not quite as strong as bonds rated 'AAA'. Because bonds
rated in the 'AAA' and 'AA' categories are not significantly vulnerable
to foreseeable future developments, short-term debt of these issuers is
generally rated 'F-1+'.

A Bonds considered to be investment grade and of high credit quality. The
obligor's ability to pay interest and repay principal is considered to
be strong, but may be more vulnerable to adverse changes in economic
conditions and circumstances than bonds with higher ratings.

BBB Bonds considered to be investment grade and of satisfactory credit
quality. The obligor's ability to pay interest and repay principal is
considered to be adequate. Adverse changes in economic conditions and
circumstances, however, are more likely to have adverse impact on these
bonds, and therefore impair timely payment. The likelihood that the
ratings of these bonds will fall below investment grade is higher than
for bonds with higher ratings.

SPECULATIVE GRADE BOND

BB Bonds are considered speculative. The obligor's ability to pay interest
and repay principal may be affected over time by adverse economic
changes. However, business and financial alternatives can be identified
which could assist the obligor in satisfying its debt service
requirements.

B Bonds are considered highly speculative. While bonds in this class are
currently meeting debt service requirements, the probability of
continued timely payment of principal and interest reflects the
obligor's limited margin of safety and the need for reasonable business
and economic activity throughout the life of the issue.

CCC Bonds have certain identifiable characteristics which, if not remedied,
may lead to default. The ability to meet obligations requires an
advantageous business and economic environment.

CC Bonds are minimally protected. Default in payment of interest and/or
principal seems probable over time.

C Bonds are in imminent default in payment of interest or principal.

DDD, DD,
AND D Bonds are in default on interest and/or principal payments. Such bonds
are extremely speculative and should be valued on the basis of their
ultimate recovery value in

A-4
<PAGE>

liquidation or reorganization of the obligor. 'DDD' represents the
highest potential for recovery on these bonds, and 'D' represents the
lowest potential for recovery.

DESCRIPTION OF IBCA'S LONG-TERM RATINGS

AAA Obligations for which there is the lowest expectation of investment
risk. Capacity for timely repayment of principal and interest is
substantial, such that adverse changes in business, economic or
financial conditions are unlikely to increase investment risk
substantially.

AA Obligations for which there is a very low expectation of investment
risk. Capacity for timely repayment of principal and interest is
substantial. Adverse changes in business, economic or financial
conditions may increase investment risk, albeit not very significantly.

A Obligations for which there is a low expectation of investment risk.
Capacity for timely repayment of principal and interest is strong,
although adverse changes in business, economic or financial conditions
may lead to increased investment risk.

BBB Obligations for which there is currently a low expectation of investment
risk. Capacity for timely repayment of principal and interest is
adequate, although adverse changes in business, economic or financial
conditions are more likely to lead to increased investment risk than for
obligations in other categories.

BB Obligations for which there is a possibility of investment risk
developing. Capacity for timely repayment of principal and interest
exists, but is susceptible over time to adverse changes in business,
economic or financial conditions.

B Obligations for which investment risk exists. Timely repayment of
principal and interest is not sufficiently protected against adverse
changes in business, economic or financial conditions.

CCC Obligations for which there is a current perceived possibility of
default. Timely repayment of principal and interest is dependent on
favorable business, economic or financial conditions.

CC Obligations which are highly speculative or which have a high risk of
default.

C Obligations which are currently in default.

DESCRIPTION OF THOMSON BANKWATCH'S LONG-TERM DEBT RATINGS

INVESTMENT GRADE

AAA The highest category; indicates that the ability to repay principal and
interest on a timely basis is very high.

A-5
<PAGE>

AA The second-highest category; indicates a superior ability to repay
principal and interest on a timely basis, with limited incremental risk
compared to issues rated in the highest category.

A The third-highest category; indicates the ability to repay principal and
interest is strong. Issues rated "A" could be more vulnerable to adverse
developments (both internal and external) than obligations with higher
ratings.

BBB The lowest investment-grade category; indicates an acceptable capacity
to repay principal and interest. Issues rated "BBB" are, however, more
vulnerable to adverse developments (both internal and external) than
obligations with higher ratings.

