[TURNER LOGO OMITTED]
Annual Report
September 30, 1999
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Turner Large Cap Growth Equity Fund
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Turner Growth Equity Fund
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Turner Midcap Growth Fund
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Turner Small Cap Growth Fund
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Turner Micro Cap Growth Fund
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Turner Top 20 Fund
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Turner Technology Fund
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Turner Short Duration Government Funds
- Three Year Portfolio
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Turner Short Duration Government Funds
- One Year Portfolio
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Turner Core High Quality Fixed Income Fund
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Portfolios of The TIP Funds [LOGO OMITTED]
<PAGE>
Contents
1 Letter to shareholders
3 Total returns of Turner Funds
5 Investment review:
Turner Large Cap Growth Equity Fund
7 Investment review:
Turner Growth Equity Fund
9 Investment review:
Turner Midcap Growth Fund
11 Investment review:
Turner Small Cap Growth Fund
13 Investment review:
Turner Micro Cap Growth Fund
15 Investment review:
Turner Top 20 Fund
17 Investment review:
Turner Technology Fund
19 Investment review:
Turner Short Duration Government
Funds-Three Year Portfolio
21 Investment review:
Turner Short Duration Government
Funds-One Year Portfolio
23 Investment review:
Turner Core High Quality Fixed
Income Fund
25 Financial statements
64 Report of Independent Auditors
Turner Funds
The Turner Funds, Portfolios of the TIP Funds, offer a series of ten no-load
mutual funds to individual and institutional investors. The minimum initial
investment in a Turner Fund for regular accounts is $2,500 and $2,000 for
individual retirement accounts. The minimum amount for subsequent investments is
$50.
Turner Investment Partners, Inc., based in Berwyn, Pennsylvania, serves as the
investment adviser to the Turner Funds. The firm, founded in 1990, invests more
than $3 billion in equity, fixed-income, and balanced portfolios on behalf of
individuals and institutions.
Shareholder services
Turner Funds shareholders receive annual and semiannual reports and monthly
account statements. Shareholders who have questions about their accounts may
call a toll-free telephone number, 1-800-224-6312. Or they may write to Turner
Funds, Box 419805, Kansas City, Missouri 64141.
<PAGE>
Letter to shareholders
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To our shareholders
What a difference a year makes. At this time last year, we were assuring
investors that despite all signs to the contrary, the global financial markets
were not headed toward a catastrophic meltdown.
This year, we are happy to report that our confidence was well founded, and that
the world's financial picture is in fact brighter than ever. And, we are pleased
to inform our investors of truly outstanding results across our entire family of
equity and fixed income funds.
For the year ended September 30, 1999, the Turner funds delivered performance
that stood out even in the crowded environment of today's mutual fund industry.
This included a breathtaking 113.46% total return for our Micro Cap Growth Fund.
Our other funds performed as follows:
[BULLET] Turner Large Cap Growth Equity Fund: 42.97%
[BULLET] Turner Growth Equity Fund: 38.16%
[BULLET] Turner Midcap Growth Fund: 84.07%
[BULLET] Turner Small Cap Growth Fund: 59.14%
[BULLET] Turner Top 20 Fund: 39.90%*
[BULLET] Turner Technology Fund: 40.60%*
[BULLET] Turner Short Duration -
Three Year Fund (Institutional Class): 2.89%
[BULLET] Turner Short Duration -
One Year Fun (Institutional Class): 5.34%
[BULLET] Turner Core High Quality
Fixed Income Fund: 0.48%*
*Inception Date: 7/1/99
These results took place against a backdrop of strong overall market
performance. After a rocky start, the domestic equity markets rallied strongly,
eventually leading the S&P 500 Index to a total return of 27.80% for the fiscal
year. This is an exceptional result by any historical standard. And it makes it
all the more remarkable that all of our equity funds significantly outperformed
their indices.
Affirmation of our investment approach.
Performance like this was bound to attract the attention of the financial media.
And in 1999, the Turner Funds and their portfolio managers became favorite
subjects of major newspaper, magazine, and broadcast reports.
These included prominent appearances in Fortune, Forbes, Barron's, Investment
News, and Mutual Funds magazine. In addition, several of our individual funds
received high ratings from Morningstar, Inc.
And while this increased level of attention is of course gratifying, we are more
pleased that 1999 continued to affirm the value of the Turner Funds investment
approach. This approach is based on the philosophy that earnings expectations
drive stock prices.
Our investment philosophy and process lead us to create portfolios that are
fully invested at all times and maintain sector weightings that are neutral or
well diversified relative to their benchmark indices. This helps us avoid risks
associated with sector rotation and market timing, and allows us to focus our
efforts exclusively on stock selection.
Investing lessons of the past decade.
During our first ten years as an independent investment firm, we have learned a
great deal about what it takes to achieve above-average results in the
challenging world of investing. And we recently condensed this knowledge into
six fundamental lessons that we believe can benefit any investor. They are:
1. Understand fully and completely what makes stocks go up and down.
Earnings growth is the essence of stock investing: Stocks of companies with good
earnings ultimately go up, and the stocks of companies with poor earnings
ultimately go down. That's why we above all seek to invest in companies with
earnings that are growing at a rate meeting or exceeding Wall Street's
expectations.
2. Don't take on risks you can't control. Our stock funds are fully
invested and sector neutral because the entire history of the market tells us
that market timing and sector rotation present a risk of selling at the bottom
and buying at the top. The best way to avoid that risk and consistently
outperform a benchmark is to look like that benchmark.
3. Be the best stock pickers possible. A multifaceted investment process is
vital in selecting good stocks because many factors contribute to stocks'
performance. Our own process involves a combination of many quantitative,
fundamental, and technical analyses.
<PAGE>
LETTER TO SHAREHOLDERS
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4. Don't get too big. Generating superior investment performance becomes
increasingly difficult once a portfolio's assets grow beyond a certain point. To
maximize our own returns, we have established asset limits for our institutional
stock portfolios and mutual funds.
5. Align the firm's goals with the client's. Investment managers have a
pronounced tendency to equate success with gaining assets rather than with
putting the client first. Instead, we focus on how to do one's best for the
client. For instance, we compensate the members of our investment team based on
how they perform. If they don't provide our clients with above-average returns,
they don't receive above-average bonuses.
6. Be willing to adjust to changes in the market. For example, the
quantitative modeling process that I developed back in 1985 worked very well, by
all accounts. Through back-testing, however, we found it was working better in
growth sectors such as technology, than in value sectors such as energy. So we
adjusted the model's value factors to give greater weight in the value sectors.
The result: improved returns in the value sectors. The investment environment is
continually changing, and you must adapt. Study the market, and alter your
activities to reflect what you've learned.
An age of infinite opportunities.
As we enter the new millennium, we look back with pride over what we have
accomplished thus far. And we are looking forward with excitement over the
nearly infinite opportunities that are available to investors during this golden
age of capitalism. While our task as money managers is more complex than ever,
it is also more rewarding because of the potential gains that global economic
growth and productivity-enhancing technology have put within our reach.
We therefore feel privileged to serve as your eyes and ears on the market, and
thank you for entrusting us to identify the very best of what the markets have
to offer - now and in the future.
/s/ signature omitted
- ---------------------
Robert E. Turner
Chairman and Chief Investment Officer
Turner Investment Partners, Inc.
[PHOTO OMITTED]
Bob Turner
2 | TURNER FUNDS 1999 ANNUAL REPORT
<PAGE>
Performance
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Total returns of Turner Funds*
Through September 30, 1999
<TABLE>
<CAPTION>
Three Year One Three Five Since
Months To Date Year Year Year inception
(annualized) (annualized) (annualized)+
Equity
=============================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
Turner Large Cap Growth Equity Fund (1.77)% 10.20% 42.97% n/a n/a 31.15%
Lipper Large-Cap Growth Funds Average 3.64 8.75 37.86 n/a n/a 23.71
Russell Top 200 Growth Index (3.40) 5.89 34.26 n/a n/a 27.29
S&P 500 Index (6.24) 5.36 27.80 n/a n/a 22.06
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Turner Growth Equity Fund (1.00) 9.97 38.16 26.58% 24.63% 19.17
Lipper Large-Cap Growth Funds Average 3.64 8.75 37.86 25.04 24.02 17.93
Russell 1000 Growth Index (3.66) 6.40 34.85 26.87 26.79 19.30
S&P 500 Index (6.24) 5.36 27.80 25.09 25.03 19.05
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Turner Midcap Growth Fund 3.95 45.80 84.07 n/a n/a 38.93
Lipper Mid-Cap Growth Funds Average 0.53 17.83 50.88 n/a n/a 13.41
Russell Midcap Growth Index (5.01) 8.47 37.19 n/a n/a 17.25
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Turner Small Cap Growth Fund 3.42 27.99 59.14 15.54 29.26 26.63
Lipper Small-Cap Growth Funds Average 0.85 13.57 43.76 9.58 15.03 12.68
Russell 2000 Growth Index (4.92) 7.27 32.63 7.14 12.16 9.85
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Turner Micro Cap Growth Fund 20.17 51.95 113.46 n/a n/a 59.94
Lipper Small-Cap Core Funds Average (3.77) 4.66 24.96 n/a n/a (4.46)
Russell 2000 Growth Index (4.92) 7.27 32.63 n/a n/a 0.71
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Turner Top 20 Fund 39.90 n/a n/a n/a n/a 39.90**
Lipper Multi-Cap Core Funds Average (6.34) n/a n/a n/a n/a (6.34)
S&P 500 Index (6.24) n/a n/a n/a n/a (6.24)
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Turner Technology Fund 40.60 n/a n/a n/a n/a 40.60**
Lipper Science & Technology Funds Average 7.02 n/a n/a n/a n/a 7.02
Pacific Exchange Technology 100 Index 4.62 n/a n/a n/a n/a 4.62
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Fixed income
=============================================================================================================================
Turner Short Duration Government Funds-
Three Year Portfolio (Institutional Class) 1.10% 2.19% 2.89% 6.00% 6.56% 6.02%
Lipper Short-Intermediate U.S. Government
Funds Average 0.81 0.41 0.69 5.3 5.94 5.05
Lehman Brothers 1-3 Year U.S. Government
Bond Index 1.24 2.41 3.18 5.98 6.36 5.76
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Turner Short Duration Government Funds-
One Year Portfolio (Institutional Class) 1.40 4.10 5.34 5.92 6.33 6.08
Lipper Ultra-Short Obligation Funds Average 1.14 3.28 4.28 5.35 5.57 5.31
Merrill Lynch Three-Month
U.S. Treasury Bill Index 1.27 3.54 4.70 5.15 5.36 5.23
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Turner Core High Quality
Fixed Income Fund 0.48 n/a n/a n/a n/a 0.48**
Lipper General Bond Funds Average (0.22) n/a n/a n/a n/a (0.22)
Lehman Brothers Aggregate Bond Index 0.68 n/a n/a n/a n/a 0.68
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</TABLE>
* Past performance is no guarantee of future results.
** Returns are cumulative.
Source: Lipper Analytical Services.
+ The inception dates for each Turner Fund are as follows: Turner Large Cap
Growth Equity Fund, February 1, 1997; Turner Growth Equity Fund, March 11,
1992; Turner Midcap Growth Fund, October 1, 1996; Turner Small Cap Growth
Fund, February 7, 1994; Turner Micro Cap Growth Fund, March 1, 1998; Turner
Top 20 Fund, July 1, 1999; Turner Technology Fund, July 1, 1999; Turner
Short Duration Government Funds-Three Year Portfolio (Institutional Class
Shares), March 1, 1994; Turner Short Duration Government Funds-One Year
Portfolio (Institutional Class Shares), March 1, 1994; and Turner Core High
Quality Fixed Income Fund, July 1, 1999.
SEI Investments Distribution Co., Oaks, PA acts as distributor of the
Turner Funds. The performance data quoted represents past performance and
the principal value and investment return will fluctuate so that an
investor's shares, when redeemed, may be worth more or less than their
original cost. This information must be preceded or accompanied by a
prospectus for the Turner Funds. Investors should read the prospectus
carefully before investing.
TURNER FUNDS 1999 ANNUAL REPORT | 3
<PAGE>
Performance
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Lipper Inc. performance rankings of mutual funds
Periods ending September 30, 1999
<TABLE>
<CAPTION>
One Two Five Seven
year years years years
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<S> <C> <C> <C> <C>
Large-Cap Growth Funds
Turner Large Cap Growth Equity Fund
Ranking vs. competitors 72/331 26/257 -- --
Percentile ranking 21 10 -- --
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Large-Cap Growth Funds
Turner Growth Equity Fund
Ranking vs. competitors 118/331 70/257 44/130 30/70
Percentile ranking 35 27 33 42
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Mid-Cap Growth Funds
Turner Midcap Growth Fund
Ranking vs. competitors 26/228 7/197 -- --
Percentile ranking 11 3
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Small-Cap Growth Funds
Turner Small Cap Growth Fund
Ranking vs. competitors 52/247 32/201 2/82 --
Percentile ranking 21 16 2 --
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Small-Cap Core Funds
Turner Micro Cap Growth Fund
Ranking vs. competitors 6/175 -- -- --
Percentile ranking 3
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Short-Intermediate U.S. Government Funds
Turner Short Duration Government Funds -
Three Year Portfolio (Institutional Class)
Ranking vs. competitors 8/91 2/86 9/58 --
Percentile ranking 9 2 15 --
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Ultra-Short Obligation Funds
Turner Short Duration Government Funds -
One Year Portfolio (Institutional Class)
Ranking vs. competitors 1/29 2/27 2/18 --
Percentile ranking 1 7 11 --
- -----------------------------------------------------------------------------------------------------------------
Source: Lipper Inc.
</TABLE>
4 | TURNER FUNDS 1999 ANNUAL REPORT
<PAGE>
Investment review
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Turner Large Cap Growth Equity Fund
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Total return
Year ending September 30, 1999
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Turner Large Cap Growth Equity Fund 42.97%
Lipper Large-Cap Growth Funds Average 37.86
S&P 500 Index 27.80
Russell Top 200 Growth Index 34.26
================================================================================
The Turner Large Cap Growth Equity Fund continued to outperform its benchmarks
by a substantial margin during the 12-month period ended September 30, 1999. The
fund achieved a total return of 42.97%, compared with 34.26% for the Russell Top
200 Growth Index and 27.80% for the S&P 500 Index.
This superior performance was attributable to strong stock selection and
decisive timing within key portfolio sectors. And it was accomplished while
remaining sector-diversified relative to the Russell Top 200 Growth Index
The year was marked by a return to favor of mid-cap and small-cap issues, which
had long been overshadowed by their larger counterparts. This trend continued
through the end of the fiscal year, but was not enough to dampen the performance
of high-quality, large-cap growth issues.
The portfolio's strongest performers for the year included perennial growth
leader Microsoft, which continued to advance despite antitrust concerns and
fundamental changes in its business model. Cisco Systems also continued to
perform strongly thanks to its unique position as the predominant mover of
Internet traffic. And even staid old IBM produced fireworks as a result of its
success in embracing Internet commerce. In the healthcare sector, Johnson &
Johnson and Bristol-Myers Squibb benefited from robust earnings growth and
promising product pipelines.
Looking ahead, we are optimistic that large cap stocks will remain market
leaders. Companies in this sector have the strong cash flows needed to fund
aggressive research and development programs. In addition, recent efforts to
streamline operations and decision-making have given large companies the agility
to adapt quickly to the rapid changes brought on by the e-commerce revolution.
As always, however, we will look beyond the obvious to locate those stocks that
appear to offer the strongest potential for above-average growth.
Growth of a $10,000 Investment in the Turner Large Cap Growth Fund:
February 1, 1997-September 30, 1999 *
Annualized total returns
Periods ending September 30, 1999
- --------------------------------------------------------------------------------
Past one year Since inception
42.97% 31.15%
In the printed version of the document, a line graph
appears which depicts the following plot points:
Turner Russell S&P
Large Cap Top 200 500
--------- ------- ------
1/31/97 10,000 10,000 10,000
Sep. 97 12,279 12,013 12,199
Sep. 98 14,399 14,165 13,304
Sep. 99 20,586 19,018 17,003
* These figures represent past performance, which is no guarantee of future
results. The investment return and principal value of an investment will
fluctuate, so an investor's shares, when redeemed, may be worth more or less
than their original cost. The inception date of the Turner Large Cap Growth
Equity Fund is February 1, 1997.
TURNER FUNDS 1999 ANNUAL REPORT | 5
<PAGE>
Investment review
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Turner Large Cap Growth Equity Fund
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Fund objective
The Turner Large Cap Growth Equity Fund seeks capital appreciation. It invests
primarily in a diversified portfolio of common stocks with market
capitalizations exceeding $10 billion at the time of purchase that Turner
believes offer strong earnings growth potential. The fund's economic-sector
weightings approximate the sector weightings of the Russell Top 200 Growth
Index.
- --------------------------------------------------------------------------------
Fund profile
September 30, 1999
o CUSIP #900297508
o Top 10 holdings
(1) Microsoft, (2) Cisco Systems, (3) Johnson & Johnson, (4) Intel, (5)
Bristol-Myers Squibb, (6) Lucent Technologies, (7) America Online, (8)
Procter & Gamble, (9) Wal-Mart Stores, (10) IBM
o % in 10 largest holdings 43.8%
o Number of holdings 44
o Price/earnings ratio 42.2
o Weighted average market capitalization $124.7 billion
o % of holdings with positive earnings surprises 68.0%
o % of holdings with negative earnings surprises 12.3%
o Net assets $8.5 million
[FUND PROFILE GRAPH OMITTED]
- --------------------------------------------------------------------------------
Sector weightings:
neutral to Russell Top 200 Growth Index
[BAR GRAPH OMITTED]
44.3% Technology
19.3% Health care
15.9% Consumer discretionary/services
10.7% Consumer staples
4.2% Financial services
2.6% Producer durables
2.6 Utilities/communication
1.0% Materials/processing
Portfolio managers
[PHOTO OMITTED]
John F. Hammerschmidt has served as the lead product manager of the Large Cap
Growth Equity Fund since its inception in 1997. John joined Turner in 1992.
Previously he was vice president of government securities trading with S. G.
Warburg. He holds a bachelor's degree from Lehigh University and an MBA degree
from Duke University.
[PHOTO OMITTED]
Robert E. Turner, founder, chairman, and chief investment officer of Turner
Investment Partners, serves as a comanager of the Large Cap Growth Equity Fund.
A Chartered Financial Analyst, Bob previously was senior investment manager with
Meridian Investment Company. He earned bachelor's and MBA degrees at Bradley
University.
[PHOTO OMITTED]
Mark D. Turner, president of Turner Investment Partners, serves as a comanager
of the Large Cap Growth Equity Fund. Mark joined Turner when it was founded in
1990. He previously served as vice president and senior portfolio manager with
First Maryland Asset Management. He earned a bachelor's degree from Bradley
University and an MBA degree from the University of Illinois.
6 | TURNER FUNDS 1999 ANNUAL REPORT
<PAGE>
Turner Growth Equity Fund
Total return
Year ending September 30, 1999
- --------------------------------------------------------------------------------
Turner Growth Equity Fund 38.16%
Lipper Large-Cap Growth Funds Average 37.86
S&P 500 Index 27.80
Russell 1000 Growth Index 34.85
- --------------------------------------------------------------------------------
In a year marked by exceptional market volatility, the Turner Growth Equity Fund
handily outperformed its benchmarks, delivering a total return of 38.16%. By
comparison, the Russell 1000 Growth Index returned 34.85%, while the S&P 500
Index yielded 27.80%.
The fund's outperformance is attributable to careful stock selection which
focused on companies with outstanding management, world-class products and
services, and long-term records of superior performance.
The top ten holdings of the fund at year-end were without exception household
names, including Microsoft, Cisco Systems, Intel, Johnson & Johnson,
Bristol-Myers Squibb, Lucent Technologies, Procter & Gamble, Wal-Mart Stores,
Home Depot, and Schering Plough. Among their many other attributes, all ten are
ranked among "America's Most Admired Companies" in their respective categories
by Fortune magazine.
Looking ahead, we believe that the growth sector will continue to dominate the
markets well into the future. In fact, we are convinced that a sea-change in the
markets has placed growth stocks in a position of uncontested dominance over
their value-oriented counterparts.
Of course, this does not mean that this sector is forever immune to volatility.
But through our identification of best-of-class companies, we anticipate that
the Growth Equity Fund will continue to live up to its name.
Growth of a $10,000 Investment in the Turner Growth Equity Fund:
March 31, 1992-September, 30, 1999 *
In the printed version of the document, a line graph
appears which depicts the following plot points:
Turner Growth S&P 500 Russell 1000
Equity Fund Composite Index Growth Index
------------- --------------- ------------
3/31/92 10,000 10,000 10,000
Sep. 92 10,055 10,511 10,326
Sep. 93 12,734 11,871 10,942
Sep. 94 12,352 12,309 11,583
Sep. 95 14,900 15,965 15,311
Sep. 96 18,314 19,209 18,588
Sep. 97 24,286 26,976 25,335
Sep. 98 26,887 29,420 28,147
Sep. 99 37,147 37,598 37,957
Annualized total returns
Periods ending September 30, 1999
- --------------------------------------------------------------------------------
Past one Past three Past five Since
year years years inception
38.16% 26.58% 24.63% 19.17%
* These figures represent past performance, which is no guarantee of future
results. The investment return and principal value of an investment will
fluctuate, so an investor's shares, when redeemed, may be worth more or less
than their original cost. The inception date of the Turner Growth Equity Fund is
March 11, 1992. Returns are calculated from the first full month following the
fund's inception date.
TURNER FUNDS 1999 ANNUAL REPORT | 7
<PAGE>
INVESTMENT REVIEW
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Turner Growth Equity Fund
- --------------------------------------------------------------------------------
Fund objective
The Turner Growth Equity Fund seeks capital appreciation. It invests primarily
in a diversified portfolio of common stocks that, in Turner's opinion, have
strong earnings growth potential. The fund's economic-sector weightings
approximate the sector weightings of the Russell 1000 Growth Index.
- --------------------------------------------------------------------------------
Fund profile
September 30, 1999
o Ticker symbol TRGEX
o CUSIP #900297102
o Top 10 holdings (1) Microsoft, (2) Cisco Systems, (3) Intel, (4) Johnson &
Johnson, (5) Bristol-Myers Squibb, (6) Lucent Technologies, (7) Procter &
Gamble, (8) Wal-Mart Stores, (9) Home Depot, (10) Schering-Plough
o % in 10 largest holdings 36.9%
o Number of holdings 97
o Price/earnings ratio 39.9
o Weighted average market capitalization $105.6 billion
o % of holdings with positive earnings surprises 73.6%
o % of holdings with negative earnings surprises 9.7%
o Net assets $142.8 million
[GROWTH EQUITY GRAPH OMITTED]
- --------------------------------------------------------------------------------
Sector weightings:
neutral to Russell 1000 Growth Index
36.3% Technology
16.7% Health care
15.3% Consumer discretionary/services
9.0% Consumer staples
5.1% Financial services
4.5% Utilities/communication
3.5% Producer durables
1.2% Materials/processing
0.9% Energy
0.4% Autos/transportation
[BAR GRAPH OMITTED]
Portfolio managers
[PHOTO OMITTED]
Robert E. Turner, founder, chairman, and chief investment officer of Turner
Investment Partners, has served as the lead product manager of the Growth Equity
Fund since its inception in 1992. A Chartered Financial Analyst, Bob previously
was senior investment manager with Meridian Investment Company. He earned
bachelor's and MBA degrees at Bradley University.
