TIP INSTITUTIONAL FUNDS, N-14, 1998-11-30

TIP INSTITUTIONAL FUNDS
N-14, 1998-11-30

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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON NOVEMBER 30, 1998

File No. 333-__________

________________________________________________________________________________

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM N-14

REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OF 1933 /X/

TIP INSTITUTIONAL FUNDS
(formerly, The Solon Funds)

(Exact Name of Registrant as Specified in Charter)
c/o Corporation Service Company
1013 Centre Road
Wilmington, Delaware 19805
New Castle County
(Address of Principal Executive Offices, Zip Code)

Registrant's Telephone Number, including Area Code (302) 636-5450

(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
2000 ONE LOGAN SQUARE 2000 ONE LOGAN SQUARE
PHILADELPHIA, PENNSYLVANIA 19103 PHILADELPHIA, PENNSYLVANIA 19103

________________________________________________________________________________

Registrant hereby amends this Registration Statement on such date or dates as
may be necessary to delay its effective date until the Registrant shall file a
further amendment which specifically states that this Registration Statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission acting pursuant to said Section 8(a)
may determine.

No filing fee is required because an indefinite number of shares have previously
been registered pursuant to Rule 24f-2 under the Investment Company Act of 1940.
________________________________________________________________________________

<PAGE>

TIP INSTITUTIONAL FUNDS

Cross Reference Sheet

ITEMS REQUIRED BY FORM N-14

<TABLE>
<S> <C>
Part A. INFORMATION REQUIRED IN REGISTRATION STATEMENT HEADING
PROSPECTUS

Item 1. Beginning of Registration Cover Page of Registration Statement
Statement and outside Front Cover
Page of Prospectus

Item 2. Beginning and Outside Back Table of Contents
Cover Page of Prospectus

Item 3. Synopsis and Risk Factors Synopsis; Comparison of Investment Objectives and
Policies of the Alpha Select Funds and the Tip Funds

Item 4. Information About the Transaction Synopsis; Reasons for the Reorganization;
Information Relating to the Reorganization;
Agreement and Plan of Reorganization and Liquidation

Item 5. Information About the Registrant Prospectus Cover Page; Synopsis; Reasons for the
Reorganization; Description of the Alpha Select Funds;
Information about the Funds; Comparison of Investment
Objectives and Policies of the Alpha Select Funds and
the TIP Funds; Fund Transactions; Shareholder Rights

Item 6. Information About the Company Prospectus Cover Page; Synopsis; Reasons for the
Being Acquired Reorganization; Information Relating to the
Reorganization; Description of TIP Funds; Comparison of
Investment Objectives and Policies of the Alpha Select
Funds and the TIP Funds; Fund Transactions;
Shareholder Rights

Item 7. Voting Information Prospectus Cover Page; Notice of Special Meeting of
Shareholders; Synopsis; Agreement and Plan of
Reorganization and Liquidation

Item 8. Interest of Certain Persons and Voting on the Reorganization; Legal Matters
Experts

Item 9. Additional Information Required Inapplicable
for Reoffering by Persons Deemed
to be Underwriters
</TABLE>

<PAGE>

<TABLE>
<S> <C>
Part B. INFORMATION REQUIRED IN A
STATEMENT OF ADDITIONAL
INFORMATION

Item 10. Cover Page Cover Page

Item 11. Table of Contents Table of Contents

Item 12. Additional Information About Incorporated by Reference to the
the Registrant Registrant's Prospectus and SAI attached as
exhibits to this filing

Item 13. Additional Information About the Incorporated by Reference to the Company's
the Company Being Acquired Prospectus and SAI attached as exhibits to
this filing

Item 14. Financial Statements Financial Statements

Part C. OTHER INFORMATION

Item 15. Indemnification Indemnification

Item 16. Exhibits Exhibits

Item 17. Undertakings Undertakings
</TABLE>

C-1
<PAGE>

TIP FUNDS

TIP TARGET SELECT EQUITY FUND
PENN CAPITAL SELECT FINANCIAL SERVICES FUND

Dear Shareholder:

A Special Meeting of Shareholders of the TIP Target Select Equity Fund and
Penn Capital Select Financial Services Fund (each a "Fund" and, together, the
"Funds") of TIP Funds (the "Trust") has been scheduled for Monday, January 25,
1999. If you are a Shareholder of record as of the close of business on Monday,
November 23, 1998, you are entitled to vote at the meeting and for any
adjournment of the meeting.

While you are, of course, welcome to join us at the meeting, most
Shareholders will cast their votes by filling out and signing the enclosed Proxy
Card(s). Whether or not you plan to attend the meeting, we need your vote.
Please mark, sign, and date the enclosed Proxy Card(s) and return it promptly in
the enclosed, postage-paid envelope so that the maximum number of shares may be
voted.

The attached Prospectus/Proxy Statement is designed to give you information
relating to the proposal(s) upon which you will be asked to vote. The Board of
Trustees is recommending that you approve a reorganization of the Funds under
which each Fund would be combined with and into a corresponding series of Alpha
Select Funds (formerly, TIP Institutional Funds) ("Alpha Select"). Shareholders
of each Fund will vote separately on the reorganization. Assuming approval by
Shareholders of each Fund: (i) each holder of shares of the Trust's TIP Target
Select Equity Fund will receive a number of shares of the Alpha Select's Premier
Core Equity Fund equal in dollar value and in the number of shares of the
Trust's TIP Target Select Equity Fund owned by such holder at the time of the
combination; and (ii) each holder of shares of the Trust's Penn Capital Select
Financial Services Fund will receive a number of shares of Alpha Select's Global
Financial Services Fund equal in dollar value and in the number of shares of the
Trust's Penn Capital Select Financial Services Fund owned by such holder at the
time of the combination. As further explained in the accompanying
Prospectus/Proxy Statement, the Board of Trustees has recommended approval of
the combination. We encourage you to support the Trustees' recommendation to
approve the proposals.

We are proposing the Reorganization for two principal reasons:

o ACCESS TO MULTIPLE SPECIALIST MANAGERS: The Alpha Select Funds are each
managed by one or more specialist sub-advisers under the general
supervision of Turner Investment Partners, Inc. This structure provides
access to the combined talents and favorite stock picking ideas of a number
of highly regarded advisers.

o ACCESS TO BROADER DISTRIBUTION CHANNELS: The Alpha Select Funds will be
available to investors in both retail and institutional distribution
channels. As a result, it is hoped that the Funds will achieve operating
efficiencies and will realize economies of scale.

Your vote is important to us. Please do not hesitate to call 1-800-224-6312
if you have any questions about the proposals under consideration. Thank you for
taking the time to consider these important proposals and for your investment in
the Funds.

Sincerely,

Stephen Kneeley
President

<PAGE>

INFORMATION ABOUT YOUR PROSPECTUS/PROXY STATEMENT

Q. WHY AM I RECEIVING THIS PROSPECTUS/PROXY STATEMENT?

A. TIP Funds (the "Trust") seeks your approval of a reorganization of the
Trust's TIP Target Select Equity and Penn Capital Select Financial Services
Funds. The Board of Trustees recommends approval of the reorganization
because it believes that it will result in a structure that more
appropriately serves the needs of shareholders.

Q. HOW WILL THE REORGANIZATION WORK?

A. The TIP Target Select Equity and Penn Capital Select Financial Services
Funds each will transfer all of their assets and all of their liabilities
to Alpha Select's Premier Core Equity and Global Financial Services Funds,
respectively, each a series of the Alpha Select Funds, in return for shares
of the Funds having an equivalent aggregate value. The assets of the
Trust's TIP Target Select Equity and Penn Capital Select Financial Services
Funds will be transferred at their current value as of the reorganization
date, and the shares provided in return will have a total value equal to
the transferred net assets, again as of the reorganization date. Finally,
each of the TIP Target Select Equity and Penn Capital Select Financial
Services Funds will distribute the shares received by it to its
shareholders in a liquidating distribution. Shareholders of the Trust's TIP
Target Select Equity and Penn Capital Select Financial Services Funds will
thus effectively be converted into shareholders of Alpha Select's Premier
Core Equity Fund and Global Financial Services Funds, respectively. If the
Plan is carried out as proposed, there will be no federal or state tax
consequences to either Fund or its shareholders.

Please refer to the Prospectus/Proxy Statement for a detailed explanation
of the proposals and for a fuller description of TIP Funds, the Funds and
Alpha Select Funds.

Q. HOW WILL THIS AFFECT MY ACCOUNT?

A. Following the reorganization you will be a shareholder of Alpha Select
Funds. The reorganization will not, however, affect the value of your
account. In addition, you can expect the same high level of management
expertise and shareholder services that you currently receive.

Q. WHY DO I NEED TO VOTE?

A. Your vote is needed to ensure that the proposal can be acted upon. Your
immediate response on the enclosed proxy card will help prevent the need
for any further solicitations for a shareholder vote. We encourage all
shareholders to participate.

<PAGE>

Q. HOW DOES THE BOARD OF TRUSTEES SUGGEST THAT I VOTE?

A. After careful consideration, the Board of Trustees of TIP Funds recommends
that you vote "FOR" the item(s) proposed on the enclosed proxy card(s).

Q. WHO IS PAYING FOR EXPENSES RELATED TO THE SHAREHOLDER MEETING?

A. Turner Investment Partners, Inc., the sponsor of TIP Funds and Alpha Select
Funds, will pay the costs of this shareholder meeting and the
Prospectus/Proxy Statement.

Q. WHERE DO I MAIL MY PROXY CARD?

A. You may use the enclosed postage-paid envelope or mail your proxy card to:

TIP Funds
c/o ADP
53 Mercedes Way
Edgewood, NY 11717

[YOU MAY ALSO VOTE OVER THE INTERNET BY VISITING "http://www.______.com"
AND FOLLOWING THE VOTING INSTRUCTIONS. YOU MAY ALSO VOTE OVER THE
TELEPHONE BY CALLING _________.]

Q. WHOM DO I CALL IF I HAVE QUESTIONS?

A. We will be happy to answer your questions about the proxy solicitation.
Please call us at (800) 224-6312 between 8:00 a.m. and 5:30 p.m. Eastern
Time, Monday through Friday.

<PAGE>

TIP FUNDS
C/O TURNER INVESTMENT PARTNERS, INC.
1235 WESTLAKES DRIVE
SUITE 350
BERWYN, PENNSYLVANIA 19312

NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON JANUARY 25, 1999

Notice is hereby given that a Special Meeting of Shareholders of the TIP Target
Select Equity Fund and Penn Capital Select Financial Services Fund (each a
"Fund" and, together, the "Funds") of TIP Funds (the "Trust") will be held at
the offices of SEI Investments Company ("SEI"), Oaks, Pennsylvania 19456, on
Monday, January 25, 1999, at 3:30 p.m. (Eastern Time) for the purpose of
considering the proposals set forth below.

At the Meeting, Shareholders of each Fund will be asked to consider and act upon
a proposed Agreement and Plan of Reorganization and Liquidation pursuant to
which each Fund will transfer all of its assets and liabilities to a portfolio
of Alpha Select Funds (formerly, TIP Institutional Funds) ("Alpha Select") with
a similar investment objective and comparable investment policies in exchange
for shares of the applicable portfolio. The series of the Alpha Select Funds
designated to acquire the assets and liabilities of the Funds are the Premier
Core Equity Fund and Global Financial Services Fund (each an "Alpha Select Fund"
and, together, the "Alpha Select Funds"). The proposals, which are more fully
described in the attached Prospectus/Proxy Statement, are as follows:

1. TIP TARGET SELECT EQUITY FUND:

APPROVAL OF AN AGREEMENT AND PLAN OF REORGANIZATION AND LIQUIDATION
BETWEEN THE TRUST, ON BEHALF OF THE TIP TARGET SELECT EQUITY FUND, AND
ALPHA SELECT, ON BEHALF OF THE PREMIER CORE EQUITY FUND.

2. PENN CAPITAL SELECT FINANCIAL SERVICES FUND:

APPROVAL OF AN AGREEMENT AND PLAN OF REORGANIZATION AND LIQUIDATION
BETWEEN THE TRUST, ON BEHALF OF THE PENN CAPITAL SELECT FINANCIAL
SERVICES FUND, AND ALPHA SELECT, ON BEHALF OF THE GLOBAL FINANCIAL
SERVICES FUND.

Shareholders of each Fund will vote separately on the Proposal applicable
to them.

The persons named as proxies are authorized to vote on such other business
as may properly come before the Meeting in accordance with their own discretion.

All Shareholders are cordially invited to attend the Meeting. However, if
you are unable to attend the Meeting, you are requested to mark, sign and date
the enclosed Proxy Card(s) and return

<PAGE>

it promptly in the enclosed, postage-paid envelope so that the Meeting may be
held and a maximum number of shares may be voted. [YOU MAY ALSO VOTE OVER THE
INTERNET BY VISITING "http://www.______.com" AND FOLLOWING THE VOTING
INSTRUCTIONS. YOU MAY ALSO VOTE OVER THE TELEPHONE BY CALLING _________.]

Shareholders of record at the close of business on Monday, November 23,
1998 are entitled to notice of and to vote at the Meeting or any adjournment
thereof.

BY ORDER OF THE BOARD OF TRUSTEES

JAMES W. JENNINGS, SECRETARY

_______________, 1998

<PAGE>

PROSPECTUS/PROXY STATEMENT

November 30, 1998

RELATING TO THE ACQUISITION OF THE ASSETS AND LIABILITIES OF

TIP TARGET SELECT EQUITY FUND
AND
PENN CAPITAL SELECT FINANCIAL SERVICES FUND
EACH A SERIES OF

TIP FUNDS
1235 WESTLAKES DRIVE
SUITE 350
BERWYN, PENNSYLVANIA 19312
(800) 224-6312

BY AND IN EXCHANGE FOR SHARES OF

PREMIER CORE EQUITY FUND
AND
GLOBAL FINANCIAL SERVICES FUND
EACH A SERIES OF

ALPHA SELECT FUNDS
(FORMERLY, TIP INSTITUTIONAL FUNDS)
1235 WESTLAKES DRIVE
SUITE 350
BERWYN, PENNSYLVANIA 19312
(888) TIP-7654

This Prospectus/Proxy Statement is furnished in connection with the solicitation
of proxies by the Board of Trustees ("Board") of the TIP Funds in connection
with the Special Meeting of Shareholders (the "Meeting") of the TIP Target
Select Equity Fund and Penn Capital Select Financial Services Fund (each a
"Fund" and, together, the "Funds") to be held on Monday, January 25, 1999, at
3:30 p.m. (Eastern Time) at the offices of SEI Investments Company ("SEI"), One
Freedom Valley Drive, Oaks, Pennsylvania 19456. At the meeting, shareholders of
the Funds will be asked to consider and approve a proposed Agreement and Plan of
Reorganization and Liquidation (the "Reorganization Agreement") between TIP
Trust, on behalf of its TIP Target Select Equity and Penn Capital Select
Financial Services Funds, and Alpha Select Funds (formerly, TIP Institutional
Funds) ("Alpha Select"), on behalf of its Premier Core

<PAGE>

Equity and Global Financial Services Funds, as well as the other matters
contemplated therein. A copy of the Reorganization Agreement is attached as
Exhibit A.

The Reorganization Agreement provides that the TIP Target Select Equity and Penn
Capital Select Financial Services Funds each will transfer all of their assets
and all of their liabilities to Alpha Select's Premier Core Equity and Global
Financial Services Funds, respectively, each a series of the Alpha Select Funds,
in return for Class I Shares of the Funds having an equivalent aggregate value.
The assets of the Trust's TIP Target Select Equity and Penn Capital Select
Financial Services Funds will be transferred at their current value as of the
reorganization date, and the shares provided in return will have a total value
equal to the transferred net assets, again as of the reorganization date.
Finally, each of the TIP Target Select Equity and Penn Capital Select Financial
Services Funds will distribute the shares received by it to its shareholders in
a liquidating distribution. Shareholders of the Trust's TIP Target Select Equity
and Penn Capital Select Financial Services Funds will thus effectively be
converted into shareholders of Alpha Select's Premier Core Equity Fund and
Global Financial Services Funds, respectively. If the Plan is carried out as
proposed, there will be no federal or state tax consequences to either Fund or
its shareholders.

TIP Funds is an open-end management investment company, or mutual fund. Turner
Investment Partners, Inc. ("Turner") and Penn Capital Management Company, Inc.
("Penn Capital") provide investment advisory services to the TIP Target Select
Equity Fund and Penn Capital Select Financial Services Fund, respectively.
Turner also oversees two sub-advisers who provide, along with Turner, day-to-day
investment management of certain assets of the TIP Target Select Equity Fund.
Turner serves as adviser to a portion of the assets of the Fund, along with
Merrill Lynch Asset Management and __________________________, sub-advisers to
the Fund.

Alpha Select Funds is an open-end management investment company, or mutual fund.
Turner provides investment advisory services to the Premier Core Equity Fund and
Global Financial Services Fund. Turner also oversees a number of sub-advisers
who provide day-to-day investment management of the assets of the Premier Core
Equity Fund and the Global Financial Services Fund. Penn Capital serves as one
of the sub-advisers to the Global Financial Services Fund, along with Mercury
Asset Management and Merrill Lynch Asset Management.

This Prospectus/Proxy Statement sets forth the information that a shareholder of
TIP Target Select Equity and Penn Capital Select Financial Services Funds should
know before voting on the Reorganization, and should be retained for future
reference. The following additional relevant documents have been filed with the
Securities and Exchange Commission ("SEC") and are incorporated by reference in
whole or in part:

(i) A Statement of Additional Information, dated December 18, 1998,
relating to this Prospectus/Proxy Statement and the Reorganization is
incorporated into this Prospectus/Proxy Statement in its entirety. A
copy of such Statement of Additional Information is available upon
request and without charge by writing to TIP Funds, P.O. Box 419805,
Kansas City, MO 64141-6805 or by calling 1-800-224-6312.

<PAGE>

(ii) The prospectuses for TIP Funds relating to the TIP Target Select
Equity and Penn Capital Select Financial Services Funds, dated January
31, 1998 and July 31, 1998, respectively, contain a more detailed
discussion of the investment objectives, policies and risks of the
Funds. They are incorporated by reference into this Prospectus/Proxy
Statement insofar as they relate to the TIP Target Select Equity and
Penn Capital Select Financial Services Funds and not to any other Fund
of TIP Funds described therein. Copies are available upon request and
without charge by calling 1-800-224-6312.

(iii) Statements of Additional Information for the Funds, dated January 31,
1998, are incorporated by reference into this Prospectus/Proxy
Statement. A copy is available upon request and without charge by
calling 1-800-224-6312.

This Prospectus/Proxy Statement constitutes the proxy statement of TIP Funds'
TIP Target Select Equity and Penn Capital Select Financial Services Funds for
the Meeting and is expected to be sent to shareholders on or about Wednesday,
December 23, 1998. Only shareholders of record as of the close of business on
Monday, November 23, 1998 (the "Record Date") are entitled to notice of, and to
vote at, the Meeting or any adjournment thereof.

THE SECURITIES AND EXCHANGE COMMISSION HAS NOT APPROVED OR DISAPPROVED THESE
SECURITIES OR PASSED UPON THE ADEQUACY OF THIS PROSPECTUS/PROXY STATEMENT. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

<PAGE>

TABLE OF CONTENTS

Page
----

SYNOPSIS...................................................................
REASONS FOR THE REORGANIZATION.............................................
INFORMATION RELATING TO THE REORGANIZATION.................................
DESCRIPTION OF THE ALPHA SELECT FUNDS......................................
DESCRIPTION OF THE TIP FUNDS...............................................
THE REORGANIZATION AGREEMENT...............................................
CONSIDERATIONS OF THE TRUSTEES OF TIP FUNDS................................
COMPARISON OF INVESTMENT OBJECTIVES AND POLICIES...........................
ADDITIONAL INFORMATION ABOUT THE FUNDS.....................................
FUND TRANSACTIONS..........................................................
SHAREHOLDER RIGHTS.........................................................
LEGAL MATTERS..............................................................
VOTING ON THE REORGANIZATION AGREEMENT.....................................
OTHER BUSINESS.............................................................
SHAREHOLDER INQUIRIES......................................................

EXHIBIT A -- AGREEMENT AND PLAN OF REORGANIZATION AND
LIQUIDATION..............................................................

<PAGE>

SYNOPSIS

The following is a summary of certain information contained elsewhere in this
Prospectus/Proxy Statement and is qualified by reference to the more complete
information contained herein and in the attached Exhibit A. Shareholders should
read this entire Prospectus/Proxy Statement carefully.

THE REORGANIZATION

The Board of Trustees of TIP Funds, including those Trustees who are not
"interested persons" within the meaning of Section 2(a)(19) of the Investment
Company Act of 1940 ("1940 Act"), has unanimously approved, subject to
shareholder approval, the Funds' entry into the Reorganization Agreement. The
Reorganization Agreement provides that the assets and liabilities of the TIP
Target Select Equity and Penn Capital Select Financial Services Funds will be
transferred to the Premier Core Equity Fund and the Global Financial Services
Fund, respectively, of Alpha Select at their current value on the date of the
transaction, and that the Class I Shares provided in return will have a total
value equal to the total value of the transferred net assets, again as of the
transaction date. Finally, the Reorganization Agreement calls for each Fund to
distribute the shares received by it to its shareholders in a liquidating
distribution. Shareholders of TIP Target Select Equity and Penn Capital Select
Financial Services Funds will thus effectively be converted into shareholders of
the Premier Core Equity Fund and the Global Financial Services Fund,
respectively, of Alpha Select Funds. There will be no federal or state tax
consequences to either Fund or to their shareholders. No sales charge will be
imposed in connection with these transactions.

The Board of Trustees of TIP Funds, including the Trustees who are not
"interested persons," has concluded that the Reorganization would be in the best
interests of both Funds and their shareholders and that the interests of
existing shareholders in the Funds would not be diluted as a result of the
transaction contemplated by the Reorganization. The Board recommends that you
vote for the approval of the Reorganization Agreement.

THE ALPHA SELECT FUNDS

INVESTMENT OBJECTIVES AND POLICIES.

PREMIER CORE EQUITY FUND -- The Premier Core Fund seeks long term capital
appreciation primarily from investment in U.S. equity securities.

GLOBAL FINANCIAL SERVICES FUND -- The Global Financial Services Fund seeks to
generate long term capital appreciation.

RISKS. The investment policies of the Alpha Select Funds entail certain risks
and considerations of which investors should be aware. The Premier Core Equity
Fund intends to invest primarily (and, under normal circumstances, at least 65%
of its total assets) in equity

<PAGE>

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.

The Global Financial Services Fund will be exposed to the risks of investing in
equity securities, including equity securities of small cap issuers (I.E.,
issuers with market capitalizations of less than $1 billion). Investments in
smaller companies involve greater risks than investments in larger, more
established companies. The Global Financial Services Fund will focus its
investments in the U.S. and foreign banking industry and the financial services
sector, and will be concentrated in the banking industry (I.E., at least 25%
(and up to 100%) of its total assets will be invested in the banking industry).
The banking industry includes commercial and industrial banks, savings and loan
associations and their holding companies. The financial services sector includes
consumer and industrial finance companies, diversified financial service
companies, investment banking, securities brokerage and investment advisory
companies, leasing companies and insurance companies and other financial
services companies. Although diversified throughout the industry, to the extent
that it invests a significant portion of its assets in the global banking
industry and the financial services sector, it is subject to the risks
associated with investing in banking and financial services issuers.

The Alpha Select Funds may enter into futures and options transactions, although
it has no intention to do so in the foreseeable future. The Alpha Select Funds
also may purchase securities of foreign issuers. Investments in these securities
involve certain other risks. The Alpha Select Funds are non-diversified, and may
therefore be invested in equity securities of a limited number of issuers.

The Alpha Select Funds may also, to a limited extent, borrow money and utilize
leveraging techniques. The Funds may invest in securities that fluctuate in
value, and investors should expect the Funds' net asset value per share to
fluctuate in value. The value of equity securities may be affected by the
financial markets as well as by developments impacting specific issuers. The
values of fixed income securities tend to vary inversely with interest rates,
and may be affected by market and economic factors, as well as by developments
impacting specific issuers. The Funds' high yield securities, if any, may be
volatile and are subject to greater amounts of credit risk than investment grade
issuers

INVESTMENT ADVISORY INFORMATION.

Turner has served as investment adviser to the TIP Target Select Equity Fund
since its inception. In the interests of obtaining increased flexibility
respecting marketing and operational issues, Turner determined to propose to the
Trustees and to the TIP Target Select Equity Fund's Shareholders, the transfer
of the assets of TIP Target Select Equity Fund to a newly-organized portfolio
(I.E., Premier Core Equity Fund) of Alpha Select. The Premier Core Equity Fund
has an identical investment objective and comparable investment policies to the
TIP Target Select

<PAGE>

Equity Fund. Turner will serve as investment adviser to the Premier Core Equity
Fund, and will oversee two sub-advisers who will manage portions of the assets
of the Fund along with Turner.

Penn Capital has served as investment adviser to the Penn Capital Select
Financial Services Fund, a separate series of TIP Funds, since its inception.
Turner and Penn Capital determined to propose to the Trustees and to the Penn
Capital Select Financial Services Fund's Shareholders, the transfer of the
assets of Penn Capital Select Financial Services Fund to a newly-organized fund
(I.E., the Global Financial Services Fund) of Alpha Select. The Global Financial
Services Fund has a similar investment objective and comparable investment
policies to that of the Penn Capital Select Financial Services Fund. Turner will
serve as investment adviser to the Global Financial Services Fund, and will
oversee three sub-advisers (including Penn Capital) who will manage portions of
the assets of the Fund.

COMPARISON OF FEES AND EXPENSES

The following table compares the annual operating expenses, including advisory
fees, of the TIP Target Select Equity and Penn Capital Select Financial Services
Funds to those of the Premier Core Equity and Global Financial Services Funds.

ANNUAL OPERATING EXPENSES*
(As a percentage of average net assets)

Premier Core Penn Capital Global Financial
TIP Target Select Equity Fund Select Financial Services Fund
Equity Fund (Class I Shares) Services Fund (Class I Shares)
----------------- ---------------- ---------------- ----------------
<S> <C> <C> <C> <C>
Advisory Fees (less waivers)(1)....... 1.05% .75% 1.00% 1.00%
12b-1 Fees............................ None None None None
Other Expenses(2)..................... .25% .25% .40% .40%
Total Operating Expenses(3)........... 1.30% 1.00% 1.40% 1.40%
</TABLE>

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

(1) The Advisers have agreed, on a voluntary basis, to waive their advisory
fees to the extent necessary to keep the "Total Operating Expenses" of the
TIP Target Select Equity Fund and the Penn Capital Select Financial
Services Fund from exceeding 1.30% and 1.40%, respectively, during the
fiscal year. Absent these fee waivers, Advisory Fees would be 1.05% and
1.00%, respectively. The Advisers reserve the right to terminate their
waivers at any time in their sole discretion.

(2) The Adviser will reimburse expenses in order to limit "Other Expenses" for
Class I Shares of the Premier Core Equity Fund and Global Financial
Services Fund to .25% and .40%, respectively, for the current fiscal year.

(3) Absent fee waivers or expense reimbursements, "Total Operating Expenses"
for the TIP Target Select Equity Fund and the Penn Capital Select Financial
Services Fund would be 1.67% and 1.41%, respectively, based on current
expectations and assumptions. Absent fee waivers or expense reimbursements,
"Total Operating Expenses" for the

<PAGE>

Premier Core Equity Fund and the Global Financial Services Fund are
expected to be ____% and ___%, respectively, based on current expectations
and assumptions.

EXAMPLE

This example is intended to help you compare the cost of investing in the TIP
Funds' TIP Target Select Equity Fund or Penn Capital Select Financial Services
Fund with the cost of investing in the Alpha Select Premier Core Equity Fund or
Global Financial Services Fund.

The example assumes that you invest $1,000 in each Fund for the time periods
indicated and then redeem all of your shares at the end of those periods. The
example assumes that your investment has a 5% return each year and that each
Fund's operating expenses remain the same. Although your actual costs may be
higher or lower, based on these assumptions your costs would be:

1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------ --------
<S> <C> <C> <C> <C>
TIP TARGET SELECT EQUITY FUND.................. $13 $40 $__ $__

PREMIER CORE EQUITY FUND
(CLASS I SHARES)............................. $__ $__ $__ $__

PENN CAPITAL SELECT FINANCIAL SERVICES FUND.... $14 $44 $__ $__

GLOBAL FINANCIAL SERVICES FUND
(CLASS I SHARES)............................. $__ $__ $__ $__
</TABLE>

SHAREHOLDER INFORMATION. The purchase and redemption procedures and exchange
privileges of the TIP Funds Target Select Equity and Penn Capital Select
Financial Services Funds are substantially similar to those of the Premier Core
Equity and Global Select Financial Services Fund. However, the Premier Core
Equity Fund and Global Financial Services Funds offer multiple classes of
shares, some of which have sales charges and/or Rule 12b-1 or shareholder
servicing plans. Specifically, the Class A Shares of the Premier Core Equity and
Global Financial Services Funds are sold subject to a front-end sales charge and
a .25% shareholder servicing fee. The Class C Shares of the Funds are sold
subject to a 1.00% contingent-deferred sales charge and a .75% Rule 12b-1 fee
and a .25% shareholder servicing fee. Class I Shares of the Alpha Select Funds
are sold without a sales charge and do not pay any Rule 12b-1 or shareholder
servicing fees.

REASONS FOR THE REORGANIZATION

The Reorganization has been proposed to enable the Funds to better focus their
marketing efforts. Multi-manager funds seek to take advantage of the security
selection capabilities of multiple advisers that utilize different (yet
complimentary) investment styles. The TIP Target Select Equity and Penn Capital
Select Financial Services Funds fit well into this model, and will permit the
Funds to be identified with a separate group of funds designed specifically as
multi-manager funds.

<PAGE>

In addition to considering the terms and conditions of the Reorganization
Agreement, the Trustees considered the following benefits of the proposed
transaction:

o ACCESS TO MULTIPLE SPECIALIST MANAGERS: The Alpha Select structure, wherein
each Fund is managed by one or more specialist sub-advisers under the
general supervision of Turner, provides access to the combined talents and
favorite stock picking ideas of a number of highly regarded advisers.

o TAX TREATMENT: The Trustees considered the fact that Morgan, Lewis &
Bockius, LLP believes that the Reorganization will be tax-free to the
Funds' shareholders.

The cost of the solicitation and the shareholders' meeting necessary in order to
carry out the transaction will be borne by Turner.

Based on the factors described above, the Trustees, including these Trustees who
are not "interested persons" of TIP Funds within the meaning of Section 2(a)(19)
of the 1940 Act, determined that participation in the Reorganization is in the
best interests of each Fund's shareholders and that the interest of the Funds
existing shareholders would not be diluted as a result of the merger.
Accordingly, the Trustees recommend that shareholders approve the
Reorganization. In addition, the Trustees of Alpha Select, including those
Trustees who are not "interested persons" of Alpha Select within the meaning of
the 1940 Act, determined that participation in the Reorganization is in the best
interests of the Alpha Select Funds.

INFORMATION RELATING TO THE REORGANIZATION

DESCRIPTION OF THE REORGANIZATION. The following summary is qualified in its
entirety by reference to the Reorganization Agreement found in Exhibit A.

The Reorganization Agreement provides that all of the assets and all of the
liabilities of the TIP Target Select Equity and Penn Capital Select Financial
Services Funds will be transferred to the corresponding series of Alpha Select
at the close of business on January 27, 1999, or such later date as is agreed to
by the parties (the "Effective Time"). In exchange for the transfer of these
assets, the Alpha Select Premier Core Equity and Global Financial Services Funds
will simultaneously issue to TIP Funds, at the Effective Time, a number of full
and fractional Class I Shares equal in value to the net asset value of the TIP
Target Select Equity and Penn Capital Select Financial Services Funds
immediately prior to the Effective Time.

Following the transfer of assets and liabilities in exchange for Alpha Select
Premier Core Equity and Global Financial Services Funds shares, TIP Funds will
distribute pro rata the shares received to its shareholders in a liquidating
distribution. Each shareholder of the TIP Target

<PAGE>

Select Equity and Penn Capital Select Financial Services Funds owning shares at
the Effective Time will receive Alpha Select Premier Core Equity and Global
Financial Services Funds shares of equal value. Such liquidation and
distribution will be accomplished by the establishment of accounts in the names
of the TIP Fund's shareholders on the share records of the Alpha Select Fund's
transfer agent. Each account will represent the respective pro rata number of
full and fractional Class I Shares of Alpha Select due to the shareholders of
the TIP Funds. Alpha Select does not issue share certificates to shareholders.
Class I Shares of Alpha Select will have no preemptive or conversion rights.
After the Reorganization, the TIP Target Select Equity and Penn Capital Select
Financial Services Funds will cease operations. The Reorganization is subject to
a number of conditions, including the receipt of certain legal opinions
described in the Reorganization Agreement (including an opinion of counsel that
the TIP Target Select Equity Fund and Penn Capital Select Financial Services
Fund shares issued in accordance with the terms of the Reorganization Agreement
will be validly issued, fully paid and non-assessable); the receipt of certain
certificates from the parties concerning aggregate asset values; and the
parties' performance in all material respects of the agreements and undertakings
in the Reorganization Agreement. Assuming satisfaction of the conditions in the
Reorganization Agreement, the Effective Time of the Reorganization will be
January 27, 1999 or such later date as is agreed to by the parties.

The Reorganization Agreement and the Reorganization may be abandoned without
penalty at any time prior to the Effective Time of the Reorganization by
resolution of the Board of TIP Funds or of the Board of Alpha Select Funds or at
the discretion of any duly authorized officer if circumstances should develop
that, in the opinion of the Board or officers, make it inadvisable to proceed
with the Reorganization.

