<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON April 19, 1996
File No. 333-00641
File No. 811-07527
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OF 1933 /X/
PRE-EFFECTIVE AMENDMENT NO. 1
and
REGISTRATION STATEMENT UNDER THE
INVESTMENT COMPANY ACT OF 1940 /X/
AMENDMENT NO. 1
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.
________________________________________________________________________________
<PAGE>
TURNER FUNDS
CROSS REFERENCE SHEET
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<CAPTION>
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
</TABLE>
<PAGE>
<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:
TURNER GROWTH EQUITY FUND
TURNER FIXED INCOME FUND
TURNER 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 April 30, 1996 has been filed with the
Securities and Exchange Commission and is available without charge by calling 1-
800-224-6312. The Statement of Additional Information is incorporated into this
Prospectus by reference.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION 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.
April 30, 1996
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
<S> <C>
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................................................... 12
The Adviser.............................................................. 13
The Administrator........................................................ 14
The Transfer Agent....................................................... 14
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 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,
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 Fixed Income Fund seeks total return through both current income and capital
appreciation. It invests primarily in fixed income securities of varying
maturities.
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.
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. The Funds may enter into futures and options transactions and
may purchase zero coupon and mortgage-backed securities and certain of the Funds
may purchase securities of foreign issuers. Investments in these securities may
involve certain risks.
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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<PAGE>
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 requires 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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<PAGE>
EXPENSE SUMMARY
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<CAPTION>
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>
<CAPTION>
ANNUAL OPERATING EXPENSES GROWTH FIXED SMALL
(as a percentage of average net assets) EQUITY FUND INCOME FUND CAP FUND
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<S> <C> <C> <C>
Advisory Fees (after fee waivers) .75% .05% (1) .55% (1)
12b-1 Fees None None None
Other Expenses .28% (2) .70% (4) 70% (3)
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Total Operating Expenses
(after fee waivers) 1.03% (2) .75% 1.25%
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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 Advisory fee, after fee waiver, for the Small Cap Fund
has been restated to reflect the anticipated advisory fee for the current
year. 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.
<TABLE>
<CAPTION>
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 EXPENSES FOR THE FIXED
INCOME FUND ARE BASED ON ESTIMATES FOR THE CURRENT FISCAL YEAR. 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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<PAGE>
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 Portfolio of The Advisors' Inner Circle Fund. The financial
statements of the Turner Growth Equity Portfolio of the Advisors' Inner Circle
Fund were audited by Arthur Andersen LLP whose report dated December 5, 1995, is
included in the Statement of Additional Information.
The Growth Equity Fund acquired all of the assets and liabilities of the Turner
Growth Equity Portfolio on April 30, 1996. All references herein to the Growth
Equity Fund shall be deemed to include the Turner Growth Equity Portfolio.
Additional performance information is set forth in the financial statements
which are available upon request and without charge by calling 1-800-224-6312.
For a Share Outstanding Throughout each Period:
<TABLE>
<CAPTION>
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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% 0.28% (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 Portfolio commenced operations on March 11, 1992.
(2) Absent the Turner Growth Equity Portfolio'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 Portfolio of The Advisors' Inner Circle Fund. The financial statements of
Turner Small Cap Portfolio of The Advisors' Inner Circle Fund were audited by
Arthur Andersen LLP whose report dated December 5, 1995, is included in the
Statement of Additional Information. The Small Cap Fund acquired all of the
assets and liabilities of the Turner Small Cap Portfolio on April 30, 1996. All
references herein to the Small Cap Fund shall be deemed to include the Turner
Small Cap Portfolio. Additional performance information is set forth in the
financial statements which are available upon request and are without charge by
calling 1-800-224-6312.
For a Share Outstanding Throughout the Period:
<TABLE>
<CAPTION>
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11/01/94 02/07/94(1)
TO TO
10/31/95 10/31/94
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<S> <C> <C>
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 Portfolio commenced operations on February 7, 1994.
-8-
<PAGE>
THE TRUST AND THE FUNDS
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 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").
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 (and, under normal
conditions, at least 65% of its assets,) 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 economic
sector weightings of the Russell 1000 Growth Index (or such other appropriate
index selected by the Adviser). The Fund may invest in warrants and rights to
purchase common stocks, and may invest up to 10% of its total assets in 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 as fully as practicable (and, under normal
conditions, at least 65% of its assets) in a portfolio of fixed income
securities of varying levels of quality and maturity that, in the Adviser's
opinion, are undervalued in the market. To determine a security's fair market
value, the Adviser will focus on the yield and credit quality of particular
securities based upon third-party evaluations of quality as well as the
Adviser's own research and analysis of the issuer. The Adviser will attempt to
-9-
<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 (currently 4.6 years). Duration is a measure of the expected life of a
fixed income security on a cash flow basis. The Adviser considers duration an
accurate measure of a security's expected life and sensitivity to interest rate
changes. The Adviser may increase or decrease this average weighted duration
when, in the Adviser's opinion, market conditions warrant.
The Fund will purchase the following types of securities if, at the time of
purchase, such securities either have been classified as investment grade by a
nationally recognized statistical rating organization ("NRSRO") or are
determined by the Adviser to be of comparable quality: (i) obligations issued
or guaranteed as to principal and interest by the U.S. Government or its
agencies or instrumentalities ("U.S. Government securities"); (ii) corporate
bonds and debentures of U.S. and foreign issuers rated in one of the four
highest rating categories; (iii) privately issued mortgage-backed securities
rated in the highest rating category; (iv) asset-backed securities rated in the
two highest rating categories; (v) receipts evidencing separately traded
interest and principal component parts of U.S. Government obligations
("Receipts"); (vi) commercial paper rated in one of the two highest rating
categories; (vii) obligations of U.S. commercial banks and savings and loan
institutions that have net assets of at least $500 million as of the end of
their most recent fiscal year ("bank obligations"); (viii) obligations issued or
guaranteed by the government of Canada; (ix) obligations of supranational
entities rated in one of the four highest rating categories; (x) loan
participations; (xi) repurchase agreements involving any of the foregoing
securities; and (xii) shares of other investment companies. Investment grade
bonds include securities rated BBB by S&P or Baa by Moody's Investors Service,
Inc. ("Moody's"), which may be regarded as having speculative characteristics as
to repayment of principal. If a security is downgraded to below investment
grade, the Adviser will review the situation and take appropriate action.
The Fund may invest in variable and floating rate obligations and in convertible
debt securities that meet the ratings criteria set forth above.
SMALL CAP FUND
The Small Cap Fund invests primarily and, under normal conditions at least 65%
of its assets 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 a weighted 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 economic sector weightings comprising the Russell 25000 Index
(or such other appropriate index selected by the Adviser). The Fund may invest
in warrants and rights to purchase common stocks, and may invest up to 10% of
its total assets in ADRs. The Fund only will purchase securities that are traded
on registered exchanges or the over-the-counter market in the United States.
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<PAGE>
ALL FUNDS
Each Fund may purchase securities on a when-issued basis.
Each Fund may enter into futures and options transactions.
Each Fund may purchase convertible securities.
Each Fund may invest up to 15% of its net assets in illiquid securities.
Each Fund may, for temporary or defensive purposes, invest up to 100% of its
total assets in money market instruments (including U.S. Government securities,
bank obligations, commercial paper rated in the highest rating category by an
NRSRO, repurchase agreements involving the foregoing securities, shares of money
market investment companies and cash.
For a further description of these types of instruments, 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. 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 fixed income investments will
change in response to interest rate changes and other factors. During periods of
fall-
-11-
<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. Mortgage-backed and asset-backed
securities purchased by the Fixed Income Fund may be subject to prepayment,
which may result in capital gains or losses, and which make it difficult to
determine such securities' average life and yield.
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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(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 25% or more of the
total assets of the Fund to be invested in the securities of one or more issuers
conducting their principal business activities in the same industry, provided
that this limitation does not apply to investments in obligations issued or
guaranteed by the U.S. Government or its agencies and instrumentalities and
repurchase agreements involving such securities.
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 E. 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 E. 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 D. 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 .12%
of that Fund's average daily net assets up to $75 million, .10% on the next $75
million of such assets, .09% of the next $150 million of such assets, .08% of
the next $300 million of such assets, and 0.75% of such assets in excess of
$600 million.
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.
Certain brokers assist their clients in the purchase or redemption of shares
and charge a fee for this service in addition to a Portfolio's public offering
price.
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 request will be effective as of the day received by the Transfer
Agent if the Transfer Agent receives the purchase request in good order and
payment before 4:00 p.m., Eastern time. Purchase requests in good order received
after 4:00p.m.; Eastern time will be effective the next Business Day. Payment
may be made by check or readily available funds. The purchase price of shares of
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 requests in good order 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 number of 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, and 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.
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.
Each sale, exchange or redemption of a Fund's shares is a taxable event to the
shareholder.
GENERAL INFORMATION
THE TRUST
The Trust, an open-end management investment company, was organized under
Massachusetts law as a business trust under a Declaration of Trust dated January
26, 1996. 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. Shareholders of each Fund will vote separately on matters pertaining
solely to that Fund. As a Massachusetts business trust, the Trust is not
required to hold annual meetings of Shareholders, but approval will be sought
for certain changes in the operation of the Trust and for the election of
Trustees under certain circumstances.
In addition, a Trustee may be removed by the remaining Trustees or by
Shareholders at a special meeting called upon written request of Shareholders
owning at least 10% of the outstanding shares of the Trust. In the event that
such a meeting is requested, the Trust will provide appropriate assistance and
information to the Shareholders requesting the meeting.
REPORTING
The Trust issues unaudited financial information semiannually and audited
financial statements annually for 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. 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.
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
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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.
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:
TURNER GROWTH EQUITY FUND
TURNER FIXED INCOME FUND
TURNER 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
April 30, 1996
<PAGE>
TRUST:
TURNER FUNDS
FUNDS:
TURNER GROWTH EQUITY FUND
TURNER FIXED INCOME FUND
TURNER SMALL CAP FUND
INVESTMENT ADVISER:
TURNER INVESTMENT PARTNERS, INC.
This Statement of Additional Information is not a prospectus and relates only to
the Turner Growth Equity Fund (the "Growth Equity Fund"), the Turner Fixed
Income Fund (the "Fixed Income Fund") and the Turner 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 April 30, 1996. The Prospectus may be obtained without
charge by calling 1-800-224-6312.
TABLE OF CONTENTS
<TABLE>
<S> <C>
THE TRUST.............................................................. S-2
DESCRIPTION OF PERMITTED INVESTMENTS................................... S-2
INVESTMENT LIMITATIONS................................................. S-4
THE ADVISER............................................................ S-6
THE ADMINISTRATOR...................................................... S-7
THE DISTRIBUTOR........................................................ S-8
TRUSTEES AND OFFICERS OF THE TRUST..................................... S-8
COMPUTATION OF YIELD AND TOTAL RETURN.................................. S-8
PURCHASE AND REDEMPTION OF SHARES..................................... S-9
DETERMINATION OF NET ASSET VALUE...................................... S-9
TAXES................................................................. S-10
PORTFOLIO TRANSACTIONS................................................ S-11
DESCRIPTION OF SHARES................................................. S-13
SHAREHOLDER LIABILITY................................................. S-13
LIMITATION OF TRUSTEES' LIABILITY..................................... S-13
5% SHAREHOLDERS....................................................... S-13
EXPERTS............................................................... S-14
FINANCIAL INFORMATION................................................. S-14
APPENDIX............................................................... A-1
</TABLE>
April 30, 1996
<PAGE>
THE TRUST
This Statement of Additional Information relates only to the 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"). 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
FUTURES CONTRACTS AND OPTIONS ON FUTURES CONTRACTS
Futures contracts provide for the future sale by one party and purchase by
another party of a specified amount of a specific security at a specified future
time and at a specified price. An option on a futures contract gives the
purchaser the right, in exchange for a premium, to assume a position in a
futures contract at a specified exercise price during the term of the option. A
Fund may use futures contracts and related options for bona fide hedging
purposes, to offset changes in the value of securities held or expected to be
acquired or be disposed of, to minimize fluctuations in foreign currencies, or
to gain exposure to a particular market or instrument. A Fund will minimize the
risk that it will be unable to close out a futures contract by only entering
into futures contracts which are traded on national futures exchanges. In
addition, a Fund will only sell covered futures contracts and options on futures
contracts.
Stock and bond index futures are futures contracts for various stock and bond
indices that are traded on registered securities exchanges. Stock and bond
index futures contracts obligate the seller to deliver (and the purchaser to
take) an amount of cash equal to a specific dollar amount times the difference
between the value of a specific stock or bond index at the close of the last
trading day of the contract and the price at which the agreement is made.
Stock and bond index futures contracts are bilateral agreements pursuant to
which two parties agree to take or make delivery of an amount of cash equal to a
specified dollar amount times the difference between the stock or bond index
value at the close of trading of the contract and the price at which the futures
contract is originally struck. No physical delivery of the stocks or bonds
comprising the Index is made; generally contracts are closed out prior to the
expiration date of the contracts.
No price is paid upon entering into futures contracts. Instead, a Fund would be
required to deposit an amount of cash or U.S. Treasury securities known as
"initial margin." Subsequent payments, called "variation margin," to and from
the broker, would be made on a daily basis as the value of the futures position
varies (a process known as "marking to market"). The margin is in the nature of
a performance bond or good-faith deposit on a futures contract.
There are risks associated with these activities, including the following: (1)
the success of a hedging strategy may depend on an ability to predict movements
in the prices of individual securities, fluctuations in markets and movements in
interest rates; (2) there may be an imperfect or no correlation between the
changes in market value of the securities held by the Fund and the prices of
futures and options on futures; (3) there may not be a liquid secondary market
for a futures contract or option; (4) trading restrictions or limitations may be
imposed by an exchange; and (5) government regulations may restrict trading in
futures contracts and futures options.
A Fund may enter into futures contracts and options on futures contracts traded
on an exchange regulated by the Commodities Futures Trading Commission ("CFTC"),
as long as, to the extent that such transactions are not, for "bona fide hedging
purposes," the aggregate initial margin and premiums on such positions
(excluding the amount by which such options are in the money) do not exceed 5%
of a Fund's net assets. A Fund may buy and sell futures contracts and related
options to manage its exposure to changing interest rates and securities prices.
Some strategies reduce a Fund's exposure to price fluctuations, while others
tend to increase its market exposure. Futures and options on futures can be
volatile instruments and involve certain risks that could negatively impact a
Fund's return.
In order to avoid leveraging and related risks, when a Fund purchase futures
contracts, it will collateralize its position by depositing an amount of cash
or liquid, high grade debt securities, equal to the market value of the futures
positions held, less margin deposits, in a segregated account with its
custodian. Collateral equal to the current market value of the futures position
will be marked on a daily basis.
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."
OPTIONS
A put option gives the purchaser of the option the right to sell, and the writer
of the option the obligation to buy, the underlying security at any time during
the option period. A call option gives the purchaser of the option the right to
buy, and the writer of the option the obligation to sell, the underlying
security at any time during the option period. The premium paid to the writer is
the consideration for undertaking the obligations under the option contract. The
initial purchase (sale) of an option contract is an "opening transaction." In
order to close out an option position, a Fund may enter into a "closing
transaction," which is simply the sale (purchase) of an option contract on the
same security with the same exercise price and expiration date as the option
contract originally opened. If a Fund is unable to effect a closing purchase
transaction with respect to an option it has written, it will not be able to
sell the underlying security until the option expires or the Fund delivers the
security upon exercise.
A Fund may purchase put and call options to protect against a decline in the
market value of the securities in its portfolio or to anticipate an increase in
the market value of securities that the Fund may seek to purchase in the future.
A Fund purchasing put and call options pays a premium therefor. If price
movements in the underlying securities are such that exercise of the options
would not be profitable for the Fund, loss of the premium paid may be offset by
an increase in the value of the Fund's securities or by a decrease in the cost
of acquisition of securities by the Fund.
A Fund may write covered call options as a means of increasing the yield on its
fund and as a means of providing limited protection against decreases in its
market value. When a fund sells an option, if the underlying securities do not
increase or decrease to a price level that would make the exercise of the option
profitable to the holder thereof, the option generally will expire without being
exercised and the Fund will realized as profit the premium received for such
option. When a call option written by a Fund is exercised, the Fund will be
required to sell the underlying securities to the option holder at the strike
price,and will not participate in any increase in the price of such securities
above the strike price. When a put option written by a Fund is exercised, the
Fund will be required to purchase the underlying securities at the strike price,
which may be in excess of the market value of such securities.
A Fund may purchase and write options on an exchange or over-the-counter.
Over-the-counter options ("OTC") differ from exchange-traded options in several
respects. They ar transacted directly with dealers and not with a clearing
corporation, and therefore entail the risk of non-performance by the dealer.
OTC options are available for a greater variety of securities and for a wider
range of expiration dates and exercise prices than are available for
exchange-traded options. Because OTC options are not traded on an exchange,
pricing is done normally by reference to information from a market maker. It is
the position of the SEC that OTC options are generally illiquid.
A fund may purchase and write put and call options on foreign currencies (traded
on U.S. and foreign exchanges or over-the-counter markets) to manage its
exposure to exchange rates. Call options on foreign currency written by a Fund
will be "covered," which means that the Fund will own an equal amount of the
underlying foreign currency. With respect to put options on foreign currency
written by a Fund, the Fund will establish a segregated account with its
Custodian consisting of cash or liquid, high grade debt securities in an amount
equal to the amount the Fund would be required to pay upon exercise of the put.
A Fund may purchase and write put and call options on indices and enter into
related closing transactions. Put and call options on indices are similar to
options on securities except that options on an index give the holder the right
to receive, upon exercise of the option, an amount of cash if the closing level
of the underlying index is greater than (or less than, in the case of puts) the
exercise price of the option. This amount of cash is equal to the difference
between the closing price of the index and the exercise price of the option,
expressed in dollars multiplied by a specified number. Thus, unlike options on
individual securities, all settlements are in cash, and gain or loss depends on
price movements in the particular market represented by the index generally,
rather than the price movements in individual securities. A Fund may choose to
terminate an option position by entering into a closing transaction. The
ability of a Fund to enter into closing transactions depends upon the existence
of a liquid secondary market for such transactions.
All options written on indices must be covered. When a Fund writes an option on
an index, it will establish a segregated account containing cash or liquid,
high grade debt securities with its custodian in an amount at least equal to the
market value of the option and will maintain the account while the option is
open or will otherwise cover the transaction.
Risk Factors: Risks associated with options transactions include: (1) the
- ------------
success of a hedging strategy may depend on an ability to predict movements in
the prices of individual securities, fluctuations in markets and movements in
interest rates; (2) there may be an imperfect correlation between the movement
in prices of options and the securities underlying them; (3) there may not be a
liquid secondary market for options; and (4) while a Fund will receive a premium
when it writes covered call options, it may not participate fully in a rise in
the market value of the underlying security.
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. Borrow money in an amount exceeding 33 1/3% of the value of its total
assets, provided that, for purposes of this limitation, investment
strategies which either obligate a Fund to purchase securities or require a
Fund to segregate assets are not considered to be borrowings. Asset
coverage of at least 300% is required for all borrowings, except where a
Fund has borrowed money for temporary purposes in amounts not exceeding 5%
of its total assets. A Fund will not purchase securities while its
borrowings exceed 5% of its total assets.
2. 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.
3. 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.
4. 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").
5. Act as an underwriter of securities of other issuers except as it may be
deemed an underwriter in selling a portfolio security.
