<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JANUARY 28, 1997
File No. 333-00641
File No. 811-07527
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OF 1933 /X/
POST-EFFECTIVE AMENDMENT NO. 4
------------------------------
and
REGISTRATION STATEMENT UNDER
INVESTMENT COMPANY ACT OF 1940 /X/
AMENDMENT NO. 5
---------------
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
(Name and Address of Agent for Service)
STEPHEN KNEELEY
TURNER INVESTMENT PARTNERS, INC.
1235 WESTLAKES DR., SUITE 350
BERWYN, PENNSYLVANIA 19312-2414
Copies to:
JAMES W. JENNINGS, ESQUIRE JOHN H. GRADY, JR., ESQUIRE
MORGAN, LEWIS & BOCKIUS LLP MORGAN, LEWIS & BOCKIUS LLP
2000 ONE LOGAN SQUARE 1800 M STREET, NW
PHILADELPHIA, PENNSYLVANIA 19103 WASHINGTON, DC 20036
- --------------------------------------------------------------------------------
CALCULATION OF REGISTRATION FEE UNDER THE SECURITIES ACT OF 1933
<TABLE>
<CAPTION>
================================================================================
<S> <C> <C> <C>
Title of Securities Being Amount Proposed Maximum Proposed Maximum
Registered Being Offering Price Aggregate Offering
Registered Per Unit Price
- --------------------------------------------------------------------------------
Units of beneficial $31,954,686 $ 13.37 per share $31,954,686
interest
================================================================================
</TABLE>
Registrant's Growth Equity Fund had actual aggregate redemptions of $ 52,227,905
for its fiscal year ended September 30, 1996; has used $ 20,273,219 of available
redemptions for reductions pursuant to Rule 24f-2(c) under the 1940 Act and has
previously used no available redemptions for reductions pursuant to Rule 24e-
2(a) of the 1940 Act during the current year. Registrant elects to use
redemptions in the aggregate amount of $ 31,954,686 for reductions in its
current amendment.
- --------------------------------------------------------------------------------
It is proposed that this filing become effective
(check appropriate box):
X immediately upon filing pursuant to paragraph (b)
___
___ on [date] pursuant to paragraph (b)
___ 60 days after filing pursuant to paragraph (a)
___ on [date] pursuant to paragraph (a) of Rule 485
- --------------------------------------------------------------------------------
DECLARATION PURSUANT TO RULE 24F-2: Pursuant to Rule 24f-2 under the
Investment Company Act of 1940 the Registrant has registered an indefinite
number or amount of its shares of beneficial interest under the Securities Act
of 1933. The Rule 24f-2 Notice for the Registrant's fiscal year ended September
30, 1996 was filed on November 27, 1996.
<PAGE>
TURNER FUNDS
CROSS REFERENCE SHEET
<TABLE>
<CAPTION>
N-1A ITEM NO.
LOCATION
- --------------------------------------------------------------------------------------------------------------------------
PART A -
<S> <C> <C>
Item 1. Cover Page Cover Page
Item 2. Synopsis Summary; Expense Summary
Item 3. Condensed Financial Information Financial Highlights
Item 4. General Discription of Registrant The Trust and the Funds; Investment Objectives; Invest-
ment 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 Infor-
mation-Shareholder Inquiries; General Information-Divi-
dends 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 Poli-
cies (Prospectus); Investment Limitations
Item 14. Management of the Registrant General Information - Trustees of the Trust (Prospec-
tus); Trustees and Officers of the Trust; The Admin-
istrator
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 Trans-
actions
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; Deter-
mination 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
Item 23. Financial Statements Financial Information
</TABLE>
<PAGE>
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.
* Included in Registrant's Annual Report to Shareholders
ii
<PAGE>
TURNER FUNDS
Investment Advisers
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 MIDCAP FUND
TURNER SMALL CAP FUND
TURNER FIXED INCOME 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 January 31, 1997 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.
Effective on the date that Turner Investment Partner's small cap product (which
includes the Small Cap Fund) reaches $500 million in net assets, the Fund will
be closed to most new investors. (As of January 31, 1997, Turner Investment
Partner's small cap product had net assets of approximately $440 milllion.)
Existing shareholders may continue to make investments in the Fund, and may open
additional accounts with the Fund, provided the new account is registered in the
same name or has the same taxpayer identification or social security number
assigned to it. In addition, certain classes of new investors may also purchase
shares. See "Purchase and Redemption of Shares."
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.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C>
Summary................................................................. 3
Expense Summary......................................................... 5
Financial Highlights.................................................... 7
The Trust and the Funds................................................. 11
Investment Objectives................................................... 11
Investment Policies..................................................... 11
Risk Factors............................................................ 13
Investment Limitations.................................................. 15
The Adviser............................................................. 15
The Administrator....................................................... 16
The Transfer Agent...................................................... 17
The Distributor......................................................... 17
Portfolio Transactions.................................................. 17
Purchase and Redemption of Shares....................................... 17
Performance............................................................. 21
Taxes................................................................... 21
General Information..................................................... 23
Description of Permitted Investments and Risk Factors................... 25
</TABLE>
-2-
<PAGE>
SUMMARY
The following provides basic information about the Turner Growth Equity Fund
(the "Growth Equity Fund"), Tuner Midcap Fund (the "Midcap Fund"), Tuner Small
Cap Fund (the "Small Cap Fund") and Tuner Fixed Income Fund (the "Fixed Income
Fund") (each a "Fund" and, collectively, the "Funds"). The Funds are the four
mutual funds comprising the Tuner Funds (the "Trust"). This summary is qualified
in its entirety by reference to the more detailed information provided elsewhere
in this Prospectus and in the Statement of Additional Information.
WHAT IS EACH FUND'S INVESTMENT OBJECTIVE AND PRIMARY POLICIES?
The Growth Equity Fund seeks appreciation. It invests primarily in a diversified
portfolio of common stocks that, in the Adviser's opinion, have strong earnings
growth potential.
The Midcap Fund seeks capital appreciation. It invests primarily in a
diversified portfolio of common stocks of issuers with, at the time of purchase,
market capitalizations between $500 million and $6 billion that the Adviser
believes offer strong earning growth potential.
The Small Cap Fund seeks capital appreciation. It invests primarily in a
diversified portfolio of common stocks of issuers with market capitalizations of
not more than $1 billion that the Adviser believes offer strong earnings growth
potential.
The Fixed Income Fund seeks total return through both current income and capital
appreciation. It invests primarily in fixed income securities of varying
maturities.
WHAT ARE THE RISKS INVOLVED WITH INVESTING IN THE FUNDS? The investment
policies of each Fund entail certain risks and considerations of which investors
should be aware. Each Fund invests in securities that fluctuate in value, and
investors should expect each Fund's net asset value per share to fluctuate in
value. The value of equity securities may be affected by the financial markets
as well as by developments impacting specific issuers. The values of fixed
income securities tend 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 securities. Each
of the Funds, other than the Midcap Fund, may purchase mortgage-backed
securities, and certain of the Funds may purchase securities of foreign issuers.
Investments in these securities involve certain other 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? Tuner Investment PArtners, Inc. (the "Adviser") serves as
the investment adviser to each Fund. See "Expense Summary' and "The Adviser."
-3-
<PAGE>
WHO IS THE ADMINISTRATOR? SEI Fund Resources (the "Administrator") serves as the
administrator and shareholder servicing agent for the Funds. See "Expenses
Summary" and "The Administrator."
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? The Funds require a minimum initial investment of
$10,000, 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 DISRRIBUTIONS 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".
-4-
<PAGE>
EXPENSE SUMMARY
SHAREHOLDER TRANSACTION EXPENSES
- ----------------------------------------------------------------------------
Sales Load Imposed on Purchases....................................... None
Sales Load Imposed on Reinvested Dividends............................ None
Deferred Sales Load................................................... None
Redemption Fees(1).................................................... None
Exchange Fees......................................................... None
- ----------------------------------------------------------------------------
(1) A wire redemption charge, currently $10.00, is deducted from the amount of
a Federal Reserve wire redemption payment made at the request of a
shareholder.
ANNUAL OPERATING EXPENSES(as a percentage of average net assets)
- ----------------------------------------------------------------------------
<TABLE>
<CAPTION>
Growth Equity Midcap Small Cap Fixed Income
Fund Fund Fund Fund
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Advisory Fees (after fee waivers or
reimbursements, if applicable) /(1)/ .75% .75% .92% .05%
12b-1 Fees None None None None
Other Expenses /(2)/ /(3)/ .25% .50% .33% .70%
- ----------------------------------------------------------------------------------------------------------------------
Total Operating Expenses (after fee waivers or
reimbursements) /(4)/ 1.00% 1.25% 1.25% .75%
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) The Advisor has agreed, on a voluntary basis, to waived its advisory fee
for the Growth Equity, Midcap, Small Cap and Fixed Income Funds to the
extent necessary to keep the "Total Operating Expenses" of the Funds during
the current fiscal year from exceeding 1.00%, 1.25%, 1.25% and .75%,
respectively. The Advisory Fee for the Midcap and Small Cap Funds have been
restated to reflect the effect of current and anticipated advisory fee
waivers and/or reimbursements. The Advisor reserves the right to terminate
its waivers at any wire in its sole discretion. Absent such waivers,
Advisory Fees for the Midcap Fund, Small Cap Fund and Fixed Income Fund
would be .75%, 1.00% and .50%, respectively.
(2) "Other Expenses" for the current fiscal year do not reflect the value of
arrangements whereby certain broker-dealers have agreed to pay certain
expenses of the Growth Equity, Midcap and Small Cap Funds in return for the
direction of a percentage of the Funds' brokerage transaction. As a result
of these arrangements, the amount of "Other Expenses" and "Total Operating
Expenses" deducted from the Growth Equity Fund's assets in the most recent
fiscal year was .16% and .94%, respectively, the amount of "Other Expenses"
and Total Operating Expenses" expected to be deducted from Midcap Fund's
assets is .50% and 1.25%, respectively, and the amount of "Other Expenses"
and "Total Operating Expenses" expected to be deducted from the Small Cap
Fund's assets are anticipated to be .29% and 1.25%, respectively.
(3) "Other Expenses" for the Fixed Income Fund are estimated for the current
fiscal year.
(4) Absent fee waivers, expense reimbursements, and assuming that certain
expenses were not paid for by certain broker-dealers in return for the
direction to them, of brokerage transactions, "Total Operating Expenses"
for the Growth Equity, Midcap, Small Cap and Fixed Income Funds would be
1.02%, 5.67%, 1.31% and 1.20%, respectively. The amounts for Growth Equity
and Small Cap Funds have been restated to reflect current expectations and
assumptions.
EXAMPLE
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Year would pay the following expenses on a 1 year 3 years 5 years 10 years
------ ------- ------- --------
$1,000 investment in a Fund assuming (1) a 5%
annual return and (2) redemption at the end of
each time period.
<S> <C> <C> <C> <C>
Growth Equity Fund $10 $32 $55 $122
Midcap Fund $13 $40 - -
Small Cap Fund $13 $40 $69 $151
Fixed Income Fund $8 $24 - -
- ----------------------------------------------------------------------------------------
</TABLE>
-5-
<PAGE>
The example is based upon total operating expenses of each Fund after waivers
and reimbursements, if any, as shown in the expense table. The example should
not be considered a representation of past or future expenses. Actual expenses
may be greater or less than those shown. The purpose of the expense table and
example is to assist the investor in understanding the various costs and
expenses that may be directly or indirectly borne by shareholders of the Funds.
Additional information may be found under "The Advisor" and "The Administrator".
-6-
<PAGE>
FINANCIAL HIGHLIGHTS
The following information for the fiscal year ended September 30, 1996 with
respect to the Growth Equity Fund has been audited by Ernst & Young LLP, the
Fund's independent auditors, whose report dated November 1, 1996 was
unqualified. On April 30, 1996, the Growth Equity Fund acquired all of the
assets and liabilities of the Turner Growth Equity Portfolio of The Advisors'
Inner Circle Fund. The information prior to that date relates to the Turner
Growth Equity Portfolio, The financial statements of the Turner Growth Equity
Portfolio of The Advisors' Inner Circle Fund were audited by Arthur Andersen
LLP. The following table should be read in conjunction with the Fund's financial
statements and the notes thereto. Additional performance information is set
forth in the Trust's 1996 Annual Report to Shareholders, which is available upon
request and without charge by calling 1-800-224-6312. All references herein to
the Growth Equity Fund shall be deemed to include the Turner Growth Equity
Portfolio.
For a Share Outstanding Throughout the Period:
<TABLE>
<CAPTION>
GROWTH EQUITY FUND
- -------------------------------------------------------------------------------------------------------------------------------
11/01/95 11/01/94 11/01/93 11/01/92 03/01/92(1)
to to to to to
9/30/96 10/31/95 10/31/94 10/31/93 10/31/92
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period........... $14.97 $12.46 $13.12 $10.40 $10.00
- -------------------------------------------------------------------------------------------------------------------------------
Income from Investment Operations
Net Investments Income....................... 0.02 0.10 0.10 0.09 0.03
Net Realized and Unrealized
Gain (Loss) on Investments................. 2.91 2.52 (0.66) 2.72 0.40
- -------------------------------------------------------------------------------------------------------------------------------
Total From Investment Operations............... 2.93 2.62 (0.56) 2.81 0.43
- -------------------------------------------------------------------------------------------------------------------------------
Less Distributions:
Dividends From Net Investment Income........... (0.02) (0.11) (0.10) (0.09) (0.03)
Distributions from Capital Gains............... (0.85) - - - -
Total Distributions.......................... (0.87) (0.11) (0.10) (0.09) (0.03)
- -------------------------------------------------------------------------------------------------------------------------------
Net Asset Value, End of Period................. $17.03 $14.97 $12.46 $13.12 $10.40
- -------------------------------------------------------------------------------------------------------------------------------
Total Returns................................... 20.61% 21.15% (4.28)% 27.08% 6.95%
- -------------------------------------------------------------------------------------------------------------------------------
Ratios and Supplemental Data
Net Assets, End of Period (000)................ $96,164 $115,819 $112,959 $53,327 $7,781
Ratios of Expenses To Average Net Assets....... 1.06%(2)* 1.03%/(2)/ 0.95% 100% 1.44%*
Ratio of Expenses To Average Net Assets
Excluding Fee Waivers........................ 1.06%(2)* 1.03%/(2)/ 1.08% 1.52% 2.55%*
Ratio Of Net Investment Income To Average
Net Assets................................... 0.03%(2)* 0.69%/(2)/ 0.86% 0.80% 0.73%*
Ratio of Net Investment Income to
Average Net Assets Excluding Fee Waivers..... 0.03%(2)* 0.69%/(2)/ 0.73% 0.28% (0.38)%*
Portfolio Turnover Rate........................ 147.79% 177.86% 164.81% 88.35% 205.00%
Average Contribution Rate(3)................... $0.06 - - - -
===============================================================================================================================
===============================================================================================================================
</TABLE>
* Annualized
(1) The Turner Growth Equity Portfolio commenced operations on March 11,
1992.