NON-INVESTMENT GRADE

BB While not investment grade, the "BB" rating suggests that the likelihood
of default is considerably less than for lower-rated issues. However,
there are significant uncertainties that could affect the ability to
adequately service debt obligations.

B Issues rated "B" show a higher degree of uncertainty and therefore
greater likelihood of default than higher-rated issues. Adverse
developments could well negatively affect the payment of interest and
principal on a timely basis.

CCC Issues rated "CCC" clearly have a high likelihood of default, with
little capacity to address further adverse changes in financial
circumstances.

CC "CC" is applied to issues that are subordinate to other obligations
rated "CCC" and are afforded less protection in the event of bankruptcy
or reorganization.

D Default

<PAGE>

PART C: OTHER INFORMATION

Item 23. Exhibits

(a)(1) Agreement and Declaration of Trust of the Registrant, dated
January 26, 1996 is incorporated by reference to Exhibit 1 of the
Registrant's Registration Statement as filed on February 1, 1996.

(a)(2) Certificate of Amendment of Agreement and Declaration of Trust
dated March 28, 1997, is incorporated by reference to Exhibit
1(a) of the Registrant's Post-Effective Amendment No. 5 as filed
on April 10, 1997.

(b) By-Laws are incorporated by reference to Exhibit 2 of the
Registrant's Registration Statement as filed on February 1,
1996.

(d)(1) Investment Advisory Agreement between the Registrant and
Turner Investment Partners, Inc., is incorporated by reference
to Exhibit 5(a) of the Registrant's Post-Effective Amendment
No. 4 as filed on January 28, 1997.

(d)(2) Investment Advisory Agreement between the Registrant and
Clover Capital Management, Inc., is incorporated by reference
to Exhibit 5(b) of the Registrant's Post-Effective Amendment
No. 10 as filed on October 15, 1997.

(d)(3) Investment Advisory Agreement between the Registrant and Penn
Capital Management Company, Inc., is incorporated by reference to
Exhibit d(3) of the Registrant's Post-Effective Amendment No. 12
as filed on November 17, 1998.

(d)(4) Investment Advisory Agreement between Registrant and Turner
Investment Partners, Inc., is incorporated by reference to
Exhibit d(4) of the Registrant's Post-Effective Amendment No. 12
as filed on November 17, 1998.

(d)(5) Investment Sub-Advisory Agreement between Turner Investment
Partners, Inc., and Clover Capital Management, Inc., is
incorporated by reference to Exhibit d(5) of the Registrant's
Post-Effective Amendment No. 12 as filed on November 17, 1998.

(d)(6) Investment Sub-Advisory Agreement between Turner Investment
Partners, Inc. and Penn Capital Management, Inc., is incorporated
by reference to Exhibit d(6) of the Registrant's Post-Effective
Amendment No. 12 as filed on November 17, 1998.

C-1
<PAGE>

(d)(7) Investment Sub-Advisory Agreement between Turner Investment
Partners, Inc. and Chartwell Investment Partners, is incorporated
by reference to Exhibit d(7) of the Registrant's Post-Effective
Amendment No. 14 as filed on March 31, 1999.

(e)(1) Distribution Agreement between the Registrant and SEI Investments
Distribution Co. (formerly, SEI Financial Services Company), is
incorporated by reference to Exhibit 6(a) of the Registrant's
Post-Effective Amendment No. 4 as filed on January 28, 1997.

(e)(2) Distribution Agreement between the Registrant and CCM Securities
Inc., is incorporated by reference to Exhibit 6(b) of the
Registrant's Registration Statement as filed on January 23, 1998.

(f) Not applicable.

(g) Custodian Agreement between the Registrant and CoreStates
Bank, N.A., is incorporated by reference to Exhibit 8(a) of the
Registrant's Post-Effective Amendment No. 4 as filed on January
28, 1997.

(h)(1) Administration Agreement between the Registrant and SEI
Investments Management Corporation (formerly, SEI Financial
Management Corporation), is incorporated by reference to
Exhibit 9(a) of the Registrant's Post-Effective Amendment No.
4 filed on January 28, 1997.