6. 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 3 years after the effective date of the agreement and shall continue
in effect for successive periods of 1 year 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, Conestoga Family of
Funds, CoreFunds, Inc., CrestFunds, Inc.(C), CUFUND, First American Funds, Inc.,
First American Investment Funds, Inc., 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.
TRUSTEES AND OFFICERS OF THE TRUST
The Trustees and Executive Officers of the Trusts, their respective dates of
birth, and their principal occupations for the last five years are set forth
below. Each may have held other positions with named companies during that
period. Unless otherwise noted, the business address of each Trustee and each
Executive Officer is SEI Financial Management Corporation, 680 East Swedesford
Road, Wayne, Pennsylvania 19087-1658. Certain officers of the Trust also serve
as officers of some or all of the following: The Achievement Funds Trust; The
Advisors' Inner Circle Fund; The Arbor Fund: ARK Funds; Bishop Street Funds;
Conestoga Family of Funds; CoreFunds, Inc.; CrestFunds, Inc.; CUFUND; First
American Funds, Inc.; First American Investment Funds, Inc.; FMB Funds, Inc.;
Insurance Investment Products Trust; Inventor Funds, Inc.; Marquis Funds(R);
Monitor Funds; Morgan Grenfell Investment Trust; The Pillar Funds; The PBHG
Funds, Inc.; Rembrandt Funds(R); SEI Asset Allocation Trust; SEI Daily Income
Trust; SEI Index Funds; SEI Institutional Managed Trust; SEI International
Trust; SEI Liquid Asset Trust; SEI Tax Exempt Trust; 1784 Funds; Stepstone
Funds; STI Classic Funds; and STI Classic Variable Trust, each of which is an
open-end management investment company managed by SEI Financial Management
Corporation and, except for Rembrandt Funds(R), distributed by SEI Financial
Services Company.
ROBERT E. TURNER - Trustee* - Date of Birth: 11/26/56. Chairman and Chief
Investment Officer of Turner Investment Partners, Inc. (the Adviser) since 1990.
JOAN LAMM-TENNANT, Ph.D. - Trustee - Date of Birth: 10/20/52. Professor of
Finance, Villanova University, since 1989. Director, Selective Insurance
(property and casualty insurance), since 1993. Director, Focus Trust Fund
(mutual fund), since 1995.
ALFRED C. SALVATO - Trustee - Date of Birth: 01/09/58. Treasurer, Thomas
Jefferson University Health Care Pension Fund, since ______________.
MARK D. TURNER - Trustee* - Date of Birth: 12/12/57. President and Director of
Fixed Income Management of Turner Investment Partners, Inc. (the Adviser), since
1990.
JOHN T. WHOLIHAN - Trustee - Date of Birth: 12/12/37. Professor, Loyola
Mary Mount University, since 1984.
DAVID G. LEE - President, Chief Executive Officer - Date of Birth: 04/16/52.
Senior Vice President of SEI Financial Management Corporation and SEI Financial
Services Company, since 1993. Vice President of SEI Financial Management
Corporation and SEI Financial Services Corporation, 1991-1993. President, GW
Sierra Trust Funds prior to 1991.
STEPHEN J. KNEELEY - Vice President, Assistant Secretary - Date of Birth: _____.
Director of Marketing of Turner Investment Partners, Inc., since ___________.
TODD B. CIPPERMAN - Vice President, Assistant Secretary - Date of Birth:
02/14/66. Attorney, SEI Corporation, since 1995. Associate, Dewey Ballantine
(law firm), 1994-1995. Associate Winston and Strawn (law firm), 1991-1994.
JOSEPH M. LYDON - Vice President, Assistant Secretary - Date of Birth:
09/27/59. Director of Business Administration of Fund Resources, SEI
Corporation, since 1995. Vice President of Fund Group and Vice President of
Dreman Value Management (investment adviser) and President of Dreman Financial
Services, Inc., prior to 1995.
SANDRA K. ORLOW - Vice President, Assistant Secretary - Date of Birth:
10/18/53. Vice President and Assistant Secretary of SEI Financial Management
Corporation and SEI Financial Services Company, since 1988.
KEVIN P. ROBBINS - Vice President, Assistant Secretary - Date of Birth:
04/15/61. Senior Vice President and General Counsel of SEI Corporation, the
Manager and Distributor since 1994. Vice President of SEI Corporation,
1992-1994. Associate, Morgan, Lewis & Bockius (law firm) prior to 1992.
RICHARD J. SCHOCH - Vice President, Assistant Secretary - Date of Birth:
10/28/66. Vice President, SEI Corporation, since 1995. Regulatory Manager, SEI
Corporation, 1991-1995. Student, Widener University School of Law, 1992-1995.
CATHERINE L. STANTON - Vice President, Assistant Secretary - Date of Birth:
11/19/58. Vice President and Assistant Secretary of SEI Corporation, the
Manager and Distributor, since 1994. Associate, Morgan, Lewis & Bockius (law
firm), 1989-1994.
JEFFREY A. COHEN - Controller, Chief Accounting Officer - Date of Birth:
04/22/61. Director, Fund Resources, 1991 to present. Senior Accountant, Price
Waterhouse, 1988-1991.
JAMES W. JENNINGS - Secretary - Date of Birth: 1/15/37. Partner, Morgan, Lewis
& Bockius LLP (law firm), counsel to the Trust, the Adviser, the Manager and
Distributor.
CHRISTINE TRECROCI - Assistant Secretary - Date of Birth: ____________________.
_________________________, SEI Corporation since _____________________________.
__________________________ to ________________________________.
MICHAEL ZELINSKY - Assistant Secretary - Date of Birth: ______________________.
_________________________, SEI Corporation, _______________________ to present.
_________________________________, _________________________________________,
___________________ to _______________________________________.
JOHN H. GRADY, JR. - Assistant Secretary - Date of Birth: 06/01/61. 1800 M
Street, N.W., Washington, D.C. 20036, Partner, Morgan, Lewis & Bockius LLP,
Counsel to the Trust, Adviser, Manager and Distributor.
EDWARD B. BAER - Assistant Secretary - Date of Birth: 09/27/68. 1800 M Street,
N.W., Washington, D.C. 20036, Associate, Morgan, Lewis & Bockius LLP, Counsel to
the Trust, Adviser, Manager and Distributor, since 1995. Attorney, Aquila
Management Corporation, 1994. Rutgers University School of Law - Newark,
1991-1994.
--------------------
*Messrs. Turner and Turner are Trustees who may be deemed to be "interested
persons" of the Trust as the term is defined in the 1940 Act.
The Trustees and Officers of the Trust own less than 1% of the outstanding
shares of the Trust. The Trust pays fees to the Trustees who are not interested
persons of the Trust. Compensation of Officers and affiliated Trustees of the
Trust is paid by the adviser or the manager.
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>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Shareholders and Trustees of Turner Growth Equity Fund and Turner Small
Cap Fund of the Advisors' Inner Circle Fund:
We have audited the accompanying statements of net assets of Turner Growth
Equity Fund and Turner Small Cap Fund (two of the funds constituting The
Advisors' Inner Circle Fund) as of October 31, 1995, and the related statements
of operations, changes in net assets and financial highlights for the periods
presented. These financial statements and financial highlights are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards required that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. As audit includes examining, on
a test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
October 31, 1995, by correspondence with the custodian and brokers. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of Turner
Growth Equity Fund and Turner Small Cap Fund of the Advisors' Inner Circle Fund
as of October 31, 1995, the results of their operations, changes in their net
assets, and financial highlights for the periods presented, in conformity with
generally accepted accounting principled.
ARTHUR ANDERSEN LLP
Philadelphia, PA
December 5, 1995
<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 (incorporated by reference to Initial
Registration Statement filed on February 1, 1996).
2 By-Laws of the Registrant (incorporated by reference to Initial
Registration Statement filed on February 1, 1996).
5(a) Form of Investment Advisory Agreement between the Registrant and
Turner Investment Partners, Inc., filed herewith.
6(a) Form of Distribution Agreement between the Registrant and SEI
Financial Services Company, filed herewith.
8(a) Form of Custodian Agreement between the Registrant and
CoreStates Bank, N.A., filed herewith.
9(a) Form of Administration Agreement between the Registrant and SEI
Financial Management Corporation, filed herewith.
9(b) Form of Transfer Agency Agreement between the Registrant and DST
Systems, Inc., filed herewith.
10 Opinion and Consent of Counsel, filed herewith.
11 Opinion and Consent of Independent Public Accountants, filed
herewith.
16 Performance Calculations, filed herewith.
24 Powers of Attorney for Jeffrey Cohen, Joan Lamm-Tennant, David
G. Lee, Alfred C. Salvato, Mark Turner, Robert E. Turner and
John T. Wholikan, filed herewith.
27 Financial Data Schedules, filed herewith.
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 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
Monitor Funds January 11, 1996
FMB Funds, Inc. March 1, 1996
SEI Asset Allocation Trust April 1, 1996
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 --
Steve Bendinelli Vice President --
Gordon W. Carpenter Vice President --
Todd B. Cipperman Vice President & Assistant Secretary
Kathy Heilig Vice President --
Larry Hutchison Vice President --
Michael Kantor Vice President --
Samuel King Vice President --
Donald H. Korytowski Vice President --
Jack May Vice President --
Sandra K. Orlow Vice President & Assistant Secretary Vice President &
W. Kelso Morrill 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
Pre-Effective Amendment No. 1 to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Wayne, Commonwealth of Pennsylvania on
the 19th day of April, 1996.
TURNER FUNDS
By: /s/ David G. Lee
-----------------
David G. Lee
ATTEST: /s/ Jeffrey A. Cohen
------------------------------------
Jeffrey A. Cohen, Controller
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.
*
- -------------------------- Trustee April 19, 1996
Alfred C. Salvato
*
- -------------------------- Trustee April 19, 1996
Joan Lamm-Tennant
*
- -------------------------- Trustee April 19, 1996
Mark D. Turner
*
- -------------------------- Trustee April 19, 1996
Robert E. Turner
*
- -------------------------- Trustee April 19, 1996
John T. Wholihan
/s/ David G. Lee
- -------------------------- President and April 19, 1996
David G. Lee Chief Executive
Officer
/s/ Jeffrey A. Cohen
- -------------------------- Controller and April 19, 1996
Jeffrey A. Cohen Chief Financial
Officer
*By /s/ David G. Lee
-----------------------
Attorney-in-Fact
C-7
<PAGE>
EXHIBIT INDEX
Name Exhibit Page
---- ------- ----
Agreement and Declaration of Trust of the Ex-99.B1
Registrant, dated January 26, 1996 (incorporated
by reference to Initial Registration
Statement filed on February 1, 1996).
By-Laws of the Registrant Ex-99.B2
(incorporated by reference to Initial
Registration Statement filed on
February 1, 1996).
Form of Investment Advisory Agreement Ex-99.B5(a)
between the Registrant and Turner
Investment Partners, Inc.
Form of Distribution Agreement Ex-99.B6(a)
between the Registrant and SEI
Financial Services Company
Form of Custodian Agreement between Ex-99.B8(a)
the Registrant and CoreStates Bank, N.A.
Form of Administration Agreement Ex-99.B9(a)
between the Registrant and SEI
Financial Management Coporation
Form of Agency Agreement Ex-99.B9(b)
between the Registrant and DST
Systems, Inc.
Opinion and Consent of Counsel Ex-99.B10
Opinion and Consent of Independent Ex-99.B11
Public Accountant
Performance Calculations Ex-99.B16
Powers of Attorney for Jeffrey Cohen, Ex-99.B24
Joan Lamm-Tennant, David G. Lee,
Alfred C. Salvato, Mark Turner,
Robert E. Turner and John T. Wholihan,
filed herewith.
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>
Ex-99.B5(a)
INVESTMENT ADVISORY AGREEMENT
AGREEMENT made this ____ day of April, 1996, by and between Turner Funds, a
Massachusetts business trust (the "Trust"), and Turner Investment Partners, Inc.
(the "Adviser").
WHEREAS, the Trust is an open-end, diversified management investment
company registered under the Investment Company Act of 1940, as amended,
consisting of several series of shares, each having its own investment policies;
and
WHEREAS, the Trust has retained SEI Financial Management Corporation (the
"Administrator") to provide administration of the Trust's operations, subject to
the control of the Board of Trustees;
WHEREAS, the Trust desires to retain the Adviser to render investment
management services with respect to the Portfolios set forth in the attached
schedule and such other portfolios as the Trust and the Adviser may agree upon
(the "Portfolios"), and the Adviser is willing to render such services:
NOW, THEREFORE, in consideration of mutual covenants herein contained, the
parties hereto agree as follows:
1. DUTIES OF ADVISER. The Trust employs the Adviser to manage the
investment and reinvestment of the assets, and to continuously review,
supervise, and administer the investment program of the Portfolios, to
determine in its discretion the securities to be purchased or sold, to
provide the Administrator and the Trust with records concerning the
Adviser's activities which the Trust is required to maintain, and to
render regular reports to the Administrator and to the Trust's
Officers and Trustees concerning the Adviser's discharge of the
foregoing responsibilities.
The Adviser shall discharge the foregoing responsibilities subject to
the control of the Board of Trustees of the Trust and in compliance
with such policies as the Trustees may from time to time establish,
and in compliance with the objectives, policies, and limitations for
each such Portfolio set forth in the Portfolio's prospectus and
statement of additional information as amended from time to time, and
applicable laws and regulations.
The Adviser accepts such employment and agrees, at its own expense, to
render the services and to provide the office space, furnishings and
equipment and the personnel required by it to perform the services on
the terms and for the compensation provided herein.
<PAGE>
2. PORTFOLIO TRANSACTIONS. The Adviser is authorized to select the
brokers or dealers that will execute the purchases and sales of
portfolio securities for the Portfolios and is directed to use its
best efforts to obtain the best net results as described from time to
time in the Portfolios' Prospectuses and Statement of Additional
Information. The Adviser will promptly communicate to the
Administrator and to the officers and the Trustees of the Trust such
information relating to portfolio transactions as they may reasonably
request.
It is understood that the Adviser will not be deemed to have acted
unlawfully, or to have breached a fiduciary duty to the Trust or be in
breach of any obligation owing to the Trust under this Agreement, or
otherwise, by reason of its having directed a securities transaction
on behalf of the Trust to a broker-dealer in compliance with the
provisions of Section 28(e) of the Securities Exchange Act of 1934 or
as described from time to time by the Portfolios' Prospectuses and
Statement of Additional Information.
3. COMPENSATION OF THE ADVISER. For the services to be rendered by the
Adviser as provided in Sections 1 and 2 of this Agreement, the Trust
shall pay to the Adviser compensation at the rate specified in the
Schedule(s) which are attached hereto and made a part of this
Agreement. Such compensation shall be paid to the Adviser at the end
of each month, and calculated by applying a daily rate, based on the
annual percentage rates as specified in the attached Schedule(s), to
the assets. The fee shall be based on the average daily net assets
for the month involved (less any assets of such Portfolios held in
non-interest bearing special deposits with a Federal Reserve Bank).
All rights of compensation under this Agreement for services performed
as of the termination date shall survive the termination of this
Agreement.
4. OTHER EXPENSES. The Adviser shall pay all expenses of printing and
mailing reports, prospectuses, statements of additional information,
and sales literature relating to the solicitation of prospective
clients. The Trust shall pay all expenses relating to mailing to
existing shareholders prospectuses, statements of additional
information, proxy solicitation material and shareholder reports.
5. EXCESS EXPENSES. If the expenses for any Portfolio for any fiscal
year (including fees and other amounts payable to the Adviser, but
excluding interest, taxes, brokerage costs, litigation, and other
extraordinary costs) as calculated every business day would exceed the
expense limitations imposed on investment companies by any applicable
statute or regulatory authority of any jurisdiction in which shares of
a Portfolio are qualified for offer and sale, the Adviser shall bear
such excess cost.
<PAGE>
However, the Adviser will not bear expenses of any Portfolio which
would result in the Portfolio's inability to qualify as a regulated
investment company under provisions of the Internal Revenue Code.
Payment of expenses by the Adviser pursuant to this Section 5 shall be
settled on a monthly basis (subject to fiscal year end reconciliation)
by a reduction in the fee payable to the Adviser for such month
pursuant to Section 3 and, if such reduction shall be insufficient to
offset such expenses, by reimbursing the Trust.
6. REPORTS. The Trust and the Adviser agree to furnish to each other, if
applicable, current prospectuses, proxy statements, reports to
shareholders, certified copies of their financial statements, and such
other information with regard to their affairs as each may reasonably
request.
7. STATUS OF ADVISER. The services of the Adviser to the Trust are not
to be deemed exclusive, and the Adviser shall be free to render
similar services to others so long as its services to the Trust are
not impaired thereby. The Adviser shall be deemed to be an
independent contractor and shall, unless otherwise expressly provided
or authorized, have no authority to act for or represent the Trust in
any way or otherwise be deemed an agent of the Trust.
8. CERTAIN RECORDS. Any records required to be maintained and preserved
pursuant to the provisions of Rule 31a-1 and Rule 31a-2 promulgated
under the Investment Company Act of 1940 which are prepared or
maintained by the Adviser on behalf of the Trust are the property of
the Trust and will be surrendered promptly to the Trust on request.
9. LIMITATION OF LIABILITY OF ADVISER. The duties of the Adviser shall
be confined to those expressly set forth herein, and no implied duties
are assumed by or may be asserted against the Adviser hereunder. The
Adviser shall not be liable for any error of judgment or mistake of
law or for any loss arising out of any investment or for any act or
omission in carrying out its duties hereunder, except a loss resulting
from willful misfeasance, bad faith or gross negligence in the
performance of its duties, or by reason of reckless disregard of its
obligations and duties hereunder, except as may otherwise be provided
under provisions of applicable state law or Federal securities law
which cannot be waived or modified hereby. (As used in this Paragraph
9, the term "Adviser" shall include directors, officers, employees and
other corporate agents of the Adviser as well as that corporation
itself).
10. PERMISSIBLE INTERESTS. Trustees, agents, and shareholders of the
Trust are or may be interested in the Adviser (or any successor
thereof) as directors, partners, officers, or shareholders, or
otherwise; directors,
<PAGE>
partners, officers, agents, and shareholders of the Adviser are or may
be interested in the Trust as Trustees, shareholders or otherwise; and
the Adviser (or any successor) is or may be interested in the Trust as
a shareholder or otherwise. In addition, brokerage transactions for
the Trust may be effected through affiliates of the Adviser if
approved by the Board of Trustees, subject to the rules and
regulations of the Securities and Exchange Commission.
11. LICENSE OF ADVISER'S NAME. The Adviser hereby agrees to grant a
license to the Trust for use of its name in the names of the
Portfolios for the term of this Agreement and such license shall
terminate upon termination of this Agreement.
12. DURATION AND TERMINATION. This Agreement, unless sooner terminated as
provided herein, shall remain in effect until two years from date of
execution, and thereafter, for periods of one year so long as such
continuance thereafter is specifically approved at least annually (a)
by the vote of a majority of those Trustees of the Trust who are not
parties to this Agreement or interested persons of any such party,
cast in person at a meeting called for the purpose of voting on such
approval, and (b) by the Trustees of the Trust or by vote of a
majority of the outstanding voting securities of each Portfolio;
provided, however, that if the shareholders of any Portfolio fail to
approve the Agreement as provided herein, the Adviser may continue to
serve hereunder in the manner and to the extent permitted by the
Investment Company Act of 1940 and rules and regulations thereunder.
The foregoing requirement that continuance of this Agreement be
"specifically approved at least annually" shall be construed in a
manner consistent with the Investment Company Act of 1940 and the
rules and regulations thereunder.
