<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON January 31, 1996
File No. 33-______
File No. 811-_____
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OF 1933 /X/
and
REGISTRATION STATEMENT UNDER THE
INVESTMENT COMPANY ACT OF 1940 /X/
TURNER FUNDS
(Exact Name of Registrant as Specified in Charter)
c/o The CT Corporation System
2 Oliver Street
Boston, Massachusetts 02109
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES, ZIP CODE)
Registrant's Telephone Number, including Area Code (610) 251-0268
Mr. Stephen Darby
Turner Investment Partners, Inc.
1235 Westlakes Dr. Suite 350
Berwyn, Pennsylvania 19312-2414
(Name and Address of Agent for Service)
Copies to:
JAMES W. JENNINGS, ESQUIRE JOHN H. GRADY, JR., ESQUIRE
MORGAN, LEWIS & BOCKIUS LLP MORGAN, LEWIS & BOCKIUS LLP
2000 ONE LOGAN SQUARE 1800 M STREET, NW
PHILADELPHIA, PENNSYLVANIA 19103 WASHINGTON, DC 20036
________________________________________________________________________________
/X/ Approximate date of Proposed Public Offering:
As soon as practicable after the
effective date of this Registration Statement
________________________________________________________________________________
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.
Pursuant to the provisions of Rule 24f-2 under the Investment Act of 1940, an
indefinite number of units of beneficial interest is being registered by this
Registration Statement.
________________________________________________________________________________
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TURNER FUNDS
CROSS REFERENCE SHEET
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N-1A ITEM NO. LOCATION
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PART A -
Item 1. Cover Page Cover Page
Item 2. Synopsis Summary; Expense Summary
Item 3. Condensed Financial Information Financial Highlights
Item 4. General Description of Registrant The Trust and the Funds; Investment Objectives;
Investment Policies; Risk Factors; Investment
Limitations; General Information - The Trust
Item 5. Management of the Fund General Information-Trustees of the Trust; The
Adviser; The Administrator; The Transfer Agent;
The Distributor; Portfolio Transactions;
Expense Summary
Item 5A. Management's Discussion of Fund **
Performance
Item 6. Capital Stock and Other Securities General Information-Voting Rights; General
Information-Shareholder Inquiries; General
Information-Dividends and Distributions; Taxes
Item 7. Purchase of Securities Being Offered Purchase and Redemption of Shares
Item 8. Redemption or Repurchase Purchase and Redemption of Shares
Item 9. Pending Legal Proceedings *
PART B -
Item 10. Cover Page Cover Page
Item 11. Table of Contents Table of Contents
Item 12. General Information and History The Trust
Item 13. Investment Objectives and Policies Investment Objectives (Prospectus); Investment
Policies (Prospectus); Investment Limitations
Item 14. Management of the Registrant General Information - Trustees of the Trust
(Prospectus); Trustees and Officers of the
Trust; The Administrator
Item 15. Control Persons and Principal Trustees and Officers of the Trust;
Holders of Securities 5% Shareholders
Item 16. Investment Advisory and Other The Adviser (Prospectus and Statement of Additional
Services Information); The Administrator Prospectus
and Statement of Additional Information
The Distributor (Prospectus and
Statement of Additional Information);
The Transfer Agent (Prospectus); General
Information - Counsel and Independent Public
Accountants (Prospectus); Experts; General
Information - Custodian (Prospectus)
Item 17. Brokerage Allocation Portfolio Transactions (Prospectus); Portfolio
Transactions
Item 18. Capital Stock and Other Securities Description of Shares
Item 19. Purchase, Redemption, and Pricing Purchase and Redemption of Shares
of Securities Being Offered (Prospectus); Purchase and Redemption of
Shares; Determination
of Net Asset Value;
Item 20. Tax Status Taxes (Prospectus); Taxes
Item 21. Underwriters The Distributor
Item 22. Calculation of Performance Data Computation of Yield and Total Return
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<TABLE>
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Item 23. Financial Statements Financial Information
</TABLE>
Part C -
Information required to be included in Part C is set forth under the
appropriate item, so numbered, in Part C of this Registration
Statement.
* Not Applicable
ii
<PAGE>
TURNER FUNDS
Investment Adviser:
TURNER INVESTMENT PARTNERS, INC.
The Turner 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 funds (each a "Fund" and, together, the
"Funds"), each of which is a separate series of the Trust:
GROWTH EQUITY FUND
FIXED INCOME FUND
SMALL CAP FUND
This Prospectus concisely sets forth the information about the Trust and the
Funds 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 ___________, 1996 has been filed with the
Securities and Exchange Commission and is available without charge by calling 1-
800-________. 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 OR ANY STATE SECURITIES COMMISSION, NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
___________, 1996
<PAGE>
TABLE OF CONTENTS
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Summary.................................................................. 3
Expense Summary.......................................................... 5
Financial Highlights..................................................... 7
The Trust and the Funds.................................................. 9
Investment Objectives.................................................... 9
Investment Policies...................................................... 9
Risk Factors............................................................. 11
Investment Limitations................................................... 13
The Adviser.............................................................. 13
The Administrator........................................................ 14
The Transfer Agent....................................................... 15
The Distributor.......................................................... 15
Portfolio Transactions................................................... 15
Purchase and Redemption of Shares........................................ 15
Performance.............................................................. 18
Taxes.................................................................... 19
General Information...................................................... 20
Description of Permitted Investments and Risk Factors.................... 22
</TABLE>
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<PAGE>
SUMMARY
The following provides basic information about the Growth Equity Fund (the
"Growth Equity Fund"), Fixed Income Fund (the "Fixed Income Fund") and Small Cap
Fund (the "Small Cap Fund") (each a "Fund" and, collectively, the "Funds"). The
Funds are the three mutual funds comprising the Turner Funds (the "Trust").
This summary is qualified in its entirety by reference to the more detailed
information provided else where in this Prospectus and in the Statement of
Additional Information.
WHAT IS EACH FUND'S INVESTMENT OBJECTIVE AND PRIMARY POLICIES?
The Growth Equity Fund seeks capital appreciation. It invests in a diversified
portfolio of common stocks that, in the Adviser's opinion, have strong earnings
growth potential.
The Small Cap Fund seeks capital appreciation. It invests primarily in a
diversified portfolio of common stocks of issuers with market capitalizations of
not more than $1 billion that the Adviser believes offer strong earnings growth
potential.
The Fixed Income Fund seeks total return through both current income and capital
appreciation. It invests primarily in fixed income securities of varying
maturities.
WHAT ARE THE RISKS INVOLVED WITH INVESTING IN THE FUNDS? The investment
policies of each Fund entail certain risks and considerations of which investors
should be aware. Each Fund invests in securities that fluctuate in value, and
investors should expect each Fund's net asset value per share to fluctuate in
value. The value of equity securities in which the Growth Equity and Small Cap
Funds invest 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. In addition, the Fixed
Income Fund may invest in fixed income securities that have speculative
characteristics.
For more information about each Fund, see "Investment Objectives," "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 each Fund. See "Expense Summary" and "The Adviser."
WHO IS THE ADMINISTRATOR? SEI Financial Management Corporation (the
"Administrator") serves as the administrator and shareholder servicing agent for
the Funds. See "Expense Summary" and "The Administrator."
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WHO IS THE DISTRIBUTOR? SEI Financial Services Company (the "Distributor")
serves as the distributor of the Funds' 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 each Fund are offered on a no-load basis.
IS THERE A MINIMUM INVESTMENT? Each Fund has a minimum initial investment of
$100,000, 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 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? Each 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
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SHAREHOLDER TRANSACTION EXPENSES
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Sales Load Imposed on Purchases........................................... None
Sales Load Imposed on Reinvested Dividends................................ None
Deferred Sales Load....................................................... None
Redemption Fees (1)....................................................... None
Exchange Fees............................................................. None
</TABLE>
________________________________________________________________________________
(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.
<TABLE>
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ANNUAL OPERATING EXPENSES GROWTH SMALL FIXED
(as a percentage of average net assets) EQUITY FUND CAP FUND INCOME FUND
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Advisory Fees (after fee waivers) .75% .55% (1) .05% (1)
12b-1 Fees None None None
Other Expenses .28% (2) 70% (3) .70% (4)
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Total Operating Expenses
(after fee waivers) 1.03% (2) 1.25% .75%
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</TABLE>
(1) The Adviser has agreed, on a voluntary basis, to waive its advisory fee for
the Small Cap and Fixed Income Funds to the extent necessary to keep the
"Total Operating Expenses" of the Funds from exceeding 1.25% and .75%,
respectively. The Adviser reserves the right to terminate its waivers at
any time in its sole discretion. Absent such waivers, Advisory Fees for the
Small Cap Fund and Fixed Income Fund would be 1.00% and .50%, respectively
and Total Operating Expenses would be 1.70% and 1.20%, respectively.
(2) "Other Expenses" for the current fiscal year do not reflect the Adviser's
use of arrangements whereby certain broker-dealers have agreed to pay
certain expenses of the Growth Equity Fund in return for the direction of a
percentage of the Fund's brokerage transactions. As a result of these
arrangements, the amount of "Other Expenses" and "Total Operating Expenses"
deducted from the Fund's assets was .19% and .94%, respectively.
(3) "Other Expenses" have been restated to reflect the anticipated expenses of
the Small Cap Fund for the current year.
(4) "Other Expenses" for the Fixed Income Fund are estimated for the current
fiscal year.
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EXAMPLE
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1 year 3 years 5 years 10 years
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You would pay the following expenses on a $1,000 investment
in a Fund assuming (1) 5% annual return and (2) redemption
at the end of each time period.
Growth Equity Fund $ 11 $ 33 $ 57 $126
Fixed Income Fund $ 8 $ 24 -- --
Small Cap Fund $ 13 $ 40 $ 69 $151
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</TABLE>
THE EXAMPLE IS BASED UPON TOTAL OPERATING EXPENSES OF EACH FUND AFTER WAIVERS
AND REIMBURSEMENTS 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
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to assist the investor in understanding the various costs and expenses that may
be directly or indirectly borne by shareholders of the Funds. Additional
information may be found under "The Adviser" and "The Administrator."
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<PAGE>
FINANCIAL HIGHLIGHTS
The following information concerning the Growth Equity Fund relates to a period
of time when the assets of the Growth Equity Fund were maintained by the Turner
Growth Equity Fund of The Advisors' Inner Circle Fund. The Growth Equity Fund
acquired all of the assets and liabilities of the Turner Growth Equity Fund on
______________, 1996. All references herein to the Growth Equity Fund shall be
deemed to include the Turner Growth Equity Fund.
For a Share Outstanding Throughout the Period:
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11/01/94 11/01/93 11/01/92 03/11/92(1)
TO TO TO TO
10/31/95 10/31/94 10/31/93 10/31/92
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NET ASSET VALUE, BEGINNING OF PERIOD....... $12.46 $13.12 $10.40 $10.00
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Income From Investment Operations:
Net Investment Income ................ 0.10 0.10 0.09 0.03
Net Realized and Unrealized
Gain (Loss) on Investments............ 2.52 (0.66) 2.72 0.40
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Total From Investment Operations........... 2.62 (0.56) 2.81 0.43
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Less Distributions:
Dividends From Net Investment Income....... (0.11) (0.10) (0.09) (0.03)
Total Distributions...................... (0.11) (0.10) (0.09) (0.03)
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NET ASSET VALUE, END OF PERIOD............. $14.97 $12.46 $13.12 $10.40
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TOTAL RETURN............................... 21.15% (4.28)% 27.08% 6.95%*
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RATIOS AND SUPPLEMENTAL DATA
Net Assets, End Of Period (000)............ $115,819 $112,959 $53,327 $7,781
Ratios Of Expenses To Average Net Assets... 0.94%(2) 0.95% 1.00% 1.44%*
Ratio Of Expenses To Average Net Assets 0.94%(2) 1.08% 1.52% 2.55%*
Excluding Fee Waivers.....................
Ratio Of Net Investment Income To Average 0.78%(2) 0.86% 0.80% 0.73%*
Net Assets................................
Ratio Of Net Investment Income to 0.78%(2) 0.73% .028% (0.38)%*
Average Net Assets Excluding Fee Waivers..
Portfolio Turnover Rate.................... 177.86 164.81% 88.35% 205.00%
=====================================================================================================
</TABLE>
* Annualized
(1) The Turner Growth Equity Fund commenced operations on March 11, 1992.
(2) Absent the Turner Growth Equity Fund's participation in a directed
brokerage program, the Ratios of Expenses to Average Net Assets (with and
without waivers) and the Ratios of Net Investment Income to Average Net Assets
(with and without waivers) were 1.03% and .69%, respectively.
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<PAGE>
FINANCIAL HIGHLIGHTS
The following information concerning the Small Cap Fund relates to a period of
time when the assets of the Small Cap Fund were maintained by the Turner Small
Cap Fund of The Advisors' Inner Circle Fund. The Small Cap Fund acquired all of
the assets and liabilities of the Turner Small Cap Fund on ______________, 1996.
All references herein to the Small Cap Fund shall be deemed to include the
Turner Small Cap Fund.
For a Share Outstanding Throughout the Period:
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11/01/94 02/07/94(1)
TO TO
10/31/95 10/31/94
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NET ASSET VALUE, BEGINNING OF PERIOD......... $10.90 $10.00
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Income From Investment Operations:
Net Investment Income (Loss)............ (0.06) (0.02)
Net Realized and Unrealized
Gain (Loss) on Investments.............. 5.24 0.92
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Total From Investment Operations............. $5.18 .90
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Less Distributions: --
Dividends From Net Investment Income.........
Total Distributions................... --
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NET ASSET VALUE, END OF PERIOD............... $16.08 $10.90
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TOTAL RETURN................................. 47.52% 12.35%*
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RATIOS AND SUPPLEMENTAL DATA
Net Assets, End Of Period (000).............. $13,072 $4,806
Ratios Of Expenses To Average Net Assets..... 1.25% 1.09%*
Ratio Of Expenses To Average Net Assets 2.39% 4.32%*
Excluding Fee Waivers.....................
Ratio Of Net Investment Income To Average (0.68)% (0.27)%*
Net Assets................................
Ratio Of Net Investment Income to (1.82)% (3.50)%*
Average Net Assets Excluding Fee Waivers..
Portfolio Turnover Rate...................... 183.49% 173.92%
=================================================================================================
</TABLE>
* Annualized
(1) The Turner Small Cap Fund commenced operations on February 7, 1994.
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<PAGE>
THE TRUST AND THE FUNDS
The Turner Funds (the "Trust") offers shares in three 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 Turner Growth Equity Fund (the
"Growth Equity Fund"), Turner Fixed Income Fund (the "Fixed Income Fund"), and
Turner Small Cap Fund (the "Small Cap Fund") (each a "Fund" and, together, the
"Funds").
INVESTMENT OBJECTIVES
GROWTH EQUITY FUND -- The Growth Equity Fund seeks capital appreciation.
FIXED INCOME FUND -- The Fixed Income Fund seeks total return through current
income and capital appreciation.
SMALL CAP FUND -- The Small Cap Fund seeks capital appreciation.
There can be no assurance that any Fund will achieve its investment objective.
INVESTMENT POLICIES
GROWTH EQUITY FUND
The Growth Equity Fund invests, as fully as practicable, in a portfolio of
common stocks that Turner Investment Partners, Inc. (the "Adviser") believes to
have potential for strong growth in earnings and to be reasonably valued at the
time of purchase. The Fund seeks to purchase securities that are well
diversified across industry sectors and to maintain sector concentrations that
approximate the sector weightings of the Standard and Poor's ("S&P") 500
Composite Stock Price Index (or such other appropriate index selected by the
Adviser). The Fund may invest in warrants and rights to purchase common stocks,
and may invest up to 10% of its total assets in American Depository Receipts
("ADRs"). The Fund only will purchase securities that are traded on registered
exchanges or the over-the-counter market in the United States.
FIXED INCOME FUND
The Fixed Income Fund invests in a portfolio of fixed income securities of
varying levels of quality and maturity. The Fund purchases investment grade
fixed income securities that, in the Adviser's opinion, are undervalued in the
market. To determine a security's fair market value, the Adviser will focus on
the yield and credit quality of particular securities based upon third-party
evaluations of quality as well as the Adviser's own research and analysis of the
issuer. The Adviser will attempt to
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<PAGE>
diversify the Fund's holdings across the yield curve by holding short,
intermediate and long-term securities. Normally, the Fund will maintain a
dollar-weighted average portfolio duration that approximates the average
duration range of the Fund's benchmark index, the Lehman Brothers Aggregate Bond
Index. The Adviser may increase or decrease this average weighted duration
when, in the Adviser's opinion, market conditions warrant.
The Fund will purchase the following types of securities if, at the time of
purchase, such securities either have been classified as investment grade by a
nationally recognized statistical rating organization ("NRSRO") or are
determined by the Adviser to be of comparable quality: (i) obligations issued
or guaranteed as to principal and interest by the U.S. Government or its
agencies or instrumentalities ("U.S. Government securities"); (ii) corporate
bonds and debentures of U.S. and foreign issuers rated in one of the four
highest rating categories; (iii) privately issued mortgage-backed securities
rated in the highest rating category; (iv) asset-backed securities rated in the
two highest rating categories; (v) receipts evidencing separately traded
interest and principal component parts of U.S. Government obligations
("Receipts"); (vi) commercial paper rated in one of the two highest rating
categories; (vii) obligations of U.S. commercial banks and savings and loan
institutions that have net assets of at least $500 million as of the end of
their most recent fiscal year ("bank obligations"); (viii) obligations issued or
guaranteed by the government of Canada; (ix) obligations of supranational
entities rated in one of the four highest rating categories; (x) loan
participations; (xi) repurchase agreements involving any of the foregoing
securities; and (xii) shares of other investment companies. Investment grade
bonds include securities rated BBB by S&P or Baa by Moody's Investors Service,
Inc. ("Moody's"), which may be regarded as having speculative characteristics as
to repayment of principal.
The Fund may invest in variable and floating rate obligations and in convertible
debt securities.
SMALL CAP FUND
The Small Cap Fund invests primarily in a diversified portfolio of common stocks
of issuers with market capitalizations of not more than $1 billion at the time
of purchase, that the Adviser believes to have strong earnings growth potential.
Under normal market conditions, the Fund will maintain an average market
capitalization of less than $1 billion. The Fund seeks to purchase securities
that are well diversified across industry sectors and to maintain sector
concentrations that approximate the sector weightings comprising the Russell
2500 Index (or such other appropriate index selected by the Adviser), and may
also invest in warrants and rights to purchase common stocks. The Fund may
invest up to 10% of its total assets in ADRs. The Fund only will purchase
securities that are traded on registered exchanges or the over-the-counter
market in the United States.
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ALL FUNDS
Each Fund may purchase securities on a when-issued basis.
Each Fund may invest up to 15% of its net assets in illiquid securities.
Each Fund may, in order to maintain liquidity, or if the Adviser determines that
securities meeting the Fund's investment policies are not reasonably available
for purchase, or for temporary defensive purposes, invest up to 100% of its
total assets in money market instruments (including U.S. Government securities,
bank obligations, commercial paper rated in the highest rating category by an
NRSRO, repurchase agreements involving the foregoing securities, and shares of
money market investment companies and in cash).
For a further description of these types of obligations or transactions, see
"Description of Permitted Investments and Risk Factors" and the Statement of
Additional Information.
RISK FACTORS
EQUITY 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 a fund invests will cause the net asset value of that fund to
fluctuate. An investment in such funds may be more suitable for long-term
investors who can bear the risk of short-term principal fluctuations.
The Small Cap Fund invests to a significant degree in equity securities of
smaller companies. While the Adviser intends to invest the Fund's assets in
companies that the Adviser's research indicates should, over the long term,
provide significant growth potential, any investment in smaller 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 companies are likely to be
less liquid, and subject to more abrupt or erratic market movements than
securities of larger, more established growth companies.
FIXED INCOME SECURITIES -- The market value of the fixed income investments will
change in response to interest rate changes and other factors. During periods
of fall-
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<PAGE>
ing 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.
SECURITIES OF FOREIGN ISSUERS -- Investments in the securities of foreign
issuers may subject a 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.
PORTFOLIO TURNOVER -- The annual portfolio turnover rate for the Growth Equity
Fund for the fiscal period ended October 31, 1995, was 177.86%. The annual
portfolio turnover rate for the Small Cap Fund for the fiscal period ended
October 31, 1995, was 183.49%. An annual portfolio turnover rate in excess of
100% may result from the Adviser's investment strategy of focusing on earnings
potential and disposing of securities when the Adviser believes that their
earnings potential has diminished, or may result from the Adviser's maintenance
of appropriate issuer diversification. Portfolio turnover rates in excess of
100% may result in higher transaction costs, including brokerage commissions,
and higher levels of taxable capital gain. See "Taxes."