(2) The Ratios of Expenses to Average Net Assets (with and without waivers)
and Net Investment Income to Average Net Assets do not reflect the Adviser's
use of arrangements whereby certain broker-dealers have agreed to pay certain
expenses of the Turner Growth Equity Fund in return for the direction of a
percentage of the Fund's brokerage
-7-
<PAGE>
transactions. As a result of these arrangements, the Ratio of Expenses to
Average Net Assets was 0.94% for both the year ended 10/31/95 and the year
ended 9/30/96, and the Ratios of Net Income to Average Net Assets were
0.78% and 0.15% for the same periods described.
(3) Average communication rate paid per share for security purchases and
sales during the period. Presentations of the rate is required for fiscal
years beginning after September 1, 1965.
-8-
<PAGE>
Financial Highlights
For a Share Outstanding Throughout the Period-Unaudited
<TABLE>
<CAPTION>
Mid Cap Fund
- ---------------------------------------------------------------------------
10/01/96
to
12/31/96
(unaudited)
- ---------------------------------------------------------------------------
<S> <C>
Net Asset Value Beginning of Period............... $10.00
- ---------------------------------------------------------------------------
Income From Investment Operations:
Net Investment Income (Loss).................. (0.01)
Net Realized and Unrealized
Gain (Loss) on Investments.................... 0.34
- ---------------------------------------------------------------------------
Total From Investment Operations.................. $0.33
- ---------------------------------------------------------------------------
Less Distributions:
Dividends From Net Investment Income..............
Distributions from Capital Gains.................. $(0.11)
Total Distributions......................... $(0.11)
- ---------------------------------------------------------------------------
Net Asset Value End of Period..................... $10.22
- ---------------------------------------------------------------------------
Total Return...................................... 3.33%
- ---------------------------------------------------------------------------
Ratios and Supplemental Data
Net Assets End of Period (000).................... $1,713
Ratios of Expenses to Average Net Assets.......... 1.25%
Ratio of Expenses to Average Net Assets
Excluding Fee Waivers............................ 5.67%
Ratio of Net Investment Loss to Average
Net Assets....................................... (0.53)%
Ratio of Net Investment Loss to
Average Net Assets Excluding Fee Waivers......... (4.95)%
Portfolio Turnover Rate........................... 70.27%
Average Commission Rate /1/....................... $0.06
===========================================================================
</TABLE>
* Annualized
(1) Average commission ratio paid per share for security purchases and sales
during the period. Presentation of the rate is required for fiscal years
beginning after September 1, 1995.
-9-
<PAGE>
FINANCIAL HIGHLIGHTS
The following information for the fiscal year ended September 30, 1996 with
respect to the Small Cap Fund has been audited by Ernst & Young LLP, the Fund's
independent auditors, whose report dated November 1, 1996 was unqualified. On
April 30, 1996, the Small Cap Fund acquired all of the assets and liabilities of
the Turner Small Cap Portfolio of The Advisors' Turner Circle Fund. The
information prior to that date relates to the Turner Small Cap Portfolio. The
financial statements of the Turner Small Cap Portfolio of The Advisor's Inner
Circle Fund were audited by Arthur Andersen LLP. The following table should be
read in conjunction with the Fund's financial statements and the notes thereto.
Additional performance information is set forth in the Trust's 1996 Annual
Report to Shareholders, which is available upon request and without charge by
calling 1-800-224-6312. All references herein to the Small Cap Fund shall be
deemed to include the Turner Small Cap Portfolio.
<TABLE>
<CAPTION>
For a Share Outstanding Throughout the Period:
SMALL CAP FUND
- -------------------------------------------------------------------------------------------------------------------
11/01/95 11/01/94 02/07/94/(1)/
TO TO TO
9/30/96 10/31/95 10/31/94
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD........................ $16.08 $10.90 $10.00
- -------------------------------------------------------------------------------------------------------------------
Income From Investment Operations:
Net Investment Income (Loss)........................... (0.08) (0.06) (0.02)
Net Realized and Unrealized
Gain (Loss) on Investments............................. 8.17 5.24 0.92
- -------------------------------------------------------------------------------------------------------------------
Total From Investment Operations............................ 8.09 $5.18 .90
- -------------------------------------------------------------------------------------------------------------------
Less Distributions:
Dividends From Net Investment Income........................ -- -- --
Distributions from Capital Gains............................ (1.04) -- --
Total Distributions.................................... (1.04) --
- -------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD.............................. $23.13 $16.08 $10.90
- -------------------------------------------------------------------------------------------------------------------
TOTAL RETURNS............................................... 52.90% 47.52% 12.35%
- -------------------------------------------------------------------------------------------------------------------
RATIOS AND SUPPLEMENTAL DATA
Net Assets End of Period (000).............................. $67,452 $13,072 $4,806
Ratios Of Expenses To Average Net Assets.................... 1.25%* 1,25% 1.09%*
Ratio Of Expenses To Average Net Assets
Excluding Fee Waivers..................................... 1.54%* 2.39% 4.32%*
Ratio Of Net Investment Income To Average
Net Assets................................................ (0.88)%* (0.68)% (0.27)%*
Ratio Of Net Investment Income to
Average Net Assets Excluding Fee Waivers.................. (1.17)%* (1.82)% (3.50)%*
Portfolio Turnover Rate..................................... 149.00% 183.49% 173.92%
Average Commission Rate/(2)/................................ $0.06 -- --
===================================================================================================================
</TABLE>
* Annualized
(1) The Turner Small Cap Portfolio commenced operations on February 7, 1994.
(2) Average commission rate paid per share for security purchases and sales
during the period. Presentation of the rate is required for fiscal years
beginning after September 1, 1995.
-10-
<PAGE>
THE TRUST AND THE FUNDS
Turner Funds (the "Trust") offers shares in four separately-managed mutual
funds, each of which is a separate series of the Trust. Each share of each
mutual fund represents an undivided, proportionate interest in that mutual fund.
This Prospectus offers shares of the Trust's Turner Growth Equity Fund (the
"Growth Equity Fund"), Turner Midcap Fund (the "Midcap Fund"), Turner Small Cap
Fund (the "Small Cap Fund"), and Turner Fixed Income Fund (the "Fixed Income
Fund") (each a "Fund" and together, the "Funds").
INVESTMENT OBJECTIVES
GROWTH EQUITY FUND - The Growth Equity Fund seeks capital appreciation.
MIDCAP FUND - The Midcap Fund seeks capital appreciation.
SMALL CAP FUND - The Small Cap Fund seeks capital appreciation.
FIXED INCOME FUND - The Fixed Income Fund seeks total return through current
income and 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 total 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
economic 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.
MIDCAP FUND
The Midcap Fund invests primarily (and, under normal conditions, at least 65% of
its total assets) in a diversified portfolio of common stocks of issuers that at
the time of purchase have market capitalizations between $500 million and $6
billion that the Adviser believes to have a strong earnings growth potential.
The Fund seeks to purchase securities that are well diversified across economic
sectors and to maintain sector concentrations that approximate the economic
sector weightings comprising the Russell Midcap Growth Index (or such other
appropriate index, selected by the
-11-
<PAGE>
Adviser). Any remaining assets may be invested in securities issued by smaller
capitalization companies and larger capitalization companies, warrants and
rights to purchase common stocks, and it may invest up to 10% of its total
assets in ADRs. The Fund only will purchase securities that are traded on
registered exchanges or the over-the-counter market in the United States. The
Fund may purchase shares of other investment companies.
SMALL CAP FUND
The Small Cap Fund invests primarily (and, under normal conditions, at least 65%
of its total assets) in a diversified portfolio of common stocks of issuers with
market capitalizations of not more that $1 billion that the Adviser believes to
have strong earnings growth potential. Under normal market conditions, the Fund
will maintain a weighted average market capitalization of less than $1 billion.
The Fund seeks to purchase securities that are well diversified across economic
sectors and to maintain sector concentrations that approximate the economic
sector weightings comprising the Russell 2500 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.
FIXED INCOME FUND
The Fixed Income Fund invests as fully as practicable (and, under normal
conditions, at least 65% of its total assets) in a portfolio of fixed income
securities of varying levels of quality and maturity, that, in the Adviser's
opinion, are undervalued in the market. To determine a security's fair market
value, the Adviser will focus on the yield and credit quality of particular
securities based upon third-party evaluations of quality as well as the
Adviser's own research and analysis of the issuer. The Adviser will attempt to
diversify the Fund's holdings across the yield curve by holding short,
intermediate and long-term securities. Normally, the Fund will maintain a
dollar-weighted average portfolio duration that approximates the average
duration range of the Fund's benchmark index, the Lehman Brothers Aggregate Bond
Index (currently 4.6 years). Duration is a measure of the expected life of a
fixed income security on a cash flow basis. For example, assuming a portfolio
duration of eight years, an increase in interest rates of 1%, a parallel shift
in the yield curve, and no change in the spread relationships among securities,
the value of the portfolio would decline 8%. Using the same assumptions, if
interest rates decrease 1%, the value of the portfolio would increase 8%. The
Adviser considers duration an accurate measure of a security's expected life and
sensitivity to interest rate changes. The Adviser may increase or decrease this
average weighted duration when, in the Adviser's opinion, market conditions
warrant.
The Fund will purchase the following types of securities if at the time of
purchase, such securities either have been classified as investment grade by a
nationally recognized statistical rating organization ("NRSRO") or are
determined by the Adviser to be of comparable quality: (i) obligations issued or
guaranteed as to principal and interest by the U.S. Government or its agencies
or instrumentalities ("U.S. Government securities"); (ii) corporate bonds and
debentures of
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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 Standard and
Poor's Corporation ("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. Securities
rated below investment grade will not constitute more than 5% of the Fund's
total assets.
The Fund may invest in variable and floating rate obligations and in convertible
debt securities that meet the ratings criteria set forth above.
ALL FUNDS
Each Fund may purchase securities on a when-issued basis.
Each Fund may enter into futures and options transactions.
Each Fund may invest up to 15% of its net assets in illiquid securities.
Each Fund, except Midcap Fund, may purchase convertible securities.
Each Fund may, for temporary defensive purposes, invest up to 100% of its total
assets in money market instruments (including U.S. Government securities, bank
obligations, commercial paper rated in the highest rating category by an NRSRO,
repurchase agreements involving the foregoing securities), shares of money
market investment companies and cash.
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
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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, and the Midcap Fund may
invest to a lesser 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
falling interest rates, the values of outstanding fixed income securities
generally rise. Conversely, during periods of rising interest rates, the values
of such securities generally decline. Moreover, while securities with longer
maturities tend to produce higher yields, the prices of longer maturity
securities are also subject to greater market fluctuations as a result of
changes in interest rates. Changes by recognized agencies in the rating of any
fixed income security and in the ability of an issuer to make payments of
interest and principal also affect the value of these investments. Changes in
the value of theses 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.
When the mortgage-backed securities held by a Fund are prepaid, the Fund must
reinvest the proceeds in securities the yield of which reflects prevailing
interest rates, which may be lower than the yield of the pre-paid security.
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 September 30, 1996, was 147.79%. The annual
portfolio turnover rate for the Small Cap Fund for the fiscal period ended
September 30, 1996, was 149.00%. Under normal circumstances, the portfolio
turnover rate for the Midcap Fund is not expected to exceed 175%. An annual
portfolio turnover rate in excess of 100% may result from the Adviser's
investment strategy
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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
increased 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 Stated Government, its agencies or instrumentalities
and repurchase agreements involving such securities) if, as a result, more that
5% of the total assets of the Fund would be invested in the securities of such
issuer, or (ii) acquire more than 10% of the outstanding voting securities of
any one issuer. This restriction applies to 75% of each Fund's total assets.
2. 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 instrumentalitles 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, 1996 the Adviser had
discretionary management authority with respect to approximately $2.26 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
continuously 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 and Midcap Funds, 1.00%
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of those of the Small Cap Fund and .50% of those of the Fixed Income Fund. The
Adviser has voluntarily agreed to waive all or a portion of its fee and to
reimburse expenses of the Growth Equity, Midcap, Small Cap and Fixed Income
Funds in order to limit their total operating expenses (as a percentage of
average daily net assets on an annualized basis) to not more than 1.00%, 1.25%,
1.25% and 0.75% and, respectively. The Adviser received .75% for the Growth
Equity, Fund and .71% for its advisory services to the Small Cap Fund for the
fiscal year ended September 30, 1996. The Midcap Fund and Fixed Income Fund had
not commenced operations as of September 30, 1996. 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 and is co-manager of the
Midcap Fund. 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.