(h)(2) Transfer Agency Agreement between the Registrant and DST Systems,
Inc. is incorporated by reference to Exhibit 9(b) of the
Registrant's Registration Statement as filed on January 23, 1998.

(h)(3) Amended Schedule to the Administration Agreement between the
Registration and SEI Investment Management Corporation (formerly,
SEI Financial Management Corporation), is incorporated by
reference to Exhibit h(3) of the Registrant's Post-Effective
Amendment No. 14 as filed on March 31, 1999.

(i) Opinion and Consent of Counsel, is filed herewith.

(j) Auditors Consent, is filed herewith.

(k) Not applicable.

(l) Not applicable.

(m) Not applicable.

(n) Not applicable.

(o) Not applicable.

C-2
<PAGE>

(p) Not applicable.

(q) Powers of Attorney for Robert E. Turner, Richard A. Hocker,
Michael E. Jones, Alfred C. Salvato, John T. Wholihan, Stephen J.
Kneeley, Janet F. Sansone, and Robert DellaCroce, are
incorporated by reference to Exhibit (p) of Registrant's
Post-Effective Amendment No. 12 as filed on November 17, 1998.

Item 24. Persons Controlled by or under Common Control with Registrant:

See the Prospectus and the Statement of Additional Information regarding
the Registrant's control relationships. SEI Investments Management Corporation
(formerly, SEI Financial Management Corporation) is the owner of all beneficial
interest in the Administrator and is a subsidiary of SEI Investments Company,
which also controls the distributor of the Registrant, SEI Investments
Distribution Co. (formerly, SEI Financial Services Company), as well as to other
corporations engaged in providing various financial and record keeping services,
primarily to bank trust departments, pension plan sponsors, and investment
managers.

Item 25. Indemnification:

Article VIII of the Agreement of Declaration of Trust filed as Exhibit 1 to
the Registration Statement is incorporated by reference. Insofar as
indemnification for liability arising under the Securities Act of 1933 may be
permitted to directors, officers and controlling persons of the Registrant
pursuant to the Declaration of Trust or otherwise, the Registrant is aware that
in the opinion of the Securities and Exchange Commission, such indemnification
is against public policy as expressed in the Act and, therefore, is
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the Registrant of expenses incurred or
paid by trustees, directors, officers or controlling persons of the Registrant
in connection with the successful defense of any act, suit or proceeding) is
asserted by such trustees, directors, officers or controlling persons in
connection with the shares being registered, the Registrant will, unless in the
opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issues.

Item 26. Business and Other Connections of Investment Advisers:

ADVISERS

TURNER INVESTMENT PARTNERS, INC.

Turner Investment Partners, Inc. ("Turner") is the investment adviser for the
Turner Large Cap Growth Equity, Turner Growth Equity, Turner Midcap Growth,
Turner Small Cap Growth, Turner Micro Cap Growth, Turner Top 20, Turner
Technology, Turner Large Cap Focused, Turner International Growth, Turner Short
Duration Government Funds - One Year Portfolio, Turner Short Duration Government
Funds - Three Year Portfolio, Turner Core High Quality Fixed Income and TIP

C-3
<PAGE>

Target Select Equity Funds. The principal address of Turner is 1235 Westlakes
Drive, Suite 350, Berwyn, PA 19312. Turner is an investment adviser registered
under the Advisers Act.

NAME AND POSITION POSITION WITH OTHER
WITH COMPANY OTHER COMPANY COMPANY
- ----------------- ------------- -------------------
<S> <C> <C>
Stephen J. Kneeley SEI Investments Distribution Co. Registered Representative
Chief Operating Officer, Secretary,
President

Janet Rader Rote SEI Investments Distribution Co Registered Representative
Director of Compliance

Thomas R. Trala
CFO, Treasurer -- --

Mark D. Turner
Vice Chairman, Director of Fixed Income -- --

Robert E. Turner, Jr.
Chairman, CIO -- --
</TABLE>

CLOVER CAPITAL MANAGEMENT, INC.