FEDERAL INCOME TAXES. The Reorganization is intended to qualify for federal
income tax purposes as a tax-free reorganization under Section 368(a)(1)(F) of
the Internal Revenue Code of 1986, as amended. If it qualifies, shareholders of
the Funds will not recognize gain or loss in the transaction; the tax basis of
the Alpha Select Premier Core Equity Fund and Global Financial Services Fund
shares received will be the same as the tax basis of the TIP Funds shares
surrendered; and the holding period of the Alpha Select Premier Core Equity Fund
and Global Financial Services Fund shares received will include the holding
period of the TIP Fund shares surrendered, provided that the shares surrendered
were capital assets in the hands of the TIP Target Select Equity and Penn
Capital Select Financial Services Funds' shareholders at the time of the
transaction. As a condition to the closing of the Reorganization, the Funds will
receive an opinion from counsel to that effect. The Advisers, on behalf of the
Funds, have not sought a tax ruling from the Internal Revenue Service. The
opinion of counsel is not binding on the Internal Revenue Service and does not
preclude the Internal Revenue Service from adopting a contrary position.
Shareholders should consult their own tax advisers concerning the potential tax
consequences of the Reorganization to them, including state and local tax
consequences. THE ADVISERS DO NOT ANTICIPATE THAT SECURITIES HELD BY THE
COMBINED FUNDS WILL BE SOLD IN SIGNIFICANT AMOUNTS TO COMPLY WITH ALPHA SELECT'S
INVESTMENT POLICIES OR STRATEGIES.

<PAGE>

CAPITALIZATION. The following table sets forth as of__________, 1998: (i) the
capitalization of each Fund; and (ii) the pro forma combined capitalization of
the Alpha Select Premier Core Equity and Global Financial Services Funds
assuming the Reorganization has been approved.

NET ASSET VALUE SHARES
FUND NET ASSETS PER SHARE OUTSTANDING
---- ---------- --------------- -----------
<S> <C> <C> <C>
TIP FUNDS

TIP Target Select Equity Fund $ $

Penn Capital Financial Services Fund $ $

ALPHA SELECT FUNDS

Premier Core Equity Fund $0 N/A 0

Global Financial Services $0 N/A 0

PRO FORMA ALPHA SELECT $

Premier Core Equity Fund $ $

Global Financial Services $ $
</TABLE>

<PAGE>

DESCRIPTION OF THE ALPHA SELECT FUNDS

Alpha Select Funds (formerly, TIP Institutional Funds) was organized under
Delaware law as a business trust pursuant to a Declaration of Trust dated
October 25, 1993, as amended on October 7, 1998. Alpha Select is an open-end
management investment company registered under the 1940 Act, and has authorized
capital consisting of an unlimited number of units of beneficial interest
without par value of separate series of Alpha Select. Each series of Alpha
Select has Class A, Class C, and Class I Shares. Each of the Alpha Select Funds
is a duly organized and validly existing series of Alpha Select.

Turner serves as investment adviser to each Alpha Select Fund pursuant to an
investment advisory agreement dated January 1, 1998 (the "Advisory Agreement").
The Advisory Agreement provides, in part, that Turner makes investment decisions
for the assets of each Alpha Select Fund and continuously reviews, supervises
and administers each Alpha Select Fund's investment program, subject to the
supervision of, and policies established by, the Trustees of Alpha Select. For
its services, Turner is entitled to a fee, which is calculated daily and paid
monthly, at an annual rate of .75% of the average daily net assets of the
Premier Core Equity Fund, and 1.00% of those of the Global Financial Services
Fund. Turner pays the sub-advisers out of the fees it receives.

DESCRIPTION OF TIP FUNDS

TIP Funds was organized under Massachusetts law as a business trust pursuant to
an Agreement and Declaration of Trust dated January 26, 1996, as amended on
February 21, 1997. TIP Funds is an open-end management investment company
registered under the 1940 Act which has authorized capital consisting of an
unlimited number of units of beneficial interest, each with a par value of
$.00001, of each of the separate series of TIP Funds. Each series of TIP Funds
currently has only one class of shares. The TIP Target Select Equity Fund and
the Penn Capital Select Financial Services Fund are each duly organized and
validly existing series of TIP Funds.

Following the conclusion of the reorganization, Turner will serve as investment
adviser to each corresponding series of Alpha Select. The investment advisory
agreement between Turner and Alpha Select is substantially identical to the
advisory agreement that exists between Turner and TIP Funds, on behalf of the
Funds, except for the performance fee and the provisions relating to the hiring
of sub-advisers. Significantly, both investment advisory agreements provide for
the same duties and standards of care. For its services to the TIP Funds, Turner
is entitled to a fee, which is calculated daily and paid monthly, at an annual
rate of 1.05 % of the average daily net assets of the TIP Target Select Equity
Fund, and Penn Capital is entitled to a fee, which is calculated daily and paid
monthly, at an annual rate of 1.00% of the average daily net assets of the Penn
Capital Select Financial Services Fund. Each of Turner and Penn Capital has
voluntarily agreed to waive all or a portion of its fee and to reimburse
expenses of the Funds in

<PAGE>

order to limit their total operating expenses. Turner and Penn Capital each
reserve the right, in its sole discretion, to terminate these voluntary fee
waivers and reimbursements at any time.

THE REORGANIZATION AGREEMENT

The Reorganization Agreement provides that all of the assets and all of the
liabilities of the TIP Target Select Equity and Penn Capital Select Financial
Services Funds will be transferred to corresponding series of Alpha Select in
return for Class I Shares of Alpha Select's Premier Core Equity and Global
Financial Services Funds having an equivalent aggregate value. The assets and
liabilities of TIP Funds' TIP Target Select Equity and Penn Capital Select
Financial Services Funds will be transferred to Alpha Select's Premier Core
Equity and Global Financial Services Funds at their current value on the date of
the transaction, and the shares provided in return will have a total value equal
to the total value of the transferred net assets, again as of the transaction
date. Finally, the Funds will distribute the shares received by it to its
shareholders in a liquidating distribution.

The Agreement also provides that TIP Funds will receive, prior to the closing,
an opinion of counsel to the effect that: (i) Alpha Select and the Alpha Select
Funds are duly organized and validly existing under the laws of the State of
Delaware; (ii) Alpha Select is an open-end management investment company
registered under the Investment Company Act of 1940 (the "1940 Act"); (iii) the
Agreement and the Reorganization provided for therein and the execution of the
Agreement have been duly authorized and approved by all requisite action of
Alpha Select and has been duly executed and delivered by Alpha Select on behalf
of the Alpha Select Funds and is a valid and binding obligation of the Alpha
Select Funds, subject to applicable bankruptcy, insolvency, fraudulent
conveyance, and similar laws or court decisions regarding enforcement of
creditors' rights generally; and (iv) to the best of counsel's knowledge after
reasonable inquiry, no consent, approval, order or other authorization of any
federal or state court or administrative or regulatory agency is required for
Alpha Select to enter into the Agreement or carry out its terms on behalf of the
Alpha Select Funds that has not been obtained other than where the failure to
obtain such consent, approval, order, or authorization would not have a material
adverse affect on the operations of the Alpha Select Funds.

In addition, Alpha Select shall have received, prior to the closing, an opinion
of counsel to the effect that: (i) TIP Funds and the Funds are duly organized
and validly existing under the laws of the Commonwealth of Massachusetts; (ii)
TIP Funds is an open-end management investment company registered under the 1940
Act; (iii) the Agreement, the Reorganization provided for therein, and the
execution of the Agreement have been duly authorized and approved by all
requisite corporate action of TIP Funds and the Agreement has been duly executed
and delivered by TIP Funds and is a valid and binding obligation of TIP Funds,
subject to applicable bankruptcy, insolvency, fraudulent conveyance and similar
laws or court decisions regarding enforcement of creditors' rights generally;
(iv) to the best of counsel's knowledge after reasonable inquiry, no consent,
approval, order or other authorization of any federal or state court or
administration or regulatory agency is required for TIP Funds to enter into the
Agreement or carry out its terms on behalf of the Funds that has not already
been obtained, other than where

<PAGE>

the failure to obtain any such consent, approval, order or authorization would
not have a material adverse effect on the operations of TIP Funds or the Funds;
and (v) TIP Funds shares to be issued in the reorganization have been duly
authorized and upon issuance thereof in accordance with the Agreement, will be
validly issued, fully paid and non-assessable.

CONSIDERATIONS OF THE TRUSTEES OF TIP FUNDS

At Meetings held on August 14, 1998 and November 6, 1998, the Trustees of TIP
Funds reviewed the Agreement and determined that the Reorganization is in the
best interests of the TIP Funds and the TIP Funds' Shareholders, and that the
interests of the TIP Funds' Shareholders will not be diluted as a result of the
Reorganization.

In making this determination, the Trustees carefully reviewed the terms and
provisions of the Agreement, the substantial similarity of the objectives,
policies and restrictions of the corresponding Alpha Select Funds, the tax
consequences of the Reorganization to the Alpha Select Funds and their
Shareholders, and the expense ratios of the Funds and the Alpha Select Funds. In
addition, the Trustees considered the nature and quality of the services
expected to be rendered to the Alpha Select Funds by Turner, as well as the
services provided by Turner to the TIP Funds, the fact that the compensation
payable to Turner will be similar to that paid to the Funds, the history,
reputation, qualification and background of Turner and the qualifications of its
personnel and its financial condition, and the benefits expected to be realized
by the Shareholders of the TIP Funds as a result of the Reorganization,
including access to broader distribution channels.

After careful review and consideration, the Trustees have determined to
recommend that the Shareholders of the TIP Funds approve the Agreement and the
Reorganization transaction. If this recommendation is not adopted by
Shareholders of one TIP Fund, the Reorganization will still be effectuated with
respect to the other TIP Fund and the non-approving TIP Fund will continue to
operate in the same manner as prior to the proposed Reorganization.

THE TRUSTEES RECOMMEND THAT THE SHAREHOLDERS OF THE ALPHA
SELECT FUNDS VOTE FOR THE PROPOSAL TO APPROVE THE AGREEMENT
AND PLAN OF REORGANIZATION AND LIQUIDATION.

<PAGE>

COMPARISON OF THE INVESTMENT OBJECTIVES AND POLICIES OF THE
ALPHA SELECT FUNDS AND THE TIP FUNDS

This section tells you about and compares for each Fund:

o Its investment goal

o Its main investment strategies

o The risks of investing in the Funds

There is more information about the Funds' investment practices in the Statement
of Additional Information ("SAI") which legally is a part of this
Prospectus/Proxy Statement. For details about how to get an SAI and other
reports and information, see the back cover of this Prospectus/Proxy Statement.

INVESTMENT OBJECTIVES AND POLICIES

Each of the newly-organized Alpha Select Funds of has an investment objective
that is substantially similar to the investment objective of each corresponding
series of TIP Funds.

PREMIER CORE EQUITY FUND -- The Premier Core Equity Fund seeks long term capital
appreciation primarily from investment in U.S. equity securities. This objective
is substantially identical to the objective of the TIP Target Select Equity
Fund.

The Adviser and Sub-Advisers of the Premier Core Equity Fund will each invest in
a limited number (as few as 10) of equity securities 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 by owning too many
securities, so that the positive contributions of winning investments will prove
substantial.

In the process, the Premier Core Equity Fund provides focused security selection
by bringing together each manager's favorite investment ideas, and access to
differing investment styles. The managers will apply their own unique
stock-picking styles. Their differing styles may help to smooth the Fund's
overall return. Ideally, when one style is out of favor, the other styles will
offer a counterbalancing influence.

Clover Capital Management, Inc. ("Clover Capital"), Penn Capital, and Chartwell
Investment Partners ("Chartwell") (each a "Sub-Adviser" and collectively, the
"Sub-Advisers") serve as the investment sub-advisers to the TIP Target Select
Equity Fund and provide investment advisory services for a portion of the assets
of the Fund. Turner will be the Adviser to the Premier Core Equity Fund, and the
sub-advisers will be Merrill Lynch Asset Management and _________.

<PAGE>

GLOBAL FINANCIAL SERVICES FUND -- The Global Financial Services Fund seeks to
generate long term capital appreciation. This objective is identical to the
objective of the Penn Capital Select Financial Services Fund.

The Global 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 Global Financial Services Fund will hold a diversified
portfolio of companies with strong fundamentals, many of which Turner and the
sub-advisers believe 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 American Depository Receipts ("ADRs"). The Fund may also purchase shares of
other investment companies and foreign securities, and may purchase high yield
securities (otherwise known as "junk bonds") as a means of seeking to generate
current income.

Penn Capital, Merrill Lynch Asset Management, and Mercury Asset Management (each
a "Sub-Adviser" and collectively, the "Sub-Advisers") serve as the investment
sub-advisers to the Global Financial Services Fund and provide investment
advisory services for a portion of the assets of the Fund. Turner will be the
Adviser to the Global Financial Services Fund, and will oversee these
sub-advisers.

The investment objective and investment policies of the Penn Capital Select
Financial Services Funds are substantially similar, except the Global Financial
Services Fund will invest to a greater extent in securities of foreign issuers.

GENERAL INVESTMENT POLICIES

Each Alpha Select Fund is designed to provide an investment that combines the
investment expertise and best investment ideas of a number of outstanding
money-management firms. The Adviser and Sub-Advisers will manage a portion of
each Alpha Select Fund's portfolio on a day-to-day basis. Assets for investment
will be allocated to each manager by the Alpha Select Funds' 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.

<PAGE>

The Alpha Select Funds intend to invest primarily (and, under normal
circumstances, at least 65% of total assets) in equity securities. Selection of
equity securities will not be restricted by market capitalization, and each
Fund's Adviser and Sub-Advisers will employ their own proprietary investment
processes in managing assets.

Any remaining assets of the Alpha Select Funds may be invested in securities of
foreign issuers, shares of other investment companies, American Depository
Receipts ("ADRs") and Real Estate Investment Trusts ("REITs"). The Funds may
also invest up to 15% of their net assets in illiquid securities, invest up to
25% of their total assets in convertible securities, including convertible
securities rated below investment grade, purchase unregistered securities that
are eligible for resale pursuant to Rule 144A under the Securities Act, and
purchase fixed income securities, including securities rated below investment
grade. In addition, the Funds 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 Standard
& Poor's Corporation ("S&P"), and/or Baa by Moody's Investor Service, Inc.
("Moody's"), or unrated securities of comparable quality, are also known as
"junk bonds." The maximum percentage of each Fund's assets that may be invested
in securities rated below investment grade is 25%.

These investment policies, including the investments and investment techniques,
of the TIP Funds and the Alpha Select Funds are substantially similar.

RISKS

The investment policies of the Alpha Select Funds entail certain risks and
considerations of which investors should be aware. The Premier Core Equity 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.

BANKING INDUSTRY AND FINANCIAL SERVICES SECTOR -- To the extent that the Global
Financial Services Fund invests a significant percentage of its assets in the
banking industry and the financial services sector, it is subject to risks
associated with banking and financial services companies. The companies within
the banking industry and the financial services sector are subject to extensive
regulation, rapid business changes, volatile performance dependent upon the
availability and cost of capital and prevailing interest rates, and significant
competition. General economic conditions significantly affect these companies.
Credit and other losses resulting from the financial difficulty of borrowers or
other third parties have a potentially adverse effect on companies in this
industry. Investment banking, securities brokerage and investment advisory
companies are particularly subject to government regulation and the risks
inherent in securities trading and underwriting activities. Insurance companies
are particularly subject to government regulation and rate setting, potential
anti-trust and tax law changes, and industry-wide pricing

<PAGE>

and competition cycles. Property and casualty insurance companies may also be
affected by weather and other catastrophes. Life and health insurance companies
may be affected by mortality and morbidity rates, including the effects of
epidemics. Individual insurance companies may be exposed to reserve
inadequacies, problems in investment portfolios and failures to reinsurance
carriers.

The Global Financial Services Fund may invest in securities of foreign issuers
and in sponsored and unsponsored ADRs. Investments in the securities of foreign
issuers may subject the Fund 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 the 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 Fund may incur costs in connection with conversions between various
currencies.

The Alpha Select Funds may also, to a limited extent, borrow money and utilize
leveraging techniques. The Funds may invest in securities that fluctuate in
value, and investors should

<PAGE>

expect the Funds' net asset value per share to fluctuate in value. The value of
equity securities may be affected by the financial markets as well as by
developments impacting specific issuers. The values of fixed income securities
tend to vary inversely with interest rates, and may be affected by market and
economic factors, as well as by developments impacting specific issuers. The
Funds' high yield securities, if any, may be volatile and are subject to greater
amounts of credit risk than investment grade issuers

The investment risks of the Funds are substantially similar, except the Alpha
Select Global Financial Services Fund will invest a greater percentage of its
assets in securities of foreign issuers.

PERFORMANCE

The table below provides the average annual total return for each Fund for
selected time periods. Additional information about each Fund is contained in
the Statement of Additional Information relating to this Prospectus/Proxy
Statement, and in the Prospectus relating to the Funds. How the Funds have
performed in the past does not necessarily indicate how the Funds will perform
in the future, especially since each Alpha Select Fund will have different
advisory arrangements than the TIP Funds.

AVERAGE ANNUAL TOTAL RETURN FOR PERIODS ENDED SEPTEMBER 30, 1998

PENN CAPITAL SELECT FINANCIAL
TIP TARGET SELECT EQUITY FUND SERVICES FUND
----------------------------- -----------------------------

1 Year % %

Since Inception* % %

- ----------
* TIP Target Select Equity Fund commenced operations on 1/1/98.
* Penn Capital Select Financial Services Fund commenced operations on
10/19/97.

<PAGE>

FUND MANAGEMENT.

Each of the Alpha Select Funds will utilize a "manager of managers" structure,
with Turner acting as the investment adviser and manager of managers and
overseeing one or more specialist sub-advisers who make investment decisions on
behalf of the Funds. Turner may also make investment decisions on behalf of the
Funds. This is the same management approach currently employed by the TIP Target
Select Equity Fund. However, the Penn Capital Select Financial Services Fund
currently utilizes a single investment adviser, Penn Capital, to manage that
Fund's assets.

Turner Investment Partners, Inc., is a professional investment management firm
founded in March, 1990. Robert E. Turner is the Chairman and controlling
shareholder of Turner. As of August 1, 1998, Turner had discretionary management
authority with respect to approximately $3.0 billion of assets. Turner has
provided investment advisory services to investment companies since 1992. The
principal business address of Turner is 1235 Westlakes Drive, Suite 350, Berwyn,
Pennsylvania 19312.

Turner serves as the investment adviser for the Alpha Select Funds under an
investment advisory agreement (the "Advisory Agreement"). Under the Advisory
Agreement, Turner continuously reviews, supervises and administers the Fund's
investment program, subject to the supervision of, and policies established by,
the Trustees of Alpha Select. Turner makes recommendations to the Trustees with
respect to the appropriate allocation of assets to each of the Fund's
Sub-Advisers, and directly manages assets of the Fund not allocated to the
Sub-Advisers.

Robert E. Turner is a Trustee of each of TIP Funds and Alpha Select Funds and
will act as portfolio manager of the portion of the assets of the Premier Core
Equity Fund managed by Turner. Mr. Turner is also Chairman and Chief Investment
Officer of Turner. He has held this position since the founding of Turner in
1990. He has been in the investment business since 1982.

Penn Capital Management Company, Inc., 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, 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 $350 million. Penn
Capital 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 to the differences in sub-advisers discussed in this
Prospectus/Proxy Statement, the advisory fees paid to Turner by the Alpha Select
Funds provide for performance based fees. Each Alpha Select Fund will pay Turner
an advisory fee that increases if a Fund outperforms its benchmark index by a
certain percentage, and decreases if a Fund underperforms its benchmark index by
an equal percentage. Turner will pay the sub-advisers out of the fees it
receives, and

<PAGE>

may pay the sub-advisers higher fees if a sub-adviser outperforms its benchmark
index. In addition, if a sub-adviser underperforms its benchmark index, it may
receive a lower fee for the following fiscal year.

SPECIAL CONSIDERATIONS REGARDING THE MULTI-ADVISER APPROACH

Turner, the Adviser of the Alpha Select Funds, oversees the portfolio management
services provided to the Funds by each of the Sub-Advisers, and may act as
investment adviser to a portion of the assets of the Fund. Subject to the review
of the Alpha Select Funds' Board of Trustees, Turner monitors each Sub-Adviser
to assure that the Sub-Adviser is managing its segment of the Funds consistently
with that Fund's investment objective and restrictions and applicable laws and
guidelines, including, but not limited to, compliance with the diversification
requirements set forth in Subchapter M of the Code. Turner also provides the
Funds with certain administrative services, including maintenance of certain
Fund records and assistance in the preparation of the Funds' registration
statement under federal and state laws. Because each Sub-Adviser will be
managing its segment of the Funds independently from the other Sub-Advisers, the
same security may be held in two different segments of a Fund, or may be
acquired for one segment of a Fund at a time when the Sub-Adviser of another
segment deems it appropriate to dispose of the security from that other segment.
Similarly, under some market conditions, Turner or one or more of the
Sub-Advisers may believe that temporary, defensive investments in short-term
instruments or cash are appropriate when Turner or another Sub-Adviser believes
continued exposure to the equity markets is appropriate for their segments of a
Fund. Because Turner and each Sub-Adviser directs the trading for its own
segment of each Fund, and does not aggregate its transactions with those of
Turner or the other Sub-Advisers, the Funds may incur higher brokerage costs
than would be the case if a single Adviser were managing an entire Fund.

On a daily basis, capital activity will be allocated equally by Turner among the
segments of the Alpha Select Funds. However, Turner may, subject to review by
Alpha Select Funds' Board of Trustees, allocate new investment capital
differently among the Sub-Advisers. This action may be necessary, if, for
example, Turner or a Sub-Adviser determines that it desires no additional
investment capital. Also, because each segment of the portfolio will perform
differently from the other segments depending upon the investments it holds and
changing market conditions, one segment may be larger or smaller at various
times than the other segments. Although it reserves the right to do so, subject
to the review of the Alpha Select Funds' Board of Trustees, Turner does not
intend to reallocate each Fund's assets among the segments to reduce these
differences in size.

MANAGER OF MANAGERS OPTION

Each Alpha Select Fund may, in the future, seek to achieve its investment
objective by using a "manager of managers" structure. Under a manager of
managers structure, Turner would act as investment adviser in much the same way
as is currently contemplated. However, as manager of managers, Turner would be
permitted, subject to direction from and oversight by the Board of Trustees, to
allocate and reallocate each Fund's assets among sub-advisers, and to recommend

<PAGE>

that the Board of Trustees hire, terminate or replace sub-advisers without
shareholder approval. By reducing the number of shareholder meetings that may
have to be held to approve new or additional sub-advisers for a Fund, the Funds
anticipate that there will be substantial potential cost savings, as well as the
opportunity to achieve certain management efficiencies.

Before it can operate using a manager of managers structure, the Alpha Select
Funds and Turner will have to obtain exemptive relief from the Securities and
Exchange Commission ("SEC") to permit such an arrangement. There is no assurance
that such an order will be granted by the SEC. The initial shareholder of the
Funds voted to vest authority to implement a manager of managers structure with
the Trustees, and such a structure may be adopted without shareholder approval.
However, shareholders of the Funds will be given at least 30 days' prior written
notice of any such change, and any such change would only be made if the
Trustees determine that it would be in the best interests of the Funds and their
shareholders. In making that determination, the Trustees will consider, among
other factors, the benefits to shareholders and/or the opportunity to reduce
costs and achieve operational efficiencies.

This manager of managers approach differs from the current advisory arrangements
in place for the Penn Capital Select Financial Services Fund, which utilizes
only one investment adviser. In addition, as discussed above, the advisory fee
arrangements for the Alpha Select Funds involve certain performance-based fees.

ADDITIONAL INFORMATION

The Alpha Select Funds and TIP Funds each have a different Board of Trustees.
However, the Funds have the same administrator, custodian, distributor and
transfer agent as the Alpha Select Funds, as well as the same principal
executive officers.

THE ADMINISTRATOR

SEI Investments Mutual Funds Services (the "Administrator") provides both TIP
Funds and Alpha Select Funds with administrative services, including regulatory
reporting and all necessary office space, equipment, personnel, and facilities.

For these administrative services, the Administrator is entitled to a fee from
each Alpha Select Fund, which is calculated daily and paid monthly, at an annual
rate of .09% of Alpha Select's average daily net assets up to $250
million, .07% on the next $250 million of such assets, .06% on the next $250
million of such assets, .05% of the next $125 million of such assets, and .04%
of such assets in excess of $2 billion. The Alpha Select Funds are subject to
a minimum annual administration fee of $65,000.

The Administrator also serves as shareholder servicing agent for both TIP Funds
and Alpha Select Funds under a shareholder servicing agreement with each trust.

<PAGE>

THE TRANSFER AGENT AND CUSTODIAN

DST Systems, Inc. (the "Transfer Agent"), 330 W. 9th Street, Kansas City,
Missouri 64105, serves as the transfer agent and dividend disbursing agent for
both TIP Funds and Alpha Select Funds under a transfer agency agreement with
each Trust. First Union National Bank, Broad and Chestnut Streets, P.O. Box
7618, Philadelphia, Pennsylvania 19101 acts as the custodian (the "Custodian")
of Alpha Select Funds and TIP Funds.

THE DISTRIBUTOR

SEI Investments Distribution Co. ("SIDCO"), Oaks, Pennsylvania 19456, a
wholly-owned subsidiary of SEI Investments Company, acts as distributor for both
TIP Funds and Alpha Select Funds pursuant to a distribution agreement (the
"Distribution Agreement"). No compensation is paid to the Distributor for its
distribution services to TIP Funds. SIDCO receives Rule 12b-1 fees from the
Class C Shares of the Alpha Select Funds, but Class I Shares of the Alpha Select
Funds do not pay any compensation to SIDCO.

ADDITIONAL INFORMATION ABOUT THE FUNDS

You may obtain additional information about the Premier Core Equity and Global
Select Financial Services Funds in the following ways:

PROSPECTUSES. [EACH ALPHA SELECT FUND HAS A PROSPECTUS THAT CONTAINS INFORMATION
ABOUT THE OPERATION AND MANAGEMENT OF THAT FUND. THE PROSPECTUS DATED JANUARY
31, 1999, IS ON FILE WITH THE SECURITIES AND EXCHANGE COMMISSION, AND IS
INCORPORATED HEREIN BY REFERENCE AND ACCOMPANIES THIS PROSPECTUS/PROXY
STATEMENT.]

STATEMENTS OF ADDITIONAL INFORMATION. [IN ADDITION TO THE PROSPECTUS, THE FUNDS
HAVE A STATEMENT OF ADDITIONAL INFORMATION ("SAI") THAT CONTAINS ADDITIONAL,
MORE DETAILED INFORMATION ABOUT THE FUNDS. THE SAI DATED JANUARY 31, 1999, IS ON
FILE WITH THE SECURITIES AND EXCHANGE COMMISSION AND IS INCORPORATED BY
REFERENCE INTO THIS PROSPECTUS/PROXY STATEMENT.]

SHAREHOLDER REPORTS. The financial statements of the Funds contained in the TIP
Funds Annual Report to shareholders for the fiscal year ended September 30,
1998, will be audited by Ernst & Young LLP, its independent auditors. These
financial statements are incorporated by reference into this Prospectus/Proxy
Statement insofar as they relate to the Funds, and not to any other portfolios
that are a part of TIP Funds and described therein. A copy of TIP Funds' Annual
Report, which includes discussions of the performance of the Funds, and the most
recent Semi-Annual Report succeeding such Annual Report, may be obtained by
writing TIP Funds at P.O. Box 419805, Kansas City, Missouri 64141-6805, or by
calling 1-800-224-6312.

Information about TIP Funds and Alpha Select Funds, including the prospectus,
SAI, and shareholder reports of each Fund, may be obtained from the SEC in any
of the following ways: (1) in person: you may review and copy documents in the
SEC's Public Reference Room in Washington D.C. (for information call
1-800-SEC-0330); (2) on-line: you may retrieve

<PAGE>

information from the SEC's web site at "http://www.sec.gov"; or (3) mail: you
may request documents, upon payment of a duplicating fee, by writing to SEC,
Public Reference Section, Washington, D.C. 20549-6009. To aid you in obtaining
this information, TIP Funds' 1940 Act registration number is 811-07527 and Alpha
Select Funds' 1940 Act registration number is 811-8104.

FUND TRANSACTIONS

The policies regarding portfolio transactions of TIP Funds and Alpha Select
Funds are substantially identical, although the Fund's have different investment
minimums. Please refer to the prospectuses for more information.

SHAREHOLDER RIGHTS

GENERAL. TIP Funds was established as a business trust under Massachusetts law
by a Declaration of Trust dated January 26, 1996, as amended and restated on
February 21, 1997. The Fund is also governed by its By-Laws and by applicable
Massachusetts law.

Alpha Select Funds was established as a business trust under Delaware law by a
Declaration of Trust dated October 25, 1993, as amended and restated on
October 7, 1998. Alpha Select is also governed by its By-Laws and by applicable
Delaware law.

SHARES. TIP Funds is authorized to issue an unlimited number shares of
beneficial interest, with a par value of $.00001 per share, from an unlimited
number of series (portfolios) of shares. The shares of each TIP Fund have no
preference as to conversion, exchange, dividends, retirement or other features,
and have no preemptive rights.

Alpha Select Funds is authorized to issue an unlimited number shares of
beneficial interest, with no par value, from an unlimited number of series
(portfolios) of shares. The shares of each Alpha Select Fund have no preference
as to conversion, exchange, dividends, retirement or other features, and have no
preemptive rights.

SHAREHOLDER VOTING. Shareholders of each TIP Fund have identical voting rights.
Shareholders are entitled to one vote for each full share held and fractional
votes for fractional shares. The shares of the Fund have non-cumulative voting
rights, which means the holder of more than [50%] of the shares voting for the
election of Trustees can elect [100%] of the Trustees if the holder chooses to
do so. At shareholder meetings, the holders of [40%] of a portfolio's shares
entitled to vote at the meeting generally constitute a quorum. Shareholders of a
class have exclusive voting rights regarding any matter submitted to
shareholders that relates solely to that class of shares, and separate voting
rights on any other matter submitted to shareholders in which the interests of
the shareholders of that class differ from the interests of holders of any other
class.

Shareholders of Alpha Select have [IDENTICAL] voting rights.

<PAGE>

SHAREHOLDER MEETINGS. Annual meetings of shareholders of TIP Funds will not be
held, but special meetings of shareholders may be held under certain
circumstances. A meeting will be held to vote on the removal of a Trustee(s) of
a Fund if requested in writing by the holders of not less than [10%] of the
outstanding shares of the Fund. The Funds will assist in shareholder
communications in such matters to the extent required by law.

Alpha Select has similar voting provisions.

ELECTION AND TERM OF TRUSTEES. The Funds' affairs are supervised by the Trustees
under the laws governing business trusts in the Commonwealth of Massachusetts.
Trustees of the Fund are elected by a majority vote of a quorum cast by written
ballot at the regular meeting of shareholders, if any, or at a special meeting
held for that purpose. Trustees hold office until their successors are duly
elected and qualified or until their death, removal or resignation. Shareholders
may remove a Trustee by vote of a majority of the votes entitled to be cast for
the election of directors and may elect a successor to fill a resulting vacancy.
A Trustee elected thereby serves for the balance of the term of the removed
Trustee.

Alpha Select has similar requirements regarding Trustees.

SHAREHOLDER LIABILITY. The shareholders of each Fund generally are not
personally liable for the acts, omissions or obligations of the Trustees or of
TIP Funds.

Shareholders of Alpha Select are not personally liable for the obligations of
the Alpha Select Funds.

LIABILITY OF TRUSTEES. The Trustees shall not be personally liable for any
obligation of the Fund. Each Fund will indemnify its Trustees and officers out
of Fund assets against all liabilities and expenses except for liabilities
arising from such person's self-dealing, willful misconduct or recklessness.

Alpha Select has similar provisions regarding Trustee liability.

LEGAL MATTERS

Morgan, Lewis & Bockius LLP, 1800 M Street, N.W., Washington, D.C. 20036, serves
as counsel to TIP Funds and Alpha Select Funds.

THE BOARD OF TRUSTEES OF TIP FUNDS RECOMMEND THAT YOU VOTE FOR
APPROVAL OF THE REORGANIZATION AGREEMENT AND THE PROPOSALS
DESCRIBED IN THIS PROSPECTUS/PROXY STATEMENT.

<PAGE>

VOTING ON THE REORGANIZATION AGREEMENT

GENERAL INFORMATION. This Prospectus/Proxy Statement is furnished in connection
with the solicitation of proxies by the Board of Trustees of the TIP Funds in
connection with the Meeting. It is expected that the solicitation of proxies
will be primarily by mail. [YOU MAY ALSO VOTE OVER THE INTERNET BY VISITING
"http://www.______.com" AND FOLLOWING THE VOTING INSTRUCTIONS. YOU MAY ALSO VOTE
OVER THE TELEPHONE BY CALLING _________.] Officers of the Funds, Turner, and
Penn Capital may also solicit proxies by telephone, telegraph, facsimile or in
person. The cost of solicitation and the shareholders' meeting will be borne by
Turner.

VOTE REQUIRED TO APPROVE REORGANIZATION AGREEMENT. Shareholders of the TIP Funds
TIP Target Select Equity Fund and Penn Capital Select Financial Services Fund on
the Record Date will be entitled to one vote per share then held and a
fractional vote for each fractional share then held. Approval of the
Reorganization Agreement requires the affirmative vote of a majority of the
outstanding voting securities present at the meeting, in person or by proxy. The
vote of a "majority of the outstanding securities" means the vote of 67% or more
of the voting securities present, if the holders of more than 50% of the
outstanding voting securities are present in person or by proxy, or the vote of
more than 50% of the outstanding voting securities, whichever is less. Any
shareholder giving a proxy may revoke it at any time before it is exercised by
submitting to the Secretary of the Fund a written notice of revocation or a
subsequently executed proxy, or by attending the Meeting and voting in person.

Shares represented by a properly executed proxy will be voted in accordance with
the instructions thereon, or if no specification is made, the shares will be
voted "FOR" the approval of the Reorganization Agreement. For purposes of
determining the presence of a quorum for transacting business at the Meeting,
abstentions and broker "non-votes" (that is, proxies from brokers or nominees
indicating that such persons have not received instructions from the beneficial
owners or other persons entitled to vote shares on a particular matter) will be
treated as shares that are present at the Meeting but which have not been voted.
For this reason, abstentions and broker non-votes will have the effect of a vote
against approval of the Reorganization Agreement.