Christopher K. McHugh, Equity Portfolio Manager, is a co-manger of Midcap Fund.
Mr. Mchugh joined the Adviser in 1990. Prior to 1990, he was a Performance
Specialist with Providence Capital Management. He has 10 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 Fixed Income Fund. Mr. Turner joined Turner
Investment Partners, Inc. in 1990. Prior 1990, he was Vice President and Senior
Portfolio Manager with First Maryland Assets Management. He has 14 years of
investment experience.
THE ADMINISTRATOR
SEI Fund Resources (the "Administrator") provides the Trust with administrative
services, including regulatory reporting and all necessary office space,
equipment, personnel, and facilities.
For these administrative services, the Administrator is entitled to a fee from
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% on the next $150 million of such assets, .08% of
the next $300 million of such assets, and .075% of such assets in excess of $600
million. In respect to the Midcap Fund, for the first 6 months of the
operations, the Fund will pay no fee to the Administrator. For the second 6
month of the operations, the Midcap Fund will pay to the Administrator 25% of
the $75,000 minimum annual administration fee. Once the Fund's net assets exceed
$62.5 million, the Administrator will receive asset-based fees in accordance
with the schedule set forth above.
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The Administrator also serves as shareholder servicing agent for the Trust
under a shareholder servicing agreement with the Trust.
THE TRANSFER AGENT
DST Systems, Inc., 1004 Baltimore Street, Kansas City, Missouri 64105 (the
"Transfer Agent") serves as the transfer agent and dividend disbursing agent for
the Trust under a transfer agency agreement with the Trust.
THE DISTRIBUTOR
SEI Financial Services Company (the "Distributor") Oaks, Pennsylvania 19456, a
wholly-owned subsidiary of SEI Investments Company, acts as the Trust's
distributor pursuant to a distribution agreement (the "Distribution Agreement").
No compensation is paid to the Distributor for its distribution services.
Certain broker-dealers assist their clients in the purchase of shares from the
Distributor and charge a fee for this service in addition to 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,
Midcap and Small Cap Fund to designated broker-dealers (including the
Distributor) in connection with such broker-dealers' payment of certain Growth
Equity, Midcap and Small Cap 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
Purchases and redemptions may be made through the Transfer Agent on each day
that the New York Stock Exchange is open for business ("Business Day").
Investors may purchase and redeem shares of each Fund directly through the
Transfer Agent at: The Turner Funds, P.O. Box 419805, Kansas City, Missouri
64141-6805, by mail or wire transfer. All shareholders may place orders by
telephone, when market conditions are extremely busy, it is possible that
investors may experience difficulties placing orders by telephone and may wish
to place orders by mail. Purchases and redemptions of shares of the Fund may be
on any Business Day. Shares of each Fund are offered only to residents of states
in which such shares are eligible for purchase.
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The minimum initial investment in the Funds is $10,000, 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 of redemption of shares and
charge a fee for this service in addition to a Fund's public offering
price.
PURCHASES BY MAIL
An account may be opened by mailing a check or other negotiable bank draft
(payable to the name of the appropriate Fund) for $10,000 or more, together with
a completed Account Application to: The Turner Funds, P.O. Box 419805, Kansas
City, Missouri 64141-6805. Third-Party checks, credit cards, credit card checks
and cash will not be accepted. When purchases are made by check (including
certified or cashier's checks), redemption proceeds will not be forwarded until
the investment being redeemed had been in the account for 15 days. Subsequent
investments may also be mailed directly to the Transfer Agent.
PURCHASES BY WIRE TRANSFER
Shareholders having an account with a commercial bank that is a member of the
Federal Reserve System may purchase shares of the Fund by requesting their bank
to transmit funds by wire to: United Missouri Bank of Kansas, N.A; ABA#10-10-
00695; for Account Number 98-7060-116-8; Further Credit: [____________Fund]. The
shareholder's name and account number must be specified in the wire.
Initial Purchases: Before making an initial investment by wire, an investor must
first telephone 1-800-224-6312 to be assigned an account number. The investor's
name, account number, taxpayer identification number or Social Security number,
and address must be specified in the wire. In addition, an Account Application
should be promptly forwarded to: Turner Funds, P.O. Box 419805, Kansas City,
Missouri 64141-6805.
Subsequent Purchases: Additional investments may be made at any time through the
wire procedures described above, which must include a shareholder's name and
account number. The investor's bank may impose a fee for investments by wire.
Subsequent purchases may also be made by wire through the Automated Clearing
House ("ACH").
GENERAL INFORMATION REGARDING PURCHASES
A purchase request will be effective as of the day received by the Transfer
Agent if the Transfer Agent (or its authorized agent) receives the purchase
request in good order and payment before 4:00 p.m, Eastern time. A purchase
request is in good order if it is complete and accompanied by the appropriate
documentation, including an Account Application and additional documentation
required. Purchase requests in good order received after 4:00 p.m. Eastern time,
will be effective
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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.
WHO WILL BE ELIGIBLE TO INVEST IN THE SMALL CAP FUND AFTER THE FUND HAS CLOSED
TO NEW INVESTORS?
The Board of Trustees will close the Small Cap Fund to new investors when the
Adviser's small cap product (which includes the Small Cap Fund) reaches
approximately $ 500 million in total assets. If you are a shareholder of the
Small Cap Fund when it closes, you will be able to make additional investments
in the Fund and reinvest your dividends and capital gain distributions, even
after the Fund has closed. After the Fund has closed, you may open a new account
only if;
. your business or other organization is already a shareholder of the Fund and
you are opening an account for an employee benefit plan sponsored by that
organization or an affiliated organization;
. you are a current Fund trustee or officer, or an employee of Turner Investment
Partners, Inc., or a member of the immediate family of any of those people;
. you are an existing advisory client of Turner Investment Partners, Inc.; or
. you are a client of a financial adviser or planner who has client assets
invested in the Turner Funds as of the date of any proposed new investment in
the Fund.
In addition, an employee benefit plan which is a Fund shareholder may continue
to buy shares in the ordinary course of the plan's operations, even for new plan
participants.
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 loss for federal income tax purposes. The shareholder must have
received a current prospectus for the new Fund before any exchange will be
effected, and the exchange privilege may be exercised only in those states where
shares of the new Fund may legally be sold. If the Transfer Agent (or its
authorized agent) receives exchange instructions in writing or by telephone (an
"Exchange Request") in good order by 4:00 p.m, Eastern time, on any Business
Day, the exchange will be effected that day. The liability of the Fund or the
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Transfer Agent for fraudulent or unauthorized telephone instructions may be
limited as described below. The Trust reserves the right to modify or terminate
this exchange offer on 60 days' notice.
REDEMPTIONS
Redemption requests in good order received by the Transfer Agent (or its
authorized agent) prior to 4:00 p.m., Eastern time on any Business Day will be
effective that day. To redeem shares of the Fund, shareholders must place their
redemption orders with the Transfer Agent (or its authorized agent) prior to
4:00 p.m., Eastern time, on any Business Day. The redemption price of shares of
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 transaction 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.
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 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.
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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
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. Further information
concerning taxes is set forth in the Statement of Additional Information.
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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; however, such distributions which do qualify for
the dividends-received deduction may be subject to the corporate alternative
minimum tax. 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 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 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 by a Fund 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.
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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 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
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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 Turner Funds, P.O. Box 419805,
Kansas City, Missouri 64141-6805, or by calling 1-800-224-6312. Purchases,
exchanges and redemptions of shares should be made through the Transfer Agent by
calling 1-800-224-6312.
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 and the Midcap Fund are 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 for the Trust.
-24-
<PAGE>
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 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.
DERIVATIVES - Derivatives are securities that derive their value from other
securities, financial instruments or indices. The following are considered
derivative securities: options on futures, futures, options (e.g. puts and
---
calls), swap agreements, mortgage-backed securities (e.g. CMOs, REMICs, IOs and
---
POs), when issued securities and forward commitments, floating and
variable rate securities, convertible securities, "stripped" U.S. Treasury
securities (e.g. Receipts and STRIPs), privately issued stripped securities
---
(e.g. TGRs, TRs, and CATs). See elsewhere in the "Description of Permitted
---
Investments and Risk Factors" and in the Statement of Additional Information for
discussions of these various instruments.
ILLIQUID SECURITIES -- Illiquid securities are securities that cannot be
disposed of within seven business days at approximately the price at which they
are being carried on the Fund's books. Illiquid securities include demand
instruments with demand notice periods exceeding seven days, securities for
which there is no active secondary market, and repurchase agreements with
durations 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-
-25-
<PAGE>
quality commercial paper ratings; and (v) repurchase agreements involving any of
the foregoing obligations entered into with highly-rated banks and
broker-dealers.
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 (including principal and interest) on an agreed
upon date within a number of days from the date of purchase. Repurchase
agreements are considered loans under the 1940 Act.
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").
WARRANTS -- Warrants are instruments giving holders the right, but not the
obligation, to buy equity or fixed income securities of a company at a given
price during a specified period.
WHEN-ISSUED AND DELAYED DELIVERY SECURITIES -- When-issued or delayed delivery
transactions involve the purchase of an instrument with payment and delivery
taking place in the future. Delivery of and payment for these securities may
occur a month or more after the date of the purchase commitment. The Fund will
maintain with the Custodian a separate account with liquid, 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.
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.
-26-
<PAGE>
Trust:
TURNER FUNDS
Funds
TURNER GROWTH EQUITY FUND
TURNER MIDCAP FUND
TURNER SMALL CAP FUND
TURNER FIXED INCOME FUND
Adviser:
TURNER INVESTMENT PARTNERS, INC.
Distributor:
SEI FINANCIAL SERVICES COMPANY
Administrator:
SEI FUND RESOURCES
Legal Counsel:
MORGAN; LEWIS & BOCKIUS LLP
Independent Auditors:
ERNST & YOUNG LLP
<PAGE>
Trust:
TURNER FUNDS
Funds:
TURNER GROWTH EQUITY FUND
TURNER MIDCAP FUND
TURNER SMALL CAP FUND
TURNER FIXED INCOME 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"), Turner Midcap Fund
(the "Midcap Fund"), Turner Small Cap Fund (the "Small Cap Fund") and Turner
Fixed Income Fund (the "Fixed Income Fund") (each a "Fund" and, together, the
"Funds"). It is intended to provide additional information regarding the
activities and operations of the Turner Funds (the "Trust") and should be read
in conjunction with the Funds' Prospectus dated January 31, 1997. The
Prospectus may be obtained without charge by calling 1-800-224-6312.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
<S> <C>
THE TRUST........................................................... S-2
DESCRIPTION OF PERMITTED INVESTMENTS................................ S-2
INVESTMENT LIMITATIONS.............................................. S-6
THE ADVISER......................................................... S-8
THE ADMINISTRATOR................................................... S-9
THE DISTRIBUTOR..................................................... S-10
TRUSTEES AND OFFICERS OF THE TRUST.................................. S-10
COMPUTATION OF YIELD AND TOTAL RETURN............................... S-13
PURCHASE AND REDEMPTION OF SHARES................................... S-14
DETERMINATION OF NET ASSET VALUE.................................... S-15
TAXES............................................................... S-15
PORTFOLIO TRANSACTIONS.............................................. S-16
DESCRIPTION OF SHARES............................................... S-18
SHAREHOLDER LIABILITY............................................... S-19
LIMITATION OF TRUSTEES' LIABILITY................................... S-19
5% SHAREHOLDERS..................................................... S-19
EXPERTS............................................................. S-21
FINANCIAL INFORMATION............................................... S-22
APPENDIX............................................................ A-1
</TABLE>
JANUARY 31, 1997
<PAGE>
THE TRUST
This Statement of Additional Information relates only to the Turner Growth
Equity Fund (the "Growth Equity Fund"), Turner Midcap Fund (the "Midcap Fund"),
Turner Small Cap Fund (the "Small Cap Fund") and Turner Fixed Income Fund (the
"Fixed Income 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." 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
S-2
<PAGE>
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 purchases 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 to market on a daily basis.
Investment Company Shares
Each Fund may invest in shares of other investment companies, to the extent
permitted by applicable law 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."
S-3
<PAGE>
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 options") differ from exchange-traded options in
several respects. They are transacted directly with dealers and not with a
clearing corporation, and therefore entail the risk of non-performance by the
dealer. OTC options are available for a greater variety of securities and for a
wider range of expiration dates and exercise prices than are available for
exchange-traded options. Because OTC options are not traded on an exchange,
pricing is done normally by reference to information from a market maker. It is
the position of the SEC that OTC options are generally illiquid.
A Fund may purchase and write put and call options on foreign currencies (traded
on U.S. and foreign exchanges or over-the-counter markets) to manage its
exposure to
S-4
<PAGE>
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-5
<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.
When-Issued and Delayed Delivery Securities
When-issued or delayed delivery securities are subject to market fluctuations
due to changes in market interest rates and it is possible that the market value
at the time of settlement could be higher or lower than the purchase price if
the general level of interest rates has changed. Although a Fund generally
purchases securities on a when-issued or forward commitment basis with the
intention of actually acquiring securities for its investment portfolio, a Fund
may dispose of a when-issued security or forward commitment prior to settlement
if it deems appropriate.
INVESTMENT LIMITATIONS
Fundamental Policies
The following investment limitations (and those set forth in the Prospectus) are
fundamental policies of each Fund which cannot be changed with respect to a Fund
without the consent of the holders of a majority of that Fund's outstanding
shares. The term "majority of the outstanding shares" means the vote of (i) 67%
or more of a Fund's shares present at a meeting, if more than 50% of the
outstanding shares of 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 fund to purchase securities or require a
Fund to segregate assets are not considered to be borrowings. Asset coverage
of a 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.
S-6
<PAGE>
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.