This Agreement may be terminated as to any Portfolio at any time,
without the payment of any penalty by vote of a majority of the
Trustees of the Trust or by vote of a majority of the outstanding
voting securities of the Portfolio on not less than 30 days nor more
than 60 days written notice to the Adviser, or by the Adviser at any
time without the payment of any penalty, on 90 days written notice to
the Trust. This Agreement will automatically and immediately
terminate in the event of its assignment. Any notice under this
Agreement shall be given in writing, addressed and delivered, or
mailed postpaid, to the other party at any office of such party.
As used in this Section 11, the terms "assignment", "interested
persons", and a "vote of a majority of the outstanding voting
securities" shall have the respective meanings set forth in the
Investment Company Act of 1940 and the rules and regulations
thereunder; subject to such exemptions as
<PAGE>
may be granted by the Securities and Exchange Commission under said
Act.
13. NOTICE. Any notice required or permitted to be given by either party
to the other shall be deemed sufficient if sent by registered or
certified mail, postage prepaid, addressed by the party giving notice
to the other party at the last address furnished by the other party to
the party giving notice: if to the Trust, at 680 East Swedesford
Road, Wayne, PA 19087-1658 and if to the Adviser at 300 Berwyn Park,
Suite 350, Berwyn, PA 19312.
14. SEVERABILITY. If any provision of this Agreement shall be held or
made invalid by a court decision, statute, rule or otherwise, the
remainder of this Agreement shall not be affected thereby.
15. GOVERNING LAW. This Agreement shall be construed in accordance with
the laws of the Commonwealth of Massachusetts and the applicable
provisions of the 1940 Act. To the extent that the applicable laws of
the Commonwealth of Massachusetts, or any of the provisions herein,
conflict with the applicable provisions of the 1940 Act, the latter
shall control.
A copy of the Declaration of Trust of the Trust is on file with the Secretary of
The Commonwealth of Massachusetts, and notice is hereby given that this
instrument is executed on behalf of the Trustees of the Trust as Trustees, and
are not binding upon any of the Trustees, officers, or shareholders of the Trust
individually but binding only upon the assets and property of the Trust.
Further, the obligations of the Trust with respect to any one Portfolio shall
not be binding upon any other Portfolio.
IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be executed
as of the day and year first written above.
TURNER FUNDS
By:_________________________
Attest:_____________________
TURNER INVESTMENT PARTNERS, INC.
By:_________________________
Attest:_____________________
<PAGE>
SCHEDULE A DATED APRIL ____, 1996
TO THE
INVESTMENT ADVISORY AGREEMENT
DATED APRIL ______ 1996
BETWEEN
TURNER FUNDS
AND
TURNER INVESTMENT PARTNERS, INC.
Pursuant to Article 3, the Trust shall pay the Adviser compensation at an annual
rate as follows:
Portfolio Fee (in basis points)
- ------------------------- -----------------------
Growth Equity Fund .75% of the average daily net assets
Small Cap Fund 1.00% of the average daily net assets
Fixed Income Fund .50% of the average daily net assets
<PAGE>
Ex-99.B6(a)
DISTRIBUTION AGREEMENT
TURNER FUNDS
THIS AGREEMENT is made as of the _____ day of ___________, 1996 by and
between Turner Funds (the "Trust"), a Massachusetts business trust, and SEI
Financial Services Company (the "Distributor"), a Pennsylvania corporation.
WHEREAS, the Trust is registered as an investment company with the
Securities and Exchange Commission (the "SEC") under the Investment Company Act
of 1940, as amended ("1940 Act"), and its shares are registered with the SEC
under the Securities Act of 1933, as amended (the "1933 Act"); and
WHEREAS, the Distributor is registered as a broker-dealer with the SEC
under the Securities Exchange Act of 1934, as amended;
NOW, THEREFORE, in consideration of the mutual covenants hereinafter
contained, the Trust and Distributor hereby agree as follows:
ARTICLE 1. Sale of Shares. The Trust grants to the Distributor the
--------------
exclusive right to sell units (the "Shares") of the portfolios (the
"Portfolios") of the Trust at the net asset value per Share, plus any applicable
sales charges in accordance with the current prospectuses, as agent and on
behalf of the Trust, during the term of this Agreement and subject to the
registration requirements of the 1933 Act, the rules and regulations of the SEC
and the laws governing the sale of securities in the various states (the "Blue
Sky Laws").
ARTICLE 2. Solicitation of Sales. In consideration of these rights
---------------------
granted to the Distributor, the Distributor agrees to use all reasonable
efforts, consistent with its other business, in connection with the distribution
of Shares of the Trust; provided, however, that the Distributor shall not be
prevented from entering into like arrangements with other issuers. The
provisions of this paragraph do not obligate the Distributor to register as a
broker or dealer under the Blue Sky Laws of any jurisdiction when it determines
it would be uneconomical for it to do so or to maintain its registration in any
jurisdiction in which it is now registered nor obligate the Distributor to sell
any particular number of Shares.
ARTICLE 3. Compensation. As compensation for providing the services under
this Agreement:
(a) The Distributor shall receive from the Trust:
(1) all distribution and service fees, as applicable, at the rate and
under the terms and conditions set forth in each Distribution and
Shareholder Services Plan adopted by the appropriate class of shares
of each of the
<PAGE>
Portfolios, as such Plans may be amended from time to time, and
subject to any further limitations on such fees as the Board of
Trustees of the Trust may impose;
(2) all contingent deferred sales charges ("CDSC") applied on
redemptions of CDSC Class Shares of each Portfolio on the terms and
subject to such waivers as are described in the Trust's Registration
Statement and current prospectuses, as amended from time to time, or
as otherwise required pursuant to applicable law; and
(3) all front-end sales charges, if any, on purchases of Class A
Shares of each Portfolio sold subject to such charges as described in
the Trust's Registration Statement and current prospectuses, as
amended from time to time. The Distributor, or brokers, dealers and
other financial institutions and intermediaries that have entered into
sub-distribution agreements with the Distributor, may collect the
gross proceeds derived from the sale of such Class A Shares, remit the
net asset value thereof to the Trust upon receipt of the proceeds and
retain the applicable sales charge.
(b) The Distributor may reallow any or all of the distribution or service
fees, contingent deferred sales charges and front-end sales charges which
it is paid by the Trust to such brokers, dealers and other financial
institutions and intermediaries as the Distributor may from time to time
determine.
ARTICLE 4. Authorized Representations. The Distributor is not authorized
--------------------------
by the Trust to give any information or to make any representations other than
those contained in the current registration statements and prospectuses of the
Trust filed with the SEC or contained in Shareholder reports or other material
that may be prepared by or on behalf of the Trust for the Distributor's use.
The Distributor may prepare and distribute sales literature and other material
as it may deem appropriate, provided that such literature and materials have
been prepared in accordance with applicable rules and regulations.
ARTICLE 5. Registration of Shares. The Trust agrees that it will take all
----------------------
action necessary to register Shares under the federal and state securities laws
so that there will be available for sale the number of Shares the Distributor
may reasonably be expected to sell and to pay all fees associated with said
registration. The Trust shall make available to the Distributor such number of
copies of its currently effective prospectuses and statements of additional
information as the Distributor may reasonably request. The Trust shall furnish
to the Distributor copies of all information, financial statements and other
papers which the Distributor may reasonably request for use in connection with
the distribution of Shares of the Trust.
2
<PAGE>
ARTICLE 6. Indemnification of Distributor. The Trust agrees to indemnify
------------------------------
and hold harmless the Distributor and each of its directors and officers and
each person, if any, who controls the Distributor within the meaning of Section
15 of the 1933 Act against any loss, liability, claim, damages or expense
(including the reasonable cost of investigating or defending any alleged loss,
liability, claim, damages, or expense and reasonable counsel fees and
disbursements incurred in connection therewith), arising by reason of any person
acquiring any Shares, based upon the ground that the registration statement,
prospectus, Shareholder reports or other information filed or made public by the
Trust (as from time to time amended) included an untrue statement of a material
fact or omitted to state a material fact required to be stated or necessary in
order to make the statements made not misleading. However, the Trust does not
agree to indemnify the Distributor or hold it harmless to the extent that the
statements or omission was made in reliance upon, and in conformity with,
information furnished to the Trust by or on behalf of the Distributor.
In no case (i) is the indemnity of the Trust to be deemed to protect the
Distributor against any liability to the Trust or its Shareholders to which the
Distributor or such person otherwise would be subject by reason of willful
misfeasance, bad faith or gross negligence in the performance of its duties or
by reason of its reckless disregard of its obligations and duties under this
Agreement, or (ii) is the Trust to be liable to the Distributor under the
indemnity agreement contained in this paragraph with respect to any claim made
against the Distributor or any person indemnified unless the Distributor or
other person shall have notified the Trust in writing of the claim within a
reasonable time after the summons or other first written notification giving
information of the nature of the claim shall have been served upon the
Distributor or such other person (or after the Distributor or the person shall
have received notice of service on any designated agent). However, failure to
notify the Trust of any claim shall not relieve the Trust from any liability
which it may have to the Distributor or any person against whom such action is
brought otherwise than on account of its indemnity agreement contained in this
paragraph.
The Trust shall be entitled to participate at its own expense in the
defense or, if it so elects, to assume the defense of any suit brought to
enforce any claims subject to this indemnity provision. If the Trust elects to
assume the defense of any such claim, the defense shall be conducted by counsel
chosen by the Trust and satisfactory to the indemnified defendants in the suit
whose approval shall not be unreasonably withheld. In the event that the Trust
elects to assume the defense of any suit and retain counsel, the indemnified
defendants shall bear the fees and expenses of any additional counsel retained
by them. If the Trust does not elect to assume the defense of a suit, it will
reimburse the indemnified defendants for the reasonable fees and expenses of any
counsel retained by the indemnified defendants.
The Trust agrees to notify the Distributor promptly of the commencement of
any litigation or proceedings against it or any of its officers or Trustees in
connection with the
3
<PAGE>
issuance or sale of any of its Shares.
ARTICLE 7. Indemnification of Trust. The Distributor covenants and agrees
------------------------
that it will indemnify and hold harmless the Trust and each of its Trustees and
officers and each person, if any, who controls the Trust within the meaning of
Section 15 of the Act, against any loss, liability, damages, claim or expense
(including the reasonable cost of investigating or defending any alleged loss,
liability, damages, claim or expense and reasonable counsel fees incurred in
connection therewith) based upon the 1933 Act or any other statute or common law
and arising by reason of any person acquiring any Shares, and alleging a
wrongful act of the Distributor or any of its employees or alleging that the
registration statement, prospectus, Shareholder reports or other information
filed or made public by the Trust (as from time to time amended) included an
untrue statement of a material fact or omitted to state a material fact required
to be stated or necessary in order to make the statements not misleading,
insofar as the statement or omission was made in reliance upon and in conformity
with information furnished to the Trust by or on behalf of the Distributor.
In no case (i) is the indemnity of the Distributor in favor of the Trust or
any other person indemnified to be deemed to protect the Trust or any other
person against any liability to which the Trust or such other person would
otherwise be subject by reason of willful misfeasance, bad faith or gross
negligence in the performance of its duties or by reason of its reckless
disregard of its obligations and duties under this Agreement, or (ii) is the
Distributor to be liable under its indemnity agreement contained in this
paragraph with respect to any claim made against the Trust or any person
indemnified unless the Trust or person, as the case may be, shall have notified
the Distributor in writing of the claim within a reasonable time after the
summons or other first written notification giving information of the nature of
the claim shall have been served upon the Trust or upon any person (or after the
Trust or such person shall have received notice of service on any designated
agent). However, failure to notify the Distributor of any claim shall not
relieve the Distributor from any liability which it may have to the Trust or any
person against whom the action is brought otherwise than on account of its
indemnity agreement contained in this paragraph.
The Distributor shall be entitled to participate, at its own expense, in
the defense or, if it so elects, to assume the defense of any suit brought to
enforce the claim, but if the Distributor elects to assume the defense, the
defense shall be conducted by counsel chosen by the Distributor and satisfactory
to the indemnified defendants whose approval shall not be unreasonably withheld.
In the event that the Distributor elects to assume the defense of any suit and
retain counsel, the defendants in the suit shall bear the fees and expenses of
any additional counsel retained by them. If the Distributor does not elect to
assume the defense of any suit, it will reimburse the indemnified defendants in
the suit for the reasonable fees and expenses of any counsel retained by them.
4
<PAGE>
The Distributor agrees to notify the Trust promptly of the commencement of
any litigation or proceedings against it in connection with the issue and sale
of any of the Trusts' Shares.
ARTICLE 8. Effective Date. This Agreement shall be effective upon its
--------------
execution, and unless terminated as provided, shall continue in force for two
years from the effective date and thereafter from year to year, provided that
such annual continuance is approved by (i) either the vote of a majority of the
Trustees of the Trust, or the vote of a majority of the outstanding voting
securities of the Trust, and (ii) the vote of a majority of those Trustees of
the Trust who are not parties to this Agreement or the Trust's Distribution Plan
or interested persons of any such party ("Qualified Trustees"), cast in person
at a meeting called for the purpose of voting on the approval. This Agreement
shall automatically terminate in the event of its assignment. As used in this
paragraph the terms "vote of a majority of the outstanding voting securities",
"assignment" and "interested person" shall have the respective meanings
specified in the 1940 Act. In addition, this Agreement may at any time be
terminated without penalty by the Distributor, by a vote of a majority of
Qualified Trustees or by vote of a majority of the outstanding voting securities
of the Trust upon not less than 60 days prior written notice to the other party.
ARTICLE 9. Notices. Any notice required or permitted to be given by
-------
either party to the other shall be deemed sufficient if sent by registered or
certified mail, postage prepaid, addressed by the party giving notice to the
other party at the last address furnished by the other party to the party giving
notice: if to the Trust, at 680 East Swedesford Road, Wayne, Pennsylvania,
19087-1658, and if to the Distributor, 680 East Swedesford Road, Wayne,
Pennsylvania 19087-1658.
ARTICLE 10. Limitation of Liability. A copy of the Declaration of Trust
-----------------------
of the Trust is on file with the Secretary of State of the Commonwealth of
Massachusetts, and notice is hereby given that this Agreement is executed on
behalf of the Trustees of the Trust as Trustees and not individually and that
the obligations of this instrument are not binding upon any of the Trustees,
officers or unitholders of the Trust individually but binding only upon the
assets and property of the Trust. Further, obligations of the Trust with
respect to any one Portfolio shall not be binding upon any other Portfolio.
ARTICLE 11. Governing Law. This Agreement shall be construed in
-------------
accordance with the laws of the Commonwealth of Massachusetts and the applicable
provisions of the 1940 Act. To the extent that the applicable laws of the
Commonwealth of Massachusetts, or any of the provisions herein, conflict with
the applicable provisions of the 1940 Act, the latter shall control.
5
<PAGE>
ARTICLE 12. Multiple Originals. This Agreement may be executed in two or
------------------
more counterparts, each of which when so executed shall be deemed to be an
original, but such counterparts shall together constitute but one and the same
instrument.
IN WITNESS, the Trust and Distributor have each duly executed this
Agreement, as of the day and year above written.
TURNER FUNDS
By: __________________________________
Attest: ______________________________
SEI FINANCIAL SERVICES COMPANY
By: __________________________________
Attest: ______________________________
6
<PAGE>
Ex-99.B8(a)
CUSTODIAN AGREEMENT
TURNER FUNDS
This Agreement, dated as of the ______ day of April, 1996 by and between
Turner Funds (the "Fund"), a Massachusetts business trust, and CoreStates Bank,
N.A. (the "Bank").
WITNESSETH:
WHEREAS, the Fund desires to appoint the Bank to act as Custodian of its
portfolio securities, cash and other property from time to time deposited with
or collected by the Bank for the Fund;
WHEREAS, the Bank is qualified and authorized to act as Custodian for the
Fund and the separate series thereof (each a "Portfolio" and, collectively, the
"Portfolios"), and is willing to act in such capacity upon the terms and
conditions herein set forth;
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants herein contained, the parties hereto, intending to be legally bound,
do hereby agree as follows:
SECTION 1. The terms as defined in this Section wherever used in this
- ---------
Agreement, or in any amendment or supplement hereto, shall have meanings herein
specified unless the context otherwise requires.
CUSTODIAN: The term Custodian shall mean the Bank in its capacity as Custodian
under this Agreement.
DEPOSITORY: The term Depository means any depository service which acts as a
system for the central handling of securities where all securities of any
particular class or series of an issuer deposited within the system are treated
as fungible and may be transferred by bookkeeping entry without physical
delivery.
PROPER INSTRUCTIONS. For purposes of this Agreement, the Custodian shall be
deemed to have received Proper Instructions upon receipt of written (including
instructions received by means of computer terminals or facsimile
transmissions), telephone or telegraphic instructions from a person or persons
authorized from time to time by the Trustees of the Fund to give the particular
class of instructions. Telephone or telegraphic instructions shall be confirmed
in writing by such person or persons as said Trustees shall have from time to
time authorized to give the particular class of instructions in question. The
Custodian may act upon telephone or telegraphic instructions without awaiting
<PAGE>
receipt of written confirmation, and shall not be liable for the Fund's failure
to confirm such instructions in writing.
SECURITIES: The term Securities means stocks, bonds, rights, warrants and all
other negotiable or non-negotiable paper issued in certificated or book-entry
form commonly known as "securities" in banking custom or practice.
SHAREHOLDERS: The term Shareholders shall mean the registered owners from time
to time of the Shares of the Fund in accordance with the registry records
maintained by the Fund or agents on its behalf.
SHARES: The term Shares of the Fund shall mean the issued and outstanding
shares of common stock of the Fund.
SECTION 2. The Fund hereby appoints the Custodian as Custodian of the Fund's
- ---------
cash, Securities and other property, to be held by the Custodian as provided in
this Agreement. The Custodian hereby accepts such appointment subject to the
terms and conditions hereinafter provided. The Bank shall open a separate
custodial account in the name of the Fund on the books and records of the Bank
to hold the Securities of the Fund deposited with, transferred to or collected
by the Bank for the account of the Fund, and a separate cash account to which
the Bank shall credit monies received by the Bank for the account of or from the
Fund. Such cash shall be segregated from the assets of others and shall be and
remain the sole property of the Fund.
SECTION 3. The Fund shall from time to time file with the Custodian a certified
- ---------
copy of each resolution of its Board of Trustees authorizing the person or
persons to give Proper Instructions and specifying the class of instructions
that may be given by each person to the Custodian under this Agreement, together
with certified signatures of such persons authorized to sign, which shall
constitute conclusive evidence of the authority of the officers and signatories
designated therein to act, and shall be considered in full force and effect with
the Custodian fully protected in acting in reliance thereon until it receives
written notice to the contrary; provided, however, that if the certifying
officer is authorized to give Proper Instructions, the certification shall be
also signed by a second officer of the Fund.
SECTION 4. The Fund will cause to be deposited with the Custodian hereunder the
- ---------
applicable net asset value of Shares sold from time to time whether representing
initial issue, other stock or reinvestments of dividends and/or distributions
payable to Shareholders.