If sufficient votes in favor of the Proposal are not received by the time
scheduled for the meeting, the persons named as proxies may propose one or more
adjournments of the Meeting for a reasonable period of time to permit further
solicitation of proxies. Any such adjournment will require the affirmative vote
of a majority of the votes cast in person or by proxy at the session of the
Meeting to be adjourned. The persons named as proxies will vote for an
adjournment any proxies which they are entitled to vote in favor of the
Proposal. They will vote as against any proxies required to be voted against the
Proposal. The costs of any additional solicitation and of any adjourned session
will be borne by Turner.

OUTSTANDING SHARES. Only shareholders of record on the Record Date are entitled
to notice of and to vote at the Meeting and any adjournment thereof. At the
close of business on the Record Date there were outstanding and entitled to
vote:

<PAGE>

______ shares of the TIP Target Select Equity Fund of TIP Funds.

______ shares of the Penn Capital Select Financial Services Fund of TIP
Funds.

BENEFICIAL OWNERS. The following table sets forth certain information as of
_____________, 1998, concerning each person who owned, of record or
beneficially, 5% or more of the shares of the TIP Target Select Equity Fund
and/or Penn Capital Select Financial Services Fund. Turner or Penn Capital may
be deemed to "beneficially own" a substantial number of shares of the Funds
because their investment advisory relationships may permit them to dispose of
shares or advise Shareholders to dispose of shares. Turner or Penn Capital may
be deemed to control the Fund(s) if it beneficially owns more than 25% of the
Fund(s) outstanding shares. Turner and Penn Capital do not vote shares of the
Funds for any of their clients.

- -------------------------------------------------------------------------------
TIP TARGET SELECT EQUITY FUND
- -------------------------------------------------------------------------------
PERCENTAGE OF SHARES OWNED
NAME & ADDRESS BEFORE REORGANIZATION
- -------------------------------------------------------------------------------
%
- -------------------------------------------------------------------------------
%
- -------------------------------------------------------------------------------
%
- -------------------------------------------------------------------------------
PENN CAPITAL SELECT FINANCIAL SERVICES FUND
- -------------------------------------------------------------------------------
PERCENTAGE OF SHARES OWNED
NAME & ADDRESS BEFORE REORGANIZATION
- -------------------------------------------------------------------------------
%
- -------------------------------------------------------------------------------
%
- -------------------------------------------------------------------------------
%
- -------------------------------------------------------------------------------

* Record and Beneficial Ownership.

As of Record Date the Trustees and officers of the Trust as a group owned [less
than 1%] of the total outstanding shares of each Fund.

EXPENSES. In order to obtain the necessary quorum at the Meeting, additional
solicitation may be made by mail, telephone, telegraph, facsimile or personal
interview by representatives of Turner, Penn Capital, SEI Investments or the
Trust. All costs of solicitation (including the printing and mailing of this
proxy statement, meeting notice and form of proxy, as well as any necessary
supplementary solicitations) will be paid by Turner. Persons holding shares as
nominees will,

<PAGE>

upon request, be reimbursed for their reasonable expenses in sending soliciting
material to their principals.

OTHER BUSINESS

The Board knows of no other business to be brought before the Meeting. However,
if any other matters properly come before the Meeting, proxies which do not
contain specific restrictions to the contrary will be voted on such matters in
accordance with the judgment of the persons named as proxy.

SHAREHOLDER INQUIRIES

Shareholder inquiries may be addressed to TIP Funds in writing at the address on
the cover page of this Prospectus/Proxy Statement or by telephoning
1-800-224-6312.

SHAREHOLDERS WHO DO NOT EXPECT TO BE PRESENT AT THE MEETING ARE REQUESTED TO
DATE AND SIGN THE ENCLOSED PROXY AND RETURN IT IN THE ENCLOSED ENVELOPE. NO
POSTAGE IS REQUIRED IF MAILED IN THE UNITED STATES. [YOU MAY ALSO VOTE OVER THE
INTERNET BY VISITING "http://www.______.com" AND FOLLOWING THE VOTING
INSTRUCTIONS. YOU MAY ALSO VOTE OVER THE TELEPHONE BY CALLING _________.]

<PAGE>

EXHIBIT A

AGREEMENT AND PLAN
OF REORGANIZATION AND LIQUIDATION

AGREEMENT AND PLAN OF REORGANIZATION AND LIQUIDATION dated as of
_____________, 199_ (the "Agreement"), by and between the TIP Funds (the
"Trust"), a Massachusetts business trust, on behalf of the TIP Target Select
Equity Fund and the Penn Capital Select Financial Services Fund (collectively,
the "Acquired Funds"), and the Alpha Select Funds ("Alpha Select Funds") a
Delaware business trust, on behalf of the Premier Core Equity Fund and Global
Financial Services Fund (collectively, the "Acquiring Funds").

WHEREAS, the Trust was organized under Massachusetts law as a business
trust under a Declaration of Trust dated January 26, 1996 and amended on
February 21, 1997. The Trust is an open-end management investment company
registered under the Investment Company Act of 1940, as amended (the "1940
Act"). The Trust has authorized capital consisting of an unlimited number of
units of beneficial interest of separate series of the Trust. The Acquired Funds
are duly organized and validly existing series of the Trust;

WHEREAS, Alpha Select Funds was organized under Delaware law as a business
trust under a Declaration of Trust dated October 26, 1993 and amended on August
14, 1998. Alpha Select Funds is an open-end management investment company
registered under the 1940 Act. Alpha Select Funds has authorized capital
consisting of an unlimited number of units of beneficial interest of separate
series of Alpha Select Funds. The Acquiring Funds are duly organized and validly
existing series of Alpha Select Funds;

NOW, THEREFORE, in consideration of the mutual promises herein contained,
the parties hereto agree to effect the transfer of all of the assets of the
Acquired Funds solely in exchange for the assumption by the corresponding
Acquiring Funds of all or substantially all of the liabilities of the Acquired
Funds and units of beneficial interest of the corresponding Acquiring Funds
("Acquiring Funds Shares") followed by the distribution, at the Effective Time
(as defined in Section 9 of this Agreement), of such Acquiring Funds Shares to
the holders of units of beneficial interest of the Acquired Funds ("Acquired
Funds Shares"), on the terms and conditions hereinafter set forth in liquidation
of the Acquired Funds. The parties hereto covenant and agree as follows:

1. PLAN OF REORGANIZATION. At the Effective Time, the Acquired Funds will
assign, deliver and otherwise transfer all of their assets and good and
marketable title thereto, and assign all or substantially all of the liabilities
as are set forth in a statement of assets and responsibilities, to be prepared
as of the Effective Time (the "Statement of Assets and

<PAGE>

Liabilities") to the Acquiring Funds free and clear of all liens, encumbrances
and adverse claims except as provided in this Agreement, and the Acquiring Funds
shall acquire all such assets, and shall assume all such liabilities of the
Acquired Funds, in exchange for delivery to the Acquired Funds by the Acquiring
Funds of a number of Acquiring Funds Shares (both full and fractional)
equivalent in number and value to the Acquired Funds Shares outstanding
immediately prior to the Effective Time. The assets and stated liabilities of
the Acquired Funds, as set forth in the Statement of Assets and Liabilities
attached hereto as Exhibit A, shall be exclusively assigned to and assumed by
the Acquiring Funds. All debts, liabilities, obligations and duties of the
Acquired Funds, to the extent that they exist at or after the Effective Time and
are stated in the Statement of Assets and Liabilities, shall after the Effective
Time attach to the Acquiring Funds and may be enforced against the Acquiring
Funds to the same extent as if the same had been incurred by the Acquiring
Funds.

2. TRANSFER OF ASSETS. The assets of the Acquired Funds to be acquired by the
corresponding series of the Acquiring Funds and allocated thereto shall include,
without limitation, all cash, cash equivalents, securities, receivables
(including interest and dividends receivable) as set forth in the Statement of
Assets and Liabilities, as well as any claims or rights of action or rights to
register shares under applicable securities laws, any books or records of the
Acquired Funds and other property owned by the Acquired Funds at the Effective
Time.

3. LIQUIDATION AND DISSOLUTION OF THE ACQUIRED FUNDS. At the Effective Time, the
Acquired Funds will liquidate and the Acquiring Funds Shares (both full and
fractional) received by the Acquired Funds will be distributed to the
shareholders of record of the Acquired Funds as of the Effective Time in
exchange for their respective Acquired Funds Shares and in complete liquidation
of the Acquired Funds. Each shareholder of the Acquired Funds will receive a
number of Acquiring Funds Shares equal in number and value to the Acquired Funds
Shares held by that shareholder, and each Acquiring Funds and Acquired Funds
share will be of equivalent net asset value per share. Such liquidation and
distribution will be accompanied by the establishment of an open account on the
share records of the Acquiring Funds in the name of each shareholder of the
Acquired Funds and representing the respective number of Acquiring Funds Shares
due such shareholder. As soon as practicable after the Effective Time, but not
later than _________, 199_ the Trust shall take all steps as shall be necessary
and proper to effect a complete termination of the Acquired Funds.

4. REPRESENTATIONS AND WARRANTIES OF THE ACQUIRING FUNDS. The Acquiring Funds
represent and warrant to the Acquired Funds as follows:

(a) ORGANIZATION, EXISTENCE, ETC. Alpha Select Funds is a business trust
duly organized, validly existing and in good standing under the laws of the
State of Delaware and has the power to carry on its business as it is now
being conducted.

<PAGE>

(b) REGISTRATION AS INVESTMENT COMPANY. Alpha Select Funds is registered
under the 1940 Act as an open-end management investment company; such
registration has not been revoked or rescinded and will be in full force
and effect.

(c) FINANCIAL STATEMENTS. The unaudited financial statements, if any, of
Alpha Select Funds relating to the Acquiring Funds dated as of _______,
199_ (the "Acquiring Funds Financial Statements"), which will, if
available, be delivered to the Acquired Funds as of the Effective Time,
will fairly present the financial position of the Acquiring Funds as of the
date thereof.

(d) SHARES TO BE ISSUED UPON REORGANIZATION. The Acquiring Funds Shares to
be issued in connection with the Reorganization have been duly authorized
and upon consummation of the Reorganization will be validly issued, fully
paid and nonassessable. Prior to the Effective Time, there shall be no
issued and outstanding Acquiring Funds Shares or any other securities
issued by the Acquiring Funds.

(e) AUTHORITY RELATIVE TO THIS AGREEMENT. Alpha Select Funds, on behalf of
the Acquiring Funds, has the power to enter into this Agreement and to
carry out its obligations hereunder. The execution, delivery and
performance of this Agreement, and the consummation of the transactions
contemplated hereby, have been duly authorized by the Alpha Select Funds
Board of Trustees, and no other proceedings by the Acquiring Funds are
necessary to authorize its officers to effectuate this Agreement and the
transactions contemplated hereby. Each of the Acquiring Funds is not a
party to or obligated under any charter, by-law, indenture or contract
provision or any other commitment or obligation, or subject to any order or
decree, which would be violated by its executing and carrying out this
Agreement.

(f) LIABILITIES. There are no liabilities of the Acquiring Funds, whether
or not determined or determinable, other than liabilities disclosed or
provided for in the Acquiring Funds Financial Statements and liabilities
incurred in the ordinary course of business subsequent to the Effective
Time or otherwise previously disclosed to the Acquired Funds, none of which
has been materially adverse to the business, assets or results of
operations of the Acquiring Funds.

(g) LITIGATION. Except as previously disclosed to the Acquired Funds, there
are no claims, actions, suits or proceedings pending or, to the actual
knowledge of the Acquiring Funds, threatened which would materially
adversely affect the Acquiring Funds or its assets or business or which
would prevent or hinder in any material respect consummation of the
transactions contemplated hereby.

<PAGE>

(h) CONTRACTS. Except for contracts and agreements disclosed to the
Acquired Funds, under which no default exists, each of the Acquiring Funds
is not a party to or subject to any material contract, debt instrument,
plan, lease, franchise, license or permit of any kind or nature whatsoever
with respect to the Acquiring Funds.

(i) TAXES. As of the Effective Time, all Federal and other tax returns and
reports of the Acquiring Funds required by law to have been filed shall
have been filed, and all other taxes shall have been paid so far as due, or
provision shall have been made for the payment thereof, and to the best of
the Acquiring Funds' knowledge, no such return is currently under audit and
no assessment has been asserted with respect to any of such returns.

5. REPRESENTATIONS AND WARRANTIES OF THE ACQUIRED FUNDS. The Acquired Funds
represent and warrant to the Acquiring Funds as follows:

(a) ORGANIZATION, EXISTENCE, ETC. The Trust is a business trust duly
organized, validly existing and in good standing under the laws of the
Commonwealth of Massachusetts and has the power to carry on its business as
it is now being conducted.

(b) REGISTRATION AS INVESTMENT COMPANY. The Trust is registered under the
1940 Act as an open-end management investment company; such registration
has not been revoked or rescinded and is in full force and effect.

(c) FINANCIAL STATEMENTS. The audited financial statements of the Trust
relating to the Acquired Funds for the fiscal year ended _________, 199_,
and the unaudited financial statements of the Acquired Funds dated as of
_________, 199_ (the "Acquired Funds Financial Statements"), as delivered
to the Acquiring Funds, fairly present the financial position of the
Acquired Funds as of the dates thereof, and the results of its operations
and changes in its net assets for the periods indicated.

(d) MARKETABLE TITLE TO ASSETS. Each of the Acquired Funds will have, at
the Effective Time, good and marketable title to, and full right, power and
authority to sell, assign, transfer and deliver, the assets to be
transferred to the Acquiring Funds. Upon delivery and payment for such
assets, each of the Acquiring Funds will have good and marketable title to
such assets without restriction on the transfer thereof free and clear of
all liens, encumbrances and adverse claims.

(e) AUTHORITY RELATIVE TO THIS AGREEMENT. The Trust, on behalf of the
Acquired Funds, has the power to enter into this Agreement and to carry out
its obligations hereunder. The execution, delivery and performance of this
Agreement, and the consummation of the transactions contemplated hereby,
have

<PAGE>

been duly authorized by the Trust's Board of Trustees, and, except for
approval by the shareholders of the Acquired Funds, no other proceedings by
the Acquired Funds are necessary to authorize its officers to effectuate
this Agreement and the transactions contemplated hereby. Each of the
Acquired Funds is not a party to or obligated under any charter, by-law,
indenture or contract provision or any other commitment or obligation, or
subject to any order or decree, which would be violated by its executing
and carrying out this Agreement.

(f) LIABILITIES. There are no liabilities of the Acquired Funds, whether or
not determined or determinable, other than liabilities disclosed or
provided for in the Acquired Funds Financial Statements and liabilities
incurred in the ordinary course of business subsequent to _________, 199_,
or otherwise previously disclosed to the Acquiring Funds, none of which has
been materially adverse to the business, assets or results of operations of
the Acquired Funds. The Trust's Registration Statement, which is on file
with the Securities and Exchange Commission, does not contain an untrue
statement of a material fact required to be stated therein or necessary to
make the statements therein not misleading.

(g) LITIGATION. Except as previously disclosed to the Acquiring Funds,
there are no claims, actions, suits or proceedings pending or, to the
knowledge of the Acquired Funds, threatened which would materially
adversely affect the Acquired Funds or its assets or business or which
would prevent or hinder in any material respect consummation of the
transactions contemplated hereby.

(h) CONTRACTS. Except for contracts and agreements disclosed to the
Acquiring Funds, under which no default exists, each of the Acquired Funds,
at the Effective Time, is not a party to or subject to any material
contract, debt instrument, plan, lease, franchise, license or permit of any
kind or nature whatsoever.

(i) TAXES. As of the Effective Time, all Federal and other tax returns and
reports of the Acquired Funds required by law to have been filed shall have
been filed, and all other taxes shall have been paid so far as due, or
provision shall have been made for the payment thereof, and to the best of
the Acquired Funds' knowledge, no such return is currently under audit and
no assessment has been asserted with respect to any of such returns.

6. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE ACQUIRING FUNDS.

(a) All representations and warranties of the Acquired Funds contained in
this Agreement shall be true and correct in all material respects as of the
date hereof and, except as they may be affected by the transactions
contemplated by this Agreement, as of the Effective Time, with the same
force and effect as if made on and as of the Effective Time.

(b) The Acquiring Funds shall have received an opinion of counsel, dated as
of the Effective Time, addressed to and in form and substance satisfactory
to counsel for the

<PAGE>

Acquiring Funds, to the effect that (i) the Acquired Funds are duly
organized and validly existing series of the Trust under the laws of the
Commonwealth of Massachusetts; (ii) the Trust is an open-end management
investment company registered under the 1940 Act; (iii) this Agreement and
the Reorganization provided for herein and the execution of this Agreement
have been duly authorized and approved by all requisite action of each of
the Acquired Funds and this Agreement has been duly executed and delivered
by the Trust on behalf of the Acquired Funds and is a valid and binding
obligation of the Acquired Funds, subject to applicable bankruptcy,
insolvency, fraudulent conveyance and similar laws or court decisions
regarding enforcement of creditors' rights generally; (iv) to the best of
counsel's knowledge after reasonable inquiry, no consent, approval, order
or other authorization of any Federal or state court or administrative or
regulatory agency is required for each of the Acquired Funds to enter into
this Agreement or carry out its terms that has not been obtained other than
where the failure to obtain any such consent, approval, order or
authorization would not have a material adverse effect on the operations of
the Acquired Funds; and (v) upon consummation of this Agreement, the
Acquiring Funds shall have acquired all of the Acquired Funds's assets
listed in the Statement of Assets and Liabilities, free and clear of all
liens encumbrances or adverse claims.

(c) The Acquired Funds shall have delivered to the Acquiring Funds at the
Effective Time the Acquired Funds' Statement of Assets and Liabilities,
prepared in accordance with generally accepted accounting principles
consistently applied, together with a certificate of the Treasurer or
Assistant Treasurer of the Acquired Funds as to the aggregate asset value
of the Acquired Funds' portfolio securities.

7. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE ACQUIRED FUNDS.

(a) All representations and warranties of the Acquiring Funds contained in
this Agreement shall be true and correct in all material respects as of the
date hereof and, except as they may be affected by the transactions
contemplated by this Agreement, as of the Effective Time, with the same
force and effect as if made on and as of the Effective Time.

(b) The Acquired Funds shall have received an opinion of counsel for the
Acquiring Funds, dated as of the Effective Time, addressed to and in form
and substance satisfactory to counsel for the Acquired Funds, to the effect
that: (i) the Acquiring Funds are duly organized and validly existing
series of Alpha Select Funds under the laws of the State of Delaware; (ii)
Alpha Select Funds is an open-end management investment company registered
under the 1940 Act; (iii) this Agreement and the Reorganization provided
for herein and the execution of this Agreement have been duly authorized
and approved by all requisite corporate action of each of the Acquiring
Funds and this Agreement has been duly executed and delivered by the
Acquiring Funds and is a valid and binding obligation of the Acquiring
Funds, subject to applicable bankruptcy, insolvency, fraudulent conveyance
and similar laws or court decisions regarding enforcement of creditors'
rights generally; (iv) to the best of counsel's knowledge, no consent,
approval, order or other authorization of any Federal or state court or
administrative or regulatory agency is required for each of the

<PAGE>

Acquiring Funds to enter into this Agreement or carry out its terms that
has not already been obtained, other than where the failure to obtain any
such consent, approval, order or authorization would not have a material
adverse effect on the operations of the Acquiring Funds; and (v) the
Acquiring Funds Shares to be issued in the Reorganization have been duly
authorized and upon issuance thereof in accordance with this Agreement will
be validly issued, fully paid and nonassessable.

8. FURTHER CONDITIONS PRECEDENT TO OBLIGATIONS OF THE ACQUIRED FUNDS AND THE
ACQUIRING FUNDS. The obligations of the Acquired Funds and the Acquiring
Funds to effectuate this Agreement shall be subject to the satisfaction of
each of the following conditions:

(a) Such authority from the Securities and Exchange Commission (the "SEC")
as may be necessary to permit the parties to carry out the transactions
contemplated by this Agreement shall have been received.

(b) With respect to the Acquired Funds, the Trust will call a meeting of
shareholders to consider and act upon this Agreement and to take all other
actions reasonably necessary to obtain the approval by shareholders of each
of the Acquired Funds of this Agreement and the transactions contemplated
herein, including the Reorganization and the termination of the Acquired
Funds if the Reorganization is consummated. The Trust has prepared or will
prepare the notice of meeting, form of proxy and proxy statement
(collectively, "Proxy Materials") to be used in connection with such
meeting, and with such other information relating to the Acquiring Funds as
is reasonably necessary for the preparation of the Proxy Materials.

(c) The Registration Statement on Form N-1A of the Acquiring Funds shall be
effective under the Securities Act of 1933 and, to the best knowledge of
the Acquiring Funds, no investigation or proceeding for that purpose shall
have been instituted or be pending, threatened or contemplated under the
1933 Act.

(d) The shares of the Acquiring Funds shall have been duly qualified for
offering to the public in all states of the United States, the Commonwealth
of Puerto Rico and the District of Columbia (except where such
qualifications are not required) so as to permit the transfer contemplated
by this Agreement to be consummated.

(e) The Acquired Funds and the Acquiring Funds shall have received on or
before the Effective Time an opinion of counsel satisfactory to the
Acquired Funds and the Acquiring Funds substantially to the effect that for
Federal income tax purposes:

(1) No gain or loss will be recognized to the Acquired Funds upon the
transfer of its assets in exchange solely for the Acquiring Funds
Shares and the assumption by the Acquiring Funds of the corresponding
Acquired Fund's stated liabilities;

<PAGE>

(2) No gain or loss will be recognized to the Acquiring Funds on its
receipt of the Acquired Funds' assets in exchange for the Acquiring
Funds Shares and the assumption by the Acquiring Funds of the
corresponding Acquired Fund's liabilities;

(3) The basis of an Acquired Fund's assets in the corresponding
Acquiring Fund's hands will be the same as the basis of those assets
in the Acquired Fund's hands immediately before the conversion;

(4) The Acquiring Funds' holding period for the assets transferred to
the Acquiring Funds by the Acquired Funds will include the holding
period of those assets in the corresponding Acquired Fund's hands
immediately before the conversion;

(5) No gain or loss will be recognized to the Acquired Funds on the
distribution of the Acquiring Funds Shares to the Acquired Funds'
shareholders in exchange for their Acquired Funds Shares;

(6) No gain or loss will be recognized to the Acquired Funds'
shareholders as a result of the Acquired Funds' distribution of
Acquiring Funds Shares to the Acquired Funds' shareholders in exchange
for the Acquired Funds' shareholders' Acquired Funds Shares;

(7) The basis of the Acquiring Funds Shares received by the Acquired
Funds' shareholders will be the same as the adjusted basis of that
Acquired Funds' shareholders' Acquired Funds Shares surrendered in
exchange therefor; and

(8) The holding period of the Acquiring Funds Shares received by the
Acquired Funds' shareholders will include the Acquired Funds' share
holders' holding period for the Acquired Funds' shareholders' Acquired
Funds Shares surrendered in exchange therefor, provided that said
Acquired Funds Shares were held as capital assets on the date of the
conversion.

(f) A vote approving this Agreement and the Reorganization contemplated
hereby shall have been adopted by at least a majority of the outstanding
shares of each of the Acquired Funds entitled to vote at an annual or
special meeting.

(g) The Board of Trustees of Alpha Select Funds, at a meeting duly called
for such purpose, shall have authorized the issuance by each of the
Acquiring Funds of Acquiring Funds Shares at the Effective Time in exchange
for the assets of the Acquired Funds pursuant to the terms and provisions
of this Agreement.

<PAGE>

9. EFFECTIVE TIME OF THE REORGANIZATION. The exchange of the Acquired Funds'
assets for Acquiring Funds Shares shall be effective as of close of
business on _________, 199_, or at such other time and date as fixed by the
mutual consent of the parties (the "Effective Time").

10. TERMINATION. This Agreement and the transactions contemplated hereby may be
terminated and abandoned without penalty by resolution of the Board of
Trustees of the Trust, at any time prior to the Effective Time, if
circumstances should develop that, in the opinion of the Board, make
proceeding with the Agreement inadvisable.

11. AMENDMENT. This Agreement may be amended, modified or supplemented in such
manner as may be mutually agreed upon in writing by the parties; provided,
however, that following the Shareholders' Meeting called on behalf of the
Acquired Funds pursuant to Section 8 of this Agreement, no such amendment
may have the effect of changing the provisions for determining the number
or value of Acquiring Funds Shares to be paid to the Acquired Funds'
shareholders under this Agreement to the detriment of the Acquired Funds,
shareholders without their further approval.

12. GOVERNING LAW. This Agreement shall be governed and construed in accordance
with the laws of the State of Massachusetts.

13. NOTICES. Any notice, report, statement or demand required or permitted by
and provision of this Agreement shall be in writing and shall be given by
prepaid telegraph, telecopy, certified mail or overnight express courier
addressed as follows:

if to the Acquiring Funds:

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

with a copy to:

James W. Jennings, Esq.
Morgan, Lewis & Bockius LLP
2000 One Logan Square
Philadelphia, PA 19103

if to the Acquired Funds:

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

<PAGE>

with a copy to:

John H. Grady, Jr., Esq.
Morgan, Lewis & Bockius LLP
2000 One Logan Square
Philadelphia, PA 19103

14. FEES AND EXPENSES.

(a) Each of the Acquiring Funds and the Acquired Funds represents and
warrants to the other that there are no brokers or finders entitled to
receive any payments in connection with the transactions provided for
herein.

(b) Except as otherwise provided for herein, all expenses of the
transactions contemplated by this Agreement incurred by each of the
Acquired Funds and the Acquiring Funds will be borne by Turner Investment
Partners, Inc. Such expenses include, without limitation, (i) expenses
incurred in connection with the entering into and the carrying out of the
provisions of this Agreement; (ii) expenses associated with the preparation
and filing of the Proxy Statement under the 1934 Act; (iii) registration or
qualification fees and expenses of preparing and filing such forms as are
necessary under applicable state securities laws to qualify the Acquiring
Funds Shares to be issued in connection herewith in each state in which the
Acquired Funds' shareholders are resident as of the date of the mailing of
the Proxy Statement to such shareholders; (iv) postage; (v) printing; (iv)
accounting fees; (vii) legal fees; and (viii) solicitation costs of the
transaction. Notwithstanding the foregoing, the Acquiring Funds shall pay
their own Federal and state registration fees.

15. HEADINGS, COUNTERPARTS, ASSIGNMENT.

(a) The article and paragraph headings contained in this Agreement are for
reference purposes only and shall not effect in any way the meaning or
interpretation of this Agreement.

(b) This Agreement may be executed in any number of counterparts, each of
which shall be deemed an original.

(c) This Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and assigns, but no
assignment or transfer hereof or of any rights or obligations hereunder
shall be made by any party without the written consent of the other party.
Nothing herein expressed or implied is intended or shall be construed to
confer upon or give any person, firm or corporation other than the parties
hereto and their respective successors and assigns any rights or remedies
under or by reason of this Agreement.

<PAGE>

16. ENTIRE AGREEMENT. Each of the Acquiring Funds and the Acquired Funds agree
that neither party has made any representation, warranty or covenant not
set forth herein and that this Agreement constitutes the entire agreement
between the parties. The representations, warranties and covenants
contained herein or in any document delivered pursuant hereto or in
connection herewith shall survive the consummation of the transactions
contemplated hereunder.

17. FURTHER ASSURANCES. Each of the Acquiring Funds and the Acquired Funds
shall take such further action as may be necessary or desirable and proper
to consummate the transactions contemplated hereby.

18. BINDING NATURE OF AGREEMENT. As provided in each Trust's Declaration of
Trust on file with the Secretary of State of the Commonwealth of
Massachusetts or the State of Delaware, this Agreement was executed by the
undersigned officers of Alpha Select Funds and the Trust, on behalf of each
of the Acquiring Funds and the Acquired Funds, respectively, as officers
and not individually, and the obligations of this Agreement are not binding
upon the undersigned officers individually, but are binding only upon the
assets and property of each Trust. Moreover, no series of a trust shall be
liable for the obligations of any other series of that trust.

Attest: TIP FUNDS,
on behalf of its series, the TIP Target
Select Equity Fund and the Penn Capital
Select Financial Services Fund

By:
- ----------------------------- ----------------------------------

Attest: ALPHA SELECT FUNDS,
on behalf of its series, the Premier
Core Equity Fund and the Global
Financial Services Fund

By:
- ----------------------------- ------------------------------------

<PAGE>

TIP FUNDS
TIP TARGET SELECT EQUITY FUND

SPECIAL MEETING OF THE SHAREHOLDERS

PROXY SOLICITED BY THE BOARD OF TRUSTEES FOR
THE SPECIAL MEETING OF SHAREHOLDERS, JANUARY 25, 1999

The undersigned, revoking previous proxies with respect to the Shares (defined
below), hereby appoints Stephen J. Kneeley and Lynda J. Striegel as proxies and
each of them, each with full power of substitution, to vote at the Special
meeting of Shareholders of the TIP Target Select Equity Fund of TIP Funds (the
"Trust") to be held in the offices of SEI Investments Company ("SEI
Investments"), Oaks, Pennsylvania 19456, on Monday, January 25, 1999, at 3:30
p.m., and any adjournments or postponements thereof (the "Meeting") all shares
of beneficial interest of said Trust that the undersigned would be entitled to
vote if personally present at the Meeting ("Shares") on the proposal set forth
below respecting the proposed Agreement and Plan of Reorganization between the
Trust, on behalf of the TIP Target Select Equity Fund, and Alpha Select Funds
(formerly TIP Institutional Funds), and in accordance with their own discretion,
any other matters properly brought before the Meeting.

THE BOARD OF TRUSTEES OF THE TRUST RECOMMENDS A VOTE "FOR" THE PROPSAL TO:

PROPOSAL 1. Approval of an Agreement and Plan of Reorganization and
Liquidation between the Trust, on behalf of the TIP Target Select
Equity Fund, and Alpha Select Funds, on behalf of the
Premier Core Equity Fund.

___ For ___ Against ____ Abstain

THIS PROXY WILL, WHEN PROPERLY EXECUTED, BE VOTED AS DIRECTED HEREIN BY THE
SIGNING SHAREHOLDER. IF NO CONTRARY DIRECTION IS GIVEN WHEN THE DULY EXECUTED
PROXY IS RETURNED, THIS PROXY WILL BE VOTED FOR THE FOREGOING PROPOSAL AND WILL
BE VOTED IN THE APPOINTED PROXIES' DISCRETION UPON SUCH OTHER BUSINESS AS MAY
PROPERLY COME BEFORE THE MEETING.

The undersigned acknowledges receipt with this Proxy of a copy of the Notice of
Special Meeting and the Proxy Statement of the Board of Trustees. Your
signature(s) on this Proxy should be exactly as your name(s) appear on this
Proxy. If the shares are held jointly, each holder should sign this Proxy.
Attorneys-in-fact, executors, administrators, trustees or guardians should
indicate the full title and capacity in which they are signing.

<PAGE>

Dated: _____________, 199_

______________________________
Signature of Shareholder

______________________________
Signature (Joint owners)

PLEASE DATE, SIGN AND RETURN PROMPTLY USING THE ENCLOSED, POSTAGE-PAID ENVELOPE
WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING; YOU MAY, NEVERTHELESS, VOTE IN
PERSON IF YOU DO ATTEND. [YOU MAY ALSO VOTE OVER THE INTERNET BY VISITING
"http://www.______.com" AND FOLLOWING THE VOTING INSTRUCTIONS. YOU MAY ALSO VOTE
OVER THE TELEPHONE BY CALLING _________.]

<PAGE>

TIP FUNDS
PENN CAPITAL SELECT FINANCIAL SERVICES FUND

SPECIAL MEETING OF THE SHAREHOLDERS

PROXY SOLICITED BY THE BOARD OF TRUSTEES FOR
THE SPECIAL MEETING OF SHAREHOLDERS, JANUARY 25, 1999

The undersigned, revoking previous proxies with respect to the Shares (defined
below), hereby appoints Stephen J. Kneeley and Lynda J. Striegel as proxies and
each of them, each with full power of substitution, to vote at the Special
Meeting of Shareholders of the Penn Capital Select Financial Services Fund to
TIP Funds (the "Trust") to be held in the offices of SEI Investments ("SEI
Investments"), Oaks, Pennsylvania 19456, on Monday, January 25, 1999, at 3:30
p.m., and any adjournments or postponements thereof (the "Meeting") all shares
of beneficial interest of said Trust that the undersigned would be entitled to
vote if personally present at the Meeting ("Shares") on the proposal set forth
below respecting the proposed Agreement and Plan of Reorganization between the
Trust, on behalf of the Penn Capital Select Financial Services Fund, and Alpha
Select Funds (formerly, TIP Institutional Funds), and in accordance with their
own discretion, any other matters properly brought before the Meeting.

THE BOARD OF TRUSTEES OF THE TRUST RECOMMENDS A VOTE "FOR" THE PROPOSAL TO:

PROPOSAL 1. Approval of an Agreement and Plan of Reorganization and
Liquidation between the Trust, on behalf of the Penn Capital
Select Financial Services Fund, and Alpha Select Funds, on behalf
of the Global Financial Services Fund.