The foregoing percentages (except with respect to the limitation on borrowing)
will apply at the time of the purchase of a security and shall not be considered
violated unless an excess or deficiency occurs immediately after or as a result
of a purchase of such security.
Non-Fundamental Policies
The following investment limitations are non-fundamental policies of each Fund
and may be changed with respect to a Fund by the Board of Trustees.
No Fund may:
1. Pledge, mortgage or hypothecate assets except to secure borrowings permitted
by the Fund's fundamental limitation on borrowing.
2. Invest in companies for the purpose of exercising control.
3. Purchase securities on margin or effect short sales, except that each Fund
may (i) obtain short-term credits as necessary for the clearance of security
transactions; (ii) provide initial and variation margin payments in
connection with transactions involving futures contracts and options on such
contracts; and (iii) make short sales "against the box" or in compliance
with the SEC's position regarding the asset segregation requirements imposed
by Section 18 of the 1940 Act.
S-7
<PAGE>
4. Invest its assets in securities of any investment company, except as
permitted by the 1940 Act.
5. Purchase or hold illiquid securities, i.e., securities that cannot be
disposed of for their approximate carrying value in seven days or less
(which term includes repurchase agreements and time deposits maturing in
more than seven days) if, in the aggregate, more than 15% of its net assets
would be invested in illiquid securities.
In addition, each Fund will invest no more than 5% of its net assets in short
sales, unregistered securities, futures contracts, options and investment
company securities. Unregistered securities sold in reliance on the exemption
from registration in Section 4(2) of the 1933 Act and securities exempt from
registration on re-sale pursuant to Rule 144A of the 1933 Act may be treated as
liquid securities under procedures adopted by the Board of Trustees.
THE ADVISER
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 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.
On April 30, 1996, the Growth Equity Fund, the Small Cap Fund and the Fixed
Income Fund acquired the assets of the Turner Growth Equity, Turner Small Cap
and Turner
S-8
<PAGE>
Fixed Income Portfolios, respectively, of The Advisors' Inner Circle Fund. For
the fiscal years ended October 31, 1994 and 1995, and September 30, 1996, the
Funds paid the following advisory fees:
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------
Advisory Fees Paid Advisory Fees Waived
- -----------------------------------------------------------------------------
1994 1995 1996 1994 1995 1996
- -----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Growth Equity $613,070 $897,405 $666,476 $114,486 $0 $0
Fund
- -----------------------------------------------------------------------------
Small Cap Fund * * $197,634 * * $82,694
- -----------------------------------------------------------------------------
Fixed Income Fund ** ** ** ** ** **
- -----------------------------------------------------------------------------
</TABLE>
* For the fiscal periods ending October 1994 and 1995, the Advisor waived all
fees due it under the Advisory Agreement with respect to the Small Cap Portfolio
and reimbursed expenses of $66,551 and $11,944, respectively.
** Not in operation during such period.
THE ADMINISTRATOR
The Trust and SEI Fund Resources (the "Administrator") have entered into an
administration agreement (the "Administration Agreement"). The Administration
Agreement provides that the Administrator shall not be liable for any error of
judgment or mistake of law or for any loss suffered by the Trust in connection
with the matters to which the Administration Agreement relates, except a loss
resulting from willful misfeasance, bad faith or gross negligence on the part of
the Administrator in the performance of its duties or from reckless disregard by
it of its duties and obligations thereunder. The Administration Agreement shall
remain in effect for a period of three (3) years after the effective date of the
agreement and shall continue in effect for successive periods of one (1) year
unless terminated by either party on not less than 90 days' prior written notice
to the other party.
The Administrator, a Delaware business trust, has its principal business offices
at Oaks, Pennsylvania 19456. SEI Financial Management Corporation ("SFM"), a
wholly-owned subsidiary of SEI Investments Company ("SEI"), is the owner of all
beneficial interests in the Administrator. SEI and its affiliates, including
the Administrator, are leading providers of funds evaluation services, trust
accounting systems, and brokerage and information services to financial
institutions, institutional investors and money managers. The Administrator and
its affiliates also serve as administrator to the following other mutual funds:
The Achievement Funds Trust, The Advisors' Inner Circle Fund, The Arbor Fund,
ARK Funds, Bishop Street Funds, CoreFunds, Inc., CrestFunds, Inc., CUFUND, FMB
Funds, First American Funds, Inc., First American Investment Funds, Inc., First
American Strategy Funds, Inc., Marquis Funds(R), Monitor Funds, Morgan Grenfell
Investment Trust, The PBHG Funds, Inc., The Pillar Funds, Profit Funds
Investment Trust, Rembrandt Funds(R), Santa Barbara Group of Mutual
S-9
<PAGE>
Funds, Inc., 1784 Funds(R), SEI Asset Allocation Trust, SEI Daily Income Trust,
SEI Index Funds, SEI Institutional Investments Trust, SEI Institutional Managed
Trust, SEI International Trust, SEI Liquid Asset Trust, SEI Tax Exempt Trust,
Stepstone Funds, STI Classic Funds and STI Classic Variable Trust.
On April 30, 1996, the Growth Equity Fund, the Small Cap Fund and the Fixed
Income Fund acquired the assets of the Turner Growth Equity, Turner Small Cap
and Turner Fixed Income Portfolios, respectively, of The Advisors' Inner Circle
Fund. For the fiscal years ended October 31, 1994 and 1995, and September 30,
1996, the Funds paid the following administrative fees:
<TABLE>
<CAPTION>
----------------------------------------------
Administrative Fees Paid
----------------------------------------------
1994 1995 1996
----------------------------------------------
<S> <C> <C> <C>
Growth Equity $164,423 $214,591 $136,587
Fund
----------------------------------------------
Small Cap Fund $ 54,658 $ 75,000 $ 68,682
----------------------------------------------
Fixed Income * * *
Fund
----------------------------------------------
</TABLE>
* Not in operation during such period.
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.
The Trustees and Executive Officers of the Trust, their respective dates of
birth, and their principal occupations for the last five years are set forth
below. Each may have
S-10
<PAGE>
held other positions with named companies during that period. Unless otherwise
noted, the business address of each Trustee and each Executive Officer is SEI
Investments Company, Oaks, Pennsylvania 19456. Certain officers of the Trust
also serve as officers of some or all of the following: The Achievement Funds
Trust, The Advisors' Inner Circle Fund, The Arbor Fund, ARK Funds, Bishop Street
Funds, CoreFunds, Inc., CrestFunds, Inc., CUFUND, FMB Funds, Inc., First
American Funds, Inc., First American Investment Funds, Inc., First American
Strategy Funds, Inc, Marquis Funds(R), Monitor Funds, Morgan Grenfell Investment
Trust, The PBHG Funds, Inc., The Pillar Funds, Profit Funds Investment Trust,
Rembrandt Funds(R), Santa Barbara Group of Mutual Funds, Inc., 1784 Funds(R),
SEI Asset Allocation Trust, SEI Daily Income Trust, SEI Index Funds, SEI
Institutional Investments Trust, SEI Institutional Managed Trust, SEI
International Trust, SEI Liquid Asset Trust, SEI Tax Exempt Trust, Stepstone
Funds, STI Classic Funds, and STI Classic Variable Trust, each of which is an
open-end management investment company managed by SEI Fund Resources or its
affiliates and, except for Profit Funds Investment Trust, Rembrandt Funds(R),
and Santa Barbara Group of Mutual Funds, Inc., are distributed by SEI Financial
Services Company.
ROBERT E. TURNER (DOB 11/26/56) - Trustee* - Chairman and Chief Investment
Officer of Turner Investment Partners, Inc. (the Adviser) since 1990.
JOAN LAMM-TENNANT, Ph.D. (DOB 10/20/52) - Trustee - 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 (DOB 01/09/58) - Trustee - Treasurer, Thomas Jefferson
University Health Care Pension Fund, since 1995, and Assistant Treasurer, 1988-
1995.
MARK D. TURNER (DOB 12/12/57) - Trustee* - President and Director of Fixed
Income Management of Turner Investment Partners, Inc. (the Adviser), since
1990.
JOHN T. WHOLIHAN (DOB 12/12/37) - Trustee - Professor, Loyola Marymount
University, since 1984.
DAVID G. LEE (DOB 04/16/52) - President and Chief Executive Officer - Senior
Vice President of the Administrator and Distributor since 1993. Vice President
of the Administrator and Distributor (1991-1993). President, GW Sierra Trust
Funds before 1991.
STEPHEN J. KNEELEY (DOB 02/09/63) - Vice President and Assistant Secretary -
Chief Operating Officer of Turner Investment Partners, Inc., since 1990.
TODD B. CIPPERMAN (DOB 02/14/66) - Vice President and Assistant Secretary - Vice
President and Assistant Secretary of SEI, the administrator and distributor
since 1995. Associate, Dewey Ballantine (law firm), 1994-1995. Associate,
Winston and Strawn (law firm), 1991-1994.
S-11
<PAGE>
JOSEPH P. LYDON (DOB 09/27/59) - Vice President and Assistant Secretary -
Director, Business Administration of Fund Resources, April 1995. Vice
President, Fund Group, Dreman Value Management, LP, President Dreman Financial
Services, Inc., prior to 1995.
SANDRA K. ORLOW (DOB 10/18/53) - Vice President and Assistant Secretary - Vice
President and Assistant Secretary of the Administrator and Distributor since
1988.
KEVIN P. ROBINS (DOB 04/15/61) - Vice President, Assistant Secretary - Senior
Vice President, General Counsel and Assistant Secretary of SEI, Senior Vice
President, General Counsel and Secretary of the Administrator and Distributor
since 1994. Vice President and Assistant Secretary of SEI, the Administrator
and Distributor 1992-1994. Associate, Morgan, Lewis & Bockius LLP(law firm) ,
1988-1992.
KATHRYN L. STANTON (DOB 11/19/58) - Vice President and Assistant Secretary,
Deputy General Counsel, Vice President and Assistant Secretary of SEI, Vice
President and Assistant Secretary of the Administrator and Distributor, since
1994. Associate, Morgan, Lewis & Bockius LLP(law firm), 1989-1994.
STEPHEN G. MEYER (DOB 07/12/65) - Controller, Chief Financial Officer - Vice
President and Controller of SEI Fund Resources since 1995. Director, Internal
Audit and Risk Management, SEI Corporation, 1992-1995. Senior Associate,
Coopers & Lybrand, 1990-1992.
BARBARA A. NUGENT (DOB 06/18/56) - Vice President and Assistant Secretary -Vice
President and Assistant Secretary of SEI, the Administrator and Distributor
since 1996. Associate, Drinker, Biddle & Reath (law firm) (1994-1996).
Assistant Vice President/Administration, Delaware Service Company, Inc. (1992-
1993): Assistant Vice President - Operations of Delaware Service Company, Inc.
(1988-1992)
MARC H. CAHN (DOB 06/19/57) - Vice President and Assistant Secretary - Vice
President and Assistant Secretary of SEI, the Administrator and Distributor
since 1996. Associate General Counsel, Barclays Bank PLC (1995-1996). ERISA
counsel, First Fidelity Bancorporation (1994-1995), Associate, Morgan, Lewis &
Bockius LLP (1989-1994).
JAMES W. JENNINGS (DOB 01/15/37) - Secretary - Partner, Morgan, Lewis & Bockius
LLP (law firm), counsel to the Trust, the Adviser, the Administrator and
Distributor.
JOHN H. GRADY, JR. (DOB 06/01/61) - Assistant Secretary - 1800 M Street, N.W.,
Washington, D.C. 20036, Partner, Morgan, Lewis & Bockius LLP, Counsel to the
Trust, Adviser, Administrator and Distributor.
EDWARD B. BAER (DOB 09/27/68) - Assistant Secretary - 1800 M Street, N.W.,
Washington, D.C. 20036, Associate, Morgan, Lewis & Bockius LLP, Counsel to the
Trust, Adviser, Administrator and Distributor, since 1995. Attorney,
Aquila
S-12
<PAGE>
Management Corporation, 1994. Rutgers University School of Law - Newark, 1991-
1994.
--------------------------
* Messrs. Robert Turner and Mark 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 only to the Trustees who
are not interested persons of the Trust. Compensation of Officers and
interested Trustees of the Trust is paid by the adviser or the manager.
The following table exhibits Trustee compensation for the fiscal year ended
September 30, 1996.
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------
Name of Person, Aggregate Pension Estimated Total
Position Compensation or Annual Compensation
From Retirement Benefits From Registrant
Registrant Benefits Upon and Fund
for the Accrued Retirement Complex Paid to
Fiscal Year as Part Trustees for the
Ended of Fund Fiscal Year Ended
September Expenses September 30,
30, 1996 1996
- -------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Robert Turner * * * *
- -------------------------------------------------------------------------------------
Mark Turner * * * *
- -------------------------------------------------------------------------------------
Joan Lamm-Tennant $3,500 N/A N/A $3,500
- -------------------------------------------------------------------------------------
Alfred C. Salvato $3,500 N/A N/A $3,500
- -------------------------------------------------------------------------------------
John T. Wholihan $3,500 N/A N/A $3,500
- -------------------------------------------------------------------------------------
</TABLE>
* Messrs. Robert Turner and Mark Turner are Trustees who may be deemed to be
"interested persons" of the Trust as the term is defined in the 1940 Act.
COMPUTATION OF YIELD AND TOTAL RETURN
From time to time the Trust may advertise yield and total return of the Funds.
These figures will be based on historical earnings and are not intended to
indicate future performance. No representation can be made concerning actual
future yields or returns. The yield of a Fund refers to the annualized income
generated by an investment in the Fund over a specified 30-day period. The yield
is calculated by assuming that the income generated by the investment during
that 30-day period is generated in each period over one year and is shown as a
percentage of the investment. In particular, yield will be calculated according
to the following formula:
Yield = 2[((a-b)/cd + 1)/6/ - 1] where a = dividends and interest earned during
the period; b = expenses accrued for the period (net of reimbursement); c = the
current daily
S-13
<PAGE>
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.