2
<PAGE>
SECTION 5. The Bank, acting as agent for the Fund, is authorized, directed and
- ---------
instructed subject to the further provisions of this Agreement:
(a) to hold Securities issued only in bearer form in bearer form;
(b) to register in the name of the nominee of the Bank, the Bank's
Depositories, or sub-custodians, (i) Securities issued only in
registered form, and (ii) Securities issued in both bearer and
registered form, which are freely interchangeable without penalty;
(c) to deposit any Securities which are eligible for deposit (i) with any
domestic or foreign Depository on such terms and conditions as such
Depository may require, including provisions for limitation or
exclusion of liability on the part of the Depository; and (ii) with
any sub-custodian which the Bank uses, including any subsidiary or
affiliate of the Bank;
(d) (i) to credit for the account of the Fund all proceeds received
and payable on or in respect of the assets maintained
hereunder,
(ii) to debit the account of the Fund for the cost of acquiring
Securities the Bank has received for the Fund, against
delivery of such Securities to the Bank,
(iii) to present for payment Securities and other obligations
(including coupons) upon maturity, when called for
redemption, and when income payments are due, and
(iv) to make exchanges of Securities which, in the Bank's opinion,
are purely ministerial as, for example, the exchange of
Securities in temporary form for Securities in definitive form
or the mandatory exchange of certificates;
(e) to forward to the Fund, and/or any other person designated by the
Fund, all proxies and proxy materials received by the Bank in
connection with Securities held in the Fund's account, which have been
registered in the name of the Bank's nominee, or are being held by any
Depository, or sub-custodian, on behalf of the Bank;
(f) to sell any fractional interest of any Securities which the Bank has
received resulting from any stock
3
<PAGE>
dividend, stock split, distribution, exchange, conversion or similar
activity;
(g) to release the Fund's name, address and aggregate share position to
the issuers of any domestic Securities in the account of the Fund,
provided, however, the Fund may instruct the Bank not to provide any
such information to any issuer;
(h) to endorse and collect all checks, drafts or other orders for the
payment of money received by the Bank for the account of or from the
Fund;
(i) at the direction of the Fund, to enroll designated Securities
belonging to the Fund and held hereunder in a program for the
automatic reinvestment of all income and capital gains distributions
on those Securities in new shares (an "Automatic Reinvestment
Program"), or instruct any Depository holding such Securities to
enroll those Securities in an Automatic Reinvestment Program;
(j) at the direction of the Fund, to receive, deliver and transfer
Securities and make payments and collections of monies in connection
therewith, enter purchase and sale orders and perform any other acts
incidental or necessary to the performance of the above acts with
brokers, dealers or similar agents selected by the Fund, including any
broker, dealer or similar agent affiliated with the Bank, for the
account and risk of the Fund in accordance with accepted industry
practice in the relevant market, provided, however, if it is
determined that any certificated Securities transferred to a
Depository or sub-custodian, the Bank, or the Bank's nominee, the
Bank's sole responsibility for such Securities under this Agreement
shall be to keep the Securities safe in accordance with Section 11
hereof; and
(k) to notify the Fund and/or any other person designated by the Fund upon
receipt of notice by the Bank of any call for redemption, tender
offer, subscription rights, merger, consolidation, reorganization or
recapitalization which (i) appears in The Wall Street Journal (New
York edition), The Standard & Poor's Called Bond Record for Preferred
Stocks, Financial Daily Called Bond Service, The Kenny Services, any
official notifications from The Depository Trust Company and such
other publications or services to which the Bank may from time to time
subscribe, (ii) requires the Bank to act in response thereto, and
(iii) pertain to Securities belonging to the Fund and held
4
<PAGE>
hereunder which have been registered in the name of the Bank's nominee
or are being held by a Depository or sub-custodian on behalf of the
Bank. Notwithstanding anything contained herein to the contrary, the
Fund shall have the sole responsibility for monitoring the applicable
dates on which Securities with put option features must be exercised.
All solicitation fees payable to the Bank as agent in connection
herewith will be retained by the Bank unless expressly agreed to the
contrary in writing by the Bank.
Notwithstanding anything in this Section to the contrary, the Bank is authorized
to hold Securities for the Fund which have transfer limitations imposed upon
them by the Securities Act of 1933, as amended, or represent shares of mutual
funds (i) in the name of the Fund, (ii) in the name of the Bank's nominee, or
(iii) with any Depository or sub-custodian.
SECTION 6. The Custodian's compensation shall be as agreed to from time to time
- ---------
by the Fund and the Custodian. The Bank is authorized to charge the Fund's
account for such compensation. All expenses and taxes payable with respect to
the Securities in the account of the Fund including, without limitation,
commission charges on purchases and sales and the amount of any loss or
liability for stockholders' assessments or otherwise, claimed or asserted
against the bank or against the Bank's nominee by reason of any registration
hereunder shall be charged to the Fund.
SECTION 7. In connection with its functions under this Agreement, the Custodian
- ---------
shall:
(a) render to the Fund a daily report of all monies received or paid on
behalf of the Fund; and
(b) create, maintain and retain all records relating to its activities and
obligations under this Agreement in such manner as will meet the
obligations of the Fund with respect to said Custodian's activities in
accordance with generally accepted accounting principles. All records
maintained by the Custodian in connection with the performance of its
duties under this Agreement will remain the property of the Fund and
in the event of termination of this Agreement will be relinquished to
the Fund.
SECTION 8. Any Securities deposited with any Depository or with any sub-
- ---------
custodian will be represented in accounts in the name of the Bank which include
only property held by the Bank as Custodian for customers in which the Bank acts
in a fiduciary or agency capacity.
5
<PAGE>
Should any Securities which are forwarded to the Bank by the Fund, and which are
subsequently deposited to the Bank's account in any Depository or with any sub-
custodian, or which the Fund may arrange to deposit in the Bank's account in any
Depository or with any sub-custodian, not be deemed acceptable for deposit by
such Depository or sub-custodian, for any reason, and as a result thereof there
is a short position in the account of the Bank with the Depository for such
Security, the Fund agrees to furnish the Bank immediately with like Securities
in acceptable form.
SECTION 9. The Fund represents and warrants that: (i) it has the legal right,
- ---------
power and authority to execute, deliver and perform this Agreement and to carry
out all of the transactions contemplated hereby; (ii) it has obtained all
necessary authorizations; (iii) the execution, delivery and performance of this
Agreement and the carrying out of any of the transactions contemplated hereby
will not be in conflict with, result in a breach of or constitute a default
under any agreement or other instrument to which the Fund is a party or which is
otherwise known to the Fund; (iv) it does not require the consent or approval of
any governmental agency or instrumentality, except any such consents and
approvals which the Fund has obtained; (v) the execution and delivery of this
Agreement by the Fund will not violate any law, regulation, charter, by-law,
order of any court or governmental agency or judgment applicable to the Fund;
and (vi) all persons executing this Agreement on behalf of the Fund and carrying
out the transactions contemplated hereby on behalf of the Fund are duly
authorized to do so.
In the event any of the foregoing representations should become untrue,
incorrect or misleading, the Fund agrees to notify the Bank immediately in
writing thereof.
SECTION 10. The Bank represents and warrants that: (i) it has the legal right,
- ----------
power and authority to execute, deliver and perform this Agreement and to carry
out all of the transactions contemplated hereby; (ii) it has obtained all
necessary authorizations; (iii) the execution, delivery and performance of this
Agreement and the carrying out of any of the transactions contemplated hereby
will not be in conflict with, result in a breach of or constitute a default
under any agreement or other instrument to which the Bank is a party or which is
otherwise known to the Bank; (iv) it does not require the consent or approval of
any governmental agency or instrumentality, except any such consents and
approvals which the Bank has obtained; (v) the execution and delivery of this
Agreement by the Bank will not violate any law, regulation, charter, by-law,
order of any court or governmental agency or judgment applicable to the Bank;
(vi) it is qualified to act as a custodian for a registered investment company
under the Investment Company Act of 1940; and (vii) all persons executing this
Agreement on behalf of the Bank and carrying out the transactions contemplated
hereby on behalf of
6
<PAGE>
the Bank are duly authorized to do so. In the event that any of the foregoing
representations should become untrue, incorrect or misleading, the Bank agrees
to notify the Fund immediately in writing thereof.
SECTION 11. All cash and Securities held by the Bank hereunder shall be kept
- ----------
with the care exercised as to the Bank's own similar property. The Bank may at
its option insure itself against loss from any cause, but shall be under no
obligation to insure for the benefit of the Fund.
SECTION 12. No liability of any kind shall be attached to or incurred by the
- ----------
Custodian by reason of its custody of the Fund's assets held by it from time to
time under this Agreement, or otherwise by reason of its position as Custodian
hereunder except only for its own negligence, bad faith, or willful misconduct
in the performance of its duties as specifically set forth in the Custodian
Agreement. Without limiting the generality of the foregoing sentence, the
Custodian:
(a) may rely upon the advice of counsel for the Fund; and for any action
taken or suffered in good faith based upon such advice or statements
the Custodian shall not be liable to anyone;
(b) shall not be liable for anything done or suffered to be done in good
faith in accordance with any request or advice of, or based upon
information furnished by, the Fund or its authorized officers or
agents;
(c) is authorized to accept a certificate of the Secretary or Assistant
Secretary of the Fund, or Proper Instructions, to the effect that a
resolution in the form submitted has been duly adopted by its Board of
Trustees or by the Shareholders, as conclusive evidence that such
resolution has been duly adopted and is in full force and effect; and
(d) may rely and shall be protected in acting upon any signature, written
(including telegraph or other mechanical) instructions, request,
letter of transmittal, certificate, opinion of counsel, statement,
instrument, report, notice, consent, order, or other paper or document
reasonably believed by it to be genuine and to have been signed,
forwarded or presented by the purchaser, Fund or other proper party or
parties.
SECTION 13. The Fund, its successors and assigns do hereby fully indemnify and
- ----------
hold harmless the Custodian its successors and assigns, from any and all loss,
liability, claims, demand, actions, suits and expenses of any nature as the same
may arise
7
<PAGE>
from the failure of the Fund to comply with any law, rule, regulation or order
of the United States, any state or any other jurisdiction, governmental
authority, body, or board relating to the sale, registration, qualification of
units of beneficial interest in the Fund, or from the failure of the Fund to
perform any duty or obligation under this Agreement.
Upon written request of the Custodian, the Fund shall assume the entire defense
of any claim subject to the foregoing indemnity, or the joint defense with the
Custodian of such claim, as the Custodian shall request. The indemnities and
defense provisions of this Section 13 shall indefinitely survive termination of
this Agreement.
SECTION 14. If so instructed by the Fund, the Custodian shall appoint one or
- ----------
more U.S. banking institutions as sub-custodian (including, but not limited to,
U.S. banks located in foreign countries) of Securities and moneys at any time
owned by the Fund. The Custodian shall have no liability to the Fund or any
other person by reason of any act or omission of any sub-custodian so appointed,
and the Fund shall indemnify the Custodian and save it harmless from any and
against any and all actions, suits, and claims, whether groundless or otherwise,
and from and against any and all losses, damages, costs, charges, counsel fees,
payments, expenses, and liabilities arising directly or indirectly out of or in
connection with the performance of any sub-custodian which the Custodian was
instructed to appoint. The Custodian shall not be under any obligation to
prosecute or to defend any action, suit, or claim arising out of or in
connection with the performance of any such sub-custodian, which, in the opinion
of its counsel, may involve it in expense or liability, and the Fund shall, so
often as reasonably requested, furnish the Custodian with satisfactory indemnity
against such expense or liability, and upon request of the Custodian, the Fund
shall assume the entire defense of any action, suit, or claim subject to the
foregoing indemnity. The Fund shall pay all fees and expenses of any Sub-
Custodian which the Fund instructs the Custodian to appoint.
In addition, the Custodian may from time to time in its discretion appoint
in writing (and may at any time remove) any other bank or trust company (which
may include a foreign branch or agency of a bank or trust company) as sub-
Custodian hereunder, to carry out as agent of the Custodian, in accordance with
the terms of this Agreement, such of the provisions of this Agreement as the
Custodian may from time to time direct; provided, however, that any such sub-
custodian (which must itself meet the qualifications for a successor custodian
set forth in Section 16 hereof and which must be selected with reasonable care,
having in mind the duties to be assigned to it) is understood to be the agent of
the Custodian and not of the Fund, and the Custodian shall be fully responsible
for the acts of any sub-custodian
8
<PAGE>
which the Custodian shall appoint in its discretion, and the Custodian shall not
be relieved of any of its responsibilities hereunder by the appointment of any
such sub-custodian.
SECTION 15. This Agreement may be amended from time to time without notice to
- ----------
or approval of the Shareholders by a supplemental agreement executed by the Fund
and the Bank and amending and supplementing this Agreement in the manner
mutually agreed.
SECTION 16. Either the Fund or the Custodian may give one hundred twenty (120)
- ----------
days' written notice to the other of the termination of this Agreement, such
termination to take effect at the time specified in the notice. In case such
notice of termination is given either by the Fund or by the Custodian, the
Trustees of the Fund shall, by resolution duly adopted, promptly appoint a
successor Custodian (the "Successor Custodian") which Successor Custodian shall
be a bank, trust company, or a bank and trust company in good standing, with
legal capacity to accept custody of the cash and Securities of a mutual fund.
Upon receipt of written notice from the Fund of the appointment of such
Successor Custodian and upon receipt of Proper Instructions, the Custodian shall
deliver such cash and Securities as it may then be holding hereunder directly
and only to the Successor Custodian. Unless or until a Successor Custodian has
been appointed as above provided, the Custodian then acting shall continue to
act as Custodian under this Agreement.
Every Successor Custodian appointed hereunder shall execute and deliver an
appropriate written acceptance of its appointment and shall thereupon become
vested with the rights, powers, obligations and custody of its predecessor
Custodian. The Custodian ceasing to act shall nevertheless, upon request of the
Fund and the Successor Custodian and upon payment of its charges and
disbursements, execute an instrument in form approved by its counsel
transferring to the Successor Custodian all the predecessor Custodian's rights,
duties, obligations and custody.
Subject to the provisions of Section 22 hereof, in case the Custodian shall
consolidate with or merge into any other corporation, the corporation remaining
after or resulting from such consolidation or merger shall ipso facto without
the execution of filing of any papers or other documents, succeed to and be
substituted for the Custodian with like effect as though originally named as
such, provided, however, in every case that said successor corporation maintains
the qualifications set out in Section 17(f) of the Investment Company Act of
1940, as amended.
SECTION 17. This Agreement shall take effect when assets of the Fund are first
- ----------
delivered to the Custodian.
9
<PAGE>
SECTION 18. This Agreement may be executed in two or more counterparts, each of
- ----------
which when so executed shall be deemed to be an original, but such counterparts
shall together constitute but one and the same instrument.
SECTION 19. A copy of the Agreement and Declaration of Trust of the Fund is on
- ----------
file with the Secretary of the Commonwealth of Massachusetts, and notice is
hereby given that this instrument is executed on behalf of the Trustees of the
Fund as Trustees and not individually and that the obligations of this
instrument are not binding upon any of the Trustees, officers or Shareholders of
the Fund individually, but binding only upon the assets and property of the
Fund. No Portfolio of the Fund shall be liable for the obligations of any other
Portfolio of the Fund.
SECTION 20. The Custodian shall create and maintain all records relating to its
- ----------
activities and obligations under this Agreement in such manner as will meet the
obligations of the Fund under the Investment Company Act of 1940, with
particular attention to Section 31 thereof and Rules 31a-1 and 31a-2 thereunder,
applicable Federal and state tax laws and any other law or administrative rules
or procedures which may be applicable to the Fund.
Subject to security requirements of the Custodian applicable to its own
employees having access to similar records within the Custodian, the books and
records of the Custodian pertaining to this Agreement shall be open to
inspection and audit at any reasonable times by officers of, attorneys for, and
auditors employed by, the Fund.
SECTION 21. Nothing contained in this Agreement is intended to or shall require
- ----------
the Custodian in any capacity hereunder to perform any functions or duties on
any holiday or other day of special observance on which the Custodian is closed.
Functions or duties normally scheduled to be performed on such days shall be
performed on, and as of, the next business day the Custodian is open.
SECTION 22. This Agreement shall extend to and shall be binding upon the
- ----------
parties hereto and their respective successors and assigns; provided, however,
that this Agreement shall not be assignable by the Fund without the written
consent of the Custodian, or by the Custodian without the written consent of the
Fund, authorized or approved by a resolution of its Board of Trustees.
SECTION 23. All communications (other than Proper Instructions which are to be
- ----------
furnished hereunder to either party, or under any amendment hereto, shall be
sent by mail to the address listed below, provided that in the event that the
Bank, in its sole discretion, shall determine that an emergency exists, the Bank
10
<PAGE>
may use such other means of communications as the Bank deems advisable.
To the Fund: Kevin P. Robins
SEI Corporation
680 East Swedesford Road
Wayne, PA 19087
To the Bank: ___________________________________
___________________________________
___________________________________
SECTION 24. This Agreement, and any amendments hereto, shall be governed,
- ----------
construed and interpreted in accordance with the laws of the Commonwealth of
Pennsylvania applicable to agreements made and to be performed entirely within
such Commonwealth.
IN WITNESS WHEREOF, the Fund and the Custodian have caused this Agreement to be
signed by their respective officers as of the day and year first above written.
TURNER FUNDS
By: __________________________
Name:
Title:
CORESTATES BANK, N.A.
By: __________________________
Name:
Title:
11
<PAGE>
Ex-99.B9(a)
ADMINISTRATION AGREEMENT
TURNER FUNDS
THIS AGREEMENT is made as of this _____ day of April, 1996, by and between
Turner Funds (the "Trust"), a Massachusetts business trust, and SEI Financial
Management Corporation (the "Administrator"), a Delaware corporation.
WHEREAS, the Trust is an open-end diversified management investment company
registered under the Investment Company Act of 1940, as amended (the "1940
Act"), consisting of several series of shares; and
WHEREAS, the Trust desires the Administrator to provide, and the
Administrator is willing to provide, management, administrative, transfer agent,
dividend disbursing agent and shareholder servicing services to such portfolios
of the Trust as the Trust and the Administrator may agree on ("Portfolios") and
as listed on the schedule attached hereto ("Schedule") and made a part of this
Agreement, on the terms and conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the premises and the covenants
hereinafter contained, the Trust and the Administrator hereby agree as follows:
ARTICLE 1. Retention of the Administrator. The Trust hereby retains the
------------------------------
Administrator to act as the administrator of the Portfolios and to furnish the
Portfolios with the management, administrative, dividend disbursing agent and
shareholder servicing services as set forth below. The Administrator hereby
accepts such employment to perform the duties set forth below.
The Administrator shall, for all purposes herein, be deemed to be an
independent contractor and, unless otherwise expressly provided or authorized,
shall have no authority to act for or represent the Trust in any way and shall
not be deemed an agent of the Trust.
ARTICLE 2. Dividend Disbursing Agent. The Administrator shall act as
-------------------------
dividend disbursing agent for the Portfolios' accounts and, as such, in
accordance with the provisions of the Trust's Declaration of Trust and the
Portfolios' then current prospectuses, shall prepare and wire or credit income
and capital gains distributions to Shareholders (or instruct the Custodian to do
so) after deducting any amount required to be withheld by any applicable tax
laws, rules and regulations or other applicable rules or regulations.
The Trust agrees that it shall promptly inform the Administrator of the
declaration
1
<PAGE>
of any dividend or distribution on the units of beneficial interest ("Shares")
of any of its Portfolios, and that on or before the payment date of a
distribution, it shall instruct the Custodian to make available, at the
instruction of the dividend disbursing agent, sufficient funds for the cash
amount to be paid out. If a Shareholder is entitled to receive additional Shares
by virtue of any such distribution or dividend, appropriate credits will be made
to the Shareholder's account.