___ For ___ Against ____ Abstain

<PAGE>

Dated: _____________, 199_

______________________________
Signature of Shareholder

______________________________
Signature (Joint owners)

<PAGE>

STATEMENT OF ADDITIONAL INFORMATION

Acquisition of the Assets of

TIP TARGET SELECT EQUITY FUND
and
PENN CAPITAL SELECT FINANCIAL SERVICES
each a Series of

TIP FUNDS
1235 Westlakes Drive, Suite 350
Berwyn, Pennsylvania 19312
(800) 224-6312

By and In Exchange For Shares of

PREMIER CORE EQUITY FUND
and
GLOBAL FINANCIAL SERVICES FUND
each a Series of

ALPHA SELECT FUNDS
(formerly TIP Institutional Funds)
1235 Westlakes Drive, Suite 350
Berwyn, Pennsylvania 19312
(800) 224-6312

This Statement of Additional Information, relating specifically to the
proposed transfer of the assets and liabilities of TIP Target Select Equity Fund
("Target Select Fund") and Penn Capital Select Financial Services Fund ("Capital
Select"), each a series of TIP Funds, respectively, in exchange for shares of
beneficial interest of Alpha Select Funds, without par value, consists of this
cover page and the following described documents, each of which is attached
hereto and incorporated by reference herein:

(1) The Statement of Additional Information of TIP Funds dated January 1,
1998 and January 31, 1998;

(2) The Statement of Additional Information of Alpha Select Funds dated
February 28, 1998;

(3) Annual Report of TIP Funds for the year ended September 30, 1998;

<PAGE>

This Statement of Additional Information, which is not a prospectus,
supplements, and should be read in conjunction with, the Prospectus/Proxy
Statement of TIP Funds and Alpha Select dated December 18, 1998. A copy of the
Prospectus/Proxy Statement may be obtained without charge by calling or writing
to TIP Funds or Alpha Select, respectively, at the numbers or addresses set
forth above.

The date of this Statement of Additional Information is December 18, 1998.

<PAGE>

TIP INSTITUTIONAL FUNDS

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933

FORM N-14

PART C

OTHER INFORMATION

Item 15. 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 16. Exhibits

(1)(a) Agreement and Declaration of Trust dated October 25, 1993,
is incorporated by reference to Exhibit (a)(1) of the
Registrant's Post-Effective Amendment No. 8 as filed with the
Securities and Exchange Commission on November 24, 1998.

(1)(b) Certificate of Amendment of Agreement and Declaration of
Trust of Corona Investment Trust dated December 11, 1993,
is incorporated by reference to Exhibit (a)(2) of the
Registrant's Post-Effective Amendment No. 8 as filed with the
Securities and Exchange Commission on November 24, 1998.

(1)(c) Certificates of Amendment of Agreement and Declaration of
Trust and Certificate of Trust of the Solon Funds dated June
13, 1994, is incorporated by reference to Exhibit (a)(3) of
the Registrant's Post-Effective Amendment No. 8 as filed with
the Securities and Exchange Commission on November 24, 1998.

(1)(d) Certificate of Amendment of Agreement and Declaration of
Trust dated November 10, 1997, is incorporated by reference
to Exhibit 1(d) of the Registrant's Post-Effective Amendment
No. 5 as filed with the Securities and Exchange Commission
on December 16, 1997.

C-1

<PAGE>

(1)(e) Amended and Restated Agreement and Declaration of Trust
dated September, 1998, is incorporated by reference to the
Registrant's Post-Effective Amendment No. 7 as filed with
the Securities and Exchange Commission on October 1, 1998.

(2) By-Laws are incorporated by reference to Exhibit (b) of the
Registrant's Post-Effective Amendment No. 8 as filed with the
Securities and Exchange Commission on November 24, 1998.

(3) Inapplicable.

(4) Form of Agreement and Plan of Reorganization and Liquidation
is filed herewith.

(5) Inapplicable.

(6)(a) Investment Management Agreement is incorporated by reference
to Exhibit 5(a) of the Registrant's Post-Effective Amendment
No. 3 as filed with the Securities and Exchange Commission
on June 28, 1996.

(6)(b) Sub-Advisory Agreement is incorporated by reference to
Exhibit 5(b) of the Registrant's Post-Effective Amendment
No. 3 as filed with the Securities and Exchange Commission
on June 28, 1996.

(6)(c) Investment Advisory Agreement between the Registrant and
Turner Investment Partners, Inc., on behalf of the Short
Duration Funds - One Year Portfolio and the Short Duration
Funds Three Year Portfolio, is incorporated by reference to
the Registrant's Post-Effective Amendment No. 7 as filed
with the Securities and Exchange Commission on October 1,
1998.

(6)(d) Investment Advisory Agreement between the Registrant and
Turner Investment Partners, Inc., is incorporated by
reference to the Registrant's Post-Effective Amendment No. 7
as filed with the Securities and Exchange Commission on
October 1, 1998.

(6)(e) Investment Advisory Agreement between the Registrant and
Penn Capital Management Company, Inc., is incorporated by
reference to the Registrant's Post-Effective Amendment No. 7
as filed with the Securities and Exchange Commission on
October 1, 1998.

(7)(a) Underwriting Agreement is incorporated by reference to
Exhibit 6(a) of the Registrant's Post-Effective Amendment
No. 3 as filed with the Securities and Exchange Commission
on June 28, 1996.

(7)(b) Distribution Agreement between the Registrant and SEI
Investments Distribution Co., is incorporated by reference to
the Registrant's Post-Effective Amendment No. 7 as filed
with the Securities and Exchange Commission on October 1,
1998.

C-2

<PAGE>

(8) Inapplicable

(9)(a) Custodian Agreement is incorporated by reference to Exhibit
8 of the Registrant's Post-Effective Amendment No. 2 as
filed with the Securities and Exchange Commission on June
29, 1995.

(9)(b) Form of Custodian Agreement by and between the Registrant and
First Union National Bank is incorporated by reference to the
Registrant's Post-Effective Amendment No. 8 as filed with the
Securities and Exchange Commission on November 24, 1998.

(10) Inapplicable

(11) Opinion and Consent of Morgan, Lewis & Bockius LLP that
shares will be validly issued, fully paid and non-assessable
is filed herewith.

(12) Opinion and Consent of Morgan, Lewis & Bockius LLP as to tax
matters and consequences is filed herewith.

(13)(a) Administrative Services Contract is incorporated by
reference to Exhibit 9(a) of the Registrant's Post-Effective
Amendment No. 3 as filed with the Securities and Exchange
Commission on June 28, 1996.

(13)(b) Services Agreement is incorporated by reference to Exhibit
9(b) of the Registrant's Post-Effective Amendment No. 3 as
filed with the Securities and Exchange Commission on June
28, 1996.

(13)(c) Administration Agreement between the Registrant and SEI Fund
Resources, is incorporated by reference to the Registrant's
Post-Effective Amendment No. 7 as filed with the Securities
and Exchange Commission on October 1, 1998.

(13)(d) Transfer Agency Agreement between the Registrant and DST
Systems, Inc., is incorporated by reference to the
Registrant's Post-Effective Amendment No. 7 as filed with
the Securities and Exchange Commission on October 1, 1998.

(14) Consent of Ernst & Young LLP is filed herewith.

(15) Inapplicable.

(16) Inapplicable.

(17)(a) Prospectus for TIP Fund's TIP Target Select Equity Fund
dated January 1, 1998 is filed herewith.

(17)(b) Prospectus for TIP Fund's Penn Capital Select Financial
Services Fund dated January 31, 1998, as amended July 31,
1998 is filed herewith.

C-3

<PAGE>

(17)(c) Statement of Additional Information for TIP Funds TIP Target
Select Equity Fund dated January 1, 1998 is filed herewith.

(17)(d) Statement of Additional Information for TIP Funds Penn
Capital Select Financial Services dated January 31, 1998 is
filed herewith.

(17)(e) Audited Financial Statements dated September 30, 1998 for
the TIP Funds are filed herewith.

Item 17. UNDERTAKINGS.

The registrant agrees that prior to any public reoffering of the securities
registered through the use of a prospectus which is a part of this registration
statement by any person or party who is deemed to be an underwriter within the
meaning of Rule 145(c) of the Securities Act, the reoffering prospectus will
contain the information called for by the applicable registration form for
reofferings by persons who may be deemed underwriters, in addition to the
information called for by the other items of the applicable form.

The registrant agrees that every prospectus that is filed under paragraph
(1) above will be filed as a part of an amendment to the registration statement
and will not be used until the amendment is effective, and that, in determining
any liability under the 1933 Act, each post-effective amendment shall be deemed
to be a new registration statement for the securities offered therein, and the
offering of the securities at that time shall be deemed to be the initial bona
fide offering of them.

C-4

<PAGE>

SIGNATURES

As required by the Securities Act of 1933 this Registration Statement has
been signed on behalf of the Registrant in Philadelphia on the 25th of November,
1998.

TIP INSTITUTIONAL FUNDS
Registrant

By: /s/ Stephen J. Kneeley
-------------------------------------
Stephen J. Kneeley
President

Pursuant to the requirements of the Securities Act of 1933, this Amendment
has been signed below by the following persons in the capacity on the dates
indicated.

/s/ Robert E. Turner
- ----------------------------------- Trustee November 25, 1998
Robert E. Turner

/s/ Ronald W. Filante Trustee November 25, 1998
- -----------------------------------
Ronald W. Filante

/s/ Katherine Griswold Trustee November 25, 1998
- -----------------------------------
Katherine R. Griswold

/s/ Alfred C. Salvato Trustee November 25, 1998
- -----------------------------------
Alfred C. Salvato

/s/ Stephen J. Kneeley President and Chief November 25, 1998
- ----------------------------------- Executive Officer
Stephen J. Kneeley

/s/ Robert DellaCroce Controller and November 25, 1998
- ----------------------------------- Chief Financial
Robert DellaCroce Officer

*By: /s/ Stephen J. Kneeley November 25, 1998
-------------------------------
Stephen J. Kneeley
Attorney-in-Fact

C-5

<PAGE>

Exhibit Index

(1)(a) Agreement and Declaration of Trust dated October 25, 1993, is
incorporated by reference to Exhibit (a)(1) of the Registrant's
Post-Effective Amendment No. 8 as filed with the Securities and
Exchange Commission on November 24, 1998.

(1)(b) Certificate of Amendment of Agreement and Declaration of Trust of
Corona Investment Trust dated December 11, 1993, is incorporated by
reference to Exhibit (a)(2) of the Registrant's Post-Effective
Amendment No. 8 as filed with the Securities and Exchange Commission
on November 24, 1998.

(1)(c) Certificates of Amendment of Agreement and Declaration of Trust and
Certificate of Trust of the Solon Funds dated June 13, 1994, is
incorporated by reference to Exhibit (a)(3) of the Registrant's
Post-Effective Amendment No. 8 as filed with the Securities and
Exchange Commission on November 24, 1998.

(1)(d) Certificate of Amendment of Agreement and Declaration of Trust dated
November 10, 1997, is incorporated by reference to Exhibit 1(d) of the
Registrant's Post-Effective Amendment No. 5 as filed with the
Securities and Exchange Commission on December 16, 1997.

(1)(e) Amended and Restated Agreement and Declaration of Trust dated
September, 1998, is incorporated by reference to the Registrant's
Post-Effective Amendment No. 7 as filed with the Securities and
Exchange Commission on October 1, 1998.

(2) By-Laws are incorporated by reference to Exhibit (b) of the
Registrant's Post-Effective Amendment No. 8 as filed with the
Securities and Exchange Commission on November 24, 1998.

(3) Inapplicable.

(4) Form of Agreement and Plan of Reorganization and Liquidation is filed
herewith.

(5) Inapplicable.

(6)(a) Investment Management Agreement is incorporated by reference to
Exhibit 5(a) of the Registrant's Post-Effective Amendment No. 3 as
filed with the Securities and Exchange Commission on June 28, 1996.

(6)(b) Sub-Advisory Agreement is incorporated by reference to Exhibit 5(b) of
the Registrant's Post-Effective Amendment No. 3 as filed with the
Securities and Exchange Commission on June 28, 1996.

(6)(c) Investment Advisory Agreement between the Registrant and Turner
Investment Partners, Inc., on behalf of the Short Duration Funds - One
Year Portfolio and the Short Duration Funds - Three Year Portfolio, is
incorporated by reference to the Registrant's Post-Effective Amendment
No. 7 as filed with the Securities and Exchange Commission on October
1, 1998.

(6)(d) Investment Advisory Agreement between the Registrant and Turner
Investment Partners, Inc., is incorporated by reference to the
Registrant's Post-Effective Amendment No. 7 as filed with the
Securities and Exchange Commission on October 1, 1998.

(6)(e) Investment Advisory Agreement between the Registrant and Penn Capital
Management Company, Inc., is incorporated by reference to the
Registrant's Post-Effective Amendment No. 7 as filed with the
Securities and Exchange Commission on October 1, 1998.

C-6

<PAGE>

(7)(a) Underwriting Agreement is incorporated by reference to Exhibit 6(a) of
the Registrant's Post-Effective Amendment No. 3 as filed with the
Securities and Exchange Commission on June 28, 1996.

(7)(b) Distribution Agreement between the Registrant and SEI Investments
Distribution Co., is incorporated by reference to the Registrant's
Post-Effective Amendment No. 7 as filed with the Securities and
Exchange Commission on October 1, 1998.

(8) Inapplicable

(9)(a) Custodian Agreement is incorporated by reference to Exhibit 8 of the
Registrant's Post-Effective Amendment No. 2 as filed with the
Securities and Exchange Commission on June 29, 1995.

(9)(b) Form of Custodian Agreement by and between the Registrant and First
Union National Bank is incorporated by reference to the Registrant's
Post-Effective Amendment No. 8 as filed with the Securities and
Exchange Commission on November 24, 1998.

(10) Inapplicable

(11) Opinion and Consent of Morgan, Lewis & Bockius LLP that shares will be
validly issued, fully paid and non-assessable is filed herewith.

(12) Opinion and Consent of Morgan, Lewis & Bockius LLP as to tax matters
and consequences is filed herewith.

(13)(a) Administrative Services Contract is incorporated by reference to
Exhibit 9(a) of the Registrant's Post-Effective Amendment No. 3 as
filed with the Securities and Exchange Commission on June 28, 1996.

(13)(b) Services Agreement is incorporated by reference to Exhibit 9(b) of the
Registrant's Post-Effective Amendment No. 3 as filed with the
Securities and Exchange Commission on June 28, 1996.

(13)(d) Transfer Agency Agreement between the Registrant and DST Systems,
Inc., is incorporated by reference to the Registrant's Post-Effective
Amendment No. 7 as filed with the Securities and Exchange Commission
on October 1, 1998.

(14) Consent of Ernst & Young LLP is filed herewith.

(15) Inapplicable.

(16) Inapplicable.

(17)(a) Prospectus for TIP Fund's TIP Target Select Equity dated January 1,
1998 is filed herewith.

C-7

<PAGE>

(17)(b) Prospectus for TIP Fund's Penn Capital Select Financial Services Fund
dated January 31, 1998, as amended July 31, 1998 is filed herewith.

(17)(c) Statement of Additional Information for TIP Fund's TIP Target Select
Equity Fund dated January 1, 1998 is filed herewith.

(17)(d) Statement of Additional Information for TIP Fund's Penn Capital Select
Financial Services Fund dated January 31, 1998 is filed herewith.

(17)(e) Audited Financial Statements dated September 30, 1998 for the TIP
Funds are filed herewith.

C-8

AGREEMENT AND PLAN
OF REORGANIZATION AND LIQUIDATION

<PAGE>

claims except as provided in this Agreement, and the Acquiring Funds shall
acquire all such assets, and shall assume all such liabilities of the Acquired
Funds, in exchange for delivery to the Acquired Funds by the Acquiring Funds of
a number of Acquiring Funds Shares (both full and fractional) equivalent in
number and value to the Acquired Funds Shares outstanding immediately prior to
the Effective Time. The assets and stated liabilities of the Acquired Funds, as
set forth in the Statement of Assets and Liabilities attached hereto as Exhibit
A, shall be exclusively assigned to and assumed by the Acquiring Funds. All
debts, liabilities, obligations and duties of the Acquired Funds, to the extent
that they exist at or after the Effective Time and are stated in the Statement
of Assets and Liabilities, shall after the Effective Time attach to the
Acquiring Funds and may be enforced against the Acquiring Funds to the same
extent as if the same had been incurred by the Acquiring Funds.

4. REPRESENTATIONS AND WARRANTIES OF THE ACQUIRING FUNDS. The Acquiring Funds
represent and warrant to the Acquired Funds as follows:

<PAGE>

5. REPRESENTATIONS AND WARRANTIES OF THE ACQUIRED FUNDS. The Acquired Funds
represent and warrant to the Acquiring Funds as follows:

<PAGE>

Agreement, and the consummation of the transactions contemplated hereby,
have been duly authorized by the Trust's Board of Trustees, and, except for
approval by the shareholders of the Acquired Funds, no other proceedings by
the Acquired Funds are necessary to authorize its officers to effectuate
this Agreement and the transactions contemplated hereby. Each of the
Acquired Funds is not a party to or obligated under any charter, by-law,
indenture or contract provision or any other commitment or obligation, or
subject to any order or decree, which would be violated by its executing
and carrying out this Agreement.

(i) TAXES. As of the Effective Time, all Federal and other tax returns
and reports of the Acquired Funds required by law to have been filed
shall have been filed, and all other taxes shall have been paid so far
as due, or provision shall have been made for the payment thereof, and
to the best of the Acquired Funds' knowledge, no such return is
currently under audit and no assessment has been asserted with respect
to any of such returns.

6. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE ACQUIRING FUNDS.

5
<PAGE>

(b) The Acquiring Funds shall have received an opinion of counsel, dated as
of the Effective Time, addressed to and in form and substance satisfactory
to counsel for the Acquiring Funds, to the effect that (i) the Acquired
Funds are duly organized and validly existing series of the Trust under the
laws of the Commonwealth of Massachusetts; (ii) the Trust is an open-end
management investment company registered under the 1940 Act; (iii) this
Agreement and the Reorganization provided for herein and the execution of
this Agreement have been duly authorized and approved by all requisite
action of each of the Acquired Funds and this Agreement has been duly
executed and delivered by the Trust on behalf of the Acquired Funds and is
a valid and binding obligation of the Acquired Funds, subject to applicable
bankruptcy, insolvency, fraudulent conveyance and similar laws or court
decisions regarding enforcement of creditors' rights generally; (iv) to the
best of counsel's knowledge after reasonable inquiry, no consent, approval,
order or other authorization of any Federal or state court or
administrative or regulatory agency is required for each of the Acquired
Funds to enter into this Agreement or carry out its terms that has not been
obtained other than where the failure to obtain any such consent, approval,
order or authorization would not have a material adverse effect on the
operations of the Acquired Funds; and (v) upon consummation of this
Agreement, the Acquiring Funds shall have acquired all of the Acquired
Funds's assets listed in the Statement of Assets and Liabilities, free and
clear of all liens encumbrances or adverse claims.

7. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE ACQUIRED FUNDS.

<PAGE>

the best of counsel's knowledge, no consent, approval, order or other
authorization of any Federal or state court or administrative or regulatory
agency is required for each of the Acquiring Funds to enter into this
Agreement or carry out its terms that has not already been obtained, other
than where the failure to obtain any such consent, approval, order or
authorization would not have a material adverse effect on the operations of
the Acquiring Funds; and (v) the Acquiring Funds Shares to be issued in the
Reorganization have been duly authorized and upon issuance thereof in
accordance with this Agreement will be validly issued, fully paid and
nonassessable.

(1) No gain or loss will be recognized to the Acquired Funds upon the
transfer of its assets in exchange solely for the Acquiring Funds

<PAGE>

Shares and the assumption by the Acquiring Funds of the corresponding
Acquired Fund's stated liabilities;

(3) The basis of an Acquired Fund's assets in the corresponding
Acquiring Fund's hands will be the same as the basis of those assets
in the Acquired Fund's hands immediately before the conversion;

(5) No gain or loss will be recognized to the Acquired Funds on the
distribution of the Acquiring Funds Shares to the Acquired Funds'
shareholders in exchange for their Acquired Funds Shares;

(g) The Board of Trustees of Alpha Select Funds, at a meeting duly called
for such purpose, shall have authorized the issuance by each of the
Acquiring Funds of Acquiring

<PAGE>

Funds Shares at the Effective Time in exchange for the assets of the
Acquired Funds pursuant to the terms and provisions of this Agreement.

9. EFFECTIVE TIME OF THE REORGANIZATION. The exchange of the Acquired Funds'
assets for Acquiring Funds Shares shall be effective as of close of business on
_________, 199_, or at such other time and date as fixed by the mutual consent
of the parties (the "Effective Time").

10. TERMINATION. This Agreement and the transactions contemplated hereby may be
terminated and abandoned without penalty by resolution of the Board of Trustees
of the Trust, at any time prior to the Effective Time, if circumstances should
develop that, in the opinion of the Board, make proceeding with the Agreement
inadvisable.

11. AMENDMENT. This Agreement may be amended, modified or supplemented in such
manner as may be mutually agreed upon in writing by the parties; provided,
however, that following the Shareholders' Meeting called on behalf of the
Acquired Funds pursuant to Section 8 of this Agreement, no such amendment may
have the effect of changing the provisions for determining the number or value
of Acquiring Funds Shares to be paid to the Acquired Funds' shareholders under
this Agreement to the detriment of the Acquired Funds, shareholders without
their further approval.

12. GOVERNING LAW. This Agreement shall be governed and construed in accordance
with the laws of the State of Massachusetts.

if to the Acquiring Funds:

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

with a copy to:

James W. Jennings, Esq.
Morgan, Lewis & Bockius LLP
2000 One Logan Square
Philadelphia, PA 19103

if to the Acquired Funds:

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

<PAGE>

with a copy to:

John H. Grady, Jr., Esq.
Morgan, Lewis & Bockius LLP
2000 One Logan Square
Philadelphia, PA 19103

14. FEES AND EXPENSES.

(b) Except as otherwise provided for herein, all expenses of the
transactions contemplated by this Agreement incurred by each of the
Acquired Funds and the Acquiring Funds will be borne by Turner
Investment Partners, Inc. Such expenses include, without limitation,
(i) expenses incurred in connection with the entering into and the
carrying out of the provisions of this Agreement; (ii) expenses
associated with the preparation and filing of the Proxy Statement under
the 1934 Act; (iii) registration or qualification fees and expenses of
preparing and filing such forms as are necessary under applicable state
securities laws to qualify the Acquiring Funds Shares to be issued in
connection herewith in each state in which the Acquired Funds'
shareholders are resident as of the date of the mailing of the Proxy
Statement to such shareholders; (iv) postage; (v) printing; (iv)
accounting fees; (vii) legal fees; and (viii) solicitation costs of the
transaction. Notwithstanding the foregoing, the Acquiring Funds shall
pay their own Federal and state registration fees.

15. HEADINGS, COUNTERPARTS, ASSIGNMENT.

(a) The article and paragraph headings contained in this Agreement are
for reference purposes only and shall not effect in any way the meaning
or interpretation of this Agreement.

(b) This Agreement may be executed in any number of counterparts, each
of which shall be deemed an original.

(c) This Agreement shall be binding upon and inure to the benefit of
the parties hereto and their respective successors and assigns, but no
assignment or transfer hereof or of any rights or obligations hereunder
shall be made by any party without the written consent of the other
party. Nothing herein expressed or implied is intended or shall be
construed to confer upon or give any person, firm or corporation other
than the parties hereto and their

<PAGE>

respective successors and assigns any rights or remedies under or by
reason of this Agreement.

16. ENTIRE AGREEMENT. Each of the Acquiring Funds and the Acquired Funds agree
that neither party has made any representation, warranty or covenant not set
forth herein and that this Agreement constitutes the entire agreement between
the parties. The representations, warranties and covenants contained herein or
in any document delivered pursuant hereto or in connection herewith shall
survive the consummation of the transactions contemplated hereunder.

17. FURTHER ASSURANCES. Each of the Acquiring Funds and the Acquired Funds shall
take such further action as may be necessary or desirable and proper to
consummate the transactions contemplated hereby.

18. BINDING NATURE OF AGREEMENT. As provided in each Trust's Declaration of
Trust on file with the Secretary of State of the Commonwealth of Massachusetts
or the State of Delaware, this Agreement was executed by the undersigned
officers of Alpha Select Funds and the Trust, on behalf of each of the Acquiring
Funds and the Acquired Funds, respectively, as officers and not individually,
and the obligations of this Agreement are not binding upon the undersigned
officers individually, but are binding only upon the assets and property of each
Trust. Moreover, no series of a trust shall be liable for the obligations of any
other series of that trust.

Attest: TIP FUNDS,
on behalf of its series, the TIP
Target Select Equity Fund and the
Penn Capital Select Financial
Services Fund

________________________ By:______________________________

Attest: ALPHA SELECT FUNDS,
on behalf of its series, the Premier
Core Equity Fund and the Global
Financial Services Fund

________________________ By:______________________________

November 18, 1998

TIP Funds
One Freedom Valley Drive
Oaks, Pennsylvania 19456

TIP Institutional Funds
One Freedom Valley Drive
Oaks, Pennsylvania 19456

Re: AGREEMENT AND PLAN OF REORGANIZATION BY AND BETWEEN TIP INSTITUTIONAL FUNDS
AND TIP FUNDS, ON BEHALF OF ITS TIP TARGET SELECT EQUITY FUNDS AND PENN
CAPITAL SELECT FINANCIAL SERVICES FUNDS, ON BEHALF OF ITS PREMIER CORE
EQUITY AND GLOBAL FINANCIAL SERVICES FUNDS

Ladies and Gentlemen:

We have acted as counsel to TIP Institutional Funds, a Delaware business trust,
in connection with the execution and delivery of the draft Agreement and Plan of
Reorganization (the "Agreement"), dated as of November 6, 1998, by TIP
Institutional Funds, on behalf of its Premier Core Equity and Global Financial
Services Funds, relating to the transfer of all the assets and liabilities of
the TIP Funds TIP Target Select Equity and Penn Capital Financial Services Funds
(the "Acquired Portfolios"), in exchange for shares of the Premier Core Equity
Fund and Global Financial Services Fund (the "Acquiring Portfolios") followed by
the distribution of such Shares (the "Acquiring Portfolios' Shares") to the
holders of shares of the Acquired Portfolio ("Acquired Portfolios' Shares") in
exchange for such Acquired Portfolios' Shares in complete liquidation of such
Acquired Portfolios (the "Reorganization"), pursuant to the Agreement. This
opinion letter is delivered to you pursuant to Section 8(e) of the Agreement.
Capitalized terms used but not defined herein shall have the meanings assigned
to them in the Agreement.

<PAGE>

Morgan, Lewis & Bockius LLP
November 18, 1998
Page 2

In connection with this opinion, we have examined and are familiar with
originals or copies, certified or otherwise identified to our satisfaction, of
(i) the Agreement, and (ii) such other documents as we have deemed necessary or
appropriate in order to enable us to render the opinion below. In our
examination, we have assumed the genuineness of all signatures, the legal
capacity of all natural persons, the authenticity of all documents submitted to
us as originals, the conformity to original documents of all documents submitted
to us as certified, conformed or photostatic copies and the authenticity of the
originals of such copies. Our opinion is based in part on the facts set forth
below. We have not undertaken an independent investigation or verification of
these facts or of the information set forth either in the aforementioned
documents or in other documents that we have reviewed.

1. The Reorganization will be consummated in compliance with the material
terms of the Agreement, and none of the material terms and conditions
therein have been waived or modified and neither party has any plan or
intention to waive or modify any such material condition.

2. The fair market value of the Acquiring Portfolios' Shares to be
received by each shareholder of the Acquired Portfolios in the
Reorganization will be approximately equal to the fair market value of
the shares in the Acquired Portfolios surrendered and exchanged
therefor.

3. To the knowledge of the Acquired Portfolios there is no plan or
intention on the part of any shareholder of the Acquired Portfolios to
sell, exchange or otherwise dispose of a number of Shares received in
the transaction that would reduce the number of Acquiring Portfolios'
Shares held by the shareholders of the Acquired Portfolios to a number
of shares having a value, as of the date of the Reorganization equal
to less than 50 percent of the value of all the formerly outstanding
Acquired Portfolios' Shares.

4. No consideration other than the Acquiring Portfolios' Shares and the
assumption by the Acquiring Portfolios of the stated liabilities of
the Acquired Portfolios will be issued in exchange for shares of
common stock in the Acquired Portfolios in the Reorganization.

5. The Acquiring Portfolios have no plan or intention to sell additional
shares of beneficial interest in the Acquiring Portfolios or to redeem
or otherwise reacquire any of the Acquiring Portfolios' Shares issued
in the Reorganization other than in the ordinary course of their
business as regulated investment companies.

<PAGE>

Morgan, Lewis & Bockius LLP
November 18, 1998
Page 3

6. The Acquiring Portfolios have no plan or intention to sell or
otherwise dispose of any of the Acquired Portfolios' assets to be
acquired by them in the Reorganization except for dispositions made in
the ordinary course of their business as regulated investment
companies.

7. Following the Reorganization, the Acquiring Portfolios will continue
the historic business of the Acquired Portfolios or use a significant
portion of the Acquired Portfolios' assets in their business.

8. Immediately following consummation of the Reorganization, the
Acquiring Portfolios will possess the same liabilities as those
possessed by the Acquired Portfolios immediately prior to the
Reorganization. The fair market value of the assets of the Acquired
Portfolios acquired by the Acquiring Portfolios will exceed the
liabilities of the Acquired Portfolios assumed by the Acquiring
Portfolios plus the amount of liabilities, if any, to which the
acquired assets are subject.

9. There is no intercorporate indebtedness existing between the Acquiring
Portfolios and the Acquired Portfolios that was issued, acquired, or
will be settled at a discount.

10. The Acquiring Portfolios will meet the requirements of Subchapter M of
the Internal Revenue Code of 1986 for qualification and treatment as
regulated investment companies.

11. The Acquiring Portfolios do not own nor will they acquire prior to the
consummation of the Reorganization any shares of common stock in the
Acquired Portfolios.

Our opinion summarizes certain Federal income tax consequences of the
Reorganization to holders of shares in the Acquired Portfolios (individually, a
"Shareholder" and, collectively, the "Shareholders"). Our opinion does not
address all aspects of Federal income taxation that may be relevant to
particular Shareholders and may not be applicable to Shareholders who are not
citizens or residents of the United States. Further, our opinion does not
address the effect of any applicable foreign, state, local or other tax laws.

<PAGE>

Morgan, Lewis & Bockius LLP
November 18, 1998
Page 4

In rendering our opinion, we have considered the applicable provisions of the
Internal Revenue Code of 1986 (the "Code"), Treasury Regulations, pertinent
judicial authorities, interpretive rulings of the Internal Revenue Service and
such other authorities as we have considered relevant.

Based upon and subject to the foregoing, we are of the opinion that the
Reorganization will, under current law, constitute a tax-free reorganization
under Section 368(a) of the Code, and that the Acquired Portfolios and Acquiring
Portfolios will each be a party to the reorganization within the meaning of
Section 368(b) of the Code.

The Reorganization, as a tax-free reorganization, will have the following
Federal income tax consequences for the Shareholders, the Acquired Portfolios
and the Acquiring Portfolios:

1. No gain or loss will be recognized to the Acquired Portfolios upon the
transfer of their assets in exchange solely for the Acquiring
Portfolios Shares and the assumption by the Acquiring Portfolios of
the Acquired Portfolios' stated liabilities;

2. No gain or loss will be recognized to the Acquiring Portfolios on
their receipt of the Acquired Portfolios' assets in exchange for the
Acquiring Portfolios' Shares and the assumption by the Acquiring
Portfolios of the Acquired Portfolios' liabilities;

3. The basis of an Acquired Portfolio's assets in the Acquiring
Portfolios' hands will be the same as the basis of those assets in the
Acquired Portfolios' hands immediately before the conversion;

4. The Acquiring Portfolios' holding period for the assets transferred to
the Acquiring Portfolios by the Acquired Portfolios will include the
holding period of those assets in the Acquired Portfolios' hands
immediately before the conversion;

5. No gain or loss will be recognized to the Acquired Portfolios on the
distribution of the Acquiring Portfolios' Shares to the Acquired
Portfolios' shareholders in exchange for its Acquired Portfolios'
Shares;

6. No gain or loss will be recognized to the Acquired Portfolios'
shareholders as a result of the Acquired Portfolios' distribution of

<PAGE>

Morgan, Lewis & Bockius LLP
November 18, 1998
Page 5

Acquiring Portfolios' Shares to the Acquired Portfolios' shareholders
in exchange for the Acquired Portfolios' shareholders' Acquired
Portfolios' Shares;

7. The basis of the Acquiring Portfolios' Shares received by the Acquired
Portfolios' shareholders will be the same as the adjusted basis of
that Acquired Portfolios' shareholders' Acquired Portfolios' Shares
surrendered in exchange therefor; and

8. The holding period of the Acquiring Portfolios' Shares received by the
Acquired Portfolios' shareholders will include the Acquired
Portfolios' shareholders' holding period for the Acquired Portfolios'
shareholders' Acquired Portfolios' Shares surrendered in exchange
therefor, provided that said Acquired Portfolios' Shares were held as
capital assets on the date of the conversion.

Except as set forth above, we express no opinion as to the tax consequences to
any party, whether Federal, state, local or foreign, of the Reorganization or
the Agreement or of any transactions related to the Reorganization or the
Agreement or contemplated by the Reorganization or the Agreement. This opinion
is being furnished to you on behalf of the Acquired Portfolios in connection
with the Reorganization and the Agreement and solely for your benefit in
connection therewith and may not be used or relied upon for any other purpose
and may not be circulated, quoted or otherwise referred to for any other purpose
without our express written consent.

Very truly yours,

/s/ Morgan, Lewis & Bockius LLP

November 18, 1998

TIP Institutional Funds
One Freedom Valley Drive
Oaks, PA 19456

RE: TIP INSTITUTIONAL FUNDS - FORM N-14 OPINION

Ladies and Gentlemen:

We refer to the Registration Statement on Form N-14 (the "Registration
Statement") of the TIP Institutional Funds (the "Trust") relating to the
transfer of all the assets and liabilities of the TIP Fund's TIP Target Select
Equity Fund and Penn Capital Select Financial Services Fund (the "Acquired
Portfolios"), in exchange for shares of the Trust's Premier Core Equity Fund and
Global Financial Services Fund (the "Acquiring Portfolios"), followed by the
distribution of such Shares (the "Acquiring Portfolio's Shares"), in exchange
for such Acquired Portfolio's Shares in complete liquidation of the Acquired
Portfolio (the "Reorganization"), pursuant to the Agreement.