INVESTMENT LIMITATIONS
The investment objective of each Fund and certain of the investment limitations
set forth here and in the Statement of Additional Information are fundamental
policies of that Fund. Fundamental policies cannot be changed with respect to a
Fund without the consent of the holders of a majority of that Fund's outstanding
shares.
1. No Fund may (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
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<PAGE>
(ii) acquire more than 10% of the outstanding voting securities of any one
issuer. This restriction applies to 75% of each Fund's total assets.
2. No Fund may purchase any securities which would cause more than 25% 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. No Fund may borrow money in an amount exceeding 331/3% of the value of its
total assets, provided that, for purposes of this limitation, investment
strategies which either obligate a Fund to purchase securities or require a Fund
to segregate assets are not considered to be borrowings. Except where a Fund
has borrowed money for temporary purposes in amounts not exceeding 5% of its
total assets, asset coverage of at least 300% is required for all borrowings.
The foregoing percentages will apply at the time of the purchase of a security.
THE ADVISER
Turner Investment Partners, Inc. is a professional investment management firm
founded in March, 1990. Robert Turner is the Chairman and controlling
shareholder of the Adviser. As of December 31, 1995, the Adviser had
discretionary management authority with respect to approximately $2.5 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 each Fund under an investment
advisory agreement (the "Advisory Agreement"). Under the Advisory Agreement,
the Adviser makes the investment decisions for the assets of each Fund and
contin uously reviews, supervises and administers each 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 .75% of the average daily net assets of
the Growth Equity Fund, .50% of those of the Fixed Income Fund and 1.00% of
those of the Small Cap Fund. The advisory fees for the Growth Equity Fund and
Small Cap Fund are higher than those paid by most other investment companies,
but the Adviser believes that they are comparable to the investment advisory
fees paid by other investment companies with comparable investment objectives
and policies. The Adviser has voluntarily agreed to waive all or a portion of
its fee and to reimburse expenses of the Fixed Income and Small Cap Funds in
order to limit their total
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operating expenses (as a percentage of average daily net assets on an annualized
basis) to not more than 0.75% and 1.25%, respectively. The Adviser reserves the
right, in its sole discretion, to terminate these voluntary fee waivers and
reimbursements at any time.
Robert Turner, CFA, Chairman and Chief Investment Officer of the Adviser, has
managed the Growth Equity Fund since its inception. Mr. Turner founded Turner
Investment Partners, Inc. in 1990. Prior to 1990, he was Senior Investment
Manager with Meridian Investment Company. He has 15 years of investment
experience.
William H. Chenoweth, CFA, Senior Equity Portfolio Manager of the Adviser,
manages the Small Cap Fund. Mr. Chenoweth joined Turner Investment Partners,
Inc. in 1993. Prior to 1993, he was Second Vice President with Jefferson-Pilot
Corporation. He has 11 years of investment experience.
Mark Turner, President and Director of Fixed Income Management of the Adviser,
is the manager of the Fixed Income Fund. Mr. Turner joined Turner Investment
Partners, Inc. in 1990. Prior to 1990, he was Vice President and Senior
Portfolio Manager with First Maryland Asset Management. He has 14 years of
investment experience.
THE ADMINISTRATOR
SEI Financial Management Corporation (the "Administrator"), a wholly-owned
subsidiary of SEI Corporation ("SEI"), 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
each Fund, which is calculated daily and paid monthly, at an annual rate of ___%
of that Fund's average daily net assets up to $__ million and ___% of such
assets in excess of $__ million.
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., [ADDRESS], 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.
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THE DISTRIBUTOR
SEI Financial Services Company (the "Distributor"), 680 East Swedesford Road,
Wayne, Pennsylvania 19087-1658, a wholly-owned subsidiary of SEI, 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 a Fund's
public offering price.
PORTFOLIO TRANSACTIONS
Each Fund may execute brokerage or other agency transactions through the
Distributor for which the Distributor may receive usual and customary
compensation. The Adviser may direct commission business for the Growth Equity
Fund to designated broker-dealers (including the Distributor) in connection with
such broker-dealers' payment of certain Growth Equity Fund expenses.
Since shares of the Funds are not marketed through intermediary broker-dealers,
no Fund has 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 any Fund
with qualified broker-dealers who refer clients to that Fund.
PURCHASE AND REDEMPTION OF SHARES
Investors may purchase and redeem shares of each Fund directly through the
Transfer Agent, [ADDRESS], Kansas City, Missouri 64105, 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.
Shares of each Fund are offered only to residents of states in which such shares
are eligible for purchase.
The minimum initial investment in any Fund is $100,000, and subsequent purchases
must be at least $10,000. The Distributor may waive these minimums at its
discretion. No minimum applies to subsequent purchases effected by dividend
reinvestment.
PURCHASES BY MAIL
An account may be opened by mailing a check or other negotiable bank draft
(payable to the name of the appropriate Fund) for $100,000 or more, together
with a completed Account Application to the Transfer Agent, [ADDRESS], Kansas
City,
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Missouri 64105. 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
#[____________]; for Account Number [__________]; Further Credit: [___________
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-_______ 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: DST Systems, Inc.,
[ADDRESS], Kansas City, Missouri 64105.
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").]
GENERAL INFORMATION REGARDING PURCHASES
A purchase order will be effective as of the day received by the Transfer Agent
if the Transfer Agent receives the order and payment before 4:00 p.m., Eastern
time. Payment may be made by check or readily available funds. The purchase
price of shares of any Fund is that 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 each Fund calculated to three decimal places. The
Trust will not issue certificates representing shares of any 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.
EXCHANGES
Shareholders of each Fund may exchange their shares for shares of the other
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
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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 receives exchange
instructions in writing or by telephone (an "Exchange Request") in good order by
4:00 p.m. 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 orders received by the Transfer 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
prior to 4:00 p.m., Eastern time, on any Business Day. The redemption price of
shares of any Fund is the net asset value per share of that 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 a 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.
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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VALUATION OF SHARES
The net asset value per share of each Fund is determined by dividing the total
market value of that Fund's investments and other assets, less any liabilities,
by the total outstanding shares of that 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, each 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 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 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 a 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.
A 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. A Fund may quote
Morningstar, Inc., a service that ranks mutual funds on the basis of risk-
adjusted performance. A Fund may quote Ibbotson Associates of Chicago,
Illinois, which provides historical returns of the capital markets in the U.S.
A 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 a
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.
A Fund may quote various measures of volatility and benchmark correlation in
advertising and may compare these measures to those of other funds. Measures of
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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 a Fund or its shareholders.
Shareholders are urged to consult their tax advisors regarding specific
questions as to federal, state and local income taxes.
TAX STATUS OF THE FUNDS:
Each Fund is treated as a separate entity for federal income tax purposes and is
not combined with the Trust's other portfolios. Each 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 a 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:
Each Fund will distribute all of its net investment income (including, for this
purpose, net short-term capital gain) to shareholders. Dividends from 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. It can be expected that none of the dividends
paid by the Fixed Income Fund will qualify for that deduction. Any net capital
gains will be distributed annually and will be taxed to shareholders as long-
term capital gains, regardless of how long the shareholder has held shares.
Each 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 a Fund (such as STRIPS, TRs, TIGRs and CATS,
defined in "Description of Permitted Investments and Risk Factors") are sold
with original issue discount and thus do not make periodic cash interest
payments. Each Fund will be required to include as part of its current income
the accrued discount on
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such obligations even though the Fund has not received any interest payments on
such obligations during that period. Because each Fund distributes all of its
net investment income to its shareholders, a 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 a 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. Each 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.
Each sale, exchange or redemption of a Fund's shares is a taxable event to the
shareholder.
Income received on direct U.S. obligations is exempt from income tax at the
state level when received directly and may be exempt, depending on the state,
when received by a shareholder from a Fund provided certain state-specific
conditions are satisfied. The Funds 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 a Fund is considered tax exempt in their
particular state. Income derived by a Fund from securities of foreign issuers
may be subject to foreign withholding taxes. The Funds will not be able to
elect to treat shareholders as having paid their proportionate share of such
foreign taxes.
GENERAL INFORMATION
THE TRUST
The Trust, a diversified, open-end management investment company, was organized
under Massachusetts law as a business trust under a Declaration of Trust dated
January 26, 1996. 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.
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
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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. The Shareholder 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 each Fund. The Trust also furnishes periodic
reports and, as necessary, proxy statements to shareholders of record.
SHAREHOLDER INQUIRIES
Shareholder inquiries should be directed to DST Systems, Inc., [ADDRESS], Kansas
City, Missouri 64105, or by calling 1-800-________. Purchases, exchanges and
redemptions of shares should be made through the Transfer Agent by calling 1-
800-_______.
DIVIDENDS AND DISTRIBUTIONS
Substantially all of the net investment income (excluding capital gains) of the
Growth Equity Fund is distributed in the form of quarterly dividends, that of
the Fixed Income Fund is distributed in the form of monthly dividends, and that
of the Small Cap Fund
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is distributed in the form of dividends at least annually. Shareholders of
record of the Growth Equity Fund and the Fixed Income Fund on the last Business
Day of each quarter or month, respectively, will be entitled to receive the
quarterly or monthly dividend distribution. If any capital gain is realized,
substantially all of it will be distributed 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 each 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 of 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 one or more of the
Funds:
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
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under no obligation to distribute shareholder communications received from the
issuer of the deposited security or to pass through, to the holders of the
receipts, voting rights with respect to the deposited securities.
ASSET-BACKED SECURITIES (Non-mortgage) -- Asset-backed securities are securities
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.
Asset-backed securities are not issued or guaranteed by the U.S. Government or
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 associate with mortgage-
backed securities. In addition, credit card receivables are unsecured
obligations of the cardholder.
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 similar to 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.
FOREIGN SECURITIES - Foreign securities may subject the Funds to investment
risks that differ in some respects from those related to investments in
obligations of U.S. domestic issuers. Such risks include future adverse
political and economic developments, possible imposition of withholding taxes on
interest or other income, possible seizure, nationalization, or expropriation of
foreign deposits, possible establishment of exchange controls or taxation at the
source, greater fluctuations in value due to changes in exchange rates, or the
adoption of other foreign governmental restrictions that might adversely affect
the payment of principal and
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interest on such obligations. Such investments may also entail higher custodial
fees and sales commissions than domestic investments. Foreign issuers of
securities or obligations 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. Foreign issuers are,
generally speaking, subject to less government supervision and regulation and
different accounting treatment than are those in the United States.
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. An illiquid security includes a demand
instrument with a demand notice period exceeding seven days, where there is no
secondary market for such security, and repurchase agreements with durations
over 7 days in length.
MONEY MARKET INSTRUMENTS - Money market securities are high-quality, dollar-
denominated, short-term debt instruments. They consist of: (i) bankers'
acceptances, certificates of deposits, notes and time deposits of highly-rated
U.S. banks and U.S. branches of foreign banks; (ii) U.S. Treasury obligations
and obligations issued or guaranteed by the agencies and instrumentalities of
the U.S. Government; (iii) high-quality commercial paper issued by U.S. and
foreign corporations; (iv) debt obligations with a maturity of one year or less
issued by corporations with outstanding high-quality commercial paper ratings;
and (v) repurchase agreements involving any of the foregoing obligations entered
into with highly-rated banks and broker-dealers.
MORTGAGE-BACKED SECURITIES -- Mortgage-backed securities are instruments that
entitle the holder to a share of all interest and principal payments from
mortgages underlying the security. The mortgages backing these securities
include conventional thirty-year fixed rate mortgages, graduated payment
mortgages, and adjustable rate mortgages. During periods of declining interest
rates, prepayment of mortgages underlying mortgage-backed securities can be
expected to accelerate. Prepayment of mortgages which underlie securities
purchased at a premium often results in capital losses, while prepayment of
mortgages purchased at a discount often results in capital gains. Because of
these unpredictable prepayment characteristics, it is often not possible to
predict accurately the average life or realized yield of a particular issue.
Government Pass-Through Securities: These are securities that are issued or
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guaranteed by a U.S. Government agency representing an interest in a pool of
mortgage loans. The primary issuers or guarantors of these mortgage-backed
securities are GNMA, FNMA and FHLMC. FNMA and FHLMC obligations are not backed
by the full faith and credit of the U.S. Government as GNMA certificates are,
but FNMA and FHLMC securities are supported by the instrumentalities' right to
borrow from the U.S. Treasury. GNMA, FNMA and FHLMC each guarantees timely
distributions of interest to certificate holders. GNMA and FNMA also each
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guarantees timely distributions of scheduled principal. FHLMC has in the past
guaranteed only the ultimate collection of principal of the underlying mortgage
loan; however, FHLMC now issues mortgage-backed securities (FHLMC Gold PCs)
which also guarantee timely payment of monthly principal reductions. Government
and private guarantees do not extend to the securities' value, which is likely
to vary inversely with fluctuations in interest rates.
Private Pass-Through Securities: These are mortgage-backed securities issued by
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a non-governmental entity, such as a trust. These securities include
collateralized mortgage obligations ("CMOs") and real estate mortgage investment
conduits ("REMICs") that are rated in one of the top two rating categories.
While they are generally structured with one or more types of credit
enhancement, private pass-through securities typically lack a guarantee by an
entity having the credit status of a governmental agency or instrumentality.
Collateralized Mortgage Obligations ("CMOs"): CMOs are debt obligations or
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multiclass pass-through certificates issued by agencies or instrumentalities of
the U.S. Government or by private originators or investors in mortgage loans.
In a CMO, series of bonds or certificates are usually issued in multiple
classes. Principal and interest paid on the underlying mortgage assets may be
allocated among the several classes of a series of a CMO in a variety of ways.
Each class of a CMO, often referred to as a "tranche," is issued with a specific
fixed or floating coupon rate and has a stated maturity or final distribution
date. Principal payments on the underlying mortgage assets may cause CMOs to be
retired substantially earlier then their stated maturities or final distribution
dates, resulting in a loss of all or part of any premium paid.
REMICs: A REMIC is a CMO that qualifies for special tax treatment under the
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Internal Revenue Code and invests in certain mortgages principally secured by
interests in real property. Investors may purchase beneficial interests in
REMICs, which are known as "regular" interests, or "residual" interests.
Guaranteed REMIC pass-through certificates ("REMIC Certificates) issued by FNMA
or FHLMC represent beneficial ownership interests in a REMIC trust consisting
principally of mortgage loans or FNMA, FHLMC or GNMA-guaranteed mortgage pass-
through certificates. For FHLMC REMIC Certificates, FHLMC guarantees the timely
payment of interest, and also guarantees the payment of principal as payments
are required to be made on the underlying mortgage participation certificates
issued and guaranteed as to timely distribution of principal and interest by
FNMA.
Parallel Pay Securities; PAC Bonds: Parallel pay CMOs and REMICS are structured
- ----------------------------------
to provide payments of principal on each payment date to more than one class.
These simultaneous payments are taken into account in calculating the stated
maturity date or final distribution date of each class, which must be retired by
its stated maturity date or final distribution date, but may be retired earlier.
Planned
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Amortization Class CMOs ("PAC Bonds") generally require payments of a specified
amount of principal on each payment date. PAC Bonds are always parallel pay
CMOs with the required principal payment on such securities having the highest
priority after interest has been paid to all classes.
Stripped Mortgage-Backed Securities ("SMBs"): SMBs are usually structured with
- --------------------------------------------
two classes that receive specified proportions of the monthly interest and
principal payments from a pool of mortgage securities. One class may receive
all of the interest payment and is thus termed an interest-only class ("IO"),
while the other class may receive all of the principal payments and is thus
termed the principal-only class ("PO"). The value of IOs tends to increase as
rates rise and decrease as rates fall; the opposite is true of POs. SMBs are
extremely sensitive to changes in interest rates because of the impact thereon
of prepayment of principal on the underlying mortgage securities. The market
for SMBs is not as fully developed as other markets; SMBs therefore may be
illiquid.
Risk Factors: Due to the possibility of prepayments of the underlying mortgage
- ------------
instruments, mortgage-backed securities generally do not have a known maturity.
In the absence of a known maturity, market participants generally refer to an
estimated average life. An average life estimate is a function of an assumption
regarding anticipated prepayment patterns, based upon current interest rates,
current condition in the relevant housing markets and other factors. The
assumption is necessarily subjective, and thus different market participants can
produce different average life estimates with regard to the same security.
There can be no assurance that estimated average life will be a security's
actual average life.
RECEIPTS -- Interests in separately traded interest and principal component
parts of U.S. Government obligations that are issued by banks or brokerage firms
and are created by depositing U.S. Government 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 or receipts. The
Custodian arranges for the issuance of the certificates or receipts evidencing
ownership and maintains the register. Receipts include "Treasury Receipts"
("TRs"), "Treasury Investment Growth Receipts" ("TIGRs"), and "Certificates of
Accrual on Treasury Securities" ("CATS"). TIGRs and CATS are interests in
private proprietary accounts while TRs and STRIPS (see "U.S. Treasury
Obligations") are interests in accounts sponsored by the U.S. Treasury.
Receipts are sold as zero coupon securities; for more information, see "Zero
Coupon Securities."
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.
-26-
<PAGE>
REPURCHASE AGREEMENTS -- Repurchase agreements are agreements by which a Fund
obtains a security and simultaneously commits to return the security to the
seller at an agreed upon price on an agreed upon date within a number of days
from the date of purchase. The Custodian will hold the security as collateral
for the repurchase agreement. The Fund bears a risk of loss in the event the
other party defaults on its obligations and the Fund is delayed or prevented
from exercising its right to dispose of the collateral or if the Fund realizes a
loss on the sale of the collateral. The Fund will enter into repurchase
agreements only with financial institutions deemed to present minimal risk of
bankruptcy during the term of the agreement based on established guidelines.
Repurchase agreements are considered loans under the 1940 Act.
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., Federal
National Mortgage Association 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").
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 actually
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 shares of a company at a given price during a specified
period.
-27-
<PAGE>
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, high grade debt
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. These securities are subject
to market fluctuation 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.
ZERO COUPON SECURITIES -- Zero coupon obligations are debt securities that do
not bear any interest, but instead are issued at a deep discount from par. The
value of a zero coupon obligation increases over time to reflect the interest
accreted. Such obligations will not result in the payment of interest until
maturity, and will have greater price volatility than similar securities that
are issued at par and pay interest periodically.
-28-
<PAGE>
Trust:
TURNER FUNDS
Funds:
GROWTH EQUITY FUND
FIXED INCOME FUND
SMALL CAP FUND
Adviser:
TURNER INVESTMENT PARTNERS, INC.
Distributor:
SEI FINANCIAL SERVICES COMPANY
Administrator:
SEI FINANCIAL MANAGEMENT CORPORATION
Legal Counsel:
MORGAN, LEWIS & BOCKIUS LLP
Independent Public Accountants:
ERNST & YOUNG LLP
_______________, 1996
<PAGE>
TRUST:
TURNER FUNDS
FUNDS:
GROWTH EQUITY FUND
FIXED INCOME FUND
SMALL CAP FUND
INVESTMENT ADVISER:
TURNER INVESTMENT PARTNERS, INC.
This Statement of Additional Information is not a prospectus and relates only to
the Growth Equity Fund (the "Growth Equity Fund"), the Fixed Income Fund (the
"Fixed Income Fund") and the Small Cap Fund (the "Small Cap Fund") (each a
"Fund" and, together, the "Funds"). It is intended to provide additional
information regarding the activities and operations of the Turner Funds (the
"Trust") and the Funds and should be read in conjunction with the Funds'
Prospectus dated ____________, 1996. The Prospectus may be obtained without
charge by calling 1-800-_______.
TABLE OF CONTENTS
<TABLE>
<S> <C>
THE TRUST.............................................................. S-2
DESCRIPTION OF PERMITTED INVESTMENTS................................... S-2
INVESTMENT LIMITATIONS................................................. S-5
THE ADVISER............................................................ S-7
THE ADMINISTRATOR...................................................... S-8
THE DISTRIBUTOR........................................................ S-8
TRUSTEES AND OFFICERS OF THE TRUST..................................... S-9
COMPUTATION OF YIELD AND TOTAL RETURN.................................. S-9
PURCHASE AND REDEMPTION OF SHARES..................................... S-10
DETERMINATION OF NET ASSET VALUE...................................... S-10
TAXES................................................................. S-10
PORTFOLIO TRANSACTIONS................................................ S-12
DESCRIPTION OF SHARES................................................. S-13
SHAREHOLDER LIABILITY................................................. S-13
LIMITATION OF TRUSTEES' LIABILITY..................................... S-14
5% SHAREHOLDERS....................................................... S-14
EXPERTS............................................................... S-14
FINANCIAL INFORMATION................................................. S-14
APPENDIX............................................................... A-1
</TABLE>
________________, 1996
<PAGE>
THE TRUST
This Statement of Additional Information relates only to the Growth Equity Fund
(the "Growth Equity Fund"), Fixed Income Fund (the "Fixed Income Fund") and
Small Cap Fund (the "Small Cap Fund") (each a "Fund" and, together, the
"Funds"). Each Fund is a separate series of the 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. 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." No
investment in shares of a portfolio should be made without first reading that
portfolio's prospectus. Capitalized terms not defined herein are defined in the
Prospectus offering shares of the Funds.