Clover Capital Management, Inc. is the investment adviser for the Clover Max Cap
Value, Clover Equity Value, Clover Fixed Income and Clover Small Cap Value
Funds. Clover Capital Management, Inc. is the sub-adviser for the TIP Target
Select Equity Fund. The principal address of Clover Capital Management, Inc. is
11 Tobey Village Office Park, Pittsford, NY 14534. Clover is an investment
adviser registered under the Advisors Act.

<TABLE>
<CAPTION>
NAME AND POSITION
WITH COMPANY OTHER COMPANY CONNECTION WITH OTHER COMPANY
- ----------------- -------------- -----------------------------
<S> <C> <C>

James G. Gould CCM Securities, Inc. VP, Registered Representative
Director & President
WealthNet LLC President, Director

Richard J. Huxley
Director of Fixed Income -- --

Michael E. Jones CCM Securities, Inc. VP, CFO, Principal, Secretary,
Managing Director & Exec. VP Treasurer

WealthNet LLC Director, Investment Officer

Geoffrey H. Rosenberger CCM Securities, Inc. Director, Principal
Managing Director, Exec VP,
Treasurer & Secretary

Ned Roman CCM Securities, Inc. President, CEO, CLO, Principal
Compliance Officer WealthNet LLC VP
</TABLE>

C-4
<PAGE>

PENN CAPITAL MANAGEMENT COMPANY, INC.

Penn Capital Management Company, Inc. is the investment adviser for the Penn
Capital Select Financial Services, Penn Capital Strategic High Yield Bond and
Penn Capital Value Plus Funds. Penn Capital Management Company, Inc. is the
sub-adviser for the TIP Target Select Equity Fund. The principal address of Penn
Capital Management Company, Inc., is 52 Haddonfield-Berlin Road, Suite 1000,
Cherry Hill, NJ 08034. Penn Capital is an investment adviser registered under
the Advisors Act.

<TABLE>
<CAPTION>
NAME AND POSITION WITH CONNECTION WITH OTHER
COMPANY OTHER COMPANY COMPANY
- ---------------------- ------------- ---------------------
<S> <C> <C>
John J. Gallagher, Jr. Valley Forge Military Academy & Chairman of Board of Trustees
Trustee College

Kimberley Hocker
Trustee -- --

Kirsten Hocker
Trustee -- --

Marcia Ann Hocker MAH Inc. Secretary/Treasurer
President, COO, Trustee

Richard Alan Hocker
CIO -- --

Kathleen Ann News
Managing Director -- --

Michael F. Swallow
Secretary, Treasurer -- --
</TABLE>

C-5
<PAGE>

CHARTWELL INVESTMENT PARTNERS

Chartwell Investment Partners is the sub-adviser for the TIP Target Select
Equity Fund. The principal address of Chartwell Investment Partners is 1235
Westlakes Drive, Suite 330, Berwyn, PA 19312. Chartwell is an investment adviser
registered under the Advisors Act.

<TABLE>
<CAPTION>
NAME AND POSITION WITH CONNECTION WITH OTHER
COMPANY OTHER COMPANY COMPANY
- ---------------------- ------------- ---------------------
<S> <C> <C>
Edward N. Antoian
Partner/Portfolio Manager -- --

Terry F. Bovarnick
Partner/Portfolio Manager -- --

Bobcat Partners
General Partner of Maverick Partners -- --

Chartwell G.P., Inc.
General Partner of Maverick Partners -- --

David C. Dalrymple
Partner/Portfolio Manager -- --

Winthrop S. Jessup
Partner -- --

Michael T. Kennedy Radnor Holdings Corp. President, CEO
Indirect Limited Partner
Trinity Capital Partners President, CEO

Maverick Partners L.P.
Limited Partner -- --

Michael J. McCloskey
Partner -- --

John P. McNiff CAM Investment Advisors, Inc. Chairman
Indirect Limited Partner
Longwood Investment Advisors, Managing Director
Inc.
Kevin A. Melich
Partner/Portfolio Manager -- --

Harold A. Ofstie
Partner/Portfolio Manager -- --

Timothy J. Riddle
Compliance Officer -- --

Bernard P. Schaffer
Partner/Portfolio Manager -- --

Mark A. Sullivan
Vice President Client Services -- --
</TABLE>

C-6

<PAGE>

Item 27. Principal Underwriters:

(a) Furnish the name of each investment company (other than the Registrant)
for which each principal underwriter currently distributing the
securities of the Registrant also acts as a principal underwriter,
distributor or investment adviser.