We have been requested by the Trust to furnish this opinion as Exhibit 11 to the
Registration Statement.

We have examined such records, documents, instruments, certificates of public
officials and of the Trust, made such inquiries of the Trust, and examined such
questions of law as we have deemed necessary for the purpose of rendering the
opinion set forth herein. We have assumed the genuineness of all signatures and
the authenticity of all items submitted to us as originals and the conformity
with originals of all items submitted to us as copies.

Based upon and subject to the foregoing, we are of the opinion that:

The issuance of the Shares by the Trust has been duly and validly
authorized by all appropriate action and, upon delivery thereof and payment
therefor in accordance with

<PAGE>

the Registration Statement, the Shares, when issued, will be duly
authorized, validly issued, fully paid and nonassessable by the Trust.

We have not reviewed the securities laws of any state or territory in connection
with the proposed offering of Shares and we express no opinion as to the
legality of any offer of sale of Shares under any such state or territorial
securities laws.

This opinion is intended only for your use in connection with the offering of
Shares and may not be relied upon by any other person.

We hereby consent to the inclusion of this opinion as an exhibit to the Trust's
Registration Statement to be filed with the Securities and Exchange Commission.

Very truly yours,

/s/ Morgan, Lewis & Bockius LLP

Consent of Ernst & Young LLP, Independent Auditors

We consent to the references to our firm under the caption "Shareholder Reports"
in the Prospectus/Proxy Statement and "Financial Information" in the Statement
of Additional Information and to the inclusion in Registration Statement on Form
N-14 and related Prospectus/Proxy Statement of the TIP Institutional Funds
(Premier Core Equity Fund and Global Financial Services Fund) of those
references and of our report dated November 2, 1998 on the TIP Target Select
Equity Fund and Penn Capital Select Financial Services Fund of the TIP Funds.

/s/ Ernst & Young LLP
- --------------------------
Philadelphia, Pennsylvania
November 24, 1998

TIP FUNDS

Investment Adviser:
TURNER INVESTMENT PARTNERS, INC.

Sub-Advisers:
CHARTWELL INVESTMENT PARTNERS
CLOVER CAPITAL MANAGEMENT, INC.
PENN CAPITAL MANAGEMENT COMPANY, INC.

TIP Funds (the "Trust") provides a convenient and economical means of investing
in professionally managed portfolios of securities. This Prospectus offers
shares of the following mutual fund (the "Fund"), which is a separate series of
the Trust:

TIP TARGET SELECT EQUITY FUND

This Prospectus concisely sets forth the information about the Trust and the
Fund that a prospective investor should know before investing. Investors are
advised to read this Prospectus and retain it for future reference. A Statement
of Additional Information dated January 1, 1998, has been filed with the
Securities and Exchange Commission, and is available without charge by calling
1-800-224-6312. The Statement of Additional Information is incorporated into
this Prospectus by reference.

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

January 1, 1998

<PAGE>

TABLE OF CONTENTS

Summary ................................................................. 3
Expense Summary........................................................... 5
The Trust and the Fund.................................................... 6
Investment Objective...................................................... 6
Investment Policies....................................................... 6
Risk Factors............................................................... 7
Investment Limitations..................................................... 8
Special Considerations Regarding the Multi-Adviser Approach.................9
The Adviser............................................................... 10
The Sub-Advisers...........................................................11
The Administrator......................................................... 12
The Transfer Agent........................................................ 12
The Distributor........................................................... 12
Portfolio Transactions.................................................... 13
Purchase and Redemption of Shares......................................... 13
Performance............................................................... 17
Taxes ................................................................. 18
General Information....................................................... 19
Description of Permitted Investments and Risk Factors..................... 21

-2-

<PAGE>

SUMMARY

The following provides basic information about the TIP Target Select Equity Fund
(the "Target Select Fund" or the "Fund"). The Fund is one of thirteen mutual
funds comprising the TIP Funds (the "Trust"). The other portfolios of the TIP
Funds are described in separate prospectuses, which are available by calling
1-800-224-6312. This summary is qualified in its entirety by reference to the
more detailed information provided elsewhere in this Prospectus and in the
Statement of Additional Information.

WHAT IS THE FUND'S GOAL AND ITS PRIMARY POLICIES? The Target Select Fund is an
equity fund that seeks to increase the value of your investment over the long
term by using the combined talents and favorite stock picking ideas of four
highly regarded investment advisers.

WHAT ARE THE RISKS INVOLVED WITH INVESTING IN THE FUND? The investment policies
of the Fund entail certain risks and considerations of which investors should be
aware. The Fund invests in securities that fluctuate in value, and investors
should expect the Fund's net asset value per share to fluctuate in value. The
value of equity securities may be affected by the financial markets, as well as
by developments impacting specific issuers. The Fund may enter into futures and
options transactions, although it has no intention to do so in the foreseeable
future. The Fund also may purchase securities of foreign issuers. Investments in
these securities involve certain other risks. The Fund is non-diversified, and
may therefore be invested in equity securities of a limited number of issuers.

For more information about the Fund, see "Investment Objective," "Investment
Policies," "Risk Factors," and "Description of Permitted Investments and Risk
Factors."

WHO IS THE ADVISER? Turner Investment Partners, Inc. (the "Adviser"), serves as
the investment adviser to the Fund. As Adviser, Turner oversees the Fund's
Sub-Advisers, and also provides investment advisory services for a portion of
the assets of the Fund. See "Expense Summary" and "The Adviser."

WHO ARE THE SUB-ADVISERS? Clover Capital Management, Inc. ("Clover Capital"),
Penn Capital Management Company, Inc. ("Penn Capital"), and Chartwell Investment
Partners ("Chartwell") (each a "Sub-Adviser" and collectively, the
"Sub-Advisers") serve as the investment sub-advisers to the Fund and provide
investment advisory services for a portion of the assets of the Fund. See
"Expense Summary" and "The Sub-Advisers".

WHO IS THE ADMINISTRATOR? SEI Fund Resources (the "Administrator") serves as the
administrator and shareholder servicing agent for the Fund. See "Expense
Summary" and "The Administrator."

WHO IS THE DISTRIBUTOR? SEI Investments Distribution Co. (the "Distributor")
serves as the distributor of the Fund's shares. See "The Distributor."

-3-

<PAGE>

WHO IS THE TRANSFER AGENT? DST Systems, Inc., serves as the transfer agent and
dividend disbursing agent for the Trust. See "The Transfer Agent."

IS THERE A SALES LOAD? No, shares of the Fund are offered on a no-load basis.

IS THERE A MINIMUM INVESTMENT? The Fund requires a minimum initial investment of
$2,500 ($2,000 for IRAs), which the Distributor may waive at its discretion.

HOW DO I PURCHASE AND REDEEM SHARES? Purchases and redemptions may be made
through the Transfer Agent on each day that the New York Stock Exchange is open
for business (a "Business Day"). A purchase order will be effective as of the
Business Day received by the Transfer Agent if the Transfer Agent (or its
authorized agent) receives the order and payment, by check or in readily
available funds, prior to 4:00 p.m., Eastern time. Redemption orders received by
the Transfer Agent prior to 4:00 p.m., Eastern time, on any Business Day will be
effective that day. The purchase and redemption price for shares is the net
asset value per share determined as of the end of the day the order is
effective. See "Purchase and Redemption of Shares."

HOW ARE DISTRIBUTIONS PAID? The Fund distributes substantially all of its net
investment income (exclusive of capital gains) in the form of quarterly
dividends. Any capital gain is distributed at least annually. Distributions are
paid in additional shares unless the shareholder elects to take the payment in
cash. See "Dividends and Distributions."

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<PAGE>

EXPENSE SUMMARY
Target Select
SHAREHOLDER TRANSACTION EXPENSES Equity Fund
- --------------------------------------------------------------------------------
Sales Load Imposed on Purchases........................................None
Sales Load Imposed on Reinvested Dividends.............................None
Deferred Sales Load....................................................None
Redemption Fees (1)....................................................None
Exchange Fees..........................................................None
- --------------------------------------------------------------------------------
(1) A wire redemption charge, currently $10.00, is deducted from the amount of
a Federal Reserve wire redemption payment made at the request of a
shareholder.

ANNUAL OPERATING EXPENSES (as a percentage of average net assets)
- --------------------------------------------------------------------------------

- --------------------------------------------------------------------------------
Advisory Fees 1.05%
12b-1 Fees None
Other Expenses(1) .25%
-------------------------------------------------------------------------------
Total Operating Expenses (after fee waivers)(2) 1.30%
- ---------------------------------------------------------------- ---------------

(1) The Adviser has, on a voluntary basis, agreed to reimburse certain Fund
expenses in order to limit total operating expenses of the Fund to an
annual rate of not more than 1.30%, of average daily net assets. The
Adviser reserves the right, in its sole discretion, to terminate its
reimbursement arrangement at any time. See "The Adviser."

(2) Absent reimbursements by the Adviser, Total Operating Expenses for the
Fund, based on current expectations and assumptions are estimated to be
1.67%

EXAMPLE
- --------------------------------------------------------------------------------
Your would pay the following expenses on a $1,000 investment in the Fund
assuming (1) a 5% annual return and (2) redemption at the end of each time
period.

1 YEAR 3 YEARS
------ -------
Target Select Equity Fund $13 $40

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

THE EXAMPLE IS BASED UPON TOTAL OPERATING EXPENSES OF THE FUND AFTER
REIMBURSEMENTS, IF ANY, AS SHOWN IN THE EXPENSE TABLE. THE EXAMPLE SHOULD NOT BE
CONSIDERED A REPRESENTATION OF PAST OR FUTURE EXPENSES. ACTUAL EXPENSES MAY BE
GREATER OR LESS THAN THOSE SHOWN. The purpose of the expense table and example
is to assist the investor in understanding the various costs and expenses that
may be directly or indirectly borne by shareholders of the Fund. Additional
information may be found under "The Adviser" and "The Administrator."

-5-

<PAGE>

THE TRUST AND THE FUND

TIP Funds (the "Trust") offers shares in thirteen separately-managed mutual
funds, each of which is a separate series of the Trust. Each share of each
mutual fund represents an undivided, proportionate interest in that mutual fund.
This Prospectus offers shares of the Trust's TIP Target Select Equity Fund (the
"Target Select Fund" or the "Fund").

INVESTMENT OBJECTIVE

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 the Fund will achieve its investment objective.

INVESTMENT POLICIES

TARGET SELECT EQUITY FUND

The Adviser and Sub-Advisers of the Fund will each invest in a maximum of 20
equity securities (hence the Target Select Equity Fund designation) 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 by owning too many securities, so that the positive contributions of
winning investments will prove substantial.

In the process, the Fund provides two benefits:

* One, focused security selection. By bringing together each manager's
favorite investment ideas, the fund's overall portfolio will contain a
total of 40-80 stocks.

* And two, differing investment styles. The managers will apply their
own unique stock-picking styles. Their differing styles may help to
smooth the fund's overall return. Ideally, when one style is out of
favor, the other styles will offer a counterbalancing influence.

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' 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.

-6-

<PAGE>

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, American Depository Receipts
("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 Standard & Poor's
Corporation ("S&P"), and/or Baa by Moody's Investor Service, Inc. ("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.

For a further description of these types of instruments see "Description of
Permitted Investments and Risk Factors" in the Statement of Additional
Information.

RISK FACTORS

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 the Fund invests will cause the net
asset value of the Fund to fluctuate. An investment in the Fund may be more
suitable for long-term investors who can bear the risk of short-term principal
fluctuations.

-7-

<PAGE>

HIGH YIELD SECURITIES -- The high yield market consists primarily of fixed
income securities that are not rated or that are rated below investment grade
(I.E., Ba1 or lower rating by Moody's and/or BB+ or lower by S&P), including
securities of issuers subject to proceedings under the Federal Bankruptcy Code.
High yield securities include, but are not limited to, bonds and preferred
stock, interests in term loans and in revolving credit facilities (or
combinations thereof), convertible securities, units of bonds and warrants or
stock, and other securities and financial instruments, including those on which
the issuer is unable to pay stated dividends or interest payments on a current
basis. Investments in high yield securities involve market risks, credit risks
and call risks. High yield securities are generally medium term bonds and are
more sensitive than short-term and less sensitive than long-term securities to
general interest rate fluctuations. Credit risks relate to the continuing
ability of the issuer of a security to pay the stated interest or dividends and
ultimately to repay principal upon maturity. Discontinuation of such payments
could substantially adversely affect the market price of the security. Call
risks arise from early call features that many high-yield securities contain. In
general, the market for such securities is relatively inefficient due to its
complexity and the limited availability of information on such securities.

NON-DIVERSIFICATION -- The Fund is a non-diversified company, as defined in the
Investment Company Act of 1940, as amended (the "1940 Act"), which means that a
relatively high percentage of assets of the Fund may be invested in the
obligations of a limited number of issuers. Although the Adviser and the
Sub-Advisers do not intend to invest more than 5% of the 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 the Fund may be more
susceptible to any single economic, political or regulatory occurrence than the
shares of a diversified investment company would be. The Fund intends 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 the 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.

PORTFOLIO TURNOVER -- The Fund's annual portfolio turnover rate is expected to
exceed 100%, but is not expected to exceed 200%. An annual portfolio turnover
rate in excess of 100% may result from the securities selection processes
employed by the Adviser and the Sub-Advisers. Portfolio turnover rates in excess
of 100% may result in higher transaction costs, including increased brokerage
commissions, and higher levels of taxable capital gain.

INVESTMENT LIMITATIONS

The investment objective of the Fund and certain of the investment limitations
set forth here and in the Statement of Additional Information are fundamental
policies of the Fund. Fundamental policies cannot be changed with respect to the
Fund without the consent of the holders of a majority of the Fund's outstanding
shares.

1. The Fund may not (i) purchase securities of any issuer (except securities
issued or guaranteed by the United States Government, its agencies or
instrumentalities and repurchase agreements

-8-

<PAGE>

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 50% of the Fund's total assets.

2. The Fund may not 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. The Fund may not 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.
The Fund will not purchase securities while its borrowings exceed 5% of its
total assets.

The foregoing percentages will apply at the time of the purchase of a security.

SPECIAL CONSIDERATIONS REGARDING THE MULTI-ADVISER APPROACH

Turner Investment Partners, Inc. (the "Adviser"), the Adviser of the Fund,
oversees the portfolio management services provided to the Fund by each of its
three Sub-Advisers, and acts as investment adviser to a portion of the assets of
the Fund. Subject to the review of TIP Funds' Board of Trustees, the Adviser
monitors each Sub-Adviser to assure that the Sub-Adviser is managing its segment
of the Fund consistently with the Fund's investment objective and restrictions
and applicable laws and guidelines, including, but not limited to, compliance
with the diversification requirements set forth in Subchapter M of the Code. The
Adviser also provides the Fund with certain administrative services, including
maintenance of certain Fund records and assistance in the preparation of the
Fund's registration statement under federal and state laws. Because each
Sub-Adviser will be managing its segment of the Fund independently from the
other Sub-Advisers, the same security may be held in two different segments of
the Fund, or may be acquired for one segment of the Fund at a time when the
Sub-Adviser of another segment deems it appropriate to dispose of the security
from that other segment. Similarly, under some market conditions, the Adviser or
one or more of the Sub-Advisers may believe that temporary, defensive
investments in short-term instruments or cash are appropriate when the Adviser
or another Sub-Adviser believes continued exposure to the equity markets is
appropriate for their segments of the Fund. Because the Adviser and each
Sub-Adviser directs the trading for its own segment of the Fund, and does not
aggregate its transactions with those of the Adviser or the other Sub-Advisers,
the Fund may incur higher brokerage costs than would be the case if a single
Adviser were managing the entire Fund.

On a daily basis, capital activity will be allocated equally by the Adviser
among the segments of the Fund. However, the Adviser may, subject to review by
TIP Funds' Board of Trustees, allocate new

-9-

<PAGE>

investment capital differently among the Sub-Advisers. This action may be
necessary, if, for example, the Adviser or a Sub-Adviser determines that it
desires no additional investment capital. Also, because each segment of the
portfolio will perform differently from the other segments depending upon the
investments it holds and changing market conditions, one segment may be larger
or smaller at various times than the other segments. Although it reserves the
right to do so, subject to the review of the TIP Funds' Board of Trustees, the
Adviser does not intend to reallocate the Fund's assets among the segments to
reduce these differences in size.

MANAGER OF MANAGERS OPTION

The Fund may, in the future, seek to achieve its investment objective by using a
"manager of managers" structure. Under a manager of managers structure, Turner
Investment Partners would act as investment adviser in much the same way as is
currently contemplated. However, as manager of managers, Turner would be
permitted, subject to direction from and oversight by the Board of Trustees, to
allocate and reallocate the Fund's assets among sub-advisers, and to recommend
that the Board of Trustees hire, terminate or replace sub-advisers without
shareholder approval. By reducing the number of shareholder meetings that may
have to be held to approve new or additional sub-advisers for the Fund, the Fund
anticipates that there will be substantial potential cost savings, as well as
the opportunity to achieve certain management efficiencies.

Before it can operate using a manager of managers structure, the Fund and Turner
will have to obtain exemptive relief from the Securities and Exchange Commission
("SEC") to permit such an arrangement. There is no assurance that such an order,
if sought, will be granted by the SEC. The initial shareholder of the Fund voted
to vest authority to implement a manager of managers structure with the
Trustees, and such a structure may be adopted without shareholder approval.
However, shareholders of the Fund will be given at least 30 days' prior written
notice of any such change, and any such change would only be made if the
Trustees determine that it would be in the best interests of the Fund and its
shareholders. In making that determination, the Trustees will consider, among
other factors, the benefits to shareholders and/or the opportunity to reduce
costs and achieve operational efficiencies.

THE ADVISER

Turner Investment Partners, Inc., is a professional investment management firm
founded in March, 1990. Robert E. Turner is the Chairman and controlling
shareholder of the Adviser. As of September 30, 1997, the Adviser had
discretionary management authority with respect to approximately $2.3 billion of
assets. The Adviser has provided investment advisory services to investment
companies since 1992. The principal business address of the Adviser is 1235
Westlakes Drive, Suite 350, Berwyn, Pennsylvania 19312.

The Adviser serves as the investment adviser for the Fund under an investment
advisory agreement (the "Advisory Agreement"). Under the Advisory Agreement, the
Adviser continuously reviews, supervises and administers the Fund's investment
program, subject to the

-10-

<PAGE>

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 Fund's Sub-Advisers, and directly manages
assets of the Fund not allocated to the Sub-Advisers.

For its services, the Adviser is entitled to a fee, which is calculated daily
and paid monthly, at an annual rate of 1.05% of the average daily net assets of
the Fund. The Adviser (not the Fund) pays each of the Sub-Advisers out of this
fee a sub-advisory fee equal to .80% of the average daily net assets of the Fund
allocated to each Sub-Adviser. The Adviser has voluntarily agreed to waive all
or a portion of its fee and to reimburse expenses of the Fund in order to limit
its total operating expenses (as a percentage of average daily net assets on an
annualized basis) to not more than 1.30%. The Adviser reserves the right, in its
sole discretion, to terminate these voluntary fee waivers and reimbursements at
any time.

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 been in
the investment business since 1982.

THE SUB-ADVISERS

The 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 manages 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 .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"), 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 the 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 September 30, 1997, the
Clover Capital had discretionary management authority with respect to
approximately $2.2 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. The

-11-

<PAGE>

principal business address of Clover Capital is 11 Tobey Village Office Park,
Pittsford, New York 14534.

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 September 30, 1997, Penn Capital had assets under management
of approximately $480 million. Penn Capital 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.

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 $1.1 billion in assets for institutional
clients.

THE ADMINISTRATOR

SEI Fund Resources (the "Administrator") provides the Trust with administrative
services, including regulatory reporting and all necessary office space,
equipment, personnel, and facilities.

For these administrative services, the Administrator is entitled to a fee from
the Fund, which is calculated daily and paid monthly, at an annual rate of .12%
of the Fund's average daily net assets up to $75 million, .10% on the next $75
million of such assets, .09% on the next $150 million of such assets, .08% of
the next $300 million of such assets, and .075% of such assets in excess of $600
million. The Fund is subject to a minimum annual administration fee of $75,000.

The Administrator also serves as shareholder servicing agent for the Trust under
a shareholder servicing agreement with the Trust.

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<PAGE>

THE TRANSFER AGENT

DST Systems, Inc., 1004 Baltimore Avenue, Kansas City, Missouri 64105 (the
"Transfer Agent"), serves as the transfer agent and dividend disbursing agent
for the Trust under a transfer agency agreement with the Trust.

THE DISTRIBUTOR

PORTFOLIO TRANSACTIONS

The Adviser and each Sub-Adviser will select brokers on the basis of the
research, statistical and pricing services they provide to the Fund. A
commission paid to such brokers may be higher than that which another qualified
broker would have charged for effecting the same transaction, provided that such
commissions are in compliance with the Securities Exchange Act of 1934, as
amended, and that the Adviser determines in good faith that the commission is
reasonable in terms of either the transaction or the overall responsibility of
the Adviser to the Fund and the Adviser's other clients.

Since shares of the Fund are not marketed through intermediary broker-dealers,
the Fund does not have a practice of allocating brokerage or effecting principal
transactions with broker-dealers on the basis of sales of shares which may be
made through such firms. However, the Adviser and each Sub-Adviser may place
orders for the Fund with qualified broker-dealers who refer clients to the Fund.

Some securities considered for investment by the Fund may also be appropriate
for other accounts and/or clients served by the Adviser or any Sub-Adviser. If
the purchase or sale of securities consistent with the investment policies of
the Fund and another of the Adviser's or Sub-Adviser's accounts and/or clients
are considered at or about the same time, transactions in such securities will
be allocated among the Fund and the other accounts and/or clients in a manner
deemed equitable by the Adviser or the Sub-Adviser.

PURCHASE AND REDEMPTION OF SHARES

Purchases and redemptions may be made through the Transfer Agent (or its
authorized agent) on each day that the New York Stock Exchange is open for
business (a "Business Day"). Investors may purchase and redeem shares of the
Fund directly through the Transfer Agent at: TIP Funds, P.O. Box 419805, Kansas
City, Missouri 64141-6805, by mail or wire transfer. All shareholders may place
orders by telephone; when market conditions are extremely busy, it is possible
that investors may experience difficulties placing orders by telephone and may
wish to place orders by mail. Purchases

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<PAGE>

and redemptions of shares of the Fund may be made on any Business Day. Certain
brokers assist their clients in the purchase or redemption of shares and charge
a fee for this service in addition to the Fund's public offering price.

The minimum initial investment in the Fund is $2,500 ($2,000 for IRAs), and
subsequent purchases must be at least $500. The Distributor may waive these
minimums at its discretion. No minimum applies to subsequent purchases effected
by dividend reinvestment.

MINIMUM ACCOUNT SIZE - Due to the relatively high cost of maintaining smaller
accounts, the Fund reserves the right to redeem shares in any account if, as the
result of redemptions, the value of that account drops below $2,500. You will be
allowed at least 60 days, after notice by the Fund, to make an additional
investment to bring your account value up to at least $2,500 before the
redemption is processed.

PURCHASES BY MAIL

An account may be opened by mailing a check or other negotiable bank draft
(payable to the Fund) for $2,500 ($2,000 or more for IRAs) or more, together
with a completed Account Application to: TIP Funds, P.O. Box 419805, Kansas
City, Missouri 64141-6805. Third-Party checks, credit cards, credit card checks
and cash will not be accepted. When purchases are made by check (including
certified or cashier's checks), redemption proceeds will not be forwarded until
the check providing for the investment being redeemed has cleared (which may
take up to 15 days). Subsequent investments may also be mailed directly to the
Transfer Agent.

PURCHASES BY WIRE TRANSFER

Shareholders having an account with a commercial bank that is a member of the
Federal Reserve System may purchase shares of the Fund by requesting their bank
to transmit funds by wire to: United Missouri Bank of Kansas, N.A.; ABA
#10-10-00695; for Account Number 98-7060-116-8; Further Credit: [TIP Funds
Target Select Equity Fund]. The shareholder's name and account number must be
specified in the wire.

INITIAL PURCHASES: Before making an initial investment by wire, an investor must
first telephone 1-800-224-6312 to be assigned an account number. The investor's
name, account number, taxpayer identification number or Social Security number,
and address must be specified in the wire. In addition, an Account Application
should be promptly forwarded to: TIP Funds, P.O. Box 419805, Kansas City,
Missouri 64141-6805.

SUBSEQUENT PURCHASES: Additional investments may be made at any time through the
wire procedures described above, which must include a shareholder's name and
account number. The investor's bank may impose a fee for investments by wire.
Subsequent purchases may also be made by wire through the Automated Clearing
House ("ACH").

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<PAGE>

GENERAL INFORMATION REGARDING PURCHASES

A purchase request will be effective as of the day received if the Transfer
Agent (or its authorized agent) receives the purchase request in good order and
payment before 4:00 p.m., Eastern time. A purchase request is in good order if
it is complete and accompanied by the appropriate documentation, including an
Account Application and any additional documentation required. Purchase requests
in good order received after 4:00 p.m., Eastern time, will be effective the next
Business Day. Payment may be made by check or readily available funds. The
purchase price of shares of the Fund is the Fund's net asset value per share
next determined after a purchase order is effective. Purchases will be made in
full and fractional shares of the Fund calculated to three decimal places. The
Trust will not issue certificates representing shares of the Fund.

If a check received for the purchase of shares does not clear, the purchase will
be canceled, and the investor could be liable for any losses or fees incurred.
The Trust reserves the right to reject a purchase order when the Trust
determines that it is not in the best interest of the Trust or its shareholders
to accept such order.

Shares of the Fund may be purchased in exchange for securities to be included in
the Fund, subject to the Adviser's or Administrator's determination that these
securities are acceptable. Securities accepted in such an exchange will be
valued at their market value. All accrued interest and subscription or other
rights that are reflected in the market price of accepted securities at the time
of valuation become the property of the Fund and must be delivered by the
shareholder to the Fund upon receipt from the issuer.

The Adviser or Administrator will not accept securities in exchange for Fund
shares unless (1) such securities are appropriate for the Fund at the time of
the exchange; (2) the shareholder represents and agrees that all securities
offered to the Fund are not subject to any restrictions upon their sale by the
Fund under the Securities Act of 1933, as amended, or otherwise; and (3) prices
are available from an independent pricing service approved by the Trust's Board
of Trustees.

SYSTEMATIC INVESTMENT PLAN - A shareholder may also arrange for periodic
additional investments in the Fund through automatic deductions by Automated
Clearing House ("ACH") transactions from a checking or savings account by
completing the Systematic Investment Plan form. This Systematic Investment Plan
is subject to account minimum initial purchase amounts and a minimum
pre-authorized investment amount of $100 per month. An application form for the
Systematic Investment Plan may be obtained by calling 1-800-224-6312.

EXCHANGES

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<PAGE>

be effected. If the Transfer Agent (or its authorized agent) receives exchange
instructions in writing or by telephone (an "Exchange Request") in good order by
4:00 p.m., Eastern time, on any Business Day, the exchange will be effected that
day. The liability of the Fund or the Transfer Agent for fraudulent or
unauthorized telephone instructions may be limited as described below. The Trust
reserves the right to modify or terminate this exchange offer on 60 days'
notice.

REDEMPTIONS

Redemption requests in good order received by the Transfer Agent (or its
authorized agent) prior to 4:00 p.m., Eastern time on any Business Day will be
effective that day. To redeem shares of the Fund, shareholders must place their
redemption orders with the Transfer Agent (or its authorized agent) prior to
4:00 p.m., Eastern time, on any Business Day. The redemption price of shares of
the Fund is the net asset value per share of the Fund next determined after the
redemption order is effective. Payment of redemption proceeds will be made as
promptly as possible and, in any event, within seven days after the redemption
order is received, provided, however, that redemption proceeds for shares
purchased by check (including certified or cashier's checks) will be forwarded
only upon collection of payment for such shares; collection of payment may take
up to 15 days. Shareholders may not close their accounts by telephone.
Redemption requests from IRA accounts must be made in writing.

Shareholders may receive redemption payments in the form of a check or by
Federal Reserve or ACH wire transfer. There is no charge for having a check for
redemption proceeds mailed. The Custodian will deduct a wire charge, currently
$10.00, from the amount of a Federal Reserve wire redemption payment made at the
request of a shareholder. Shareholders cannot redeem shares of a Fund by Federal
Reserve wire on Federal holidays on which wire transfers are restricted. The
Fund does not charge for ACH wire transactions; however, such transactions will
not be posted to a shareholder's bank account until the second Business Day
following the release of redemption proceeds.

Neither the Trust nor the Transfer Agent will be responsible for the
authenticity of instructions received by telephone if they reasonably believe
those instructions to be genuine. The Trust and the Transfer Agent will each
employ reasonable procedures to confirm that telephone instructions are genuine.
Such procedures may include the taping of telephone conversations.

The right of redemption may be suspended or the date of payment of redemption
proceeds postponed during certain periods as set forth more fully in the
Statement of Additional Information.

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<PAGE>

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. The Trust does not accept guarantees from notaries public
or from organizations that do not provide reimbursement in the case of fraud.

SYSTEMATIC WITHDRAWAL PLAN - The Fund offers a Systematic Withdrawal Plan
("SWP") for shareholders who wish to receive regular distributions from their
account. Upon commencement of the SWP, the account must have a current value of
$2,500 or more. Shareholders may elect to receive automatic payments via ACH
wire transfers of $100 or more on a monthly, quarterly, semi-annual or annual
basis. An application form for SWP may be obtained by calling 1-800-224-6312.

Shareholders should realize that if withdrawals exceed income dividends, their
invested principal in the account will be depleted. Thus, depending on the
frequency and amounts of the withdrawal payments and/or any fluctuations in the
net asset value per share, their original investment could be exhausted
entirely. To participate in the SWP, shareholders must have their dividends
automatically reinvested. Shareholders may change or cancel the SWP at any time,
upon written notice to the Transfer Agent.

VALUATION OF SHARES

The net asset value per share of the Fund is determined by dividing the total
market value of the Fund's investments and other assets, less any liabilities,
by the total number of outstanding shares of the Fund. Net asset value per share
is determined daily as of the close of business of the New York Stock Exchange
(currently, 4:00 p.m., Eastern time) on any Business Day.

PERFORMANCE

From time to time, the Fund may advertise its yield and total return. These
figures will be based on historical earnings and are not intended to indicate
future performance. No representation can be made regarding actual future yields
or returns. The yield of the 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 same amount of income generated by the
investment during that period is generated in each 30-day period over one year
and is shown as a percentage of the investment.

The total return of the Fund refers to the average compounded rate of return on
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 and assuming the reinvestment of all dividend and capital gain
distributions.

The Fund may periodically compare its performance to that of other mutual funds
tracked by mutual fund rating services (such as Lipper Analytical Services,
Inc.), financial and business publications

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<PAGE>

and periodicals, broad groups of comparable mutual funds, unmanaged indices,
which may assume investment of dividends but generally do not reflect deductions
for administrative and management costs, or other investment alternatives. The
Fund may quote Morningstar, Inc., a service that ranks mutual funds on the basis
of risk-adjusted performance, and Ibbotson Associates of Chicago, Illinois,
which provides historical returns of the capital markets in the U.S. The Fund
may also quote the Frank Russell Company or Wilshire Associates, consulting
firms that compile financial characteristics of common stocks and fixed income
securities, regarding non-performance-related attributes of the Fund's
portfolio. The Fund may use long term performance of these capital markets to
demonstrate general long-term risk versus reward scenarios and could include the
value of a hypothetical investment in any of the capital market. The Fund may
also quote financial and business publications and periodicals as they relate to
fund management, investment philosophy, and investment techniques.

The Fund may quote various measures of volatility and benchmark correlation in
advertising and may compare these measures to those of other funds. Measures of
volatility attempt to compare historical share price fluctuations or total
returns to a benchmark while measures of benchmark correlation indicate how
valid a comparative benchmark might be. Measures of volatility and correlation
are calculated using averages of historical data and cannot be calculated
precisely.

TAXES

The following summary of federal income tax consequences is based on current tax
laws and regulations, which may be changed by legislative, judicial or
administrative action. No attempt has been made to present a detailed
explanation of the federal income tax treatment of the Fund or its shareholders.
Shareholders are urged to consult their tax advisors regarding specific
questions as to federal, state and local income taxes. Further information
concerning taxes is set forth in the Statement of Additional Information.

TAX STATUS OF THE FUND:

The Fund is treated as a separate entity for federal income tax purposes and is
not combined with the Trust's other portfolios. The Fund intends to qualify or
to continue to qualify for the special tax treatment afforded regulated
investment companies as defined under Subchapter M of the Internal Revenue Code
of 1986, as amended. So long as the Fund qualifies for this special tax
treatment, it will be relieved of federal income tax on that part of its net
investment income and net capital gain (the excess of net long-term capital gain
over net short-term capital loss) which it distributes to shareholders.

TAX STATUS OF DISTRIBUTIONS:

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<PAGE>

net investment income will qualify for the dividends-received deduction for
corporate shareholders only to the extent such distributions are derived from
dividends paid by domestic corporations; however, such distributions which do
qualify for the dividends-received deduction may be subject to the corporate
alternative minimum tax. Any net capital gains will be distributed annually and
will be taxed to shareholders as gain from the sale or exchange of a capital
asset held for more than one year, regardless of how long the shareholder has
held shares. The Fund will make annual reports to shareholders of the federal
income tax status of all distributions, including the amount of dividends
eligible for the dividends-received deduction.

Certain securities purchased by the Fund are sold with original issue discount
and thus do not make periodic cash interest payments. The Fund will be required
to include as part of its current income the accrued discount on such
obligations even though the Fund has not received any interest payments on such
obligations during that period. Because the Fund distributes all of its net
investment income to its shareholders, the Fund may have to sell portfolio
securities to distribute such accrued income, which may occur at a time when the
Adviser would not have chosen to sell such securities and which may result in a
taxable gain or loss.