DESCRIPTION OF PERMITTED INVESTMENTS
INVESTMENT COMPANY SHARES
Each Fund may invest in shares of other investment companies, to the extent
permitted by applicable law and subject to certain restrictions. These
investment companies typically incur fees that are separate from those fees
incurred directly by the Fund. A Fund's purchase of such investment company
securities results in the layering of expenses, such that shareholders would
indirectly bear a proportionate share of the operating expenses of such
investment companies, including advisory fees, in addition to paying Fund
expenses. Under applicable regulations, a Fund is prohibited from acquiring the
securities of another investment company if, as a result of such acquisition:
(1) the Fund owns more than 3% of the total voting stock of the other company;
(2) securities issued by any one investment company represent more than 5% of
the Fund's total assets; or (3) securities (other than treasury stock) issued by
all investment companies represent more than 10% of the total assets of the
Fund. See also "Investment Limitations."
REPURCHASE AGREEMENTS
Repurchase agreements are agreements by which a Fund obtains a security and
simultaneously commits to return the security to the seller (a member bank of
the Federal Reserve System or primary securities dealer as recognized by the
Federal Reserve Bank of New York) at an agreed upon price (including principal
and interest) on an agreed upon date within a number of days (usually not more
than seven) from the date of purchase. The resale price reflects the purchase
price plus an agreed upon market rate of interest which is unrelated to the
coupon rate or maturity of the underlying security. A repurchase agreement
involves the obligation of the seller to pay the agreed upon price, which
obligation is in effect secured by the value of the underlying security.
S-2
<PAGE>
Repurchase agreements are considered to be loans by a Fund for purposes of its
investment limitations. The repurchase agreements entered into by a Fund will
provide that the underlying security at all times shall have a value at least
equal to 102% of the resale price stated in the agreement (the Adviser monitors
compliance with this requirement). Under all repurchase agreements entered into
by a Fund, the Trust's Custodian or its agent must take possession of the
underlying collateral. However, if the seller defaults, the Fund could realize
a loss on the sale of the underlying security to the extent that the proceeds of
sale, including accrued interest, are less than the resale price provided in the
agreement including interest. In addition, even though the Bankruptcy Code
provides protection for most repurchase agreements, if the seller should be
involved in bankruptcy or insolvency proceedings, a Fund may incur delay and
costs in selling the underlying security or may suffer a loss of principal and
interest if the Fund is treated as an unsecured creditor and is required to
return the underlying security to the seller's estate.
U.S. GOVERNMENT SECURITIES
Each Fund may invest in securities issued or guaranteed by U.S. Government
agencies or instrumentalities such as the Government National Mortgage
Association ("GNMA"), the Federal National Mortgage Association ("FNMA") and the
Federal Home Loan Mortgage Corporation ("FHLMC"). Obligations of GNMA are
backed by the full faith and credit of the United States Government.
Obligations of FNMA and FHLMC are not backed by the full faith and credit of the
United States Government, but are considered to be of high quality since they
are considered to be instrumentalities of the United States. The market value
and interest yield of these securities can vary due to market interest rate
fluctuations and early prepayments of underlying mortgages. These securities
represent ownership in a pool of federally insured mortgage loans with a maximum
maturity of 30 years. However, due to scheduled and unscheduled principal
payments, GNMA certificates have a shorter average maturity and, therefore, less
principal volatility than a comparable 30-year bond. Since prepayment rates
vary widely, it is not possible to accurately predict the average maturity of a
particular GNMA pool. The scheduled monthly interest and principal payments
relating to mortgages in the pool will be "passed through" to investors. GNMA
securities differ from conventional bonds in that principal is paid back to the
certificate holders over the life of the loan rather than at maturity. As a
result, there will be monthly scheduled payments of principal and interest. In
addition, there may be unscheduled principal payments representing prepayments
on the underlying mortgages. Although GNMA certificates may offer yields higher
than those available from other types of U.S. Government securities, GNMA
certificates may be less effective than other types of securities as a means of
"locking in" attractive long-term rates because of the prepayment feature. For
instance, when interest rates decline, the value of a GNMA certificate likely
will not rise as much as comparable debt securities due to the prepayment
feature. In addition, these prepayments can cause the price of a GNMA
certificate originally purchased at a premium to decline in price to its par
value, which may result in a loss.
S-3
<PAGE>
Each Fund may invest in Separately Traded Interest and Principal Securities
("STRIPS"), which are component parts of U.S. Treasury Securities traded through
the Federal Book-Entry System. The Adviser will purchase only those STRIPS that
it determines are liquid or, if illiquid, do not violate the Fund's investment
policy concerning investments in illiquid securities. While there is no
limitation on the percentage of a Fund's assets that may be comprised of STRIPS,
the Adviser will monitor the level of such holdings to avoid the risk of
impairing shareholders' redemption rights.
INVESTMENT LIMITATIONS
FUNDAMENTAL POLICIES
The following investment limitations (and those set forth in the Prospectus) are
fundamental policies of each Fund which cannot be changed with respect to a Fund
without the consent of the holders of a majority of that Fund's outstanding
shares. The term "majority of the outstanding shares" means the vote of (i) 67%
or more of a Fund's shares present at a meeting, if more than 50% of the
outstanding shares of a Fund are present or represented by proxy, or (ii) more
than 50% of a Fund's outstanding shares, whichever is less.
No Fund may:
1. 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.
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.
S-4
<PAGE>
The foregoing percentages will apply at the time of the purchase of a security
and shall not be considered violated unless an excess or deficiency occurs
immediately after or as a result of a purchase of such security.
NON-FUNDAMENTAL POLICIES
The following investment limitations are non-fundamental policies of each Fund
and may be changed with respect to a Fund by the Board of Trustees.
No Fund may:
1. Pledge, mortgage or hypothecate assets except to secure borrowings
permitted by the Fund's fundamental limitation on borrowing.
2. Invest in companies for the purpose of exercising control.
3. Purchase securities on margin or effect short sales, except that each Fund
may (i) obtain short-term credits as necessary for the clearance of
security transactions; (ii) provide initial and variation margin payments
in connection with transactions involving futures contracts and options on
such contracts; and (iii) make short sales "against the box" or in
compliance with the SEC's position regarding the asset segregation
requirements imposed by Section 18 of the 1940 Act.
4. Invest its assets in securities of any investment company, except (i) by
purchase in the open market involving only customary brokers' commissions;
(ii) in connection with mergers, acquisitions of assets, or consolidations;
or (iii) as otherwise permitted by the 1940 Act.
5. Purchase securities of any company which has (with predecessors) a record
of less than three years continuing operations if, as a result, more than
15% of the total assets (taken at fair market value) would be invested in
such securities.
6. 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. 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-5
<PAGE>
ADDITIONAL RESTRICTIONS
The following are non-fundamental investment limitations that are currently
required by one or more states in which the Trust sells shares of the Funds.
These limitations are in addition to, and in some cases more restrictive than,
the fundamental and non-fundamental investment limitations listed above. A
limitation may be changed or eliminated without shareholder approval if the
relevant state changes or eliminates its policy regarding such investment
restriction. As long as a Fund's shares are registered for sale in such states,
it may not:
1. Invest more than 5% of its net assets in warrants; provided that of this 5%
no more than 2% will be in warrants that are not listed on the New York
Stock Exchange or the American Stock Exchange.
2. Invest in the securities of other investment companies except by purchase
in the open market where no commission or profit to a sponsor or dealer
results from the purchase other than the customary broker's commission, or
except when the purchase is part of a plan of merger, consolidation,
reorganization or acquisition.
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 any Fund (including amounts payable to the Adviser but excluding
interest, taxes, brokerage, litigation, and other extraordinary expenses)
exceeds limitations established by any state in which the shares of the Fund are
registered, the Adviser will bear the amount of such excess. The Adviser will
not be required to bear expenses of any Fund to an extent which would result in
the Fund's inability to qualify as a regulated investment company under
provisions of the 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
S-6
<PAGE>
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
The Trust and SEI Financial Management Corporation (the "SFM" or
"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 ___ years after the effective date of the agreement and shall
continue in effect for successive periods of ___ years unless terminated by
either party on not less than __ days' prior written notice to the other party.
The Trust and the Administrator have also entered into a shareholder servicing
agreement pursuant to which the Administrator provides certain shareholder
services in addition to those set forth in the Administration Agreement.
The Administrator, a wholly-owned subsidiary of SEI Corporation ("SEI"), was
organized as a Delaware corporation in 1969, and has its principal business
offices at 680 East Swedesford Road, Wayne, Pennsylvania 19087-1658. Alfred P.
West, Jr., Henry H. Greer and Carmen V. Romeo, constitute the Board of Directors
of the Administrator. Mr. West is the Chairman of the Board and Chief Executive
Officer of the Administrator and of SEI. Mr. Greer is the President and Chief
Operating Officer of the Administrator and of SEI. SEI and its subsidiaries 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 also serves as administrator to
the following other mutual funds: The Achievement Funds Trust, The Advisors'
Inner Circle Fund, The Arbor Fund, Bishop Street Funds, The Compass Capital
Group, Conestoga Family of Funds, CoreFunds, Inc., CrestFunds, Inc.(C), CUFUND,
First American Funds, Inc., First American Investment Funds, Inc., FFB Lexicon
Funds, Insurance Investment Products Trust, Inventor Funds, Inc., Marquis
Funds(R), Morgan Grenfell Investment Trust, The PBHG Funds, Inc., The Pillar
Funds, Rembrandt Funds(R), 1784 Funds, SEI Daily Income Trust, SEI Index Funds,
SEI Institutional Managed Trust, SEI International Trust, SEI Liquid Asset
Trust, SEI Tax Exempt Trust, Stepstone Funds, STI Classic Funds and STI Classic
Variable Trust.
S-7
<PAGE>
THE DISTRIBUTOR
SEI Financial Services Company (the "Distributor"), a wholly-owned subsidiary of
SEI, 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 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.
[LIST OF OFFICERS AND TRUSTEES]
It is anticipated that after consummation of reorganization transaction, certain
officers and Trustees of the Trust will own the following percentages of the
outstanding shares of the Funds:
<TABLE>
<CAPTION>
FUND OFFICER/TRUSTEE PERCENTAGE OF FUND
<S> <C> <C>
Growth Equity
Small Cap
Fixed Income
</TABLE>
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
S-8
<PAGE>
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 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.
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. Shares of each Fund are
offered on a continuous basis.
It is currently the Trust's policy to pay all redemptions in cash. The Trust
retains the right, however, to alter this policy to provide for redemptions in
whole or in part by a distribution in-kind of securities held by a Fund in lieu
of cash. Shareholders may incur brokerage charges on the sale of any such
securities so received in payment of redemptions.
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
will use an independent pricing service to obtain valuations of securities. The
pricing
S-9
<PAGE>
service relies primarily on prices of actual market transactions as well as
trade quotations. 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 following discussion of federal income tax consequences is based on the Code
and the regulations issued thereunder as in effect on the date of this Statement
of Additional Information. New legislation, as well as administrative changes
or court decisions, may significantly change the conclusions expressed herein,
and may have a retroactive effect with respect to the transactions contemplated
herein.
Each Fund intends to qualify as a "regulated investment company" ("RIC") as
defined under Subchapter M of the Code. By following such a policy, each Fund
expects to eliminate or reduce to a nominal amount the federal taxes to which it
may be subject.
In order to qualify for treatment as a RIC under the Code, each Fund must
distribute annually to its shareholders at least the sum of 90% of its net
interest income excludable from gross income plus 90% of its investment company
taxable income (generally, net investment income plus net short-term capital
gain) ("Distribution Requirement") and also must meet several additional
requirements. Among these requirements are the following: (i) at least 90% of
the Fund's gross income each taxable year must be derived from dividends,
interest, payments with respect to securities loans, and gains from the sale or
other disposition of stock or securities, or certain other income; (ii) the Fund
must derive less than 30% of its gross income each taxable year from the sale or
other disposition of stocks or securities held for less than three months; (iii)
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 (iv) 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 the Fund controls or which are engaged in the same, similar or
related trades or business.
S-10
<PAGE>
Notwithstanding the Distribution Requirement described above, which requires
only that the Fund distribute at least 90% of its annual investment company
taxable income and does not require any minimum distribution of net capital gain
(the excess of net long-term capital gain over net short-term capital loss),
each Fund will be subject to a nondeductible 4% federal excise tax to the extent
it fails to distribute by the end of any calendar year 98% of its ordinary
income for that year and 98% of its capital gain net income (the excess of
short- and long-term capital gains over short-and long-term capital losses) for
the one-year period ending on October 31 of that year, plus certain other
amounts.
In certain cases, a Fund will be required to withhold, and remit to the United
States Treasury, 31% of any distributions paid to a shareholder who (1) has
failed to provide a correct taxpayer identification number, (2) is subject to
backup withholding by the Internal Revenue Service, or (3) has not certified to
that Fund that such shareholder is not subject to backup withholding.
If any Fund fails to qualify as a RIC for any taxable year, it will be taxable
at regular corporate rates. In such an event, all distributions (including
capital gains distributions) will be taxable as ordinary dividends to the extent
of the Fund's current and accumulated earnings and profits, and such
distributions 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 Adviser may, consistent with the interests of the Fund, 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
S-11
<PAGE>
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.
It is expected that the Funds may execute brokerage or other agency transactions
through the Distributor, which is a registered broker-dealer, for a commission
in conformity with the 1940 Act, the Securities Exchange Act of 1934 and rules
promulgated by the SEC. Under these provisions, the Distributor is permitted to
receive and retain compensation for effecting portfolio transactions for a Fund
on an exchange if a written contract is in effect between the Trust and the
Distributor expressly permitting the Distributor to receive and retain such
compensation. These rules further require that commissions paid to the
Distributor by a Fund for exchange transactions not exceed "usual and customary"
brokerage commissions. The rules define "usual and customary" commissions to
include amounts which are "reasonable and fair compared to the commission, fee
or other remuneration received or to be received by other brokers in connection
with comparable transactions involving similar securities being purchased or
sold on a securities exchange during a comparable period of time." The
Trustees, including those who are not "interested persons" of the Trust, have
adopted procedures for evaluating the reasonableness of commissions paid to the
Distributor and will review these procedures periodically.
Because no Fund markets its shares through intermediary brokers or dealers, it
is not the Funds' practice to allocate brokerage or principal business on the
basis of sales of its shares which may be made through such firms. However, the
Adviser may place portfolio orders with qualified broker-dealers who recommend a
Fund's shares to clients, and may, when a number of brokers and dealers can
provide best net results on a particular transaction, consider such
recommendations by a broker or dealer in selecting among broker-dealers.
S-12
<PAGE>
DESCRIPTION OF SHARES
The Declaration of Trust authorizes the issuance of an unlimited number of
portfolios and shares of each portfolio. Each share of a portfolio represents
an equal propor tionate interest in that portfolio with each other share.
Shares are entitled upon liqui dation 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
The Declaration of Trust provides that a Trustee shall be liable only for his
own willful defaults and, if reasonable care has been exercised in the selection
of officers, agents, employees or investment advisers, shall not be liable for
any neglect or wrongdoing of any such person. The Declaration of Trust also
provides that the Trust will indemnify its Trustees and officers against
liabilities and expenses incurred in connection with actual or threatened
litigation in which they may be involved because of their offices with the Trust
unless it is determined in the manner provided in the Declaration of Trust that
they have not acted in good faith in the reasonable belief that their actions
were in the best interests of the Trust. However, nothing in the Declaration of
Trust shall protect or indemnify a Trustee against any liability for his willful
misfeasance, bad faith, gross negligence or reckless disregard of his duties.
5% SHAREHOLDERS
As of the date of this Statement of Additional Information, SEI Financial
Management Corporation controls all of the outstanding shares of the Funds.
S-13
<PAGE>
EXPERTS
FINANCIAL INFORMATION
S-14
<PAGE>
STATEMENT OF NET ASSETS THE ADVISORS' INNER CIRCLE FUND
October 31, 1995
<TABLE>
<CAPTION>
Market
Value
TURNER GROWTH EQUITY FUND Shares (000)
- ----------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCK -- 98.7%
AIR TRANSPORTATION -- 0.9%
Delta Air Lines 15,300 $ 1,004
--------
AIRCRAFT -- 1.2%
Boeing 22,080 1,449
--------
APPAREL/TEXTILES --1.1%
Tommy Hilfiger* 35,000 1,334
--------
AUTO & TRUCK RELATED -- 1.7%
Chrysler 18,400 950
General Motors 24,200 1,059
--------
2,009
--------
BANKS -- 4.1%
Ahmanson H F 27,988 700
Chemical Bank 25,210 1,434
First Bank System 21,500 1,070
Nationsbank 24,220 1,592
--------
4,796
--------
BASIC CHEMICALS -- 1.7%
Morton International 36,820 1,123
Sigma Aldrich 18,070 858
--------
1,981
--------
COMMUNICATIONS -- 9.8%
Airtouch Communications* 43,570 1,242
Ascend Communications* 37,440 2,434
Cascade Communications* 18,260 1,301
Glenayre Technologies* 8,980 577
Tele-Communications, Cl A* 85,380 1,451
Ultratech Stepper* 31,010 1,240
Bellsouth 8,870 679
Comcast Special, Cl A 73,545 1,315
HBO 15,920 1,126
--------
11,365
--------
COMPUTERS & SERVICES -- 16.4%
America Online* 15,000 1,200
Bay Networks* 37,500 2,485
Cirrus Logic* 18,750 790
Cisco Systems* 20,000 1,550
Compaq Computer* 28,850 1,608
Informix* 30,270 $ 882
Intuit* 13,840 996
Medic Computer Systems* 13,080 697
Microsoft* 16,220 1,622
Netscape Communications* 14,870 1,309
Oracle* 36,800 1,605
UUNET Technologies* 14,940 908
First Data 20,900 1,382
Hewlett Packard 13,870 1,285
National Data 25,400 673
--------
18,992
--------
CONCRETE & MINERAL PRODUCTS -- 1.0%
Owens Corning Fiberglass* 27,620 1,170
--------
ELECTRONIC AND OTHER ELECTRICAL EQUIPMENT --
8.9%
3COM* 18,490 869
Applied Materials* 43,640 2,188
Atmel* 18,880 590
Komag* 16,700 952
LSI Logic* 25,000 1,178
Silicon Valley Group* 26,140 846
Worldcom* 39,460 1,287
Intel 23,000 1,607
Micron Technology 10,390 734
--------
10,251
--------
ENERGY & POWER -- 0.9%
California Energy* 54,570 989
--------
FINANCIAL SERVICES -- 3.5%
Donaldson, Lufkin, & Jenrette* 28,500 848
Block H & R 29,440 1,215
First USA 19,370 891
Household International 19,510 1,097
--------
4,051
--------
FOOD, BEVERAGE & TOBACCO -- 8.8%
Chiquita Brands International 56,390 916
Coca Cola 17,230 1,238
Dole Food 40,000 1,505
Pepsico 35,120 1,853
Philip Morris 23,680 2,001
Sara Lee 50,000 1,469
Seagram 32,720 1,178
--------
10,160
--------
</TABLE>
<PAGE>
STATEMENT OF NET ASSETS THE ADVISORS' INNER CIRCLE FUND
October 31, 1995
<TABLE>
<CAPTION>
Market
TURNER GROWTH EQUITY Value
FUND (Continued) Shares (000)
- ----------------------------------------------------------------------------
<S> <C> <C>
FOOTWEAR -- 1.3%
Just For Feet* 27,050 $ 639
Nine West Group* 20,000 890
--------
1,529
--------
GRAIN MILL PRODUCTS -- 1.0%
Ralston Purina 19,460 1,155
--------
HEALTHCARE -- 6.3%
Amgen* 18,130 870
Boston Scientific* 22,290 939
Columbia HCA Healthcare 28,340 1,392
Johnson & Johnson 14,020 1,143
Medtronic 30,000 1,732
Merck 21,300 1,225
--------
7,301
--------
INSURANCE -- 4.1%
Phycor* 16,665 612
Aetna Life & Casualty 20,450 1,439
The PMI Group 17,120 822
United Healthcare 36,200 1,923
--------
4,796
--------
LUMBER & WOOD PRODUCTS -- 1.0%
Georgia-Pacific 13,410 1,106
--------
MACHINERY -- 0.6%
Smith International* 40,000 640
--------
METAL & METAL INDUSTRIES -- 3.4%
Engelhard 68,680 1,709
Phelps Dodge 18,090 1,146
Reynolds Metals 20,480 1,032
--------
3,887
--------
OIL & GAS -- 7.9%
Apache 65,510 1,671
Exxon 19,570 1,495
Helmerich & Payne 25,000 647
Mobil 20,000 2,015
Texaco 30,000 2,043
USX-Marathon Group 73,430 1,303
--------
9,174
--------
PAPER & PAPER PRODUCTS -- 1.1%
Kimberly Clark 17,446 $ 1,267
--------
RAILROADS -- 1.8%
CSX 14,470 1,211
Union Pacific 14,020 917
--------
2,128
--------
RECREATIONAL PRODUCTS & SERVICES -- 2.2%
Mirage Resorts* 34,420 1,127
Walt Disney 24,950 1,438
--------
2,565
--------
RETAIL -- 5.5%
Corporate Express* 48,935 1,278
Micro Warehouse* 24,440 1,088
Officemax* 50,000 1,238
Petsmart* 30,000 1,005
Sunglass Hut International* 40,600 1,106
Zale* 40,530 598
--------
6,313
--------
UTILITIES, ELECTRIC, & GAS -- 2.5%
AES* 46,950 927
Southern 56,070 1,339
Ultramar 26,640 649
--------
2,915
--------
TOTAL COMMON STOCK
(Cost $93,879,341) 114,327
--------
REPURCHASE AGREEMENTS -- 0.1%
Lehman Brothers 5.560%, dated 10/31/95, matures 11/01/95,
repurchase price $152,982 (collateralized by U.S. Treasury
Note, par value $151,419, 7.500%, matures 01/31/97: market
value $157,618) 153
--------
TOTAL REPURCHASE AGREEMENTS (Cost $152,982) 153
--------
TOTAL INVESTMENTS -- 98.8%
(Cost $94,032,323) 114,480
--------
OTHER ASSETS AND LIABILITIES -- 1.2%
Other Assets and Liabilities, Net 1,339
--------
</TABLE>
<PAGE>
STATEMENT OF NET ASSETS THE ADVISORS' INNER CIRCLE FUND
October 31, 1995
<TABLE>
<CAPTION>
TURNER GROWTH EQUITY FUND (Concluded)
- ------------------------------------------------------------------------------
<S> <C>
NET ASSETS:
Portfolio shares (unlimited authorization-- no par value)
based on 7,735,310 outstanding shares of beneficial interest $ 89,664
Net investment loss (40)
Accumulated net realized gain on investments 5,747
Net unrealized appreciation on investments 20,448
--------
TOTAL NET ASSETS: -- 100.0% $115,819
========
Net Asset Value, Offering Price and Redemption Price Per Share $14.97
========
</TABLE>
* Non-income producing security.