[PHOTO OMITTED]
John F. Hammerschmidt serves as a comanager of the Growth Equity Fund. John
joined Turner in 1992. Previously he was vice president of government securities
trading with S. G. Warburg. He holds a bachelor's degree from Lehigh University
and an MBA degree from Duke University.
[PHOTO OMITTED]
Mark D. Turner, president of Turner Investment Partners, serves as a comanager
of the Growth Equity Fund. Mark joined Turner when it was founded in 1990. He
previously served as vice president and senior portfolio manager with First
Maryland Asset Management. He earned a bachelor's degree from Bradley University
and an MBA degree from the University of Illinois.
8 | TURNER FUNDS 1999 ANNUAL REPORT
<PAGE>
Turner Midcap Growth Fund
Total return
Year ending September 30, 1999
- --------------------------------------------------------------------------------
Turner Midcap Growth Fund 84.07%
Lipper Mid-Cap Growth Funds Average 50.88
Russell Midcap Growth Index 37.19
- --------------------------------------------------------------------------------
During the 12 months ended September 30, 1999, the Turner Midcap Growth Fund
added to its outstanding record by soaring 84.07%. In doing so, the fund more
than doubled the performance of the Russell Midcap Growth Index, which returned
37.19%.
Among the strongest performing sectors of the portfolio were technology,
healthcare and producer durables. Broadcasting/media, specialty retailing,
biotechnology, semiconductor and networking stocks were especially profitable.
Only our consumer-stables positions lagged.
What is particularly notable about the fund's superior performance is that it
was achieved while maintaining an average price earnings ratio (P/E Ratio) just
over 33 relative to the Russell Midcap P/E Ratio of 34. In light of the
favorable earnings prospects of our holdings, we think Midcap Growth can perform
relatively well in favorable or unfavorable economic conditions.
The companies in the Midcap Growth Fund are well-known, well-capitalized
organizations with dominant market positions and reputations for innovation.
They include "dot-com" address provider Network Solutions; electronics retailers
Best Buy and Circuit City; payroll processing leader Paychex; Internet
advertising giant DoubleClick; advertising conglomerate Interpublic Group;
adhesive products maker Avery Denison; printer manufacturer Lexmark
International; food distributor Sysco, and fiber optics leader JDS Uniphase.
Looking ahead, we believe that the Midcap Growth Fund has strong prospects for
the future, thanks to its continued emphasis on finding leaders in a dynamic
market place. And while it is unrealistic to expect consecutive years of
performance of this caliber, we believe the fund is well positioned for a wide
range of market environments.
Growth of a $10,000 Investment in the Turner Midcap Growth Fund:
October 31, 1996-September 30, 1999*
In the printed version of the document, a line graph
appears which depicts the following plot points:
Turner Midcap Growth Russell Midcap Growth Index
-------------------- ---------------------------
10/31/96 10,000 10,000
Sep. 97 14,248 13,117
Sep. 98 14,425 11,887
Sep. 99 26,552 16,309
Annualized total returns
Periods ending September 30, 1999
- --------------------------------------------------------------------------------
Past one year Since inception
84.07% 38.93%
* These figures represent past performance, which is no guarantee of future
results. The investment return and principal value of an investment will
fluctuate, so an investor's shares, when redeemed, may be worth more or less
than their original cost. The inception date of the Turner Midcap Growth Fund is
October 1, 1996.
TURNER FUNDS 1999 ANNUAL REPORT | 9
<PAGE>
Investment review
- --------------------------------------------------------------------------------
Turner Midcap Growth Fund
- --------------------------------------------------------------------------------
Fund objective
The Turner Midcap Growth Fund seeks capital appreciation. It invests primarily
in a diversified portfolio of common stocks with market capitalizations between
$1 billion and $8 billion at the time of purchase that Turner believes offer
strong earnings growth potential. The fund's economic-sector weightings
approximate the sector weightings of the Russell Midcap Growth Index.
- --------------------------------------------------------------------------------
Fund profile
September 30, 1999
o Ticker symbol TMGFX
o CUSIP #900297409
o Top 10 holdings (1) Network Solutions, (2) Best Buy, (3) Paychex, (4)
DoubleClick, (5) Interpublic Group, (6) Bausch & Lomb, (7) Circuit City, (8)
Lexmark International, (9) SPX, (10) JDS Uniphase
o % in 10 largest holdings 13.9%
o Number of holdings 113
o Price/earnings ratio 33.8
o Weighted average market capitalization $5.2 billion
o % of holdings with positive earnings surprises 71.1%
o % of holdings with negative earnings surprises 5.9%
o Net assets $148.8 million
[MIDCAP FUND GRAPH OMITTED]
- --------------------------------------------------------------------------------
Sector weightings:
neutral to Russell Midcap Growth Index
[BAR GRAPH OMITTED]
27.4% Technology
24.4% Consumer discretionary/services
11.1% Health care
9.1% Financial services
6.5% Producer durables
5.4% Utilities/communication
3.4% Materials/processing
3.0% Consumer staples
2.6% Energy
1.9% Autos/transportation
Portfolio managers
[PHOTO OMITTED]
Christopher K. McHugh has served as the lead product manager of the Midcap
Growth Fund since its inception in 1996. Chris joined Turner when it was founded
in 1990 and previously held a position as performance specialist at Provident
Capital Management. He earned a bachelor's degree at the Philadelphia College of
Textiles and Science and an MBA degree at St. Joseph's University.
[PHOTO OMITTED]
William C. McVail serves as a comanager of the Midcap Growth Fund. Before
joining Turner in 1998, Bill was a portfolio manager at PNC Equity Advisors. A
Chartered Financial Analyst, Bill received a bachelor's degree from Vassar
College.
[PHOTO OMITTED]
Robert E. Turner, founder, chairman, and chief investment officer of Turner
Investment Partners, serves as a comanager of the Midcap Growth Fund. A
Chartered Financial Analyst, Bob previously was senior investment manager with
Meridian Investment Company. He earned bachelor's and MBA degrees at Bradley
University.
10 | TURNER FUNDS 1999 ANNUAL REPORT
<PAGE>
Turner Small Cap Growth Fund
Total return
Year ending September 30, 1999
- --------------------------------------------------------------------------------
Turner Small Cap Growth Fund 59.14%
Lipper Small-Cap Growth Funds Average 43.76
Russell 2000 Growth Index 32.63
- --------------------------------------------------------------------------------
Small-cap growth stocks performed extremely well during the year ended September
30, 1999. But the Turner Small Cap Growth Fund performed even better. For the
period, the fund returned a whopping 59.14% -- nearly doubling the performance
of the Russell 2000 Growth Index, which returned 32.63%.
This performance is even more notable in light of the fact that some key
sectors, including financial services and producer durables, spent a good
portion of the year out of the market's favor. However, any underperformance was
more than made up by the fund's outstanding holdings in such areas as consumer
discretionary/ services and technology.
Top performers in the portfolio included cable equipment maker ANTEC; specialty
software creator Mercury Interactive; investment banker Hambrecht & Quist;
videoconferencing leader Polycom; pharmaceutical innovator Jones Pharma;
security software producer Symantec; French software developer Business Objects;
communications equipment maker Powerwave Technologies; help desk software
developer Peregrine Systems; and home products retailer Linens 'N Things.
Overall, more than 63% of the portfolio's holdings reported positive earnings
surprises, while just over five percent reported negative earnings surprises.
Looking ahead, we continue to favor selected consumer, telecommunications, and
bandwidth-technology stocks that have contributed so much to our recent results.
And we continue to find outstanding values in the small-cap sector, which is so
rich with innovative, energetic young companies.
Growth of a $10,000 Investment in the Turner Small Cap Growth Fund:
February 28, 1994-September 30, 1999*
In the printed version of the document, a line graph
appears which depicts the following plot points:
Turner Small Frank Russell
Cap Growth 2000 Growth Index
------------ -----------------
2/28/94 10,000 10,000
Sep. 94 10,303 9,618
Sep. 95 15,812 12,328
Sep. 96 24,103 13,881
Sep. 97 28,114 17,123
Sep. 98 23,362 12,872
Sep. 99 37,179 17,072
Annualized total returns
Periods ending September 30, 1999
- --------------------------------------------------------------------------------
Past one Past three Past five Since
year years years inception
59.14% 15.54% 29.26% 26.63%
* These figures represent past performance, which is no guarantee of future
results. The investment return and principal value of an investment will
fluctuate, so an investor's shares, when redeemed, may be worth more or less
than their original cost. The inception date of the Turner Small Cap Growth Fund
is February 7, 1994. Returns are calculated from the first full month following
the fund's inception date.
TURNER FUNDS 1999 ANNUAL REPORT | 11
<PAGE>
Investment review
- --------------------------------------------------------------------------------
Turner Small Cap Growth Fund
- --------------------------------------------------------------------------------
Fund objective
The Turner Small Cap Growth Fund seeks capital appreciation. It invests
primarily in a diversified portfolio of common stocks with market
capitalizations at the time of purchase not exceeding $2 billion that Turner
believes offer strong earnings growth potential. The fund's economic-sector
weightings approximate the sector weightings of the Russell 2000 Growth Index.
- --------------------------------------------------------------------------------
Fund profile
September 30, 1999
[SMALL CAP GRAPH OMITTED]
o Ticker symbol TSCEX
o CUSIP #900297300
o Top 10 holdings ((1) ANTEC, (2) Mercury Interactive, (3) Hambrecht & Quist,
(4) Polycom, (5) Jones Pharma, (6) Symantec, (7) Business Objects, (8)
Powerwave Technologies, (9) Peregrine Systems, (10) Linens 'N Things
o % in 10 largest holdings 12.9%
o Number of holdings 146
o Price/earnings ratio 28.1
o Weighted average market capitalization $1.3 billion
o % of holdings with positive earnings surprises 73.6%
o % of holdings with negative earnings surprises 3.5%
o Net assets $254.1 million
- --------------------------------------------------------------------------------
Sector weightings:
neutral to Russell 2000 Growth Index
23.9% Consumer discretionary/services
22.8% Technology
13.3% Health care
10.9% Financial services
10.0% Producer durables
6.2% Materials/processing
5.6% Utilities/communication
1.7% Energy
1.6% Autos/transportation
1.3% Consumer staples
[BAR GRAPH OMITTED]
- --------------------------------------------------------------------------------
Portfolio managers
[PHOTO OMITTED]
William C. McVail serves as the lead product manager of the Small Cap Growth
Fund. Before joining Turner in 1998, Bill was a portfolio manager at PNC Equity
Advisors. A Chartered Financial Analyst, Bill received a bachelor's degree from
Vassar College.
[PHOTO OMITTED]
Frank L. Sustersic serves as a comanager of the Small Cap Growth Fund. A
Chartered Financial Analyst, Frank joined Turner in 1994. Previously he was an
investment officer and fund manager with First Fidelity Bank Corporation. He
holds a bachelor's degree from the University of Pennsylvania.
[PHOTO OMITTED]
Christopher K. McHugh serves as a comanager of the Small Cap Growth Fund. Chris
joined Turner when it was founded in 1990 and previously held a position as
performance specialist at Provident Capital Management. He earned a bachelor's
degree at the Philadelphia College of Textiles and Science and an MBA degree at
St. Joseph's University.
12 | TURNER FUNDS 1999 ANNUAL REPORT
<PAGE>
Turner Micro Cap Growth Fund
Total return
Year ending September 30, 1999
- --------------------------------------------------------------------------------
Turner Micro Cap Growth Fund 113.46%
Lipper Small-Cap Core Funds Average 24.96
Russell 2000 Growth Index 32.63
- --------------------------------------------------------------------------------
Those who believe that triple-digit annual returns are the sole province of
certain Internet stocks are likely to think that the performance figures of the
Turner Micro Cap Growth Fund are a misprint. But they are not. For the 12 months
ended September 30, 1999, the fund delivered an astonishing return of 113.46%.
In doing so, the fund more than tripled the performance of its key benchmark,
the Russell 2000 Growth Index, which recorded an annual return of 32.63%.
We are pleased to report that this performance has not come at the expense of
diversification. Throughout the year, the fund was represented in all ten market
sectors -- unlike other micro-cap funds which invest primarily in technology
stocks while maintaining only token weightings in other sectors.
The fund was aided by a general strength in growth stocks; particularly those in
the technology sector. However, the real story was stock selection. Our
fundamental analysis and proprietary quantitative model led us to companies that
were clearly poised for above-average growth. And over the course of the year,
more than 46% of our holdings came through with positive earnings surprises,
while only three percent delivered negative surprises.
Our top ten holdings were among the best-performing stocks in the portfolio. Our
largest holding, CD-ROM producer Zomax, rose more than 1,000% during the year.
Other superior performers included cell phone manufacturer Audiovox; electronics
retailer Rex Stores; video game creator THQ, Inc.; specialty circuits
manufacturer Zoran; cardiac products leader Zoll Medical; broadcast equipment
maker California Amplifier; and remote control producer Universal Electronics.
Looking ahead, one cannot expect performance of this level to repeat itself --
especially as the fund grows in size. However, we believe that micro-cap stocks
remain a fertile area for exceptional rates of growth. And we believe that our
strategy of seeking the most promising stocks in each industry sector will
continue to provide an effective method for outperforming the overall market.
Growth of a $10,000 Investment in the Turner Micro Cap Growth Fund:
March 1, 1998-September 30, 1999*
In the printed version of the document, a line graph
appears which depicts the following plot points:
Turner Micro Cap Russell 2000
Growth Fund Growth Index
---------------- ------------
2/98 10,000 10,000
9/98 9,882 7,625
9/99 21,093 10,113
Annualized total returns
Periods ending September 30, 1999
- --------------------------------------------------------------------------------
Past one year Since inception
113.46% 59.94%
* These figures represent past performance, which is no guarantee of future
results. The investment return and principal value of an investment will
fluctuate, so an investor's shares, when redeemed, may be worth more or less
than their original cost. The inception date of the Turner Micro Cap Growth Fund
is March 1, 1998.
TURNER FUNDS 1999 ANNUAL REPORT | 13
<PAGE>
INVESTMENT REVIEW
- --------------------------------------------------------------------------------
Turner Micro Cap Growth Fund
- --------------------------------------------------------------------------------
Fund objective
The Turner Micro Cap Growth Fund seeks capital appreciation. It invests
primarily in a diversified portfolio of common stocks that, in Turner's opinion,
have strong earnings growth potential and market capitalizations not exceeding
$500 million at the time of purchase. The fund's economic-sector weightings stay
within a range that's not more than 50% above or below the sector weightings of
the Russell 2000 Growth Index.
The Fund participates in the Initial Public Offering ("IPO") market, and a
significant portion of the fund's returns are attributable to its investment in
IPOs, which have a magnified impact due to the fund's relatively small asset
base. There is no guarantee that as the fund's assets grow, it will continue to
experience substantially similar performance by investing in IPOs.
- --------------------------------------------------------------------------------
Fund profile
September 30, 1999
[MICRO CAP GRAPH OMITTED]
o Ticker symbol TMCGX
o CUSIP #872524301
o Top 10 holdings (1) Zomax, (2) Audiovox, (3) Rex Stores, (4) THQ, (5) Zoran,
(6) Eclipse Surgical Technologies, (7) Zoll Medical, (8) California Amplifier,
(9) Homeseekers.com, (10) Universal Electronics
o % in 10 largest holdings 16.1%
o Number of holdings 126
o Price/earnings ratio 34.4
o Weighted average market capitalization $300 million
o % of holdings with positive earnings surprises 56.9%
o % of holdings with negative earnings surprises 3.4%
o Net assets $13.0 million
- --------------------------------------------------------------------------------
Sector weightings:
resemble Russell 2000 Growth Index
31.1% Technology
27.4% Consumer discretionary/services
12.2% Health care
5.2% Financial services
5.0% Materials/processing
4.1% Energy
3.9% Producer durables
3.5% Utilities/communication
2.6% Autos/transportation
0.9% Consumer staples
[BAR GRAPH OMITTED]
Portfolio managers
[PHOTO OMITTED]
Frank L. Sustersic has served as the lead product manager of the Micro Cap
Growth Fund since its inception in 1998. A Chartered Financial Analyst, Frank
joined Turner in 1994. Previously he was an investment officer and fund manager
with First Fidelity Bank Corporation. He holds a bachelor's degree from the
University of Pennsylvania.
[PHOTO OMITTED]
William C. McVail serves as the comanager of the Micro Cap Growth Fund. Before
joining Turner in 1998, Bill was a portfolio manager at PNC Equity Advisors. A
Chartered Financial Analyst, Bill received a bachelor's degree from Vassar
College.
[PHOTO OMITTED]
Christopher J. Perry serves as the comanager of the Micro Cap Growth Fund. Chris
joined Turner in 1998 after serving as a research analyst at the Pennsylvania
Merchant Group. A Chartered Financial Analyst, he earned a bachelor's degree at
Villanova University and an MBA degree at Drexel University.
14 | TURNER FUNDS 1999 ANNUAL REPORT
<PAGE>
Turner Top 20 Fund
Total return
Period ending September 30, 1999
- --------------------------------------------------------------------------------
Turner Top 20 Fund 39.90%
Lipper Multi-Cap Core Funds Average 24.96
S&P 500 Index (6.24)
- --------------------------------------------------------------------------------
The Turner Top 20 Fund, which invests in the 15-25 stocks on which we are the
most bullish, recorded a bullish initial performance in the third quarter. Top
20 climbed 39.90% to beat the S&P 500 Index's 6.24% loss by 46.14 percentage.
Our holdings were culled from the approximately 250 stocks in all capitalization
ranges that we own in our other stock funds -- the stocks that we think are the
best of the best. In essence, we regard the fund as a distillation of our
ability to pick good stocks. As the market fluctuated in the quarter, we moved
in and out of our holdings adroitly. For instance, we reaped gains in technology
stocks, then sold a portion of them to buy health-care stocks and benefit from
their subsequent rally. Our holdings remain broadly diversified by sector and
security, with investments in seven sectors and typical weightings in individual
stocks of about 5%; we think such an approach should produce smoother returns
over time.
Growth of a $10,000 Investment in the Turner Top 20 Fund:
July 1, 1999-September 30, 1999*
In the printed version of the document, a line graph
appears which depicts the following plot points:
Turner S&P
------ -----
6/98 10,000 10,000
9/99 13,990 9,375
Cumulative total returns
Period ending September 30, 1999
- --------------------------------------------------------------------------------
Since inception
39.90%
* These figures represent past performance, which is no guarantee of future
results. The investment return and principal value of an investment will
fluctuate, so an investor's shares, when redeemed, may be worth more or less
than their original cost. The inception date of the Turner Top 20 Fund is
July 1, 1999.
TURNER FUNDS 1999 ANNUAL REPORT | 15
<PAGE>
INVESTMENT REVIEW
- --------------------------------------------------------------------------------
Turner Top 20 Fund
- --------------------------------------------------------------------------------
Fund objective
The Turner Top 20 Fund seeks capital appreciation. It invests in common stock
and other equity securities of companies, regardless of their market
capitalization, that Turner believes have strong earnings potential. The
portfolio will contain a total of 15-25 stocks representing Turner's favorite
investment ideas.
- --------------------------------------------------------------------------------
Fund profile
September 30, 1999
[TOP 20 GRAPH OMITTED]
o Ticker symbol TTOPX
o CUSIP #87252R862
o Top 10 holdings (1) NetZero, (2) Yahoo!, (3) America Online, (4) JDS Uniphase,
(5) InterNAP Network Services, (6) Scientific-Atlanta, (7) Johnson & Johnson,
(8) Micron Technology, (9) Abercrombie & Fitch, (10) Bausch & Lomb
o % in 10 largest holdings 53.8%
o Number of holdings 21
o Price/earnings ratio 39.8
o Weighted average market capitalization $57.3 billion
o % of holdings with positive earnings surprises 68.8%
o % of holdings with negative earnings surprises 19.1%
o Net assets $16.1 million
- --------------------------------------------------------------------------------
Sector weightings:
resemble Russell 2000 Growth Index
35.9% Technology
28.1% Consumer discretionary/services
9.9% Health care
9.8% Producer durables
8.5% Energy
4.6% Financial services
4.3% Consumer staples
[BAR GRAPH OMITTED]
Portfolio managers
[PHOTO OMITTED]
Robert E. Turner, founder, chairman, and chief investment officer of Turner
Investment Partners, serves as a comanager of the Midcap Growth Fund. A
Chartered Financial Analyst, Bob previously was senior investment manager with
Meridian Investment Company. He earned bachelor's and MBA degrees at Bradley
University.
[PHOTO OMITTED]
Christopher K. McHugh has served as the lead product manager of the Midcap
Growth Fund since its inception in 1996. Chris joined Turner when it was founded
in 1990 and previously held a position as performance specialist at Provident
Capital Management. He earned a bachelor's degree at the Philadelphia College of
Textiles and Science and an MBA degree at St. Joseph's University.
[PHOTO OMITTED]
William C. McVail serves as a comanager of the Midcap Growth Fund. Before
joining Turner in 1998, Bill was a portfolio manager at PNC Equity Advisors. A
Chartered Financial Analyst, Bill received a bachelor's degree from Vassar
College.
16 | TURNER FUNDS 1999 ANNUAL REPORT
<PAGE>
Turner Technology Fund
Total return
Period ending September 30, 1999
- --------------------------------------------------------------------------------
Turner Technology Fund 40.60%
Lipper Science & Technology Funds Average 24.96
Pacific Exchange Technology 100 Index 4.62
- --------------------------------------------------------------------------------
Performance was generally bleak for the 10 sectors of the stock market in the
third quarter, but the technology sector was a notable exception. The Pacific
Exchange Technology 100 Index, for one, advanced 4.62%. The Turner Technology
Fund began operation in the quarter and made the most of this favorable
environment: it soared 40.60% to outdistance the PSE Tech Index by 35.98
percentage points.
During the summer, technology stocks bottomed after a tough second quarter and
came roaring back. Seeing an enormous buying opportunity, we scooped up selected
Internet, software, and semiconductor shares, then rode their ascent. For
instance, software stocks were so beaten down that they were selling at
price/earnings multiples below their growth rates, which is highly unusual.
Going forward, we especially like the fundamentals of enterprise-resource-
planning software firms, which should benefit from future capital spending on
technology.
Growth of a $10,000 Investment in the Turner Technology Fund:
July 1, 1999-September 30, 1999*
In the printed version of the document, a line graph
appears which depicts the following plot points:
Turner Pacific
------ -------
6/99 10,000 10,000
9/99 14,060 10,467
Cumulative total returns
Period ending September 30, 1999
- --------------------------------------------------------------------------------
Since inception
40.60%
* These figures represent past performance, which is no guarantee of future
results. The investment return and principal value of an investment will
fluctuate, so an investor's shares, when redeemed, may be worth more or less
than their original cost. The inception date of the Turner Technology Fund is
July 1, 1999.