Registrant's distributor, SEI Investments Distribution Co. (the
"Distributor"), acts as distributor for:

SEI Daily Income Trust July 15, 1982
SEI Liquid Asset Trust November 29, 1982
SEI Tax Exempt Trust December 3, 1982
SEI Index Funds July 10, 1985
SEI Institutional Managed Trust January 22, 1987
SEI Institutional International Trust August 30, 1988
The Advisors' Inner Circle Fund November 14, 1991
The Pillar Funds February 28, 1992
CUFUND May 1, 1992
STI Classic Funds May 29, 1992
First American Funds, Inc. November 1, 1992
First American Investment Funds, Inc. November 1, 1992
The Arbor Fund January 28, 1993
Boston 1784 Funds(R) June 1, 1993
The PBHG Funds, Inc. July 16, 1993
Morgan Grenfell Investment Trust January 3, 1994
The Achievement Funds Trust December 27, 1994
Bishop Street Funds January 27, 1995
STI Classic Variable Trust August 18, 1995
ARK Funds November 1, 1995
Huntington Funds January 11, 1996
SEI Asset Allocation Trust April 1, 1996
SEI Institutional Investments Trust June 14, 1996
First American Strategy Funds, Inc. October 1, 1996
HighMark Funds February 15, 1997
Armada Funds March 8, 1997
PBHG Insurance Series Fund, Inc. April 1, 1997
The Expedition Funds June 9, 1997
Alpha Select Funds January 1, 1998
Oak Associates Funds February 27, 1998
The Nevis Fund, Inc. June 29, 1998
The Parkstone Group of Funds September 14, 1998
CNI Charter Funds April 1, 1999
The Parkstone Advantage Funds May 1, 1999
Amerindo Funds, Inc. July 13, 1999

The Distributor provides numerous financial services to investment
managers, pension plan sponsors, and bank trust departments. These
services include portfolio evaluation, performance measurement and

C-7
<PAGE>

consulting services ("Funds Evaluation") and automated execution,
clearing and settlement of securities transactions ("MarketLink").

(b) Furnish the Information required by the following table with respect to
each director, officer or partner of each principal underwriter named
in the answer to Item 21 of Part B. Unless otherwise noted, the
business address of each director or officer is Oaks, PA 19456.

<TABLE>
<CAPTION>
POSITION AND OFFICE POSITIONS AND OFFICES
NAME WITH UNDERWRITER WITH REGISTRANT
- ---- ------------------- ---------------------
<S> <C> <C>

Alfred P. West, Jr. Director, Chairman of the Board of Directors --
Carmen V. Romeo Director --
Mark J. Held President & Chief Operating Officer --
Gilbert L. Beebower Executive Vice President --
Richard B. Lieb Executive Vice President --
Dennis J. McGonigle Executive Vice President --
Robert M. Silvestri Chief Financial Officer & Treasurer --
Leo J. Dolan, Jr. Senior Vice President --
Carl A. Guarino Senior Vice President --
Larry Hutchison Senior Vice President --
Jack May Senior Vice President --
Hartland J. McKeown Senior Vice President --
Barbara J. Moore Senior Vice President --
Kevin P. Robins Senior Vice President & General Counsel --
Patrick K. Walsh Senior Vice President --
Robert Aller Vice President --
Gordon W. Carpenter Vice President --
Todd Cipperman Vice President & Assistant Secretary Vice President & Assistant Secretary
S. Courtney E. Collier Vice President & Assistant Secretary --
Robert Crudup Vice President & Managing Director --
Barbara Doyne Vice President --
Jeff Drennen Vice President --
James R. Foggo Vice President & Assistant Secretary --
Vic Galef Vice President & Managing Director --
Lydia A. Gavalis Vice President & Assistant Secretary Vice President & Assistant Secretary
Greg Gettinger Vice President & Assistant Secretary --
Kathy Heilig Vice President Vice President & Assistant Secretary
Jeff Jacobs Vice President --
Samuel King Vice President --
Kim Kirk Vice President & Managing Director --
John Krzeminski Vice President & Managing Director --
Carolyn McLaurin Vice President & Managing Director --
W. Kelso Morrill Vice President --
Mark Nagle Vice President --
Joanne Nelson Vice President --
Christina McCullough Vice President & Assistant Secretary --
Maria Rinehart Vice President --
Edward T. Searle Vice President & Assistant Secretary Vice President & Assistant Secretary
Steve Smith Vice President --
Daniel Spavanta Vice President --
Mark Samuels Vice President & Managing Director --
Steve Smith Vice President --
Daniel Spavanta Vice President --
Mark Samuels Vice President & Managing Director --
Steve Smith Vice President --
Daniel Spavanta Vice President --
Daniel Spavanta Vice President --
</TABLE>