ARTICLE 3. Other Administrative Services. In addition to the services
-----------------------------
described above, the Administrator shall perform or supervise the performance by
others of other administrative services in connection with the operations of the
Portfolios, and, on behalf of the Trust, will investigate, assist in the
selection of and conduct relations with custodians, depositories, accountants,
underwriters, brokers and dealers, corporate fiduciaries, insurers, banks and
persons in any other capacity deemed to be necessary or desirable for the
Portfolios' operations. The Administrator shall provide the Trustees of the
Trust with such reports regarding investment performance as they may reasonably
request but shall have no responsibility for supervising the performance by any
investment adviser or sub-adviser of its responsibilities.
The Administrator shall provide the Trust with regulatory reporting, fund
accounting and related portfolio accounting services, all necessary office
space, equipment, personnel compensation and facilities (including facilities
for Shareholders' and Trustees' meetings) for handling the affairs of the
Portfolios and such other services as the Administrator shall, from time to
time, determine to be necessary to perform its obligations under this Agreement.
The Administrator shall make reports to the Trust's Trustees concerning the
performance of its obligations hereunder; furnish advice and recommendations
with respect to other aspects of the business and affairs of the Portfolios as
the Trust and the Administrator shall determine desirable; and shall provide the
Portfolios' Shareholders with the reports described in the Portfolios' then
current prospectuses.
The Administrator shall calculate the daily net asset value of the
Portfolios in accordance with the procedures prescribed in the Trust's
Registration Statement and such other procedures as may be established by the
Trustees of the Trust.
Also, the Administrator will perform other services for the Trust as agreed
from time to time, including, but not limited to, preparation and mailing of
appropriate Federal income tax forms and returns to the Internal Revenue Service
and other appropriate taxing authorities; mailing the annual reports of the
Portfolios; preparing an annual list of Shareholders; furnishing the Trust with
such reports regarding the sale and redemption of Shares as may be required in
order to comply with Federal and state securities law; and mailing notices of
Shareholders' meetings, proxies and proxy statements, for all of which the Trust
will pay the Administrator's out-of-pocket expenses.
2
<PAGE>
ARTICLE 4. Allocation of Charges and Expenses.
----------------------------------
(A) The Administrator. The Administrator shall furnish at its own expense
-----------------
the executive, supervisory and clerical personnel necessary to perform its
obligations under this Agreement. The Administrator shall also provide the items
which it is obligated to provide under this Agreement, and shall pay all
compensation, if any, of officers of the Trust as well as all Trustees of the
Trust who are affiliated persons of the Administrator or any affiliated
corporation; provided, however, that unless otherwise specifically provided, the
Administrator shall not be obligated to pay the compensation of any employee of
the Trust retained by the Trustees of the Trust to perform services on behalf of
the Trust.
(B) The Trust. The Trust assumes and shall pay or cause to be paid all
---------
other expenses of the Trust not otherwise allocated herein, including, without
limitation, organizational costs, taxes, expenses for legal and auditing
services, the expenses of preparing (including typesetting), printing and
mailing reports, prospectuses, statements of additional information, proxy
solicitation material and notices to existing Shareholders, all expenses
incurred in connection with issuing and redeeming Shares, the costs of custodial
services, the cost of initial and ongoing registration of the Shares under
Federal and state securities laws, fees and out-of-pocket expenses of Trustees
who are not affiliated persons of the Administrator or any affiliated
corporation, insurance, interest, brokerage costs, litigation and other
extraordinary or nonrecurring expenses, and all fees and charges of investment
advisers to the Trust.
ARTICLE 5. Compensation of the Administrator.
---------------------------------
(A) Administration Fee. For the services to be rendered, the facilities
------------------
furnished and the expenses assumed by the Administrator pursuant to this
Agreement, the Trust shall pay to the Administrator compensation at an annual
rate specified in the Schedule. Such compensation shall be calculated and
accrued daily, and paid to the Administrator monthly.
If this Agreement becomes effective subsequent to the first day of a month
or terminates before the last day of a month, the Administrator's compensation
for that part of the month in which this Agreement is in effect shall be
prorated in a manner consistent with the calculation of the fees as set forth
above. Payment of the Administrator's compensation for the preceding month shall
be made promptly.
(B) Compensation from Transactions. The Trust hereby authorizes any entity
------------------------------
or person associated with the Administrator which is a member of a national
securities exchange to effect any transaction on the exchange for the account of
the Trust which is permitted by Section 11 (a) of the Securities Exchange Act of
1934 and Rule 11a2-2(T) thereunder, and the Trust hereby consents to the
retention of compensation for such transactions in accordance with Rule 11a2-
2(T) (a) (2) (iv).
3
<PAGE>
(C) Survival of Compensation Rates. All rights of compensation under this
------------------------------
Agreement for services performed as of the termination date shall survive the
termination of this Agreement.
ARTICLE 6. Limitation of Liability of the Administrator. The duties of
--------------------------------------------
the Administrator shall be confined to those expressly set forth herein, and no
implied duties are assumed by or may be asserted against the Administrator
hereunder. The Administrator shall not be liable for any error of judgment or
mistake of law or for any loss arising out of any investment or for any act or
omission in carrying out its duties hereunder, except a loss resulting from
willful misfeasance, bad faith or gross negligence in the performance of its
duties, or by reason of reckless disregard of its obligations and duties
hereunder, except as may otherwise be provided under provisions of applicable
law which cannot be waived or modified hereby. (As used in this Article 6, the
term "Administrator" shall include directors, officers, employees and other
corporate agents of the Administrator as well as that corporation itself.)
So long as the Administrator acts in good faith and with due diligence and
without gross negligence, the Trust assumes full responsibility and shall
indemnify the Administrator and hold it harmless from and against any and all
actions, suits and claims, whether groundless or otherwise, and from and against
any and all losses, damages, costs, charges, reasonable counsel fees and
disbursements, payments, expenses and liabilities (including reasonable
investigation expenses) arising directly or indirectly out of said
administration, transfer agency, and dividend disbursing relationships to the
Trust or any other service rendered to the Trust hereunder. The indemnity and
defense provisions set forth herein shall indefinitely survive the termination
of this Agreement.
The rights hereunder shall include the right to reasonable advances of
defense expenses in the event of any pending or threatened litigation with
respect to which indemnification hereunder may ultimately be merited. In order
that the indemnification provision contained herein shall apply, however, it is
understood that if in any case the Trust may be asked to indemnify or hold the
Administrator harmless, the Trust shall be fully and promptly advised of all
pertinent facts concerning the situation in question, and it is further
understood that the Administrator will use all reasonable care to identify and
notify the Trust promptly concerning any situation which presents or appears
likely to present the probability of such a claim for indemnification against
the Trust, but failure to do so in good faith shall not affect the rights
hereunder.
The Administrator may apply to the Trust at any time for instructions and
may consult counsel for the Trust or its own counsel and with accountants and
other experts with respect to any matter arising in connection with the
Administrator's duties, and the Administrator shall not be liable or accountable
for any action taken or omitted by it in good faith in accordance with such
instruction or with the opinion of such counsel,
4
<PAGE>
accountants or other experts.
Also, the Administrator shall be protected in acting upon any document
which it reasonably believes to be genuine and to have been signed or presented
by the proper person or persons. Nor shall the Administrator be held to have
notice of any change of authority of any officers, employee or agent of the
Trust until receipt of written notice thereof from the Trust.
ARTICLE 7. Activities of the Administrator. The services of the
-------------------------------
Administrator rendered to the Trust are not to be deemed to be exclusive. The
Administrator is free to render such services to others and to have other
businesses and interests. It is understood that Trustees, officers, employees
and Shareholders of the Trust are or may be or become interested in the
Administrator, as directors, officers, employees and shareholders or otherwise
and that directors, officers, employees and shareholders of the Administrator
and its counsel are or may be or become similarly interested in the Trust, and
that the Administrator may be or become interested in the Trust as a Shareholder
or otherwise.
ARTICLE 8. Duration of this Agreement. The Term of this Agreement shall
--------------------------
be as specified in the Schedule.
This Agreement shall not be assignable by either party without the written
consent of the other party.
ARTICLE 9. Amendments. This Agreement may be amended by the parties
----------
hereto only if such amendment is specifically approved (i) by the vote of a
majority of the Trustees of the Trust, and (ii) by the vote of a majority of the
Trustees of the Trust who are not parties to this Agreement or interested
persons of any such party, cast in person at a Board of Trustees meeting called
for the purpose of voting on such approval.
For special cases, the parties hereto may amend such procedures set forth
herein as may be appropriate or practical under the circumstances, and the
Administrator may conclusively assume that any special procedure which has been
approved by the Trust does not conflict with or violate any requirements of its
Declaration of Trust, By-Laws or then current prospectuses, or any rule,
regulation or requirement of any regulatory body.
ARTICLE 10. Trustees' Liability. A copy of the Declaration of Trust of
-------------------
the Trust is on file with the Secretary of State of the Commonwealth of
Massachusetts, and notice is hereby given that this instrument is executed on
behalf of the Trustees of the Trust as Trustees and not individually and that
the obligations of this instrument are not binding upon any of the Trustees,
officers or Shareholders of the Trust individually, but binding only upon the
assets and property of the Trust. Further, the obligations of the Trust with
respect to any one Portfolio shall not be binding upon any other Portfolio.
5
<PAGE>
ARTICLE 11. Certain Records. The Administrator shall maintain customary
---------------
records in connection with its duties as specified in this Agreement. Any
records required to be maintained and preserved pursuant to Rules 31a-1 and 31a-
2 under the 1940 Act which are prepared or maintained by the Administrator on
behalf of the Trust shall be prepared and maintained at the expense of the
Administrator, but shall be the property of the Trust and will be made available
to or surrendered promptly to the Trust on request.
In case of any request or demand for the inspection of such records by
another party, the Administrator shall notify the Trust and follow the Trust's
instructions as to permitting or refusing such inspection; provided that the
Administrator may exhibit such records to any person in any case where it is
advised by its counsel that it may be held liable for failure to do so, unless
(in cases involving potential exposure only to civil liability) the Trust has
agreed to indemnify the Administrator against such liability.
ARTICLE 12. Definitions of Certain Terms. The terms "interested person"
----------------------------
and "affiliated person," when used in this Agreement, shall have the respective
meanings specified in the 1940 Act and the rules and regulations thereunder,
subject to such exemptions as may be granted by the Securities and Exchange
Commission.
ARTICLE 13. Notice. Any notice required or permitted to be given by
-------
either party to the other shall be deemed sufficient if sent by registered or
certified mail, postage prepaid, addressed by the party giving notice to the
other party at the last address furnished by the other party to the party giving
notice: if to the Trust, at 680 East Swedesford Road, Wayne, PA 19087-1658, and
if to the Administrator at 680 East Swedesford Road, Wayne, PA 19087-1658.
ARTICLE 14. Governing Law. This Agreement shall be construed in
--------------
accordance with the laws of the Commonwealth of Massachusetts and the applicable
provisions of the 1940 Act. To the extent that the applicable laws of the
Commonwealth of Massachusetts, or any of the provisions herein, conflict with
the applicable provisions of the 1940 Act, the latter shall control.
ARTICLE 15. Multiple Originals. This Agreement may be executed in two or
------------------
more counterparts, each of which when so executed shall be deemed to be an
original, but such counterparts shall together constitute but one and the same
instrument.
6
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement as of the day and year first above written.
TURNER FUNDS
By: ___________________________
Attest: _______________________
SEI FINANCIAL MANAGEMENT CORPORATION
By: ___________________________
Attest: _______________________
7
<PAGE>
GROWTH EQUITY FUND
SMALL CAP FUND
FIXED INCOME FUND
SCHEDULE
TO THE ADMINISTRATION AGREEMENT
DATED APRIL _______, 1996
BETWEEN
TURNER FUNDS
AND
SEI FINANCIAL MANAGEMENT CORPORATION
Fees: Pursuant to Article 5, Section A, the Trust shall pay the
Administrator compensation for services rendered to each Portfolio
(each a "Portfolio") at an annual rate set forth below:
<TABLE>
<CAPTION>
========================================================
FEE (ON AVERAGE ANNUAL
ASSETS) PORTFOLIO
------------------------------------------------------
<S> <C>
.12% to $75 Million
------------------------------------------------------
.10% Next $75 Million
------------------------------------------------------
.09% Next $150 Million
------------------------------------------------------
.08% Next $300 Million
------------------------------------------------------
.075% Over $600 Million
========================================================
</TABLE>
The annual minimum fee for each Portfolio will be $75,000, payable monthly. For
new portfolios the minimum fee will be phased in over a two year period (25%
within 6 months, 50% within 12 months, 75% within 18 months, 100% within 24
months.
Term: Pursuant to Article 8, the term of this Agreement shall commence on
April _____, 1996, and shall remain in effect for 3 years ("Initial
Term"). This Agreement shall continue in effect for successive periods
of 1 year after the Initial Term, unless terminated by either party on
not less than 90 days' prior written notice to the other party.
<PAGE>
AGENCY AGREEMENT
THIS AGREEMENT made the __________ day of ______________, 19___, by and
between ____________ a corporation existing under the laws of the State of
_________, having its principal place of business at _________________________
("Fund"), and DST SYSTEMS, INC., a corporation existing under the laws of the
State of Delaware, having its principal place of business at 1055 Broadway,
Kansas City, Missouri 64105 ("DST"):
WITNESSETH:
WHEREAS, Fund desires to appoint DST as Transfer Agent and Dividend
Disbursing Agent, and DST desires to accept such appointment;
NOW, THEREFORE, in consideration of the mutual covenants herein contained,
the parties hereto agree as follows:
1. Documents to be Filed with Appointment.
--------------------------------------
In connection with the appointment of DST as Transfer Agent and Dividend
Disbursing Agent for Fund, there will be filed with DST the following
documents:
A. A certified copy of the resolutions of the Board of Directors of Fund
appointing DST as Transfer Agent and Dividend Disbursing Agent,
approving the form of this Agreement, and designating certain persons
to sign stock certificates, if any, and give written instructions and
requests on behalf of Fund;
B. A certified copy of the Articles of Incorporation of Fund and all
amendments thereto;
C. A certified copy of the Bylaws of Fund;
D. Copies of Registration Statements and amendments thereto, filed with
the Securities and Exchange Commission.
E. Specimens of all forms of outstanding stock certificates, in the forms
approved by the Board of Directors of Fund, with a certificate of the
Secretary of Fund, as to such approval;
F. Specimens of the signatures of the officers of the Fund authorized to
sign stock certificates and individuals authorized to sign written
instructions and requests;
G. An opinion of counsel for Fund with respect to:
(1) Fund's organization and existence under the laws of its state of
organization,
(2) The status of all shares of stock of Fund covered by the
appointment under the Securities Act of 1933, as amended, and any
other applicable federal or state statue, and
(3) That all issued shares are, and all unissued shares will be, when
issued, validly issued, fully paid and nonassessable.
<PAGE>
2. Certain Representations and Warranties of DST.
---------------------------------------------
DST represents and warrants to Fund that:
A. It is a corporation duly organized and existing and in good standing
under the laws of Delaware.
B. It is duly qualified to carry on its business in the State of
Missouri.
C. It is empowered under applicable laws and by its Articles of
Incorporation and bylaws to enter into and perform the services
contemplated in this Agreement.
D. It is registered as a transfer agent to the extent required under the
Securities Exchange Act of 1934.
E. All requisite corporate proceedings have been taken to authorize it to
enter into and perform this Agreement.
F. It has and will continue to have and maintain the necessary
facilities, equipment and personnel to perform its duties and
obligations under this Agreement.
3. Certain Representations and Warranties of Fund.
----------------------------------------------
Fund represents and warrants to DST that:
A. It is a corporation duly organized and existing and in good standing
under the laws of the State of __________.
B. It is an open-end diversified management investment company registered
under the Investment Company Act of 1940, as amended.
C. A registration statement under the Securities Act of 1933 has been
filed and will be effective with respect to all shares of Fund being
offered for sale.
D. All requisite steps have been and will continue to be taken to
register Fund's shares for sale in all applicable states and such
registration will be effective at all times shares are offered for
sale in such state.
E. Fund is empowered under applicable laws and by its charter and bylaws
to enter into and perform this Agreement.
4. Scope of Appointment.
--------------------
A. Subject to the conditions set forth in this Agreement, Fund hereby
appoints DST as Transfer Agent and Dividend Disbursing Agent.
B. DST hereby accepts such appointment and agrees that it will act as
Fund's Transfer Agent and Dividend Disbursing Agent. DST agrees that
it will also act as agent in connection with Fund's periodic
withdrawal payment accounts and other open accounts or similar plans
for shareholders, if any.
<PAGE>
C. Fund agrees to use its best efforts to deliver to DST in Kansas City,
Missouri, as soon as they are available, all of its shareholder
account records.
D. DST, utilizing TA2000(TM), DST's computerized data processing system
for securityholder accounting (the "TA2000(TM) System"), will perform
the following services as transfer, dividend disbursing and
shareholders' servicing agent for the Fund, and as agent of the Fund
for shareholder accounts thereof, in a timely manner: issuing
(including countersigning), transferring and canceling share
certificates; maintaining all shareholder accounts; providing
transaction journals; preparing shareholder meeting lists, mailing
proxies and proxy materials, receiving and tabulating proxies,
certifying the shareholder votes in the Fund; mailing shareholder
reports and prospectuses; withholding, as required by Federal law,
taxes on shareholder accounts, disbursing income dividends and capital
gains distributions to shareholders, preparing, filing and mailing
U.S. Treasury Department Forms 1099, 1042, and 10428 and performing
and paying backup withholding as required for all shareholders;
preparing and mailing confirmation forms to shareholders and dealers,
as instructed, for all purchases and liquidations of shares of the
Fund and other confirmable transactions in shareholders' accounts;
recording reinvestment of dividends and distributions in shares of the
Fund; providing or making available on-line daily and monthly reports
as provided by the TA2000(TM) System and as requested by the Fund or
its management company; maintaining those records necessary to carry
out DST's duties hereunder, including all information reasonably
required by the Fund to account for all transactions in Fund shares,
calculating the appropriate sales charge with respect to each purchase
of Fund shares as set forth in the prospectus for the Fund,
determining the portion of each sales charge payable to the dealer
participating in a sale in accordance with schedules delivered to DST
by the Fund's principal underwriter or distributor (hereinafter
"principal underwriter") from time to time, disbursing dealer
commissions collected to such dealers, determining the portion of each
sales charge payable to such principal underwriter and disbursing such
commissions to the principal underwriter; receiving correspondence
pertaining to any former, existing or new shareholder account,
processing such correspondence for proper recordkeeping, and
responding promptly to shareholder correspondence; mailing to dealers
confirmations of wire order trades; mailing copies of shareholder
statements to shareholders and registered
<PAGE>
representatives of dealers in accordance with the Fund's instructions;
and processing, generally on the date of receipt, purchases or
redemptions or instructions to settle any mail or wire order purchases
or redemptions received in proper order as set forth in the
prospectus, rejecting promptly any requests not received in proper
order (as defined by the Fund or its agents), and causing exchanges of
shares to be executed in accordance with the Fund's instructions and
prospectus and the general exchange privilege application.
F. Fund shall have the right to add new series to the TA2000(TM) System
upon at least thirty (30) days' prior written notice to DST provided
that the requirements of the new series are generally consistent with
services then being provided by DST under this Agreement. Rates or
charges for additional series shall be as set forth in Exhibit B, as
hereinafter defined, for the remainder of the contract term except as
such series use functions, features or characteristics for which DST
has imposed an additional charge as part of its standard pricing
schedule. In the latter event, rates and charges shall be in
accordance with DST's then-standard pricing schedule.