For the 30-day period ended September 30, 1996, the Growth Equity Fund's yield
was 0% and the Small Cap Fund's yield was 0%. The Fixed Income Fund and Midcap
Fund were not in operation during this 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.
For the fiscal year ended September 30, 1996, and for the period from March 11,
1992 (commencement of operations of the Turner Growth Equity Portfolio of The
Advisors' Inner Circle Fund) through September 30, 1996, the total return for
the Growth Equity Fund was 20.61% and 14.54%, respectively. For the fiscal year
ended September 30, 1996 and the period from February 7, 1994 (commencement of
operations of the Turner Small Cap Portfolio of The Advisors' Inner Circle Fund)
through September 30, 1996, the total return for the Small Cap Fund was 52.90%
and 40.53%, respectively. The Fixed Income Fund and Midcap Fund were not in
operation during these periods.
PURCHASE AND REDEMPTION OF SHARES
Purchases and redemptions may be made through the Transfer Agent on days when
the New York Stock Exchange is open for business. Currently, the weekdays on
which the Fund is closed for business are: New Year's Day, Presidents' Day, Good
Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving Day and
Christmas Day. Shares of each Fund are offered on a continuous basis.
It is currently the Trust's policy to pay all redemptions in cash. The Trust
retains the right, however, to alter this policy to provide for redemptions in
whole or in part by a distribution in-kind of securities held by a Fund in lieu
of cash. Shareholders may incur brokerage charges on the sale of any such
securities so received in payment of redemptions.
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
S-14
<PAGE>
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 service relies primarily on prices of actual market transactions as well
as on trade quotations obtained from third parties. The procedures of the
pricing service and its valuations are reviewed by the officers of the Trust
under the general supervision of the Trustees.
TAXES
The following is only a summary of certain tax considerations generally
affecting the 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, gains from the sale or
other disposition of stock or securities, or certain other income (including
gains from options, futures or forward contracts); (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
S-15
<PAGE>
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 are engaged in the same, similar or
related trades or business if the Fund owns at least 20% of the voting power of
such issuer.
Notwithstanding the Distribution Requirement described above, which requires
only that the Fund distribute at least 90% of its annual investment company
taxable income and does not require any minimum distribution of net capital gain
(the excess of net long-term capital gain over net short-term capital loss),
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.
S-16
<PAGE>
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 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-17
<PAGE>
On April 30, 1996, the Growth Equity Fund, the Small Cap Fund and the Fixed
Income Fund acquired the assets of the Turner Growth Equity, Turner Small Cap
and Turner Fixed Income Portfolios, respectively, of The Advisors' Inner Circle
Fund. For the fiscal years ended October 31, 1994, 1995 and September 30, 1996,
the Funds turnover rate was as follows:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
TURNOVER RATE
-----------------------------------------------------------
1994 1995 1996
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Growth Equity Fund 164.81% 177.86% 147.79%
- --------------------------------------------------------------------------------
Small Cap Fund 173.92% 183.49% 149.00%
- --------------------------------------------------------------------------------
Fixed Income Fund * * *
- --------------------------------------------------------------------------------
</TABLE>
* Not in operation during such period.
On April 30, 1996, the Growth Equity Fund, the Small Cap Fund and the Fixed
Income Fund acquired the assets of the Turner Growth Equity, Turner Small Cap
and Turner Fixed Income Portfolios, respectively, of The Advisors' Inner Circle
Fund. The Brokerage Commissions paid for each Fund for the fiscal years ended
October 31, 1994, 1995 and September 30, 1996, was as follows:
<TABLE>
<CAPTION>
--------------------------------------------------------------
Total Dollar Amount of Brokerage
Commissions Paid
-----------------------------------------
1994 1995 1996
--------------------------------------------------------------
<S> <C> <C> <C>
Growth $497,901 $581,138 $369,573
Equity Fund
-------------------------------------------------------------
Small Cap $22,495 $41,882 $128,154
Fund
-------------------------------------------------------------
Fixed Income * * *
Fund
-------------------------------------------------------------
</TABLE>
* Not in operation during such period.
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 proportion ate interest in that portfolio with each other share.
Shares are entitled upon liquidation to a pro rata share in the net assets of
the portfolio. Shareholders have no preemptive rights. All consideration
received by the Trust for shares of any portfolio and all assets in which such
consideration is invested would belong to that portfolio and would be
S-18
<PAGE>
subject to the liabilities related thereto. Share certificates representing
shares will not be issued.
SHAREHOLDER LIABILITY
The Trust is an entity of the type commonly known as a "Massachusetts business
trust." Under Massachusetts law, shareholders of such a trust could, under
certain circumstances, be held personally liable as partners for the obligations
of the trust. Even if, however, the Trust were held to be a partnership, the
possibility of the shareholders' incurring financial loss for that reason
appears remote because the Trust's Declaration of Trust contains an express
disclaimer of shareholder liability for obligations of the Trust, and requires
that notice of such disclaimer be given in each agreement, obligation or
instrument entered into or executed by or on behalf of the Trust or the
Trustees, and because the Declaration of Trust provides for indemnification out
of the Trust property for any shareholder held personally liable for the
obligations of the Trust.
LIMITATION OF TRUSTEES' LIABILITY
The Declaration of Trust provides that a Trustee shall be liable only for his
own willful defaults and, if reasonable care has been exercised in the selection
of officers, agents, employees or investment advisers, shall not be liable for
any neglect or wrongdoing of any such person. The Declaration of Trust also
provides that the Trust will indemnify its Trustees and officers against
liabilities and expenses incurred in connection with actual or threatened
litigation in which they may be involved because of their offices with the Trust
unless it is determined in the manner provided in the Declaration of Trust that
they have not acted in good faith in the reasonable belief that their actions
were in the best interests of the Trust. However, nothing in the Declaration of
Trust shall protect or indemnify a Trustee against any liability for his willful
misfeasance, bad faith, gross negligence or reckless disregard of his duties.
5% SHAREHOLDERS
As of January 6,1997, the following persons were the only persons who were
record owners (or to the knowledge of the Trust, beneficial owners) of 5% or
more of the shares of the Portfolios. The Trust believes that most of the
shares referred to below were held by the persons indicated in accounts for
their fiduciary, agency, or custodial customers.
Growth Equity Fund
<TABLE>
<CAPTION>
Name and Address Number of Shares Percent of Funds
- ---------------- ---------------- ----------------
<S> <C> <C>
Saul & Co. 905,399.48 12.69%
FBO Sheet Metal Annuity
c/o First Union National Bank
A/C 154600537
</TABLE>
S-19
<PAGE>
<TABLE>
<S> <C> <C>
401 South Tryon Street CMG-1151
Charlotte, NC 28202-1911
Retirement Plan for Employees of 683,904.23 9.59%
Bridgeport Hospital
c/o People's Bank Trust Department
850 Main Street, 13th Floor
Bridgeport, CT 06604-4917
Citicorp USA Inc. Pledgee 582,077.38 8.16%
McNeil Children's Trust
Loan Collateral Account
c/o Carole McNeil
P.O. Box 803598
Dallas, TX 75380-3598
Plumbers Local Union #690 558,315.37 7.83%
Pension Fund
2791 Southampton Road
Philadelphia, PA 19154-1296
Corestates Bank NA TTEE 547,876.45 7.68%
Montgomery, McCracken,
Walker & Rhoads
Retirement Plan 02320-07-A
P.O. Box 7829
Philadelphia, PA 19101-7829
Saxon & Co. TTEE 477,368.80 6.69%
FBO Duane Morris/Heckshel Trust
Account # 35 35 002 1029077
P.O. Box 7780-1888
Philadelphia, PA 19182
Society National Bank TTEE 365,956.26 5.13%
FBO Clevland Botanical Garden
P.O. Box 94870
Cleveland, OH 44101-4870
Small Cap Fund
Charles Schwab & Co. Inc 1,845,638.27 50.82%
Special Customer Account
FBO of Customers
Attn: Mutual Funds/Team A
101 Montgomery Street
San Francisco, CA 94104-4122
</TABLE>
S-20
<PAGE>
<TABLE>
<S> <C> <C>
Donaldson Lufkin Jenrette Secs Corp. 531,997.00 14.65%
Pershing Division
P.O. Box 2052
Jersey City, NJ 07399-0001
Midcap Fund
Wachovia Bank of NC NA 33,827.13 18.96%
Investment Advice IRA Master Plan
A/C for H. Vann Austin
A/C #33-86003-00 NC-31057
301 North Main Street P.O. Box 3073
Winston Salem, NC 27160-0001
Wachovia Bank of NC Customer 26,582.61 14.90%
for H. Vann Austin Trust
DTD 08-18-1995
U/A with H. Vann Austin
P.O. Box 3073 NC 31057
Winston Salem, NC 27150-0001
Mark D. Turner 26,483.62 14.85%
1235 Westlakes Drive, Suite 350
Berwyn, PA 19312-2414
Mark D. Turner & 20,021.09 11.22%
Christina M. Turner JTWROS
Attn: Mark Turner
1235 Westlakes Drive, Suite 1235
Berwyn, PA 19312-2407
Charles Schwab & Co. Inc. 13,313.44 7.46%
Special Customer Acct.
FBO of Customers
Attn: Mutual Funds/Team A
101 Montgomery Street
San Francisco, CA 94104-4122
</TABLE>
S-21
<PAGE>
FINANCIAL STATEMENTS
The Trust's financial statements for the fiscal year ended September 30, 1996,
including notes thereto and the report of Ernst & Young LLP thereon, are herein
incorporated by reference. The unaudited financial statements for the Midcap
Fund accompany this Statement of Additional Information. A copy of the 1996
Annual Report must accompany the delivery of this Statement of Additional
Information.
S-22
<PAGE>
STATEMENT OF NET ASSETS TURNER MID-CAP PORTFOLIO
December 31, 1996 Unaudited
<TABLE>
<CAPTION>
Market
Value
TURNER MID-CAP PORTFOLIO Shares (000)
- -------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCKS (95.3%)
AGRICULTURE (1.0%)
Pioneer Hi Bred International 250 $ 17
------
APPAREL/TEXTILES (1.1%)
Tommy Hilfiger* 395 19
------
AUTOMOTIVE (1.3%)
Harley Davidson 490 23
------
BEAUTY PRODUCTS (2.3%)
Alberto-Culver, C1 B 400 19
Avon Products 355 20
------
39
------
CHEMICALS (2.8%)
Air Products & Chemicals 260 18
Avery Dennison 460 16
BF Goodrich 350 14
------
48
------
COMMUNICATIONS EQUIPMENT (4.0%)
Andrew* 250 13
Cascade Communications* 320 18
Omnipoint* 910 18
Tellabs* 510 19
------
68
------
COMPUTERS & SERVICES (3.3%)
HBO 370 22
Seagate Technology* 400 16
Sterling Commerce* 530 19
------
57
------
DRUGS (1.0%)
Sigma Aldrich 270 17
------
ENVIRONMENTAL SERVICES (2.9%)
Republic Industries* 800 25
USA Waste Services* 790 25
------
50
------
FINANCIAL SERVICES (4.6%)
First USA Paymentech* 650 22
Green Tree Financial 500 19
Household International 200 18
The Money Store 720 20
------
79
------
FOOD, BEVERAGE & TOBACCO (2.0%)
Starbucks* 640 18
UST 500 16
------
34
------
HOTELS & LODGING (2.4%)
HFS* 380 $ 23
Hilton Hotels 700 18
------
41
------
HOUSEHOLD PRODUCTS (1.3%)
Danaher 470 22
------
INSURANCE (3.6%)
CRA Managed Care* 500 22
Pacificare Health Systems, C1 B* 195 17
SunAmerica 500 22
------
61
------
MACHINERY (1.2%)
Applied Materials* 590 21
------
MEASURING DEVICES (0.9%)
Waters* 540 16
------
MEDICAL PRODUCTS & SERVICES (5.4%)
Health Management
Associates, Class A* 1,050 24
Healthsouth Rehabilitation* 570 22
Phycor* 820 23
Universal Health Services* 845 24
------
93
------
METALS & MINING (1.1%)
Titanium Metals* 590 19
------
MISCELLANEOUS BUSINESS SERVICES (11.3%)
Altera* 215 16
BMC Software* 400 17
CUC International* 800 19
Electronic Arts* 500 15
Fore Systems* 520 17
Parametic Technology* 415 21
Peoplesoft* 380 18
Rational Software* 560 22
Remedy* 430 23
Teradyne* 530 13
Xylan* 455 13
------
194
------
MISCELLANEOUS CONSUMER SERVICES (2.5%)
Accustaff* 1,050 22
Service International 710 20
------
42
------
MISCELLANEOUS MANUFACTURING (2.5%)
International Game Technology 1,230 22
Rmi Titanium* 740 21
------
43
------
</TABLE>
<PAGE>
STATEMENT OF NET ASSETS TURNER MID-CAP PORTFOLIO
December 31, 1996 Unaudited
<TABLE>
<CAPTION>
Market
TURNER MID-CAP PORTFOLIO Value
(Concluded) Shares (000)
- ------------------------------------------------------------------------------
<S> <C> <C>
OFFICE FURNITURE & FIXTURES (1.1%)
Lear* 565 $ 19
PAPER & PAPER PRODUCTS (1.1%) --------
Fort Howard* 640 18
--------
PETROLEUM & FUEL PRODUCTS (5.0%)
Apache 690 24
Flores & Rucks* 510 27
Houston Exploration* 1,000 18
Louisiana Land & Exploration 310 17
--------
86
--------
PETROLEUM REFINING (2.2%)
Abacan Resource* 2,250 20
Polymer Group* 1,270 18
--------
38
--------
PROFESSIONAL SERVICES (2.5%)
Gartner Group* 700 27
Paychex 350 18
--------
45
--------
RETAIL (10.7%)
Bed Bath & Beyond* 850 21
Borders Group* 615 22
Boston Market* 710 25
Corporate Express* 800 24
Kroger* 420 20
PetSmart* 825 18
Rite Aid 525 21
Saks Holdings* 550 15
Williams Sonoma* 500 18
--------
184
--------
SEMI-CONDUCTORS/INSTRUMENTS (7.0%)
Atmel* 600 20
Microchip Technology* 450 23
Micron Technology 610 18
National Semiconductor* 710 17
Novellus Systems* 200 11
VLSI Technology* 670 16
Xilinx* 380 14
--------
119
--------
SPECIALTY MACHINERY (1.3%)
U.S. Filter* 730 23
--------
TELEPHONES & TELECOMMUNICATION (3.3%)
Cincinnati Bell 290 18
LCI International* 690 15
Teleport Communications Group* 750 23
--------
56
--------
</TABLE>
<TABLE>
<CAPTION>
Shares/Face Market
Amount Value
(000) (000)
- -------------------------------------------------------------------------------
<S> <C> <C>
WHOLESALE (2.5%)
Amerisource Health* 530 $ 26
Ingram Micro 685 16
--------
42
--------
TOTAL COMMON STOCKS
(Cost $1,610) 1,633
--------
REPURCHASE AGREEMENT (1.0%)
Lehman Brothers
5.58%, dated 12/31/96,
matures 01/02/97, repurchase
price $16,970 (collateralized
by U.S. Treasury Note, par
value $17,188, 6.75%,
matures 06/30/99: market
value $17,532) $17 17
--------
TOTAL REPURCHASE AGREEMENT
(Cost $17) 17
--------
TOTAL INVESTMENTS (96.3%)
(Cost $1,627) 1,650
--------
OTHER ASSETS AND LIABILITIES, NET (3.7%) 63
--------
NET ASSETS:
Portfolio Shares (unlimited
authorization -- no par value)
based on 167,640 outstanding
shares of beneficial interest 1,650
Accumulated net investment loss (2)
Accumulated net realized
gain on Investments 42
Net unrealized appreciation
on investments 23
--------
TOTAL NET ASSETS (100.0%) $1,713
========
Net Asset Value, Offering and
Redemption Price Per Share $10.22
========
</TABLE>
*Non-Income producing security
The accompanying notes are an integral part of the financial statements.