TURNER FUNDS 1999 ANNUAL REPORT | 17
<PAGE>
Investment Review
- --------------------------------------------------------------------------------
Turner Technology Fund
- --------------------------------------------------------------------------------
Fund objective
The Turner Technology Fund seeks capital appreciation. It invests in common
stock of companies that develop new technologies and that may experience
exceptional growth in sales and earnings driven technology related products and
services. Stock selection will not be based on company size, but rather on an
assessment of a company's fundamental prospects.
The Fund participates in the Initial Public Offering ("IPO") market, and a
significant portion of the fund's returns are attributable to its investment in
IPOs, which have a magnified impact due to the fund's relatively small asset
base. There is no guarantee that as the fund's assets grow, it will continue to
experience substantially similar performance by investing in IPOs.
- --------------------------------------------------------------------------------
Fund profile
September 30, 1999
[TECH GRAPH OMITTED]
o Ticker symbol TTECX
o CUSIP #87252R870
o Top 10 holdings (1) InterNAP Network Services, (2) Amazon.com, (3) NetZero,
(4) Microsoft, (5) Priceline.com, (6) Network Solutions, (7) Ciena, (8)
Intuit, (9) America Online, (10) JDS Uniphase
o % in 10 largest holdings 39.9%
o Number of holdings 39
o Price/earnings ratio 42.9
o Weighted average market capitalization $45.1 billion
o % of holdings with positive earnings surprises 68.5%
o % of holdings with negative earnings surprises 15.3%
o Net assets $8.3 million
- --------------------------------------------------------------------------------
Sector weightings:
resemble Russell 2000 Growth Index
56.9% Technology
24.4% Consumer discretionary/services
8.7% Producer durables
2.9% Utilities/communication
2.6% Health care
[BAR GRAPH OMITTED]
Portfolio managers
[PHOTO OMITTED]
Robert E. Turner, founder, chairman, and chief investment officer of Turner
Investment Partners, serves as a comanager of the Midcap Growth Fund. A
Chartered Financial Analyst, Bob previously was senior investment manager with
Meridian Investment Company. He earned bachelor's and MBA degrees at Bradley
University.
[PHOTO OMITTED]
Christopher K. McHugh has served as the lead product manager of the Midcap
Growth Fund since its inception in 1996. Chris joined Turner when it was founded
in 1990 and previously held a position as performance specialist at Provident
Capital Management. He earned a bachelor's degree at the Philadelphia College of
Textiles and Science and an MBA degree at St. Joseph's University.
18 | TURNER FUNDS 1999 ANNUAL REPORT
<PAGE>
Turner Short Duration Government Funds-
Three Year Portfolio
Total return
Year ending September 30, 1999
- --------------------------------------------------------------------------------
Turner Short Duration Government Funds-
Three Year Portfolio (Institutional Class) 2.89%
Lipper Short/Intermediate U.S. Government
Funds Average 0.69
Lehman Brothers 1-3 Year
U.S. Government Bond Index 3.18
- --------------------------------------------------------------------------------
In a challenging year for all fixed income investors, the Turner Short Duration
- -- Three Year Fund Institutional Class delivered strong results, with a total
return of 2.89%. By comparison, the Lehman Brothers 1-3 Year U.S.
Government Bond Index returned only a slightly higher 3.18%.
During the fiscal year, fixed income securities were hit by two rate hikes by
the Federal Reserve Board, each pushing short rates up by 0.25%. The Fed's goal
in each case was to tap the brakes on the economy and preempt inflation.
Throughout the period, we held the fund's average weighted maturity to a
relatively conservative 2.2 years. This positioned us to take advantage of
higher yields as they became available. We also maintained our level of quality,
focusing primarily on U.S. Treasury notes and government agency securities.
The new year offers considerable challenge as the economy continues to grow at a
healthy pace and inflation fears rise. In the face of this the Turner Short
Duration Government Fund-Three Year Portfolio will continue to invest in high
quality instruments and to manage interest rate risk carefully. We will seek to
benefit from an eventual fall in rates, which we expect, without exposing our
investors to undue risk.
Growth of a $10,000 Investment in the Turner Short Duration Government Funds-
Three Year Portfolio, Institutional Class:
March 31, 1994-September 30, 1999 *
In the printed version of the document, a line graph
appears which depicts the following plot points:
Turner Short Duration Lehman 1-3 yr
--------------------- -------------
1/31/94 10,000 10,000
Sep 94 10,089 10,049
Sep 95 10,976 10,871
Sep 96 11,637 11,488
Sep 97 12,463 12,279
Sep 98 13,469 13,253
Sep 99 13,858 13,676
Annualized total returns
Periods ending September 30, 1999
Past one Past three Past five Since
year years years inception
Institutional Class Shares
2.89% 6.00% 6.56% 6.02%
Advisor Class Shares
-- -- -- 5.64%
* These figures represent past performance, which is no guarantee of future
results. The investment return and principal value of an investment will
fluctuate, so an investor's shares, when redeemed, may be worth more or less
than their original cost. The inception date of the Turner Short Duration
Government Funds-Three Year Portfolio (Institutional Class) is March 1, 1994.
TURNER FUNDS 1999 ANNUAL REPORT | 19
<PAGE>
Investment Review
- --------------------------------------------------------------------------------
Turner Short Duration Government Funds-
Three Year Portfolio
- --------------------------------------------------------------------------------
Fund objective
The Turner Short Duration Government Funds-Three Year Portfolio seeks to produce
maximum total return consistent with preservation of capital and investment
prudence. It invests primarily in high-grade securities issued or guaranteed by
the U.S. government or its agencies. The fund seeks to limit fluctuations in
principal and reduce interest-rate risk by maintaining an average effective
duration no greater than that of a three-year Treasury bill.
- --------------------------------------------------------------------------------
Fund profile
September 30, 1999
[THREE YEAR GRAPH]
o Ticker symbol TSDGX, Institutional Class Shares
o CUSIP #872524202, Institutional Class Shares
o Top 10 holdings (1) U.S. Treasury Notes, 5.75%, 10/31/00, (2) U.S. Treasury
Notes, 5.00%, 02/28/01, (3) U.S. Treasury Notes, 7.00%, 07/15/06, (4) Federal
Home Loan Mortgage Corporation, 9.50%, 06/15/06, (5) Spiegel Credit Card,
7.50%, 1995-A, (6) Federal Home Loan Mortgage Corporation Gold, 7.50%,
10/14/29, (7) U.S. Treasury Notes, 6.375%, 08/15/02, (8) Structured Assets SEC
Corporation Variable %, 10/30/07, (9) Fleet Credit Card, 1998-A, (10) Ford
Motor Credit, 5.75%, 02/23/04
o % in 10 largest holdings 57.4%
o Number of holdings 44
o Average effective duration 1.7 years
o Average maturity 2.3 years
o Average yield to maturity 6.13%
o Average credit quality Agency
o Convexity (0.21)
o Net assets $38.8 million
- --------------------------------------------------------------------------------
Sector weightings:
47.6% Mortgage-backed securities
30.1% Treasury securities
11.6% Asset-backed securities
7.4% Corporates
3.3% Other
[BAR GRAPH OMITTED]
- --------------------------------------------------------------------------------
Portfolio managers
[PHOTO OMITTED]
James I. Midanek, fixed-income chief investment officer, has served as manager
of the Short Duration Funds-One Year Portfolio since inception. Jim joined
Turner in 1998, upon our acquisition of Solon Asset Management, which he
cofounded. Previously he was chief investment officer, fixed income with
Montgomery Asset Management. He holds a bachelor's degree from Queens College.
[PHOTO OMITTED]
Kathy Dull, senior portfolio manager/security analyst, joined the firm in 1997.
She earned a bachelor's degree at Miami University, Oxford, Ohio. Previously
Kathy was an assistant to the fixed-income portfolio manager at Montgomery Asset
Management.
[PHOTO OMITTED]
Robb J. Parlanti, senior portfolio manager/security analyst, joined Turner in
1993. A Chartered Financial Analyst, he received a bachelor's degree at Wake
Forest University. Robb formerly was an assistant vice president/portfolio
manager at PNC Bank.
20 | TURNER FUNDS 1999 ANNUAL REPORT
<PAGE>
Turner Short Duration Government Funds-
One Year Portfolio
Total return
Year ending September 30, 1999
- --------------------------------------------------------------------------------
Turner Short Duration Government Funds-
One Year Portfolio (Institutional Class) 5.34%
Lipper Ultra-Short Obligation Funds Average 4.28
Merrill Lynch 3 Month
U.S. Treasury Bill Index 4.70
- --------------------------------------------------------------------------------
For the 12 months ended September 30, 1999, the Turner Short Duration - One Year
Fund Institutional Class delivered a strong total return of 5.34%. By contrast,
the Merrill Lynch 3 Month U.S. Treasury Bill Index reported a total return of
4.70%.
The fund benefited from the Federal Reserve Board's two rate hikes late in the
fiscal year, each of which boosted short-term yields by 0.25%. Because of these
actions, short-term instruments actually outperformed intermediate-term
securities for the year.
The fund also took advantage of the incremental yield opportunities available at
the longer end of its maturity spectrum. And, it boosted returns still further
by holding a sizeable proportion of government-backed collateralized mortgage
obligation (CMO) securities, which offer higher income levels than Treasury
issues of comparable maturities.
Looking ahead, we believe the potential for additional rate increases remains
fairly strong for the early part of calendar year 2000. Once the Federal Reserve
Board is satisfied that any Y2K-related concerns have been put to rest, the
strength of the economy and tightness in the labor markets could make a
compelling case for additional action. Whether or not this occurs, we believe
the fund is well positioned to continue delivering yields well in excess of the
rate of inflation.
Growth of a $10,000 Investment in the Turner Short Duration Government Funds-
One Year Portfolio, Institutional Class
March 1, 1998-September 30, 1999*
In the printed version of the document, a line graph
appears which depicts the following plot points:
Turner Short Duration Merrill Lynch 3-month
--------------------- ---------------------
3/3/94 10,000 10,000
Sep.94 10,231 10,235
Sep 95 10,935 10,837
Sep 96 11,704 11,431
Sep 97 12,428 12,047
Sep 98 13,201 12,693
Sep 99 13,906 13,289
Annualized total returns
Periods ending September 30, 1999
Past one Past three Past five Since
year years years inception
Institutional Class Shares
5.34% 5.92% 6.33% 6.08%
Advisor Class Shares
5.00% -- -- 5.22%
* These figures represent past performance, which is no guarantee of future
results. The investment return and principal value of an investment will
fluctuate, so an investor's shares, when redeemed, may be worth more or less
than their original cost. The inception date of the Turner Short Duration
Government Funds-One Year Portfolio (Institutional Class) is March 1, 1994.
TURNER FUNDS 1999 ANNUAL REPORT | 21
<PAGE>
INVESTMENT REVIEW
- --------------------------------------------------------------------------------
Turner Short Duration Government Funds-
One Year Portfolio
- --------------------------------------------------------------------------------
Fund objective
The Turner Short Duration Government Funds-One Year Portfolio seeks to produce
maximum total return consistent with the preservation of capital and investment
prudence. It invests primarily in high-grade securities issued or guaranteed by
the U.S. government or its agencies. The fund seeks to limit fluctuations in
principal and reduce interest-rate risk by maintaining an average effective
duration no greater than that of a one-year Treasury note.
- --------------------------------------------------------------------------------
Fund profile
September 30, 1999
[ONE YEAR GRAPH OMITTED]
o CUSIP #872524103, Institutional Class Shares
o Top 10 holdings (1) Federal National Mortgage Association, 5.84375%, 06/25/00,
(2) Federal Home Loan Mortgage Corporation, 5.85%, 11/15/05, (3) U.S. Treasury
Notes, 5.75%, 10/31/00, (4) Federal Home Loan Mortgage Corporation, 6.50%,
09/15/06, (5) Morgan Stanley, 6.85%, 02/15/20, (6) Federal National Mortgage
Association, 5.84375%, 06/25/08, (7) Government National Mortgage Association,
6.375%, (8) Federal Home Loan Mortgage Corporation, 6.00%, 11/15/05, (9)
Federal Home Loan Mortgage Corporation, 5.70%, 07/15/05, (10) Federal Home
Loan Mortgage Corporation, 7.00%, 10/15/18
o % in 10 largest holdings 69.6%
o Number of holdings 33
o Average effective duration 0.4 years
o Average maturity 0.5 years
o Average yield to maturity 5.73%
o Average credit quality Agency
o Convexity (0.18)
o Net assets $6.4 million
- --------------------------------------------------------------------------------
Sector weightings:
47.6% Mortgage-backed securities
30.1% Treasury securities
11.6% Asset-backed securities
7.4% Corporates
3.3% Other
[BAR GRAPH OMITTED]
- --------------------------------------------------------------------------------
Portfolio managers
[PHOTO OMITTED]
James I. Midanek, fixed-income chief investment officer, has served as manager
of the Short Duration Funds-Three Year Portfolio since inception. Jim joined
Turner in 1998, upon our acquisition of Solon Asset Management, which he
cofounded. Previously he was chief investment officer, fixed income with
Montgomery Asset Management. He holds a bachelor's degree from Queens College.
[PHOTO OMITTED]
Kathy Dull, senior portfolio manager/security analyst, joined the firm in 1997.
She earned a bachelor's degree at Miami University, Oxford, Ohio. Previously
Kathy was an assistant to the fixed-income portfolio manager at Montgomery Asset
Management.
[PHOTO OMITTED]
Robb J. Parlanti, senior portfolio manager/security analyst, joined Turner in
1993. A Chartered Financial Analyst, he received a bachelor's degree at Wake
Forest University. Robb formerly was an assistant vice president/portfolio
manager at PNC Bank.
22 | TURNER FUNDS 1999 ANNUAL REPORT
<PAGE>
Turner Core High Quality
Fixed Income Fund
Total return
Period ending September 30, 1999*
- --------------------------------------------------------------------------------
Turner Core High Quality
Fixed Income Fund 0.48%
Lipper General Bond Funds Average 4.28
Lehman Brothers Aggregate
Bond Index 0.68
- --------------------------------------------------------------------------------
Interest rates rose at most maturities in the third quarter, but not enough to
prevent the Turner Core High Quality Fixed Income Fund from recording a positive
return, 0.48%. That return was below the 0.68% performance of the bond market,
as represented by the Lehman Brothers Aggregate Bond Index. Our results were
enhanced by the portfolio's high average credit quality (better-quality
securities outperformed), significant positions in Treasury, mortgage-backed,
and asset-backed securities (those three sectors outperformed), and a
conservative average duration (longer durations underperformed). Conversely, our
results would have been better if we had owned more bonds with above-average
yields, especially more mortgage pass-throughs, which have done well lately. We
are keeping our average duration in neutral territory to capture more yield than
we would with a more conservative positioning.
Growth of a $10,000 Investment in the Turner Core High Quality Fixed Income
Fund: July 1, 1999-September 30, 1999*
In the printed version of the document, a line graph
appears which depicts the following plot points:
Turner Lehman
------ ------
6/98 10,000 10,000
9/99 10,047 10,068
Cumulative total returns
Period ending September 30, 1999
- --------------------------------------------------------------------------------
Since inception
0.48%
* These figures represent past performance, which is no guarantee of future
results. The investment return and principal value of an investment will
fluctuate, so an investor's shares, when redeemed, may be worth more or less
than their original cost. The inception date of the Turner Core High Quality
Fixed Income Fund is July 1, 1999.
TURNER FUNDS 1999 ANNUAL REPORT | 23
<PAGE>
INVESTMENT REVIEW
- --------------------------------------------------------------------------------
Turner Core High Quality Fixed Income Fund
- --------------------------------------------------------------------------------
Fund objective
The Turner Core High Quality Fixed Income Fund seeks current income and capital
appreciation, an objective that emphasizes total return rather than just yield
alone. It invests in investment-grade fixed-income securities, including U.S.
government, corporate, mortgaged-backed and asset-backed securities.
- --------------------------------------------------------------------------------
Fund profile
September 30, 1999
[CORE HIGH GRAPH OMITTED]
o Ticker symbol THQFX
o CUSIP #87252R847
o Top 10 holdings (1) U.S. Treasury Notes, 7.00%, 07/15/06, (2) U.S. Treasury
Notes, 8.125%, 05/15/21, (3) Spiegel Credit Card, 7.50%, 1995-A, (4) FNCI,
6.00%, 02/01/13, (5) Federal National Mortgage Association, 6.00%, 12/25/22,
(6) Federal Home Loan Mortgage Corporation, 6.00%, 6/01/29, (7) Federal Home
Loan Mortgage Corporation Gold Pool, 7.50%, 10/01/28, (8) FNCL, 6.00%,
04/01/28, (9) Federal Home Loan Mortgage Corporation, 9.50%, 06/15/06, (10)
Olympic Auto, 6.15%, 1995-D
o % in 10 largest holdings 85.8%
o Number of holdings 26
o Average effective duration 5.0 years
o Average maturity 8.5 years
o Average yield to maturity 6.49%
o Average credit quality Agency
o Convexity 0.09
o Net assets $10.0 million
- --------------------------------------------------------------------------------
Sector weightings:
resemble Russell 2000 Growth Index
44.1% Mortgage-backed securities
38.1% Treasury securities
13.7% Corporates
2.2% Asset-backed securities
1.9% Other
[BAR GRAPH OMITTED]
Portfolio managers
[PHOTO OMITTED]
James I. Midanek, fixed-income chief investment officer, has served as manager
of the Short Duration Funds-Three Year Portfolio since inception. Jim joined
Turner in 1998, upon our acquisition of Solon Asset Management, which he
cofounded. Previously he was chief investment officer, fixed income with
Montgomery Asset Management. He holds a bachelor's degree from Queens College.
[PHOTO OMITTED]
Kathy Dull, senior portfolio manager/security analyst, joined the firm in 1997.
She earned a bachelor's degree at Miami University, Oxford, Ohio. Previously
Kathy was an assistant to the fixed-income portfolio manager at Montgomery Asset
Management.
[PHOTO OMITTED]
Robb J. Parlanti, senior portfolio manager/security analyst, joined Turner in
1993. A Chartered Financial Analyst, he received a bachelor's degree at Wake
Forest University. Robb formerly was an assistant vice president/portfolio
manager at PNC Bank.
24 | TURNER FUNDS 1999 ANNUAL REPORT
<PAGE>
FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
Statement of net assets
Turner Large Cap Growth Equity Fund
September 30, 1999
Value
Shares (000)
- ----------------------------------------------------------
Common stocks--100.3%
- ----------------------------------------------------------
Beauty products--4.7%
- ----------------------------------------------------------
Colgate-Palmolive 2,530 $ 116
Procter & Gamble 3,015 283
-----
Total Beauty products 399
-----
- ----------------------------------------------------------
Broadcasting, newspapers & advertising--2.8%
- ----------------------------------------------------------
AT&T Corp-Liberty Media, Cl A* 3,740 139
Clear Channel Communications* 1,220 97
-----
Total Broadcasting, newspapers &
advertising 236
-----
- ----------------------------------------------------------
Communications equipment--7.7%
- ----------------------------------------------------------
Juniper Networks* 910 166
Lucent Technologies 5,490 356
Nokia 1,460 131
-----
Total Communications equipment 653
-----
- ----------------------------------------------------------
Computers & services--12.7%
- ----------------------------------------------------------
Cisco Systems* 7,094 486
EMC* 2,380 170
IBM 2,170 263
Sun Microsystems* 1,660 154
-----
Total Computers & services 1,073
-----
- ----------------------------------------------------------
Drugs--11.4%
- ----------------------------------------------------------
American Home Products 3,990 166
Bristol-Myers Squibb 5,500 371
Genentech* 1,405 206
Schering Plough 5,030 219
-----
Total Drugs 962
-----
- ----------------------------------------------------------
Electronics--3.4%
- ----------------------------------------------------------
Micron Technology 1,610 107
Solectron* 2,500 180
-----
Total Electronics 287
-----
Value
Shares (000)
- ----------------------------------------------------------
Financial services--2.1%
- ----------------------------------------------------------
American Express 610 $ 82
Automatic Data Processing 2,080 93
-----
Total Financial services 175
-----
- ----------------------------------------------------------
Food, beverage & tobacco--2.5%
- ----------------------------------------------------------
Anheuser Busch 1,120 78
Seagram 2,880 131
-----
Total Food, beverage & tobacco 209
-----
- ----------------------------------------------------------
Insurance--2.1%
- ----------------------------------------------------------
American International Group 2,097 182
-----
Total Insurance 182
-----
- ----------------------------------------------------------
Internet services--6.4%
- ----------------------------------------------------------
Amazon.com* 1,310 105
America Online* 2,885 300
Yahoo* 790 142
-----
Total Internet services 547
-----
- ----------------------------------------------------------
Medical products & services--7.9%
- ----------------------------------------------------------
Amgen* 2,190 178
Johnson & Johnson 4,375 402
Medtronic 2,400 85
-----
Total Medical products & services 665
-----
- ----------------------------------------------------------
Miscellaneous manufacturing--1.0%
- ----------------------------------------------------------
Tyco International 810 84
-----
Total Miscellaneous manufacturing 84
-----
- ----------------------------------------------------------
Multimedia--0.9%
- ----------------------------------------------------------
CBS 1,705 79
-----
Total Multimedia 79
-----
TURNER FUNDS 1999 ANNUAL REPORT | 25
<PAGE>
FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
Statement of net assets
Turner Large Cap Growth Equity Fund
Value
Shares (000)
- ----------------------------------------------------------
Retail--9.1%
- ----------------------------------------------------------
CVS 3,430 $ 140
Home Depot 3,043 209
Kroger* 2,950 65
Safeway* 2,300 88
Wal-Mart Stores 5,635 268
-----
Total Retail 770
-----
- ----------------------------------------------------------
Semiconductors/instruments--9.9%
- ----------------------------------------------------------
Intel 5,010 372
Jds Uniphase* 1,920 219
Texas Instruments 2,970 244
-----
Total Semiconductors/instruments 835
-----
- ----------------------------------------------------------
Software & programming--13.1%
- ----------------------------------------------------------
BMC Software* 2,490 178
Computer Associates 2,220 136
Microsoft* 6,800 616
Oracle* 3,890 177
-----
Total Software & programming 1,107
-----
- ----------------------------------------------------------
Telephones & telecommunications--2.6%
- ----------------------------------------------------------
Qwest Communications
International* 4,530 134
Sprint (PCS Group)* 1,150 86
-----
Total Telephones &
telecommunications 220
-----
- ----------------------------------------------------------
Total common stocks
(Cost $7,993) 8,483
==========================================================
Face amount Value
(000) (000)
- ----------------------------------------------------------
Repurchase agreement--0.9%
- ----------------------------------------------------------
Morgan Stanley, 5.00%, dated 09/30/99,
matures 10/01/99, repurchase price
$76,151 (collateralized by U.S. Treasury
Note, par value $73,410, 7.25%,
08/15/04: market value $77,918) $76 $ 76
- ----------------------------------------------------------
Total repurchase agreement
(Cost $76) 76
==========================================================
Total investments--101.2%
(Cost $8,069) 8,559
==========================================================
- ----------------------------------------------------------
Other assets and liabilities, net--(1.2%) (100)
==========================================================
- ----------------------------------------------------------
Net assets:
- ----------------------------------------------------------
Portfolio Shares (unlimited authorization
-- no par value) based on 447,615
outstanding shares of beneficial interest 6,352
Accumulated net realized
gain on investments 1,617
Net unrealized appreciation
on investments 490
- ----------------------------------------------------------
Total net assets--100.0% $8,459
==========================================================
Net asset value, offering and
redemption price per share $18.90
==========================================================
*Non-income producing security.