G. DST shall use reasonable efforts to provide, reasonably promptly under
the circumstances, the same services with respect to any new,
additional functions or features or any changes or improvements to
existing functions or features as provided for in Fund's instructions,
prospectus or application as amended from time to time, for the Fund
provided (i) DST is advised in advance by the Fund of any changes
therein and (ii) the TA2000(TM) System and the mode of operations
utilized by DST as then constituted supports such additional functions
and features. If any addition to; improvement of or change in the
features and functions currently provided by the TA2000(TM) System or
the operations as requested by the Fund requires an enhancement or
modification to the TA2000(TM) System or to operations as presently
conducted by DST, DST shall not be liable therefore until such
modification or enhancement is installed on the TA2000(TM) System or
new mode of operation is instituted. If any new, additional function
or feature or change or improvement to existing functions or features
or new service or mode of operation measurably increases DST's cost of
performing the services required hereunder at the current level of
service, DST shall advise the Fund of the amount of such increase and
if the Fund elects to utilize such function, feature or service, DST
shall be entitled to increase its fees by the amount of the increase
in costs. In no event shall DST
<PAGE>
be responsible for or liable to provide any additional function,
feature, improvement or change in method of operation until it has
consented thereto in writing.
5. Limit of Authority.
------------------
Unless otherwise expressly limited by the resolution of appointment or by
subsequent action by the Fund, the appointment of DST as Transfer Agent
will be construed to cover the full amount of authorized stock of the class
or classes for which DST is appointed as the same will, from time to time,
be constituted, and any subsequent increases in such authorized amount.
In case of such increase Fund will file with DST:
A. If the appointment of DST was theretofore expressly limited, a
certified copy of a resolution of the Board of Directors of Fund
increasing the authority of DST;
B. A certified copy of the amendment to the Articles of Incorporation of
Fund authorizing the increase of stock;
C. A certified copy of the order or consent of each governmental or
regulatory authority required by law to consent to the issuance of the
increased stock, and an opinion of counsel that the order or consent
of no other governmental or regulatory authority is required;
D. Opinion of counsel for Fund stating:
(1) The status of the additional shares of stock of Fund under the
Securities Act of 1933, as amended, and any other applicable
federal or state statute; and
(2) That the additional shares are, or when issued will be, validly
issued, fully paid and nonassessable.
6. Compensation and Expenses.
-------------------------
A. In consideration for its services hereunder as Transfer Agent and
Dividend Disbursing Agent, Fund will pay to DST from time to time a
reasonable compensation for all services rendered as Agent, and also,
all its reasonable out-of-pocket expenses, charges, counsel fees, and
other disbursements (Compensation and Expenses) incurred in connection
with the agency. Such compensation is set forth in a separate schedule
to be agreed to by Fund and DST, a copy of which is attached hereto as
Exhibit A. If the Fund has not paid such Compensation and Expenses to
DST within a reasonable time, DST may charge against any monies held
under this Agreement, the amount of any Compensation and/or Expenses
for which it shall be entitled to reimbursement under this Agreement.
B. The Fund also agrees promptly to reimburse DST for all reasonable
out-of-pocket expenses or disbursements incurred by DST in
<PAGE>
connection with the performance of services under this Agreement
including, but not limited to, expenses for postage, express delivery
services, freight charges, envelopes, checks, drafts, forms
(continuous or otherwise), specially requested reports and statements,
telephone calls, telegraphs, stationery supplies, counsel fees,
outside printing and mailing firms (including Output Technology, Inc.
and Support Resources, Inc.), magnetic tapes, reels or cartridges (if
sent to a Fund or to third party at the Fund's request) and magnetic
tape handling charges, off-site record storage, media for storage of
records (e.g., microfilm, microfiche, optical platters, computer
tapes), computer equipment installed at the Fund's request at the
Fund's or a third party's premises, telecommunications equipment,
telephone/telecommunication lines between Fund and its agents, on one
hand, and DST on the other, proxy soliciting, processing and/or
tabulating costs, second-site backup computer facility, transmission
of statement data for remote printing or processing, and NSCC
transaction fees to the extent any of the foregoing are paid by DST.
The Fund agrees to pay postage expenses at least one day in advance if
so requested. In addition, any other expenses incurred by DST at the
request or with the consent of the Fund will be promptly reimbursed by
the Fund.
C. Amounts due hereunder shall be due and paid on or before the thirtieth
(30th) business day after receipt of the statement therefor by the
Fund (the "Due Date"). The Fund is aware that its failure to pay all
amounts in a timely fashion so that they will be received by DST on or
before the Due Date will give rise to costs to DST not contemplated by
this Agreement, including but not limited to carrying, processing and
accounting charges. Accordingly, subject to Section 6.D. hereof, in
the event that any amounts due hereunder are not received by DST by
the Due Date, the Fund shall pay a late charge equal to the lesser of
the maximum amount permitted by applicable law or the product of that
rate announced from time to time by State Street Bank and Trust
Company as its "Prime Rate" plus three (3) percentage points times the
amount overdue, times the number of days from the Due Date up to and
including the day on which payment is received by DST divided by 365.
The parties hereby agree that such late charge represents a fair and
reasonable computation of the costs incurred by reason of late payment
or payment of amounts not properly due. Acceptance of such late charge
shall in no event constitute a waiver of the Fund's or DST's default
or prevent the non-defaulting party from exercising any other rights
and remedies available to it.
<PAGE>
D. In the event that any charges are disputed, the Fund shall, on or
before the Due Date, pay all undisputed amounts due hereunder and
notify DST in writing of any disputed charges for out-of-pocket
expenses which it is disputing in good faith. Payment for such
disputed charges shall be due on or before the close of the fifth
(5th) business day after the day on which DST provides to the Fund
documentation which an objective observer would agree reasonably
supports the disputed charges (the "Revised Due Date"). Late charges
shall not begin to accrue as to charges disputed in good faith until
the first day after the Revised Due Date.
E. The fees and charges set forth on Exhibit A shall increase or may be
increased as follows:
(1) On the first day of each new term, in accordance with the "Fee
Increases" provision in Exhibit A.
(2) DST may increase the fees and charges set forth on Exhibit A upon
at least ninety (90) days prior written notice, if changes in
existing laws, rules or regulations; (i) require substantial
system modifications or (ii) materially increase cost of
performance hereunder.
(3) DST may charge for additional features of TA2000 used by the Fund
which features are not consistent with the Fund's current
processing requirements.
If DST notifies Fund of an increase in fees or charges pursuant to
subparagraph (2) of this Section 6.E., the parties shall confer, diligently
and in good faith and agree upon a new fee to cover the amount necessary,
but not more than such amount, to reimburse DST for the Fund's necessary,
but not more than such amount, to reimburse DST for the Fund's aliquot
portion of the cost of developing the new software to comply with
regulatory charges and for the increased cost of operation.
If DST notifies Fund of an increase in fees or charges under
subparagraph (3) of this Section 6.E., the parties shall confer, diligently
and in good faith, and agree upon a new fee to cover such new fund feature.
7. Operation of DST System.
-----------------------
In connection with the performance of its services under this Agreement,
DST is responsible for such items as:
A. That entries in DST's records and in the Fund's records on the
TA2000(TM) System created by DST reflect the orders, instructions, and
other information received by DST from broker-dealers, shareholders,
the Fund, the Fund's principal underwriter or Fund's investment
adviser;
B. That shareholder lists, shareholder account verifications,
confirmations and other shareholder account information to be
<PAGE>
produced from its records or data be available and accurately reflect
the data in the Fund's records on the TA2000(TM) System;
C. The accurate and timely issuance of dividend and distribution checks
in accordance with instructions received from the Fund and the data in
the Fund's records on the TA2000(TM) System;
D. That redemption transactions and payments be effected timely, under
normal circumstances on the day of receipt, and accurately in
accordance with redemption instructions received by DST from dealers,
shareholders, the Fund or the Fund's principal underwriter and the
data in the Fund's records on the TA2000(TM) System;
E. The deposit daily in the Fund's appropriate special bank account of
all checks and payments received by DST from NSCC, broker-dealers or
shareholders for investment in shares;
F. Notwithstanding anything herein to the contrary, with respect to "as
of" adjustments, DST will not assume one hundred percent (100%)
responsibility for losses resulting from "as of 's" due to clerical
errors or misinterpretations of shareholder instructions, but DST will
discuss with the Fund DST's accepting liability for an "as of" on a
case-by-case basis and may accept financial responsibility for a
particular situation resulting in a financial loss to the Fund where
DST in its discretion deems that to be appropriate;
G. The requiring of proper forms of instructions, signatures and
signature guarantees and any necessary documents supporting the
opening of shareholder accounts transfers, redemptions and other
shareholder account transactions, all in conformance with DST's
present procedures as set forth in its Legal Manual, Third Party Check
Procedures, Checkwriting Draft Procedures, and Signature Guarantee
Procedures with such changes or deviations therefrom as may be from
time to time required or approved by the Fund, its investment adviser
or principal underwriter, or their or DST's counsel (the "Procedures")
and the rejection of orders or instructions not in good order in
accordance with the applicable prospectus or the Procedures;
H. The maintenance of customary records in connection with its agency,
and particularly those records required to be maintained pursuant to
subparagraph (2) (iv) of paragraph (b) of Rule 31a-1 under the
Investment Company Act of 1940, if any; and
I. The maintenance of a current, duplicate set of the Fund's essential
records at a secure separate location, in a form available and usable
forthwith in the vent of any breakdown or disaster disrupting its main
operation.
<PAGE>
8. Indemnification.
---------------
A. DST shall at all times use reasonable care, due diligence and act in
good faith in performing its duties under this Agreement. DST shall
provide its services as transfer agent in accordance with Section 17A
of the Exchange Act, and the rules and regulations thereunder. In the
absence of bad faith, willful misconduct, knowing violations of
applicable law pertaining to the manner in which transfer agency
services are to be performed by DST (excluding any violations arising
directly or indirectly out of the actions of DST-unaffiliated third
parties), reckless disregard of the performance of its duties, or
negligence on its part, DST shall not be liable for any action taken,
suffered, or omitted by it or for any error of judgment made by it in
the performance of its duties under this Agreement. For those
activities or actions delineated in the Procedures, DST shall be
presumed to have used reasonable care, due diligence and acted in good
faith if it has acted in accordance with the Procedures, copies of
which have been provided to the Fund and reviewed and approved by Fund
counsel, as amended from time to time with approval of counsel, or for
any deviation therefrom approved by Fund or DST counsel. DST shall not
be responsible for, and the Fund shall indemnify and hold DST harmless
from and against, any and all losses, damages, costs, charges, counsel
fees, payments, expenses and liability which may be asserted against
DST or for which DST may be held to be liable, arising out of or
attributable to:
(1) All actions of DST required to be taken by DST pursuant to this
Agreement, provided that DST has acted in good faith and with due
diligence and reasonable care;
(2) The Fund's refusal or failure to comply with the terms of this
Agreement, the Fund's negligence or willful misconduct, or the
breach of any representation or warranty of the Fund hereunder;
(3) The good faith reliance on, or the carrying out of, any written
or oral instructions or requests of persons designated by the
Fund in writing (see Exhibit B) from time to time as authorized
to give instructions on its behalf or representatives of the
Fund's investment advisor, sponsor or principal underwriter or
DST's good faith reliance on, or use of, information, data,
records and documents received from, or which have been prepared
and/or maintained by the Fund, its investment advisor, its
sponsor or its principal underwriter;
(4) Defaults by dealers or shareowners with respect to payment for
shares orders previously entered;
<PAGE>
(5) The offer or sale of the Fund's shares in violation of any
requirement under federal securities laws or regulations or the
securities laws or regulations of any state or in violation of
any stop order or other determination or ruling by any federal
agency or state with respect to the offer or sale of such shares
in such state (unless such violation results from DST's failure
to comply with written instructions of the Fund or of any officer
of the Fund that no offers or sales be input into the Funds
securityholder records in or to residents of such state);
(6) The Fund's errors and mistakes in the use of the TA2000(TM)
System, the data center, computer and related equipment used to
access the TA2000(TM) System (the "DST Facilities"), and control
procedures relating thereto in the verification of output and in
the remote input of data;
(7) Errors, inaccuracies, and omissions in, or errors, inaccuracies
or omissions of DST arising out of or resulting from such errors,
inaccuracies and omissions in, the Fund's records, shareholder
and other records, delivered to DST hereunder by the Fund or its
prior agent(s); and
(8) Actions or omissions to act by the Fund or agents designated by
the Fund with respect to duties assumed thereby as provided for
in Section 21 hereof.
B. Except where DST is entitled to indemnification under Section 6.A.
hereof and with respect to "as ofs" set forth in Section 7.F., DST
shall indemnify and hold the Fund harmless from and against any and
all losses, damages, costs, charges, counsel fees, payments, expenses
and liability arising out of DST's failure to comply with the terms of
this Agreement or arising out of or attributable to DST's negligence
or willful misconduct or breach of any representation or warranty of
DST hereunder.
C. EXCEPT FOR VIOLATIONS OF SECTIONS 23, IN NO EVENT AND UNDER NO
CIRCUMSTANCES SHALL EITHER PARTY TO THIS AGREEMENT BE LIABLE TO
ANYONE, INCLUDING, WITHOUT LIMITATION TO THE OTHER PARTY, FOR
CONSEQUENTIAL DAMAGES FOR ANY ACT OR FAILURE TO ACT UNDER ANY
PROVISION OF THIS AGREEMENT EVEN IF ADVISED OF THE POSSIBILITY
THEREOF.
D. Promptly after receipt by an indemnified person of notice of the
commencement of any action, such indemnified person will, if a claim
in respect thereto is to be made against an indemnifying party
hereunder, notify the indemnifying party in writing of the
commencement thereof; but the failure so to notify the indemnifying
<PAGE>
party will not relieve an indemnifying party from any liability that
it may have to any indemnified person for contribution or otherwise
under the indemnity agreement contained herein except to the extent it
is prejudiced as a proximate result of such failure to timely notify.
In case any such action is brought against any indemnified person and
such indemnified person seeks or intends to seek indemnity from an
indemnifying party, the indemnifying party will be entitled to
participate in, and, to the extent that it may wish, assume the
defense thereof (in its own name or in the name and on behalf of any
indemnified party or both with counsel reasonably satisfactory to such
indemnified person); provided, however, if the defendants in such
indemnified person); provided, however, if the defendants in any such
action include both the indemnified person and an indemnifying party
and the indemnified person shall have reasonably concluded that there
may be a conflict between the positions of the indemnified person and
an indemnifying party in conducting the defense of any such action or
that there may be legal defenses available to it and/or other
indemnified persons which are inconsistent with those available to an
indemnifying party, the indemnified person or indemnified persons
shall have the right to select one separate counsel (in addition to
local counsel) to assume such legal defense and to otherwise
participate in the defense of such action on behalf of such
indemnified person or indemnified persons at such indemnified party's
sole expense. Upon receipt of notice from an indemnifying party to
such indemnified person of its election so to assume the defense of
such action and approval by the indemnified person of counsel, which
approval shall not be unreasonably withheld (and any disapproval shall
be accompanied by a written statement of the reasons therefor), the
indemnifying party will not be liable to such indemnified person
hereunder for any legal or other expenses subsequently incurred by
such indemnified person in connection with the defense thereof. An
indemnifying party will not settle or compromise or consent to the
entry of any judgment with respect to any pending or threatened claim,
action, suit or proceeding in respect of which indemnification or
contribution may be sought hereunder (whether or not the indemnified
persons are actual or potential parties to such claim, action, suit or
proceeding) unless such settlement, compromise or consent includes an
unconditional release of each indemnified person from all liability
arising out of such claim, action, suit or proceeding. An indemnified
party will not, without the prior written consent of the indemnifying
party settle or compromise or consent to the entry of any judgment
with respect to any pending or threatened claim,
<PAGE>
action, suit or proceeding in respect of which indemnification or
contribution may be sought hereunder. If it does so, it waives its
right to indemnification therefor.
9. Certain Covenants of DST and Fund.
---------------------------------
A. All requisite steps will be taken by Fund from time to time when and
as necessary to register the Fund's shares for sale in all states in
which Fund's shares shall at the time be offered for sale and require
registration. If at any time Fund will receive notice of any stop
order or other proceeding in any such state affecting such
registration or the sale of Fund's shares, or of any stop order or
other proceeding under the federal securities laws affecting the sale
of Fund's shares, Fund will give prompt notice thereof to DST.
B. DST hereby agrees to perform such transfer agency functions as are set
forth in section 4.E. above and establish and maintain facilities and
procedures reasonably acceptable to Fund for safekeeping of stock
certificates, check forms, and facsimile signature imprinting devices,
if any; and for the preparation or use, and for keeping account of,
such certificates, forms and devices, and to carry such insurance as
it considers adequate and reasonably available.
C. To the extent required by Section 31 of the Investment Company Act of
1940 as amended and Rules thereunder, DST agrees that all records
maintained by DST relating to the services to be performed by DST
under this Agreement are the property of Fund and will be preserved
and will be surrendered promptly to Fund on request .
D. DST agrees to furnish Fund annual reports of its parent's financial
condition, consisting of a balance sheet, earnings statement and any
other financial information reasonably requested by Fund. The annual
financial statements will be certified by DST's certified public
accountants.
E. DST represents and agrees that it will use its best efforts to keep
current on the trends of the investment company industry relating to
shareholder services and will use its best efforts to continue to
modernize and improve.
F. DST will permit Fund and its authorized representatives to make
periodic inspections of its operations as such would involve the Fund
at reasonable time during business hours.
G. DST agrees to use its best efforts to provide in Kansas City at the
Fund's expense two (2) man weeks of training for the Fund's personnel
in connection with use and operation of the TA2000(TM) System. All
travel and reimbursable expenses incurred by the Fund's personnel in
connection with and during training at DST's Facility
<PAGE>
shall be borne by the Fund. At the Fund's option and expense, DST
also agrees to use its best efforts to provide an additional two
(2) man weeks of training at the Fund's facility for the Fund's
personnel in connection with the conversion to the TA2000(TM)
System. Reasonable travel, per diem and reimbursable expenses
incurred by DST personnel in connection with and during training
at the Fund's facility or in connection with the conversion shall
be borne by the Fund.
10. Recapitalization or Readjustment.
--------------------------------
In case of any recapitalization, readjustment or other change in the
capital structure of Fund requiring a change in the form of stock
certificates, DST will issue or register certificates in the new form in
exchange for, or in transfer of, the outstanding certificates in the old
form, upon receiving:
A. Written instructions from an officer of Fund;
B. Certified copy of the amendment to the Articles of Incorporation
or other document effecting the change;
C. Certified copy of the order or consent of each governmental or
regulatory authority, required by law to the issuance of the
stock in the new form, and an opinion of counsel that the order
or consent of no other government or regulatory authority is
required;
D. Specimens of the new certificates in the form approved by the
Board of Directors of Fund, with a certificate of the Secretary
of Fund as to such approval;
E. Opinion of counsel for Fund stating:
(1) The status of the shares of stock of Fund in the new form
under the Securities Act of 1933, as amended and any other
applicable federal or state statute; and
(2) That the issued shares in the new form are, and all unissued
shares will be, when issued, validly issued, fully paid and
nonassessable.
11. Stock Certificates. [STRIKE IF THE FUND WILL NOT ISSUE STOCK CERTIFICATES]
------------------
Fund will furnish DST with a sufficient supply of blank stock certificates
and from time to time will renew such supply upon the request of DST. Such
certificates will be signed manually or by facsimile signatures of the
officers of Fund authorized by law and by bylaws to sign stock
certificates, and if required, will bear the corporate seal or facsimile
thereof.