<PAGE>
Statement of Operations
<TABLE>
<CAPTION>
Fund Name Turner Mid Cap Fund
----------------
(IN THOUSANDS)
<S> <C>
Investment Income:
Dividends $1
Interest 1
----------------
Total Investment Income 2
================
Expenses:
Investment Advisory Fees 2
Investment Advisory Fee Waiver (15)
Custodian Fees 4
Transfer Agent Fees 3
Professional Fees 2
Trustee Fees 1
Registration Fees 5
Printing Fees 1
Other Fees 1
Total Expenses 4
================
Net Investment Loss (2)
================
Net Realized Gain from Securities Sold 60
Net Unrealized Appreciation of Investment Securities 23
================
Net Realized and Unrealized Gain on Investments 83
================
Net Increase in Net Assets Resulting From Operations 81
================
</TABLE>
<PAGE>
Statement of Changes in Net Assets
<TABLE>
<CAPTION>
Fund Name: Turner Mid Cap Fund ---------------------
(IN THOUSANDS)
<S> <C>
Investments Activities:
Net Investment Loss ($2)
Net Realized Gain on Securities Sold 60
Net Unrealized Appreciation of Investment Securities 23
---------------------
Net Income in Net Assets Resulting From Operations 81
=====================
Distributions in Shareholders:
Net Investment Income 0
Realized Capital Gain (18)
---------------------
Total Distributions (18)
=====================
Shares Transactions:
Proceeds from Shares Issued 1,738
Proceeds from Shares Issued in Lieu of
Cash Distributions 17
Cost of Shares Redeemed (105)
Increase in Net Assets From Capital Shares Transaction 1,650
=====================
Total Increase in Net Assets 1,713
=====================
Net Assets:
Beginning of Period 0
---------------------
End of Period $1,713
=====================
Shares Issued And Redeemed:
Issued 176
Issued in Lieu of Cash Distributions 2
Redeemed (10)
---------------------
Net Increase in Shares Transactions 168
=====================
</TABLE>
<PAGE>
Notes to Financial Statements (Unaudited)
December 31, 1996
1. Organization:
Turner Funds (the "Trust") a Massachusetts business trust, is registered under
the Investment Company Act of 1940, as amended, as a diversified open-end
management investment company with four funds: the Turner Small Cap Fund, the
Turner Growth Equity Fund, the Turner Midcap Fund, and the Turner Fixed Income
Fund. These statements relate only to the Turner Midcap Fund (the "Fund"). The
assets of each fund are segregated, and a shareholder's interest is limited to
the fund in which shares are held. The Funds' prospectus provides a description
of each Fund's investment objectives, policies and strategies.
2. Significant Accounting Policies:
The following is a summary of the significant accounting policies followed by
the Fund.
Security Valuation - Investments in equity securities which are traded
on a national exchange (or reported on the NASDAQ national market
system) are stated at the last quoted sales price if readily available
for such equity securities on each business day; other equity securities
traded in the over-the-counter market and listed equity securities for
which no sale was reported on that date are stated at the last quoted
bid price. 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 - The Fund's intention to qualify as a regulated
investment company by complying with the appropriate provisions of the
Internal Revenue Code of 1986, as amended. Accordingly, no provision for
Federal income taxes is required.
Security Transactions and Related Income - Security transactions are
accounted for on the date the security is purchased or sold (trade
date). Dividend income is recognized on the ex-dividend date, and
interest income is recognized on the accrual basis. Costs used in
determining realized gains and losses on the sales of investment
securities are those of the specific securities sold during the
respective holding period.
Net Asset Value Per Share - The net asset value per share of the Fund is
calculated on each business day, by dividing the total value of the
Fund's assets, less liabilities, by the number of shares outstanding.
Repurchase Agreements - Securities pledged as collateral for repurchase
agreements are held by the custodian bank until the respective
agreements mature. Provisions of the repurchase agreements ensure that
the market value of the collateral, including accrued interest thereon,
is sufficient in the event of default of the counterparty. If the
counterparty defaults and the value of the collateral declines or if the
counterparty enters an insolvency proceeding, realization of the
collateral by the Fund may be delayed or limited.
Other - Expenses that are directly related to the Fund 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.
Dividends from net investment income and distributions from net realized
capital gains are determined in accordance with U.S. federal income tax
regulations, which may differ from those amounts determined under
generally accepted accounting 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
or
<PAGE>
Notes to Financial Statements (Unaudited)
December 31, 1996
accumulated net realized gain, as appropriate, in the period that the
differences arise.
The preparation of financial statements in conformity with generally
accepted accounting principals requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities
and disclosure of contingent assets and liabilities at the date of the
financial statements, and the reported amounts of revenues and expenses
during the reported period. Actual results could differ from those
estimates.
3. Transactions with Affiliates:
Certain officers and trustees of the Trust are also officers of SEI Fund
Resources (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:
As of April 30, 1996, the Trust and the Administrator entered into an agreement
under which the Administrator provides management and administrative services
for an annual fee of .12% of the average daily net assets of each of the Funds
up to $75 million, .10% on the next $75 million, .09% on the next $150 million,
.08% on the next $300 million and .075% of such assets in excess of $600
million. In respect to the Midcap Fund, for the first 6 months of operations,
the Fund will pay no fee to the Administrator. For the second 6 months of
operations, the Midcap Fund will pay to the Administrator 25% of the $75,000
minimum annual administration fee. Once the Fund's net assets exceed $62.5
million, the Administrator will receive asset-based fees in accordance with the
schedule set forth above.
DST Systems, Inc. (the "Transfer Agent") serves as the transfer agent and
dividend disbursing agent for the Fund under a transfer agency agreement with
the Trust.
The Trust and the Distributor are parties to a Distribution Agreement dated
April 30, 1996. The Distributor receives no fees for its distribution services
under this agreement.
5. Investment Advisory and Custodian Agreements:
The Trust and Turner Investment Partners, Inc. (the "Adviser") are parties to an
Investment Advisory Agreement dated April 30, 1996, under which the Adviser
receives an annual fee equal to .75% of the average daily net assets of the
Midcap Fund. The Adviser has voluntarily agreed 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 Midcap
Fund. 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 Fund or
which securities are to be purchased or sold by the Fund.
6. Investment Transactions:
The cost of security purchases and the proceeds from security sales, other than
short-term investments, for the three month period ended December 31, 1996 are
as follows:
<TABLE>
<CAPTION>
Midcap
Fund
(000)
---------
<S> <C>
Purchases
Government.. $ 0
Other....... 1,976
Sales
Government.. $ 0
Other....... 866
</TABLE>
At December 31, 1996, the total cost of securities and the net realized gains or
losses on securities sold for
<PAGE>
Notes to Financial Statements (Unaudited)
December 31, 1996
Federal income tax purposes was not materially different from amounts reported
for financial reporting purposes. The aggregate gross unrealized appreciation
and depreciation for securities held by the Fund at September 30, 1996, are as
follows:
<TABLE>
<CAPTION>
Midcap
Fund
(000)
--------
<S> <C>
Aggregate gross unrealized
appreciation . . . . . . . . . . . . . $18,009
Aggregate gross unrealized
depreciation . . . . . . . . . . . . . (1,429)
-------
Net unrealized appreciation . . . . . . . . $16,580
</TABLE>
<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.
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
A-1
<PAGE>
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 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
A-2
<PAGE>
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, although such capacity may be susceptible to adverse
changes in business, economic or financial conditions.
A-3
<PAGE>
PART C: OTHER INFORMATION
Item 24. Financial Statements and Exhibits:
(a) Financial Statements
Part A Financial Highlights
Part B The following unaudited financial statements for the
Midcap Fund as of December 31, 1996 are included as part
of the Statement of Additional Information.
Schedule of Investments
Statement of Assets & Liabilities
Statement of Operations
Statement of Changes in Net Assets
Financial Highlights
Notes to Financial Statements
The following audited financial statements as of
September 30, 1996 and the report of the independent
auditors, Ernst & Young, LLP dated November 1, 1996 are
incorporated by reference to the Statement of Additional
Information from Form N-30D filed on November 27, 1996
with Accession Number 0000935069-96-000152.
Schedule of Investments
Statement of Assets & Liabilities
Statement of Operations
Statement of Changes in Net Assets
Financial Highlights
Notes to Financial Statements
(b) Additional Exhibits
1 Agreement and Declaration of Trust of the Registrant, dated
January 26, 1996 (incorporated herein by reference to Initial
Registration Statement filed on February 1, 1996).
2 By-Laws of the Registrant (incorporated herein by reference to
Initial Registration Statement filed on February 1, 1996).
5(a) Investment Advisory Agreement between the Registrant and Turner
Investment Partners, Inc., as originally filed with Pre-
Effective Amendment No. 1 to Registration Statement filed April
19, 1996, is filed herewith.
6(a) Distribution Agreement between the Registrant and SEI Financial
Services Company, as originally filed with Pre-Effective
Amendment No. 1 to Registration Statement filed April 19, 1996,
is filed herewith.
8(a) Custodian Agreement between the Registrant and CoreStates Bank,
N.A., as originally filed with Pre-Effective Amendment No. 1 to
Registration Statement filed April 19, 1996, is filed
herewith.
C-1
<PAGE>
9(a) Administration Agreement between the Registrant and SEI
Financial Management Corporation, as originally filed with Pre-
Effective Amendment No. 1 to Registration Statement filed April
19, 1996, is filed herewith.
9(b) Form of Agency Agreement between the Registrant and DST
Systems, Inc., (incorporated herein by reference to Pre-
Effective Amendment No. 1 to Registration Statement filed April
19, 1996).
10 Opinion and Consent of Counsel, (incorporated herein by
reference to Pre-Effective Amendment No. 1 to Registration
Statement filed April 19,1996).
11(a)Consent of Arthur Andersen LLP is filed herewith.
11(b)Consent of Ernst & Young LLP is filed herewith.
16 Performance Calculations, (incorporated herein by reference to
Pre-Effective Amendment No. 1 to Registration Statement filed
April 19, 1996).
17 Financial Data Schedules are filed herewith.
24 Powers of Attorney for Joan Lamm-Tennant, David G. Lee, Alfred
C. Salvato, Mark Turner, Robert E. Turner, John T. Wholihan,
and Stephen G. Meyer are 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. SEI Financial Management Corporation is
the owner of all beneficial interest in the Administrator and is a subsidiary of
SEI Investments Company, which also controls the distributor of the Registrant,
SEI Financial Services Company, as well as to other corporations engaged in
providing various financial and record keeping services, primarily to bank trust
departments, pension plan sponsors, and investment managers.
Item 26. Number of Holders of Securities, as of January 6, 1997:
Turner Ultra Large Cap Fund 0
---
Turner Growth Equity Fund 168
---
Turner Midcap Fund 51
---
Turner Small Cap Fund 308
---
Turner Fixed Income Fund 0
---
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
C-2
<PAGE>
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:
<TABLE>
<CAPTION>
<S> <C>
SEI Daily Income Trust July 15, 1982
SEI Liquid Asset Trust November 29, 1982
SEI Tax Exempt Trust December 3, 1982
SEI Index Funds July 10, 1985
SEI Institutional Managed Trust January 22, 1987
SEI 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/(R)/ June 1, 1993
The PBHG Funds, Inc. July 16, 1993
Marquis Funds/(R)/ August 17, 1993
Morgan Grenfell Investment Trust January 3, 1994
</TABLE>
C-3
<PAGE>
<TABLE>
<S> <C>
The Achievement Funds Trust December 27, 1994
Bishop Street Funds January 27, 1995
CrestFunds, Inc. March 1, 1995
STI Classic Variable 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
SEI Institutional Investments Trust June 14, 1996
First American Strategy Funds, Inc. October 1, 1996
</TABLE>
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 Oaks, PA 19456.