The accompanying notes are an integral part of the financial statements.
<TABLE>
<CAPTION>
Market
Value
TURNER SMALL CAP FUND Shares (000)
- ---------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCK -- 97.7%
AIR TRANSPORTATION -- 2.0%
American West Airlines* 6,000 $ 82
Midwest Express Holdings* 7,034 176
-------
258
-------
APPAREL/TEXTILES -- 1.4%
Tommy Hilfiger* 3,210 122
Westpoint Stevens* 2,630 56
-------
178
-------
BANKS -- 1.2%
TCF Financial 2,700 159
-------
BASIC CHEMICALS -- 2.6%
Applied Extrusion Technologies* 9,600 148
NL Industries* 6,490 84
International Specialty Products 12,790 110
-------
342
-------
BROADCASTING, NEWSPAPERS & ADVERTISING -- 0.6%
Clear Channel Communications* 920 75
-------
COMMUNICATIONS -- 9.1%
Apac Teleservices* 3,450 $ 87
Ascend Communications* 2,680 174
Brightpoint* 3,950 75
Cascade Communications* 1,880 134
Coherent Communications Systems* 6,100 125
Picturetel* 2,300 152
Premisys Communications* 2,000 179
Transaction Network Services* 4,000 92
U.S. Order* 3,240 49
Ultratech Stepper* 3,050 122
-------
1,189
-------
COMPUTERS & SERVICES -- 23.4%
America Online* 1,770 142
Arcsys* 2,320 97
Aspen Technology* 4,390 121
Avid Technology* 4,300 188
Checkfree* 10,700 226
Computervision* 2,600 31
Dendrite International* 7,700 134
Discreet Logic* 2,490 142
HNC Software* 3,800 97
Macro Media* 4,340 161
Maxis* 1,600 71
Medic Computer Sytems* 2,160 115
Netcom On Line Communication Services* 2,200 128
Netscape Communications* 2,120 187
Pure Software* 4,850 178
Shiva* 1,950 117
Spyglass* 2,300 114
Tivoli Systems* 3,550 114
Transaction Systems Architects* 3,105 81
UUNET Technologies* 3,957 242
Verity* 2,970 109
Fair Isaac 3,560 96
National Data 6,127 162
-------
3,053
-------
CONCRETE & MINERAL PRODUCTS -- 1.0%
USG* 4,400 128
-------
</TABLE>
<PAGE>
STATEMENT OF NET ASSETS THE ADVISORS' INNER CIRCLE FUND
October 31, 1995
<TABLE>
<CAPTION>
Market
TURNER SMALL CAP FUND Value
(Continued) Shares (000)
- ----------------------------------------------------------------------------
<S> <C> <C>
CONSUMER PRODUCTS -- 2.2%
Department 56* 1,380 $ 63
Guest Supply* 4,200 79
Oakley* 4,190 144
-------
286
-------
ELECTRONIC AND OTHER ELECTRICAL
EQUIPMENT -- 5.8%
Burr-Brown* 3,510 114
Komag* 1,390 79
Oak Technology* 2,750 151
Ontrak Systems* 2,870 56
Sierra Semiconductor* 4,690 84
Silicon Valley Group* 4,770 155
Belden 4,910 118
-------
757
-------
FINANCIAL SERVICES -- 6.2%
Credit Acceptance* 3,420 80
Imperial Credit Industries* 5,400 78
Jayhawk Acceptance* 12,050 144
Litchfield Financial* 3,450 52
Markel* 920 69
Stormedia* 2,050 94
WFS Financial* 5,950 99
Mutual Risk Management 2,600 96
The Money Store 2,463 99
-------
811
-------
FOOD, BEVERAGE & TOBACCO -- 2.5%
Redhook Ale Brewery* 3,315 98
Robert Mondavi* 5,880 166
Interstate Bakeries 3,110 66
-------
330
-------
FOOTWEAR -- 1.4%
Just For Feet* 3,345 79
Nine West Group* 2,490 111
-------
190
-------
HEALTHCARE -- 3.0%
Amerisource Health* 2,550 69
Idexx Laboratories* 2,700 110
Ornda Health* 5,400 95
Physician Sales & Services* 7,675 125
-------
399
-------
HOUSEHOLD PRODUCTS -- 0.5%
RPM 3,520 $ 68
-------
INSURANCE -- 6.8%
Compdent* 5,550 173
Phycor* 3,600 132
Total Renal Care Holdings* 4,634 94
United Dental Care* 4,100 125
CMAC Investment 2,710 129
The PMI Group 2,600 125
Vesta Insurance Group 2,675 108
-------
886
-------
MACHINERY -- 2.7%
C.P. Clare* 4,650 120
Plasma & Materials Technologies* 5,700 66
PRI Automation* 2,280 84
Smith International* 5,100 82
-------
352
-------
MEASURING DEVICES -- 2.2%
Cognex* 1,050 63
Fore Systems* 2,300 122
Veeco Instruments* 4,260 102
-------
287
-------
MEDICAL PRODUCTS & SERVICES -- 2.7%
Medisense* 4,250 91
Medpartners* 2,000 56
Nellcor* 1,740 100
Orthodontic Centers of America* 3,250 104
-------
351
-------
OIL & GAS -- 4.1%
BJ Services* 3,850 90
Citation* 9,040 169
Energy Ventures* 6,000 114
Falcon Drilling* 9,600 100
Nabors Industries* 7,720 67
-------
540
-------
PACKAGING -- 1.0%
Sealed Air* 5,020 132
-------
PAPER & PAPER PRODUCTS -- 0.4%
Boise Cascade 1,640 59
-------
</TABLE>
<PAGE>
STATEMENT OF NET ASSETS THE ADVISORS' INNER CIRCLE FUND
October 31, 1995
<TABLE>
<CAPTION>
Market
Value
TURNER SMALL CAP FUND (Concluded) Shares (000)
- ---------------------------------------------------------------------------
<S> <C> <C>
PROFESSIONAL SERVICES -- 5.6%
ABR Information Services* 4,500 $ 133
Concord EFS* 3,165 109
PMT Services* 4,240 114
Quintiles Transnational* 2,500 161
RTW* 4,740 115
Loewen Group 2,430 97
-------
729
-------
RAILROADS -- 1.5%
Wisconsin Central* 2,040 123
Illinois Central 1,990 76
-------
199
-------
RECREATIONAL PRODUCTS & SERVICES -- 0.5%
Station Casinos* 4,700 61
-------
RETAIL -- 7.3%
Baby Superstore* 1,320 62
Corporate Express* 5,120 134
Eastbay* 5,450 116
Kenneth Cole Production* 1,510 62
Officemax* 5,385 133
Petsmart* 5,065 169
Sunglass Hut International* 4,400 120
U.S. Office Products* 5,410 93
Zale* 4,400 65
-------
954
-------
TOTAL COMMON STOCK
(Cost $9,769,556) 12,773
-------
REPURCHASE AGREEMENTS -- 6.9%
Lehman Brothers 5.560%, dated 10/31/95, matures 11/01/95,
repurchase price $894,718 (collateralized by U.S. Treasury
Note, par value $885,575, 7.500%, matures 01/31/97: market
value $921,828) 895
-------
TOTAL REPURCHASE AGREEMENTS (Cost $894,718) 895
-------
</TABLE>
<TABLE>
<CAPTION>
Market
Value
(000)
- ---------------------------------------------------------------------------
<S> <C>
TOTAL INVESTMENTS -- 104.6%
(Cost $10,664,274 $13,668
-------
OTHER ASSETS AND LIABILITIES -- (4.6%)
Payable for Securities Purchased (688)
Other Assets and Liabilities, Net 92
-------
TOTAL OTHER ASSETS AND LIABILITIES (596)
=======
NET ASSETS:
Portfolio shares (unlimited authorization--no par value) based on
812,803 outstanding shares of beneficial interest 9,154
Net investment loss (8)
Accumulated net realized gain on investments 922
Net unrealized appreciation on investments 3,004
-------
TOTAL NET ASSETS: -- 100.0% $13,072
=======
Net Asset Value, Offering Price and Redemption Price Per Share $ 16.08
=======
</TABLE>
* Non-income producing security.
The accompanying notes are an integral part of the financial statements.
<PAGE>
STATEMENT OF OPERATIONS THE ADVISORS' INNER CIRCLE FUND
For the year ended October 31, 1995
<TABLE>
<CAPTION>
TURNER TURNER
GROWTH EQUITY SMALL CAP
FUND FUND
------------- -----------
11/01/94 11/01/94
TO 10/31/95 TO 10/31/95
(000) (000)
- --------------------------------------------------------------------------------
<S> <C> <C>
Investment Income:
Dividend Income..................................... $ 1,905 $ 30
Interest Income..................................... 155 17
- --------------------------------------------------------------------------------
Total Investment Income............................ 2,060 47
- --------------------------------------------------------------------------------
Expenses:
Administrator Fees.................................. 215 75
Investment Advisory Fees............................ 897 82
Investment Advisory Fee Waiver...................... -- (82)
Contributions by Adviser............................ -- (12)
Custodian Fees...................................... 14 6
Transfer Agent Fees................................. 24 12
Professional Fees................................... 49 15
Trustee Fees........................................ 6 2
Registration Fees................................... (5) 1
Pricing Fees........................................ 5 --
Printing Expense.................................... 16 1
Amortization of Deferred Organizational Costs....... 3 2
Insurance and Other Fees............................ 10 1
Directed Brokerage.................................. (109) --
- --------------------------------------------------------------------------------
Total Expenses..................................... 1,125 103
- --------------------------------------------------------------------------------
Net Investment Income (Loss)...................... 935 (56)
- --------------------------------------------------------------------------------
Net Realized Gain from Securities Sold.............. 11,270 1,005
Net Unrealized Appreciation of Investment
Securities......................................... 11,773 2,573
- --------------------------------------------------------------------------------
Net Realized and Unrealized Gain on Investments.... 23,043 3,578
- --------------------------------------------------------------------------------
Net Increase in Net Assets Resulting from
Operations......................................... $23,978 $3,522
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
</TABLE>
Amounts designated as "--" are either $0 or have been rounded to $0.
The accompanying notes are an integral part of the financial statements.
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS THE ADVISORS' INNER CIRCLE FUND
For the period ended October 31, 1995
<TABLE>
<CAPTION>
TURNER TURNER
GROWTH EQUITY SMALL CAP
FUND FUND
----------------------- -----------------------
11/01/94 11/01/93 11/01/94 02/07/94(2)
TO 10/31/95 TO 10/31/94 TO 10/31/95 TO 10/31/94
(000) (000) (000) (000)
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Investment Activities:
Net Investment Income (Loss). $ 935 $ 743 $ (56) $ (8)
Net Realized Gain (Loss) on
Securities Sold............. 11,270 (5,082) 1,005 (27)
Net Unrealized Appreciation
of Investment Securities.... 11,773 2,203 2,573 431
- --------------------------------------------------------------------------------
Net Increase (Decrease) in
Net Assets Resulting from
Operations................. 23,978 (2,136) 3,522 396
- --------------------------------------------------------------------------------
Distributions to Shareholders:
Net Investment Income........ (1,022) (704) -- --
- --------------------------------------------------------------------------------
Total Distributions......... (1,022) (704) -- --
- --------------------------------------------------------------------------------
Capital Share Transactions:
Shares Issued................ 33,135 68,222 5,250 4,410
Shares Issued in Lieu of Cash
Distributions............... 909 625 -- --
Shares Redeemed.............. (54,140) (6,375) (506) --
- --------------------------------------------------------------------------------
Increase (Decrease) in Net
Assets Derived from Capital
Share Transactions.......... (20,096) 62,472 4,744 4,410
- --------------------------------------------------------------------------------
Total Increase in Net
Assets..................... 2,860 59,632 8,266 4,806
- --------------------------------------------------------------------------------
Net Assets:
Beginning of Period.......... 112,959 53,327 4,806 --
- --------------------------------------------------------------------------------
End of Period................ $115,819 $112,959 $13,072 $4,806
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Shares Issued and Redeemed:
Shares Issued................ 2,600 5,465 407 441
Issued in Lieu of Cash
Distributions............... 70 51 -- --
Redeemed..................... (3,998) (517) (35) --
- --------------------------------------------------------------------------------
Net Increase (Decrease) in
Share Transactions.......... (1,328) 4,999 372 441
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
</TABLE>
(2) The Turner Small Cap Fund commenced operations on February 7, 1994.
The accompanying notes are an integral part of the financial statements.
<PAGE>
For the period ended October 31, 1995.
FINANCIAL HIGHLIGHTS THE ADVISORS' INNER CIRCLE FUND
For a Share Outstanding Throughout the Period
<TABLE>
<CAPTION>
Net Realized and Net Ratio
Asset Unrealized Distributions Assets Ratio of Net
Value Net Gains or from Net Distributions Net Asset End of Expenses Income
Beginning Investment Losses on Investment from Capital Value End Total of Period to Average to Average
of Period Income Securities Income Gains of Period Return (000) Net Assets Net Assets
--------- ---------- ------------ ------------- ------------- --------- ------- --------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
- -------------------------
TURNER GROWTH EQUITY FUND
- -------------------------
1995 $12.46 0.10 2.52 (0.11) -- $14.97 21.15% 115,819 0.94%+ 0.78%+
1994 $13.12 0.10 (0.66) (0.10) -- $12.46 (4.28%) 112,959 0.95% 0.86%
1993 $10.40 0.09 2.72 (0.09) -- $13.12 27.08% 53,327 1.00% 0.80%
1992(1) $10.00 0.03 0.40 (0.03) -- $10.40 6.95%* 7,781 1.44%* 0.73%*
- ---------------------
TURNER SMALL CAP FUND
- ---------------------
1995 $10.90 (0.06) 5.24 -- -- $16.08 47.52% 13,072 1.25% (0.68%)
1994(2) $10.00 (0.02) 0.92 -- -- $10.90 12.35%* 4,806 1.09%* (0.27%)*
<CAPTION>
Ratio
of Net
Ratio of Income
Expenses (Loss) to
to Average Average
Net Assets Net Assets Portfolio
(Excluding (Excluding Turnover
Waivers) Waivers) Rate
---------- ---------- ---------
<S> <C> <C> <C>
- -------------------------
TURNER GROWTH EQUITY FUND
- -------------------------
1995 0.94%+ 0.78%+ 177.86%
1994 1.08% 0.73% 164.81%
1993 1.52% 0.28% 88.35%
1992(1) 2.55%* (0.38%)* 205.00%
- ---------------------
TURNER SMALL CAP FUND
- ---------------------
1995 2.39% (1.82%) 183.49%
1994(2) 4.32%* (3.50%)* 173.92%
</TABLE>
* Annualized
(1) The Turner Growth Equity Fund commenced operations on March 11, 1992.
(2) The Turner Small Cap Fund commenced operations on February 7, 1994.
+ Absent Turner Growth Equity Fund participation in a Directed Brokerage
program, the Ratios of Expenses to Average Net Assets (with and without
waivers) and Expenses to Net Income (with and without waivers) were 1.03%
and .69%, respectively.
The accompanying notes are an integral part of the financial statements.
<PAGE>
NOTES TO FINANCIAL STATEMENTS THE ADVISORS' INNER CIRCLE FUND
October 31, 1995
1. Organization:
THE ADVISORS' INNER CIRCLE FUND (the "'Trust") is organized as a Massachusetts
business trust under a Declaration of Trust dated July 18, 1991. The Trust is
registered under the Investment Company Act of 1940, as amended, as a
diversified open-end management investment company with eleven portfolios. The
financial statements included herein present those of the Turner Growth Equity
Fund and the Turner Small Cap Fund (the "Funds"). The financial statements of
the remaining portfolios are presented separately. The assets of each portfolio
are segregated, and a Shareholder's interest is limited to the portfolio in
which shares are held.
2. Significant Accounting Policies:
The following is a summary of the significant accounting policies followed by
the Funds.
Security Valuation -- Investments in equity securities which are traded on
a national exchange (or reported on the NASDAQ national market system) are
stated at the last quoted sales price if readily available for such equity
securities on each business day; other equity securities traded in the
over-the-counter market and listed equity securities for which no sale was
reported on that date are stated at the last quoted bid price. Debt
obligations exceeding sixty days to maturity for which market quotations
are readily available are valued at the most recently quoted bid price.
Debt obligations with sixty days or less remaining until maturity may be
valued at their amortized cost, which approximates market value.
Federal Income Taxes -- It is each Fund's intention to qualify as a
regulated investment company by complying with the appropriate provisions
of the Internal Revenue Code of 1986, as amended. Accordingly, no 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 each 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 Funds may be
delayed or limited.
Other -- Expenses that are directly related to one of the Funds are charged
to that Fund. Other operating expenses of the Trust are prorated to the
Funds on the basis of relative daily net assets.
Distributions from net investment income are declared and paid to
Shareholders on a quarterly basis. Any net realized capital gains on sales
of securities are distributed to Shareholders at least annually.
Distributions from net investment income and net realized capital gains are
determined in accordance with the U.S. Federal income tax regulations,
which may differ from those amounts determined under generally accepted
accounting principals. 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 in the period that the
differences arise. Accordingly, the following permanent difference,
primarily attributable to certain net operating losses which, for tax
purposes, are not available to offset future income, has been reclassified
to paid-in-capital.
<TABLE>
<CAPTION>
(000)
-----
<S> <C>
Turner Small Cap Fund.................................................. $56
</TABLE>
This reclassification has no effect on net assets or net asset value per
share.
<PAGE>
NOTES TO FINANCIAL STATEMENTS (continued) THE ADVISORS' INNER CIRCLE FUND
October 31, 1995
3. Organization Costs and Transactions with Affiliates:
The Turner Growth Equity Fund and Turner Small Cap Fund incurred organization
costs of approximately $17,000 and $19,000 respectively. These costs have been
capitalized by the funds and are being amortized over sixty months commencing
with operations. In the event of the initial shares of the fund redeemed by any
holder thereof during the period that the fund is amortizing its organizational
costs the redemption proceeds payable to the holder thereof by the fund will be
reduced by the unamortized organizational costs in the same ratio as the number
of initial shares being redeemed bears to the number of initial shares
outstanding at the time of redemption. These costs include legal fees of
approximately $7,000 and $1,000, respectively, for organizational work
performed by a law firm of which an officer of the fund is a partner.