C-8
<PAGE>

<TABLE>
<S> <C> <C>
Kathryn L. Stanton Vice President & Assistant Secretary --
Lynda J. Striegel Vice President & Assistant Secretary --
Lori L. White Vice President & Assistant Secretary --
Wayne M. Withrow Vice President & Managing Director --
</TABLE>

Item 28. Location of Accounts and Records:

Books or other documents required to be maintained by Section 31(a) of
the Investment Company Act of 1940, and the rules promulgated
thereunder, are maintained as follows:

(a) With respect to Rules 31a-1(a); 31a-1(b)(1); (2)(a) and (b); (3);
(6); (8); (12); and 31a-1(d), the required books and records will be
maintained at the offices of Registrant's Custodian:

First Union National Bank
Broad & Chestnut Streets
P.O. Box 7618
Philadelphia, Pennsylvania 19101

(b)/(c) With respect to Rules 31a-1(a); 31a-1(b)(1),(4); (2)(C) and
(D); (4); (5); (6); (8); (9); (10); (11); and 31a-1(f), the required
books and records are maintained at the offices of Registrant's
Administrator:

SEI Investments Mutual Funds Services
Oaks, Pennsylvania 19456

(c) With respect to Rules 31a-1(b)(5), (6), (9) and (10) and 31a-1(f),
the required books and records are maintained at the principal offices
of the Registrant's Advisers:

Turner Investment Partners, Inc.
1235 Westlakes Drive, Suite 350
Berwyn, Pennsylvania 19312

Clover Capital Management, Inc.
11 Tobey Village Office Park
Pittsford, New York 14534

Penn Capital Management Company, Inc.
52 Haddonfield-Berlin Road
Suite 1000
Cherry Hill, New Jersey 08034

C-9
<PAGE>

Chartwell Investment Partners
1235 Westlakes Drive
Suite 330
Berwyn, PA 19312

Item 29. Management Services: None.

Item 30. Undertakings: None

C-10
<PAGE>

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933 and the Investment
Company Act of 1940, as amended, the Registrant certifies that it meets all the
requirements for effectiveness of this Registration Statement pursuant 485(b)
under the Securities Act of 1933 and has duly caused this Post-Effective
Amendment No. 15 to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Oaks, Commonwealth of Pennsylvania on the 27th day
of January 2000.

TIP FUNDS

By: /s/ Stephen J. Kneeley
------------------------------------
Stephen J. Kneeley
President & Chief Executive Officer

Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement has been signed below by the following person in the capacity and on
the dates indicated.

* Trustee January 27, 2000
- ---------------------------
Robert E. Turner

* Trustee January 27, 2000
- ---------------------------
Richard A. Hocker

* Trustee January 27, 2000
- ---------------------------
Michael E. Jones

* Trustee January 27, 2000
- --------------------------
Janet F. Sansone

* Trustee January 27, 2000
- --------------------------
Alfred C. Salvato

* Trustee January 27, 2000
- --------------------------
John T. Wholihan

/s/ Stephen J. Kneeley President and Chief January 27, 2000
- -------------------------- Executive Officer
Stephen J. Kneeley

/s/ Robert Dellacroce Controller and January 27, 2000
- -------------------------- Chief Financial
Robert DellaCroce Officer

By: /s/ Stephen J. Kneeley January 27, 2000
----------------------
Stephen J. Kneeley
Attorney-in-Fact

C-11
<PAGE>

EXHIBIT INDEX

NAME EXHIBIT
- ---- -------

Agreement and Declaration of Trust of the Registrant, Ex-99.a(1)
dated January 26, 1996, (incorporated herein by
reference to Exhibit 1 of the Registration Statement filed on
February 1, 1996).