Cl - Class
The accompanying notes are an integral part of the financial statements.
26 | TURNER FUNDS 1999 ANNUAL REPORT
<PAGE>
- --------------------------------------------------------------------------------
Schedule of investments
Turner Growth Equity Fund
September 30, 1999
Value
Shares (000)
- ----------------------------------------------------------
Common stocks--98.8%
- ----------------------------------------------------------
Aircraft--0.5%
- ----------------------------------------------------------
Allied Signal 12,440 $ 746
-------
Total Aircraft 746
-------
- ----------------------------------------------------------
Beauty products--4.5%
- ----------------------------------------------------------
Colgate-Palmolive 36,650 1,677
Procter & Gamble 50,900 4,772
-------
Total Beauty products 6,449
-------
- ----------------------------------------------------------
Broadcasting, newspapers & advertising--2.4%
- ----------------------------------------------------------
AT&T Corp-- Liberty Media, Cl A* 30,785 1,143
Clear Channel Communications* 13,695 1,094
Omnicom Group 14,245 1,128
-------
Total Broadcasting, newspapers
& advertising 3,365
-------
- ----------------------------------------------------------
Communications--0.8%
- ----------------------------------------------------------
Vodafone Airtouch PLC, ADR 4,950 1,177
-------
Total Communications 1,177
-------
- ----------------------------------------------------------
Communications equipment--7.0%
- ----------------------------------------------------------
Ciena* 38,880 1,419
Comcast, Special, Cl A 29,970 1,195
Juniper Networks* 3,650 665
Lucent Technologies 76,360 4,954
Nokia 11,970 1,075
Scientific-Atlanta 14,480 718
-------
Total Communications equipment 10,026
-------
- ----------------------------------------------------------
Computers & services--10.8%
- ----------------------------------------------------------
Brocade Communications Systems* 3,050 641
Cisco Systems* 92,895 6,369
EMC* 25,155 1,797
Foundry Networks* 4,530 571
IBM 23,265 2,824
Lexmark International Group, Cl A* 8,620 694
Network Appliance* 10,110 724
Sun Microsystems* 19,340 1,799
-------
Total Computers & services 15,419
-------
Value
Shares (000)
- ----------------------------------------------------------
Drugs--8.0%
- ----------------------------------------------------------
American Home Products 25,240 $ 1,047
Biogen* 13,150 1,036
Bristol-Myers Squibb 79,335 5,355
Genentech* 7,190 1,052
Schering Plough 67,890 2,962
-------
Total Drugs 11,452
-------
- ----------------------------------------------------------
Electronics--3.8%
- ----------------------------------------------------------
Atmel* 19,550 661
LSI Logic* 12,955 667
Maxim Integrated Products* 10,430 658
Microchip Technology* 13,700 704
Micron Technology 14,100 939
Motorola 8,105 713
Solectron* 15,390 1,105
-------
Total Electronics 5,447
-------
- ----------------------------------------------------------
Entertainment--1.0%
- ----------------------------------------------------------
Time Warner 23,735 1,442
-------
Total Entertainment 1,442
-------
- ----------------------------------------------------------
Financial services--3.4%
- ----------------------------------------------------------
American Express 10,525 1,417
Citigroup 24,892 1,095
Concord EFS* 30,405 627
Goldman Sachs Group 11,540 704
Paychex 30,650 1,046
-------
Total Financial services 4,889
-------
- ----------------------------------------------------------
Food, beverage & tobacco--2.9%
- ----------------------------------------------------------
Anheuser Busch 20,060 1,405
Pepsi Bottling Group 26,870 458
Sara Lee 32,120 753
Seagram 32,480 1,478
-------
Total Food, beverage & tobacco 4,094
-------
- ----------------------------------------------------------
Gas/natural gas--0.5%
- ----------------------------------------------------------
Enron 17,200 710
-------
Total Gas/natural gas 710
-------
TURNER FUNDS 1999 ANNUAL REPORT | 27
<PAGE>
FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
Schedule of Investments
Turner Growth Equity Fund
Value
Shares (000)
- ----------------------------------------------------------
Glass products--0.5%
- ----------------------------------------------------------
Corning 11,010 $ 755
-------
Total Glass products 755
-------
- ----------------------------------------------------------
Healthcare--0.8%
- ----------------------------------------------------------
PE Biosystems 15,730 1,136
-------
Total Healthcare 1,136
-------
- ----------------------------------------------------------
Insurance--1.2%
- ----------------------------------------------------------
Aflac 16,890 707
American International Group 12,081 1,050
-------
Total Insurance 1,757
-------
- ----------------------------------------------------------
Internet services--5.5%
- ----------------------------------------------------------
Amazon.com* 10,740 859
America Online* 22,885 2,380
Internet Capital Group* 6,810 598
Netzero* 40,690 1,058
Priceline.com* 11,680 753
RealNetworks* 7,070 739
Yahoo* 7,750 1,391
-------
Total Internet services 7,778
-------
- ----------------------------------------------------------
Machinery--1.2%
- ----------------------------------------------------------
Applied Materials* 13,375 1,039
Eaton 7,310 631
-------
Total Machinery 1,670
-------
- ----------------------------------------------------------
Medical products & services--8.9%
- ----------------------------------------------------------
Amgen* 25,780 2,101
Bausch & Lomb 23,140 1,526
Columbia/HCA Healthcare 50,290 1,066
Johnson & Johnson 62,810 5,771
Medimmune* 7,470 744
Medtronic 42,320 1,502
-------
Total Medical products & services 12,710
-------
- ----------------------------------------------------------
Miscellaneous business services--0.7%
- ----------------------------------------------------------
Automatic Data Processing 23,360 1,042
-------
Total Miscellaneous business services 1,042
-------
- ----------------------------------------------------------
Miscellaneous manufacturing--0.8%
- ----------------------------------------------------------
Tyco International 11,010 1,137
-------
Total Miscellaneous manufacturing 1,137
-------
Value
Shares (000)
- ----------------------------------------------------------
Multimedia--1.0%
- ----------------------------------------------------------
CBS 30,490 $ 1,410
-------
Total Multimedia 1,410
-------
- ----------------------------------------------------------
Petroleum & fuel products--0.4%
- ----------------------------------------------------------
Burlington Resources 16,860 620
-------
Total Petroleum & fuel products 620
-------
- ----------------------------------------------------------
Printing & publishing--1.1%
- ----------------------------------------------------------
Tribune 30,080 1,496
-------
Total Printing & publishing 1,496
-------
- ----------------------------------------------------------
Restaurants--0.8%
- ----------------------------------------------------------
McDonald's 25,020 1,076
-------
Total Restaurants 1,076
-------
- ----------------------------------------------------------
Retail--6.8%
- ----------------------------------------------------------
Abercrombie & Fitch, Cl A* 18,230 621
CVS 18,260 745
Home Depot 43,430 2,980
Kroger* 44,985 992
Safeway* 16,250 619
Wal-Mart Stores 79,290 3,771
-------
Total Retail 9,728
-------
- ----------------------------------------------------------
Semiconductors/instruments--7.6%
- ----------------------------------------------------------
Intel 85,540 6,357
Jds Uniphase* 12,310 1,401
KLA-Tencor* 10,280 668
Lam Research* 11,790 719
Texas Instruments 20,160 1,658
-------
Total Semiconductors/instruments 10,803
-------
- ----------------------------------------------------------
Software & programming--11.7%
- ----------------------------------------------------------
BMC Software* 15,650 1,120
Checkpoint Software* 8,110 685
Computer Associates 19,020 1,165
Electronic Arts* 9,580 693
Inktomi* 5,720 687
Intuit* 11,510 1,009
Microsoft* 97,450 8,825
Oracle* 25,100 1,142
Siebel Systems* 10,670 711
Veritas Software* 8,920 677
-------
Total Software & programming 16,714
-------
28 | TURNER FUNDS 1999 ANNUAL REPORT
<PAGE>
Schedule of Investments
Turner Growth Equity Fund
Value
Shares (000)
- ----------------------------------------------------------
Steel & steel works--0.5%
- ----------------------------------------------------------
Alcoa 12,050 $ 748
-------
Total Steel & steel works 748
-------
- ----------------------------------------------------------
Telephones & telecommunications--3.2%
- ----------------------------------------------------------
McLeodusa, Cl A* 18,190 774
Nextel Communications, Cl A* 16,630 1,128
Nextlink Communications* 15,190 788
Qwest Communications
International* 24,700 730
Sprint (PCS Group)* 14,740 1,099
-------
Total Telephones & telecommunications 4,519
-------
- ----------------------------------------------------------
Wholesale--0.5%
- ----------------------------------------------------------
Sysco 20,880 732
-------
Total Wholesale 732
-------
- ----------------------------------------------------------
Total common stocks
(Cost $128,224) 141,047
==========================================================
Face Amount Value
(000) (000)
- ----------------------------------------------------------
Repurchase agreement--1.9%
- ----------------------------------------------------------
Morgan Stanley, 5.35%, dated 09/30/99,
matures 10/01/99, repurchase price
$2,713,821 (collateralized by
GNMA, par value $3,784,310,
7.50%, matures 10/15/28:
market value $2,768,098) $2,714 $ 2,714
- ----------------------------------------------------------
Total repurchase agreement
(Cost $2,714) 2,714
==========================================================
- ----------------------------------------------------------
Total investments--100.7%
(Cost $130,938) 143,761
==========================================================
- ----------------------------------------------------------
Other assets and liabilities, net--(0.7%) (937)
==========================================================
- ----------------------------------------------------------
Total net assets--100.0% $142,824
==========================================================
* Non-income producing security.
ADR - American Depository Receipts
Cl - Class
The accompanying notes are an integral part of the financial statements.
TURNER FUNDS 1999 ANNUAL REPORT | 29
<PAGE>
FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
Schedule of investments
Turner Midcap Growth Fund
September 30, 1999
Value
Shares (000)
- ----------------------------------------------------------
Common stocks--96.9%
- ----------------------------------------------------------
Automotive--0.6%
- ----------------------------------------------------------
Lear* 25,070 $ 882
-------
Total Automotive 882
-------
- ----------------------------------------------------------
Banks--2.1%
- ----------------------------------------------------------
National Commerce Bancorporation 54,790 1,204
Northern Trust 14,000 1,169
TCF Financial 24,480 699
-------
Total Banks 3,072
-------
- ----------------------------------------------------------
Broadcasting, newspapers & advertising--5.5%
- ----------------------------------------------------------
Hispanic Broadcasting* 9,020 687
Interpublic Group 48,700 2,003
Outdoor Systems* 53,931 1,928
TMP Worldwide* 27,530 1,676
Young & Rubicam* 41,480 1,825
-------
Total Broadcasting, newspapers
& advertising 8,119
-------
- ----------------------------------------------------------
Chemicals--1.7%
- ----------------------------------------------------------
Avery Dennison 28,340 1,495
W.R. Grace* 60,980 979
-------
Total Chemicals 2,474
-------
- ----------------------------------------------------------
Communications equipment--3.2%
- ----------------------------------------------------------
Antec* 14,880 790
Ciena* 44,810 1,636
Juniper Networks* 6,190 1,127
Scientific-Atlanta 24,810 1,230
-------
Total Communications equipment 4,783
-------
- ----------------------------------------------------------
Computers & services--7.3%
- ----------------------------------------------------------
Affiliated Computer Services, Cl A* 28,580 1,161
Brocade Communications Systems* 5,590 1,174
Comverse Technology* 12,890 1,216
Fiserv* 45,915 1,492
Foundry Networks* 9,280 1,169
Lexmark International Group, Cl A* 24,250 1,952
Network Appliance* 17,060 1,222
Safeguard Scientifics* 21,030 1,430
-------
Total Computers & services 10,816
-------
Value
Shares (000)
- ----------------------------------------------------------
Drugs--1.9%
- ----------------------------------------------------------
Biogen* 20,630 $ 1,626
Forest Laboratories* 27,630 1,164
-------
Total Drugs 2,790
-------
- ----------------------------------------------------------
Consumer staples--0.7%
- ----------------------------------------------------------
Dial 42,740 1,090
-------
Total Consumer staples 1,090
-------
- ----------------------------------------------------------
Electrical services--0.7%
- ----------------------------------------------------------
Calpine* 12,390 1,054
-------
Total Electrical services 1,054
-------
- ----------------------------------------------------------
Electronics--5.1%
- ----------------------------------------------------------
Atmel* 27,130 917
Gemstar International* 23,350 1,824
LSI Logic* 19,980 1,029
Maxim Integrated Products* 20,490 1,293
Micron Technology 20,500 1,365
Sawtek* 33,440 1,170
-------
Total Electronics 7,598
-------
- ----------------------------------------------------------
Financial services--3.4%
- ----------------------------------------------------------
Capital One Financial 18,360 716
Concord EFS* 65,820 1,358
Lehman Brothers Holdings 25,880 1,509
SLM Holding 33,990 1,462
-------
Total Financial services 5,045
-------
- ----------------------------------------------------------
Food, beverage & tobacco--3.1%
- ----------------------------------------------------------
Dean Foods 28,040 1,221
Paychex 59,640 2,035
Pepsi Bottling Group 81,030 1,383
-------
Total Food, beverage & tobacco 4,639
-------
- ----------------------------------------------------------
Household furniture & fixtures--0.8%
- ----------------------------------------------------------
Ethan Allen Interiors 40,095 1,276
-------
Total Household furniture & fixtures 1,276
-------
- ----------------------------------------------------------
Internet services--12.8%
- ----------------------------------------------------------
Ariba * 6,250 903
CMGI* 13,100 1,343
30 | TURNER FUNDS 1999 ANNUAL REPORT
<PAGE>
Schedule of investments
Turner Midcap Growth Fund
Value
Shares (000)
- ----------------------------------------------------------
C-Net* 18,270 $ 1,023
Doubleclick* 17,080 2,035
Exodus Communications* 15,140 1,091
Infospace.com* 30,450 1,252
Internap Network Services* 28,110 1,255
Internet Capital Group* 16,330 1,435
Looksmart* 25,980 619
Network Solutions, Cl A* 23,340 2,144
Netzero* 40,080 1,042
Phone.com* 5,560 842
Priceline.com* 21,350 1,377
RealNetworks* 10,240 1,071
Ticketmaster Online-CitySearch* 64,740 1,566
-------
Total Internet services 18,998
-------
- ----------------------------------------------------------
Machinery--2.0%
- ----------------------------------------------------------
Lennox International* 70,590 1,094
SPX 21,420 1,944
-------
Total Machinery 3,038
-------
- ----------------------------------------------------------
Medical products & services--8.7%
- ----------------------------------------------------------
Allergan 13,340 1,467
Bausch & Lomb 29,940 1,974
C.R. Bard 28,060 1,321
Express Scripts, Cl A* 13,770 1,078
Medimmune* 17,810 1,775
MiniMed* 13,440 1,320
St. Jude Medical 23,380 736
Stryker 27,140 1,388
Visx* 23,950 1,894
-------
Total Medical products & services 12,953
-------
- ----------------------------------------------------------
Paper & paper products--1.0%
- ----------------------------------------------------------
Smurfit-Stone Container* 71,470 1,546
-------
Total Paper & paper products 1,546
-------
- ----------------------------------------------------------
Petroleum services--1.9%
- ----------------------------------------------------------
Cooper Cameron* 29,530 1,115
Devon Energy 19,060 790
Eog Resources 43,760 930
-------
Total Petroleum services 2,835
-------
Value
Shares (000)
- ----------------------------------------------------------
Retail--10.8%
- ----------------------------------------------------------
Abercrombie & Fitch, Cl A* 52,280 $ 1,781
American Eagle Outfitters* 28,140 1,363
AnnTaylor Stores* 25,630 1,048
Bed Bath & Beyond* 38,990 1,362
Best Buy* 33,320 2,068
Brinker International* 58,820 1,595
Circuit City Stores 46,290 1,953
Drugstore.com* 22,660 821
Linens N Things* 20,090 678
Outback Steakhouse* 26,655 679
Tiffany & Company 26,850 1,609
TJX 39,500 1,108
-------
Total Retail 16,065
-------
- ----------------------------------------------------------
Semiconductors/instruments--9.1%
- ----------------------------------------------------------
Applied Micro Circuits* 12,660 722
Broadcom, Cl A* 9,980 1,088
E-Tek Dynamics* 23,750 1,288
GlobeSpan* 10,840 684
Jds Uniphase* 17,070 1,943
KLA-Tencor* 21,460 1,395
Lam Research* 18,980 1,158
Lattice Semiconductor* 24,720 734
PE Biosystems 16,400 1,185
QLogic* 12,700 887
RF Micro Devices* 29,620 1,355
SDL* 13,870 1,058
-------
Total Semiconductors/instruments 13,497
-------
- ----------------------------------------------------------
Software & programming--7.8%
- ----------------------------------------------------------
Electronic Arts* 16,460 1,191
Electronics for Imaging* 18,120 931
Inktomi* 11,160 1,340
Intuit* 12,220 1,071
J.D. Edwards & Company* 51,370 1,064
Mercury Interactive* 21,330 1,377
Portal Software* 31,850 1,234
Siebel Systems* 17,740 1,182
Verisign* 10,740 1,144
Veritas Software* 14,650 1,112
-------
Total Software & programming 11,646
-------
TURNER FUNDS 1999 ANNUAL REPORT | 31
<PAGE>
FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
Schedule of investments
Turner Midcap Growth Fund
Value
Shares (000)
- ----------------------------------------------------------
Technology--0.4%
- ----------------------------------------------------------
Redback Networks* 6,360 $ 687
-------
Total Technology 687
-------
- ----------------------------------------------------------
Telephones & telecommunications--6.3%
- ----------------------------------------------------------
Allegiance Telecommunications* 28,480 1,499
McLeodusa, Cl A* 39,140 1,666
Nextel Communications, Cl A* 17,610 1,194
Nextlink Communications* 25,300 1,312
NTL* 11,690 1,123
Pinnacle Holdings* 41,540 1,085
RNC* 35,590 1,459
-------
Total Telephones & telecommunications 9,338
-------
- ----------------------------------------------------------
Total common stocks
(Cost $132,982) 144,241
==========================================================
- ----------------------------------------------------------
Rights--0.0%
- ----------------------------------------------------------
Internet Capital Group Rights 1,032 --
US Interactive Rights 516 --
- ----------------------------------------------------------
Total rights
(Cost $0) --
==========================================================
Face amount Value
(000) (000)
- ----------------------------------------------------------
Repurchase agreement--3.0%
- ----------------------------------------------------------
Morgan Stanley, 5.35%, dated 09/30/99,
matures 10/01/99, repurchase price
$4,451,363 (collateralized by
GNMA, par value $6,207,240,
7.50%, 10/15/28:
market value $4,640,391) $4,451 $ 4,451
- ----------------------------------------------------------
Total repurchase agreement
(Cost $4,451) 4,451
==========================================================
- ----------------------------------------------------------
Total investments--99.9%
(Cost $137,433) 148,692
==========================================================
- ----------------------------------------------------------
Other assets and liabilities, net--0.1% 138
==========================================================
- ----------------------------------------------------------
Total net assets--100.0% $148,830
==========================================================
* Non-income producing security.
Cl - Class
The accompanying notes are an integral part of the financial statements.