Certain officers and trustees of the Trust are also officers of SEI Financial
Management Company (the "Administrator") and/or SEI Financial Services Company
(the "Distributor"). Such officers and trustees 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 Administration Agreement
dated November 14, 1991, under which the Administrator provides management and
administrative services for an annual rate of that Portfolio's proportionate
share of .20% of the aggregate average daily net assets of the Portfolios up to
$75 million and .15% of such assets in excess of $75 million. There is a
minimum annual fee of $75,000 per Fund.
DST Systems, Inc., (the "Transfer Agent") serves as the transfer agent and
dividend distributing agent for the Funds under a transfer agency agreement
with the Trust.
The Trust and the Distributor are parties to a Distribution Agreement dated
November 14, 1991. The Distributor receives no fees for its distribution
services under this agreement. However the Distribution Agreement between the
Distributor and the Trust provides that the Distributor may receive
compensation on portfolio transactions effected for the Trust in accordance
with the rules of the Securities and Exchange Commission ("SEC"). Accordingly,
it is expected that portfolio transactions may result in brokerage commissions
being paid to the Distributor. The SEC rules require that such commissions not
exceed usual and customary brokerage commissions. The Distributor returned a
portion of these commissions to the Fund in order to reduce the expenses of the
Growth Equity Fund.
5. Investment Advisory and Custodian Agreements:
The Trust and Turner Investment Partners, Inc. (the "Adviser") are parties to
an Investment Advisory Agreement dated February 21, 1992 under which the
Adviser receives an annual fee equal to .75% of the average daily net assets of
the Growth Portfolio and 1.00% of the average daily net assets of the Small Cap
Fund. The Adviser has voluntarily agreed for an indefinite period of time, to
waive all or a portion of its fees (and to reimburse the Fund's expenses) in
order to limit operating expenses to not more than 1.25% of the average daily
net assets of the Small Cap Portfolio. Fee waivers and expense reimbursements
are voluntary and may be terminated at any time.
CoreStates Bank, N.A. acts as custodian (the "Custodian") for the Fund. Fees of
the Custodian are being paid on the basis of the net assets of the Fund. The
Custodian plays no role in determining the investment policies of the Trust or
which securities are to be purchased or sold in the Fund.
6. Investment Transactions:
The cost of security purchases and the proceeds from security sales, other than
short-term investments, for the year ended October 31, 1995, are as follows:
<TABLE>
<CAPTION>
TURNER TURNER
GROWTH EQUITY SMALL CAP
FUND FUND
(000) (000)
------------- ---------
<S> <C> <C>
Purchases
Government............................................. $ 0 $ 0
Other.................................................. 208,628 19,308
Sales
Government............................................. $ 0 $ 0
Other.................................................. 230,975 14,885
</TABLE>
At October 31, 1995, 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
<PAGE>
NOTES TO FINANCIAL STATEMENTS (concluded) THE ADVISORS' INNER CIRCLE FUND
October 31, 1995
securities held by the Fund at October 31, 1995, is as follows:
<TABLE>
<CAPTION>
TURNER TURNER
GROWTH EQUITY SMALL CAP
FUND FUND
(000) (000)
------------- ---------
<S> <C> <C>
Aggregate gross unrealized appreciation................. $22,022 $3,254
Aggregate gross unrealized depreciation................. (1,574) (250)
------- ------
Net unrealized appreciation............................. $20,448 $3,004
======= ======
</TABLE>
7. Capital Loss Carryforward
The Turner Growth Equity and Turner Small Cap Funds utilized their entire
capital loss carryforward balances $5,523,115 and $26,470, respectively, to
reduce realized gains incurred which otherwise would have been distributed.
<PAGE>
APPENDIX
The following descriptions are summaries of published ratings.
DESCRIPTION OF CORPORATE BOND RATINGS
Bonds rated AAA have the highest rating S&P assigns to a debt obligation. Such
a rating indicates an extremely strong capacity to pay principal and interest.
Bonds rated AA by S&P also qualify as high-quality debt obligations. Capacity
to pay principal and interest is very strong, and differs from AAA issues only
in small degree. Debt rated A by S&P has a strong capacity to pay interest and
repay principal although it is somewhat more susceptible to the adverse effects
of changes in circumstances and economic conditions than debt in higher rated
categories.
Bonds rated BBB by S&P are considered as medium-grade obligations (i.e., they
are neither highly protected nor poorly secured). Interest payments and
principal security appear adequate for the present but certain protective
elements may be lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment characteristics and in
fact have speculative characteristics as well.
Bonds rated Aaa by Moody's are judged to be of the best quality. They carry the
smallest degree of investment risk and are generally referred to as "gilt
edged". Interest payments are protected by a large, or an exceptionally stable,
margin and principal is secure. While the various protective elements are
likely to change, such changes as can be visualized are most unlikely to impair
the fundamentally strong position of such issues. Bonds rated Aa by Moody's are
judged by Moody's to be of high quality by all standards. Together with bonds
rated Aaa, they comprise what are generally known as high-grade bonds. They are
rated lower than the best bonds because margins of protection may not be as
large as in Aaa securities or fluctuation of protective elements may be of
greater amplitude or there may be other elements present which make the long-
term risk appear somewhat larger than in Aaa securities.
Bonds rated A by Moody's possess many favorable investment attributes and are to
be considered as upper-medium grade obligations. Factors giving security to
principal and interest are considered adequate, but elements may be present
which suggest a susceptibility to impairment sometime in the future. Debt rated
Baa by Moody's is regarded as having an adequate capacity to pay interest and
repay principal. Whereas it normally exhibits adequate protection parameters,
adverse economic conditions or changing circumstances are more likely to lead to
a weakened capacity to pay interest and repay principal for debt in this
category than in higher rated categories.
A-1
<PAGE>
Fitch uses plus and minus signs with a rating symbol to indicate the relative
position of a credit within the rating category. Plus and minus signs, however,
are not used in the AAA category. Bonds rated AAA by Fitch are considered to be
investment grade and of the highest credit quality. The obligor has an
exceptionally strong ability to pay interest and repay principal, which is
unlikely to be affected by reasonably foreseeable events. Bonds rated AA by
Fitch are considered to be investment grade and of very high credit quality.
The obligor's ability to pay interest and repay principal is very strong,
although not quite as strong as bonds rated AAA. Because bonds rated in the AAA
and AA categories are not significantly vulnerable to foreseeable future
developments, short-term debt of these issuers is generally rated F-1+. Bonds
rated A by Fitch are considered to be investment grade and of high credit
quality. The obligor's ability to pay interest and repay principal is
considered to be strong, but may be more vulnerable to adverse changes in
economic conditions and circumstances than bonds with higher ratings. Bonds
rated BBB by Fitch are considered to be investment grade and of satisfactory
credit quality. The obligor's ability to pay interest and repay principal is
considered to be adequate. Adverse changes in economic conditions and
circumstances, however, are more likely to have adverse impact on these bonds,
and therefore impair timely payment. The likelihood that the ratings of these
bonds will fall below investment grade is higher than for bonds with higher
ratings.
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
A-2
<PAGE>
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.
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,
A-3
<PAGE>
although such capacity may be susceptible to adverse changes in business,
economic or financial conditions.
A-4
<PAGE>
Item 27. Indemnification
Article VIII of the Agreement of Declaration of Trust filed as Exhibit 1
to the
PART C: OTHER INFORMATION
Item 24. Financial Statements and Exhibits:
(a) Financial Statements
Not applicable.
(b) Additional Exhibits
1 Agreement and Declaration of Trust of the Registrant, dated
January 26, 1996, filed herewith.
2 By-Laws of the Registrant, filed herewith.
*5 Form of Investment Advisory Agreement between the Registrant and
Turner Investment Partners, Inc.
*6 Form of Distribution Agreement between the Registrant and SEI
Financial Services Company.
*8 Form of Custodian Agreement between the Registrant and
CoreStates Bank, N.A.
*9(a) Form of Administration Agreement between the Registrant and SEI
Financial Management Corporation.
*9(b) Form of Transfer Agent Agreement between the Registrant and DST
Systems, Inc.
*10 Opinion and Consent of Counsel.
*11 Opinion and Consent of Independent Public Accountants
*15 Form of 12b-1 Plan.
*16 Performance Calculations.
*18 18f-3 Plan.
27 Financial Data Schedules, filed herewith.
* To be filed by amendment
Item 25. Persons Controlled by or under Common Control with Registrant:
See the Prospectus and the Statement of Additional Information regarding
the Registrant's control relationships. The Administrator is a subsidiary of
SEI Corporation, which also controls the distributor of the Registrant, SEI
Financial Services Company, other corporations engaged in providing various
financial and record keeping services, primarily to bank trust departments,
pension plan sponsors, and investment managers.
Item 26. Number of Holders of Securities: None
C-1
<PAGE>
Item 27. 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 28. Business and Other Connections of Investment Adviser:
ADVISER
- -------
Turner Investment Partners, Inc. ("Turner") is the investment adviser for the
Trust. The principal address of Turner is 1235 Westlakes Drive, Suite 350,
Berwyn, PA 19312. Turner is an investment adviser registered under the Advisers
Act.
The list required by this Item 28 of officers and directors of Turner, together
with information as to any other business profession, vocation or employment of
substantial nature engaged in by such officers and directors during the past two
years is incorporated by reference to Schedules A and D of Form ADV filed by
Turner to the Advisers Act (SEC File No. 801-36220).
Item 29. Principal Underwriters:
(a) Furnish the name of each investment company (other than the Registrant) for
which each principal underwriter currently distributing the securities of
the Registrant also acts as a principal underwriter, distributor or
investment adviser.
Registrant's distributor, SEI Financial Services Company ("SFS"), acts as
distributor for:
SEI Daily Income Trust July 15, 1982
SEI Liquid Asset Trust November 29, 1982
SEI Tax Exempt Trust December 3, 1982
SEI Index Funds July 10, 1985
SEI Institutional Managed Trust January 22, 1987
C-2
<PAGE>
SEI International Trust August 30, 1988
Stepstone Funds January 30, 1991
The Compass Capital Group March 8, 1991
FFB Lexicon Funds October 18, 1991
The Advisors' Inner Circle Fund November 14, 1991
The Pillar Funds February 28, 1992
CUFUND May 1, 1992
STI Classic Funds May 29, 1992
CoreFunds, Inc. October 30, 1992
First American Funds, Inc. November 1, 1992
First American Investment Funds, Inc. November 1, 1992
The Arbor Fund January 28, 1993
1784 Funds June 1, 1993
The PBHG Funds, Inc. July 16, 1993
Marquis/(R)/ Funds August 17, 1993
Morgan Grenfell Investment Trust January 3, 1994
Inventor Funds, Inc. August 1, 1994
The Achievement Funds Trust December 27, 1994
Insurance Investment Products Trust December 30, 1994
Bishop Street Funds January 27, 1995
CrestFunds, Inc. March 1, 1995
Conestoga Family of Funds May 1, 1995
STI Variable Classic Trust August 18, 1995
ARK Funds November 1, 1995
SFS provides numerous financial services to investment managers, pension
plan sponsors, and bank trust departments. These services include
portfolio evaluation, performance measurement and consulting services
("Funds Evaluation") and automated execution, clearing and settlement of
securities transactions ("MarketLink").
(b) Furnish the Information required by the following table with respect to
each director, officer or partner of each principal underwriter named in
the answer to Item 21 of Part B. Unless otherwise noted, the business
address of each director or officer is 680 East Swedesford Road, Wayne,
Pennsylvania 19087-1658.
<TABLE>
<CAPTION>
Position and Office Positions and Offices
Name with Underwriter with Registrant
- ---- ---------------- ---------------
<S> <C> <C>
Alfred P. West, Jr. Director, Chairman & Chief Executive Officer --
Henry H. Greer Director, President & Chief Operating Officer --
Carmen V. Romeo Director, Executive Vice President & Treasurer Treasurer
Gilbert L. Beebower Executive Vice President --
Richard B. Lieb Executive Vice President --
Charles A. Marsh Executive Vice President-Capital Resources Division --
Leo J. Dolan, Jr. Senior Vice President --
</TABLE>
C-3
<PAGE>
<TABLE>
<CAPTION>
Position and Office Positions and Offices
Name with Underwriter with Registrant
- ---- ---------------- ---------------
<S> <C> <C>
Carl A. Guarino Senior Vice President --
Jerome Hickey Senior Vice President --
David G. Lee Senior Vice President President
William Madden Senior Vice President --
A. Keith McDowell Senior Vice President --
Dennis J. McGonigle Senior Vice President --
Hartland J. McKeown Senior Vice President --
James V. Morris Senior Vice President --
Steven Onofrio Senior Vice President --
Kevin P. Robins Senior Vice President,
General Counsel & Secretary Vice President &
Assistant Secretary
Robert Wagner Senior Vice President --
Patrick K. Walsh Senior Vice President --
Kenneth Zimmer Senior Vice President --
Robert Crudup Managing Director --
Vic Galef Managing Director --
Kim Kirk Managing Director --
John Krzeminski Managing Director --
Carolyn McLaurin Managing Director --
Barbara Moore Managing Director --
Donald Pepin Managing Director --
Mark Samuels Managing Director --
Wayne M. Withrow Managing Director --
Mick Duncan Team Leader --
Robert Ludwig Team Leader --
Vicki Malloy Team Leader --
Robert Aller Vice President --
C. Tony Baker Vice President --
Steve Bendinelli Vice President --
Cris Brookmyer Vice President & Controller --
Gordon W. Carpenter Vice President --
Robert B. Carroll Vice President & Assistant Secretary Vice President &
Assistant Secretary
Todd B. Cipperman Vice President & Assistant Secretary
Ed Daly Vice President Vice President &
Assistant Secretary
Jeff Drennen Vice President --
Lucinda Duncalfe Vice President --
Kathy Heilig Vice President --
Larry Hutchison Vice President --
Michael Kantor Vice President --
Samuel King Vice President --
Donald H. Korytowski Vice President --
Robert S. Ludwig Vice President --
Jack May Vice President --
Sandra K. Orlow Vice President & Assistant Secretary Vice President &
</TABLE>
C-4
<PAGE>
<TABLE>
<CAPTION>
Position and Office Positions and Offices
Name with Underwriter with Registrant
- ---- ---------------- ---------------
<S> <C> <C>
Assistant Secretary
Larry Pokora Vice President --
Kim Rainey Vice President --
Paul Sachs Vice President --
Steve Smith Vice President --
Daniel Spaventa Vice President --
Kathryn L. Stanton Vice President & Assistant Secretary Vice President &
Assistant Secretary
William Zawaski Vice President --
James Dougherty Director of Brokerage Services --
</TABLE>
Item 30. Location of Accounts and Records:
Books or other documents required to be maintained by Section 31(a) of the
Investment Company Act of 1940, and the rules promulgated thereunder, are
maintained as follows:
(a) With respect to Rules 31a-1(a); 31a-1(b)(1); (2)(a) and (b); (3); (6);
(8); (12); and 31a-1(d), the required books and records will be maintained
at the offices of Registrant's Custodian:
CoreStates Bank, N.A.
Broad & Chestnut Streets
P.O. Box 7618
Philadelphia, Pennsylvania 19101
(b)/(c) With respect to Rules 31a-1(a); 31a-1(b)(1),(4); (2)(C) and (D);
(4); (5); (6); (8); (9); (10); (11); and 31a-1(f), the required books and
records are maintained at the offices of Registrant's Administrator:
SEI Financial Management Corporation
680 East Swedesford Road
Wayne, Pennsylvania 19087-1658
(c) With respect to Rules 31a-1(b)(5), (6), (9) and (10) and 31a-1(f), the
required books and records are maintained at the principal offices of the
Registrant's Adviser:
Turner Investment Partners, Inc.
1235 Westlakes Drive, Suite 350
Berwyn, Pennsylvania 19312
C-5
<PAGE>
Item 31. Management Services: None.
Item 32. Undertakings:
Registrant hereby undertakes that whenever shareholders meeting the
requirements of Section 16(c) of the Investment Company Act of 1940 inform the
Board of Directors of their desire to communicate with Shareholders of the
Corporation, the Directors will inform such Shareholders as to the approximate
number of Shareholders of record and the approximate costs of mailing or afford
said Shareholders access to a list of Shareholders.
Registrant hereby undertakes to call a meeting of Shareholders for the
purpose of voting upon the question of removal of a Director(s) when requested
in writing to do so by the holders of at least 10% of Registrant's outstanding
shares and in connection with such meetings to comply with the provisions of
Section 16(c) of the Investment Company Act of 1940.
Registrant hereby undertakes to file a post-effective amendment, including
financial statements which need not be audited, within 4-6 months from the
effective date of the Registrant's 1933 Act Registration Statement.
C-6
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the Investment
Company Act of 1940, as amended, the Registrant has duly caused this
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Wayne, Commonwealth of Pennsylvania on the 26th
day of January, 1996.
TURNER FUNDS
By: /s/ Robert B. Carroll
----------------------
Robert B. Carroll
President, Chief Financial
Officer and Trustee
Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement has been signed below by the following person in the capacity on the
dates indicated.
By: /s/ Robert B. Carroll Trustee, President and January 26, 1996
--------------------- Chief Financial Officer
C-7
<PAGE>
EXHIBIT INDEX
Name Exhibit Page
---- ------- ----
Agreement and Declaration of Trust of the Ex-99.B1
Registrant, dated January 26, 1996,
filed herewith.
By-Laws of the Registrant, filed herewith. Ex-99.B2
Financial Data Schedule for the Turner Ex-27.1
Growth Equity Fund
Financial Data Schedule for the Turner Ex-27.2
Small Capital Equity Fund
C-8
<PAGE>
TURNER FUNDS
AGREEMENT AND DECLARATION OF TRUST
AGREEMENT AND DECLARATION OF TRUST, as of this 26th day of January, 1996, the
--
Trustees hereunder, and by the holders of Shares of beneficial interest to be
issued hereunder as hereinafter provided.
WITNESSETH that
WHEREAS, this Trust has been formed to carry on the business of an investment
company; and
WHEREAS, the Trustees elected in accordance with Article IV hereof have agreed
to manage all property coming into their hands as trustees of a Massachusetts
voluntary association with transferable Shares in accordance with the provisions
hereinafter set forth.
NOW, THEREFORE, the Trustees elected in accordance with Article IV hereof hereby
declare that they will hold all cash, securities and other assets, which they
may from time to time acquire in any manner as Trustees hereunder IN TRUST to
manage and dispose of the same for the pro rata benefit of the holders from time
to time of Shares in this Trust issued hereunder on the terms and conditions
hereinafter set forth.
ARTICLE I
NAME, PRINCIPAL PLACE OF BUSINESS AND RESIDENT AGENT, AND DEFINITIONS
NAME
- ----
Section 1. This Trust shall be known as TURNER FUNDS, and the Trustees shall
- ---------
conduct the business of the Trust under that name or any other name as they may
from time to time determine.
PRINCIPAL PLACE OF BUSINESS AND RESIDENT AGENT
- ----------------------------------------------
Section 2. The principal place of business of the Trust is 2 Oliver Street,
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Boston, Massachusetts 02109. The name of the Trust's resident agent in the
Commonwealth of Massachusetts is CT Corporation System at 2 Oliver Street,
Boston, Massachusetts 02109.
DEFINITIONS
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Section 3. Whenever used herein, unless otherwise required by the context or
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specifically provided:
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(a) The "Trust" refers to Turner Funds, the trust created hereby.
(b) "Trustee" or "Trustees" refers to the Trustees of the Trust named herein or
elected in accordance with Article IV hereof and then in office.
(c) "Shares" refers to units of beneficial interest in the assets of the Trust,
when used in relation to any particular series established by the Trustees
hereunder refers to units of beneficial interest in the assets specifically
allocated to that series, and includes fractional as well as whole Shares.
(d) "Shareholder" means a record owner of Shares.
(e) "Affiliated Person," "Assignment," "Commission," "Interested Person," and
"Principal Underwriter" shall have the meanings given them in the 1940 Act.
(f) "Majority Shareholder Vote" shall have the same meaning as "vote of a
majority of the outstanding voting securities" as that phrase is defined in
the 1940 Act, provided that such majority shall be calculated by reference
to the number of votes represented by shares entitled to vote and present
at the meeting, either in person or by proxy. Such term may be used herein
with respect to the Shares of the Trust as a whole or the Shares of a
particular series, as the context may require.
(g) "Declaration of Trust" shall mean this Agreement and Declaration of Trust,
as further amended or restated from time to time, provided that reference
made in this Agreement and Declaration of Trust to "hereby," "hereof,"
"herein," "hereunder" or similar terms shall be deemed to refer to this
Declaration of Trust rather than the Article or Section in which such words
appear, unless the context otherwise requires.
(h) "By-Laws" shall mean the By-Laws of the Trust referred to in Article IV,
Section 4 hereof, as amended from time to time.