Amendment dated March 28, 1997, to the Agreement and Ex-99.a(2)
Declaration of Trust of the Registrant, dated January 26,
1996, (incorporated herein by reference to Exhibit 1(a) of
Post-Effective Amendment No. 5 filed on April 10, 1997).

By-Laws of the Registrant, (incorporated herein by reference Ex-99.b
to Exhibit 2 of the Registration Statement filed on
February 1, 1996).

Investment Advisory Agreement between the Ex-99.d(1)
Registrant and Turner Investment Partners, Inc.,
(incorporated herein by reference to Exhibit 5(a) of
Post-Effective Amendment No. 4 filed on
January 28, 1997).

Investment Advisory Agreement between the Registrant Ex-99.d(2)
and Clover Capital Management, Inc., (incorporated
herein by reference to Exhibit 5(b) of Post-Effective
Amendment No. 10 filed on October 15, 1997).

Investment Advisory Agreement between Ex-99.d(3)
the Registrant and Penn Capital Management
Company, Inc. (incorporated herein by reference
to Exhibit d(3) of Post-Effective Amendment
No. 12 filed on November 17, 1998).

Investment Advisory Agreement between the Registrant Ex-99.(d)(4)
and Turner Investment Partners, Inc., (incorporated
herein by reference to Exhibit d(4) of Post-Effective
Amendment No. 12 filed on November 17, 1998).

Investment Sub-Advisory Agreement between Turner Ex-99.d(5)
Investment Partners, Inc. and Clover Capital
Management, Inc., (incorporated herein by reference to Exhibit
d(5) of Post-Effective Amendment No. 12 filed on November 17,
1998).

Investment Sub-Advisory Agreement between Turner Ex-99.d(6)
Investment Partners, Inc. and Penn Capital Management,
Inc., (incorporated herein by reference to Exhibit d(5) of
Post-Effective Amendment No. 12 filed on November 17, 1998).

C-12
<PAGE>

Investment Sub-Advisory Agreement between Turner Ex-99.d(7)
Investment Partners, Inc. and Chartwell Investment Partners,
(incorporated by reference to Exhibit d(7) of Post-Effective
Amendment No. 14 filed on March 31, 1999).

Distribution Agreement between the Registrant Ex-99.e(1)
and SEI Investments Distribution Co. (formerly,
SEI Financial Services Company), (incorporated
herein by reference to Exhibit 6(a) of Post-Effective
Amendment No. 4 filed on January 28, 1997).

Distribution Agreement between the Registrant and Ex-99.e(2)
CCM Securities, Inc., (incorporated herein by reference to
Exhibit 6(b) of the Registration Statement filed January 23,
1998).

Custodian Agreement between the Registrant Ex-99.g
and CoreStates Bank, N.A., (incorporated herein
by reference to Exhibit 8(a) of Post-Effective
Amendment No. 4 filed on January 28, 1997).

Administration Agreement between the Ex-99.h(1)
Registrant and SEI Investments Management Corporation
(formerly, SEI Financial Management Corporation),
(incorporated herein by reference to Exhibit 9(a)
of Post-Effective Amendment No. 4 filed on
January 28, 1997).

Transfer Agency Agreement between the Registrant and Ex-99.h(2)
DST Systems, Inc., (incorporated by reference to Exhibit
9(b) of the Registration Statement filed January 23, 1998).

Amended Schedule to the Administration Agreement between Ex-99.h(3)
the Registrant and SEI Investments Management
Corporation (formerly, SEI Financial Management Corporation),
(incorporated by reference to Exhibit h(3) of Post-Effective
Amendment No. 14 filed on March 31, 1999).