32 | TURNER FUNDS 1999 ANNUAL REPORT
<PAGE>
Statement of net assets
Turner Small Cap Growth Fund
September 30, 1999
Value
Shares (000)
- ----------------------------------------------------------
Common stocks--97.2%
- ----------------------------------------------------------
Air Transportation--0.8%
- ----------------------------------------------------------
Atlas Air* 48,860 $ 1,069
SkyWest 46,870 1,028
--------
Total Air transportation 2,097
--------
- ----------------------------------------------------------
Automotive--0.9%
- ----------------------------------------------------------
Avis Rent A Car* 61,430 1,282
Tower Automotive* 46,000 911
--------
Total Automotive 2,193
--------
- ----------------------------------------------------------
Banks--1.9%
- ----------------------------------------------------------
Community First Bankshares 80,170 1,353
Silicon Valley Bancshares* 46,970 1,133
Webster Financial 53,500 1,364
Westamerica Bancorporation 35,510 1,074
--------
Total Banks 4,924
--------
- ----------------------------------------------------------
Broadcasting, newspapers & advertising--7.1%
- ----------------------------------------------------------
Acme Communications* 29,260 907
Entercom Communications* 32,590 1,173
Flycast Communications* 50,780 2,311
Insight Communications* 40,610 1,162
Lamar Advertising* 43,840 2,170
Modem Media Poppe Tyson* 46,290 1,713
Radio One* 27,960 1,160
Salem Communications, Cl A* 46,480 1,185
TMP Worldwide* 44,370 2,701
True North Communications 55,790 2,029
Wink Communications* 36,920 1,613
--------
Total Broadcasting, newspapers &
advertising 18,124
--------
- ----------------------------------------------------------
Chemicals--1.6%
- ----------------------------------------------------------
OM Group 48,210 1,850
W.R. Grace* 134,080 2,154
--------
Total Chemicals 4,004
--------
Value
Shares (000)
- ----------------------------------------------------------
Commericial services--2.5%
- ----------------------------------------------------------
Abacus Direct* 11,090 $ 1,352
ACNielsen* 50,340 1,142
Profit Recovery Group International* 43,290 1,932
Quanta Services* 65,930 1,933
--------
Total Commericial services 6,359
--------
- ----------------------------------------------------------
Communications equipment--4.0%
- ----------------------------------------------------------
Antec* 79,230 4,209
Polycom* 66,180 3,154
Powerwave Technologies* 59,730 2,880
--------
Total Communications equipment 10,243
--------
- ----------------------------------------------------------
Computers & services--1.6%
- ----------------------------------------------------------
Digex* 48,440 1,147
Digital Insight* 18,610 279
Jack Henry & Associates 40,490 1,496
Packeteer* 31,380 1,069
--------
Total Computers & services 3,991
--------
- ----------------------------------------------------------
Containers & packaging--0.9%
- ----------------------------------------------------------
Ball 26,420 1,164
Gaylord Container* 156,830 1,117
--------
Total Containers & packaging 2,281
--------
- ----------------------------------------------------------
Drugs--5.7%
- ----------------------------------------------------------
Alkermes* 31,000 893
Alpharma, Cl A 72,530 2,561
Biovail International* 32,780 1,664
Gilead Sciences* 15,770 1,012
IDEC Pharmaceuticals* 19,040 1,790
Jones Pharmaceuticals 94,155 3,104
King Pharmaceuticals* 50,840 1,779
QLT PhotoTherapeutics* 21,440 1,639
--------
Total Drugs 14,442
--------
- ----------------------------------------------------------
Electrical services--0.7%
- ----------------------------------------------------------
Calpine* 21,210 1,804
--------
Total Electrical services 1,804
--------
TURNER FUNDS 1999 ANNUAL REPORT | 33
<PAGE>
Statement of net assets
Turner Small Cap Growth Fund
Value
Shares (000)
- ----------------------------------------------------------
Electronics--3.4%
- ----------------------------------------------------------
DII Group* 70,040 $ 2,465
DSP Group* 53,190 2,121
Optical Coating Laboratories 21,890 2,015
Sawtek* 57,000 1,995
--------
Total Electronics 8,596
--------
- ----------------------------------------------------------
Entertainment--0.3%
- ----------------------------------------------------------
Argosy Gaming* 56,300 746
--------
Total Entertainment 746
--------
- ----------------------------------------------------------
Financial services--3.8%
- ----------------------------------------------------------
Hambrecht & Quist* 65,810 3,221
Legg Mason 32,970 1,263
Metris 60,780 1,789
NCO Group* 44,220 2,078
Private Business* 74,040 352
Raymond James Financial 51,510 1,027
--------
Total Financial services 9,730
--------
- ----------------------------------------------------------
Food, beverage & tobacco--1.3%
- ----------------------------------------------------------
Aurora Foods * 63,980 1,024
Beringer Wine Estates Holdings* 29,320 1,204
Smithfield Foods* 36,550 978
--------
Total Food, beverage & tobacco 3,206
--------
- ----------------------------------------------------------
Healthcare--0.7%
- ----------------------------------------------------------
Chemdex* 61,510 1,895
--------
Total Healthcare 1,895
--------
- ----------------------------------------------------------
Household furniture & fixtures--0.5%
- ----------------------------------------------------------
Ethan Allen Interiors 42,790 1,361
--------
Total Household furniture & fixtures 1,361
--------
- ----------------------------------------------------------
Insurance--2.1%
- ----------------------------------------------------------
Annuity & Life Re Holdings 40,200 1,000
E.W. Blanch Holdings 15,000 977
Financial Security Assurance
Holdings 29,640 1,532
Radian Group 42,310 1,817
--------
Total Insurance 5,326
--------
Value
Shares (000)
- ----------------------------------------------------------
Internet services--3.7%
- ----------------------------------------------------------
Go2Net* 19,360 $ 1,254
ITXC* 40,390 1,285
Keynote Systems* 17,070 427
Looksmart* 46,270 1,102
Multex.com* 62,140 792
Network Solutions, Cl A* 20,930 1,923
Phone.com* 9,170 1,389
VerticalNet* 33,300 1,232
--------
Total Internet services 9,404
--------
- ----------------------------------------------------------
Machinery--3.3%
- ----------------------------------------------------------
Advanced Energy Industries* 65,740 2,030
Asyst Technologies* 60,150 1,985
Brooks Automation* 23,420 411
Lennox International* 65,260 1,012
PRI Automation* 47,740 1,725
SPX 12,560 1,140
--------
Total Machinery 8,303
--------
- ----------------------------------------------------------
Measuring devices--1.0%
- ----------------------------------------------------------
Mettler-Toledo International* 84,800 2,512
--------
Total Measuring devices 2,512
--------
- ----------------------------------------------------------
Medical products & services--7.4%
- ----------------------------------------------------------
Advanced Paradigm* 31,230 1,710
Conmed* 59,840 1,466
Dendrite International* 48,930 2,312
Eclipse Surgical Technologies* 94,200 1,554
Express Scripts, Cl A* 26,930 2,107
Hooper Holmes 90,090 2,309
MiniMed* 19,690 1,935
Patterson Dental* 53,900 2,671
Summit Technology* 72,320 1,324
Techne* 44,530 1,397
--------
Total Medical products & services 18,785
--------
- ----------------------------------------------------------
Miscellaneous manufacturing--1.5%
- ----------------------------------------------------------
Dexter 47,400 1,769
Kemet* 64,340 2,057
--------
Total Miscellaneous manufacturing 3,826
--------
34 | TURNER FUNDS 1999 ANNUAL REPORT
<PAGE>
- --------------------------------------------------------------------------------
Statement of net assets
Turner Small Cap Growth Fund
Value
Shares (000)
- ----------------------------------------------------------
Petroleum & fuel products--1.0%
- ----------------------------------------------------------
Global Industries* 99,890 $ 812
Ocean Energy* 174,752 1,780
--------
Total Petroleum & fuel products 2,592
--------
- ----------------------------------------------------------
Retail--13.0%
- ----------------------------------------------------------
American Eagle Outfitters* 54,100 2,620
AnnTaylor Stores* 63,130 2,580
Buca* 68,360 889
Children's Place* 87,520 2,330
Cost Plus* 31,900 1,547
Drugstore.com* 26,820 972
Foodmaker* 78,620 1,961
Insight Enterprises* 50,100 1,628
Linens N Things* 83,360 2,813
Pacific Sunwear of California* 78,210 2,192
Papa John's International* 49,180 2,029
Rex Stores* 43,820 1,358
Stamps.com* 30,980 1,077
Sunglass Hut International* 141,870 1,499
Tuesday Morning* 96,380 2,434
United Rentals* 74,180 1,613
Yankee Candle* 55,230 1,067
Zale* 64,290 2,463
--------
Total Retail 33,072
--------
- ----------------------------------------------------------
Semiconductors/instruments--8.9%
- ----------------------------------------------------------
Alpha Industries* 35,420 1,998
Applied Micro Circuits* 31,590 1,801
Cymer* 56,960 1,976
GlobeSpan* 19,320 1,220
Harmonic* 14,200 1,858
Lam Research* 37,300 2,275
Lattice Semiconductor* 76,400 2,268
MIPS Technologies* 67,060 2,133
SDL* 36,370 2,776
TranSwitch* 33,380 1,903
Varian Semiconductor Equipment
Associates* 64,480 1,358
Zoran* 43,740 1,186
--------
Total Semiconductors/instruments 22,752
--------
Value
Shares (000)
- ----------------------------------------------------------
Software & programming--10.4%
- ----------------------------------------------------------
Agile Software* 28,320 $ 1,812
Business Objects ADR* 49,520 2,922
Clarify* 29,000 1,459
E.piphany* 27,500 1,341
Kana Communications* 34,430 1,717
Mercury Interactive* 55,980 3,614
MicroStrategy* 33,390 1,872
Peregrine Systems* 69,110 2,816
Quest Software* 29,180 1,357
Symantec* 84,600 3,043
Verity* 35,920 2,472
Vignette* 21,540 1,949
--------
Total Software & programming 26,374
--------
- ----------------------------------------------------------
Specialty construction--0.5%
- ----------------------------------------------------------
U.S. Aggregates* 82,920 1,156
--------
Total Specialty construction 1,156
--------
- ----------------------------------------------------------
Telephones & telecommunications--5.8%
- ----------------------------------------------------------
AirGate PCS* 49,020 1,219
Caprock Communications* 15,290 356
CommScope * 52,630 1,710
Dycom Industries* 47,180 1,990
Focal Communications* 68,360 1,752
Intermedia Communications* 59,080 1,285
ITC Deltacom* 76,660 2,108
Pinnacle Holdings* 99,200 2,592
Price Communications* 64,627 1,620
--------
Total Telephones & telecommunications 14,632
--------
- ----------------------------------------------------------
Wholesale--0.9%
- ----------------------------------------------------------
Amerisource Health, Cl A* 37,300 884
WESCO International* 95,940 1,355
--------
Total Wholesale 2,239
--------
- ----------------------------------------------------------
Total common stocks
(Cost $211,888) 246,969
- ----------------------------------------------------------
TURNER FUNDS 1999 ANNUAL REPORT | 35
<PAGE>
Statement of net assets
Turner Small Cap Growth Fund
Face amount Value
(000) (000)
- ----------------------------------------------------------
Repurchase agreement--5.0%
- ----------------------------------------------------------
JP Morgan 5.35%, dated 09/30/99,
matures 10/01/99, repurchase price
$12,767,114 (collateralized by GNMA,
par value $17,803,206, 7.50%,
matures 10/15/28: market
value $13,022,457) $12,767 $ 12,767
- ----------------------------------------------------------
Total repurchase agreement
(Cost $12,767) 12,767
- ----------------------------------------------------------
- ----------------------------------------------------------
Total investments--102.2%
(Cost $224,655) 259,736
- ----------------------------------------------------------
Other assets and liabilities, net--(2.2%) (5,659)
- ----------------------------------------------------------
Value
(000)
- ----------------------------------------------------------
Net assets:
- ----------------------------------------------------------
Portfolio Shares (unlimited authorization--
no par value) based on 7,429,338
outstanding shares of beneficial interest $167,680
Accumulated net realized gain on investments 51,316
Net unrealized appreciation on investments 35,081
- ----------------------------------------------------------
Total net assets--100.0% $254,077
- ----------------------------------------------------------
- ----------------------------------------------------------
Net asset value, offering and
redemption price per share $34.20
- ----------------------------------------------------------
*Non-income producing security.
ADR - American Depository Receipt
Cl - Class
The accompanying notes are an integral part of the
financial statements.
36 | TURNER FUNDS 1999 ANNUAL REPORT
<PAGE>
Schedule of investments
Turner Micro Cap Growth Fund
September 30, 1999
Value
Shares (000)
- ----------------------------------------------------------
Common stocks--96.0%
- ----------------------------------------------------------
Agricultural biotechnology--1.3%
- ----------------------------------------------------------
Strategic Diagnostics* 18,500 $ 168
--------
Total Agricultural biotechnology 168
--------
- ----------------------------------------------------------
Athletic footwear--1.2%
- ----------------------------------------------------------
Saucony Inc* 9,900 156
--------
Total Athletic footwear 156
--------
- ----------------------------------------------------------
Automotive--1.2%
- ----------------------------------------------------------
Monaco Coach* 3,165 77
Oshkosh Truck 2,775 74
--------
Total Automotive 151
--------
- ----------------------------------------------------------
Banks--1.0%
- ----------------------------------------------------------
PFF Bancorp* 4,700 97
Trico Bancshares 2,000 37
--------
Total Banks 134
--------
- ----------------------------------------------------------
Building & construction supplies--1.8%
- ----------------------------------------------------------
Dayton Superior* 2,000 34
Mobile Mini* 6,600 144
NVR* 980 49
--------
Total Building & construction supplies 227
--------
- ----------------------------------------------------------
Communications equipment--1.9%
- ----------------------------------------------------------
California Amplifier* 12,500 181
Catapult Communications* 4,100 64
--------
Total Communications equipment 245
--------
- ----------------------------------------------------------
Computers & services--8.5%
- ----------------------------------------------------------
Cybex Computer Products* 1,350 45
Digital Insight* 1,400 21
Homeseekers.com* 14,000 175
In Focus Systems* 7,200 121
Mercury Computer Systems* 3,000 102
Mti Technology* 6,000 138
Netscout Systems* 2,200 47
Radisys* 1,700 67
Rare Medium Group* 15,000 158
Zomax* 9,000 233
--------
Total Computers & services 1,107
--------
Value
Shares (000)
- ----------------------------------------------------------
Consumer products--0.7%
- ----------------------------------------------------------
Steven Madden* 7,400 $ 96
--------
Total Consumer products 96
--------
- ----------------------------------------------------------
Containers & packaging--0.7%
- ----------------------------------------------------------
Gaylord Container* 12,000 85
--------
Total Containers & packaging 85
--------
- ----------------------------------------------------------
Electronics--1.9%
- ----------------------------------------------------------
Anaren Microwave* 2,450 69
Universal Electronics* 7,500 173
--------
Total Electronics 242
--------
- ----------------------------------------------------------
Entertainment--5.9%
- ----------------------------------------------------------
Alliance Gaming* 9,600 76
Argosy Gaming* 10,000 132
Boyd Gaming* 20,700 124
Isle of Capris Casinos* 9,500 95
THQ* 5,000 216
WMS Industries* 10,700 124
---------
Total Entertainment 767
---------
- ----------------------------------------------------------
Environmental services--0.9%
- ----------------------------------------------------------
Stericycle* 7,600 112
--------
Total Environmental services 112
--------
- ----------------------------------------------------------
Financial services--2.8%
- ----------------------------------------------------------
Ace Cash Express* 4,000 58
Creditrust* 5,150 116
Financial Federal* 3,900 74
Onyx Acceptance* 9,500 72
Rock Financial 2,700 49
--------
Total Financial services 369
--------
- ----------------------------------------------------------
Food, beverage & tobacco--0.4%
- ----------------------------------------------------------
Agribrands International* 1,100 55
--------
Total Food, beverage & tobacco 55
--------
- ----------------------------------------------------------
Gas/natural gas--0.6%
- ----------------------------------------------------------
Cascade Natural Gas 2,100 38
RGC Resources 1,700 34
--------
Total Gas/natural gas 72
--------
TURNER FUNDS 1999 ANNUAL REPORT | 37
<PAGE>
Schedule of investments
Turner Micro Cap Growth Fund
Value
Shares (000)
- ----------------------------------------------------------
Household furniture & fixtures--0.3%
- ----------------------------------------------------------
Stanley Furniture* 2,060 $ 44
--------
Total Household furniture & fixtures 44
--------
- ----------------------------------------------------------
Household products--1.2%
- ----------------------------------------------------------
Salton* 5,300 160
--------
Total Household products 160
--------
- ----------------------------------------------------------
Insurance--1.3%
- ----------------------------------------------------------
Farm Family Holdings* 970 38
Guarantee Life 3,200 98
Penn Treaty American* 1,450 30
--------
Total Insurance 166
--------
- ----------------------------------------------------------
Leasing & renting--0.7%
- ----------------------------------------------------------
Dollar Thrifty Automotive* 4,700 97
--------
Total Leasing & renting 97
--------
- ----------------------------------------------------------
Machinery--1.8%
- ----------------------------------------------------------
Moog, Cl A* 2,100 61
Photon Dynamics* 8,000 168
--------
Total Machinery 229
--------
- ----------------------------------------------------------
Medical products & services--8.9%
- ----------------------------------------------------------
Advanced Paradigm* 1,700 93
Collagenex Pharmaceuticals* 4,200 74
Eclipse Surgical Technologies* 12,000 198
Endocare* 7,300 46
Exactech* 6,600 89
Hooper Holmes 2,000 51
Molecular Devices* 2,850 78
PolyMedica* 7,000 163
Staar Surgical* 8,000 95
Syncor International* 2,200 83
Zoll Medical* 6,000 182
--------
Total Medical products & services 1,152
--------
- ----------------------------------------------------------
Metal--0.8%
- ----------------------------------------------------------
Century Aluminum 9,100 98
--------
Total Metal 98
--------
- ----------------------------------------------------------
Miscellaneous business services--1.0%
- ----------------------------------------------------------
Peapod* 13,000 131
--------
Total Miscellaneous business services 131
--------
Value
Shares (000)
- ----------------------------------------------------------
Miscellaneous manufacturing--2.9%
- ----------------------------------------------------------
Aeroflex* 5,650 $ 69
Jakks Pacific* 3,050 114
LSI Industries 2,400 55
Shuffle Master* 7,200 59
Uniroyal Technology* 7,500 73
--------
Total Miscellaneous manufacturing 370
--------
- ----------------------------------------------------------
Petroleum & fuel products--4.1%
- ----------------------------------------------------------
Basin Exploration* 3,400 82
Comstock Resources* 14,100 58
Edge Petroleum* 16,000 102
Frontier Oil* 9,500 65
HS Resources* 7,000 115
Key Energy Group* 23,000 114
--------
Total Petroleum & fuel products 536
--------
- ----------------------------------------------------------
Pharmaceutical--1.8%
- ----------------------------------------------------------
Corixa* 6,500 87
United Therapeutics* 5,000 144
--------
Total Pharmaceutical 231
--------
- ----------------------------------------------------------
Photography--0.6%
- ----------------------------------------------------------
Pinnacle Systems* 1,800 76
--------
Total Photography 76
--------
- ----------------------------------------------------------
Professional services--0.5%
- ----------------------------------------------------------
ICT Group* 9,000 65
--------
Total Professional services 65
--------
- ----------------------------------------------------------
Retail--11.6%
- ----------------------------------------------------------
Chico's Fas* 5,000 136
Factory 2u Stores* 4,200 125
Garden Fresh Restaurant* 4,050 62
Genesco* 8,000 100
Hot Topic* 4,500 123
Intertan* 7,000 137
Rare Hospitality International* 3,500 76
Rex Stores* 7,050 219
Seaway Food Town 2,400 67
Shop At Home* 12,000 108
Taco Cabana, Cl A* 5,500 53
Ugly Duckling* 10,000 71
Ultimate Electronics* 8,400 131
Wilsons Leather Experts* 6,300 101
--------
Total Retail 1,509
--------
38 | TURNER FUNDS 1999 ANNUAL REPORT
<PAGE>
Schedule of investments
Turner Micro Cap Growth Fund
Value
Shares (000)
- ----------------------------------------------------------
Semiconductors/instruments--10.8%
- ----------------------------------------------------------
Advanced Digital Information* 5,000 $ 139
Cohu 5,400 114
Elantec Semiconductor* 5,500 97
ESS Technology* 5,300 70
Ibis Technology* 2,800 97
Keithley Instruments 6,300 89
Measurement Specialties* 4,400 81
Parlex* 6,400 98
Pericom Semiconductor* 6,500 97
Silicon Storage Technology* 7,600 107
Three-Five Systems* 3,600 80
Triquint Semiconductor* 2,250 129
Zoran* 7,300 198
--------
Total Semiconductors/instruments 1,396
--------
- ----------------------------------------------------------
Software & programming--6.5%
- ----------------------------------------------------------
Ardent Software* 2,100 57
Avt* 2,230 68
Bluestone Software* 6,000 139
Broadbase Software * 5,000 80
JDA Software Group* 5,500 64
Mission Critical Software* 2,000 89
Pervasive Software* 2,900 100
Sapiens International* 6,100 68
Unify* 4,100 92
Verity* 1,300 89
--------
Total Software & programming 846
--------
- ----------------------------------------------------------
Steel & steel works--1.5%
- ----------------------------------------------------------
Maverick Tube* 5,700 95
NS Group* 9,000 97
--------
Total Steel & steel works 192
--------
- ----------------------------------------------------------
Telephones & telecommunications--5.2%
- ----------------------------------------------------------
Audiovox, Cl A* 13,000 228
Lightbridge* 6,100 120
Metro One Telecommunications* 6,700 129
Orckit Communications* 2,400 85
Periophonics* 3,700 116
--------
Total Telephones & telecommunications 678
--------
Shares/face Value
amount (000) (000)
- ----------------------------------------------------------
Transportation services--1.4%
- ----------------------------------------------------------
Arkansas Best* 7,300 $ 90
Forward Air* 4,000 95
--------
Total Transportation services 185
--------
- ----------------------------------------------------------
Water utilities--1.1%
- ----------------------------------------------------------
Artesian Resources, Cl A 2,800 70
E'town 1,350 67
--------
Total Water utilities 137
--------
- ----------------------------------------------------------
Wholesale--1.2%
- ----------------------------------------------------------
Advanced Marketing Systems 3,755 74
D&K Healthcare Resources* 3,700 86
--------
Total Wholesale 160
--------
- ----------------------------------------------------------
Total common stocks
(Cost $9,849) 12,444
- ----------------------------------------------------------
- ----------------------------------------------------------
Repurchase agreement--3.2%
- ----------------------------------------------------------
Morgan Stanley, 5.00%, dated 09/30/99,
matures 10/01/99, repurchase price
$413,708, (collateralized by U.S.
Treasury Notes, par value $398,882,
7.25%, matures 08/15/04: market
value $423,306) $414 414
- ----------------------------------------------------------
Total repurchase agreement
(Cost $414) 414
- ----------------------------------------------------------
- ----------------------------------------------------------
Total investments--99.2%
(Cost $10,263) 12,858
- ----------------------------------------------------------
- ----------------------------------------------------------
Other assets and liabilities, net--0.8% 105
- ----------------------------------------------------------
- ----------------------------------------------------------
Total net assets--100.0% $12,963
- ----------------------------------------------------------
*Non-income producing security.
Cl - Class
The accompanying notes are an integral part of the
financial statements.
TURNER FUNDS 1999 ANNUAL REPORT | 39
<PAGE>
Schedule of investments
Turner Top 20 Fund
September 30, 1999
Value
Shares (000)
- ----------------------------------------------------------
Common stocks--97.5%
- ----------------------------------------------------------
Communications equipment--12.8%
- ----------------------------------------------------------
Ciena* 16,000 $ 584
Nokia 7,400 665
Scientific-Atlanta 16,320 809
--------
Total Communications equipment 2,058
--------
- ----------------------------------------------------------
Computers & services--4.0%
- ----------------------------------------------------------
Cisco Systems* 9,500 651
--------
Total Computers & services 651
--------
- ----------------------------------------------------------
Electronics--8.2%
- ----------------------------------------------------------
Atmel* 16,000 541
Micron Technology 11,800 785
--------
Total Electronics 1,326
--------
- ----------------------------------------------------------
Financial services--4.4%
- ----------------------------------------------------------
Automatic Data Processing 16,000 714
--------
Total Financial services 714
--------
- ----------------------------------------------------------
Food, beverage & tobacco--4.1%
- ----------------------------------------------------------
Anheuser Busch 9,500 666
--------
Total Food, beverage & tobacco 666
--------
- ----------------------------------------------------------
Gas/natural gas--4.1%
- ----------------------------------------------------------
Enron 16,000 660
--------
Total Gas/natural gas 660
--------
- ----------------------------------------------------------
Internet services--27.4%
- ----------------------------------------------------------
America Online* 8,200 853
Internap Network services* 18,630 831
Netzero* 41,000 1,066
Priceline.com* 11,000 709
Yahoo* 5,280 948
--------
Total Internet services 4,407
--------
- ----------------------------------------------------------
Medical products & services--9.6%
- ----------------------------------------------------------
Bausch & Lomb 11,200 738
Johnson & Johnson 8,725 802
--------
Total Medical products & services 1,540
--------
Shares/face Value
amount (000) (000)
- ----------------------------------------------------------
Oil field services--4.1%
- ----------------------------------------------------------
Baker Hughes 23,000 $ 667
--------
Total Oil field services 667
--------
- ----------------------------------------------------------
Retail--4.9%
- ----------------------------------------------------------
Abercrombie & Fitch, Cl A* 23,000 783
--------
Total Retail 783
--------
- ----------------------------------------------------------
Semiconductors/instruments--9.5%
- ----------------------------------------------------------
Jds Uniphase* 7,350 837
Lam Research* 11,275 688
--------
Total Semiconductors/instruments 1,525
--------
- ----------------------------------------------------------
Software & programming--4.4%
- ----------------------------------------------------------
Microsoft* 7,830 709
--------
Total Software & programming 709
--------
- ----------------------------------------------------------
Total common stock (Cost $14,900) 15,706
- ----------------------------------------------------------
- ----------------------------------------------------------
Repurchase agreement--1.0%
- ----------------------------------------------------------
Morgan Stanley, 5.00%, dated 09/30/99,
matures 10/01/99, repurchase price
$164,964 (collateralized by U.S.