Dividends declared by the Fund in October, November or December of any year and
payable to shareholders of record on a date in one of those months will be
deemed to have been paid by the Fund and received by the shareholders on
December 31 in the year declared, if paid by the Fund at any time during the
following January. The Fund intends to make sufficient distributions prior to
the end of each calendar year to avoid liability for the federal excise tax
applicable to regulated investment companies.

Income received on direct U.S. obligations is exempt from income tax at the
state level when received directly by the Fund and may be exempt, depending on
the state, when received by a shareholder from the Fund provided certain
state-specific conditions are satisfied. The Fund will inform shareholders
annually of the percentage of income and distributions derived from direct U.S.
obligations. Shareholders should consult their tax advisers to determine whether
any portion of the income dividends received from the Fund is considered tax
exempt in their particular state. Income derived by the Fund from securities of
foreign issuers may be subject to foreign withholding taxes. The Fund will not
be able to elect to treat shareholders as having paid their proportionate share
of such foreign taxes.

Each sale, exchange or redemption of the Fund's shares is a taxable event to the
shareholder.

GENERAL INFORMATION

THE TRUST

The Trust, an open-end management investment company, was organized under
Massachusetts law as a business trust under a Declaration of Trust dated January
26, 1996, and amended on February 21, 1997. The Declaration of Trust permits the
Trust to offer separate series ("Funds") of shares. All

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<PAGE>

consideration received by the Trust for shares of any Fund and all assets of
such Fund belong to that Fund and would be subject to liabilities related
thereto. The Trust reserves the right to create and issue shares of additional
Funds.

The Trust pays its operating expenses, including fees of its service providers,
audit and legal expenses, expenses of preparing prospectuses, proxy solicitation
material and reports to shareholders, costs of custodial services and
registering the shares under federal and state securities laws, pricing and
insurance expenses, and pays additional expenses including litigation and other
extraordinary expenses, brokerage costs, interest charges, taxes and
organization expenses.

TRUSTEES 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.

VOTING RIGHTS

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. Shareholders of each Fund will vote separately on matters pertaining
solely to that Fund. 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.

REPORTING

The Trust issues unaudited financial information semiannually and audited
financial statements annually for the Fund. The Trust also furnishes periodic
reports and, as necessary, proxy statements to shareholders of record.

SHAREHOLDER INQUIRIES

Shareholder inquiries should be directed to TIP Funds, P.O. Box 419805, Kansas
City, Missouri 64141-6805, or to 1-800-224-6312. Purchases, exchanges and
redemptions of shares should be made through the Transfer Agent by calling
1-800-224-6312.

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<PAGE>

DIVIDENDS AND DISTRIBUTIONS

Substantially all of the net investment income (excluding capital gain) of the
Fund is distributed in the form of dividends to shareholders of record on the
second to last Business Day of each quarter. Capital gains, if any, are
distributed to shareholders at least annually.

Shareholders automatically receive all income dividends and capital gain
distributions in additional shares, unless the shareholder has elected to take
such payment in cash. Shareholders may change their election by providing
written notice to the Transfer Agent at least 15 days prior to the distribution.
Shareholders may receive payments for cash distributions in the form of a check
or by Federal Reserve or ACH wire transfer.

Dividends and other distributions of the Fund are paid on a per share basis. The
value of each share will be reduced by the amount of the payment. If shares are
purchased shortly before the record date for a distribution of ordinary income
or capital gains, a shareholder will pay the full price for the shares and
receive some portion of the price back as a taxable distribution or dividend.

COUNSEL AND INDEPENDENT PUBLIC ACCOUNTANTS

Morgan, Lewis & Bockius LLP serves as counsel to the Trust. Ernst & Young LLP
serves as the independent public accountants for the Trust.

CUSTODIAN

CoreStates Bank, N.A., 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.

DESCRIPTION OF PERMITTED INVESTMENTS AND RISK FACTORS

The following is a description of permitted investments for the Fund:

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.

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<PAGE>

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.

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. If
a security is downgraded, the Adviser will review the situation and take
appropriate action.

FUTURES AND OPTIONS ON FUTURES -- 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. The 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.

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 options on futures.

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 7 days in length.

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<PAGE>

MONEY MARKET SECURITIES -- 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 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 that issue high-quality commercial paper; and (v) repurchase
agreements involving any of the foregoing obligations entered into with
highly-rated banks and broker-dealers.

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, the 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 the 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.

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 the 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.

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 Permitted Investments. See also "Taxes."

REITS -- REITs are trusts that invest primarily in commercial real estate or
real estate-related loans. The value of interests in REITs may be affected by
the value of the property owned or the quality of the mortgages held by the
trust.

REPURCHASE AGREEMENTS -- Repurchase agreements are agreements by which the Fund
obtains a security and simultaneously commits to return the security to the
seller at an agreed upon price (including principal and interest) on an agreed
upon date within a number of days from the date of purchase. Repurchase
agreements are considered loans under the 1940 Act.

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<PAGE>

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 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, the Fund may lend
its securities pursuant to agreements that require 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. The 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 -- Investments in the securities of foreign
issuers may subject the Fund 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 the 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 Fund may incur costs in connection with conversions between various
currencies.

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.

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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
the Fund before settlement.

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<PAGE>

Trust:
TIP FUNDS

Fund:
TIP TARGET SELECT EQUITY FUND

Adviser:
TURNER INVESTMENT PARTNERS, INC.

Sub-Advisers:
CLOVER CAPITAL MANAGEMENT, INC.
PENN CAPITAL MANAGEMENT COMPANY, INC.
CHARTWELL INVESTMENT PARTNERS

Distributor:
SEI INVESTMENTS DISTRIBUTION CO.

Administrator:
SEI FUND RESOURCES

Legal Counsel:
MORGAN, LEWIS & BOCKIUS LLP

Independent Auditors:
ERNST & YOUNG LLP

January 1, 1998

PENN CAPITAL FUNDS

PORTFOLIOS OF THE TIP FUNDS

Investment Adviser:
PENN CAPITAL MANAGEMENT COMPANY, INC.

PENN CAPITAL SELECT FINANCIAL SERVICES FUND

This Prospectus concisely sets forth the information about the Trust and the
Fund that a prospective investor should know before investing. Investors are
advised to read this Prospectus and retain it for future reference. A Statement
of Additional Information dated January 31, 1998, has been filed with the
Securities and Exchange Commission, and is available without charge by calling
1-800-224-6312. The Statement of Additional Information is incorporated into
this Prospectus by reference.

JANUARY 31, 1998,
AS AMENDED, JULY 31, 1998

<PAGE>

TABLE OF CONTENTS

Summary ............................................................... 3
Expense Summary......................................................... 5
The Trust and the Fund.................................................. 6
Investment Objective.................................................... 6
Investment Policies..................................................... 6
Risk Factors............................................................ 8
Investment Limitations.................................................. 10
The Adviser............................................................. 11
The Administrator....................................................... 12
The Transfer Agent...................................................... 12
The Distributor......................................................... 12
Portfolio Transactions.................................................. 12
Purchase and Redemption of Shares....................................... 13
Performance............................................................. 17
Taxes ............................................................... 18
General Information..................................................... 19
Description of Permitted Investments and Risk Factors................... 21

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SUMMARY

The following provides basic information about the Penn Capital Select Financial
Services Fund (the "Select Financial Services Fund" or the "Fund"). The Fund is
one of the thirteen mutual funds comprising TIP Funds (the "Trust"). This
summary is qualified in its entirety by reference to the more detailed
information provided elsewhere in this Prospectus and in the Statement of
Additional Information.

WHAT IS THE FUND'S GOAL AND ITS PRIMARY POLICIES?

PENN CAPITAL SELECT FINANCIAL SERVICES FUND

The Select Financial Services Fund seeks to generate long term capital
appreciation. The Fund invests primarily in equity securities of companies
principally engaged in the banking industry and the financial services sector,
and will concentrate its investments in the banking industry. The banking
industry includes commercial and industrial banks, savings and loan associations
and their holding companies. The financial services sector includes consumer and
industrial finance companies, diversified financial service companies,
investment banking, securities brokerage and investment advisory companies,
leasing companies and insurance companies and other financial services
companies.

WHAT ARE THE RISKS INVOLVED WITH INVESTING IN THE FUND? The investment policies
of the Fund entail certain risks and considerations of which investors should be
aware. The Select Financial Services Fund will be exposed to the risks of
investing in equity securities, including equity securities of small cap issuers
(i.e., issuers with market capitalizations of less than $1 billion). Investments
in smaller companies involve greater risks than investments in larger, more
established companies. The Select Financial Services Fund will focus its
investments in the U.S. banking industry and the financial services sector, and
will be concentrated in the banking industry (I.E., at least 25% (and up to
100%) of its total assets will be invested in the banking industry). Although
diversified throughout the industry, to the extent that it invests a significant
portion of its assets in the banking industry and the financial services sector,
it is subject to the risks associated with investing in banking and financial
services issuers. The Fund may also, to a limited extent, borrow money and
utilize leveraging techniques. The Fund may invest in securities that fluctuate
in value, and investors should expect the Fund's net asset value per share to
fluctuate in value. The value of equity securities may be affected by the
financial markets as well as by developments impacting specific issuers. The
values of fixed income securities tend to vary inversely with interest rates,
and may be affected by market and economic factors, as well as by developments
impacting specific issuers. The Fund's high yield securities, if any, may be
volatile and are subject to greater amounts of credit risk than investment grade
issuers.

For more information about the Fund, see "Investment Objective," "Investment
Policies," "Risk Factors," and "Description of Permitted Investments and Risk
Factors."

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<PAGE>

WHO IS THE ADVISER? Penn Capital Management Company, Inc. (the "Adviser"),
serves as the investment adviser to the Fund. See "Expense Summary" and "The
Adviser."

WHO IS THE ADMINISTRATOR? SEI Fund Resources (the "Administrator") serves as the
administrator and shareholder servicing agent for the Fund. See "Expense
Summary" and "The Administrator."

WHO IS THE DISTRIBUTOR? SEI Investments Distribution Co. (the "Distributor")
serves as the distributor of the Fund's shares. See "The Distributor."

WHO IS THE TRANSFER AGENT? DST Systems, Inc., serves as the transfer agent and
dividend disbursing agent for the Trust. See "The Transfer Agent."

IS THERE A SALES LOAD? No, shares of the Fund are offered on a no-load basis.

IS THERE A MINIMUM INVESTMENT? The Fund requires a minimum initial investment of
$2,500 ($2,000 for IRAs), which the Distributor may waive at its discretion.

HOW DO I PURCHASE AND REDEEM SHARES? Purchases and redemptions may be made
through the Transfer Agent on each day that the New York Stock Exchange is open
for business ("Business Day"). A purchase order will be effective as of the
Business Day received by the Transfer Agent if the Transfer Agent (or its
authorized agent) receives the order and payment, by check or in readily
available funds, prior to the calculation of net asset value. Redemption orders
received by the Transfer Agent prior to the calculation of net asset value on
any Business Day will be effective that day. The purchase and redemption price
for shares is the net asset value per share determined as of the close of
regular trading on the New York Stock Exchange (normally, 4:00 p.m., Eastern
time) on any Business Day. See "Purchase and Redemption of Shares."

HOW ARE DISTRIBUTIONS PAID? The Fund distributes substantially all of its net
investment income (exclusive of capital gains) in the form of periodic
dividends. Any capital gain is distributed at least annually. Distributions are
paid in additional shares unless the shareholder elects to take the payment in
cash. See "Dividends and Distributions."

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EXPENSE SUMMARY

SHAREHOLDER TRANSACTION EXPENSES
- --------------------------------------------------------------------------
Sales Load Imposed on Purchases.......................................None
Sales Load Imposed on Reinvested Dividends............................None
Deferred Sales Load...................................................None
Redemption Fees (1)...................................................None
Exchange Fees.........................................................None
- --------------------------------------------------------------------------
(1) A wire redemption charge, currently $10.00, is deducted from the
amount of a Federal Reserve wire redemption payment made at the
request of a shareholder.

ANNUAL OPERATING EXPENSES (as a percentage of average net assets)

<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------
SELECT FINANCIAL
SERVICES FUND
- -------------------------------------------------------------------------------------------------------
<S> <C>
ADVISORY FEES (AFTER FEE WAIVERS)(1) .99%
12B-1 FEES NONE
OTHER EXPENSES (AFTER EXPENSE
REIMBURSEMENTS, IF APPLICABLE)(2) .41%
- -------------------------------------------------------------------------------------------------------
TOTAL OPERATING EXPENSES (AFTER FEE WAIVERS OR EXPENSE REIMBURSEMENTS) (3) 1.40%
- -------------------------------------------------------------------------------------------------------

- -------------------------------------------------------------------------------------------------------
</TABLE>

(1) The Adviser has agreed, on a voluntary basis, to waive its advisory fee
to the extent necessary to keep the "Total Operating Expenses" of the
Select Financial Services Fund during the current fiscal year from
exceeding 1.40%. Absent these fee waivers, Advisory Fees would be
1.00%. The Adviser reserves the right to terminate its waiver at any
time in its sole discretion.
(2) "Other Expenses" for the Fund are estimated for the current fiscal year.
(3) Absent fee waivers or expense reimbursements, "Total Operating
Expenses" for the Select Financial Services Fund would be 1.41%, based
on current expectations and assumptions.

EXAMPLE

<TABLE>
<S> <C> <C>
- -------------------------------------------------------------------------------------------------------
1 years 3 years
You would pay the following expenses on a $1,000 investment in the ------- -------
Fund assuming (1) a 5% annual return and (2) redemption at the end of
each time period.

Select Financial Services Fund $14 $44

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

- -------------------------------------------------------------------------------------------------------
</TABLE>

THE EXAMPLE IS BASED UPON TOTAL OPERATING EXPENSES OF THE FUND AFTER WAIVERS, AS
SHOWN IN THE EXPENSE TABLE. THE EXAMPLE SHOULD NOT BE CONSIDERED A
REPRESENTATION OF PAST OR FUTURE EXPENSES. ACTUAL EXPENSES MAY BE GREATER OR
LESS THAN THOSE SHOWN. The purpose of the expense table and example is to assist
the investor in understanding the various costs and expenses that may be
directly or indirectly borne by shareholders of the Fund. Additional information
may be found under "The Adviser" and "The Administrator."

-5-

<PAGE>

THE TRUST AND THE FUNDS

TIP Funds (the "Trust") offers shares in thirteen separately-managed mutual
funds, each of which is a separate series of the Trust. Each share of each
mutual fund represents an undivided, proportionate interest in that mutual fund.
This Prospectus offers shares of the Trust's Penn Capital Select Financial
Services Fund (the "Select Financial Services Fund" or the "Fund").

INVESTMENT OBJECTIVE

PENN CAPITAL SELECT FINANCIAL SERVICES FUND -- The Select Financial Services
Fund seeks to generate long term capital appreciation.

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

INVESTMENT POLICIES

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 the Adviser 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 American Depository Receipts ("ADRs").
The Fund may also purchase shares of other investment companies and foreign
securities, and may purchase high yield securities (otherwise known as "junk
bonds") as a means of seeking to generate current income.

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. See the Statement of Additional Information for a
discussion of these ratings.

-6-

<PAGE>

The Fund may invest in repurchase agreements, which entail a risk of loss should
the seller default on its obligation to repurchase the security which is the
subject of the transaction.

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 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.

For a further description of these types of instruments see "Description of
Permitted Investments and Risk Factors" in the Statement of Additional
Information.

-7-

<PAGE>

RISK FACTORS

Prospective investors in the Fund should consider the following factors as they
apply to the Fund's allowable investments and policies.

BANKING INDUSTRY AND FINANCIAL SERVICES SECTOR -- To the extent that the Select
Financial Services Fund invests a significant percentage of its assets in the
banking industry and the financial services sector, it is subject to risks
associated with banking and financial services companies. The companies within
the banking industry and the financial services sector are subject to extensive
regulation, rapid business changes, volatile performance dependent upon the
availability and cost of capital and prevailing interest rates, and significant
competition. General economic conditions significantly affect these companies.
Credit and other losses resulting from the financial difficulty of borrowers or
other third parties have a potentially adverse effect on companies in this
industry. Investment banking, securities brokerage and investment advisory
companies are particularly subject to government regulation and the risks
inherent in securities trading and underwriting activities. Insurance companies
are particularly subject to government regulation and rate setting, potential
antitrust and tax law changes, and industry-wide pricing and competition cycles.
Property and casualty insurance companies may also be affected by weather and
other catastrophes. Life and health insurance companies may be affected by
mortality and morbidity rates, including the effects of epidemics. Individual
insurance companies may be exposed to reserve inadequacies, problems in
investment portfolios and failures to reinsurance carriers.

EQUITY SECURITIES -- The Fund may invest in public and privately issued equity
securities, including common and preferred stocks, warrants, rights to subscribe
to common stock and convertible securities. 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 the Fund invests will cause the net asset value of
the Fund to fluctuate. An investment in the Fund may be more suitable for
long-term investors who can bear the risk of short-term principal fluctuations.

The Fund may invest to a significant degree in equity securities of smaller
institutions, including, but not limited to, those within the banking industry
and the financial services sector. Any investment in smaller or medium
capitalization companies involves greater risk than that customarily associated
with investments in larger, more established companies. This increased risk may
be due to the greater business risks of smaller size, limited markets and
financial resources, narrow product lines and lack of depth of management. The
securities of smaller companies are often traded in the over-the-counter market
and if listed on a national securities exchange may not be traded in volumes
typical for that exchange. Thus, the securities of smaller-sized companies are
likely to be less liquid, and subject to more abrupt or erratic market movements
than securities of larger, more established companies.

-8-

<PAGE>

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.

HIGH YIELD, HIGH RISK SECURITIES -- The high yield market consists primarily of
fixed income securities that are not rated or that are rated below investment
grade (i.e., Ba1 or lower rating by Moody's and/or BB+ or lower by S&P),
including securities of issuers subject to proceedings under the Federal
Bankruptcy Code. High yield securities (also known as "junk bonds") include, but
are not limited to, bonds and preferred stock, interests in term loans and in
revolving credit facilities (or combinations thereof), convertible securities,
units of bonds and warrants or stock, and other securities and financial
instruments, including those on which the issuer is unable to pay stated
dividends or interest payments on a current basis. Investments in these
securities involve market risks, credit risks and call risks. High yield
securities are generally medium term bonds and are more sensitive than
short-term and less sensitive than long-term securities to general interest rate
fluctuations. Credit risks relate to the continuing ability of the issuer of a
security to pay the stated interest or dividends and ultimately to repay
principal upon maturity. Discontinuation of such payments could substantially
adversely affect the market price of the security. Call risks arise from early
call features that many high yield securities contain. In general, the market
for such securities is relatively inefficient due to its complexity and the
limited availability of information on such securities.

SECURITIES OF FOREIGN ISSUERS -- The Fund 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 Fund 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 the Fund's assets
measured in U.S.

-9-

<PAGE>

dollars may be affected favorably or unfavorably by changes in currency rates
and in exchange control regulations, and the Fund 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.

PORTFOLIO TURNOVER -- The annual portfolio turnover rate for the Select
Financial Services Fund, under normal circumstances, is not expected to exceed
200%. 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. See "Taxes."

INVESTMENT LIMITATIONS

The investment objectives of the Fund and certain of the investment limitations
set forth here and in the Statement of Additional Information are fundamental
policies of the Fund. Fundamental policies cannot be changed with respect to the
Fund without the consent of the holders of a majority of the Fund's outstanding
shares.

1. The Fund may not: (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 the
Fund's total assets.

2. The Fund may not 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 the Select Financial Services Fund will invest at least 25% of its total
assets in the banking 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.

The foregoing percentages (except the limitation on borrowing) will apply at the
time of the purchase of a security.

-10-

<PAGE>

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 $500 million. The Adviser 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.

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 program,
subject to the supervision of, and policies established by, the Trustees of the
Trust.

For its services, the Adviser is entitled to a fee, which is calculated daily
and paid monthly, at an annual rate of 1.00% of the average daily net assets of
the Select Financial Services Fund. The Adviser has voluntarily agreed to waive
all or a portion of its fee and to reimburse expenses of the Select Financial
Services Fund in order to limit its total operating expenses (as a percentage of
average daily net assets on an annualized basis) to not more than 1.40%. The
Adviser reserves the right, in its sole discretion, to terminate these voluntary
fee waivers and reimbursements at any time.

The Fund is managed by a team consisting of certain principals of the Adviser.
The Select Financial Services Fund is managed by Richard A. Hocker. Scott D.
Schumacher, a Senior Analyst, assists Mr. Hocker in managing the Fund.

Prior to founding the Adviser, Mr. Hocker was a shareholder and Senior Portfolio
Manager of Delaware Management Co., an investment management firm which, during
Mr. Hocker's tenure, increased its assets under management from $300 million to
$21 billion. At Delaware Management Co., Mr. Hocker was instrumental in
developing and managing a variety of mutual funds, including Delchester Bond
Fund and Delaware Cash Reserve, and where he personally managed, at its height,
approximately $2 billion of assets. Additionally, Mr. Hocker was the founder,
CEO and Chairman of the Board of Covenant Bank, a community bank based in
Haddonfield, N.J., with approximately $435 million in assets. As Chairman of
Covenant Bank, Mr. Hocker was the senior negotiator for acquisitions of three
financial institutions, as well as the purchases of individual branches of
regional banks that Covenant Bank has completed since 1992. In addition, Mr.
Hocker negotiated the sale of Covenant Bank to First Union Corp., pending
settlement in the first quarter of 1998.

Scott D. Schumacher, a Senior Analyst of the Adviser, assists Mr. Hocker in
managing the Select Financial Services Fund. He has been employed by the Adviser
since 1987. Mr. Schumacher began working with the investment team in 1992. As
the Adviser's senior analyst, Mr. Schumacher is

-11-

<PAGE>

directly responsible for researching the financial services sector and
monitoring credit positions of existing accounts.

Kathleen A. News, a co-founder and principal of the Adviser, serves as the
Managing Director of the Adviser and co-portfolio manager of the Penn Capital
Strategic High Yield Bond Fund. Ms. News has over 20 years of investment
experience at both the Adviser and Delaware Management Co., including over 10
years managing high yield portfolios. While at Delaware, Ms. News served as a
portfolio manager for Delaware Cash Reserve, as well as managing fixed income
accounts for various Fortune 500 institutions.

THE ADMINISTRATOR

SEI Fund Resources (the "Administrator") provides the Trust with administrative
services, including regulatory reporting and all necessary office space,
equipment, personnel, and facilities.

For these administrative services, the Administrator is entitled to a minimum
fee from the Fund of $75,000. Once the Fund's assets reach $62.5 million, it
will be charged its asset-based fee, which is calculated daily and paid monthly,
at an annual rate of .12% of each Fund's average daily net assets up to $75
million, .10% on the next $75 million of such assets, .09% on the next $150
million of such assets, .08% of the next $300 million of such assets, and .075%
of such assets in excess of $600 million. The Administrator may, at its sole
discretion, waive all or a portion of its fees.

The Administrator also serves as shareholder servicing agent for the Trust
under a shareholder servicing agreement with the Trust.

THE TRANSFER AGENT

DST Systems, Inc., 1004 Baltimore Street, Kansas City, Missouri 64105 (the
"Transfer Agent"), serves as the transfer agent and dividend disbursing agent
for the Trust under a transfer agency agreement with the Trust.

THE DISTRIBUTOR

SEI Investments Distribution Co. (the "Distributor"), Oaks, Pennsylvania 19456,
a wholly-owned subsidiary of SEI Investments Company, acts as the Trust's
distributor pursuant to a distribution agreement (the "Distribution Agreement").
No compensation is paid to the Distributor for its distribution services.
Certain broker-dealers assist their clients in the purchase of shares from the
Distributor and charge a fee for this service in addition to the Fund's public
offering price.

PORTFOLIO TRANSACTIONS

The Fund may execute brokerage or other agency transactions through the
Distributor for which the Distributor may receive usual and customary
compensation. The Adviser obtains its research

-12-

<PAGE>

information from a number of sources, including large brokerage houses, trade
and financial journals and publications, corporate reports, rating service
manuals, and interviews with corporate executives and other industry sources.
The Adviser may select brokers on the basis of the research, statistical and
pricing services they provide to the Fund, as well as on the basis of the
Adviser's business relationship with the brokers. A commission paid to such
brokers may be higher than that which another qualified broker would have
charged for effecting the same transactions, provided that such commissions are
in compliance with the Securities Exchange Act of 1934, as amended, and that the
Adviser determines in good faith that the commission is reasonable in terms of
either the transaction or the overall responsibility of the Adviser to the Fund
and the Adviser's other clients. The Adviser may direct commission business for
the Fund to designated broker-dealers (including the Distributor) in connection
with such broker-dealers' payment of certain Fund expenses.

Since shares of the Fund are not marketed through intermediary broker-dealers,
the Fund does not have a practice of allocating brokerage or effecting principal
transactions with broker-dealers on the basis of sales of shares which may be
made through such firms. However, the Adviser may place orders for the Fund with
qualified broker-dealers who refer clients to the Fund.

Some securities considered for investment by the Fund may also be appropriate
for other accounts and/or clients served by the Adviser. If the purchase or sale
of securities consistent with the investment policies of the Fund and another of
the Adviser's accounts and/or clients are considered at or about the same time,
transactions in such securities will be allocated among the Fund and the other
accounts and/or clients in a manner deemed equitable by the Adviser.

PURCHASE AND REDEMPTION OF SHARES

Purchases and redemptions may be made through the Transfer Agent on each day
that the New York Stock Exchange is open for business ("Business Day").
Investors may purchase and redeem shares of the Fund directly through the
Transfer Agent at: TIP Funds, P.O. Box 419805, Kansas City, Missouri 64141-6805,
by mail or wire transfer. All shareholders may place orders by telephone; when
market conditions are extremely busy, it is possible that investors may
experience difficulties placing orders by telephone and may wish to place orders
by mail. Purchases and redemptions of shares of the Fund may be made on any
Business Day.

-13-

<PAGE>

Certain brokers assist their clients in the purchase or redemption of shares and
charge a fee for this service in addition to the Fund's public offering price.

PURCHASES BY MAIL

An account may be opened by mailing a check or other negotiable bank draft
(payable to the Fund) for $2,500 or more ($2,000 for IRAs), together with a
completed Account Application to: TIP Funds, P.O. Box 419805, Kansas City,
Missouri 64141-6805. Third-Party checks, credit cards, credit card checks and
cash will not be accepted. When purchases are made by check (including certified
or cashier's checks), redemption proceeds will not be forwarded until the check
providing for the investment being redeemed has cleared (which may take up to 15
days). Subsequent investments may also be mailed directly to the Transfer Agent.

PURCHASES BY WIRE TRANSFER

Shareholders having an account with a commercial bank that is a member of the
Federal Reserve System may purchase shares of the Fund by requesting their bank
to transmit funds by wire to: United Missouri Bank of Kansas, N.A.; ABA
#10-10-00695; for Account Number 98-7060-116-8; Further Credit: Select Financial
Services Fund. The shareholder's name and account number must be specified in
the wire.

GENERAL INFORMATION REGARDING PURCHASES

A purchase request will be effective as of the day received by the Transfer
Agent if the Transfer Agent (or its authorized agent) receives the purchase
request in good order and payment prior to the calculation of net asset value on
any Business Day. Otherwise, the purchase order will be effective on the next
Business Day. A purchase request is in good order if it is complete and
accompanied by the appropriate documentation, including an Account Application
and additional documentation required. Payment may be made by check or readily
available funds. The purchase price of shares of the Fund is the Fund's net
asset value per share next determined after a purchase order is effective.
Purchases will be made in full and fractional shares of the Fund calculated to
three decimal places. The Trust will not issue certificates representing shares
of the Fund.

-14-

<PAGE>

SYSTEMATIC INVESTMENT PLAN - A shareholder may also arrange for periodic
additional investments in a Portfolio through automatic deductions by Automated
Clearing House ("ACH") transactions from a checking or savings account by
completing the Systematic Investment Plan form. This Systematic Investment Plan
is subject to account minimum initial purchase amounts and a minimum
pre-authorized investment amount of $100 per month. An application form for the
Systematic Investment Plan may be obtained by calling 1-800-224-6312.

EXCHANGES

Shareholders of the Fund may exchange their shares for shares of the other TIP
Funds that are then offering their shares to the public. Exchanges are made at
net asset value. An exchange is considered a sale of shares and may result in
capital gain or loss for federal income tax purposes. The shareholder must have
received a current prospectus for the new Fund before any exchange will be
effected, and the exchange privilege may be exercised only in those states where
shares of the new Fund may legally be sold. If the Transfer Agent (or its
authorized agent) receives exchange instructions in writing or by telephone (an
"Exchange Request") in good order prior to the calculation of net asset value on
any Business Day, the exchange will be effected that day. The liability of the
Fund or the Transfer Agent for fraudulent or unauthorized telephone instructions
may be limited as described below. The Trust reserves the right to modify or
terminate this exchange offer on 60 days' notice.

REDEMPTIONS

Redemption requests in good order received by the Transfer Agent (or its
authorized agent) prior to the calculation of net asset value on any Business
Day will be effective that day. To redeem shares

-15-

<PAGE>

of the Fund, shareholders must place their redemption orders with the Transfer
Agent (or its authorized agent) prior to the calculation of net asset value on
any Business Day. Otherwise, the redemption order will be effective on the next
Business Day. The redemption price of shares of the Fund is the net asset value
per share of the Fund next determined after the redemption order is effective.
Payment of redemption proceeds will be made as promptly as possible and, in any
event, within seven days after the redemption order is received, provided,
however, that redemption proceeds for shares purchased by check (including
certified or cashier's checks) will be forwarded only upon collection of payment
for such shares; collection of payment may take up to 15 days.
Shareholders may not close their accounts by telephone.

Shareholders may receive redemption payments in the form of a check or by
Federal Reserve or ACH wire transfer. There is no charge for having a check for
redemption proceeds mailed. The Custodian will deduct a wire charge, currently
$10.00, from the amount of a Federal Reserve wire redemption payment made at the
request of a shareholder. Shareholders cannot redeem shares of the Fund by
Federal Reserve wire on Federal holidays restricting wire transfers. The Fund
does not charge for ACH wire transactions; however, such transactions will not
be posted to a shareholder's bank account until the second Business Day
following the transaction.

The right of redemption may be suspended or the date of payment of redemption
proceeds postponed during certain periods as set forth more fully in the
Statement of Additional Information.

A signature guarantee is a widely accepted way to protect shareholders by
verifying the signature on certain redemption requests. The Trust requires
signature guarantees to be provided in the following circumstances: (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. The Trust
does not accept guarantees from notaries public or from organizations that do
not provide reimbursement in the case of fraud.

SYSTEMATIC WITHDRAWAL PLAN - The Trust offers a Systematic Withdrawal Plan
("SWP") for shareholders who wish to receive regular distributions from their
account. Upon commencement of the SWP, the account must have a current value of
$2,500 or more. Shareholders may elect to receive automatic payments via ACH
wire transfers of $100 or more on a monthly, quarterly, semi-annual or annual
basis. An application form for SWP may be obtained by calling 1-800-224-6312.

-16-

<PAGE>

VALUATION OF SHARES

The net asset value per share of the Fund is determined by dividing the total
market value of the Fund's investments and other assets, less any liabilities,
by the total number of outstanding shares of the Fund. Net asset value per share
is determined daily as of the close of regular trading on the New York Stock
Exchange (normally, 4:00 p.m., Eastern time) on any Business Day.

PERFORMANCE

From time to time, the Fund may advertise yield and total return. These figures
will be based on historical earnings and are not intended to indicate future
performance. No representation can be made regarding actual future yields or
returns. The yield of the 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 same amount of income generated by the investment during
that period is generated in each 30-day period over one year and is shown as a
percentage of the investment.

The Fund may periodically compare its performance to that of other mutual funds
tracked by mutual fund rating services (such as Lipper Analytical Services,
Inc.), financial and business publications and periodicals, broad groups of
comparable mutual funds, unmanaged indices, which may assume investment of
dividends but generally do not reflect deductions for administrative and
management costs, or other investment alternatives. The Fund may quote
Morningstar, Inc., a service that ranks mutual funds on the basis of
risk-adjusted performance, and Ibbotson Associates of Chicago, Illinois, which
provides historical returns of the capital markets in the U.S. The Fund may also
quote the Frank Russell Company or Wilshire Associates, consulting firms that
compile financial characteristics of common stocks and fixed income securities,
regarding non-performance-related attributes of the Fund's portfolio. The Fund
may use long term performance of these capital markets to demonstrate general
long-term risk versus reward scenarios and could include the value of a
hypothetical investment in any of the capital markets. The Fund may also quote
financial and business publications and periodicals as they relate to fund
management, investment philosophy, and investment techniques.

-17-

<PAGE>

TAXES

TAX STATUS OF THE FUND:

TAX STATUS OF DISTRIBUTIONS:

The Fund will distribute all of its net investment income (including, for this
purpose, net short-term capital gain) to shareholders. Dividends from the Fund's
net investment income will be taxable to shareholders as ordinary income whether
received in cash or in additional shares. Distributions from net investment
income will qualify for the dividends-received deduction for corporate
shareholders only to the extent such distributions are derived from dividends
paid by domestic corporations; however, such distributions which do qualify for
the dividends-received deduction may be subject to the corporate alternative
minimum tax. Any net capital gains will be distributed annually and will be
taxed to shareholders as gains from the sale or exchange of a capital asset held
for more than one year or for more than 18 months, as the case may be,
regardless of how long the shareholder has held shares. The Fund will make
annual reports to shareholders of the federal income tax status of all
distributions, including the amount of dividends eligible for the
dividends-received deduction.

-18-

<PAGE>

investment income to shareholders, the Fund may have to sell portfolio
securities to distribute such accrued income, which may occur at a time when the
Adviser would not have chosen to sell such securities and which may result in a
taxable gain or loss.

Each sale, exchange or redemption of the Fund's shares is a taxable event to the
shareholder.

GENERAL INFORMATION

THE TRUST

The Trust, an open-end management investment company, was organized under
Massachusetts law as a 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. All consideration
received by the Trust for shares of any portfolio and all assets of such
portfolio belong to that portfolio and would be subject to liabilities related
thereto. The Trust reserves the right to create and issue shares of additional
portfolios.