12. Death, Resignation or Removal of Signing Officer.
------------------------------------------------
Fund will file promptly with DST written notice of any change in the
officers authorized to sign stock certificates, written instructions or
requests, together with two signature cards bearing the specimen signature
<PAGE>
of each newly authorized officer. In case any officer of Fund who will have
signed manually or whose facsimile signature will have been affixed to
blank stock certificates will die, resign, or be removed prior to the
issuance of such certificates, DST may issue or register such stock
certificates as the stock certificates of Fund notwithstanding such death,
resignation, or removal, until specifically directed to the contrary by
Fund in writing. In the absence of such direction, Fund will file promptly
with DST such approval, adoption, or ratification as may be required by
law.
13. Future Amendments of Charter and Bylaws.
---------------------------------------
Fund will promptly file with DST copies of all material amendments to its
Articles of Incorporation or bylaws made after the date of this Agreement.
14. Instructions, Opinion of Counsel and Signatures.
-----------------------------------------------
At any time DST may apply to any person authorized by the Fund to give
instructions to DST, and may with the approval of a Fund officer consult
with legal counsel for Fund or its own legal counsel at the expense of
Fund, with respect to any matter arising in connection with the agency and
it will not be liable for any action taken or omitted by it in good faith
in reliance upon such instructions or upon the opinion of such counsel. DST
will be protected in acting upon any paper or document reasonably believed
by it to be genuine and to have been signed by the proper person or persons
and will not be held to have notice of any change of authority of any
person, until receipt of written notice thereof from Fund. It will also be
protected in recognizing stock certificates which it reasonably believes to
bear the proper manual or facsimile signatures of the officers of Fund, and
the proper countersignature of any former Transfer Agent or Registrar, or
of a co-Transfer Agent or co-Registrar.
15. Force Majeure and Disaster Recovery Plans.
-----------------------------------------
A. DST shall not be responsible or liable for its failure or delay in
performance of its obligations under this Agreement arising out of or
caused, directly or indirectly, by circumstances beyond its
reasonable control, including, without limitation: any interruption,
loss or malfunction or any utility, transportation, computer (hardware
or software) or communication service; inability to obtain labor,
material, equipment or transportation, or a delay in mails;
governmental or exchange action, statute, ordinance, rulings,
regulations or direction; war, strike, riot, emergency, civil
disturbance, terrorism, vandalism, explosions, labor disputes,
freezes, floods, fires, tornados, acts of God or public enemy,
revolutions, or insurrection; or any other cause, contingency,
circumstance or delay not subject to DST's reasonable control which
prevents or hinders DST's performance hereunder.
<PAGE>
B. DST currently maintains an agreement with a third party whereby DST is
to be permitted to use on a "shared use" basis a "hot site" (the
"Recovery Facility") maintained by such party in event of a disaster
rendering the DST Facilities inoperable. DST has developed and is
continually revising a Business Contingency Plan detailing which, how,
when, and by whom data maintained by DST at the DST Facilities will be
installed and operated at the Recovery Facility. Provided Fund is
paying its pro rata portion of the charge therefor, DST would, in
event of a disaster rendering the DST Facilities inoperable, convert
the TA2000(TM) System containing the designated Fund data to the
computers at the Recovery Facility in accordance with the then current
Business Contingency Plan.
C. DST also currently maintains, separate from the area in which the
operations which provides the services to the Fund hereunder are
located, a Crisis Management Center consisting of phones, computers
and the other equipment necessary to operate a full service transfer
agency business in the event one of its operations areas is rendered
inoperable. The transfer of operations to other operating areas or to
the Crisis Management Center is also covered in DST's Business
Contingency Plan.
16. Certificate of Documents.
------------------------
The required copy of the Articles of Incorporation of Fund and copies of
all amendments thereto will be certified by the Secretary of State (or
other appropriate official) of the State of Incorporation, and if such
Articles of Incorporation and amendments are required by law to be also
filed with a county, city or other officer of official body, a certificate
of such filing will appear on the certified copy submitted to DST. A copy
of the order or consent of each governmental or regulatory authority
required by law to the issuance of the stock will be certified by the
Secretary or Clerk of such governmental or regulatory authority, under
proper seal of such authority. The copy of the Bylaws and copies of all
amendments thereto, and copies of resolutions of the Board of Directors of
Fund, will be certified by the Secretary or an Assistant Secretary of Fund
under the Fund's seal.
17. Records.
-------
DST will maintain customary records in connection with its agency, and
particularly will maintain those records required to be maintained pursuant
to subparagraph (2) (iv) of paragraph (b) of Rule 31a-1 under the
Investment Company Act of 1940, if any.
18. Disposition of Books, Records and Canceled Certificates.
-------------------------------------------------------
DST may send periodically to Fund, or to where designated by the Secretary
or an Assistant Secretary of Fund, all books, documents, and all records
<PAGE>
no longer deemed needed for current purposes and stock certificates which
have been canceled in transfer or in exchange, upon the understanding that
such books, documents, records, and stock certificates will be maintained
by the Fund under and in accordance with the requirements of Section 17Ad-7
adopted under the Securities Exchange Act of 1934. Such materials will not
be destroyed by Fund without the consent of DST (which consent will not be
unreasonably withheld); but will be safely stored for possible future
reference.
19. Provisions Relating to DST as Transfer Agent.
--------------------------------------------
A. DST will make original issues of stock certificates upon written
request of an officer of Fund and upon being furnished with a
certified copy of a resolution of the Board of Directors authorizing
such original issue, an opinion of counsel as outlined in paragraphs
1.D. and G. of this Agreement, any documents required by paragraphs 5.
or 10. of this Agreement, and necessary funds for the payment of any
original issue tax.
B. Before making any original issue of certificates Fund will furnish DST
with sufficient funds to pay all required taxes on the original issue
of the stock, if any. Fund will furnish DST such evidence as may be
required by DST to show the actual value of the stock. If no taxes are
payable DST will be furnished with an opinion of outside counsel to
that effect.
C. Shares of stock will be transferred and new certificates issued in
transfer, or shares of stock accepted for redemption and funds
remitted therefor, or book entry transfer by effected, upon surrender
of the old certificates in form or receipt by DST of instructions
deemed by DST properly endorsed for transfer or redemption accompanied
by such documents as DST may deem necessary to evidence the authority
of the person making the transfer or redemption. DST reserves the
right to refuse to transfer or redeem shares until it is satisfied
that the endorsement or signature on the certificate or any other
document is valid and genuine, and for that purpose it may require a
guaranty of signature in accordance with the Signature Guarantee
Procedures. DST also reserves the right to refuse to transfer or
redeem shares until it is satisfied that the requested transfer or
redemption is legally authorized, and it will incur no liability for
the refusal in good faith to make transfers or redemptions which, in
its judgment, are improper or unauthorized. DST may, in effecting
transfers or redemptions, rely upon Simplification Acts or other
statutes which protect it and Fund in not requiring complete fiduciary
documentation. In cases in which DST is not directed or otherwise
required to maintain the
<PAGE>
consolidated records of shareholder's accounts, DST will not be liable
for any loss which may arise by reason of not having such records.
D. When mail is used for delivery of stock certificates, DST will forward
stock certificates in "nonnegotiable" form by first class or
registered mail and stock certificates in "negotiable" form by
registered mail, all such mail deliveries to be covered while in
transit to the addressee by insurance arranged for by DST.
E. DST will issue and mail subscription warrants, certificates
representing stock dividends, exchanges or split ups, or act as
Conversion Agent upon receiving written instructions from any officer
of Fund and such other documents as DST deems necessary.
F. DST will issue, transfer, and split up certificates and will issue
certificates of stock representing full shares upon surrender of
script certificates aggregating one full share or more when presented
to DST for that purpose upon receiving written instructions from an
officer of Fund and such other documents as DST may deem necessary.
G. DST may issue new certificates in place of certificates represented to
have been lost, destroyed, stolen or otherwise wrongfully taken upon
receiving instructions from Fund and indemnity satisfactory to DST and
Fund, and may issue new certificates in exchange for, and upon
surrender of, mutilated certificates. Such instructions from Fund will
be in such form as will be approved by the Board of Directors of Fund
and will be in accordance with the provisions of law and the bylaws of
Fund governing such matter.
H. DST will supply a shareholder's list to Fund for its annual meeting
upon receiving a request from an officer of Fund. It will also, at the
expense of the Fund, supply lists at such other times as may be
requested by an officer of Fund.
I. Upon receipt of written instructions of an officer of Fund, DST will,
at the expense of the Fund, address and mail notices to shareholders.
J. In case of any request or demand for the inspection of the stock books
of Fund or any other books in the possession of DST, DST will endeavor
to notify Fund and to secure instructions as to permitting or refusing
such inspection. DST reserves the right, however, to exhibit the stock
books or other books to any person in case it is advised by its
counsel that it may be held responsible for the failure to exhibit the
stock books or other books to such person.
20. Provisions Relating to Dividend Disbursing Agency.
-------------------------------------------------
A. DST will, at the expense of Fund, provide a special form of check
containing the imprint of any device or other matter desired by
<PAGE>
Fund. Said checks must, however, be of a form and size convenient for
use by DST.
B. If Fund desires to include additional printed matter, financial
statements, etc., with the dividend checks, the same will be furnished
DST within a reasonable time prior to the date of mailing of the
dividend checks, at the expense of Fund.
C. If Fund desires its distributions mailed in any special form of
envelopes, sufficient supply of the same will be furnished to DST but
the size and form of said envelopes will be subject to the approval of
DST. If stamped envelopes are used, they must be furnished by Fund; or
if postage stamps are to be affixed to the envelopes, the stamps or
the cash necessary for such stamps must be furnished by Fund.
D. DST shall establish and maintain on behalf of the Fund one or more
deposit accounts as Agent for Fund, into which DST shall deposit the
funds DST receives for payment of dividends, distributions,
redemptions or other disbursements provided for hereunder and to draw
checks against such accounts.
E. DST is authorized and directed to stop payment of checks theretofore
issued hereunder, but not presented for payment, when the payees
thereof allege either that they have not received the checks or that
such checks have been mislaid, lost, stolen, destroyed or through no
fault of theirs, are otherwise beyond their control, and cannot be
produced by them for presentation and collection, and, to issue and
deliver duplicate checks in replacement thereof.
21. Assumption of Duties By the Fund or Agents Designated By the Fund.
-----------------------------------------------------------------
A. The Fund or its designated agents other than DST may assume certain
duties and responsibilities of DST or those services of Transfer Agent
and Dividend Disbursement Agent as those terms are referred to in
Section 4.E. of this Agreement including but not limited to answering
and responding to telephone inquiries from shareholders and brokers,
accepting shareholder and broker instructions (either or both oral and
written) and transmitting orders based on such instructions to DST,
preparing and mailing confirmations, obtaining certified TIN numbers,
classifying the status of shareholders and shareholder accounts under
applicable tax law, establishing shareholder accounts on the
TA2000(TM) System and assigning social codes and Taxpayer
Identification Number codes thereof, and disbursing monies of the
Fund, said assumption to be embodied in writing to be signed by both
parties.
B. To the extent the Fund or its agent or affiliate assumes such duties
and responsibilities, DST shall be relieved from all responsibility
<PAGE>
and liability therefor and is hereby indemnified and held harmless
against any liability therefrom and in the same manner and degree as
provided for in Section 8 hereof.
C. Initially the Fund or its designees shall be responsible for the
following: [LIST RESPONSIBILITIES OR DELETE AS APPROPRIATE.] (i)
answer and respond to phone calls from shareholders and broker-
dealers, and (ii) scan items into DST's AWD(TM) System as such calls
or items are received by the Fund, and (iii) enter and confirm wire
order trades.
22. Termination of Agreement.
------------------------
A. This Agreement shall be in effect for an initial period of ______
years and thereafter may be terminated by either party upon receipt of
one (1) year's written notice from the other party, provided, however,
that the effective date of any termination shall not occur during the
period from December 15 through March 30 of any year to avoid
adversely impacting year end.
B. Each party, in addition to any other rights and remedies, shall have
the right to terminate this Agreement forthwith upon the occurrence at
any time of any of the following events with respect to the other
party:
(1) Any interruption or cessation of operations by the other party or
its assigns which materially interferes with the business
operation of the first party)
(2) The bankruptcy of the other party or its assigns or the
appointment of a receiver for the other party or its assigns;
(3) Any merger, consolidation or sale of substantially all the assets
of the other party or its assigns; or
(4) Failure by the other party or its assigns to perform its duties
in accordance with the Agreement, which failure materially
adversely affects the business operations of the first party and
which failure continues for thirty (30) days after receipt of
written notice from the first party.
C. In the event of termination, Fund will promptly pay DST all amounts
due to DST hereunder. In addition, if this Agreement is terminated by
the Fund for any reason other than those set forth in Sections 22.B.
or 22.C. hereof, then the Fund shall pay to DST a termination fee
equal to the lesser of (i) the aggregate of the fees charged to the
Fund during the previous six (6) calendar months preceding receipt of
the notice or (ii) the average monthly fee over the preceding six (6)
months times the number of months remaining in the then current term
after termination. If the Fund shall not have been billed for six (6)
months before termination, the average
<PAGE>
monthly fee shall be calculated by dividing the aggregate fees charged
to the Fund during whatever period it was billed by the number of
months in that period and that average monthly fee shall be multiplied
by six (6) in order to determine the aggregate fees in subparagraph
22.C.(i). In any event, the effective date of any deconversion as a
result of termination hereof shall not occur during the period from
December 15th through March 30th of any year to avoid adversely
impacting year end.
D. In the event of termination, DST will use its best efforts to transfer
the records of the Fund to the designated successor transfer agent, to
provide reasonable assistance to the Fund and its designated successor
transfer agent, and to provide other information relating to its
service provided hereunder (subject to the recompense of DST for such
assistance at its standard rates and fees for personnel then in effect
at that time); provided, however, as used herein "reasonable
assistance" and "other information" shall not include assisting any
new service or system provider to modify, alter, enhance, or improve
its system or to improve, enhance, or alter its current, or to provide
any new, functionality or to require DST to disclose any DST
Confidential Information or any information which is otherwise
confidential to DST.
23. Confidentiality.
---------------
A. DST agrees that, except as provided in the last sentence of Section
19.J hereof, or as otherwise required by law, DST will keep
confidential all records of and information in its possession relating
to Fund or its shareholders or shareholder accounts and will not
disclose the same to any person except at the request or with the
consent of Fund.
B. Fund agrees to keep confidential all financial statements and other
financial records (other than statements and records relating solely
to Fund's business dealings with DST) and all manuals, systems and
other technical information and data, not publicly disclosed, relating
to DST's operations and programs furnished to it by DST pursuant to
this Agreement and will not disclose the same to any person except at
the request or with the consent of DST.
C. (1) The Fund acknowledges that DST has proprietary rights in and to
the TA2000(TM) System used to perform services hereunder
including, but not limited to the maintenance of shareholder
accounts and records, processing of related information and
generation of output, including, without limitation any changes
or modifications of the TA2000(TM) System and any other DST
programs, data bases, supporting documentation, or
<PAGE>
procedures (collectively "DST Confidential Information") which
the Fund's access to the TA2000(TM) System or computer hardware
or software may permit the Fund or its employees or agents to
become aware of or to access and that the DST Confidential
Information constitutes confidential material and trade secrets
of DST. The Fund agrees to maintain the confidentially of the DST
Confidential Information.
(2) The Fund acknowledges that any unauthorized use, misuse,
disclosure or taking of DST Confidential Information which is
confidential as provided by law, or which is a trade secret,
residing or existing internal or external to a computer, computer
system, or computer network, or the knowing and unauthorized
accessing or causing to be accessed of any computer, computer
system, or computer network, may be subject to civil liabilities
and criminal penalties under applicable state law. The Fund will
advise all of its employees and agents who have access to any DST
Confidential Information or to any computer equipment capable of
accessing DST or DST hardware or software of the foregoing. DST
is intended to be, and shall be, a third party beneficiary of the
Fund's obligations and undertakings contained in this Section.
(3) Fund acknowledges that disclosure of the DST Confidential
Information may give rise to an irreparable injury to DST
inadequately compensable in damages. Accordingly, DST may seek
(without the posting of any bond or other security) injunctive
relief against the breach of the foregoing undertaking of
confidentiality and nondisclosure, in addition to any other legal
remedies which may be available, and Fund consents to the
obtaining of such injunctive relief. All of the undertakings and
obligations relating to confidentiality and nondisclosure,
whether contained in this Section or elsewhere in this Agreement
shall survive the termination or elsewhere in this Agreement
shall survive the termination or expiration of this Agreement for
a period of ten (10) years.
24. Changes and Modifications.
-------------------------
A. During the term of this Agreement DST will use on behalf of the Fund
without additional cost all modifications, enhancements, or changes
which DST may make to the TA2000(TM) System in the normal course of
its business and which are applicable to functions and features
offered by the Fund, unless substantially all DST clients are charged
separately for such modifications, enhancements or changes, including,
without limitation, substantial system revisions or modifications
necessitated by changes in existing laws, rules or
<PAGE>
regulations. The Fund agrees to pay DST promptly for modifications and
improvements which are charged for separately at the rate provided for
in DST's standard pricing schedule which shall be identical for
substantially all clients, if a standard pricing schedule shall exist.
If there is no standard pricing schedule, the parties shall mutually
agree upon the rates to be charged.
B. DST shall have the right, at any time and from time to time, to alter
and modify any systems, programs, procedures or facilities used or
employed in performing its duties and obligations hereunder; provided
that the Fund will be notified as promptly as possible prior to
implementation of such alterations and modifications and that no such
alteration or modification or deletion shall materially adversely
change or affect the operations and procedures of the Fund in using or
employing the TA2000(TM) System or DST Facilities hereunder or the
reports to be generated by such system and facilities hereunder,
unless the Fund is given thirty (30) days prior notice to allow the
Fund to change its procedures and DST provides the Fund with revised
operating procedures and controls.
C. All enhancements, improvements, changes, modifications or new features
added to the TA2000(TM) System however developed or paid for shall be,
and shall remain, the confidential and exclusive property of, and
proprietary to, DST.
25. Subcontractors.
--------------
Nothing herein shall impose any duty up DST in connection with or make DST
liable for the actions or omissions to act of unaffiliated third parties
such as, by way of example and not limitation, Airborne Services, the U.S.
mails and telecommunication companies, provided, if DST selected such
company, DST shall have exercised due care in selecting the same.
26. Limitations on Liability.
------------------------
A. If Fund is comprised of more than one Portfolio, each Portfolio shall
be regarded for all purposes hereunder as a separate party apart from
each other Portfolio. Unless the context otherwise requires, with
respect to every transaction covered by this Agreement, every
reference herein to the Fund shall be deemed to relate solely to the
particular Portfolio to which such transaction relates. Under no
circumstances shall the rights, obligations or remedies with respect
to a particular Portfolio constitute a right, obligation or remedy
applicable to any other Portfolio. The use of this single document to
memorialize the separate agreement of each Portfolio is understood to
be for clerical convenience only and shall not constitute any basis
for joining the Portfolios for any reason. [DELETE IF NOT APPLICABLE]
<PAGE>
B. Notice is hereby given that a copy of Fund's Trust Agreement and all
amendments thereto is on file with the Secretary of State of the state
of its organization; that this Agreement has been executed on behalf
of Fund by the undersigned duly authorized representative of Fund in
his/her capacity as such and not individually; and that the
obligations of this Agreement shall only be binding upon the assets
and property of Fund and shall not be binding upon any trustee,
officer or shareholder of Fund individually. [DELETE IF NOT
APPLICABLE]
27. Miscellaneous.
-------------
A. This Agreement shall be construed according to, and the rights and
liabilities of the parties hereto shall be governed by, the laws of
the State of Missouri, excluding that body of law applicable to choice
of law.