(i) The "1940 Act" refers to the Investment Company Act of 1940 and the Rules
and Regulations thereunder, all as amended from time to time.
(j) "Disinterested Trustees" shall mean Trustees who are not "interested
persons" as such term is defined in the 1940 Act (including any Trustee who
has been exempted from being an "interested person" by any rule, regulation
or order of the Commission). In limitation of the foregoing, however, as
used in Article VIII hereof, a "Disinterested Trustee" shall mean a
Disinterested Trustee against whom, at the time of the votes to be taken
pursuant to said Article VIII, none of the actions, suits or other
proceedings referred to in such Article VIII, nor any other action, suit or
other proceeding on the same or similar grounds is or has been pending.
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ARTICLE II
PURPOSE
The purpose of the Trust is to provide investors with one or more
investment portfolio(s) consisting primarily of securities, including debt
instruments or obligations.
ARTICLE III
SHARES
DIVISION OF BENEFICIAL INTEREST
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Section 1. The Trustees may divide the beneficial interest in the Trust
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into an unlimited number of Shares, authorize the issuance of Shares without
prior Shareholder approval, and may provide in a By-Law or otherwise that Shares
may have voting rights based upon the value thereof. Shares may be issued in
series and, if so, Shares of any series will constitute units of beneficial
interest in assets of the Trust specifically allocated to such series. Shares of
the Trust, or any series thereof, shall have a par value of $.00001, shall
represent equal and proportionate interests in the Trust, or such series, with
none having priority or preference over any other except as specifically set
forth in this Article III, and shall be transferable. All Shares issued
hereunder, including any Shares issued in payment of dividends or other
distributions or in connection with any split of Shares, shall be fully paid and
non-assessable. Shares of the Trust or of any series may be issued in two or
more classes, as the Trustees may, without Shareholder approval, authorize, and
Shares of any class shall be identical to those of any other class of the Trust
or such series except that, if the Trustees have authorized the issuance of
Shares of any particular series in two or more classes, then such classes may,
consistent with the 1940 Act, or pursuant to any exemptive order issued by the
Commission and other applicable law, have such variations as to dividends,
redemption charges, conversion, voting rights, net asset value, expenses borne
by the class, and other matters as the Trustees shall have determined. The
Trustees may from time to time, without Shareholder approval, divide or combine
the Shares of a series into a greater or lesser number without thereby changing
their proportionate beneficial interests in assets allocated to such series.
OWNERSHIP OF SHARES
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Section 2. The ownership of Shares shall be recorded on the books of
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the Trust or its transfer or similar agent. No certificates certifying the
ownership of Shares shall be issued except as the Trustees may otherwise
determine from time to time. The Trustees may make such rules as they consider
appropriate for the issuance of Share certificates, the transfer of Shares and
similar matters. The record books of the Trust as kept by the Trust or any
transfer or similar agent of the Trust, as the case may be, shall be conclusive
as to who are the Shareholders of each series or class and as to the number of
Shares of each series or class held from time to time by each Shareholder.
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INVESTMENTS IN THE TRUST; ASSETS OF THE SERIES
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Section 3. The Trustees may accept investments in the Trust from such
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persons and on such terms and, subject to any requirements of law, for such
consideration, which may consist of cash or tangible or intangible property or a
combination thereof, as they may from time to time authorize.
All consideration received by the Trust for the issue or sale of Shares of
each series, together with all income, earnings, profits, and proceeds thereof,
including any proceeds derived from the sale, exchange or liquidation thereof,
and any funds or payments derived from any reinvestment of such proceeds in
whatever form the same may be, shall irrevocably belong to the series of Shares
with respect to which the same were received by the Trust for all purposes,
subject only to the rights of creditors, and shall be so recorded upon the books
of account of the Trust and are herein referred to as "assets of" such series.
In addition, any assets, income, earnings, profits, and proceeds thereof, funds,
or payments which are not readily identifiable as belonging to any particular
series shall be allocated by the Trustees between and among one or more of the
series in such manner as they, in their sole discretion, deem fair and
equitable. Each such allocation to any series shall be conclusive and binding
upon the Shareholders of all series for all purposes, and shall be referred to
as assets belonging to that series. No holder of Shares of any particular series
shall have any claim on or right to any assets allocated or belonging to any
other series.
ESTABLISHMENT OF CLASS OR SERIES
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Section 4. The establishment and designation of any class or series of
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Shares shall be effective upon the adoption of a resolution by a majority of the
Trustees (or of a committee thereof) setting forth such establishment and
designation and the relative rights and preferences of the Shares of such class
or series. Such establishment and designation shall not constitute an amendment
to this Declaration of Trust, although the Trustees may, at their option, set
forth such establishment and designation in a written instrument signed by them
or by an officer of the Trust. The Trustees (or a committee thereof) may by
majority vote amend such establishment and designation. At any time, if no
Shares are outstanding of a particular class or series previously so established
and designated, the Trustees (or a committee thereof) may by majority vote
abolish such class or series and said establishment and designation thereof.
NO PREEMPTIVE RIGHTS
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Section 5. Shareholders shall have no preemptive or other right to
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receive, purchase or subscribe for any additional Shares or other securities
issued by the Trust, except as otherwise provided herein or as the Trustees in
their sole discretion shall have determined by resolution.
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STATUS OF SHARES AND LIMITATION OF PERSONAL LIABILITY
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Section 6. Shares shall be deemed to be personal property giving only
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the rights provided in this instrument. Every Shareholder by virtue of having
become a Shareholder shall be held to have expressly assented and agreed to the
terms of this Declaration of Trust and to have become a party hereto. The death
of a Shareholder during the continuance of the Trust shall not operate to
terminate the same nor entitle the representative of any deceased Shareholder to
an accounting or to take any action in court or elsewhere against the Trust or
the Trustees, but only to the rights of said decedent under this Trust.
Ownership of Shares shall not entitle the Shareholder to any title in or to the
whole or any part of the Trust property or right to call for a partition or
division of the same or for an accounting, nor shall the ownership of Shares
constitute the Shareholders partners. Neither the Trust nor the Trustees, nor
any officer, employee or agent of the Trust shall have any power to bind
personally any Shareholder, nor, except as specifically provided herein, to call
upon any Shareholder for the payment of any sum of money or assessment
whatsoever other than such as the Shareholder may at any time personally agree
to pay.
TRUSTEES AND OFFICERS AS SHAREHOLDERS
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Section 7. Any Trustee, officer or other agent of the Trust may acquire,
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own and dispose of Shares of the Trust to the same extent as if he or she were
not a Trustee, officer or agent; and the Trustees may issue and sell or cause to
be issued and sold Shares to and buy such Shares from any such person or any
firm or company in which he is interested, subject only to the general
limitations herein contained as to the sale and purchase of such Shares; and all
subject to any restrictions which may be contained in the By-Laws.
ARTICLE IV
THE TRUSTEES
QUALIFICATION; NUMBER OF TRUSTEES; ELECTION
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Section 1. Each Trustee shall be a natural person and may, but need not,
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be a Shareholder. A Trustee may be elected either by the Trustees or the
Shareholders subject to the limitations of the 1940 Act. Each Trustee shall hold
office during the lifetime of this Trust until the election and qualification of
his or her successor, or until he or she sooner dies, resigns or is removed. The
number of Trustees shall be fixed from time to time by a vote of a majority of
the Trustees then in office, except that, commencing with the first
Shareholders' meeting at which Trustees are elected, there shall be not fewer
than three nor more than fifteen Trustees. The number of Trustees so fixed may
be increased either by the Shareholders or by the Trustees by a vote of a
majority of the Trustees then in office. The number of Trustees so fixed may be
decreased either by the Shareholders or by the Trustees by vote of a majority of
the Trustees then in office, but only to eliminate vacancies existing by reason
of the death, resignation or removal of one or more Trustees.
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In case of the declination, death, resignation, retirement, removal,
incapacity, or inability of any of the Trustees, or in case a vacancy shall
exist by reason of an increase in number, or for any other reason, the remaining
Trustees shall fill such vacancy by appointing such other person as they in
their discretion shall see fit consistent with the 1940 Act. Until any such
vacancy is filled as provided in this Section 1, the Trustees then in office
shall, regardless of their number, have all powers granted to and discharge all
duties imposed on the Trustees hereby. Such appointment shall be evidenced by a
written instrument signed by a majority of the Trustees in office, even though
less than a quorum, or by recording in the records of the Trust, and shall take
effect upon such signing or recording and the acceptance of such appointment by
the Trustee so appointed. An appointment of a Trustee may be made by the
Trustees then in office in anticipation of a vacancy to occur by reason of
retirement, resignation or increase in number of Trustees effective at a later
date, provided that said appointment shall become effective only at or after the
effective date of said retirement, resignation or increase in number of
Trustees.
REMOVAL AND RESIGNATION
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Section 2. By vote of the Shareholders holding a majority of the shares
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entitled to vote, the Shareholders may remove a Trustee with or without cause.
By vote of a majority of the Trustees then in office, the Trustees may remove a
Trustee with or without cause. Any Trustee may resign at any time by written
instrument signed by him or her and delivered to any officer of the Trust, to
each other Trustee or to a meeting of the Trustees. Such resignation shall be
effective upon receipt unless specified to be effective at some other time.
Except to the extent expressly provided in a written agreement with the Trust,
no Trustee resigning and no Trustee removed shall have any right to any
compensation for any period following his or her resignation or removal, or any
right to damages on account of such removal.
EFFECT OF DEATH, RESIGNATION, ETC. OF A TRUSTEE
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Section 3. The death, declination, resignation, retirement, removal,
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or incapacity of the Trustees, or any one of them, shall not operate to annul
the Trust or to revoke any existing agency created pursuant to the terms of this
Declaration of Trust.
POWERS
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Section 4. Subject to the provisions of this Declaration of Trust,
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the Trustees shall manage the business of the Trust as an investment company,
and they shall have all powers necessary or convenient to carry out that
responsibility. Without limiting the foregoing, the Trustees may adopt By-Laws
not inconsistent with this Declaration of Trust providing for the conduct of the
business of the Trust and may amend and repeal them to the extent that such By-
Laws do not reserve that right to the Shareholders; they may fill vacancies in
their number, including vacancies resulting from increases in their number, and
may elect and remove such officers and appoint and terminate such agents as they
consider appropriate;
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they may appoint from their own number, and terminate, any one or more
committees consisting of two or more Trustees, including an executive committee
which may, when the Trustees are not in session, exercise some or all of the
powers and authority of the Trustees as the Trustees may determine; they may
appoint an advisory board, the members of which shall not be Trustees and need
not be Shareholders; they may employ one or more investment advisers or
administrators as provided in Section 9 of this Article IV; they may employ one
or more custodians of the assets of the trust and may authorize such custodians
to employ subcustodians and to deposit all or any part of such assets in a
system or systems for the central handling of securities, retain a transfer
agent or a Shareholder servicing agent, or both, provide for the distribution of
Shares by the Trust, through one or more principal underwriters or otherwise,
set record dates for the determination of Shareholders with respect to various
matters, and in general delegate such authority as they consider desirable to
any officer of the Trust, to any committee of the Trustees and to any agent or
employee of the Trust or to any such custodian or underwriter; and they may
elect and remove such officers and appoint and terminate such agents as they
consider appropriate.
Without limiting the foregoing, the Trustees shall have power and
authority:
(a) To invest and reinvest cash, and to hold cash uninvested;
(b) To sell, exchange, lend, pledge, mortgage, hypothecate, write options
on and lease any or all of the assets of the Trust;
(c) To vote or give assent, or exercise any rights of ownership, with
respect to stock or other securities or property, and to execute and
deliver proxies or powers of attorney to such person or persons as the
Trustees shall deem proper, granting to such person or persons such
power and discretion with relation to securities or property as the
Trustees shall deem proper;
(d) To exercise powers and rights of subscription or otherwise which in
any manner arise out of ownership of securities;
(e) To hold any security or property in a form not indicating any trust,
whether in bearer, unregistered or other negotiable form, or in the
name of the Trustees or of the Trust or in the name of a custodian,
subcustodian or other depositary or a nominee or nominees or
otherwise;
(f) To establish separate and distinct series of shares with separately
defined investment objectives, policies and purposes, and with
separately defined relative powers, rights, privileges and
liabilities, and to allocate assets, liabilities and expenses of the
Trust to a particular series of Shares or to apportion the same among
two or more series, provided that any liability or expense determined
by the Trustees to have been incurred by a particular series of Shares
shall be payable solely out of the assets of that series and to
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establish separate classes of shares of each series, all in accordance
with Article III hereof;
(g) To consent to or participate in any plan for the reorganization,
consolidation or merger of any corporation or issuer, any security or
property of which is or was held in the Trust; to consent to any
contract, lease, mortgage, purchase or sale of property by such
corporation or issuer, and to pay calls or subscriptions with respect
to any security held in the Trust;
(h) To join with other security holders in acting through a committee,
depositary, voting trustee or otherwise, and in that connection to
deposit any security with, or transfer any security to, any such
committee, depositary or trustee, and to delegate to them such power
and authority with relation to any security (whether or not so
deposited or transferred) as the Trustees shall deem proper, and to
agree to pay, and to pay, such portion of the expenses and
compensation of such committee, depositary or trustee as the Trustees
shall deem proper;
(i) To compromise, arbitrate or otherwise adjust claims in favor of or
against the Trust or any matter in controversy, including but not
limited to claims for taxes;
(j) To enter into joint ventures, general or limited partnerships and any
other combinations or associations;
(k) To borrow funds;
(l) To endorse or guarantee the payment of any notes or other obligations
of any person; to make contracts of guaranty or suretyship, or
otherwise assume liability for payment thereof; and to mortgage and
pledge the Trust property or any part thereof to secure any or all of
such obligations;
(m) To purchase and pay for entirely out of Trust property such insurance
as they may deem necessary or appropriate for the conduct of the
business, including, without limitation, insurance policies insuring
the assets of the Trust and payment of distributions and principal on
its portfolio investments, and insurance policies insuring the
Shareholders, Trustees, officers, employees, agents, investment
advisers or administrators, principal underwriters, or independent
contractors of the Trust individually against all claims and
liabilities of every nature arising by reason of holding, being or
having held any such office or position, or by reason of any action
alleged to have been taken or omitted by any such person as
Shareholder, Trustee, officer, employee, agent, investment adviser or
administrator, principal underwriter, or independent contractor,
including any action taken or omitted that may be
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determined to constitute negligence, whether or not the Trust would
have the power to indemnify such person against such liability;
(n) To pay pensions for faithful service, as deemed appropriate by the
Trustees, and to adopt, establish and carry out pension, profit-
sharing, share bonus, share purchase, savings, thrift and other
retirement, incentive and benefit plans, trusts and provisions,
including the purchasing of life insurance and annuity contracts as a
means of providing such retirement and other benefits, for any or all
of the Trustees, officers, employees and agents of the Trust;
(o) To establish, from time to time, a minimum total investment for
Shareholders, and to require the redemption of the Shares of any
Shareholders whose investment is less than such minimum upon giving
notice to such Shareholder;
(p) To enter into contracts of any kind and description;
(q) To name, or to change the name or designation of the Trust or any
series or class of the Trust;
(r) To take whatever action may be necessary to enable the Trust to comply
with any applicable Federal, state or local statute, rule or
regulation; and
(s) To engage in any other lawful act or activity in which corporations
organized under the Massachusetts Business Corporation Law may engage.
The Trustees shall not in any way be bound or limited by any present or
future law or custom in regard to investments by Trustees.
MANNER OF ACTING
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Section 5. Except as otherwise provided herein or from time to time in the
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By-Laws, any action to be taken by the Trustees, or a committee thereof, may be
taken by a majority of the Trustees present at a meeting of Trustees, or of the
committee members present at a meeting of such committee (if in either case a
quorum be present), within or without Massachusetts, including any meeting held
by means of a conference telephone or other communications equipment by means of
which all persons participating in the meeting can communicate with each other
simultaneously and participation by such means shall constitute presence in
person at a meeting, or by written consent of a majority of the Trustees, or
members of such committee, then in office. At any meeting of the Trustees, or a
committee thereof, one third of the Trustees or members of such committee, as
the case may be, shall constitute a quorum. If a quorum is present when a duly
called or held meeting is convened, the Trustees present thereat may, following
the withdrawal of one or more Trustees originally present, continue to transact
business until adjournment thereof, even though such Trustees would not
otherwise constitute a quorum. Meetings of the
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Trustees, or a committee thereof, may be called orally or in writing by the
Chairman of the Trustees or of such committee or by any two other Trustees or
committee members, as the case may be. Notice of the time, date and place of
all meeting of the Trustees, or a committee thereof, shall be given to each
Trustee or committee member as provided in the By-Laws.
Notice of any meeting need not be given to any Trustee (or committee
member) who attends that meeting without objecting to the lack of notice or who
executes a written waiver of notice with respect to the meeting. Subject to the
requirements of the 1940 Act, the Trustees by majority vote may delegate to any
one of their number the authority to approve particular matters or take
particular actions on behalf of the Trust.
PAYMENT OF EXPENSES BY THE TRUST
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Section 6. The Trustees are authorized to pay or to cause to be paid out
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of the principal or income of the Trust, or partly out of principal and partly
out of income, as they deem fair, all expenses, fees, charges, taxes and
liabilities incurred or arising in connection with the Trust, or in connection
with the management thereof, including, but not limited to, the Trustees'
compensation, as authorized pursuant to Article VII, Section 1 hereof, and
reimbursement for expenses and disbursements and such expenses and charges for
the services of the Trust's officers, employees, investment adviser or
administrator, principal underwriter, auditor, counsel, custodian, transfer
agent, Shareholder servicing agent, and such other agents or independent
contractors and such other expenses and charges as the Trustees may deem
necessary or proper to incur, provided, however, that all expenses, fees,
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charges, taxes and liabilities incurred or arising in connection with a
particular series of Shares or class as determined by the Trustees consistent
with applicable law, shall be payable solely out of the assets of that series or
class. Any general liabilities, expenses, costs, charges or reserves of the
Trust which are not readily identifiable as belonging to any particular series
shall be allocated and charged by the Trustees between or among any one or more
of the series in such manner as the Trustees in their sole discretion deem fair
and equitable. Each such allocation shall be conclusive and binding upon the
Shareholders of all series for all purposes. Any creditor of any series may
look only to the assets of that series to satisfy such creditor's debt.
Section 7. The Trustees shall have the power, as frequently as they may
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determine, to cause each Shareholder to pay directly, in advance or arrears, for
any and all expenses of the Trust, an amount fixed from time to time by the
Trustees, by setting off such charges due from such Shareholder from declared
but unpaid dividends owed such Shareholder and/or by reducing the number of
Shares in the account of such Shareholder by that number of full and/or
fractional Shares which represents the outstanding amount of such charges due
from such Shareholder.
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OWNERSHIP OF ASSETS OF THE TRUST
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Section 8. Title to all of the assets of each series of Shares and the
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Trust shall at all times be considered as vested in the Trustees as joint
tenants. The right, title and interest of the Trustees in such assets shall
vest automatically in each person who may hereafter become a Trustee, and upon
any Trustees' death, resignation or removal, such Trustee shall automatically
cease to have any right, title or interest in such assets. Vesting and
cessation of title as set forth in this Section 8 shall be effective
notwithstanding the absence of execution and delivery of any conveyancing
documents.
ADVISORY, ADMINISTRATION AND DISTRIBUTION
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Section 9. The Trustees may, at any time and from time to time, contract
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with respect to the Trust or any series thereof for exclusive or nonexclusive
advisory and/or administration services with Turner Investment Partners, Inc.,
SEI Financial Management Corporation, and/or any other corporation, trust,
association or other organization, every such contract to comply with such
requirements and restrictions as may be set forth in the By-Laws; and any such
contract may contain such other terms interpretive of or in addition to said
requirements and restrictions as the Trustees may determine, including, without
limitation, in the case of a contract for advisory or sub-advisory services,
authority to determine from time to time what investments shall be purchased,
held, sold or exchanged and what portion, if any, of the assets of the Trust or
any series thereof shall be held uninvested and to make changes in the
investments of the Trust or any series thereof. Any contract for advisory
services shall be subject to such Shareholder approval as is required by the
1940 Act. The Trustees may also, at any time and from time to time, contract
with SEI Financial Services Company, and/or any other corporation, trust,
association or other organization, appointing it exclusive or nonexclusive
distributor or principal underwriter for the Shares, every such contract to
comply with such requirements and restrictions as may be set forth in the By-
Laws, and any such contract may contain such other terms interpretive of or in
addition to said requirements and restrictions as the Trustees may determine.