-19-

<PAGE>

TRUSTEES OF THE TRUST

VOTING RIGHTS

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. Shareholders of the Fund will vote separately on matters pertaining
solely to the Fund. 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.

As of January 5, 1998, Penn Capital Management, Inc., and the Carolyn
Turner/Robert Turner Jr. Trust, owned a controlling interest (as defined in the
Investment Company Act of 1940) of the Penn Capital Select Financial Services
Fund.

REPORTING

SHAREHOLDER INQUIRIES

Shareholder inquiries should be directed to TIP Funds, P.O. Box 419805, Kansas
City, Missouri 64141-6805, or by calling 1-800-224-6312. Purchases, exchanges
and redemptions of shares should be made through the Transfer Agent by calling
1-800-224-6312.

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<PAGE>

DIVIDENDS AND DISTRIBUTIONS

Substantially all of the net investment income (excluding capital gains) of the
Fund is distributed in the form of dividends at least annually. If any capital
gain is realized, substantially all of it will be distributed at least annually.

COUNSEL AND INDEPENDENT AUDITORS

Morgan, Lewis & Bockius LLP serves as counsel to the Trust. Ernst & Young LLP
serves as the independent auditors for the Trust.

CUSTODIAN

CoreStates Bank, N.A., 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 Investment Company Act of 1940, as amended (the "1940 Act").

DESCRIPTION OF PERMITTED INVESTMENTS AND RISK FACTORS

The following is a description of permitted investments for the Fund:

-21-

<PAGE>

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 -- The Fund may borrow money equal to 5% of its total assets for
temporary purposes to meet redemptions or to pay dividends. Borrowing may
exaggerate changes in the net asset value of the Fund's shares and in the return
on the Fund's portfolio. Although the principal of any borrowing will be fixed,
the Fund's assets may change in value during the time the borrowing is
outstanding. The 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 Fund may be required to segregate liquid assets in
an amount sufficient to meet its obligations in connection with such borrowings.

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. The 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 the Fund's securities denominated in such foreign currency.

HIGH YIELD, HIGH RISK SECURITIES -- Securities rated below investment grade are
often referred to as "junk bonds." Fixed income securities are subject to the
risk of an issuer's ability to meet principal and interest payments on the
obligation (credit risk), and may also be subject to price volatility due to
such factors as interest rate sensitivity, market perception of the
creditworthiness of the issuer and general market liquidity (market risk). Lower
rated or unrated (I.E., high yield) securities are more likely to react to
developments affecting market and credit risk than are more highly rated
securities, which primarily react to movements in the general level of interest
rates. The market values of fixed-income securities tend to vary inversely with
the level of interest rates. Yields and market values of high yield securities
will fluctuate over time, reflecting no only changing interest rates but the
market's perception of credit quality and the outlook for economic growth. When
economic conditions appear to be deteriorating, medium to lower rated securities
may decline in value due to heightened concern over credit quality, regardless
of prevailing interest rates. Investors should carefully consider the relative
risks of investing in high yield securities and understand that such securities
are not generally meant for short-term investing.

-22-

<PAGE>

The high yield market is relatively new and its growth has paralleled a long
period of economic expansion and an increase in merger, acquisition and
leveraged buyout activity. Adverse economic developments can disrupt the market
for high yield securities, and severely affect the ability of issuers,
especially highly leveraged issuers, to service their debt obligations or to
repay their obligations upon maturity which may lead to a higher incidence of
default on such securities. In addition, the secondary market for high yield
securities, which is concentrated in relatively few market makers, may not be as
liquid as the secondary market for more highly rated securities. As a result,
the Fund's adviser could find it more difficult to sell these securities or may
be able to sell the securities only at prices lower than if such securities were
widely traded. Furthermore the Trust may experience difficulty in valuing
certain securities at certain times. Prices realized upon the sale of such lower
rated or unrated securities, under these circumstances, may be less than the
prices used in calculating the Fund's net asset value.

Prices for high yield securities may be affected by legislative and regulatory
developments. These laws could adversely affect the Fund's net asset value and
investment practices, the secondary market value for high yield securities, the
financial condition of issuers of these securities and the value of outstanding
high yield securities.

Lower rated or unrated debt obligations also present risks based on payment
expectations. If an issuer calls the obligations for redemption, the Fund may
have to replace the security with a lower yielding security, resulting in a
decreased return for investors. If the Fund experiences unexpected net
redemptions, it may be forced to sell its higher rated securities, resulting in
a decline in the overall credit quality of the Fund's investment portfolio and
increasing the exposure of the Fund to the risks of high yield securities.
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 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>

SECURITIES LENDING -- In order to generate additional income, the 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. The 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.

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.

U.S. GOVERNMENT AGENCY OBLIGATIONS -- 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 -- 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 -- 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").

-24-

<PAGE>

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.

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.

ZERO COUPON, PAY-IN-KIND AND DEFERRED PAYMENT 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 accreted. 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 the 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, the 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.

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<PAGE>

Trust:
TIP FUNDS

Fund:
PENN CAPITAL SELECT FINANCIAL SERVICES FUND

Adviser:
PENN CAPITAL MANAGEMENT COMPANY, INC.

Distributor:
SEI INVESTMENTS DISTRIBUTION CO.

Administrator:
SEI FUND RESOURCES

Legal Counsel:
MORGAN, LEWIS & BOCKIUS LLP

Independent Auditors:
ERNST & YOUNG LLP

January 31, 1998

TIP FUNDS

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 TIP Target Select Equity Fund (the "Target Select Fund"). 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 Fund's
Prospectus dated January 1, 1998. The Prospectus may be obtained without charge
by calling 1-800-224-6312.

TABLE OF CONTENTS

THE TRUST....................................................................S-2
DESCRIPTION OF PERMITTED INVESTMENTS.........................................S-2
INVESTMENT LIMITATIONS.......................................................S-7
THE ADVISER..................................................................S-9
THE SUB-ADVISERS.............................................................S-9
THE ADMINISTRATOR...........................................................S-10
THE DISTRIBUTOR.............................................................S-10
TRUSTEES AND OFFICERS OF THE TRUST..........................................S-11
COMPUTATION OF YIELD AND TOTAL RETURN.......................................S-14
PURCHASE AND REDEMPTION OF SHARES...........................................S-15
DETERMINATION OF NET ASSET VALUE............................................S-15
TAXES ...................................................................S-15
PORTFOLIO TRANSACTIONS......................................................S-18
DESCRIPTION OF SHARES.......................................................S-20
SHAREHOLDER LIABILITY.......................................................S-20
LIMITATION OF TRUSTEES' LIABILITY...........................................S-20
FINANCIAL INFORMATION.......................................................S-21
APPENDIX ....................................................................A-1

January 1, 1998

S-1

<PAGE>

THE TRUST

This Statement of Additional Information relates only to the TIP Target Select
Equity Fund (the "Fund"). The Fund is a separate series of the TIP Funds
(formerly, Turner 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, and amended on February 21, 1997.
The Declaration of Trust permits the Trust to offer separate series
("portfolios") of shares of beneficial interest ("shares"). The fund is a
separate mutual fund, and each share of the fund represents an equal
proportionate interest in the fund. See "Description of Shares." Capitalized
terms not defined herein are defined in the Prospectus offering shares of the
Fund.

DESCRIPTION OF PERMITTED INVESTMENTS

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.
The 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. The 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, the 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, the 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

S-2

<PAGE>

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.

The 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 the Fund's net assets. The Fund may buy and sell futures contracts
and related options to manage its exposure to changing interest rates and
securities prices. Some strategies reduce the 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 the Fund's return.

In order to avoid leveraging and related risks, when the 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.

INVESTMENT COMPANY SHARES

The 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. The 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, the 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."

S-3

<PAGE>

OBLIGATIONS OF SUPRANATIONAL AGENCIES

The 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
or 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,
the 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 the 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.

The 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.
The 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 the 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.

The 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 the 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 the 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 the 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-4

<PAGE>

The 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.

The 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 the 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 the 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.

The 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. The Fund may choose to
terminate an option position by entering into a closing transaction. The ability
of the Fund to enter into closing transactions depends upon the existence of a
liquid secondary market for such transactions.

All options written on securities or indices must be covered. When the 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.

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 the 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.

S-5

<PAGE>

REPURCHASE AGREEMENTS

Repurchase agreements are agreements by which the 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 the Fund for purposes of its
investment limitations. The repurchase agreements entered into by the 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 the 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, the 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.

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.

VARIABLE OR FLOATING RATE INSTRUMENTS

The 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

S-6

<PAGE>

applicable to permitted investments for the 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.

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 the Fund generally
purchases securities on a when-issued or forward commitment basis with the
intention of actually acquiring securities for its investment portfolio, the
Fund may dispose of a when-issued security or forward commitment prior to
settlement if it deems appropriate.

INVESTMENT LIMITATIONS

FUNDAMENTAL POLICIES

The following investment limitations (and those set forth in the Prospectus) are
fundamental policies of the Fund which cannot be changed with respect to the
Fund without the consent of the holders of a majority of the Fund's outstanding
shares. The term "majority of the outstanding shares" means the vote of (i) 67%
or more of the 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.

The Fund may not:

1. Make loans if, as a result, more than 33 1/3% of its total assets would be
lent to other parties, except that the 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.

2. Purchase or sell real estate, physical commodities, or commodities
contracts, except that the 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.

3. Issue senior securities (as defined in the Investment Company Act of 1940
(the "1940 Act")) except as permitted by rule, regulation or order of the
Securities and Exchange Commission (the "SEC").

S-7

<PAGE>

4. Act as an underwriter of securities of other issuers except as it may be
deemed an underwriter in selling a portfolio security.

5. 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 the Fund
and may be changed with respect to the Fund by the Board of Trustees.

The Fund may not:

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 the 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.

In addition, the 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.

S-8

<PAGE>

THE ADVISER

The Trust and Turner Investment Partners, Inc. (the "Adviser"), have entered
into an advisory agreement (the "Advisory Agreement"). 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 the 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 the 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").

The continuance of the Advisory Agreement as to the 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 the 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 the Fund,
by a majority of the outstanding shares of the 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.

THE SUB-ADVISERS

The Adviser has entered into separate sub-advisory agreements (each a
"Sub-Advisory Agreement") with Clover Capital Management, Inc., Penn Capital
Management Company, Inc., and Chartwell Investment Partners (each a
"Sub-Adviser" and together, the "Sub-Advisers"), relating to the Fund. Each
Sub-Advisory Agreement provides that the Sub-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 continuance of each Sub-Advisory Agreement as to the 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 the Fund, and (ii) by the vote of a
majority of the Trustees who are not parties to the Sub-Advisory Agreement or
"interested persons" of any party thereto, cast in person at a meeting called
for the purpose of voting on such approval. Each Sub-Advisory Agreement will
terminate automatically in the event of its

S-9

<PAGE>

assignment, and is terminable at any time without penalty by the Trustees of the
Trust or, with respect to the Fund, by a majority of the outstanding shares of
the Fund, on not less than 30 days' nor more than 60 days' written notice to the
Sub-Adviser, or by the Sub-Adviser on 90 days' written notice to the Trust.

THE ADMINISTRATOR

The Trust and SEI Fund Resources (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 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"), is the owner of all
beneficial interests 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 to the
following other mutual funds: The Achievement Funds Trust, The Advisors' Inner
Circle Fund, The Arbor Fund, ARK Funds, Bishop Street Funds, Boston 1784
Funds(R), CoreFunds, Inc., CrestFunds, Inc., CUFUND, The Expedition Funds, FMB
Funds, First American Funds, Inc., First American Investment Funds, Inc., First
American Strategy Funds, Inc., HighMark Funds, Marquis Funds(R), Monitor Funds,
Morgan Grenfell Investment Trust, The PBHG Funds, Inc., PBHG Insurance Series
Fund, Inc., The Pillar Funds, Santa Barbara Group of Mutual Funds, Inc., SEI
Asset Allocation Trust, SEI Daily Income Trust, SEI Index Funds, SEI
Institutional Investments Trust, SEI Institutional Managed Trust, SEI
International Trust, SEI Liquid Asset Trust, SEI Tax Exempt Trust, STI Classic
Funds and STI Classic Variable Trust.

THE DISTRIBUTOR

SEI Investments Distribution Co. (the "Distributor"), a wholly-owned subsidiary
of SEI, and the Trust are parties to a distribution agreement (the "Distribution
Agreement") with respect to shares of the Fund. The Distributor receives no
compensation for distribution of shares of the Fund.

S-10

<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, 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 management and affairs of the Trust are supervised by the Trustees under the
laws of the Commonwealth of Massachusetts. 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 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, The Arbor Fund,
ARK Funds, Bishop Street Funds, Boston 1784 Funds(R), CoreFunds, Inc.,
CrestFunds, Inc., CUFUND, The Expedition Funds, FMB Funds, Inc., First American
Funds, Inc., First American Investment Funds, Inc., First American Strategy
Funds, Inc, HighMark Funds, Marquis Funds(R), Monitor Funds, Morgan Grenfell
Investment Trust, The PBHG Funds, Inc., PBHG Insurance Series Fund, Inc., The
Pillar Funds, Santa Barbara Group of Mutual Funds, Inc., SEI Asset Allocation
Trust, SEI Daily Income Trust, SEI Index Funds, SEI Institutional Investments
Trust, SEI Institutional 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
Fund Resources or its affiliates and, except for Santa Barbara Group of Mutual
Funds, Inc., are distributed by SEI Investments Distribution Co.

ROBERT E. TURNER (DOB 11/26/56) - Trustee* - Chairman and Chief Investment
Officer of Turner Investment Partners, Inc. (the Adviser) 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.

S-11

<PAGE>

ALFRED C. SALVATO (DOB 01/09/58) - Trustee** - Treasurer, Thomas Jefferson
University Health Care Pension Fund, since 1995, and Assistant Treasurer,
1988-1995.

JOHN T. WHOLIHAN (DOB 12/12/37) - Trustee** - Professor, Loyola Marymount
University, since 1984.

JANET F. SANSONE (DOB 08/11/45) - Trustee** - Corporate Vice President of Human
Resources of Frontier Corporation, since 1993. Director of Education at General
Electric Corporation, 1982-1993.

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 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 and distributor
since 1995. Associate, Dewey Ballantine (law firm), 1994-1995. Associate,
Winston and Strawn (law firm), 1991-1994.

SANDRA K. ORLOW (DOB 10/18/53) - Vice President and Assistant Secretary - Vice
President and Assistant Secretary of the Administrator and Distributor since
1988.

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. Associate, Morgan, Lewis & Bockius LLP(law firm),
1988-1992.

KATHRYN L. STANTON (DOB 11/19/58) - Vice President and Assistant Secretary,
Deputy General Counsel, Vice President and Assistant Secretary of SEI, Vice
President and Assistant Secretary of the Administrator and Distributor, since
1994. Associate, Morgan, Lewis & Bockius LLP (law firm), 1989-1994.

ROBERT DELLACROCE (DOB 12/17/63) - Controller and Chief Accounting Officer -
Director, Funds Administration and Accounting - Director, Funds Administration
and Accounting of SEI since 1994. Senior Audit Manager, Arthur Andersen LLP,
1986-1994.

MARC H. CAHN (DOB 06/19/57) - Vice President and Assistant Secretary - Vice
President and Assistant Secretary of SEI, the Administrator and Distributor
since 1996. Associate General Counsel, Barclays Bank PLC (1995-1996). ERISA
counsel, First Fidelity Bancorporation (1994-1995), Associate, Morgan, Lewis &
Bockius LLP (1989-1994).

S-12

<PAGE>

JAMES W. JENNINGS (DOB 01/15/37) - Secretary - Partner, Morgan, Lewis & Bockius
LLP (law firm), counsel to the Trust, the Adviser, the Administrator and
Distributor.

JOHN H. GRADY, JR. (DOB 06/01/61) - Assistant Secretary - 1800 M Street, N.W.,
Washington, D.C. 20036, Partner, Morgan, Lewis & Bockius LLP, Counsel to the
Trust, Adviser, Administrator and Distributor.

EDWARD B. BAER (DOB 09/27/68) - Assistant Secretary - 1800 M Street, N.W.,
Washington, D.C. 20036, Associate, Morgan, Lewis & Bockius LLP, Counsel to the
Trust, Adviser, Administrator and Distributor, since 1995. Attorney, Aquila
Management Corporation, 1994. Rutgers University School of Law - Newark,
1991-1994.

The following table exhibits Trustee compensation for the fiscal year ended
September 30, 1997.

- -----------------------------------------------------------------------------------------------------------------
Name of Person, Aggregate Pension or Estimated Total
Position Compensation Retirement Annual Compensation
From Benefits Benefits From
Registrant for Accrued as Upon Registrant and
the Fiscal Part of Fund Retirement Fund Complex
Year Ended Expenses Paid to
September Trustees for
30, 1997 the Fiscal
Year Ended
September
30, 1997
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Robert Turner* $0 N/A N/A $0
- -----------------------------------------------------------------------------------------------------------------
Richard A. $0 N/A N/A $0
Hocker(1)*
- -----------------------------------------------------------------------------------------------------------------
Michael E. $0 N/A N/A $0
Jones(1)*
- -----------------------------------------------------------------------------------------------------------------
Janet F. $0 N/A N/A $0
Sansone(1)**
- -----------------------------------------------------------------------------------------------------------------
Joan Lamm- $2,000 N/A N/A $2,000
Tennant(2)
- -----------------------------------------------------------------------------------------------------------------
Alfred C. Salvato** $8,000 N/A N/A $8,000
- -----------------------------------------------------------------------------------------------------------------
John T. Wholihan** $8,000 N/A N/A $8,000
- -----------------------------------------------------------------------------------------------------------------
</TABLE>

S-13

<PAGE>

(1) Elected to the Board on August 21, 1997.
(2) Resigned from the Board on March 17, 1997.

* 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.

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 the 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.

The total return of the 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
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.

S-14

<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 the 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 the 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 the 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 the 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 the 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. The procedures of the
pricing service and its valuations are reviewed by the officers of the Trust
under the general supervision of the Trustees.

TAXES

The following is only a summary of certain tax considerations generally
affecting the Fund and its 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-15

<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.

The Fund intends to qualify as a "regulated investment company" ("RIC") as
defined under Subchapter M of the Code. By following such a policy, the 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, the 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 the excess, if any, of net
short-term capital gain net long-term capital losses) ("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 issuer.

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
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

S-16

<PAGE>

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 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 eighteen months, mid-term capital gain if
the share have been held for more than twelve months but not more than eighteen
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%, mid-term
capital gains are currently taxed at a maximum rate of 28%, and short-term
capital gains are currently taxed at ordinary income tax rates.

In certain cases, the 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 the 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.

The Fund 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 (Anew shareholders@). As a result of an
In-Kind Purchase, the Fund 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

S-17

<PAGE>

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 Fund acquires 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 Fund, 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
Fund.

STATE TAXES

The Fund is not liable for any income or franchise tax in Massachusetts if it
qualifies as a RIC for federal income tax purposes. Distributions by the Fund to
shareholders and the ownership of shares may be subject to state and local
taxes.

PORTFOLIO TRANSACTIONS

The Adviser and each Sub-Adviser is authorized to select brokers and dealers to
effect securities transactions for the Fund as to the assets allocated to or
managed by it. The Adviser and each Sub-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 and each Sub-Adviser
generally seek reasonably competitive spreads or commissions, the Fund will not
necessarily be paying the lowest spread or commission available. The Adviser and
each Sub-Adviser seeks to select brokers or dealers that offer the Fund best
price and execution or other services which are of benefit to the Fund.

The Fund has 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 Fund, the Adviser and each
Sub-Adviser are responsible for placing the orders to execute transactions for
the Fund as to the assets allocated to or managed by it. In placing orders, it
is the policy of the Fund to seek to 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 and each Sub-Adviser generally seek
reasonably competitive spreads or commissions, the Fund will not necessarily be
paying the lowest spread or commission available.

S-18

<PAGE>

The money market instruments in which the Fund invests 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
and each Sub-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 Fund will primarily consist
of dealer spreads and underwriting commissions.

The Adviser and each Sub-Adviser may, consistent with the interests of the Fund,
select brokers on the basis of the research services they provide. 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 or any Sub-Adviser will be in addition to and not in lieu of the
services required to be performed by the Adviser (or Sub-Adviser) under the
respective Advisory and, Sub-Advisory Agreements. If, in the judgment of the
Adviser (or Sub-Adviser), the Fund or other accounts managed by the Adviser (or
Sub-Adviser) will be benefitted by supplemental research services, the Adviser
(or Sub-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 (or Sub-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
(or Sub-Adviser) will find all of such services of value in advising the Fund.

It is not expected that the Fund will execute brokerage or other agency
transactions through the Distributor, which is a registered broker-dealer, for a
commission in conformity with the 1940 Act, the Securities Exchange Act of 1934
and rules promulgated by the SEC. Commissions paid to the Distributor by the
Fund for exchange transactions must 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

S-19

<PAGE>

persons" of the Trust, have adopted procedures for evaluating the reasonableness
of commissions paid to the Distributor and will review these procedures
periodically.

Because the Fund does not market its shares through intermediary brokers or
dealers, it is not the Fund's 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 or any Sub-Adviser may place portfolio orders with
qualified broker-dealers who recommend the 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.

DESCRIPTION OF SHARES

The Declaration of Trust authorizes the issuance of an unlimited number of
portfolios and shares of the fund. Each share of the fund represents an equal
proportionate interest in the fund with each other share. Shares are entitled
upon liquidation to a pro rata share in the net assets of the fund. 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

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

S-20

<PAGE>

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.

FINANCIAL INFORMATION

Ernst & Young LLP has been selected to serve as the Funds independent public
accountants.

S-21

<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.

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>

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.

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

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<PAGE>

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 Standard & Poor's Corporation ("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 Investors Service,
Inc. ("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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<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-4

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,
1998. The Prospectus may be obtained without charge by calling 1-800-224-6312.

TABLE OF CONTENTS

THE TRUST..................................................................S-2
DESCRIPTION OF PERMITTED INVESTMENTS.......................................S-2
REITS......................................................................S-9
INVESTMENT LIMITATIONS....................................................S-12
THE ADVISER...............................................................S-14
THE ADMINISTRATOR.........................................................S-14
THE DISTRIBUTOR...........................................................S-15
TRUSTEES AND OFFICERS OF THE TRUST........................................S-16
COMPUTATION OF YIELD AND TOTAL RETURN.....................................S-19
PURCHASE AND REDEMPTION OF SHARES.........................................S-20
DETERMINATION OF NET ASSET VALUE..........................................S-20
TAXES .................................................................S-20
PORTFOLIO TRANSACTIONS....................................................S-22
DESCRIPTION OF SHARES.....................................................S-24
SHAREHOLDER LIABILITY.....................................................S-24
LIMITATION OF TRUSTEES' LIABILITY.........................................S-24
FINANCIAL INFORMATION.....................................................S-25
APPENDIX ..................................................................A-1

January 31, 1998

S-1

<PAGE>

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. 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. See "Description of Shares." Capitalized terms not defined herein are
defined in the Prospectus offering shares of the Funds.

DESCRIPTION OF PERMITTED INVESTMENTS

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.

S-2

<PAGE>

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 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.

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.

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

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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."

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 Investors Service, Inc. ("Moody's") and/or lower than BBB- by Standard &
Poor's Corporation ("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

S-4

<PAGE>

proceedings, the Funds may incur losses or expenses in seeking recovery 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.

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

S-5

<PAGE>

(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.

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.

S-6

<PAGE>

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

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 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
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.

S-7

<PAGE>

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.

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 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.

S-8

<PAGE>

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.

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.

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 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

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<PAGE>

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.

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

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<PAGE>

than more developed countries. Also, it may be more difficult to obtain a
judgment in a court outside the United States.

SWAPS, CAPS, FLOORS AND COLLARS

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 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. 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

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<PAGE>

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.

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.

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:

1. 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.

2. 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.

S-12

<PAGE>

3. Issue senior securities (as defined in the Investment Company Act of
1940 (the "1940 Act")) except as permitted by rule, regulation or order
of the Securities and Exchange Commission (the "SEC").

4. Act as an underwriter of securities of other issuers except as it may
be deemed an underwriter in selling a portfolio security.

5. 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 (set forth
in the Prospectus).

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.
Notwithstanding the foregoing, the Strategic High Yield Fund may
purchase securities on margin in accordance with the investment
policies set forth in the Prospectus.

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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<PAGE>

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

The Trust and Penn Capital Management Company, Inc. (the "Adviser"), have
entered into an advisory agreement (the "Advisory Agreement") with respect to
the Funds. 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").

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.

THE ADMINISTRATOR

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<PAGE>

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 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 interests 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
to the following other mutual funds: The Achievement Funds Trust, The Advisors'
Inner Circle Fund, The Arbor Fund, ARK Funds, Bishop Street Funds, Boston 1784
Funds(R), CoreFunds, Inc., CrestFunds, Inc., CUFUND, The Expedition Funds, FMB
Funds, First American Funds, Inc., First American Investment Funds, Inc., First
American Strategy Funds, Inc., HighMark Funds, Marquis Funds(R), Monitor Funds,
Morgan Grenfell Investment Trust, The PBHG Funds, Inc., PBHG Insurance Series
Fund, Inc., The Pillar Funds, Profit Funds Investment Trust, Santa Barbara Group
of Mutual Funds, Inc., SEI Asset Allocation Trust, SEI Daily Income Trust, SEI
Index Funds, SEI Institutional Investments Trust, SEI Institutional Managed
Trust, SEI International Trust, SEI Liquid Asset Trust, SEI Tax Exempt Trust,
STI Classic Funds and STI Classic Variable Trust.

THE DISTRIBUTOR

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.

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<PAGE>

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 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, The Arbor Fund,
ARK Funds, Bishop Street Funds, Boston 1784 Funds(R), CoreFunds, Inc.,
CrestFunds, Inc., CUFUND, The Expedition Funds, FMB Funds, Inc., First American
Funds, Inc., First American Investment Funds, Inc., First American Strategy
Funds, Inc, HighMark Funds, Marquis Funds(R), Monitor Funds, Morgan Grenfell
Investment Trust, The PBHG Funds, Inc., PBHG Insurance Series Fund, Inc., The
Pillar Funds, Profit Funds Investment Trust, Santa Barbara Group of Mutual
Funds, Inc., SEI Asset Allocation Trust, SEI Daily Income Trust, SEI Index
Funds, SEI Institutional Investments Trust, SEI Institutional 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 Fund Resources or its affiliates and, except
for Profit Funds Investment Trust, and Santa Barbara Group of Mutual Funds,
Inc., are distributed by SEI Investments Distribution Co.

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.

ALFRED C. SALVATO (DOB 01/09/58) - Trustee** - Treasurer, Thomas Jefferson
University Health Care Pension Fund, since 1995, and Assistant Treasurer,
1988-1995.

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<PAGE>

JOHN T. WHOLIHAN (DOB 12/12/37) - Trustee** - Professor, Loyola Marymount
University, since 1984.

JANET F. SANSONE (DOB 08/11/45) - Trustee** - Corporate Vice President of Human
Resources of Frontier Corporation (telecommunications company), since 1993.
Director of Education at General Electric Corporation, 1982-1993.

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 Compliance of Turner Investment Partners, Inc., since 1992.

SANDRA K. ORLOW (DOB 10/18/53) - Vice President and Assistant Secretary - Vice
President and Assistant Secretary of the Administrator and Distributor since
1988.

KATHRYN L. STANTON (DOB 11/19/58) - Vice President and Assistant Secretary -
Deputy General Counsel, Vice President and Assistant Secretary of SEI, Vice
President and Assistant Secretary of the Administrator and Distributor, since
1994. Associate, Morgan, Lewis & Bockius LLP (law firm), 1989-1994.

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.

BARBARA A. NUGENT (DOB 06/18/56) - Vice President and Assistant Secretary - Vice
President and Assistant Secretary of SEI, the Administrator and Distributor
since 1996. Associate, Drinker, Biddle & Reath (law firm) (1994-1996). Assistant
Vice President - Operations of Delaware Service Company, Inc. (1988-1993)

S-17

<PAGE>

Fidelity Bancorporation (1994-1995), Associate, Morgan, Lewis & Bockius LLP
(1989- 1994).

JAMES W. JENNINGS (DOB 01/15/37) - Secretary - Partner, Morgan, Lewis & Bockius
LLP (law firm), counsel to the Trust, Turner, the Administrator and Distributor.

JOHN H. GRADY, JR. (DOB 06/01/61) - Assistant Secretary - 1800 M Street, N.W.,
Washington, D.C. 20036, Partner, Morgan, Lewis & Bockius LLP, Counsel to the
Trust, Turner, Administrator and Distributor.

EDWARD B. BAER (DOB 09/27/68) - Assistant Secretary - 1800 M Street, N.W.,
Washington, D.C. 20036, Associate, Morgan, Lewis & Bockius LLP, Counsel to the
Trust, Turner, Administrator and Distributor, since 1995. Attorney, Aquila
Management Corporation, 1994. Rutgers University School of Law - Newark,
1991-1994.

The following table exhibits Trustee compensation for the fiscal year ended
September 30, 1997.

<TABLE>
<CAPTION>
Name of Person, Aggregate Pension or Estimated Total
Position Compensation Retirement Annual Compensation
From Benefits Benefits From
Registrant for Accrued as Upon Registrant and
the Fiscal Part of Fund Retirement Fund Complex
Year Ended Expenses Paid to
September Trustees for
30, 1997 the Fiscal
Year Ended
September
30, 1997
<S> <C> <C> <C> <C>
Robert Turner* $0 N/A N/A $0
Richard A. $0 N/A N/A $0
Hocker(1)*
Michael E. $0 N/A N/A $0
Jones(1)*
Janet F. $0 N/A N/A $0
Sansone(1)**
Joan Lamm- $2,000 N/A N/A $2,000
Tennant(2)
</TABLE>

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<TABLE>
<S> <C> <C> <C> <C>
Alfred C. Salvato** $8,000 N/A N/A $8,000
John T. Wholihan** $8,000 N/A N/A $8,000
</TABLE>

(1) Elected to the Board on August 21, 1997.
(2) Resigned from the Board on March 17, 1997.

** 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

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:

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
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.

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PURCHASE AND REDEMPTION OF SHARES

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.

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, but may utilize a pricing
matrix. The procedures of the pricing service and its valuations are reviewed by
the officers of the Trust under the general supervision of the Trustees.

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.

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

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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 the excess, if any, of net
short-term capital gain net long-term capital losses) ("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. 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.

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.

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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.

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 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 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 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

S-22

<PAGE>

of executing portfolio securities transactions of the Funds will primarily
consist of dealer spreads and underwriting commissions.

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 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

S-23

<PAGE>

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.

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. 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

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

S-24

<PAGE>

FINANCIAL INFORMATION

Ernst & Young LLP has served as the Funds independent public accountants since
inception.

S-25

<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>

Moody's bond ratings, where specified, are applied to senior bank obligations
and insurance company senior policyholder and claims obligations with an
original maturity in excess of one year. Obligations relying upon support
mechanisms such as letters-of-credit and bonds of indemnity are excluded unless
explicitly rated.

Obligations of a branch of a bank are considered to be domiciled in the country
in which the branch is located. Unless noted as an exception, Moody's rating on
a bank's ability to repay senior obligations extends only to branches located in
countries which carry a Moody's sovereign rating. Such branch obligations are
rated at the lower of the bank's rating or Moody's sovereign rating for the bank
deposits for the country in which the branch is located.

When the currency in which an obligation is denominated is not the same as the
currency of the country in which the obligation is domiciled, Moody's ratings do
not incorporate an opinion as to whether payment of the obligation will be
affected by the actions of the government controlling the currency of
denomination. In addition, risk associated with bilateral conflicts between an
investor's home country and either the issuer's home country or the country
where an issuer branch is located are not incorporated into Moody's ratings.

Moody's makes no representation that rated bank obligations or insurance company
obligations are exempt from registration under the U.S. Securities Act of 1933
or issued in conformity with any other applicable law or regulation. Nor does
Moody's represent that any specific bank or insurance company obligation is
legally enforceable or is a valid senior obligation of a rated issuer.

Moody's ratings are opinions, not recommendations to buy or sell, and their
accuracy is not guaranteed. A rating should be weighed solely as one factor in
an investment decision and you should make your own study and evaluation of any
issuer whose securities or debt obligations you consider buying or selling.

Note: Moody's applies numerical modifiers, 1, 2 and 3 in each generic rating
classification from Aa through B in its corporate bond rating system. The
modifier 1 indicates that the security ranks in the higher end of its generic
rating category; the modifier 2 indicates a mid-range ranking; and the modifier
3 indicates that the issue ranks in the lower end of its generic rating
category.

A-2

<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-3

<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.

Plus (+) or minus (-): The ratings from 'AA' to 'CCC' may be modified by the
addition of a plus or minus sign to show relative standing within the major
rating categories.

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
AA- may vary slightly from time to time because of economic conditions.

A+ Protection factors are average but adequate. However, risk factors are
A- more variable and greater in periods of economic stress.

BBB+ Below average protection factors but still considered sufficient for
BBB- prudent investment. Considerable variability in risk during economic
cycles.

BB+ Below investment grade but deemed likely to meet obligations when due.
BB Present or prospective financial protection factors fluctuate
BB- according to industry conditions or company fortunes. Overall quality
may move up or down frequently within this category.

B+ Below investment grade and possessing risk that obligations will not
B be met when due. Financial protection factors will fluctuate widely
B- according to economic cycles, industry 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.

A-4

<PAGE>

DESCRIPTION OF FITCH'S LONG-TERM RATINGS

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 liquidation or reorganization of the
obligor. 'DDD' represents the highest potential for recovery on these
bonds, and 'D' represents the lowest potential for recovery.

A-5

<PAGE>

PLUS (+) MINUS
(-) Plus and minus signs are used 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', 'DDD', 'DD', or 'D'
categories.
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.

Notes:"+" or "-" may be appended to a rating to denote relative status within
major rating categories.

Ratings of BB and below are assigned where it is considered that
speculative characteristics are present.