B. All terms and provisions of this Agreement shall be binding upon,
inure to the benefit of and be enforceable by the parties hereto and
their respective successors and permitted assigns.
C. The representations and warranties, and the indemnification extended
hereunder, if any, are intended to and shall continue after and
survive the expiration, termination or cancellation of this Agreement.
D. No provisions of the Agreement may be amended or modified in any
manner except by a written agreement properly authorized and executed
each party hereto.
E. The captions in the Agreement are included for convenience of
reference only, and in no way define or delimit any of the provisions
hereof or otherwise affect their construction or effect.
F. This Agreement may be executed in two or more counterparts, each of
which shall be deemed an original but all of which together shall
constitute one and the same instrument.
G. If any part, term or provision of this Agreement is by the courts held
to be illegal, in conflict with any law or otherwise invalid, the
remaining portion or portions shall be considered severable and not be
affected, and the rights and obligations of the parties shall be
construed and enforced as if the Agreement did not contain the
particular part, term or provision held to be illegal or invalid.
H. This Agreement may not be assigned by the Fund or DST without prior
written consent of the other.
I. Neither the execution nor performance of this Agreement shall be
deemed to create a partnership or joint venture by and between Fund
and DST. It is understood and agreed that all service performed
hereunder by DST shall be as an independent contractor and not as an
<PAGE>
employee of the Fund. This Agreement is between DST and the Fund and
neither this Agreement nor the performance of service under it shall
create any rights in any third parties. There are no third party
beneficiaries hereto.
J. Except as specifically provided herein, this Agreement does not in any
way affect any other agreements entered into among the parties hereto
and any actions taken or omitted by any party hereunder shall not
affect any rights or obligations of any other party hereunder.
K. The failure of either party to insist upon the performance of any
terms or conditions of this Agreement or to enforce any rights
resulting from any breach of any of the terms or conditions of this
Agreement, including the payment of damages, shall not be construed as
a continuing or permanent waiver of any such terms, conditions, rights
or privileges, but the same shall continue and remain in full force
and effect as if no such forebearance or waiver had occurred.
L. This Agreement constitutes the entire agreement between the parties
hereto and supersedes any prior agreement, draft or agreement or
proposal with respect to the subject matter hereof, whether oral or
written, and this Agreement may not be modified except by written
instrument executed by both parties.
M. All notices to be given hereunder shall be deemed properly given if
delivered in person or if sent by U.S. mail, first class, postage
prepaid, or if sent by facsimile and thereafter confirmed by mail as
follows:
If to DST:
DST Systems, Inc.
1055 Broadway, 7th Fl.
Kansas City, Missouri 64105
Attn: Senior Vice President-Full Service
Facsimile No.: 816-435-3455
With a copy of non-operational notices to:
DST Systems, Inc.
1055 Broadway, 9th Fl.
Kansas City, Missouri 64105
Attn: Legal Department
Facsimile No.: 816-435-8630
If to Fund:
____________________________
____________________________
____________________________
Attn: ______________________
Facsimile No.: _____________
<PAGE>
or to such other address as shall have been specified in writing by
the party to whom such notice is to be given.
N. The representations and warranties contained herein shall survive the
execution of this Agreement. The representations and warranties
contained herein and the provisions of Section 8 hereof shall survive
the termination of the Agreement and the performance of services
hereunder until any statute of limitations applicable to the matter at
issues shall have expired.
WITNESS WHEREOF, the parties have caused this Agreement to be executed by
their respective duly authorized officers, to be effective as of the day and
year first above written.
DST SYSTEMS, INC.
By:__________________________________
Title:_______________________________
[INSERT NAME OF FUND]
By:__________________________________
Title:_______________________________
<PAGE>
EXHIBIT A, P.1
REMOTE SERVICE
FEE SCHEDULE
FEE INCREASES
The fees and charges set forth in this Exhibit B shall increase annually upon
each anniversary of this Agreement over the fees and charges during the prior 12
months in an amount equal to the annual percentage of change in the Consumer
Price Index in the Kansas City, Missouri-Kansas Standard Metropolitan
Statistical Area, All Items, Base 1982-1984 =100, as last reported by the U.S.
Bureau of Labor Statistics for the 12 calendar months immediately preceding such
anniversary. In the event that this Agreement was not signed as of the first day
of the month, the fees and charges increase shall be effective as of the first
day of the month immediately following the month during which the anniversary
occurred.
OPEN AND CLOSED ACCOUNTS FEES
The monthly fee for an open account shall be charged in the month during which
an account is opened through the month in which such account is closed. The
monthly fee for a closed account shall be charged in the month following the
month during which such account is closed and shall cease to be charged in the
month following the Purge Date, as hereinafter defined. The "Purge Date" for any
year shall be any day after June 1st of that year, as selected by Fund, provided
that written notification is presented to DST at least forty-five (45) days
prior to the Purge Date.
REIMBURSABLE EXPENSES
Forms
Postage (to be paid in advance if so requested)
Outside Mailing Services
Computer Hardware
Telecommunications Equipment
Magnetic Tapes, Reels or Cartridges
Magnetic Tape Handling Charges
Microfiche/Microfilm
Freight Charges
<PAGE>
EXHIBIT B, P.2
REMOTE SERVICE
FEE SCHEDULE
Reimbursable Expenses (Cont.)
Proxy Processing - per proxy mailed
not including postage
Includes: Proxy Card
Printing
Outgoing Envelope
Return Envelope
Tabulation
T.I.N. Certification (W-8 & W-9)
(Postage associated with the return
envelope is included)
N.S.C.C. Communications Charge Currently $.
(Fund/Serv and Networking) per Fund per Year
Off-site Record Storage
SunGard Second Site Disaster Currently between $.
Backup Fee (per account) and (guaranteed)
not to exceed $.
through
Transmission of Statement Data for Currently $. /per
Remote Processing record
Travel, Per Diem and other Out-of-
Pockets Incurred by DST personnel
traveling to, at and from Fund at
the request of Fund
<PAGE>
April 16, 1996
Turner Funds
c/o CT Corporation
2 Oliver Street
Boston, Massachusetts 02109
Ladies and Gentlemen:
We are furnishing this opinion with respect to the proposed offer and sale from
time to time of an indefinite number of units of beneficial interest, with a par
value of $.00001 (the "Shares"), of the Turner Funds (the "Trust"), a
Massachusetts business trust, in registration under the Securities Act of 1933
by a Registration Statement on Form N-1A (File No. 333-00641; 611-07527) as
amended from time to time (the "Registration Statement").
We have acted as counsel to the Trust since its inception, and we are familiar
with the actions taken by its Trustees to authorize the issuance of the Shares.
We have reviewed the Declaration of Trust, the By-laws, and the minute books of
the Trust, and such other certificates, documents and opinions of counsel as we
deem necessary for the purpose of this opinion.
We have reviewed the Trust's Notification of Registration on Form N-8A under the
Investment Company Act of 1940. We have assisted in the preparation of the
Trust's Registration Statement, including all pre-effective amendments thereto,
filed or to be filed with the Securities and Exchange Commission.
In our review we have assumed the genuineness of all signatures, the
authenticity and completeness of all documents purporting to be originals
(whether reviewed by us in original or in copy form), and the conformity to the
originals of all documents purporting to be copies.
We have assumed the appropriate action will be taken to register or qualify the
sale of the Shares under any applicable state and federal laws regulating sales
and offerings of securities.
<PAGE>
Based upon foregoing, we are of the opinion that:
1. The Trust is a business trust validly existing under the laws of the
Commonwealth of Massachusetts. The Trust is authorized under its
Declaration of Trust to issue an unlimited number of Shares in series
representing interests in the Growth Equity Fund, Fixed Income Fund, and
Small Cap Fund and in such other series or classes as the Trustees may
hereafter duly authorize.
2. Upon the issuance of any Shares of any of the series or classes of the
Trust for payment therefor as described in, and in accordance with the
Registration Statement and the Declaration of Trust and By-laws of the
Trust, the Shares so issued will be validly issued, fully paid and non-
assessable, except that, as set forth in the Registration Statement,
shareholders of the Shares of the Trust may under certain circumstances
be held personally liable for its obligations.
This opinion is intended only for your use in connection with the offering
of Shares and may not be relied upon by any other person.
We hereby consent to the inclusion of this opinion as Exhibit 10 to the
Trust's Pre-Effective Amendment No. 1 to be filed with the Securities
and Exchange Commission and to the reference to our firm under the caption
"Counsel and Independent Accountants" in the Prospectus and Statement of
Additional Information filed as part of such Amendment.
Very truly yours,
/s/ Morgan, Lewis & Bockius LLP
<PAGE>
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the use in this
Registration Statement of our report dated December 5, 1995 included in the
Pre-Effective Amendment No. 1 to the Registration Statement on Form N-1A of
Turner Funds (No. 333-00641), and to all references to our firm included in this
Registration Statement File No. 333-00641.
ARTHUR ANDERSEN LLP
Philadelphia, PA
April 18, 1996
<PAGE>
Turner Funds EXHIBIT 16
October 31, 1995
For year ended October 31, 1995:
Total Return: P (1+T)/n/=ERV
Turner Growth
Equity Turner
Fund Small Cap
---- ---------
P= $1,000.00 $1,000.00
n= 1 1
ERV= 1,211.50 1,475.20
T= 21.15% 47.52%
Total Return: P (1+T)/n/=ERV
Since Inception
Turner Growth
Equity Turner
Fund Small Cap
---- ---------
P= $1,000.00 $1,000.00
n= 3.64384 1.72877
ERV= 4,811.35 2,273.11
T= 53.90% 60.80%
<PAGE>
Turner Funds EXHIBIT 16
This schedule is included to illustrate how yield and total return are
calculated.
Yield=2[ (a-b)/6/ -1]
---
cd
Turner Growth
Equity Turner
Fund Small Cap
---- ---------
a=Total Income $123,784.50 $3,359.23
b=Expenses 74,625.20 12,862.22
c=Shares 7,795,806,898 805,197,235
d=NAV 15.00 15.85
Yield 0.50% -0.89%
<PAGE>
TURNER FUNDS
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that the undersigned trustee and/or
officer of Turner Funds (the "Trust"), a business trust organized under the laws
of The Commonwealth of Massachusetts, hereby constitutes and appoints David G.
Lee, Kevin P. Robins, Richard J. Shoch and James W. Jennings, and each of them
singly, his true and lawful attorney-in-fact and agent with full power of
substitution and resubstitution, to sign for him and in his name, place and
stead, and in the capacity indicated below, to sign any or all amendments
(including post-effective amendments) to the Trust's Registration Statement on
Form N-1A under the provisions of the Investment Company Act of 1940 and the
Securities Act of 1933, each such Act as amended, and to file the same, with all
exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents, and each of them, acting alone, full power and authority to do and
perform each and every act and thing requisite or necessary to be done in and
about the premises, as fully to all intents and purposes as he might or could do
in person, hereby ratifying and confirming all that said attorneys-in-fact and
agents or any of them, or their substitute or substitutes, may lawfully do or
cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand and seal as
of the date set forth below.
/s/ Jeffrey A. Cohen Date: 4/5/96
______________________________ ________________
Jeffrey A. Cohen, Controller
and Chief Accounting Officer
1
<PAGE>
TURNER FUNDS
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that the undersigned trustee and/or
officer of Turner Funds (the "Trust"), a business trust organized under the laws
of The Commonwealth of Massachusetts, hereby constitutes and appoints David G.
Lee, Kevin P. Robins, Richard J. Shoch and James W. Jennings, and each of them
singly, his true and lawful attorney-in-fact and agent with full power of
substitution and resubstitution, to sign for him and in his name, place and
stead, and in the capacity indicated below, to sign any or all amendments
(including post-effective amendments) to the Trust's Registration Statement on
Form N-1A under the provisions of the Investment Company Act of 1940 and the
Securities Act of 1933, each such Act as amended, and to file the same, with all
exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents, and each of them, acting alone, full power and authority to do and
perform each and every act and thing requisite or necessary to be done in and
about the premises, as fully to all intents and purposes as he might or could do
in person, hereby ratifying and confirming all that said attorneys-in-fact and
agents or any of them, or their substitute or substitutes, may lawfully do or
cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand and seal as
of the date set forth below.
/s/ Joan Lamm-Tennant Date: 4/3/96
______________________________ ________________
Joan Lamm-Tennant, Trustee
2
<PAGE>
TURNER FUNDS
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that the undersigned trustee and/or
officer of Turner Funds (the "Trust"), a business trust organized under the laws
of The Commonwealth of Massachusetts, hereby constitutes and appoints David G.
Lee, Kevin P. Robins, Richard J. Shoch and James W. Jennings, and each of them
singly, his true and lawful attorney-in-fact and agent with full power of
substitution and resubstitution, to sign for him and in his name, place and
stead, and in the capacity indicated below, to sign any or all amendments
(including post-effective amendments) to the Trust's Registration Statement on
Form N-1A under the provisions of the Investment Company Act of 1940 and the
Securities Act of 1933, each such Act as amended, and to file the same, with all
exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents, and each of them, acting alone, full power and authority to do and
perform each and every act and thing requisite or necessary to be done in and
about the premises, as fully to all intents and purposes as he might or could do
in person, hereby ratifying and confirming all that said attorneys-in-fact and
agents or any of them, or their substitute or substitutes, may lawfully do or
cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand and seal as
of the date set forth below.
/s/ David G. Lee Date: 4/5/96
______________________________ ________________
David G. Lee, President
3
<PAGE>
TURNER FUNDS
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that the undersigned trustee and/or
officer of Turner Funds (the "Trust"), a business trust organized under the laws
of The Commonwealth of Massachusetts, hereby constitutes and appoints David G.
Lee, Kevin P. Robins, Richard J. Shoch and James W. Jennings, and each of them
singly, his true and lawful attorney-in-fact and agent with full power of
substitution and resubstitution, to sign for him and in his name, place and
stead, and in the capacity indicated below, to sign any or all amendments
(including post-effective amendments) to the Trust's Registration Statement on
Form N-1A under the provisions of the Investment Company Act of 1940 and the
Securities Act of 1933, each such Act as amended, and to file the same, with all
exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents, and each of them, acting alone, full power and authority to do and
perform each and every act and thing requisite or necessary to be done in and
about the premises, as fully to all intents and purposes as he might or could do
in person, hereby ratifying and confirming all that said attorneys-in-fact and
agents or any of them, or their substitute or substitutes, may lawfully do or
cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand and seal as
of the date set forth below.
/s/ Alfred C. Salvato Date: 4/3/96
______________________________ ________________
Alfred C. Salvato, Trustee
4
<PAGE>
TURNER FUNDS
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that the undersigned trustee and/or
officer of Turner Funds (the "Trust"), a business trust organized under the laws
of The Commonwealth of Massachusetts, hereby constitutes and appoints David G.
Lee, Kevin P. Robins, Richard J. Shoch and James W. Jennings, and each of them
singly, his true and lawful attorney-in-fact and agent with full power of
substitution and resubstitution, to sign for him and in his name, place and
stead, and in the capacity indicated below, to sign any or all amendments
(including post-effective amendments) to the Trust's Registration Statement on
Form N-1A under the provisions of the Investment Company Act of 1940 and the
Securities Act of 1933, each such Act as amended, and to file the same, with all
exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents, and each of them, acting alone, full power and authority to do and
perform each and every act and thing requisite or necessary to be done in and
about the premises, as fully to all intents and purposes as he might or could do
in person, hereby ratifying and confirming all that said attorneys-in-fact and
agents or any of them, or their substitute or substitutes, may lawfully do or
cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand and seal as
of the date set forth below.
/s/ Mark D. Turner Date: 4/3/96
______________________________ ________________
Mark D. Turner, Trustee
5
<PAGE>
TURNER FUNDS
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that the undersigned trustee and/or
officer of Turner Funds (the "Trust"), a business trust organized under the laws
of The Commonwealth of Massachusetts, hereby constitutes and appoints David G.
Lee, Kevin P. Robins, Richard J. Shoch and James W. Jennings, and each of them
singly, his true and lawful attorney-in-fact and agent with full power of
substitution and resubstitution, to sign for him and in his name, place and
stead, and in the capacity indicated below, to sign any or all amendments
(including post-effective amendments) to the Trust's Registration Statement on
Form N-1A under the provisions of the Investment Company Act of 1940 and the
Securities Act of 1933, each such Act as amended, and to file the same, with all
exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents, and each of them, acting alone, full power and authority to do and
perform each and every act and thing requisite or necessary to be done in and
about the premises, as fully to all intents and purposes as he might or could do
in person, hereby ratifying and confirming all that said attorneys-in-fact and
agents or any of them, or their substitute or substitutes, may lawfully do or
cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand and seal as
of the date set forth below.
/s/ Robert E. Turner Date: 4/3/96
______________________________ ________________
Robert E. Turner, Trustee
<PAGE>
TURNER FUNDS
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that the undersigned trustee and/or
officer of Turner Funds (the "Trust"), a business trust organized under the laws
of The Commonwealth of Massachusetts, hereby constitutes and appoints David G.
Lee, Kevin P. Robins, Richard J. Shoch and James W. Jennings, and each of them
singly, his true and lawful attorney-in-fact and agent with full power of
substitution and resubstitution, to sign for him and in his name, place and
stead, and in the capacity indicated below, to sign any or all amendments
(including post-effective amendments) to the Trust's Registration Statement on
Form N-1A under the provisions of the Investment Company Act of 1940 and the
Securities Act of 1933, each such Act as amended, and to file the same, with all
exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents, and each of them, acting alone, full power and authority to do and
perform each and every act and thing requisite or necessary to be done in and
about the premises, as fully to all intents and purposes as he might or could do
in person, hereby ratifying and confirming all that said attorneys-in-fact and
agents or any of them, or their substitute or substitutes, may lawfully do or
cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand and seal as
of the date set forth below.
/s/ John T. Wholihan Date: 4/3/96
______________________________ ________________
John T. Wholihan, Trustee
7
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<PAGE>
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<NAME> ADVISORS' INNER CIRCLE
<SERIES>
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<NAME> TURNER GROWTH EQUITY
<MULTIPLIER> 1,000
<S> <C>
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<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<CIK> 0001006783
<NAME> ADVISORS' INNER CIRCLE
<SERIES>
<NUMBER> 131
<NAME> TURNER SMALL CAPITAL EQUITY
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> OCT-31-1995
<PERIOD-START> NOV-01-1994
<PERIOD-END> OCT-31-1995
<INVESTMENTS-AT-COST> 10,664
<INVESTMENTS-AT-VALUE> 13,668
<RECEIVABLES> 92
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
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<PAYABLE-FOR-SECURITIES> 688
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<SENIOR-EQUITY> 0
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<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> (8)
<ACCUMULATED-NET-GAINS> 922
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<ACCUM-APPREC-OR-DEPREC> 3,004
<NET-ASSETS> 13,072
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<NET-CHANGE-FROM-OPS> 3,522
<EQUALIZATION> 0
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<NUMBER-OF-SHARES-SOLD> 407
<NUMBER-OF-SHARES-REDEEMED> (35)
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<NET-CHANGE-IN-ASSETS> 4,744
<ACCUMULATED-NII-PRIOR> 0
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<OVERDIST-NET-GAINS-PRIOR> (27)
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