Treasury Notes, par value $159,027,
7.25%, matures 08/15/04: market
value $168,791) $165 165
- ----------------------------------------------------------
- ----------------------------------------------------------
Total repurchase agreement
(Cost $165) 165
- ----------------------------------------------------------
- ----------------------------------------------------------
Total investments--98.5%
(Cost $15,065) 15,871
- ----------------------------------------------------------
- ----------------------------------------------------------
Other assets and liabilities, net--1.5% 241
- ----------------------------------------------------------
- ----------------------------------------------------------
Total net assets--100.0% $16,112
- ----------------------------------------------------------
* Non-income producing security.
Cl - Class
The accompanying notes are an integral part of the
financial statements.
40 | TURNER FUNDS 1999 ANNUAL REPORT
<PAGE>
Schedule of investments
Turner Technology Fund
September 30, 1999
Value
Shares (000)
- ----------------------------------------------------------
Common stocks--89.8%
- ----------------------------------------------------------
Communications equipment--8.5%
- ----------------------------------------------------------
Ciena* 6,760 $ 247
Juniper Networks* 1,000 182
Lucent Technologies 1,920 125
Scientific-Atlanta 3,100 154
--------
Total Communications equipment 708
--------
- ----------------------------------------------------------
Computers & services--4.8%
- ----------------------------------------------------------
Cisco Systems* 2,860 196
EMC* 2,850 204
--------
Total Computers & services 400
--------
- ----------------------------------------------------------
Drugs--1.2%
- ----------------------------------------------------------
Biogen* 1,300 102
--------
Total Drugs 102
--------
- ----------------------------------------------------------
Electronics--10.9%
- ----------------------------------------------------------
Atmel* 5,325 180
Gemstar International* 2,860 223
LSI Logic* 2,500 129
Micron Technology 3,350 223
Sawtek* 4,170 146
--------
Total Electronics 901
--------
- ----------------------------------------------------------
Internet services--32.7%
- ----------------------------------------------------------
Amazon.com* 4,790 383
America Online* 2,245 233
CMGI* 1,500 154
Infospace.com* 3,800 156
Internap Network services* 9,410 420
Network Solutions, Cl A* 3,070 282
Netzero* 12,630 328
Priceline.com* 4,670 301
RealNetworks* 1,070 112
Ticketmaster Online-CitySearch* 5,805 140
Yahoo* 1,140 205
--------
Total Internet services 2,714
--------
- ----------------------------------------------------------
Machinery--1.9%
- ----------------------------------------------------------
Applied Materials* 2,040 158
--------
Total Machinery 158
--------
Value
Shares (000)
- ----------------------------------------------------------
Medical products & services--1.3%
- ----------------------------------------------------------
Amgen* 1,265 $ 103
--------
Total Medical products & services 103
--------
- ----------------------------------------------------------
Semiconductors/instruments--12.5%
- ----------------------------------------------------------
Broadcom, Cl A* 1,650 180
GlobeSpan* 3,560 225
Jds Uniphase* 2,000 228
KLA-Tencor* 2,280 148
RF Micro Devices* 3,080 141
Texas Instruments 1,400 115
--------
Total Semiconductors/instruments 1,037
--------
- ----------------------------------------------------------
Software & programming--13.3%
- ----------------------------------------------------------
Computer Associates 2,230 137
Electronics for Imaging* 2,230 115
Intuit* 2,670 234
Microsoft* 3,465 314
Oracle* 3,000 136
Verisign* 1,550 165
--------
Total Software & programming 1,101
--------
- ----------------------------------------------------------
Telephones & telecommunications--2.7%
- ----------------------------------------------------------
McLeodusa, Cl A* 2,970 126
Nextel Communications, Cl A* 1,470 100
--------
Total Telephones & telecommunications 226
--------
- ----------------------------------------------------------
Total common stocks
(Cost $7,138) 7,450
- ----------------------------------------------------------
- ----------------------------------------------------------
Total investments--89.8%
(Cost $7,138) 7,450
- ----------------------------------------------------------
- ----------------------------------------------------------
Other assets and liabilities, net--10.2% 846
- ----------------------------------------------------------
- ----------------------------------------------------------
Total net assets--100.0% $8,296
- ----------------------------------------------------------
* Non-income producing producing security.
Cl - Class
The accompanying notes are an integral part of the
financial statements.
TURNER FUNDS 1999 ANNUAL REPORT | 41
<PAGE>
Schedule of investments
Turner Short Duration Government Funds-
Three Year Portfolio
September 30, 1999
Face amount Value
(000) (000)
- ----------------------------------------------------------
Asset-backed securities--11.5%
- ----------------------------------------------------------
Fleet Credit Card Master Trust,
Ser 1998-A, Cl A (A)
5.630%, 07/15/2003 $1,400 $1,398
Hyundai Auto Receivables Trust,
Ser 1998-A, Cl A2
6.050%, 07/15/2004 890 889
Olympic Automobile Receivables
Trust, Ser 1996-A, Cl A5
6.000%, 02/15/2002 250 250
Spiegel Master Trust,
Ser 1995-A, Cl A
7.500%, 09/15/2004 1,900 1,915
- ----------------------------------------------------------
Total asset-backed securities
(Cost $4,455) 4,452
- ----------------------------------------------------------
- ----------------------------------------------------------
Collateralized mortgage obligations--9.0%
- ----------------------------------------------------------
Citicorp Mortgage Securities,
Ser 1994-10, Cl A4
6.250%, 06/25/2024 15 15
Countrywide Home Loans,
Ser 1997-2, Cl A11
7.500%, 04/25/2027 2 2
Goldman Sachs Mortgage Securities,
Ser 1998-C1, Cl A1
6.060%, 10/18/2030 979 946
Residential Funding Mortgage
Securization, Ser 1993-S23, Cl A7
6.500%, 06/25/2008 310 309
Securitized Asset Sales,
Ser 1993-7, Cl TA2
6.250%, 12/25/2023 650 648
Structured Asset Securities,
Ser 1997-2, Cl 1A (A)
7.124%, 10/30/2007 1,559 1,566
- ----------------------------------------------------------
Total collateralized mortgage
obligations (Cost $3,487) 3,486
- ----------------------------------------------------------
- ----------------------------------------------------------
Corporate obligations--4.9%
- ----------------------------------------------------------
Ford Motor Credit
5.750%, 02/23/2004 1,450 1,391
Phillips Petroleum
9.000%, 06/01/2001 500 519
- ----------------------------------------------------------
Face amount Value
(000) (000)
- ----------------------------------------------------------
Total corporate obligations
(Cost $1,906) $1,910
- ----------------------------------------------------------
- ----------------------------------------------------------
U.S. government agency obligations--0.9%
- ----------------------------------------------------------
FNMA MTN
6.710%, 03/13/2002 $360 361
- ----------------------------------------------------------
Total U.S. government agency obligations
(Cost $362) 361
- ----------------------------------------------------------
- ----------------------------------------------------------
U.S. government mortgage-
backed bonds--39.7%
- ----------------------------------------------------------
FHLMC CMO/REMIC,
Ser 1093, Cl F
7.500%, 06/15/2006 408 414
FHLMC CMO/REMIC,
Ser 1361, Cl D
6.000%, 11/15/2005 285 285
FHLMC CMO/REMIC,
Ser 1411, Cl G
6.500%, 07/15/2018 330 331
FHLMC CMO/REMIC,
Ser 1430, Cl G
7.000%, 10/15/2018 491 491
FHLMC CMO/REMIC,
Ser 1457, Cl PH
7.000%, 06/15/2006 834 839
FHLMC CMO/REMIC,
Ser 1465, Cl E
6.500%, 09/15/2006 546 547
FHLMC CMO/REMIC,
Ser 1497, Cl D
6.400%, 02/15/2019 330 330
FHLMC CMO/REMIC,
Ser 1501, Cl F
6.100%, 11/15/2016 275 274
FHLMC CMO/REMIC,
Ser 161, Cl F
9.500%, 06/15/2006 2,041 2,114
FHLMC CMO/REMIC,
Ser 1862, Cl FD (A)
6.188%, 12/15/2022 388 389
FHLMC CMO/REMIC,
Ser 1900, Cl FA (A)
5.988%, 03/15/2009 634 636
42 | TURNER FUNDS 1999 ANNUAL REPORT
<PAGE>
Schedule of investments
Turner Short Duration Government Funds-
Three Year Portfolio
Face amount Value
(000) (000)
- ----------------------------------------------------------
FHLMC CMO/REMIC,
Ser 2043, Cl CD
6.000%, 09/15/2016 $ 570 $ 565
FHLMC TBA (B)
7.500%, 11/01/2029 1,815 1,823
FHLMC, Pool #G10288
6.000%, 09/01/2009 398 390
FHLMC, Pool #G10446
6.500%, 02/01/2011 824 816
FNMA CMO/REMIC,
Ser 1993-88, Cl F (A)
5.906%, 06/25/2000 850 852
FNMA, Pool #252209
6.000%, 01/01/2019 1,236 1,171
FNMA, Pool #6222
9.000%, 04/01/2016 286 301
FNMA, Pool #8245
8.000%, 12/01/2008 582 596
GNMA ARM (A), Pool #8108
6.375%, 03/20/2016 891 904
GNMA ARM (A), Pool #8254
6.625%, 08/20/2017 85 86
GNMA ARM (A), Pool #8266
6.625%, 09/20/2017 206 210
GNMA ARM (A), Pool #8426
6.125%, 11/20/2018 192 195
GNMA, Pool #351122
6.500%, 07/15/2008 596 592
GNMA, Pool #357343
6.500%, 10/15/2008 245 244
- ----------------------------------------------------------
Total U.S. government
mortgage-backed bonds
(Cost $15,407) 15,395
- ----------------------------------------------------------
- ----------------------------------------------------------
U.S. Treasury obligations--29.9%
- ----------------------------------------------------------
U.S. Treasury Notes
5.750%, 10/31/2000 4,495 4,506
5.000%, 02/28/2001 2,642 2,621
8.000%, 05/15/2001 300 311
6.375%, 08/15/2002 1,600 1,626
7.000%, 07/15/2006 2,309 2,424
6.000%, 08/15/2004 94 95
- ----------------------------------------------------------
Total U.S. Treasury obligations
(Cost $11,598) 11,583
- ----------------------------------------------------------
Face amount Value
(000) (000)
- ----------------------------------------------------------
Repurchase agreement--7.1%
- ----------------------------------------------------------
J.P. Morgan, 5.00%, dated 09/30/99,
matures 10/01/99, repurchase price
$2,758,665 (collateralized by
GNMA, par value $3,846,642,
7.50%, matures 10/15/28: market
value $2,813,838) $2,759 $ 2,759
- ----------------------------------------------------------
Total repurchase agreement
(Cost $2,759) 2,759
- ----------------------------------------------------------
- ----------------------------------------------------------
Total investments--103.0%
(Cost $39,974) 39,946
- ----------------------------------------------------------
- ----------------------------------------------------------
Other assets and liabilities, net--(3.0%) (1,172)
- ----------------------------------------------------------
- ----------------------------------------------------------
Total net assets--100.0% $38,774
- ----------------------------------------------------------
- ----------------------------------------------------------
Net asset value, offering and
redemption price per share-
institutional class shares $9.84
- ----------------------------------------------------------
- ----------------------------------------------------------
Net asset value, offering and redemption
price per share-adviser class shares $9.80
- ----------------------------------------------------------
- ----------------------------------------------------------
(A) Floating rate security. The rate reflected on the Statement of Net Assets
is the rate in effect on September 30, 1999.
(B) When issued security
ARM - Adjustable Rate Mortgage
Cl - Class
CMO - Collateralized Mortgage Obligation
FHLMC - Federal Home Loan Mortgage Obligation
FNMA - Federal National Mortgage Association
GNMA - Government National Mortgage Association
MTN - Medium Term Notes
REMIC - Real Estate Mortgage Investment Conduit
Ser - Series
TBA - To be announced
The accompanying notes are an integral part of the financial
statements.
TURNER FUNDS 1999 ANNUAL REPORT | 43
<PAGE>
Statement of net assets
Turner Short Duration Government Funds-
One Year Portfolio
September 30, 1999
Face amount Value
(000) (000)
- ----------------------------------------------------------
Asset-backed securities--1.9%
- ----------------------------------------------------------
Fleet Credit Card Master Trust,
Ser 1998-A, Cl A (A)
5.630%, 07/15/2003 $ 40 $ 40
Hyundai Auto Receivables Trust,
Ser 1998-A, Cl A2
6.050%, 07/15/2004 50 50
Spiegel Master Trust,
Ser 1995-A, Cl A
7.500%, 09/15/2004 30 30
- ----------------------------------------------------------
Total asset-backed securities
(Cost $120) 120
- ----------------------------------------------------------
- ----------------------------------------------------------
Collateralized mortgage obligations--5.1%
- ----------------------------------------------------------
Morgan Stanley Capital I,
Ser 1997-C1, Cl A1A
6.850%, 02/15/2020 322 323
- ----------------------------------------------------------
Total collateralized mortgage
obligations (Cost $322) 323
- ----------------------------------------------------------
- ----------------------------------------------------------
U.S. government agency obligations--20.4%
- ----------------------------------------------------------
FHLMC Discount Note
5.330%, 10/13/1999 800 798
FNMA Discount Note
5.293%, 10/06/1999 500 500
- ----------------------------------------------------------
Total U.S. government agency
obligations (Cost $1,299) 1,298
- ----------------------------------------------------------
- ----------------------------------------------------------
U.S. government
mortgage-backed bonds--63.5%
- ----------------------------------------------------------
FHLMC CMO/REMIC,
Ser 1301, Cl E
7.000%, 03/15/2005 64 64
FHLMC CMO/REMIC,
Ser 1361, Cl D
6.000%, 11/15/2005 219 218
FHLMC CMO/REMIC,
Ser 1430, Cl G
7.000%, 10/15/2018 186 186
FHLMC CMO/REMIC,
Ser 1457, Cl PH
7.000%, 06/15/2006 133 134
Face amount Value
(000) (000)
- ----------------------------------------------------------
FHLMC CMO/REMIC,
Ser 1465, Cl E
6.500%, 09/15/2006 $ 442 $ 443
FHLMC CMO/REMIC,
Ser 1501, Cl F
6.100%, 11/15/2016 9 9
FHLMC CMO/REMIC,
Ser 1506, Cl EA
5.700%, 07/15/2005 200 199
FHLMC CMO/REMIC,
Ser 1549, Cl D
5.850%, 11/15/2005 603 602
FHLMC CMO/REMIC,
Ser 161, Cl F
9.500%, 06/15/2006 90 93
FHLMC CMO/REMIC,
Ser 1862, Cl FD (A)
6.188%, 12/15/2022 71 71
FHLMC CMO/REMIC,
Ser 1900, Cl FA (A)
5.988%, 03/15/2009 70 70
FNMA CMO/REMIC,
Ser 1992-70, Cl H
7.000%, 04/25/2006 95 95
FNMA CMO/REMIC,
Ser 1993-76, Cl F (A)
5.906%, 06/25/2008 280 281
FNMA CMO/REMIC,
Ser 1993-88, Cl F (A)
5.906%, 06/25/2000 607 608
FNMA CMO/REMIC,
Ser 1996-35, Cl C
7.000%, 05/25/2020 95 95
GNMA ARM (A), Pool #8108
6.375%, 03/20/2016 217 221
GNMA ARM (A), Pool #8111
6.375%, 03/20/2016 47 48
GNMA ARM (A), Pool #8287
6.125%, 11/20/2017 158 158
GNMA ARM (A), Pool #8297
6.125%, 12/20/2017 67 68
GNMA ARM (A), Pool #8333
6.375%, 03/20/2018 101 102
44 | TURNER FUNDS 1999 ANNUAL REPORT
<PAGE>
Statement of investments
Turner Short Duration Government Funds-
One Year Portfolio
Face amount Value
(000) (000)
- ----------------------------------------------------------
GNMA ARM (A), Pool #8392
6.625%,08/20/2018 $ 96 $ 98
GNMA ARM (A), Pool #8405
6.625%, 09/20/2018 77 78
GNMA ARM (A), Pool #8462
6.375%, 02/20/2019 37 38
GNMA ARM (A), Pool #8489
6.375%, 04/20/2019 62 62
- ----------------------------------------------------------
Total U.S. government
mortgage-backed bonds (Cost $4,042) 4,041
- ----------------------------------------------------------
- ----------------------------------------------------------
U.S. Treasury obligations--12.7%
- ----------------------------------------------------------
U.S. Treasury Notes
5.625%, 11/30/1999 180 180
5.750%, 10/31/2000 600 602
5.000%, 02/28/2001 26 26
- ----------------------------------------------------------
- ----------------------------------------------------------
Total U.S. Treasury obligations
(Cost $806) 808
- ----------------------------------------------------------
- ----------------------------------------------------------
Total investments--103.6%
(Cost $6,589) 6,590
- ----------------------------------------------------------
- ----------------------------------------------------------
Other assets and liabilities, net--(3.6%) (228)
- ----------------------------------------------------------
Value
(000)
- ----------------------------------------------------------
Net assets:
- ----------------------------------------------------------
Portfolio shares of institutional class
shares (unlimited authorization--
no par value) based on 319,084
outstanding shares of beneficial interest $3,202
Portfolio shares of adviser class shares
(unlimited authorization--no par
value) based on 312,453 outstanding
shares of beneficial interest 3,156
Accumulated net realized gain on investments 3
Net unrealized appreciation on investments 1
- ----------------------------------------------------------
Total net assets--100.0% $6,362
- ----------------------------------------------------------
- ----------------------------------------------------------
Net asset value, offering and
redemption price per share-
institutional class shares $10.05
- ----------------------------------------------------------
- ----------------------------------------------------------
Net asset value, offering and redemption
price per share-adviser class shares $10.10
- ----------------------------------------------------------
(A) Floating rate security. The rate reflected on the Statement of Net Assets
is the rate in effect on September 30, 1999.
ARM - Adjustable Rate Mortgage
Cl - Class
CMO - Collateralized Mortgage Obligation
FHLMC - Federal Home Loan Mortgage Obligation
FNMA - Federal National Mortgage Association
GNMA - Government National Mortgage Association
REMIC - Real Estate Mortgage Investment Conduit
Ser - Series
The accompanying notes are an integral part of the
financial statements.
TURNER FUNDS 1999 ANNUAL REPORT | 45
<PAGE>
Statement of net assets
Turner Core High Quality Fixed Income Fund
September 30, 1999
Face amount Value
(000) (000)
- ----------------------------------------------------------
Asset-backed securities--13.6%
- ----------------------------------------------------------
Olympic Automobile Receivables
Trust, Ser 1995-D, Cl A5
6.150%, 07/15/2001 $ 349 $ 349
Spiegel Master Trust,
Ser 1995-A, Cl A
7.500%, 09/15/2004 1,000 1,008
- ----------------------------------------------------------
Total Asset-backed securities
(Cost $1,357) 1,357
- ----------------------------------------------------------
- ----------------------------------------------------------
Collateralized mortgage obligations--0.7%
- ----------------------------------------------------------
Drexel Burnham Lambert CMO/REMIC
Trust, Ser S, Cl 2
9.000%, 08/01/2018 25 25
Goldman Sachs Mortgage Securities II,
Ser 1998-C1, Cl A1
6.060%, 10/18/2030 42 41
- ----------------------------------------------------------
Total Collateralized mortgage
obligations (Cost $67) 66
- ----------------------------------------------------------
- ----------------------------------------------------------
Corporate obligations--1.7%
- ----------------------------------------------------------
Ford Motor Credit
5.750%, 02/23/2004 60 58
Heinz H.J.
6.750%, 10/15/1999 100 100
Phillips Petroleum
9.000%, 06/01/2001 15 16
- ----------------------------------------------------------
Total Corporate obligations (Cost $173) 174
- ----------------------------------------------------------
- ----------------------------------------------------------
U.S. government
mortgage-backed bonds--43.3%
- ----------------------------------------------------------
FHLMC CMO/REMIC,
Ser 1538, Cl J
6.500%, 06/15/2008 160 157
FHLMC CMO/REMIC,
Ser 161, Cl F
9.500%, 06/15/2006 380 393
FHLMC, Pool #C16814
7.500%, 10/01/2028 466 469
FHLMC, Pool #C27092
6.000%, 06/01/2029 600 561
FNMA, Pool #251617
6.000%, 03/01/2013 830 801
Face amount Value
(000) (000)
- ----------------------------------------------------------
FNMA, Pool #398280
6.000%, 03/01/2013 $ 114 $ 109
FNMA, Pool #416657
6.000%, 04/01/2028 472 440
FNMA, Pool #421677
6.000%, 03/01/2028 93 86
FNMA, Pool #481600
6.000%, 02/01/2029 35 33
FNMA, Ser 1993-198, Cl K
6.000%, 12/25/2022 834 784
FNMA, Ser 1998-63, Cl PG
6.000%, 03/25/2027 100 92
GNMA ARM (A), Pool #8103
6.375%, 02/20/2016 57 57
GNMA TBA (B)
7.500%, 10/01/2029 50 50
GNMA, Pool #484384
7.500%, 09/15/2028 113 113
GNMA, Pool #491479
6.500%, 06/15/2029 199 191
- ----------------------------------------------------------
Total U.S. government mortgage-
backed bonds (Cost $4,437) 4,336
- ----------------------------------------------------------
- ----------------------------------------------------------
U.S. Treasury obligations--37.7%
- ----------------------------------------------------------
U.S. Treasury Bonds
7.875%, 02/15/2021 200 233
8.125%, 05/15/2021 1,070 1,277
7.000%, 07/15/2006 2,143 2,250
6.000%, 08/15/2004 17 17
- ----------------------------------------------------------
Total U.S. Treasury obligations
(Cost $3,918) 3,777
- ----------------------------------------------------------
- ----------------------------------------------------------
Repurchase agreement--1.3%
- ----------------------------------------------------------
Morgan Stanley, 5.00%, dated 09/30/99,
matures 10/01/99, repurchase price
$125,797, (collateralized by U.S.
Treasury Notes, par value $121,269,
7.250%, matures 08/15/04: market
value $128,715) 126 126
- ----------------------------------------------------------
Total repurchase agreement
(Cost $126) 126
- ----------------------------------------------------------
46 | TURNER FUNDS 1999 ANNUAL REPORT
<PAGE>
Statement of Net Assets
Turner Core High Quality Fixed Income Fund
Value
(000)
- ----------------------------------------------------------
Total investments--98.3%
(Cost $10,078) $ 9,836
- ----------------------------------------------------------
- ----------------------------------------------------------
Other assets and liabilities, net--1.7% 173
- ----------------------------------------------------------
- -----------------------------------------------------------
Net assets:
- -----------------------------------------------------------
Portfolio Shares (unlimited authorization--
no par value) based on 1,009,986
outstanding shares of beneficial interest 10,357
Accumulated net realized loss on investments (106)
Net unrealized depreciation on investments (242)
- ----------------------------------------------------------
Total net assets--100.0% $10,009
- ----------------------------------------------------------
- ----------------------------------------------------------
Net asset value, offering and
redemption price per share $9.91
- ----------------------------------------------------------
- ----------------------------------------------------------
(A) Floating rate security. The rate reflected on the Statement of
Net Assets
is the rate in effect on September 30, 1999.