<TABLE>
<CAPTION>
Position and Office Positions and Offices
Name with Underwriter with Registrant
- ---- ---------------- ---------------
<S> <C> <C>
Alfred P. West, Jr. Director, Chairman & Chief --
Executive Officer
Henry H. Greer Director, President & Chief --
Operating Officer
Carmen V. Romeo Director, Executive Vice --
President & Treasurer
Gilbert L. Beebower Executive Vice President --
Richard B. Lieb Executive Vice President, --
President-Investment Services
Division
Leo J. Dolan, Jr. Senior Vice President --
Carl A. Guarino Senior Vice President --
Jerome Hickey Senior Vice President --
Larry Hutchison Senior Vice President --
Steven Kramer Senior Vice President --
David G. Lee Senior Vice President President
William Madden Senior Vice President --
Jack May Senior Vice President --
A. Keith McDowell Senior Vice President --
Dennis J. McGonigle Senior Vice President --
Hartland J. McKeown Senior Vice President --
Barbara J. Moore Senior Vice President --
James V. Morris Senior Vice President --
Steven Onofrio Senior Vice President --
Kevin P. Robins Senior Vice President, Vice President,
General Counsel & Secretary Assistant Secretary
Robert Wagner Senior Vice President --
</TABLE>
C-4
<PAGE>
<TABLE>
<S> <C> <C>
Patrick K. Walsh Senior Vice President --
Kenneth Zimmer Senior Vice President --
Robert Aller Vice President --
Marc H. Cahn Vice President & Assistant
Secretary Vice President,
Assistant Secretary
Gordon W. Carpenter Vice President --
Todd Cipperman Vice President & Assistant
Secretary Vice President,
Assistant Secretary
Robert Crudup Vice President & Managing
Director --
Ed Daly Vice President --
Jeff Drennen Vice President --
Mick Duncan Vice President and Team
Leader --
Vic Galef Vice President & Managing
Director --
Kathy Heilig Vice President --
Michael Kantor Vice President --
Samuel King Vice President --
Kim Kirk Vice President & Managing
Director --
Donald H. Korytowski Vice President --
John Krzeminski Vice President & Managing
Director --
Robert S. Ludwig Vice President and Team
Leader --
Vicki Malloy Vice President and Team
Leader --
Carolyn McLaurin Vice President & Managing
Director --
W. Kelso Morrill Vice President --
Barbara A. Nugent Vice President & Assistant
Secretary Vice President,
Assistant Secretary
Sandra K. Orlow Vice President & Assistant
Secretary Vice President,
Assistant Secretary
Donald Pepin Vice President & Managing
Director --
Larry Pokora Vice President --
Kim Rainey Vice President --
Paul Sachs Vice President --
Mark Samuels Vice President & Managing
Director --
Steve Smith Vice President --
Daniel Spaventa Vice President --
Kathryn L. Stanton Vice President, Deputy
General Counsel & Assistant
Secretary Vice President,
Assistant Secretary
Wayne M. Withrow Vice President & Managing
Director --
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:
C-5
<PAGE>
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 Fund Resources
Oaks, Pennsylvania 19456
(c) With respect to Rules 31a-1(b)(5), (6), (9) and (10) and 31a-1(f), the
required books and records are maintained at the principal offices of the
Registrant's Adviser:
Turner Investment Partners, Inc.
1235 Westlakes Drive, Suite 350
Berwyn, Pennsylvania 19312
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 certified for the Ultra Large
Cap Fund, within 4-6 months from the effective date of the Registrant's Post-
Effective Amendment No. 3.
Registrant hereby undertakes to furnish each prospective person to
whom a prospectus is delivered with a copy of the Registrant's latest annual
report to shareholders, when such annual report is issued containing information
called for by Item 5A of Form N-1A, upon request and without charge.
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 certifies that it meets all of
the requirements for the effectiveness of this Registration Statement pursuant
to Rule 485(b) under the Securities Act of 1933 and has duly caused this Post-
Effective Amendment No. 4 to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Wayne, Commonwealth of Pennsylvania on
the 28th day of January 1997.
TURNER FUNDS
By: /s/ David G. Lee
---------------------
David G. Lee
President
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.
<TABLE>
<CAPTION>
<S> <C> <C>
* Trustee January 28, 1997
-----------------------
Alfred C. Salvato
* Trustee January 28, 1997
-----------------------
Joan Lamm-Tennant
* Trustee January 28, 1997
-----------------------
Mark D. Turner
* Trustee January 28, 1997
-----------------------
Robert E. Turner
* Trustee January 28, 1997
-----------------------
John T. Wholihan
/s/ David G. Lee President and Chief January 28, 1997
-----------------------
David G. Lee Executive Officer
/s/ Stephen G. Meyer Controller and January 28, 1997
-----------------------
Stephen G. Meyer Chief Financial
Officer
By: /s/ David G. Lee January 28, 1997
-------------------
David G. Lee
Attorney-in-Fact
</TABLE>
C-7
<PAGE>
EXHIBIT INDEX
<TABLE>
Name Exhibit
---------------------------------------------------------------------
<S> <C>
Agreement and Declaration of Trust of the Ex-99.B1
Registrant, dated January 26, 1996,(incorporated
herein by reference to Initial Registration
Statement filed on February 1, 1996).
By-Laws of the Registrant, (incorporated herein Ex-99.B2
by reference to Initial Registration Statement
filed on February 1, 1996).
Investment Advisory Agreement between Ex-99.B5(a)
the Registrant and Turner Investment Partners, Inc.
as originally filed with Pre-Effective Amendment
No. 1 to Registration Statement filed April 19,1996,
is filed herewith.
Distribution Agreement between the Ex-99.B6(a)
Registrant and SEI Financial Services Company
as originally filed with Pre-Effective Amendment
No. 1 to Registration Statement filed April 19,1996,
is filed herewith.
Custodian Agreement between the Registrant Ex-99.B8(a)
and CoreStates Bank, N.A. as originally filed
with Pre-Effective Amendment No. 1 to
Registration Statement filed April 19,1996,
is filed herewith.
Administration Agreement between the Ex-99.B9(a)
Registrant and SEI Financial Management Corporation
as originally filed with Pre-Effective Amendment
No. 1 to Registration Statement filed April 19,1996,
is filed herewith.
Form of Agency Agreement between the Registrant and Ex-99.B9(b)
DST Systems, Inc. (incorporated herein by reference
to Pre-Effective Amendment No. 1 to Registration
Statement filed April 19,1996)
Opinion and Consent of Counsel Ex-99.B10
(incorporated herein by reference to Pre-Effective
Amendment No. 1 to Registration Statement filed
April 19,1996)
</TABLE>
C-8
<PAGE>
<TABLE>
<S> <C>
Consent of Arthur Andersen LLP is filed herewith. Ex-99.B11(a)
Consent of Ernst & Young LLP is filed herewith. Ex-99.B11(b)
Financial Statements for the fiscal year ended Ex-99.B12
September 30, 1996 are filed herewith.
Performance Calculations Ex-99.B16
(incorporated herein by reference to Pre-Effective
Amendment No. 1 to Registration Statement filed
April 19,1996)
Powers of Attorney for Dr. Joan Lamm-Tennant, Ex-99.B24
David G. Lee, Alfred C. Salvato, Mark
D. Turner, Robert E. Turner, John T. Wholihan, and
Stephen G. Meyer are filed herewith.
Financial Data Schedule for Turner Growth Equity Fund, Ex-27.1
are filed herewith.
Financial Data Schedule for Turner Midcap Fund, Ex-27.2
are filed herewith.
Financial Data Schedule for Turner Small Cap Fund, Ex-27.3
are filed herewith.
</TABLE>
C-9
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<CIK> 0001006783
<NAME> TURNER FUNDS
<SERIES>
<NUMBER> 011
<NAME> GROWTH EQUITY FUND
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> SEP-30-1996
<PERIOD-START> NOV-01-1995
<PERIOD-END> SEP-30-1996
<INVESTMENTS-AT-COST> 80,611
<INVESTMENTS-AT-VALUE> 97,191
<RECEIVABLES> 76
<ASSETS-OTHER> 31
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 97,298
<PAYABLE-FOR-SECURITIES> 1,091
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 43
<TOTAL-LIABILITIES> 1,134
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 57,709
<SHARES-COMMON-STOCK> 5,647
<SHARES-COMMON-PRIOR> 7,735
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 21,875
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 16,580
<NET-ASSETS> 96,164
<DIVIDEND-INCOME> 924
<INTEREST-INCOME> 41
<OTHER-INCOME> 0
<EXPENSES-NET> (836)
<NET-INVESTMENT-INCOME> 129
<REALIZED-GAINS-CURRENT> 21,978
<APPREC-INCREASE-CURRENT> (3,868)
<NET-CHANGE-FROM-OPS> 18,239
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (132)
<DISTRIBUTIONS-OF-GAINS> (5,807)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 14,623
<NUMBER-OF-SHARES-REDEEMED> (52,228)
<SHARES-REINVESTED> 5,650
<NET-CHANGE-IN-ASSETS> 19,655
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 5,747
<OVERDISTRIB-NII-PRIOR> (40)
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 667
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 942
<AVERAGE-NET-ASSETS> 97,039
<PER-SHARE-NAV-BEGIN> 14.97
<PER-SHARE-NII> .02
<PER-SHARE-GAIN-APPREC> 2.91
<PER-SHARE-DIVIDEND> (.02)
<PER-SHARE-DISTRIBUTIONS> (.85)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 17.03
<EXPENSE-RATIO> 1.06
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<CIK> 0001006783
<NAME> TURNER FUNDS
<SERIES>
<NUMBER> 011
<NAME> TURNER MID CAP FUNDS
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> SEP-30-1997
<PERIOD-START> OCT-01-1996
<PERIOD-END> DEC-31-1996
<INVESTMENTS-AT-COST> 1,627
<INVESTMENTS-AT-VALUE> 1,650
<RECEIVABLES> 35
<ASSETS-OTHER> 41
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 1,726
<PAYABLE-FOR-SECURITIES> 8
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 5
<TOTAL-LIABILITIES> 13
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 1,650
<SHARES-COMMON-STOCK> 168
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 2
<ACCUMULATED-NET-GAINS> 42
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 23
<NET-ASSETS> 1,713
<DIVIDEND-INCOME> 1
<INTEREST-INCOME> 1
<OTHER-INCOME> 0
<EXPENSES-NET> 4
<NET-INVESTMENT-INCOME> (2)
<REALIZED-GAINS-CURRENT> 60
<APPREC-INCREASE-CURRENT> 23
<NET-CHANGE-FROM-OPS> 81
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> (18)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 176
<NUMBER-OF-SHARES-REDEEMED> (10)
<SHARES-REINVESTED> 2
<NET-CHANGE-IN-ASSETS> 1,713
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 2
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 19
<AVERAGE-NET-ASSETS> 1,369
<PER-SHARE-NAV-BEGIN> 10.00
<PER-SHARE-NII> (.01)
<PER-SHARE-GAIN-APPREC> .34
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> (.11)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 10.22
<EXPENSE-RATIO> 1.25
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<CIK> 0001006783
<NAME> TURNER FUNDS
<SERIES>
<NUMBER> 021
<NAME> SMALL CAP FUND
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> SEP-30-1996
<PERIOD-START> NOV-01-1995
<PERIOD-END> SEP-30-1996
<INVESTMENTS-AT-COST> 61,364
<INVESTMENTS-AT-VALUE> 70,027
<RECEIVABLES> 1,817
<ASSETS-OTHER> 30
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 71,874
<PAYABLE-FOR-SECURITIES> 4,376
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 73
<TOTAL-LIABILITIES> 4,449
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 57,074
<SHARES-COMMON-STOCK> 2,915
<SHARES-COMMON-PRIOR> 813
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 1,688
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 8,663
<NET-ASSETS> 67,425
<DIVIDEND-INCOME> 21
<INTEREST-INCOME> 84
<OTHER-INCOME> 0
<EXPENSES-NET> (350)
<NET-INVESTMENT-INCOME> (245)
<REALIZED-GAINS-CURRENT> 3,860
<APPREC-INCREASE-CURRENT> 5,659
<NET-CHANGE-FROM-OPS> 9,274
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> (925)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 66,572
<NUMBER-OF-SHARES-REDEEMED> (21,472)
<SHARES-REINVESTED> 904
<NET-CHANGE-IN-ASSETS> 54,353
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 922
<OVERDISTRIB-NII-PRIOR> (8)
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 280
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 433
<AVERAGE-NET-ASSETS> 30,623
<PER-SHARE-NAV-BEGIN> 16.08
<PER-SHARE-NII> (.08)
<PER-SHARE-GAIN-APPREC> 8.17
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> (1.04)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 23.13
<EXPENSE-RATIO> 1.25
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<PAGE>
Ex-99.B5(a)
INVESTMENT ADVISORY AGREEMENT
AGREEMENT made this 28th 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: /s/ Kathryn L. Stanton
-------------------------
Attest: /s/ Brian J. Kelly
---------------------
TURNER INVESTMENT PARTNERS, INC.