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-6

<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
(Issues regarded as having speculative characteristics in the likelihood of
timely repayment of principal and interest.)

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

Ratings in the Long-Term Debt categories may include a plus (+) or minus (-)
designation, which indicates where within the respective category the issue is
placed.

DESCRIPTION OF COMMERCIAL PAPER RATINGS

A-7

<PAGE>

A-8

SCHEDULE OF INVESTMENTS TIP FUNDS
September 30, 1998

Market
TIP TARGET SELECT Value
EQUITY FUND Shares (000)
- --------------------------------------------------------------------------------
COMMON STOCKS (102.6%)
BANKS (2.8%)
BankBoston 361 $ 12
First American 390 15
-----
27
-----
BROADCASTING, NEWSPAPERS, AND ADVERTISING (1.4%)
True North Communications 650 14
-----
COMPUTERS AND SERVICES (15.1%)
Compaq Computer 700 22
Compuware* 400 24
Documentum* 600 24
EMC* 450 26
Mercury Interactive* 625 25
Microsoft* 225 25
-----
146
-----
DRUGS (5.1%)
American Home Products 380 20
Bristol-Myers Squibb 145 15
Zeneca Group 400 14
-----
49
-----
ENTERTAINMENT (2.7%)
Alliance Gaming* 10,225 26
-----
ENVIRONMENTAL SERVICES (2.5%)
Waste Management* 500 24
-----
FINANCIAL SERVICES (1.3%)
Fannie Mae 200 13
-----
FOOD, BEVERAGE, AND TOBACCO (6.5%)
Anheuser Busch 475 26
Flowers Industries 1,000 22
Universal Foods 730 15
-----
63
-----
GAS/NATURAL GAS (2.9%)
Enron 230 12
Williams 570 16
-----
28
-----

Page 1
<PAGE>

Market
Value
Shares (000)
- --------------------------------------------------------------------------------

INSURANCE (1.8%)
American General 260 $ 17
-----
MEDICAL PRODUCTS AND SERVICES (5.8%)
Baxter International 310 18
Unilab 18,375 38
-----
56
-----
MISCELLANEOUS BUSINESS SERVICES (2.0%)
Pitney Bowes 365 19
-----
MISCELLANEOUS MANUFACTURING (2.3%)
Tyco International Limited 400 22
-----
PAPER AND PAPER PRODUCTS (3.3%)
Drypers* 10,750 32
-----
PETROLEUM AND FUEL PRODUCTS (3.7%)
Bayard Drilling Technologies* 700 3
Key Energy Group* 1,460 14
Nabors Industries* 840 13
USX-Marathon Group 175 6
-----
36
-----
PHOTOGRAPHIC EQUIPMENT AND SUPPLIES (4.9%)
Eastman Kodak 400 31
Xerox 185 16
-----
47
-----
PRINTING AND PUBLISHING (4.3%)
McGraw-Hill 530 42
-----
RETAIL (14.1%)
Abercrombie & Fitch, Cl A* 550 24
Gap 450 24
Home Depot 650 26
Safeway* 575 27
The Limited 425 9
Tricon Global Restaurants* 670 26
-----
136
-----
SEMICONDUCTORS/INSTRUMENTS (6.8%)
Intel 775 66
-----
STEEL AND STEEL WORKS (0.9%)
AK Steel Holding 550 9
-----

The accompanying notes are an integral part of the financial statements.

Page 2
<PAGE>

SCHEDULE OF INVESTMENTS TIP FUNDS
September 30, 1998

Shares/Face Market
TIP TARGET SELECT Amount Value
EQUITYFUND (Concluded) (000) (000)
- --------------------------------------------------------------------------------
TELEPHONES AND TELECOMMUNICATION (7.7%)
Clearnet, Cl A* 6,310 $ 50
Frontier 500 14
Sprint 145 10
-----
74
-----
WHOLESALE (4.7%)
Exide 3,960 45
-----
TOTAL COMMON STOCKS
(Cost $1,093) 991
-----

REPURCHASE AGREEMENT (0.2%)
Morgan Stanley,
5.05%, dated 09/30/98,
matures 10/01/98, repurchase price
$2,138(collateralized by U.S.
Treasury Note, par value
$2,026, 7.75%, 02/15/01,
market value $2,191) $2 2
-----
TOTAL REPURCHASE AGREEMENT
(Cost $2) 2
-----
TOTAL INVESTMENTS (102.8%)
(Cost $1,095) $ 993
======

- ----------
* NON-INCOME PRODUCING SECURITY
Cl--CLASS

The accompanying notes are an integral part of the financial statements.

Page 3
<PAGE>

STATEMENT OF ASSETS AND LIABILITIES (000) TIP FUNDS
September 30, 1998

<TABLE>
<CAPTION>
TIP TARGET
SELECT EQUITY
FUND
- ---------------------------------------------------------------------------------------------------------------
<S> <C>

Assets:
Investment Securities at Value (Cost $1,095)................................ $ 993
Receivable for Investment Securities Sold .................................. 221
Other Assets ............................................................... 1
- ---------------------------------------------------------------------------------------------------------------

Total Assets ............................................................ 1,215
- ---------------------------------------------------------------------------------------------------------------
Liabilities:
Payable for Investment Securities Purchased ............................... 203
Accrued Expenses ........................................................... 18
Capital Shares Redeemed Payable ........................................... 22
Other Liabilities .......................................................... 6
- ---------------------------------------------------------------------------------------------------------------
Total Liabilities ......................................................... 249
- ---------------------------------------------------------------------------------------------------------------
Net Assets:
Portfolio shares (unlimited authorization--no par value) based on
93,439 outstanding shares of beneficial interest ........................ 999
Distributions in Excess of Net Investment Income............................ (1)
Accumulated Net Realized Gain on Investments .............................. 70
Net Unrealized Depreciation of Investments ................................ (102)
- ---------------------------------------------------------------------------------------------------------------
Total Net Assets ........................................................ $ 966
===============================================================================================================

Net Asset Value, Offering Price, and Redemption Price Per Share .............. $10.34
===============================================================================================================

</TABLE>

The accompanying notes are an integral part of the financial statements.

Page 4
<PAGE>

STATEMENT OF OPERATIONS (000) TIP FUNDS
<TABLE>
<CAPTION>
TIP TARGET SELECT
EQUITY FUND
-------------------
FOR THE
PERIOD 1/1/98
THRU 9/30/98(1)
- -------------------------------------------------------------------------------------------------------------------
<S> <C>

Investment Income:
Dividends ............................................................................... $ 6
Interest ................................................................................ 2
- -------------------------------------------------------------------------------------------------------------------

Total Investment Income................................................................ 8
- -------------------------------------------------------------------------------------------------------------------
Expenses:
Investment Advisory Fees ................................................................ 7
Investment Advisory Fee Waiver .......................................................... (7)
Administrator Fees ...................................................................... 56
Administrator Fee Waiver ................................................................ (56)
Custodian Fees .......................................................................... 4
Transfer Agent Fees ..................................................................... 15
Professional Fees ....................................................................... 9
Trustee Fees ............................................................................ 1
Registration Fees ....................................................................... 14
Pricing Fees ............................................................................ 2
Printing Fees ........................................................................... 6
Amortization of Deferred
Organizational Costs .................................................................. 4
Insurance and Other Fees ................................................................ 1
- -------------------------------------------------------------------------------------------------------------------
Total Expenses ........................................................................ 56
- -------------------------------------------------------------------------------------------------------------------
Less: Reimbursements by Advisor............................................................. (48)
- -------------------------------------------------------------------------------------------------------------------
Total Net Expenses .................................................................... 8
- -------------------------------------------------------------------------------------------------------------------
Net Investment Income ............................................................. --
- -------------------------------------------------------------------------------------------------------------------
Net Realized Gain From Securities Sold .................................................. 70
Net Unrealized Depreciation of Investment Securities .................................... (102)
- -------------------------------------------------------------------------------------------------------------------

Net Realized and Unrealized Loss on Investments ......................................... (32)
- -------------------------------------------------------------------------------------------------------------------

Net Decrease in Net Assets Resulting From Operations .................................... $ (32)
===================================================================================================================
(1) Commenced operations on January 1, 1998.
Amounts designated as "--" are either $0 or have been rounded to $0.

</TABLE>

The accompanying notes are an integral part of the financial statements.

Page 5
<PAGE>

STATEMENT OF CHANGES IN NET ASSETS (000) TIP FUNDS

<TABLE>
<CAPTION>
TIP TARGET
SELECT EQUITY FUND
--------------------
FOR THE
PERIOD 1/1/98
THRU 9/30/98(1)
- -----------------------------------------------------------------------------------------------------------------
<S> <C>
Investment Activities:
Net Investment Income .................................................................. $--
Net Realized Gain on Securities Sold ................................................... 70
Net Unrealized Depreciation of Investment Securities ................................... (102)
- -----------------------------------------------------------------------------------------------------------------

Net Decrease in Net Assets Resulting from Operations ................................. (32)
- -----------------------------------------------------------------------------------------------------------------

Distributions to Shareholders:
Net Investment Income .................................................................. (1)
Realized Capital Gain .................................................................. --
- -----------------------------------------------------------------------------------------------------------------

Total Distributions .................................................................. (1)
- -----------------------------------------------------------------------------------------------------------------

Capital Share Transactions:
Proceeds from Shares Issued ............................................................ 1,272
Proceeds from Shares Issued in Lieu of Cash Distributions .............................. 1
Cost of Shares Redeemed ................................................................ (274)
- -----------------------------------------------------------------------------------------------------------------

Increase in Net Assets From Capital Share Transactions ............................... 999
- -----------------------------------------------------------------------------------------------------------------

Total Increase in Net Assets ......................................................... 966
- -----------------------------------------------------------------------------------------------------------------

Net Assets:
Beginning of Period .................................................................. --
- -----------------------------------------------------------------------------------------------------------------
End of Period ........................................................................ $ 966
- -----------------------------------------------------------------------------------------------------------------

- -----------------------------------------------------------------------------------------------------------------
Shares Issued and Redeemed:
Issued ................................................................................. 115
Issued in Lieu of Cash Distributions ................................................... --
Redeemed ............................................................................... (22)

- -----------------------------------------------------------------------------------------------------------------
Net Increase in Share Transactions .................................................... 93
=================================================================================================================
</TABLE>

(1) Commenced operations on January 1, 1998.
Amounts designated as "--" are either $0 or have been rounded to $0.

The accompanying notes are an integral part of the financial statements.

Page 6
<PAGE>

FINANCIAL HIGHLIGHTS TIP FUNDS

For a Share Outstanding Throughout the Period ended September 30, 1998

Net Net Net
Asset Realized and Distributions Distributions Asset Assets Ratio
Value Net Unrealized from Net from Value End of Expenses
Beginning Investment Gains on Investment Capital End of Period to Average
of Period Income Investments Income Gains of Period Total Return(1) (000) Net Assets
- ----------------------------------------------------------------------------------------------------------------------------------
TIP TARGET SELECT EQUITY FUND
- ----------------------------------------------------------------------------------------------------------------------------------

<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1998(2) $10.00 -- 0.35 (0.01) -- $10.34 3.50% $966 1.30%*

<CAPTION>
Ratio of Net
Ratio of Investment
Ratio of Net Expenses Income to
Investment to Average Average
Income Net Assets Net Assets Portfolio
to Average (Excluding (Excluding Turnover
Net Assets Waivers) Waivers) Rate
------------------------------------------------------------------------------
TIP Target Select Equity Fund
------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1998(2) 0.02%* 18.76%* (17.44)%* 803.02%
</TABLE>

- ----------
* Annualized
(1) Returns are for the period indicated and have not been annualized.
(2) The TIP Target Select Equity Fund commenced operations on January 1, 1998.

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

The accompanying notes are an integral part of the financial statements.

Page 7
<PAGE>

NOTES TO FINANCIAL STATEMENTS TIP FUNDS
September 30, 1998

1. ORGANIZATION:
TIP FUNDS (the "Trust") a Massachusetts business trust, is registered under the
Investment Company Act of 1940, as amended, as a diversified open-end management
investment company with 10 funds (the "Funds"). The financial statement included
herein is for the TIP Target Select Equity Fund (the "Target Select Equity
Fund") (the "Fund"). The financial statements of the remaining portfolios are
presented separately. The assets of each fund are segregated, and a
shareholder's interest is limited to the portfolio in which shares are held. The
Fund's prospectus provides a description of the Fund's investment objectives,
policies, and strategies. The Fund is non-diversified, and may therefore be
invested in equity securities of a limited number of issues.

2. SIGNIFICANT ACCOUNTING POLICIES:
The following is a summary of the significant accounting policies followed by
the Fund.
SECURITY VALUATION -- Investments in equity securities which are traded on
a national exchange (or reported on the NASDAQ national market system) are
stated at the last quoted sales price if readily available for such equity
securities on each business day; other equity securities traded in the
over-the-counter market and listed equity securities for which no sale was
reported on that date are stated at the last quoted bid price.
FEDERAL INCOME TAXES -- It is the Fund's intention to qualify as a
regulated investment company by complying with the appropriate provisions of the
Internal Revenue Code of 1986, as amended. Accordingly, no provision for Federal
income taxes is required.
SECURITY TRANSACTIONS AND RELATED INCOME -- Security transactions are
accounted for on the date the security is purchased or sold (trade date).
Dividend income is recognized on the ex-dividend date, and interest income is
recognized on the accrual basis. Costs used in determining realized gains and
losses on the sales of investment securities are those of the specific
securities sold during the respective holding period.
NET ASSET VALUE PER SHARE -- The net asset value per share of the Fund is
calculated on each business day, by dividing the total value of the Fund's
assets, less liabilities, by the number of shares outstanding.
REPURCHASE AGREEMENTS -- Securities pledged as collateral for repurchase
agreements are held by the custodian bank until the respective agreements
mature. Provisions of the repurchase agreements ensure that the market value of
the collateral, including accrued interest thereon, is sufficient in the event
of default of the counterparty. If the counterparty defaults and the value of
the collateral declines or if the counterparty enters an insolvency proceeding,
realization of the collateral by the Fund may be delayed or limited.
EXPENSES -- Expenses that are directly related to the Fund are charged to
the Fund. Other operating expenses of the Trust are prorated to the funds on the
basis of relative daily net assets.

Page 8
<PAGE>

NOTES TO FINANCIAL STATEMENTS (CONTINUED) TIP FUNDS
September 30, 1998

DISTRIBUTIONS TO SHAREHOLDERS -- Distributions from net investment income
are declared and paid to Shareholders on a quarterly basis. Any net
realized capital gains on sales of securities are distributed to
Shareholders at least annually. Dividends from net investment income and
distributions from net realized capital gains are determined in accordance
with U.S. Federal income tax regulations, which may differ from those
amounts determined under generally accepted accounting principles. These
book/tax differences are either temporary or permanent in nature. To the
extent these differences are permanent, they are charged or credited to
paid-in-capital or accumulated net realized gain, as appropriate, in the
period that the differences arise. USE OF ESTIMATES -- The preparation of
financial statements in conformity with generally accepted accounting
principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements,
and the reported amounts of income and expenses during the reported period.
Actual results could differ from those estimates.

3. ORGANIZATIONAL COSTS AND TRANSACTIONS WITH AFFILIATES:
Organization costs have been capitalized by the Fund and are being amortized
over a period of sixty months. In the event any of the initial shares of a Fund
are redeemed by any holder thereof during the period that such Fund is
amortizing its organizational costs, the redemption proceeds payable to the
holder thereof by the Fund will be reduced by the unamortized organizational
costs in the same ratio as the number of initial shares outstanding at the time
of redemption.

Certain officers of the Trust are also officers of SEI Investments Mutual Funds
Services (the "Administrator") and/or SEI Investments Distribution Co. (the
"Distributor"). Such officers are paid no fees by the Trust for serving as
officers and trustees of the Trust.

4. ADMINISTRATION, SHAREHOLDER SERVICING, AND DISTRIBUTION AGREEMENTS:
The Trust and the Administrator are parties to an agreement under which the
Administrator provides management and administrative services for an annual fee
of 0.12% of the average daily net assets of the Fund up to $75 million, 0.10%on
the next $75 million, 0.09% on the next $150 million, 0.08% on the next $300
million, and 0.075% of such assets in excess on $600 million. There is a minimum
annual fee of $75,000 per Fund payable to the Administrator for services
rendered to the Fund under the Administration Agreement. During fiscal 1998, the
Administrator has voluntarily waived its fee.

DST Systems, Inc., (the "Transfer Agent"), serves as the transfer agent and
dividend disbursing agent for the Fund under a transfer agency agreement with
the Trust.

The Trust and the Distributor are parties to a Distribution Agreement dated
April 30, 1996. The Distributor receives no fees for its distribution services
under this agreement.

Page 9
<PAGE>

NOTES TO FINANCIAL STATEMENTS (CONCLUDED) TIP FUNDS
September 30, 1998

5. INVESTMENT ADVISORY AGREEMENT:
The Trust and Turner Investment Partners, Inc. (the "Adviser") are parties to an
Investment Advisory Agreement dated April 30, 1996, under which the Adviser
receives an annual fee equal to 1.05% of the average daily net assets of the
Target Select Equity Fund. The Fund currently has three Sub-Advisers--Chartwell
Investment Partners, Clover Capital Management, Inc., and Penn Capital
Management, Inc. (each a "Sub-Adviser" and collectively, the "Sub-Advisers").
Each Sub-Adviser manages a portion of the Fund's assets, which allocation is
determined by the Trustees upon the recommendation of the Adviser. For its
services, each of the Sub-Advisers is entitled to receive a fee from Turner
Investment Partners, which is calculated daily and paid monthly, at an annual
rate of .80% of the average daily net assets of the Fund allocated to it. The
Adviser has voluntarily agreed to waive all or a portion of its fees and to
reimburse expenses of the Target Select Equity Fund in order to limit its total
operating expenses (as a percentage of average daily net assets on an annualized
basis) to not more than 1.30%. Fee waivers and expense reimbursements are
voluntary and may be terminated at any time.

6. INVESTMENT TRANSACTIONS:
The total cost of security purchases and the proceeds from security sales, other
than short-term investments, for the period ended September 30, 1998 are as
follows (000):
TIP TARGET
SELECT EQUITY FUND
-------------------
Purchases ...................... $7,975
Sales .......................... $6,950

At September 30, 1998, the total cost of securities for Federal income tax
purposes was $1,109,061. The aggregate gross unrealized appreciation and
depreciation for securities held by the Fund at September 30, 1998, is as
follows (000):
TIP TARGET
SELECT EQUITY FUND
- --------------------------------------------------------------------------------
Aggregate gross unrealized appreciation $ 25
Aggregate gross unrealized depreciation (141)
-------
Net unrealized depreciation ..... $ (116)
=======

Page 10
<PAGE>

REPORT OF INDEPENDENT AUDITORS TIP FUNDS

TO THE SHAREHOLDERS AND BOARD OF TRUSTEES
TIP FUNDS

We have audited the accompanying statement of assets and liabilities
including the schedule of investments of the TIP Target Select Equity Fund (one
of the funds constituting the TIP Funds) as of September 30, 1998, and the
related statement of operations, the statement of changes in net assets, and
financial highlights for the nine months then ended. These financial statements
and financial highlights are the responsibility of the Fund's management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audit.

We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
September 30, 1998, by correspondence with the custodian and brokers. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for our
opinion.

In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position of the
TIP Target Select Equity Fund of the TIP Funds at September 30, 1998, the
results of its operations, the changes in its net assets, and financial
highlights for the nine months then ended, in conformity with generally accepted
accounting principles.

/s/ Ernst & Young LLP

Philadelphia, Pennsylvania
November 2, 1998

Page 11
<PAGE>

STATEMENT OF NET ASSETS TIP FUNDS
September 30, 1998

PENN CAPITAL SELECT Value
FINANCIAL SERVICES FUND Shares (000)
- --------------------------------------------------------------------------------
COMMON STOCKS (104.5%)
BANKS (91.2%)
Bank United Corporation, Cl A 850 $ 30
BankBoston 300 10
California Federal Bank -
Contingent Litigation
Recovery Participation
Interests* 1,150 16
California Federal Bank -
Secondary Contingent
Litigation Recovery
Participation Interests* 950 15
Cape Cod Bank & Trust 1,560 27
Century Bancorp, Cl A 1,350 23
Chase Manhattan Bank 160 7
Crestar Financial 460 26
First Essex Bancorp 1,200 20
First Union 902 46
Fleet Financial Group 490 36
Long Island Bancorp 340 16
Mellon Bank 625 34
National Penn Bancshares 600 16
North Fork Bancorporation 150 3
NSS Bancorp 325 15
PNC Bank 770 35
Premier National Bancorp* 1,328 23
Provident Bankshares 1,166 30
Regions Financial 800 29
Seacoast Banking of Florida 1,000 30
Sovereign Bancorp 2,450 33
Summit Bancorp 2,130 80
United Bankshares 860 22
Western Bancorp 550 19
----
641
----

FINANCIAL SERVICES (6.9%)
American Express 100 8
Mech Financial 925 23
Scott & Stringfellow Financial 555 18
----
49
----

Page 12
<PAGE>

Value
Shares (000)
- --------------------------------------------------------------------------------
INSURANCE (6.4%)
Allstate 250 $ 10
American International Group 90 7
Conseco 586 18
Equitable 245 10
------
45
------
TOTAL COMMON STOCKS
(Cost $857) 735
------

MUTUAL FUND (0.6%)
SEI Daily Income Trust Money
Market Portfolio 4 4
------
TOTAL MUTUAL FUND
(Cost $4) 4
------
TOTAL INVESTMENTS (105.1%)
(Cost $861) 739
------
OTHER ASSETS AND LIABILITIES, NET (-5.1%)
(36)
------

NET ASSETS:
Portfolio Shares (unlimited
authorization -- no par value)
based on 66,958 outstanding
shares of beneficial interest 774
Undistributed net investment income 4
Accumulated net realized gain
on investments 47
Net unrealized depreciation
on investments (122)
------
TOTAL NET ASSETS (100.0%) $ 703
======
Net Asset Value, Offering and
Redemption Price Per Share $10.50

======
- ----------
* NON-INCOME PRODUCING SECURITY
Cl--CLASS

The accompanying notes are an integral part of the financial statements.

Page 13
<PAGE>

STATEMENT OF OPERATIONS (000) TIP FUNDS
<TABLE>
<CAPTION>
PENN CAPITAL SELECT
FINANCIAL SERVICES FUND
-----------------------
FOR THE
PERIOD 10/20/97
THRU 9/30/98 (1)
- ------------------------------------------------------------------------------------------------------------------
<S> <C>
Investment Income:
Dividends.................................................................. $ 12
Interest ................................................................... 2
- ------------------------------------------------------------------------------------------------------------------

Total Investment Income.................................................. 14
- ------------------------------------------------------------------------------------------------------------------
Expenses:
Investment Advisory Fees ................................................... 6
Investment Advisory Fee Waiver ............................................ (6)
Administrator Fees ........................................................ 72
Administrator Fee Waiver .................................................. (37)
Custodian Fees ............................................................ 5
Transfer Agent Fees ....................................................... 24
Professional Fees ......................................................... 23
Trustee Fees .............................................................. 2
Registration Fees ......................................................... 29
Pricing Fees .............................................................. 3
Printing Fees ............................................................. 11
Amortization of Deferred Organizational Costs............................... 6
Insurance and Other Fees .................................................. 3
- ------------------------------------------------------------------------------------------------------------------
Total Expenses .......................................................... 141
- ------------------------------------------------------------------------------------------------------------------
Less: Reimbursements by Advisor............................................ (131)
- ------------------------------------------------------------------------------------------------------------------
Total Net Expenses ...................................................... 10
- ------------------------------------------------------------------------------------------------------------------
Net Investment Income ............................................... 4
- ------------------------------------------------------------------------------------------------------------------
Net Realized Gain From Securities Sold .................................... 53
Net Unrealized Depreciation
of Investment Securities ................................................. (122)
- ------------------------------------------------------------------------------------------------------------------
Net Realized and Unrealized Loss
on Investments ......................................................... (69)
- ------------------------------------------------------------------------------------------------------------------
Net Decrease in Net Assets Resulting
From Operations ........................................................ $ (65)
==================================================================================================================
<FN>
(1) Commenced operations on October 20, 1997.
</FN>
</TABLE>

The accompanying notes are an integral part of the financial statements.

Page 14

<PAGE>

STATEMENT OF CHANGES IN NET ASSETS (000) TIP FUNDS
<TABLE>
<CAPTION>
PENN CAPITAL SELECT
FINANCIAL SERVICES FUND
-----------------------
FOR THE
PERIOD 10/20/97
THRU 9/30/98(1)
- ------------------------------------------------------------------------------------------------------------------
<S> <C>
Investment Activities:
Net Investment Income ................................................... $ 4
Net Realized Gain on Securities Sold..................................... 53
Net Unrealized Depreciation of
Investment Securitiess ................................................ (122)
- ------------------------------------------------------------------------------------------------------------------
Net Decrease in Net Assets Resulting
from Operations ..................................................... (65)
- ------------------------------------------------------------------------------------------------------------------
Distributions to Shareholders:
Net Investment Income ................................................... --
Realized Capital Gain ................................................... (6)
- ------------------------------------------------------------------------------------------------------------------
Total Distributions ................................................... (6)
- ------------------------------------------------------------------------------------------------------------------
Capital Share Transactions:
Proceeds from Shares Issued ............................................. 870
Proceeds from Shares Issued in Lieu of Cash Distributions................ 6
Cost of Shares Redeemed.................................................. (102)
- ------------------------------------------------------------------------------------------------------------------
Increase in Net Assets From
Capital Share Transactions............................................. 774
- ------------------------------------------------------------------------------------------------------------------
Total Increase in Net Assets .......................................... 703
- ------------------------------------------------------------------------------------------------------------------
Net Assets:
Beginning of Period.................................................... --
- ------------------------------------------------------------------------------------------------------------------
End of Period.......................................................... $703 (2)
==================================================================================================================
Shares Issued and Redeemed:
Issued .................................................................. 74
Issued in Lieu of Cash Distributions..................................... 1
Redeemed................................................................. (8)
- ------------------------------------------------------------------------------------------------------------------
Net Increase in Share Transactions....................................... 67
- ------------------------------------------------------------------------------------------------------------------
Amounts designated as "--" are either $0 or have been rounded to $0.
<FN>
(1) Commenced operations on October 20, 1997.
(2) Includes undistributed net investment income of $4.
</FN>
</TABLE>

The accompanying notes are an integral part of the financial statements.

Page 15
<PAGE>

FINANCIAL HIGHLIGHTS TIP FUNDS

For a Share Outstanding Throughout the Period ended September 30, 1998

Net Realized and Net Net Ratio of Net
Asset Unrealized Distributions Distributions Asset Assets Ratio Investment
Value Net Loss from Net from Value End of Expenses Income
Beginning Investment on Investment Capital End Total of Period to Average to Average
of Period Income Investments Income Gains of Period Return(1) (000) Net Assets Net Assets
--------- ---------- ----------- ------------- ------------- --------- --------- --------- ----------- ----------
- -------------------------------------------
PENN CAPITAL SELECT FINANCIAL SERVICES FUND
- -------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1998(2) $10.00 0.07 0.64 (0.01) (0.20) $10.50 6.81% $703 1.40%* 0.68%*

Ratio of Net
Ratio of Investment
Expenses Income to
to Average Average
Net Assets Net Assets
(Excluding (Excluding Portfolio
Waivers and Waivers and Turnover
Reimbursements) Reimbursements) Rate
--------------- --------------- ---------
<S> <C> <C> <C>
1998(2) 29.22%* (27.14)%* 174.75%
</TABLE>

- ------------
* Annualized
(1) Returns are for the period indicated and have not been annualized.
(2) Commenced operations on October 20, 1997.

The accompanying notes are an integral part of the financial statements.

Page 16
<PAGE>

NOTES TO FINANCIAL STATEMENTS TIP FUNDS
September 30, 1998

1. ORGANIZATION:
TIP FUNDS (the "Trust") a Massachusetts business trust, is registered under the
Investment Company Act of 1940, as amended, as a diversified open-end management
investment company with 10 funds. The financial statements included herein are
for the Penn Capital Select Financial Services Fund, (the "Fund"). The financial
statements of the remaining portfolios are presented separately. The assets of
the Fund are segregated, and a shareholder's interest is limited to the fund in
which shares are held. The Fund's prospectus provides a description of the
Fund's investment objectives, policies, and strategies.

2. SIGNIFICANT ACCOUNTING POLICIES:
The following is a summary of the significant accounting policies followed by
the Fund.

SECURITY VALUATION -- Investments in equity securities which are traded on
a national exchange (or reported on the NASDAQ national market system) are
stated at the last quoted sales price if readily available for such equity
securities on each business day; other equity securities traded in the
over-the-counter market and listed equity securities for which no sale was
reported on that date are stated at the last quoted bid price.

FEDERAL INCOME TAXES -- It is the Fund's intention to qualify as a regulated
investment company by complying with the appropriate provisions of the Internal
Revenue Code of 1986, as amended. Accordingly, no provision for Federal income
taxes is required.

SECURITY TRANSACTIONS AND RELATED INCOME -- Security transactions are accounted
for on the date the security is purchased or sold (trade date). Dividend income
is recognized on the ex-dividend date, and interest income is recognized on the
accrual basis. Costs used in determining realized gains and losses on the sales
of investment securities are those of the specific securities sold during the
respective holding period.

NET ASSET VALUE PER SHARE -- The net asset value per share of the Fund is
calculated on each business day, by dividing the total value of the Fund's
assets, less liabilities, by the number of shares outstanding.

REPURCHASE AGREEMENTS -- Securities pledged as collateral for repurchase
agreements are held by the custodian bank until the respective agreements
mature. Provisions of the repurchase agreements ensure that the market value of
the collateral, including accrued interest thereon, is sufficient in the event
of default of the counterparty. If the counterparty defaults and the value of
the collateral declines or if the counterparty enters an insolvency proceeding,
realization of the collateral by the Fund may be delayed or limited.

Page 17
<PAGE>

NOTES TO FINANCIAL STATEMENTS (Continued) TIP FUNDS
September 30, 1998

EXPENSES -- Expenses that are directly related to the Fund are charged to
the Fund. Other operating expenses of the Trust are prorated to the funds
on the basis of relative daily net assets.

Dividends from net investment income and distributions from net realized
capital gains are determined in accordance with U.S. Federal income tax
regulations, which may differ from those amounts determined under generally
accepted accounting principles. These book/tax differences are either
temporary or permanent in nature. To the extent these differences are
permanent, they are charged or credited to paid-in-capital or accumulated
net realized gain, as appropriate, in the period that the differences
arise.

USE OF ESTIMATES -- The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date
of the financial statements, and the reported amounts of income and
expenses during the reported period. Actual results could differ from those
estimates.

4. ADMINISTRATION, SHAREHOLDER SERVICING, AND DISTRIBUTION AGREEMENTS:
The Trust and the Administrator are parties to an agreement under which the
Administrator provides management and administrative services for an annual fee
of 0.12% of the average daily net assets of the Fund up to $75 million, 0.10% on
the next $75 million, 0.09% on the next $150 million, 0.08% on the next $300
million, and 0.075% of such assets in excess on $600 million. There is a minimum
annual fee of $75,000 payable to the Administrator for services rendered to the
Fund under the Administration Agreement. During fiscal 1998, the Administrator
has voluntarily waived a portion of its fee.

Page 18
<PAGE>

NOTES TO FINANCIAL STATEMENTS (Concluded) TIP FUNDS
September 30, 1998

DST Systems, Inc., (the "Transfer Agent") serves as the transfer agent and
dividend disbursing agent for the Fund under a transfer agency agreement with
the Trust.

The Trust and the Distributor are parties to a Distribution Agreement dated
April 30, 1996. The Distributor receives no fees for its distribution services
under this agreement.

5. INVESTMENT ADVISORY AGREEMENT:
The Trust and Penn Capital Management Company, Inc. (the "Adviser") are parties
to an Investment Advisory Agreement, under which the Adviser receives an annual
fee equal to 1.00% of the average daily net assets of the Fund. The Adviser has
voluntarily agreed to waive all or a portion of its fees and to reimburse
expenses of the Fund in order to limit its total operating expenses (as a
percentage of average daily net assets on an annualized basis) to not more than
1.40%. Fee waivers and expense reimbursements are voluntary and may be
terminated at any time.

6. INVESTMENT TRANSACTIONS:
The total cost of security purchases and the proceeds from security sales, other
than short-term investments, for the period ended September 30, 1998 are as
follows (000):
PENN CAPITAL SELECT
FINANCIAL SERVICES
--------------------
Purchases ..................... $1,933
Sales ......................... $1,129

At September 30, 1998, the total cost of securities and the net realized gains
or losses on securities sold for Federal income tax purposes was not materially
different from amounts reported for financial reporting purposes. The aggregate
gross unrealized appreciation and depreciation for securities held by the Fund
at September 30, 1998, are as follows (000):

PENN CAPITAL SELECT
FINANCIAL SERVICES
--------------------
Aggregate gross unrealized
appreciation ................ $ 16
Aggregate gross unrealized
depreciation ................ (138)
------
Net unrealized depreciation .... $ (122)
======

Page 19
<PAGE>

REPORT OF INDEPENDENT AUDITORS TIP FUNDS

TO THE SHAREHOLDERS AND BOARD OF TRUSTEES
TIP FUNDS

We have audited the accompanying statement of net assets of the Penn
Capital Select Financial Services Fund (one of the funds constituting the TIP
Funds) as of September 30, 1998, and the related statement of operations, the
statement of changes in net assets, and financial highlights for the period
October 20, 1997 through September 30, 1998. These financial statements and
financial highlights are the responsibility of the Fund's management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audit.

In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position of the
Penn Capital Select Financial Services Fund of the TIP Funds at September 30,
1998, the results of its operations, the changes in its net assets, and
financial highlights for the period October 20, 1998 through September 30, 1998,
in conformity with generally accepted accounting principles.

/s/ Ernst & Young LLP

Philadelphia, Pennsylvania
November 2, 1998

Page 20
<PAGE>