(B) When issued security
ARM - Adjustable Rate Mortgage
Cl - Class
CMO - Collateralized Mortgage Obligation
FHLMC - Federal Home Loan Mortgage Obligation
FNMA - Federal National Mortgage Association
GNMA - Government National Mortgage Association
REMIC - Real Estate Mortgage Investment Conduit
Ser - Series
TBA - To be announced
The accompanying notes are an integral part of the
financial statements.
TURNER FUNDS 1999 ANNUAL REPORT | 47
<PAGE>
Statement of assets and liabilities (000)
<TABLE>
<CAPTION>
Turner Growth Turner Midcap
Equity Fund Growth Fund
- ----------------------------------------------------------------------------------------------------
9/30/99 9/30/99
- ----------------------------------------------------------------------------------------------------
<S> <C> <C>
Assets:
- ----------------------------------------------------------------------------------------------------
Investment securities at cost $ 130,938 $ 137,433
- ----------------------------------------------------------------------------------------------------
Investment securities at value 143,761 148,692
Cash 1 --
Dividend and interest receivable 46 22
Receivable for investment securities sold 9,934 8,896
Capital shares sold 161 467
Other receivable -- --
Other assets 18 19
- ----------------------------------------------------------------------------------------------------
Total assets 153,921 158,096
- ----------------------------------------------------------------------------------------------------
Liabilities:
Payable for investment securities purchased 1,757 5,303
Capital shares redeemed 9,162 3,957
Accrued expenses 178 6
- ----------------------------------------------------------------------------------------------------
Total liabilities 11,097 9,266
- ----------------------------------------------------------------------------------------------------
Net assets:
Portfolio capital of institutional class shares 92,958 118,551
Portfolio capital of adviser class shares -- --
Accumulated net investment loss -- (6)
Accumulated net realized gain (loss) on investments 37,043 19,026
Net unrealized appreciation (depreciation) on investments 12,823 11,259
- ----------------------------------------------------------------------------------------------------
Total net assets $ 142,824 $ 148,830
- ----------------------------------------------------------------------------------------------------
Outstanding shares of beneficial interest:
Institutional class shares 8,991,335 5,830,229
Adviser class shares -- --
- ----------------------------------------------------------------------------------------------------
Net asset value, offering and redemption price
per share-institutional class shares $ 15.88 $ 25.53
- ----------------------------------------------------------------------------------------------------
Net asset value, offering and redemption price
per share-adviser class shares $ -- $ --
- ----------------------------------------------------------------------------------------------------
48 | TURNER FUNDS 1999 ANNUAL REPORT
<PAGE>
<CAPTION>
Turner Micro Cap Turner
Growth Fund Top 20 Fund
- -------------------------------------------------------------------------------------------------------
9/30/99 9/30/99
- -------------------------------------------------------------------------------------------------------
<S> <C> <C>
Assets:
- -------------------------------------------------------------------------------------------------------
Investment securities at cost $ 10,263 $ 15,065
- -------------------------------------------------------------------------------------------------------
Investment securities at value 12,858 15,871
Cash -- --
Dividend and interest receivable -- --
Receivable for investment securities sold 738 3,227
Capital shares sold 41 627
Other receivable -- --
Other assets 17 1
- -------------------------------------------------------------------------------------------------------
Total assets 13,654 19,726
- -------------------------------------------------------------------------------------------------------
Liabilities:
Payable for investment securities purchased 641 3,580
Capital shares redeemed -- 13
Accrued expenses 50 21
- -------------------------------------------------------------------------------------------------------
Total liabilities 691 3,614
- -------------------------------------------------------------------------------------------------------
Net assets:
Portfolio capital of institutional class shares 8,153 12,765
Portfolio capital of adviser class shares -- --
Accumulated net investment loss -- --
Accumulated net realized gain (loss) on investments 2,215 2,541
Net unrealized appreciation (depreciation) on investments 2,595 806
- -------------------------------------------------------------------------------------------------------
Total net assets $ 12,963 $ 16,112
- -------------------------------------------------------------------------------------------------------
Outstanding shares of beneficial interest:
Institutional class shares 614,741 1,152,022
Adviser class shares -- --
- -------------------------------------------------------------------------------------------------------
Net asset value, offering and redemption price
per share-institutional class shares $ 21.09 $ 13.99
- -------------------------------------------------------------------------------------------------------
Net asset value, offering and redemption price
per share-adviser class shares $ -- $ --
- -------------------------------------------------------------------------------------------------------
<CAPTION>
Turner Short Duration
Turner Government Funds-
Technology Fund Three Year Portfolio
- -----------------------------------------------------------------------------------------------------------------
9/30/99 9/30/99
- -----------------------------------------------------------------------------------------------------------------
Assets:
- -----------------------------------------------------------------------------------------------------------------
Investment securities at cost $ 7,138 $ 39,974
- -----------------------------------------------------------------------------------------------------------------
Investment securities at value 7,450 39,946
Cash 141 --
Dividend and interest receivable 1 322
Receivable for investment securities sold 1,550 1,679
Capital shares sold 516 200
Other receivable -- 66
Other assets -- 4
- -----------------------------------------------------------------------------------------------------------------
Total assets 9,658 42,217
- -----------------------------------------------------------------------------------------------------------------
Liabilities:
Payable for investment securities purchased 1,338 3,176
Capital shares redeemed 14 85
Accrued expenses 10 182
- -----------------------------------------------------------------------------------------------------------------
Total liabilities 1,362 3,443
- -----------------------------------------------------------------------------------------------------------------
Net assets:
Portfolio capital of institutional class shares 6,716 38,966
Portfolio capital of adviser class shares -- 87
Accumulated net investment loss -- (34)
Accumulated net realized gain (loss) on investments 1,268 (217)
Net unrealized appreciation (depreciation) on investments 312 (28)
- -----------------------------------------------------------------------------------------------------------------
Total net assets $ 8,296 $ 38,774
- -----------------------------------------------------------------------------------------------------------------
Outstanding shares of beneficial interest:
Institutional class shares 589,991 3,933,129
Adviser class shares -- 8,909
- -----------------------------------------------------------------------------------------------------------------
Net asset value, offering and redemption price
per share-institutional class shares $ 14.06 $ 9.84
- -----------------------------------------------------------------------------------------------------------------
Net asset value, offering and redemption price
per share-adviser class shares $ -- $ 9.80
- -----------------------------------------------------------------------------------------------------------------
</TABLE>
Amounts designated as "--" are either $0 or have been rounded to $0
The accompanying notes are an integral part of the financial statements.
TURNER FUNDS 1999 ANNUAL REPORT | 49
<PAGE>
FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
Statement of operations (000)
<TABLE>
<CAPTION>
Turner Large Cap Turner Growth Turner Midcap Turner Small Cap
Growth Equity Fund Equity Fund Growth Fund Growth Fund
- -----------------------------------------------------------------------------------------------------------------------
year ended year ended year ended year ended
9/30/99 9/30/99 9/30/99 9/30/99
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Investment income:
Dividend $ 36 $ 605 $ 210 $ 291
Interest 4 101 137 259
- -----------------------------------------------------------------------------------------------------------------------
Total investment income 40 706 347 550
- -----------------------------------------------------------------------------------------------------------------------
Expenses:
Investment advisory fees 57 987 524 2,008
Investment advisory fee waiver (57) -- (2) (67)
Administrator fees 65 117 70 176
Administrator fee waiver -- -- -- --
Custodian fees 5 15 14 20
Transfer agent fees 21 96 46 271
Professional fees 15 58 40 70
Trustee fees 2 3 5 5
Registration fees 13 (10) 33 (1)
Pricing fees -- 1 1 2
Printing fees 1 47 13 58
Shareholder service fees -- -- -- --
Amortization of deferred
organizational costs 4 5 5 4
Insurance and other fees -- 28 2 14
- -----------------------------------------------------------------------------------------------------------------------
Total expenses 126 1,347 751 2,560
Less: Reimbursements from adviser (50) -- -- --
Directed brokerage -- (132) (28) (50)
- -----------------------------------------------------------------------------------------------------------------------
Net expenses 76 1,215 723 2,510
- -----------------------------------------------------------------------------------------------------------------------
Net investment income (loss) (36) (509) (376) (1,960)
- -----------------------------------------------------------------------------------------------------------------------
Net realized gain (loss) from
securities sold 1,821 37,857 20,948 61,638
Net unrealized appreciation
(depreciation) of
investment securities 307 658 10,401 30,895
- -----------------------------------------------------------------------------------------------------------------------
Net realized and unrealized
gain (loss) on investments 2,128 38,515 31,349 92,533
- -----------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
resulting from operations $2,092 $38,006 $30,973 $90,573
- -----------------------------------------------------------------------------------------------------------------------
50 | TURNER FUNDS 1999 ANNUAL REPORT
<PAGE>
<CAPTION>
Turner Micro Cap Turner Turner Technology
Growth Fund Top 20 Fund Fund
- --------------------------------------------------------------------------------------------------
year ended 7/1/99 thru 7/1/99 thru
9/30/99 9/30/99(+) 9/30/99(+)
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Investment income:
Dividend $ 16 $ 2 $ 1
Interest 13 9 4
- --------------------------------------------------------------------------------------------------
Total investment income 29 11 5
- --------------------------------------------------------------------------------------------------
Expenses:
Investment advisory fees 66 26 12
Investment advisory fee waiver (66) (19) (12)
Administrator fees 68 16 16
Administrator fee waiver -- (10) (10)
Custodian fees 4 2 2
Transfer agent fees 20 7 7
Professional fees 8 3 2
Trustee fees 3 -- --
Registration fees 11 6 4
Pricing fees 1 -- --
Printing fees 5 1 --
Shareholder service fees -- -- --
Amortization of deferred
organizational costs 3 -- --
Insurance and other fees -- -- 1
- --------------------------------------------------------------------------------------------------
Total expenses 123 32 22
Less: Reimbursements from adviser (64) -- (7)
Directed brokerage -- -- --
- --------------------------------------------------------------------------------------------------
Net expenses 59 32 15
- --------------------------------------------------------------------------------------------------
Net investment income (loss) (30) (21) (10)
- --------------------------------------------------------------------------------------------------
Net realized gain (loss) from
securities sold 2,292 2,562 1,278
Net unrealized appreciation
(depreciation) of
investment securities 2,652 806 312
- --------------------------------------------------------------------------------------------------
Net realized and unrealized
gain (loss) on investments 4,944 3,368 1,590
- --------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
resulting from operations $4,914 $3,347 $1,580
- --------------------------------------------------------------------------------------------------
<CAPTION>
Turner Short Duration
Government Funds-
------------------------- Turner Core
Three Year One Year High Quality
Portfolio Portfolio Fixed Income Fund
- --------------------------------------------------------------------------------------------
year ended year ended 7/1/99 thru
9/30/99 9/30/99 9/30/99(+)
- --------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Investment income:
Dividend $ -- $ -- $ --
Interest 1,304 101 151
- --------------------------------------------------------------------------------------------
Total investment income 1,304 101 151
- --------------------------------------------------------------------------------------------
Expenses:
Investment advisory fees 51 5 12
Investment advisory fee waiver (51) (5) (12)
Administrator fees 46 17 16
Administrator fee waiver -- -- (10)
Custodian fees 6 9 2
Transfer agent fees 35 31 7
Professional fees 54 21 3
Trustee fees 2 2 --
Registration fees 38 19 7
Pricing fees 4 1 --
Printing fees 27 16 1
Shareholder service fees -- 1 --
Amortization of deferred
organizational costs -- -- --
Insurance and other fees 2 -- 1
- --------------------------------------------------------------------------------------------
Total expenses 214 117 27
Less: Reimbursements from adviser (165) (116) (16)
Directed brokerage -- -- --
- --------------------------------------------------------------------------------------------
Net expenses 49 1 11
- --------------------------------------------------------------------------------------------
Net investment income (loss) 1,255 100 140
- --------------------------------------------------------------------------------------------
Net realized gain (loss) from
securities sold (177) -- (106)
Net unrealized appreciation
(depreciation) of
investment securities (264) (1) 18
- --------------------------------------------------------------------------------------------
Net realized and unrealized
gain (loss) on investments (441) (1) (88)
- --------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
resulting from operations $ 814 $ 99 $ 52
- --------------------------------------------------------------------------------------------
</TABLE>
(+) Commenced operations on July 1, 1999.
Amounts designated as "--" are either $0 or have been rounded to $0
The accompanying notes are an integral part of the financial statements.
TURNER FUNDS 1999 ANNUAL REPORT | 51
<PAGE>
FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
Statement of changes in net assets (000)
<TABLE>
<CAPTION>
Turner Large Cap Turner Growth
Growth Equity Fund Equity Fund
- ----------------------------------------------------------------------------------------------------------------------------
year year year year
ended ended ended ended
9/30/99 9/30/98 9/30/99 9/30/98
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Investment activities:
Net investment loss $ (36) $ (2) $ (509) $ (378)
Net realized gain (loss) from
securities sold 1,821 (170) 37,857 17,188
Net unrealized appreciation
(depreciation) of investments 307 169 658 (7,481)
- ----------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in
net assets resulting
from operations 2,092 (3) 38,006 9,329
- ----------------------------------------------------------------------------------------------------------------------------
Distributions to shareholders:
Net investment income -- (1) -- --
Realized capital gains -- (72) (12,236) (26,503)
Return of capital -- -- -- --
- ----------------------------------------------------------------------------------------------------------------------------
Total distributions -- (73) (12,236) (26,503)
- ----------------------------------------------------------------------------------------------------------------------------
Capital share transactions:(1)
Proceeds from shares issued 4,366 3,876 34,770 22,658
Proceeds from shares issued in
lieu of cash distributions -- 73 11,874 25,911
Increase from In-Kind Transfer -- -- 4,270 --
Cost of shares redeemed (2,327) (246) (31,717) (33,128)
- ----------------------------------------------------------------------------------------------------------------------------
Net increase in net assets
from capital share transactions 2,039 3,703 19,197 15,441
- ----------------------------------------------------------------------------------------------------------------------------
Total increase (decrease) in net assets 4,131 3,627 44,967 (1,733)
- ----------------------------------------------------------------------------------------------------------------------------
Net assets:
Beginning of year 4,328 701 97,857 99,590
- ----------------------------------------------------------------------------------------------------------------------------
End of year (4) $8,459 $4,328 $142,824 $97,857
- ----------------------------------------------------------------------------------------------------------------------------
(1) Shares issued and redeemed:
Issued 255 282 2,274 1,638
Issued in lieu of cash distributions -- 6 890 2,320
Issued in connection with In-Kind Transfer -- -- 273 --
Redeemed (134) (18) (2,051) (2,339)
- ----------------------------------------------------------------------------------------------------------------------------
Net increase in capital shares 121 270 1,386 1,619
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>
(2) Commenced operations on March 1, 1998.
(3) Commenced operations on July 1, 1999.
(4) Includes undistributed net investment income (loss) and/or distributions in
excess of net investment income (000) of $(6) and $(3) for the Midcap Growth
Fund, and $(0) and $(1) for the Small Cap Growth Fund as of September 30,
1999, and September 30, 1998, respectively.
Amounts designated as "--" are either $0 or have been rounded to $0
The accompanying notes are an integral part of the financial statements.
52 | TURNER FUNDS 1999 ANNUAL REPORT
<PAGE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------------
Turner Midcap Turner Small Cap
Growth Fund Growth Fund
- -------------------------------------------------------------------------------------------------------------------------------
year year year year
ended ended ended ended
9/30/99 9/30/98 9/30/99 9/30/98
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Investment activities:
Net investment loss $ (376) $ (124) $ (1,960) $ (1,609)
Net realized gain (loss) from
securities sold 20,948 (1,546) 61,638 (6,168)
Net unrealized appreciation
(depreciation) of investments 10,401 524 30,895 (22,875)
- -------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in
net assets resulting
from operations 30,973 (1,146) 90,573 (30,652)
- -------------------------------------------------------------------------------------------------------------------------------
Distributions to shareholders:
Net investment income -- -- -- --
Realized capital gains -- (358) -- (1,521)
Return of capital -- -- -- (1,148)
- -------------------------------------------------------------------------------------------------------------------------------
Total distributions -- (358) -- (2,669)
Capital share transactions:(1)
Proceeds from shares issued 127,616 28,977 87,818 96,936
Proceeds from shares issued in
lieu of cash distributions -- 320 -- 2,289
Increase from In-Kind Transfer -- -- -- --
Cost of shares redeemed (34,341) (8,356) (71,848) (71,832)
- -------------------------------------------------------------------------------------------------------------------------------
Net increase in net assets
from capital share transactions 93,275 20,941 15,970 27,393
- -------------------------------------------------------------------------------------------------------------------------------
Total increase (decrease) in net assets 124,248 19,437 106,543 (5,928)
Net assets:
Beginning of year 24,582 5,145 147,534 153,462
- -------------------------------------------------------------------------------------------------------------------------------
End of year (4) $148,830 $24,582 $254,077 $147,534
- -------------------------------------------------------------------------------------------------------------------------------
(1) Shares issued and redeemed:
Issued 5,625 1,939 3,160 3,783
Issued in lieu of cash distributions -- 24 -- 99
Issued in connection with In-Kind Transfer -- -- -- --
Redeemed (1,567) (553) (2,596) (2,840)
- -------------------------------------------------------------------------------------------------------------------------------
Net increase in capital shares 4,058 1,410 564 1,042
- -------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------------
Turner Micro Cap Turner Turner
Growth Fund Top 20 Fund Technology Fund
- ---------------------------------------------------------------------------------------------------------------------------------
year 3/1/98 7/1/99 7/1/99
ended thru thru thru
9/30/99 9/30/98 (2) 9/30/99 (3) 9/30/99 (3)
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Investment activities:
Net investment loss $ (30) $ (11) $ (21) $ (10)
Net realized gain (loss) from
securities sold 2,292 (47) 2,562 1,278
Net unrealized appreciation
(depreciation) of investments 2,652 (57) 806 312
- ---------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in
net assets resulting
from operations 4,914 (115) 3,347 1,580
- ---------------------------------------------------------------------------------------------------------------------------------
Distributions to shareholders:
Net investment income -- -- -- --
Realized capital gains -- -- -- --
Return of capital -- -- -- --
- ---------------------------------------------------------------------------------------------------------------------------------
Total distributions -- -- -- --
Capital share transactions:(1)
Proceeds from shares issued 6,101 3,087 13,557 7,914
Proceeds from shares issued in
lieu of cash distributions -- -- -- --
Increase from In-Kind Transfer -- -- -- --
Cost of shares redeemed (895) (129) (792) (1,198)
- ---------------------------------------------------------------------------------------------------------------------------------
Net increase in net assets
from capital share transactions 5,206 2,958 12,765 6,716
- ---------------------------------------------------------------------------------------------------------------------------------
Total increase (decrease) in net assets 10,120 2,843 16,112 8,296
Net assets:
Beginning of year 2,843 -- -- --
- ---------------------------------------------------------------------------------------------------------------------------------
End of year (4) $12,963 $2,843 $16,112 $8,296
- ---------------------------------------------------------------------------------------------------------------------------------
(1) Shares issued and redeemed:
Issued 380 300 1,223 696
Issued in lieu of cash distributions -- -- -- --
Issued in connection with In-Kind Transfer -- -- -- --
Redeemed (53) (12) (71) (106)
- ---------------------------------------------------------------------------------------------------------------------------------
Net increase in capital shares 327 288 1,152 590
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
TURNER FUNDS 1999 ANNUAL REPORT | 53
<PAGE>
Statement of changes in net assets (000)
<TABLE>
<CAPTION>
Turner Short Duration Government Funds-
Three Year Portfolio
- ------------------------------------------------------------------------------------------------------------------------------
year ended 3/1/98 thru year ended
9/30/99 9/30/98 2/28/98
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Investment activities:
Net investment income $ 1,255 $ 469 $ 967
Net realized gain (loss) from securities sold (177) 74 54
Net unrealized appreciation (depreciation) of investments (264) 119 98
- ------------------------------------------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations 814 662 1,119
- ------------------------------------------------------------------------------------------------------------------------------
Distributions to shareholders:
Net investment income
Institutional class (1,258) (461) (966)
Adviser class (1) -- --
Realized capital gains
Institutional class (156) (10) --
Adviser class -- -- --
- ------------------------------------------------------------------------------------------------------------------------------
Total distributions (1,415) (471) (966)
- ------------------------------------------------------------------------------------------------------------------------------
Capital share transactions: (1)
Institutional class
Proceeds from shares issued 10,962 666 3,854
Proceeds from shares issued in lieu of cash distributions 1,276 476 967
Increase from In-Kind transfers 18,947 -- --
Cost of shares redeemed (3,912) (4,862) (7,239)
- ------------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets from
institutional class transactions 27,273 (3,720) (2,418)
- ------------------------------------------------------------------------------------------------------------------------------
Adviser class
Proceeds from shares issued 192 -- --
Proceeds from shares issued in lieu of cash distributions 1 -- --
Cost of shares redeemed (106) -- --
- ------------------------------------------------------------------------------------------------------------------------------
Increase in net assets from adviser class transactions 87 -- --
- ------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets from capital
- ------------------------------------------------------------------------------------------------------------------------------
share transactions 27,360 (3,720) (2,418)
- ------------------------------------------------------------------------------------------------------------------------------
Total increase (decrease) in net assets 26,759 (3,529) (2,265)
- ------------------------------------------------------------------------------------------------------------------------------
Net assets:
Beginning of year 12,015 15,544 17,809
- ------------------------------------------------------------------------------------------------------------------------------
End of year (3) $ 38,774 $12,015 $15,544
- ------------------------------------------------------------------------------------------------------------------------------
(1) Shares issued and redeemed:
Institutional class
Issued 1,100 66 383
Issued in lieu of cash distributions 128 47 96
Issued in connection with In-Kind Transfers 1,926 -- --
Redeemed (393) (481) (722)
- ------------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets from institutional class transactions 2,761 (368) (243)
- ------------------------------------------------------------------------------------------------------------------------------
Adviser class
Issued 20 -- --
Issued in lieu of cash distributions -- -- --
Redeemed (11) -- --
- ------------------------------------------------------------------------------------------------------------------------------
Increase in net assets from adviser class transactions 9 -- --
- ------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in capital shares 2,770 (368) (243)
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(2) Commenced operations on July 1, 1999.
(3) Includes undistributed net investment income (000) of $(34), $10 and $2 for
the Three Year Fund, $0, $2 and $0 for the One Year Fund, as of September
30, 1999, September 30, 1998 and February 28, 1998, respectively.