By: /s/ Robert E. Turner
-------------------------
Attest:
---------------------
<PAGE>
SCHEDULE A DATED APRIL 28, 1996
TO THE
INVESTMENT ADVISORY AGREEMENT
DATED APRIL 28, 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 28th day of April, 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: /s/ Kathryn L. Stanton
----------------------------------
Attest: /s/ Brian J. Kelly
------------------------------
SEI FINANCIAL SERVICES COMPANY
By: /s/ Todd Cipperman
----------------------------------
Attest: /s/ Brian J. Kelly
------------------------------
6
<PAGE>
Ex-99.B8(a)
CUSTODIAN AGREEMENT
TURNER FUNDS
This Agreement, dated as of the 28th 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: Paul Cahill
-----------------------------------
CoreStates Bank, NA
-----------------------------------
530 Walnut Street
-----------------------------------
Philadelphia, PA 19106
-----------------------------------
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: /s/ Kathryn L. Stanton
--------------------------
Name: Kathryn L. Stanton
Title:
CORESTATES BANK, N.A.
By: /s/ Paul T. Cahill
--------------------------
Name: Paul T. Cahill
Title: Vice President
11
<PAGE>
EXHIBIT 99.B9(a)
ADMINISTRATION AGREEMENT
THIS AGREEMENT is made as of this 29th day of April, 1996, by and between
---- -----
Turner Funds, a Massachusetts business trust (the "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 of Common Stock; and
WHEREAS, the Trust desires the Administrator to provide, and the
Administrator is willing to provide, management and administrative services to
such portfolios of the Trust as the Trust and the Administrator may agree on
("Portfolios") and as listed on the schedules attached hereto ("Schedules") 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 and administrative services as set forth in
Article 2 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. Administrative and Accounting Services. 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, legal counsel, 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 and compliance with investment policies and
applicable laws, rules and regulations 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 may appoint a sub-
administrator to perform certain of the services to be performed by the
Administrator hereunder.
The Administrator shall provide the Trust with administrative services,
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 Trustees may, from time
to time, reasonably request and the Administrator shall, from time to time,
reasonably determine to be necessary to perform its
<PAGE>
obligations under this Agreement. In addition, at the request of the Trust's
Board of Trustees (the "Trustees"), the Administrator shall make reports to the
Trustees concerning the performance of its obligations hereunder.
Without limiting the generality of the foregoing, the Administrator shall:
(A) calculate contractual Trust expenses and control all disbursements
for the Trust, and as appropriate compute the Trust's yields, total
return, expense ratios, portfolio turnover rate and, if required,
portfolio average dollar-weighed maturity;
(B) assist Trust counsel with the preparation of prospectuses,
statements of additional information, registration statements, and
proxy materials;
(C) prepare such reports, applications and documents (including
reports regarding the sale and redemption of Shares as may be required
in order to comply with Federal and state securities law) as may be
necessary or desirable to register the Trust's shares with state
securities authorities, monitor sale of Trust shares for compliance
with state securities laws, and file with the appropriate state
securities authorities the registration statements and reports for the
Trust and the Trust's shares and all amendments thereto, as may be
necessary or convenient to register and keep effective the Trust and
the Trust's shares with state securities authorities to enable the
Trust to make a continuous offering of its shares;
(D) develop and prepare communications to shareholders, including
the annual report to shareholders, coordinate mailing prospectuses,
notices, proxy statements, proxies and other reports to Trust
shareholders, and supervise and facilitate the solicitation of proxies
solicited by the Trust for all shareholder meetings, including
tabulation process for shareholder meetings;
(E) coordinate with Trust counsel the preparation and negotiation
of, and administer contracts on behalf of the Trust with, among
others, the Trust's investment adviser, distributor, custodian, and
transfer agent;
(F) maintain the Trust's general ledger and prepare the Trust's
financial statements, including expense accruals and payments,
determine the net asset value of the Trust's assets and of the Trust's
shares, and supervise the Trust's transfer agent with respect to the
payment of dividends and other distributions to shareholders;
(G) calculate performance data of the Trust and its portfolios
for dissemination to information services covering the investment
company industry;
(H) coordinate and supervise the preparation and filing of the
Trust's tax returns;
(I) examine and review the operations and performance of the
various organizations providing services to the Trust or any Portfolio
of the Trust, including, without limitation,
<PAGE>
the Trust's investment adviser, distributor, custodian, transfer
agent, outside legal counsel and independent public accountants, and
at the request of the Trustees, report to the Trustees on the
performance of organizations;
(J) assist with the layout and printing of publicly disseminated
prospectuses and assist with and coordinate layout and printing of the
Trust's semi-annual and annual reports to shareholders;
(K) provide internal legal and administrative services as
requested by the Trust from time to time;
(L) assist with the design, development, and operation of the
Trust, including new portfolio and class investment objectives,
policies and structure;
(M) provide individuals acceptable to the Trustees for
nomination, appointment, or election as officers of the Trust, who
will be responsible for the management of certain of the Trust's
affairs as determined by the Trustees;
(N) advise the Trust and its Trustees on matters concerning the
Trust and its affairs;
(O) obtain and keep in effect fidelity bonds and directors and
officers/errors and omissions insurance policies for the Trust in
accordance with the requirements of Rules 17g-1 and 17d-1(7) under the
1940 Act as such bonds and policies are approved by the Trust's Board
of Trustees;
(P) monitor and advise the Trust and its Portfolios on their
registered investment company status under the Internal Revenue Code
of 1986, as amended;
(Q) perform all administrative services and functions of the
Trust and each Portfolio to the extent administrative services and
functions are not provided to the Trust or such Portfolio pursuant to
the Trust's or such Portfolio's investment advisory agreement,
distribution agreement, custodian agreement and transfer agent
agreement;
(R) 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
(S) prepare and file with the SEC the semi-annual report for the
Trust on Form N-SAR and all required notices pursuant to Rule 24f-2.
Also, the Administrator will perform other services for the Trust as agreed from
time to time, including, but not limited to performing internal audit
examinations; mailing the annual reports of the Portfolios; preparing an annual
list of shareholders; 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.
<PAGE>
ARTICLE 3. 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 of the Administrator; 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 pricing
services, 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 the investment adviser to the Trust or any affiliated
corporation of the Administrator or the investment Adviser, the costs of
Trustees' meetings, insurance, interest, brokerage costs, litigation and other
extraordinary or nonrecurring expenses, and all fees and charges of investment
advisers to the Trust.
ARTICLE 4. 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 Schedules. Such compensation shall be calculated
and accrued daily, and paid to the Administrator monthly. The Trust shall also
reimburse the Administrator for its reasonable out-of-pocket expenses, including
the travel and lodging expenses incurred by its officers and employees in
connection with attendance at meetings of the Trust's Board of Trustees.
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).
(C) Survival of Compensation Rates. All rights of compensation under
------------------------------
this Agreement for
<PAGE>
services performed as of the termination date shall survive the termination of
this Agreement.
ARTICLE 5. 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 5, the term "Administrator" shall include directors, officers, employees
and other agents of the Administrator as well as that corporation itself.)
So long as the Administrator, or its agents, acts in good faith and
with due diligence and without 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 Trust shall be entitled to participate at its own expense 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 Administrator, 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 Administrator shall bear the fees and expenses of any
additional counsel retained by it. If the Trust does not elect to assume the
defense of a suit, it will reimburse the Administrator for the reasonable fees
and expenses of any counsel retained by the Administrator.
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, accountants or other experts.
<PAGE>
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 6. 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 7. Confidentiality. The Administrator agrees on
---------------
behalf of itself and its employees to treat confidentially all records and other
information relative to the Trust and its prior, present or potential
Shareholders and relative to the Adviser and its prior, present or potential
customers, except, after prior notification to and approval in writing by the
Trust, which approval shall not be unreasonably withheld and may not be withheld
where the Administrator may be exposed to civil or criminal contempt proceedings
for failure to comply, when requested to divulge such information by duly
constituted authorities, or when so requested by the Trust.
ARTICLE 8. Equipment Failures. In the event of equipment
------------------
failures beyond the Administrator's control, the Administrator shall, at no
additional expense to the Trust, take reasonable steps to minimize service
interruptions but shall have no liability with respect thereto. The
Administrator shall develop and maintain a plan for recovery from equipment
failures which may include contractual arrangements with appropriate parties
making reasonable provision for emergency use of electronic data processing
equipment to the extent appropriate equipment is available.
ARTICLE 9. Compliance With Governmental Rules and
--------------------------------------
Regulations. The Administrator undertakes to comply with all applicable
- -----------
requirements of the 1933 Act, the 1934 Act, the 1940 Act and any laws, rules and
regulations of governmental authorities having jurisdiction with respect to the
duties to be performed by the Administrator hereunder.
ARTICLE 10. Duration and Termination of this Agreement. This
------------------------------------------
Agreement shall become effective on the date set forth in the Schedules and
shall remain in effect for the initial term of the Agreement (the "Initial
Term") and each renewal term thereof (each, a "Renewal Term"), each as set forth
in the Schedules, unless terminated in accordance with the provisions of this
Article 10. This Agreement may be terminated only: (a) by the mutual written
agreement of the parties; (b) by either party hereto on 90 days' written notice,
as of the end of the Initial Term or the end of any Renewal Term; (c) by either
party hereto on such date as is specified in written notice given by the
terminating party, in the event of a material breach of this Agreement by the
other party, provided the terminating party has notified the other party of such
breach at least 45 days prior to the specified date of termination and the
breaching party has not remedied such breach by the specified date; (d)
effective upon the liquidation of the Administrator; or (e) as to any Portfolio
or the Trust, effective upon the liquidation of such Portfolio or the Trust, as
the case may be. For purposes of this Article 10, the term "liquidation" shall
mean a
<PAGE>
transaction in which the assets of the Administrator, the Trust or a Portfolio
are sold or otherwise disposed of and proceeds therefrom are distributed in cash
to the shareholders in complete liquidation of the interests of such
shareholders in the entity.
This Agreement shall not be assignable by the Administrator, without
the prior written consent of the Trust, except to an entity that is controlled
by, or under common control, with, the Administrator.
ARTICLE 11. Amendments. This Agreement or any part hereof may be
----------
changed or waived only by an instrument in writing signed by the party against
which enforcement of such change or waiver is sought.
ARTICLE 12. 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 13. 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 14. 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 c/o Kevin P. Robins, General Counsel, SEI Financial
Management Corporation, 680 East Swedesford Road, Wayne, PA 19087; and if to the
Administrator at 680 East Swedesford Road, Wayne, PA 19087-1658.
ARTICLE 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.
ARTICLE 16. 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.
<PAGE>
ARTICLE 17. Limitation of Liability. The Administrator is hereby
-----------------------
expressly put on notice of the limitation of liability as set forth in Article
XI of the Trust's Declaration of Trust and agrees that the obligations pursuant
to this Agreement of a particular Portfolio and of the Trust with respect to
that Portfolio shall be limited solely to the assets of that Portfolio, and the
Administrator shall not seek satisfaction of any such obligation from any other
Portfolio, the shareholders of any Portfolio, the Trustees, officers, employees
or agents of the Trust, or any of them.
ARTICLE 18. Binding Agreement. This Agreement, and the rights and
-----------------
obligations of the parties and the Portfolios hereunder, shall be binding on,
and inure to the benefit of, the parties and the Portfolios and the respective
successors and assigns of each of them.
IN WITNESS WHEREOF, the parties hereto have executed and delivered
this Agreement as of the day and year first above written.
TURNER FUNDS
By: /s/ Todd Cipperman
Attest: /s/ Brian J. Kelly
SEI FINANCIAL MANAGEMENT CORPORATION
By: /s/ Kathryn L. Stanton
Attest: /s/ Brian J. Kelly
<PAGE>
SCHEDULE A
DATED NOVEMBER 15, 1996
--
TO THE ADMINISTRATION AGREEMENT
DATED APRIL 28, 1996
BETWEEN
TURNER FUNDS
AND
SEI FUND RESOURCES
Portfolios: This Agreement shall apply to all Portfolios of Turner Funds,
either now in existence or in the future created. The following
is a listing of the current portfolios of the Trust,
(collectively, the "Portfolios"):
Turner Growth Equity Fund
Turner Fixed Income Fund
Turner Small Cap Fund
Turner Midcap Fund
Turner Ultra Large Cap Fund
Fees: Pursuant to Article 4, Section A, the Trust shall pay the
Administrator compensation for services rendered to the
Portfolios at an annual rate, which is calculated daily and paid
monthly according to the following schedule:
<TABLE>
<CAPTION>
Fee (on average annual assets) Assets in Fund
---------------------------------------------------
<C> <S>
.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: This Agreement shall become effective on the date of
coversion of assets (from the Advisers' Inner Circle to the
Turner Trust), and shall remain in effect for an Initial Term of
three (3) years from such date and, thereafter, for successive
Renewal Terms of two (2) years each, unless and until this
Agreement is terminated in accordance with the provisions of
Article 10 hereof.
<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 and John H. Grady, Jr., 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/ Stephen G. Meyer Date: October 22, 1996
- --------------------------------- --------------------
Stephen G. Meyer, Controller/CFO
<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
<PAGE>
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
-----------------------------------------
As independent public accountants, we hereby consent to all references to our
firm included in the Post-Effective Amendment No. 4 to the Registration
Statement (File No. 333-00641) on Form N1-A of the Turner Funds.
/s/ ARTHUR ANDERSEN LLP
Philadelphia, PA
January 22, 1997
<PAGE>
Consent of Independent Auditors
We consent to the references to our firm under the captions "Financial
Highlights" in the Prospectuses and "Financial Statements" in the Statements of
Additional Information for the Turner Growth Equity Fund and the Turner Small
Cap Fund, and to the incorporation by reference in this Post-Effective Amendment
No. 4 to the Registration Statement (Form N1-A File Nos. 333-00641 & 811-07527)
of Turner Funds, Inc. of our report dated November 1, 1996, included in the 1996
Annual Report to Shareholders of Turner Funds, Inc.
/s/ Ernst & Young LLP
Philadelphia, Pennsylvania
January 28, 1997