Opinion and Consent of Counsel, filed herewith. Ex-99.i

Auditors Consent, filed herewith. Ex-99.j

Powers of Attorney for Robert E. Turner, Ex-99.q
Richard A. Hocker, Michael E. Jones, Alfred C. Salvato,
John T. Wholihan, Stephen J. Kneeley, Janet F. Sansone
and Robert DellaCroce, (incorporated herein by reference
to Exhibit p of Post-Effective Amendment No. 12 filed on
November 17, 1998).

C-13

[Morgan, Lewis & Bockius, 1800 M Street, NW, Washington, DC 20036]

January 24, 2000

TIP Funds
1235 Westlakes Drive, Suite 350
Berwyn, Pennsylvania 19312

Re: Opinion of Counsel regarding Post-Effective Amendment No. 15 to the
Registration Statement Filed on Form N-1A under the Securities Act of 1933
(File No. 333-00641).

Ladies and Gentlemen:

We have acted as counsel to TIP Funds, a Massachusetts business trust (the
"Trust"), in connection with the above-referenced Registration Statement (as
amended, the "Registration Statement") which relates to the Trust's units of
beneficial interest, without par value (collectively, the "Shares"). This
opinion is being delivered to you in connection with the Trust's filing of Post-
Effective Amendment No. 15 to the Registration Statement (the "Amendment") to be
filed with the Securities and Exchange Commission pursuant to Rule 485(b) of the
Securities Act of 1933 (the "1933 Act"). With your permission, all assumptions
and statements of reliance herein have been made without any independent
investigation or verification on our part except to the extent otherwise
expressly stated, and we express no opinion with respect to the subject matter
or accuracy of such assumptions or items relied upon.

In connection with this opinion, we have reviewed, among other things, executed
copies of the following documents:

(a) a certificate of the Commonwealth of Massachusetts as to the existence
and good standing of the Trust;

(b) the Agreement and Declaration of Trust for the Trust and all
amendments and supplements thereto (the "Declaration of Trust");

<PAGE>

TIP Funds
January 24, 2000
Page 2

(c) a certificate executed by John H. Grady, Jr., Assistant Secretary of
the Trust, certifying as to, and attaching copies of, the Trust's
Declaration of Trust and By-Laws (the "By-Laws"), and certain
resolutions adopted by the Board of Trustees of the Trust authorizing
the issuance of the Shares; and

(d) a printer's proof of the Amendment.

In our capacity as counsel to the Trust, we have examined the originals, or
certified, conformed or reproduced copies, of all records, agreements,
instruments and documents as we have deemed relevant or necessary as the basis
for the opinion hereinafter expressed. In all such examinations, we have assumed
the legal capacity of all natural persons executing documents, the genuineness
of all signatures, the authenticity of all original or certified copies, and the
conformity to original or certified copies of all copies submitted to us as
conformed or reproduced copies. As to various questions of fact relevant to such
opinion, we have relied upon, and assume the accuracy of, certificates and oral
or written statements of public officials and officers or representatives of the
Fund. We have assumed that the Amendment, as filed with the Securities and
Exchange Commission, will be in substantially the form of the printer's proof
referred to in paragraph (d) above.

Based upon, and subject to, the limitations set forth herein, we are of the
opinion that the Shares, when issued and sold in accordance with the Declaration
of Trust and By-Laws, and for the consideration described in the Registration
Statement, will be legally issued, fully paid and non-assessable under the laws
of the Commonwealth of Massachusetts.

We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement. In giving this consent, we do not concede that we are in
the category of persons whose consent is required under Section 7 of the 1933
Act.

Very truly yours,

/s/ Morgan, Lewis & Bockius LLP
- ---------------------------------
Morgan, Lewis & Bockius LLP

CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS

We consent to the references to our firm under the captions "Financial
Highlights" in the Prospectuses and "Experts" and "Financial Statements" in the
Statements of Additional Information and to the incorporation by reference in
this Post-Effective Amendment Number 15 to the Registration Statement (Form
N-1A) (No. 333-00641) of The TIP Funds, Inc. of our report dated November 8,
1999, included in the 1999 annual reports to shareholders.

/s/ Ernst & Young LLP

Philadelphia, Pennsylvania
January 27, 2000