The fact that:
(i) any of the Shareholders, Trustees or officers of the Trust is a
shareholder, director, officer, partner, trustee, employee,
administrator, adviser, principal underwriter, or distributor or
agent of or for any corporation, trust, association, or other
organization, or of or for any parent or affiliate of any
organization, with which an advisory or administration or principal
underwriter's or distributor's contract, or transfer, Shareholder
servicing or other agency contract may have been or may hereafter be
made, or that any such organization, or any parent or affiliate
thereof, is a Shareholder or has an interest in the Trust, or that
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(ii) any corporation, trust, association or other organization with which
an advisory or administration or principal underwriter's or
distributor's contract, or transfer, Shareholder servicing or other
agency contract may have been or may hereafter be made also has an
advisory or administration contract, or principal underwriter's or
distributor's contract, or transfer, Shareholder servicing or other
agency contract with one or more other corporations, trusts,
associations, or other organizations, or has other businesses or
interests
shall not affect the validity of any such contract or disqualify any
Shareholder, Trustee or officer of the Trust from voting upon or executing the
same or create any liability or accountability to the Trust or its Shareholders.
ARTICLE V
SHAREHOLDERS' VOTING POWERS AND MEETINGS
The Shareholders shall have power to vote only (i) for the election or
removal of Trustees as provided in Article IV, Section 1 hereof, (ii) with
respect to any investment adviser as provided in Article IV, Section 7 hereof,
(iii) with respect to any termination of the Trust or any series or class to the
extent and as provided in Article IX, Section 4 hereof, (iv) with respect to any
amendment of this Declaration of Trust to the extent and as provided in Article
IX, Section 7 hereof, (v) to the same extent as the stockholders of a
Massachusetts business corporation as to whether or not a court action,
proceeding or claim should or should not be brought or maintained derivatively
or as a class action on behalf of the Trust or the Shareholders, (vi) with
respect to any merger, consolidation, sale of assets, or incorporation of the
Trust or any series to the extent and as provided in Article IX, Sections 6 and
7 hereof, and (vii) with respect to such additional matters relating to the
Trust as may be required by law, by this Declaration of Trust, by the By-Laws or
by any registration of the Trust with the Securities and Exchange Commission or
any state, or as the Trustees may consider necessary or desirable.
Notwithstanding any other provisions of this Declaration of Trust, on any matter
submitted to a vote of Shareholders, all Shares of the Trust then entitled to
vote shall be voted by individual series or class, except that (1) when so
required by the 1940 Act, Shares shall be voted in the aggregate and not by
individual series or class, and (2) when the Trustees have determined that the
matter affects only the interests of one or more series or class, then only
Shareholders of such series or class(es) shall be entitled to vote thereon. The
Shareholders may hold meetings and take action as provided in the By-Laws,
subject to the requirements of the 1940 Act where applicable. Until Shares are
issued, the Trustees may exercise all rights of Shareholders and may take any
action required by law, this Declaration of Trust or the By-Laws to be taken by
Shareholders.
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ARTICLE VI
DISTRIBUTIONS, REDEMPTIONS, REPURCHASES
AND DETERMINATION OF NET ASSET VALUE
DISTRIBUTIONS
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Section 1. The Trustees may, but need not, distribute from time to time to
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the Shareholders of each series such income and gains, accrued or realized, as
the Trustees may determine, after providing for actual and accrued expenses and
liabilities (including such reserves as the Trustees may establish) determined
in accordance with good accounting practices. The Trustees shall have full
discretion to determine which items shall be treated as income and which items
as capital and their determination shall be binding upon the Shareholders.
Distributions of each year's income of each series, if any be made, may be made
in one or more payments, which shall be in Shares, in cash or otherwise and on a
date or dates determined by the Trustees. At any time and from time to time in
their discretion, the Trustees may distribute to the Shareholders of any one or
more series as of a record date or dates determined by the Trustees, in Shares,
in cash or otherwise, all or part of any gains realized on the sale or
disposition of property of the series or otherwise, or all or part of any other
principal of the Trust attributable to the series. Each distribution pursuant
to this Section 1 shall be made ratably according to the number of Shares of the
series or class held by the several Shareholders on the applicable record date
thereof, provided that no distributions need be made on Shares purchased
pursuant to orders received, or for which payment is made, after such time or
times as the Trustees may determine. Any such distribution paid in Shares will
be paid at the net asset value thereof as determined in accordance with this
Declaration of Trust.
REDEMPTIONS AND REPURCHASES
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Section 2. Any holder of Shares of the Trust may, by presentation of a
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written request, together with his or her certificates, if any, for such Shares,
in proper form for transfer, at the office of the Trust, the adviser, the
underwriter or the distributors, or at a principal office of a transfer or
Shareholder services agent appointed by the Trust (as the Trustees may
determine), or in accordance with such other procedures for redemption as the
Trustees may from time to time authorize, redeem his or her Shares in accordance
with the provisions of this Section 2 for the net asset value thereof determined
and computed in accordance with the By-Laws, less any redemption charge the
Trustees may establish, including any contingent deferred sales charge to which
redemption of such Shares may be subject. Upon receipt of such written request
for redemption of Shares by the Trust, the adviser, the underwriter or the
distributor, or the Trust's transfer or Shareholder services agent, the Trust
shall purchase such Shares and shall pay therefor the net asset value thereof
next determined after such receipt or the net asset value thereof determined as
of such other time fixed by the Trustees, as may be permitted or required by the
1940 Act in each instance, less any applicable redemption charge.
13
<PAGE>
The obligation of the Trust to redeem its Shares as set forth in this
Section 2 shall be subject to the condition that, during any time of emergency,
as hereinafter defined, such obligation may be suspended by the Trust by or
under authority of the Trustees for such period or periods during such time of
emergency as shall be determined by or under authority of the Trustees. If
there is such a suspension, any Shareholder may withdraw any demand for
redemption and any tender of Shares which has been received by the Trust during
any such period and any tender of Shares the applicable net asset value of which
would but for such suspension be calculated as of a time during such period.
Upon such withdrawal, the Trust shall return to the Shareholder the certificates
therefor, if any. Shareholders who do not so withdraw any such demand shall
receive payment based on the net asset value next determined after the
termination of such suspension. For the purposes of any such suspension "time
of emergency" shall mean, either with respect to all Shares or any series of
Shares, as appropriate, any period during which:
(a) the New York Stock Exchange is closed other than for customary weekend
and holiday closings; or
(b) the Trustees or authorized officers of the Trust shall have
determined, in compliance with any applicable rules and regulations or
orders of the Commission, either that trading on the New York Stock
Exchange is restricted, or that an emergency exists as a result of
which (i) disposal by the Trust of securities owned by it is not
reasonably practicable or (ii) it is not reasonably practicable for
the Trust fairly to determine the current value of the net assets of
the Trust or of a series; or
(c) the suspension or postponement of such obligations is permitted by
order of the Commission.
The Trust may also purchase, repurchase or redeem Shares in accordance with
such other methods, upon such other terms and subject to such other conditions
as the Trustees may from time to time authorize at a price not exceeding the net
asset value of such Shares in effect when the purchase or repurchase or any
contract to purchase or repurchase is made.
PAYMENT IN KIND
- ---------------
Section 3. Subject to any generally applicable limitation imposed by the
---------
Trustees, any payment on redemption, purchase or repurchase by the Trust of
Shares may, if authorized by the Trustees, be made wholly or partly in kind,
instead of in cash. Such payment in kind shall be made by distributing
securities or other property, constituting, in the opinion of the Trustees, a
fair representation of the various types of securities and other property then
held by the series of Shares being redeemed, purchased or repurchased (but not
necessarily involving a portion of each of that series' holdings) and taken at
their value used in determining the net asset value of the Shares in respect of
which payment is made.
14
<PAGE>
ADDITIONAL PROVISIONS RELATING TO REDEMPTIONS AND REPURCHASES
- -------------------------------------------------------------
Section 4. The completion of redemption, purchase or repurchase of Shares
---------
shall constitute a full discharge of the Trust and the Trustees with respect to
such Shares and the Trustees may require that any certificate or certificates
issued by the Trust to evidence the ownership of such Shares shall be
surrendered to the Trustees for cancellation or notation.
ASSETS AVAILABLE FOR DIVIDENDS, DISTRIBUTIONS, REDEMPTIONS AND REPURCHASES
- --------------------------------------------------------------------------
Section 5. No dividend or distribution (including, without limitation, any
---------
distribution paid upon termination of the Trust or of any series) with respect
to, nor any redemption or repurchase of, the Shares of any series shall be
effected by the Trust other than from the assets of such series.
REDEMPTIONS AT THE OPTION OF THE TRUST
- --------------------------------------
Section 6. The Trustees shall have the power at any time to redeem Shares,
---------
of any class or any series, of a Shareholder at a redemption price determined in
accordance with the provisions of Section 2 of this Article if at such time the
aggregate net asset value of the Shares of that class of that series in such
Shareholder's account is less than the minimum investment amount established by
the Trustees for that class of that series. A Shareholder shall be notified
prior to any such redemption and shall be allowed to make additional investments
in Shares of that class or that series before such redemption is effected.
ARTICLE VII
COMPENSATION AND LIMITATION
OF LIABILITY OF TRUSTEES
COMPENSATION
- ------------
Section 1. The Trustees as such shall be entitled to reasonable
---------
compensation from the Trust; they may fix the amount of their compensation.
Nothing herein shall in any way prevent the employment of any Trustee for
advisory, administration, legal, accounting, investment banking or other
services and payment for the same by the Trust.
LIMITATION OF LIABILITY
- -----------------------
Section 2. The Trustees shall not be responsible or liable in any event
---------
for any neglect or wrongdoing of any officer, agent, employee, investment
adviser or administrator, principal underwriter or custodian, nor shall any
Trustee be responsible for the act or omission of any other Trustee, but nothing
herein contained shall protect any Trustee against any liability to which he or
she would otherwise be subject by reason of willful
15
<PAGE>
misfeasance, bad faith, gross negligence or reckless disregard of the duties
involved in the conduct of his or her office.
Every note, bond, contract, instrument, certificate, Share or undertaking
and every other act or thing whatsoever executed or done by or on behalf of the
Trust or the Trustees or any of them in connection with the Trust shall be
conclusively deemed to have been executed or done only in or with respect to
their or his or her capacity as Trustees or Trustee, and such Trustees or
Trustee shall not be personally liable thereon.
ARTICLE VIII
INDEMNIFICATION
Subject to the exceptions and limitations contained in this Article, every
person who is, or has been, a Trustee or officer of the Trust shall be
indemnified by the Trust to the fullest extent permitted by law against
liability and against all expenses reasonably incurred or paid by him in
connection with any claim, action, suit or proceeding in which he becomes
involved as a party or otherwise by virtue of his being or having been a Trustee
or officer and against amounts paid or incurred by him in settlement thereof.
No indemnification shall be provided hereunder to a Trustee or officer:
(a) against any liability to the Trust or its Shareholders by reason of a
final adjudication by the court or other body before which the
proceeding was brought that he engaged in willful misfeasance, bad
faith, gross negligence or reckless disregard of the duties involved
in the conduct of his office;
(b) with respect to any matter as to which he shall have been finally
adjudicated not to have acted in good faith in the reasonable belief
that his action was in the best interests of the Trust;
(c) in the event of a settlement or other disposition not involving a
final adjudication (as provided in paragraph (a) or (b)) and resulting
in a payment by a Trustee or officer, unless there has been either a
determination that such Trustee or officer did not engage in willful
misfeasance, bad faith, gross negligence or reckless disregard of the
duties involved in the conduct of his office by the court or other
body approving the settlement or other disposition
16
<PAGE>
or a reasonable determination, based on a review of readily available
facts (as opposed to a full trial-type inquiry) that he did not engage
in such conduct:
(i) by a vote of a majority of the Disinterested Trustees acting on
the matter (provided that a majority of the Disinterested
Trustees then in office act on the matter); or
(ii) by written opinion of independent legal counsel.
The rights of indemnification hereinafter provided may be insured against
by policies maintained by the Trust, shall be severable, shall not affect any
other rights to which any Trustee or officer may now or hereafter be entitled,
shall continue as to a person who has ceased to be such Trustee or officer and
shall inure to the benefit of the heirs, executors and administrators of such a
person. Nothing contained herein shall affect any rights to indemnification to
which Trust personnel other than Trustees and officers may be entitled by
contract or otherwise under law.
Expenses of preparation and presentation of a defense to any claim, action,
suit or proceeding of the character described in the next to the last paragraph
of this Article shall be advanced by the Trust prior to final disposition
thereof upon receipt of an undertaking by or on behalf of the recipient to repay
such amount if it is ultimately determined that he is not entitled to
indemnification under this Article, provided that either:
(a) such undertaking is secured by a surety bond or some other appropriate
security or the Trust shall be insured against losses arising out of
any such advances; or
(b) a majority of the Disinterested Trustees acting on the matter
(provided that a majority of the Disinterested Trustees then in office
act on the matter) or independent legal counsel in a written opinion
shall determine, based upon a review of the readily available facts
(as opposed to a full trial-type inquiry), that there is reason to
believe that the recipient ultimately will be found entitled to
indemnification.
As used in this Article, the words "claim," "action," "suit" or
"proceeding" shall apply to all claims, actions, suits or proceedings (civil,
criminal or other, including appeals), actual or threatened; and the words
"liability" and "expenses" shall include without limitation, attorney's fees,
costs, judgments, amounts paid in settlement, fines, penalties and other
liabilities.
In case any Shareholder or former Shareholder shall be held to be
personally liable solely by reason of his or her being or having been a
shareholder and not because of his or her acts or omissions or for some other
reason, the shareholder or former Shareholder (or his or her heirs, executors,
administrators or other legal representatives or in the case of a
17
<PAGE>
corporation or other entity, its corporate or other general successor) shall be
entitled to be held harmless from and indemnified against all loss and expenses
arising from such liability, but only out of the assets of the particular series
of Shares of which he or she is or was a Shareholder.
ARTICLE IX
MISCELLANEOUS
TRUSTEES, SHAREHOLDERS, ETC. NOT PERSONALLY LIABLE; NOTICE
- ----------------------------------------------------------
Section 1. All persons extending credit to, contracting with or having any
---------
claim against the Trust or a particular series or class of Shares shall look
only to the assets of the Trust or the assets of that particular series of
Shares for payment under such credit, contract or claim; and neither the
Shareholders nor the Trustees, nor any of the Trust's officers, employees or
agents, whether past, present or future, shall be personally liable therefor.
Nothing in this Declaration of Trust shall protect any Trustee against any
liability to which such Trustee would otherwise be subject by reason of willful
misfeasance, bad faith, gross negligence or reckless disregard of the duties
involved in the conduct of the office of Trustee.
Every note, bond, contract, instrument, certificate or undertaking made or
issued by the Trustees or by any officers or officer shall give notice that this
Declaration of Trust is on file with the Secretary of the Commonwealth of
Massachusetts and shall recite that the same was executed or made by or on
behalf of the Trust or by them as Trustees or Trustee or as officers or officer
and not individually and that the obligations of such instrument are not binding
upon any of them or the Shareholders individually but are binding only upon the
assets and property of the Trust, and may contain such further recital as he or
she or they may deem appropriate, but the omission thereof shall not operate to
bind any Trustees or Trustee or officers or officer or Shareholders or
Shareholder individually.
TRUSTEES' GOOD FAITH ACTION, EXPERT ADVICE; NO BOND OR SURETY
- -------------------------------------------------------------
Section 2. The exercise by the Trustees of their powers and discretion
---------
hereunder shall be binding upon everyone interested. A Trustee shall be liable
for his or her own willful misfeasance, bad faith, gross negligence or reckless
disregard of the duties involved in the conduct of the office of Trustee, and
for nothing else, and shall not be liable for errors of judgment or mistakes of
fact or law. The Trustees may take advice of counsel or other experts with
respect to the meaning and operation of this Declaration of Trust, and shall be
under no liability for any act or omission in accordance with such advice or for
failing to follow such advice. The Trustees shall not be required to give any
bond as such, nor any surety if a bond is required.
18
<PAGE>
LIABILITY OF THIRD PERSONS DEALING WITH TRUSTEES
- ------------------------------------------------
Section 3. No person dealing with the Trustees shall be bound to make any
---------
inquiry concerning the validity of any transaction made or to be made by the
Trustees or to see to the application of any payments made or property
transferred to the Trust or upon its order.
DURATION AND TERMINATION OF TRUST
- ---------------------------------
Section 4. Unless terminated as provided herein, the Trust shall continue
---------
without limitation of time. The Trust may be terminated at any time by vote of
Shareholders holding at least a majority of the Shares entitled to vote or by
the Trustees by written notice to the Shareholders. Any series or class of
Shares may be terminated at any time by Majority Shareholder vote of such series
or class entitled to vote or by the Trustees by written notice to the
Shareholders of such series or class. Upon termination of the Trust or of any
one or more series or classes of Shares, after paying or otherwise providing for
all charges, taxes, expenses and liabilities, whether due or accrued or
anticipated, of the Trust or of the particular series or class as may be
determined by the Trustees, the Trust shall, in accordance with such procedures
as the Trustees consider appropriate, reduce the remaining assets to
distributable form in cash or Shares or other securities, or any combination
thereof, and distribute the proceeds to the Shareholders of the series or class
involved, ratably according to the number of Shares of such series or class held
by the several Shareholders of such series or class on the date of termination.
Section 5. The original or a copy of this instrument and of each amendment
---------
hereto shall be kept at the office of the Trust where it may be inspected by any
Shareholder. A copy of this instrument and of each amendment hereto shall be
filed by the Trust with the Secretary of the Commonwealth of Massachusetts and
with the Boston City Clerk, as well as any other governmental office where such
filing may from time to time be required. Anyone dealing with the Trust may
rely on a certificate by an officer of the Trust as to whether or not any such
amendments have been made and as to any matters in connection with the Trust
hereunder; and, with the same effect as if it were the original, may rely on a
copy certified by an officer of the Trust to be a copy of this instrument or of
any such amendments. In this instrument and in such amendment, references to
this instrument, and the expression "herein," "hereof," and "hereunder" shall be
deemed to refer to this instrument as amended from time to time. Headings are
placed herein for convenience of reference only and shall not be taken as part
hereof or control or affect the meaning, construction or effect of this
instrument. This instrument may be executed in any number of counterparts each
of which shall be deemed an original.
MERGER, CONSOLIDATION AND SALE OF ASSETS
- ----------------------------------------
Section 6. The Trust may merge or consolidate with any other corporation,
---------
association, trust or other organization or may sell, lease or exchange all or
substantially all of the assets of the Trust (or all or substantially all of the
assets allocated or belonging to
19
<PAGE>
a particular series of the Trust) including its good will, upon such terms and
conditions and for such consideration when and as authorized, at any meeting of
Shareholders called for such purpose, by the vote or written consent of the
Shareholders of all series of the Trust voting as a single class, or of the
affected series of the Trust, as the case may be; and any such merger,
consolidation, sale, lease or exchange shall be deemed for all purposes to have
been accomplished under and pursuant to the statutes of the Commonwealth of
Massachusetts. Nothing contained herein shall be construed as requiring
approval of Shareholders for any sale of assets in the ordinary course of the
business of the Trust. Holders of Shares of any series or class shall have no
appraisal rights with respect to their Shares.
INCORPORATION, REORGANIZATION
- -----------------------------
Section 7. With the approval of the Shareholders, the Trustees may cause
---------
to be organized or assist in organizing a corporation or corporations under the
laws of any jurisdiction, or any other trust, unit investment trust,
partnership, association or other organization to take over the assets of the
Trust or to carry on any business in which the Trust shall directly or
indirectly have any interest, and to sell, convey and transfer such assets to
any such corporation, trust, partnership, association or organization in
exchange for the shares or securities thereof or otherwise, and to lend money
to, subscribe for the shares or securities of, and enter into any contracts with
any such corporation, trust, partnership, association or organization in which
the Trust holds or is about to acquire shares or any other interest. Subject to
Section 6 of this Article IX, the Trustees may also cause a merger or
consolidation between the Trust or any successor thereto and any such
corporation, trust, partnership, association or other organization if and to the
extent permitted by law. Nothing contained in this Section shall be construed
as requiring approval of Shareholders for the Trustees to organize or assist in
organizing one or more corporations, trusts, partnerships, associations or other
organizations and selling, conveying or transferring a portion of the assets of
the Trust to such organization or entities.
With the approval of Shareholders of any series, the Trustees may sell,
lease or exchange all of the assets allocated or belonging to that series, or
cause to be organized or assist in organizing a corporation or corporations
under the laws of any other jurisdiction, or any other trust, unit investment
trust, partnership, association or other organization, to take over all of the
assets allocated or belonging to that series and to sell, convey or transfer
such assets to any such corporation, trust, unit investment trust, partnership,
association, or other organization in exchange for the shares or securities
thereof or otherwise.
APPLICABLE LAW
- --------------
Section 8. The Trust shall be of the type commonly called a Massachusetts
---------
business trust, and without limiting the provisions hereof, the Trust may
exercise all powers which are ordinarily exercised by such a trust. This
Declaration of Trust is to be governed by and construed and administered
according to the laws of said Commonwealth.
20
<PAGE>
AMENDMENTS
- ----------
Section 9. This Declaration of Trust may be amended at any time by an
---------
instrument in writing signed by a majority of the then Trustees when authorized
to do so by a vote or written consent of Shareholders, except that an amendment
which shall affect the holders of one or more series or classes of Shares but
not the holders of all outstanding series or classes shall be authorized by vote
or written consent of the Shareholders of each series or classes affected and no
vote of Shareholders of a series or classes not affected shall be required.
Amendments having the purpose of changing the name of the Trust or of supplying
any omission, curing any ambiguity or curing, correcting or supplementing any
defective or inconsistent provision contained herein shall not require
authorization by Shareholder vote.
IN WITNESS WHEREOF, the undersigned being the sole Trustee of the Trust has
executed this document this 26th day of January, 1996.
----
/s/ Robert B. Carroll
---------------------------
STATE OF )
) SS:
COUNTY OF )
On this 26th day of January, A.D. 1996, before me personally appeared
----
Robert B. Carroll to me known to be the persons described in and who
executed the foregoing instrument and acknowledged that _________________
executed the same as their free act and deed.
My commission expires 10/12/98 /s/ Christine L. Trecroci
---------------- -------------------------
Notary Public
------------------------------------
Notorial Seal
Christine L. Trecroci, Notary Public
Tredyffrin Twp., Chester County
My Commission Expires Oct. 12, 1998
------------------------------------
Member, Pennsylvania Association of
Notaries
21
<PAGE>
BY-LAWS
OF
TURNER FUNDS
SECTION 1. AGREEMENT AND DECLARATION OF TRUST AND PRINCIPAL OFFICE
1.1 Agreement and Declaration of Trust. These By-Laws shall be subject to the
-----------------------------------
Agreement and Declaration of Trust, as from time to time in effect (the
"Declaration of Trust"), of Turner Funds, a Massachusetts business trust
established by the Declaration of Trust (the "Trust").
1.2 Principal Office of the Trust. The principal office of the Trust shall be
------------------------------
located in Boston, Massachusetts.
SECTION 2. SHAREHOLDERS
2.1 Annual Meeting. The Trust will not hold annual meetings of the
---------------
shareholders.
2.2 Special Meetings. A special meeting of the Shareholders of the Trust or of
-----------------
any series or class may be called at any time by the Trustees, by the
President or such other person or persons as may be specified in these By-
Laws, and held from time to time for the purpose of taking action upon any
matter requiring the vote or the authority of the Shareholders of the Trust
or any series or class as herein provided or upon any other matter deemed
by the Trustees to be necessary or desirable. Each call of a meeting shall
state the place, date, hour and purposes of the meeting. If the Trustees
shall fail to call or give notice of any meeting of Shareholders for a
period of thirty days after written application by Shareholders holding at
least 10% of the Shares then outstanding requesting a meeting to be called
for a purpose requiring action by the Shareholders as provided herein, then
Shareholders holding at least 10% of the Shares then outstanding may call
and give notice of such meeting, and thereupon the meeting shall be held in
the manner provided for herein in case of call thereof by the Trustees.
Notice of a meeting need not be given to any Shareholder if a written
waiver of notice, executed by him or her before or after the meeting, is
filed with the records of the meeting, or to any Shareholder who attends
the meeting without protesting prior thereto or at its commencement the
lack of notice to him or her.
2.3 Place of Meetings. All meetings of the shareholders shall be held at such
------------------
place within the United States as shall be designated by the Trustees or
the president of the Trust.
1
<PAGE>
2.4 Notice of Meetings. A written notice of each meeting of shareholders,
-------------------
stating the place, date and hour and the purposes of the meeting, shall be
given at least seven days before the meeting to each shareholder entitled
to vote thereat by leaving such notice with him or at his residence or
usual place of business or by mailing it, postage prepaid, and addressed to
such shareholder at his address as it appears in the records of the Trust.
Such notice shall be given by the secretary or an assistant secretary or by
an officer designated by the Trustees. No notice of any meeting of
shareholders need be given to a shareholder if a written waiver of notice,
executed before or after the meeting by such shareholder or his attorney
thereunto duly authorized, is filed with the records of the meeting.
2.5 Voting Power. Each whole Share held entitles the holder of record to one
-------------
vote for each dollar (carried forward to two decimal places) of net asset
value of such Share as of the close of business on the record date for any
meeting of Shareholders (or written consent in lieu thereof) at which such
Share may be voted, and each fractional Share shall be entitled to a
proportionate fractional vote. There shall be no cumulative voting in the
election of Trustees. Shares may be voted in person or by proxy.
A proxy with respect to Shares held in the name of two or more persons
shall be valid if executed by any one of them unless at or prior to the
exercise of the proxy the Trust receives a specific written notice to the
contrary from any one of them. A proxy purporting to be executed by or on
behalf of a Shareholder shall be deemed valid unless challenged at or prior
to its exercise and the burden of proving invalidity shall rest on the
challenger.
2.6 Quorum and Required Vote. A majority in interest of the Shares entitled to
-------------------------
vote shall be a quorum for the transaction of business at a Shareholders'
meeting, except that where any provision of law or of the Declaration of
Trust permits or requires that holders of any series or class shall vote as
a series or class, then a majority in interest of the Shares of that series
or class entitled to vote shall be necessary to constitute a quorum for the
transaction of business by that series or class. Any lesser number,
however, shall be sufficient for adjournments. Any adjourned session or
sessions may be held within a reasonable time after the date set for the
original meeting without the necessity of further notice.
Except when a larger vote is required by any provisions of the Declaration
of Trust or these By-Laws, a majority in interest of the Shares voted on
any matter shall decide such matter and a plurality shall elect a Trustee,
provided that where any provision of law or of this Declaration of Trust
permits or requires that the holders of any series or class shall vote as a
series or class, then a majority in interest of the Shares of that series
or class voted on the matter shall decide that matter insofar as that
series or class is concerned.
2
<PAGE>
A majority in interest shall mean 50.1% or more of total votes represented
by all Shares entitled to vote and present at the meeting either in person
or by proxy.
2.7 Ballots. No ballot shall be required for any election unless requested by
--------
a shareholder present or represented at the meeting and entitled to vote in
the election.
2.8 Proxies. Shareholders entitled to vote may vote either in person or by
--------
proxy in writing dated not more than six months before the meeting named
therein, which proxies shall be filed with the secretary or other person
responsible to record the proceedings of the meeting before being voted.
Unless otherwise specifically limited by their terms, such proxies shall
entitle the holders thereof to vote at any adjournment of such meeting but
shall not be valid after the final adjournment of such meeting.
2.9 Action by Written Consent. Any action taken by Shareholders may be taken
--------------------------
without a meeting if a majority of Shareholders entitled to vote on the
matter (or such larger vote as shall be required by any provision of the
Declaration of Trust or these By-Laws) consent to the action in writing and
such written consents are filed with the records of the meetings of
Shareholders. Such consent shall be treated for all purposes as a vote
taken at a meeting of Shareholders.
SECTION 3. TRUSTEES
3.1 Committees and Advisory Board. The Trustees may appoint from their number
------------------------------
an executive committee and other committees. Except as the Trustees may
otherwise determine, any such committee may make rules for conduct of its
business. The Trustees may appoint an advisory board to consist of not
less than two nor more than five members. The members of the advisory
board shall be compensated in such manner as the Trustees may determine and
shall confer with and advise the Trustees regarding the investments and
other affairs of the Trust. Each member of the advisory board shall hold
office until the first meeting of the Trustees following the next annual
meeting of the shareholders and until his successor is elected and
qualified, or until he sooner dies, resigns, is removed, or becomes
disqualified, or until the advisory board is sooner abolished by the
Trustees.
3.2 Regular Meetings. Regular meetings of the Trustees may be held without
-----------------
call or notice at such places and at such times as the Trustees may from
time to time determine, provided that notice of the first regular meeting
following any such determination shall be given to absent Trustees. A
regular meeting of the Trustees may be held without call or notice
immediately after and at the same place as the annual meeting of the
shareholders.
3.3 Special Meetings. Special meetings of the Trustees may be held at any time
-----------------
and at any place designated in the call of the meeting, when called by the
Chairman of the Board, the president or the treasurer or by two or more
Trustees, sufficient notice
3
<PAGE>
thereof being given to each Trustee by the secretary or an assistant
secretary or by the officer or one of the Trustees calling the meeting.
3.4 Notice. It shall be sufficient notice to a Trustee to send notice by mail
-------
at least forty-eight hours or by telegram at least twenty-four hours before
the meeting addressed to the Trustee at his or her usual or last known
business or residence address or to give notice to him or her in person or
by telephone at least twenty-four hours before the meeting. Notice of a
meeting need not be given to any Trustee if a written waiver of notice,
executed by him or her before or after the meeting, is filed with the
records of the meeting, or to any Trustee who attends the meeting without
protesting prior thereto or at its commencement the lack of notice to him
or her. Neither notice of a meeting nor a waiver of a notice need specify
the purposes of the meeting.
3.5 Quorum. At any meeting of the Trustees one-third of the Trustees then in
-------
office shall constitute a quorum; provided, however, a quorum shall not be
less than two. Any meeting may be adjourned from time to time by a
majority of the votes cast upon the question, whether or not a quorum is
present, and the meeting may be held as adjourned without further notice.
SECTION 4. OFFICERS AND AGENTS
4.1 Enumeration; Qualification. The officers of the Trust shall be a
---------------------------
president, a treasurer, a secretary and such other officers, if any, as the
Trustees from time to time may in their discretion elect or appoint. The
Trust may also have such agents, if any, as the Trustees from time to time
may in their discretion appoint. Any officer may be but none need be a
Trustee or shareholder. Any two or more offices may be held by the same
person.
4.2 Powers. Subject to the other provisions of these By-Laws, each officer
-------
shall have, in addition to the duties and powers herein and in the
Declaration of Trust set forth, such duties and powers as are commonly
incident to his or her office as if the Trust were organized as a
Massachusetts business corporation and such other duties and powers as the
Trustees may from time to time designate.
4.3 Election. The president, the treasurer and the secretary shall be elected
---------
annually by the Trustees. Other officers, if any, may be elected or
appointed by the Trustees at any time.
4.4 Tenure. The president, the treasurer and the secretary shall hold office
-------
for a one year term and until their respective successors are chosen and
qualified, or in each case until he or she sooner dies, resigns, is removed
or becomes disqualified. Each agent shall retain his or her authority at
the pleasure of the Trustees.
4
<PAGE>
4.5 President and Vice Presidents. The president shall be the chief executive
------------------------------
officer of the Trust. The president shall, subject to the control of the
Trustees, have general charge and supervision of the business of the Trust.
Any vice president shall have such duties and powers as shall be designated
from time to time by the Trustees.
4.6 Chairman of the Board. If a Chairman of the Board of Trustees is elected,
----------------------
he shall have the duties and powers specified in these By-Laws and, except
as the Trustees shall otherwise determine, preside at all meetings of the
shareholders and of the Trustees at which he or she is present and have
such other duties and powers as may be determined by the Trustees.
4.7 Treasurer and Controller. The treasurer shall be the chief financial
-------------------------
officer of the Trust and subject to any arrangement made by the Trustees
with a bank or trust company or other organization as custodian or transfer
or shareholder services agent, shall be in charge of its valuable papers
and shall have such other duties and powers as may be designated from time
to time by the Trustees or by the president. If at any time there shall be
no controller, the treasurer shall also be the chief accounting officer of
the Trust and shall have the duties and powers prescribed the Trust and
shall have the duties and powers prescribed herein for the controller. Any
assistant treasurer shall have such duties and powers as shall be
designated from time to time by the Trustees.
The controller, if any be elected, shall be the chief accounting officer of
the Trust and shall be in charge of its books of account and accounting
records. The controller shall be responsible for preparation of financial
statements of the Trust and shall have such other duties and powers as may
be designated from time to time by the Trustees or the president.
4.8 Secretary and Assistant Secretaries. The secretary shall record all
------------------------------------
proceedings of the shareholders and the Trustees in books to be kept
therefor, which books shall be kept at the principal office of the Trust.
In the absence of the secretary from any meeting of shareholders or
Trustees, an assistant secretary, or if there be none or he or she is
absent, a temporary clerk chosen at the meeting shall record the
proceedings thereof in the aforesaid books.
SECTION 5. RESIGNATION AND REMOVALS
Any Trustee, officer or advisory board member may resign at any time by
delivering his or her resignation in writing to the Chairman of the Board, the
president, the treasurer or the secretary or to a meeting of the Trustees. The
Trustees may remove any officer elected by them with or without cause by the
vote of a majority of the Trustees then in office. Except to the extent
expressly provided in a written agreement with the Trust, no Trustee, officer,
or advisory board member resigning, and no officer or advisory board member
removed shall have any right to any compensation for any period following his or
her resignation or removal, or any right to damages on account of such removal.
5
<PAGE>
SECTION 6. VACANCIES
A vacancy in any office may be filled at any time. Each successor shall hold
office for the unexpired term, and in the case of the president, the treasurer
and the secretary, until his or her successor is chosen and qualified, or in
each case until he or she sooner dies, resigns, is removed or becomes
disqualified.
SECTION 7. SHARES OF BENEFICIAL INTEREST
In lieu of issuing certificates for shares, the Trustees or the transfer or
shareholder services agent may either issue receipts therefor or may keep
accounts upon the books of the Trust for the record holders of such shares, who
shall in either case be deemed, for all purposes hereunder, to be the holders of
certificates for such shares as if they had accepted such certificates and shall
be held to have expressly assented and agreed to the terms hereof.
SECTION 8. RECORD DATE
The Trustees may fix in advance a time, which shall not be more than 90 days
before the date of any meeting of shareholders or the date for the payment of
any dividend or making of any other distribution to shareholders, as the record
date for determining the shareholders having the right to notice and to vote at
such meeting and any adjournment thereof or the right to receive such dividend
or distribution, and in such case only shareholders of record on such record
date shall have such right, notwithstanding any transfer of shares on the books
of the Trust after the record date.
SECTION 9. SEAL
The seal of the Trust shall, subject to alteration by the Trustees, consist of a
flat-faced circular die with the word "Massachusetts", together with the name of
the Trust and the year of its organization, cut or engraved thereon; but, unless
otherwise required by the Trustees, the seal shall not be necessary to be placed
on, and its absence shall not impair the validity of, any document, instrument
or other paper executed and delivered by or on behalf of the Trust.
SECTION 10. EXECUTION OF PAPERS
Except as the Trustees may generally or in particular cases authorize the
execution thereof in some other manner, all deeds, leases, transfers, contracts,
bonds, notes, checks, drafts and other obligations made, accepted or endorsed by
the Trust shall be signed, and any transfers of securities standing in the name
of the Trust shall be executed, by the president or by one of the vice
presidents or by the treasurer or by whomsoever else shall be designated for
that purpose by the vote of the Trustees and need not bear the seal of the
Trust.
6
<PAGE>
SECTION 11. FISCAL YEAR
The fiscal year of the Trust shall end on such date in each year as the Trustees
shall from time to time determine.
SECTION 12. PROVISIONS RELATING TO THE CONDUCT OF THE TRUST'S BUSINESS
12.1 Dealings with Affiliates. No officer, Trustee or agent of the Trust and no
-------------------------
officer, director or agent of any investment adviser shall deal for or on
behalf of the Trust with himself as principal or agent, or with any
partnership, association or corporation in which he has a material
financial interest; provided that the foregoing provisions shall not
prevent (a) officers and Trustees of the Trust from buying, holding or
selling shares in the Trust, or from being partners, officers or directors
of or financially inter ested in any investment adviser to the Trust or in
any corporation, firm or association which may at any time have a
distributor's or principal underwriter's contract with the Trust; (b)
purchases or sales of securities or other property if such transaction is
permitted by or is exempt or exempted from the provisions of the Investment
Company Act of 1940 or any Rule or Regulation thereunder and if such
transaction does not involve any commission or profit to any security
dealer who is, or one or more of whose partners, shareholders, officers or
directors is, an officer or Trustee of the Trust or an officer or director
of the investment adviser, administrator or principal underwriter of the
Trust; (c) employment of legal counsel, registrar, transfer agent,
shareholder services, dividend disbursing agent or custodian who is, or has
a partner, stockholder, officer or director who is, an officer or Trustee
of the Trust; or (d) shar ing statistical, research and management
expenses, including office hire and services, with any other company in
which an officer or Trustee of the Trust is an officer or director or
financially interested.
12.2 Dealing in Securities of the Trust. The Trust, the investment adviser, any
-----------------------------------
corporation, firm or association which may at any time have an exclusive
distributor's or principal underwriter's contract with the Trust (the
"distributor") and the officers and Trustees of the Trust and officers and
directors of every investment adviser and distributor, shall not take long
or short positions in the securities of the Trust, except that:
(a) the distributor may place orders with the Trust for its shares
equivalent to orders received by the distributor;
(b) shares of the Trust may be purchased at not less than net asset value
for investment by the investment adviser and by officers and directors
of the distributor, investment adviser, or the Trust and by any trust,
pension, profit-sharing or other benefit plan for such persons, no
such purchase to be in contravention of any applicable state or
federal requirement.
7
<PAGE>
12.3 Limitation on Certain Loans. The Trust shall not make loans to any
----------------------------
officer, Trustee or employee of the Trust or any investment adviser or
distributor or their respective officers, directors or partners or
employees.
12.4 Custodian. All securities and cash owned by the Trust shall be maintained
----------
in the custody of one or more banks or trust companies having (according to
its last published report) not less than two million dollars ($2,000,000)
aggregate capital, surplus and undivided profits (any such bank or trust
company is hereinafter referred to as the "custodian"); provided, however,
the custodian may deliver securities as collateral on borrowings effected
by the Trust, provided, that such delivery shall be conditioned upon
receipt of the borrowed funds by the custodian except where additional
collateral is being pledged on an outstanding loan and the custodian may
deliver securities lent by the Trust against receipt of initial collateral
specified by the Trust. Subject to such rules, regulations and orders, if
any, as the Securities and Exchange Commission may adopt, the Trust may, or
may permit any custodian to, deposit all or any part of the securities
owned by the Trust in a system for the central handling of securities
operated by the Federal Reserve Banks, or established by a national
securities exchange or national securities association registered with said
Commission under the Securities Exchange Act of 1934, or such other person
as may be permitted by said Commission, pursuant to which system all
securities of any particular class or series of any issue deposited with
the system are treated as fungible and may be transferred or pledged by
bookkeeping entry, without physical delivery of such securities.
The Trust shall upon the resignation or inability to serve of its custodian
or upon change of the custodian:
(a) in the case of such resignation or inability to serve use its best
efforts to obtain a successor custodian;
(b) require that the cash and securities owned by this corporation be
delivered directly to the successor custodian; and
(c) in the event that no successor custodian can be found, submit to the
shareholders, before permitting delivery of the cash and securities
owned by this Trust otherwise than to a successor custodian, the
question whether or not this Trust shall be liquidated or shall
function without a custodian.
12.5 Limitations on Investment. Each series of shares may not invest in
--------------------------
securities other than those described in the Trust's then current
prospectus as appropriate for the series of shares for which such
securities are being purchased.
8
<PAGE>
12.6 Determination of Net Asset Value. Determinations of net asset value made
--------------------------------
in good faith shall be binding on all parties concerned.
The term "net asset value" with respect to Shares of any series shall mean
that amount by which the assets of that series exceed its liabilities, all
as determined by or under the direction of the Trustees. Such value shall
be determined on such days and at such times as the Trustees may determine.
Such determination shall be made with respect to securities for which
market quotations are readily available, at the market value of such
securities; and with respect to other securities and assets, at the fair
value as determined in good faith by the Trustees, provided, however, that
the Trustees, without Shareholder approval, may alter the method of
appraising portfolio securities insofar as permitted under the 1940 Act and
interpretations thereof promulgated or issued by the Commission or insofar
as permitted by any order of the Commission. The Trustees may delegate any
powers and duties under this Section 12.6 with respect to appraisal of
assets and liabilities. At any time the Trustees may cause the value per
Share last determined to be determined again in similar manner and may fix
the time when such redetermined value shall become effective.
12.7 Reports to Shareholders; Distributions from Realized Gains. The Trust
-----------------------------------------------------------
shall send to each shareholder of record at least annually a statement of
the condition of the Trust and of the results of its operation, containing
all information required by applicable laws or regulations.
SECTION 13. AMENDMENTS
These By-Laws may be amended or repealed, in whole or in part, by a majority of
the Trustees then in office at any meeting of the Trustees, or by one or more
writings signed by such majority.
Adopted this 26
day of January 1996.
9
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