Amounts designated as "--" are either $0 or have been rounded to $0 The
accompanying notes are an integral part of the financial statements.
54 | TURNER FUNDS 1999 ANNUAL REPORT
<PAGE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------
Turner Short Duration Government Funds-
One Year Portfolio
- --------------------------------------------------------------------------------------------------------------------
year ended 3/1/98 thru year ended
9/30/99 9/30/98 2/28/98
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Investment activities:
Net investment income $ 100 $ 37 $ 66
Net realized gain (loss) from securities sold -- 1 1
Net unrealized appreciation (depreciation) of investments (1) -- 1
- --------------------------------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations 99 38 68
Distributions to shareholders:
Net investment income
Institutional class (77) (35) (66)
Adviser class (25) -- --
Realized capital gains
Institutional class -- (1) --
Adviser class -- -- --
- --------------------------------------------------------------------------------------------------------------------
Total distributions (102) (36) (66)
Capital share transactions: (1)
Institutional class
Proceeds from shares issued 3,414 5 827
Proceeds from shares issued in lieu of cash distributions 76 36 66
Increase from In-Kind transfers -- -- --
Cost of shares redeemed (1,272) (247) (564)
- --------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets from
institutional class transactions 2,218 (206) 329
- --------------------------------------------------------------------------------------------------------------------
Adviser class
Proceeds from shares issued 3,642 -- --
Proceeds from shares issued in lieu of cash distributions 23 -- --
Cost of shares redeemed (509) -- --
- --------------------------------------------------------------------------------------------------------------------
Increase in net assets from adviser class transactions 3,156 -- --
Net increase (decrease) in net assets from capital
share transactions 5,374 (206) 329
Total increase (decrease) in net assets 5,371 (204) 331
Net assets:
Beginning of year 991 1,195 864
- --------------------------------------------------------------------------------------------------------------------
End of year (3) $6,362 $ 991 $1,195
- --------------------------------------------------------------------------------------------------------------------
(1) Shares issued and redeemed:
Institutional class
Issued 340 -- 82
Issued in lieu of cash distributions 8 4 7
Issued in connection with In-Kind Transfers -- -- --
Redeemed (127) (56) (18)
- --------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets from institutional class
transactions 221 (21) 33
Adviser class
Issued 360 -- --
Issued in lieu of cash distributions 2 -- --
Redeemed -- -- --
- --------------------------------------------------------------------------------------------------------------------
Increase in net assets from adviser class transactions 312 -- --
- --------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in capital shares 533 (21) 33
- --------------------------------------------------------------------------------------------------------------------
<CAPTION>
- ---------------------------------------------------------------------------------------------------
Turner Core High Quality
Fixed Income Fund
- ---------------------------------------------------------------------------------------------------
7/1/99 thru
9/30/99 (2)
- ---------------------------------------------------------------------------------------------------
<S> <C>
Investment activities:
Net investment income $ 140
Net realized gain (loss) from securities sold (106)
Net unrealized appreciation (depreciation) of investments 18
- ---------------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations 52
Distributions to shareholders:
Net investment income
Institutional class (140)
Adviser class --
Realized capital gains
Institutional class --
Adviser class --
- ---------------------------------------------------------------------------------------------------
Total distributions (140)
- ---------------------------------------------------------------------------------------------------
Capital share transactions: (1)
Institutional class
Proceeds from shares issued 18
Proceeds from shares issued in lieu of cash distributions 139
Increase from In-Kind transfers 10,120
Cost of shares redeemed (180)
- ---------------------------------------------------------------------------------------------------
Increase (decrease) in net assets from
institutional class transactions 10,097
- ---------------------------------------------------------------------------------------------------
Adviser class
Proceeds from shares issued --
Proceeds from shares issued in lieu of cash distributions --
Cost of shares redeemed --
- ---------------------------------------------------------------------------------------------------
Increase in net assets from adviser class transactions --
- ---------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets from capital
share transactions 10,097
- ---------------------------------------------------------------------------------------------------
Total increase (decrease) in net assets 10,009
- ---------------------------------------------------------------------------------------------------
Net assets:
Beginning of year --
- ---------------------------------------------------------------------------------------------------
End of year (3) $10,009
- ---------------------------------------------------------------------------------------------------
(1) Shares issued and redeemed:
Institutional class
Issued 2
Issued in lieu of cash distributions 14
Issued in connection with In-Kind Transfers 1,012
Redeemed (18)
- ---------------------------------------------------------------------------------------------------
Increase (decrease) in net assets from institutional class
transactions 1,010
- ---------------------------------------------------------------------------------------------------
Adviser class
Issued --
Issued in lieu of cash distributions --
Redeemed --
- ---------------------------------------------------------------------------------------------------
Increase in net assets from adviser class transactions --
- ---------------------------------------------------------------------------------------------------
Net increase (decrease) in capital shares 1,010
- ---------------------------------------------------------------------------------------------------
</TABLE>
TURNER FUNDS 1999 ANNUAL REPORT | 55
<PAGE>
<TABLE>
<CAPTION>
FINANCIAL STATEMENTS
- -------------------------------------------------------------------------------------------------------------------------------
Financial highlights
For a share outstanding throughout each period
Net Realized and
asset Net unrealized Distributions Distributions
value, investment gains from net from Net asset
beginning income (losses) on investment capital Return value end
of period (loss) investments income gains of capital of period
- -------------------------------------------------------------------------------------------------------------------------------
Turner Large Cap Growth Equity Fund (formerly Turner Ultra Large Cap Growth Fund)
- ---------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
1999 $13.22 (0.08) 5.76 -- -- -- $18.90
1998 $12.28 (0.01) 1.98 (0.01) (1.02) -- $13.22
1997 (1) $10.00 0.01 2.27 -- -- -- $12.28
- -------------------------
Turner Growth Equity Fund
- -------------------------
1999 $12.87 (0.05) 4.66 -- (1.60) -- $15.88
1998 $16.64 (0.05) 1.10 -- (4.82) -- $12.87
1997 $17.03 (0.03) 4.23 -- (4.59) -- $16.64
1996 (2) $14.97 0.02 2.91 (0.02) (0.85) -- $17.03
1995 $12.46 0.10 2.52 (0.11) -- -- $14.97
1994 $13.12 0.10 (0.66) (0.10) -- -- $12.46
- -------------------------
Turner Midcap Growth Fund
- -------------------------
1999 $13.87 (0.06) 11.72 -- -- -- $25.53
1998 $14.22 (0.07) 0.22 -- (0.50) -- $13.87
1997 (3) $10.00 (0.03) 4.36 -- (0.11) -- $14.22
- ----------------------------
Turner Small Cap Growth Fund
- ----------------------------
1999 $21.49 (0.26) 12.97 -- -- -- $34.20
1998 $26.35 (0.23) (4.19) -- (0.25) (0.19) $21.49
1997 $23.13 (0.07) 3.80 -- (0.51) -- $26.35
1996 (2) $16.08 (0.08) 8.17 -- (1.04) -- $23.13
1995 $10.90 (0.06) 5.24 -- -- -- $16.08
1994 (4) $10.00 (0.02) 0.92 -- -- -- $10.90
- ----------------------------
Turner Micro Cap Growth Fund
- ----------------------------
1999 (5) $ 9.88 (0.05) 11.26 -- -- -- $21.09
1998 (6) $10.00 (0.04) (0.08) -- -- -- $ 9.88
- ------------------
Turner Top 20 Fund
- ------------------
1999 (7) $10.00 (0.02) 4.01 -- -- -- $13.99
- ----------------------
Turner Technology Fund
- ----------------------
1999 (7) $10.00 (0.02) 4.08 -- -- -- $14.06
</TABLE>
* Annualized
+ Returns are for the period indicated and have not been annualized.
(1) Commenced operations on February 1, 1997.
(2) On April 19, 1996, the Board of Trustees of the Adviser Inner Circle Funds
voted to approve a tax-free reorganization of the Turner Funds. In
connection with the reorganization, the Funds changed their fiscal year end
from October 31 to September 30, effective September 30, 1996.
(3) Commenced operations on October 1, 1996.
(4) Commenced operations on February 7, 1994.
56 | TURNER FUNDS 1999 ANNUAL REPORT
<PAGE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------
Ratio of Ratio of Ratio of
net expenses net expenses expenses
to average net to average Ratio of net to average
Net assets (including net assets investment net assets
assets end directed (including income (loss) (excluding
Total of period brokerage waivers and to average waivers and
return+ (000) arrangements) reimbursements) net assets reimbursements)
- --------------------------------------------------------------------------------------------------------------------------
Turner Large Cap Growth Equity Fund (formerly Turner Ultra Large Cap Growth Fund)
- ---------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
1999 42.97% $ 8,459 1.00% 1.00% (0.47)% 2.41%
1998 17.26% $ 4,328 1.00% 1.00% (0.10)% 7.70%
1997 (1) 22.80% $ 701 1.00%* 1.00%* 0.20%* 26.45%*
- -------------------------
Turner Growth Equity Fund
- -------------------------
1999 38.16% $ 142,824 0.92% 0.96% (0.42)% 0.96%
1998 10.71% $ 97,857 1.00% 1.04% (0.42)% 1.12%
1997 32.61% $ 99,590 0.96% 1.02% (0.25)% 1.05%
1996 (2) 20.61% $ 96,164 0.94%* 1.06%* 0.03%* 1.06%*
1995 21.15% $ 115,819 0.94% 1.03% 0.69% 1.03%
1994 (4.28)% $ 112,959 0.95% 0.95% 0.86% 1.08%
- -------------------------
Turner Midcap Equity Fund
- -------------------------
1999 84.07% $ 148,830 1.03% 1.08% (0.58)% 1.08%
1998 1.24% $ 24,582 1.23% 1.34% (0.79)% 1.73%
1997 (3) 43.77% $ 5,145 1.25%* 1.25%* (0.62)%* 7.96%*
- ----------------------------
Turner Small Cap Growth Fund
- ----------------------------
1999 59.14% $ 254,077 1.25% 1.27% (1.00)% 1.31%
1998 (16.90)% $ 147,534 1.25% 1.28% (0.99)% 1.41%
1997 16.64% $ 153,462 1.24% 1.24% (0.84)% 1.33%
1996 (2) 52.90% $ 67,425 1.25%* 1.25%* (0.88)%* 1.54%*
1995 47.52% $ 13,072 1.25% 1.25% (0.68)% 2.39%
1994 (4) 12.35% $ 4,806 1.09%* 1.09%* (0.27)%* 4.32%*
- ----------------------------
Turner Micro Cap Growth Fund
- ----------------------------
1999 (5) 113.46% $ 12,963 0.90% 0.90% (0.47)% 2.86%
1998 (6) (1.20)% $ 2,843 1.25%* 1.25%* (0.64)%* 8.18%*
- ------------------
Turner Top 20 Fund
- ------------------
1999 (7) 39.90% $ 16,112 1.35%* 1.35%* (0.87)%* 2.55%*
- ----------------------
Turner Technology Fund
- ----------------------
1999 (7) 40.60% $ 8,296 1.35%* 1.35%* (0.87)%* 3.89%*
<CAPTION>
- ---------------------------------------------------------------------------------
Ratio of net
investment
income (loss)
to average
net assets
(excluding Portfolio
waivers and turnover
reimbursements) rate
- ---------------------------------------------------------------------------------
Turner Large Cap Growth Equity Fund (formerly Turner Ultra Large Cap Growth Fund)
- ---------------------------------------------------------------------------------
<S> <C> <C>
1999 (1.88)% 370.71%
1998 (6.80)% 234.93%
1997 (1) (25.25)% 346.47%
- -------------------------
Turner Growth Equity Fund
- -------------------------
1999 (0.42)% 328.26%
1998 (0.50)% 249.58%
1997 (0.28)% 178.21%
1996 (2) 0.03%* 147.79%
1995 0.69% 177.86%
1994 0.73% 164.81%
- -------------------------
Turner Midcap Equity Fund
- -------------------------
1999 (0.58)% 290.79%
1998 (1.18)% 304.29%
1997 (3) (7.33)%* 348.29%
- ----------------------------
Turner Small Cap Growth Fund
- ----------------------------
1999 (1.04)% 223.61%
1998 (1.12)% 167.73%
1997 (0.93)% 130.68%
1996 (2) (1.17)%* 149.00%
1995 (1.82)% 183.49%
1994 (4) (3.50)%* 173.92%
- ----------------------------
Turner Micro Cap Growth Fund
- ----------------------------
1999 (5) (2.43)% 239.32%
1998 (6) (7.57)%* 128.53%
- ------------------
Turner Top 20 Fund
- ------------------
1999 (7) (2.07)%* 369.11%
- ----------------------
Turner Technology Fund
- ----------------------
1999 (7) (3.41)%* 317.32%
</TABLE>
(5) On January 25, 1999 shareholders of the Alpha Select Turner Micro Cap Growth
Fund (the "Funds") approved a tax-free reorganization under which all assets
and liabilities of the Fund were transferred to the TIP Turner Micro Cap
Growth Fund.
(6) Commenced operations on March 1, 1998.
(7) Commenced operations on July 1, 1999.
Amounts designated as "--" are either $0 or have been rounded to $0.
The accompanying notes are an integral part of the financial statements.
TURNER FUNDS 1999 ANNUAL REPORT | 57
<PAGE>
FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
Financial highlights
For a share outstanding throughout each period
<TABLE>
<CAPTION>
Realized and
Net asset unrealized Distributions Distributions
value, Net gains from net from Net asset Net assets
beginning investment (losses) on investment capital value end Total end of
of period income investments income gains of period return+ period (000)
- ------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------
Turner Short Duration Government Funds-Three Year Portfolio--Institutional
- --------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1999 (1) $10.25 0.55 (0.27) (0.55) (0.14) $ 9.84 2.89% $38,687
1998 (2) $10.10 0.35 0.15 (0.34) (0.01) $10.25 5.09% $12,015
1998 (3) $10.00 0.59 0.10 (0.59) -- $10.10 7.07% $15,544
1997 $10.04 0.58 (0.01) (0.59) (0.02) $10.00 5.45% $17,809
1996 $ 9.80 0.60 0.23 (0.59) -- $10.04 8.73% $11,027
1995 (4) $10.00 0.61 (0.22) (0.59) -- $ 9.80 4.08% $ 7,065
- --------------------------------------------------------------------
Turner Short Duration Government Funds-Three Year Portfolio--Adviser
- --------------------------------------------------------------------
1999 (5) $ 9.95 0.68 (0.13) (0.70) -- $ 9.80 5.64% $ 87
- ------------------------------------------------------------------------
Turner Short Duration Government Funds-One Year Portfolio--Institutional
- ------------------------------------------------------------------------
1999 (6) $10.09 0.54 (0.02) (0.56) -- $10.05 5.34% $ 3,207
1998 (2) $10.08 0.35 -- (0.33) (0.01) $10.09 3.50% 991
1998 (3) $10.06 0.60 0.02 (0.60) -- $10.08 6.34% 1,195
1997 $10.03 0.60 0.03 (0.60) -- $10.06 6.32% 864
1996 $ 9.99 0.64 0.05 (0.65) -- $10.03 7.09% 398
1995 (4) $10.00 0.53 (0.02) (0.52) -- $ 9.99 5.21% 145
- ------------------------------------------------------------------
Turner Short Duration Government Funds-One Year Portfolio--Adviser
- ------------------------------------------------------------------
1999 (6) $10.11 0.47 0.02 (0.50) -- $10.10 5.00% $ 3,155
1998 (7) $10.08 0.30 0.03 (0.30) -- $10.11 3.26% --
- ------------------------------------------
Turner Core High Quality Fixed Income Fund
- ------------------------------------------
1999 (8) $10.00 0.14 (0.09) (0.14) -- $ 9.91 0.48% $10,009
</TABLE>
* Annualized
+ Returns are for the period indicated and have not been annualized.
(1) On January 25, 1999 shareholders of the Alpha Select Turner Short Duration
Government Funds-Three Year Portfolio (the "Fund") approved a tax-free
reorganization under which all assets and liabilities of the Fund were
transferred to the TIP Turner Short Duration Government Funds-Three Year
Portfolio.
(2) On November 10, 1997 the Board of Trustees of TIP Institutional Funds
(formerly, The Solon Funds) approved a change in the Turner Short Duration
Government Funds Three Year and One Year Portfolios' year end from February
28 to September 30, effective March 1, 1998.
(3) On January 22, 1998, shareholders of both the Three Year and One Year Funds
approved a change in the advisor from Solon Asset Management, L.P. to Turner
Investment Partners, Inc.
(4) Commenced operations on March 1, 1994.
(5) Commenced operations on April 28, 1999.
58 | TURNER FUNDS 1999 ANNUAL REPORT
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Ratio of net
Ratio of investment
expenses income (loss)
Ratio of net to average to average Average Average
Ratio of investment net assets net assets debt debt
net expenses income (excluding (excluding per share outstanding
to average to average waivers and waivers and Interest during during
net assets net assets reimbursements) reimbursements) expense the period (9) the period (9)(10)
- ------------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------
Turner Short Duration Government Funds-Three Year Portfolio--Institutional
- --------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
1999 (1) 0.24% 6.21% 1.31% 5.14% -- -- --
1998 (2) 0.24%* 5.84%* 1.49%* 4.59%* -- -- --
1998 (3) 0.24% 5.85% 1.21% 4.88% -- -- --
1997 0.24% 5.80% 1.21% 4.83% 0.02% $0.04 $ 56,238
1996 0.24% 6.18% 1.45% 4.97% 0.12% $0.28 $ 256,115
1995 (4) 0.15% 6.21% 1.18% 5.18% 0.04% $0.08 $ 75,604
- --------------------------------------------------------------------
Turner Short Duration Government Funds-Three Year Portfolio--Adviser
- --------------------------------------------------------------------
1999 (5) 0.48%* 5.71%* 0.95%* 5.24%* -- -- --
- ------------------------------------------------------------------------
Turner Short Duration Government Funds-One Year Portfolio--Institutional
- ------------------------------------------------------------------------
1999 (6) 0.00% 5.50% 6.53% (1.03)% -- -- --
1998 (2) 0.00%* 5.88%* 10.83%* (4.95)%* -- -- --
1998 (3) 0.00% 5.97% 8.83% (2.86)% -- -- --
1997 0.00% 5.91% 10.25% (4.34)% -- -- --
1996 0.00% 6.46% 16.47% (10.01)% -- -- --
1995 (4) 0.00% 5.74% 27.89% (22.15)% -- -- --
- ------------------------------------------------------------------
Turner Short Duration Government Funds-One Year Portfolio--Adviser
- ------------------------------------------------------------------
1999 (6) 0.23% 5.13% 6.76% (1.40)% -- --
1998 (7) 0.25%* 5.63%* 11.08%* (5.20)%* -- -- --
- ------------------------------------------
Turner Core High Quality Fixed Income Fund
- ------------------------------------------
1999 (8) 0.45%* 5.67%* 1.99%* 4.13%* -- -- --
<CAPTION>
- --------------------------------------------------------------------------------
Average
shares
outstanding Portfolio
during turnover
the period rate
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------
Turner Short Duration Government Funds-Three Year Portfolio--Institutional
- --------------------------------------------------------------------------
1999 (1) -- 257.98%
1998 (2) -- 121.63%
1998 (3) -- 197.03%
1997 1,320,830 279.00%
1996 901,238 251.00%
1995 (4) 895,472 405.00%
- --------------------------------------------------------------------
Turner Short Duration Government Funds-Three Year Portfolio--Adviser
- --------------------------------------------------------------------
1999 (5) -- 257.98%
- ------------------------------------------------------------------------
Turner Short Duration Government Funds-One Year Portfolio--Institutional
- ------------------------------------------------------------------------
1999 (6) -- 154.33%
1998 (2) -- 96.56%
1998 (3) -- 68.80%
1997 -- 81.82%
1996 -- --
1995 (4) -- --
- ------------------------------------------------------------------
Turner Short Duration Government Funds-One Year Portfolio--Adviser
- ------------------------------------------------------------------
1999 (6) -- 154.33%
1998 (7) -- 96.56%
- ------------------------------------------
Turner Core High Quality Fixed Income Fund
- ------------------------------------------
1999 (8) -- 39.70%
</TABLE>
(6) On May 24, 1999 shareholders of the Alpha Select Turner Short Duration
Government Funds-One Year Portfolio (the "Fund") approved a tax-free
reorganization under which all assets and liabilities of the Fund were
transferred to the TIP Turner Short Duration Government Funds-One Year
Portfolio.
(7) Commenced operations on February 27, 1998.
(8) Commenced operations on July 1, 1999.
(9) Average based upon amounts outstanding at each month end.
(10) There was no debt outstanding at the end of any period presented.
Amounts designated as "--" are either $0 or have been rounded to $0.
The accompanying notes are an integral part of the financial statements.
TURNER FUNDS 1999 ANNUAL REPORT | 59
<PAGE>
FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
Notes to financial statements
September 30, 1999
1. Organization:
TIP Funds (the "Trust"), a Massachusetts business trust, is registered under the
Investment Company Act of 1940, as amended, as a diversified open-end management
investment company with 19 portfolios. The financial statements included herein
are those of the Turner Large Cap Growth Equity Fund (formerly Turner Ultra
Large Cap Growth Fund) (the "Large Cap Growth Equity Fund"), the Turner Growth
Equity Fund (the "Growth Equity Fund"), the Turner Midcap Growth Fund (the
"Midcap Growth Fund"), the Turner Small Cap Growth Fund (the "Small Cap Growth
Fund"), the Turner Micro Cap Growth Fund (the "Micro Cap Growth Fund"), the
Turner Top 20 Fund (the "Top 20 Fund"), the Turner Technology Fund (the
"Technology Fund"), the Turner Short Duration Government Funds-Three Year
Portfolio (the "Three Year Portfolio"), the Turner Short Duration Government
Funds-One Year Portfolio (the "One Year Portfolio"), and the Turner Core High
Quality Fixed Income Fund (the "Core High Quality Fixed Income Fund") (each a
"fund" and collectively the "Funds"). The Turner Short Duration Government
Funds-Three Year and One Year Portfolios are registered to offer two classes of
shares, Institutional Class Shares and Adviser Class Shares. The financial
statements of the remaining portfolios are presented separately. The assets of
each fund are segregated, and a shareholder's interest is limited to the fund in
which shares are held. The Funds' prospectus provides a description of each
fund's investment objectives, policies, and strategies.
As of September 30, 1999, the Turner International Growth Fund and the Turner
Focused Large Cap Equity Fund had not yet commenced operations.
The Turner Small Cap Growth Fund was closed to new investors as of August 30,
1997.
2. Significant accounting policies:
The following is a summary of the significant accounting policies followed by
the Funds.
Security valuation--Investments in equity securities which are traded on a
national exchange (or reported on the NASDAQ national market system) are
stated at the last quoted sales price if readily available for such equity
securities on each business day; other equity securities traded in the
over-the-counter market and listed equity securities for which no sale was
reported on that date are stated at the last quoted bid price. Market value
for debt obligations is determined on the basis of last reported sales price,
or if no sales are reported, as is the case with most securities traded over
the counter, the mean between representative bid and asked quotations.
Short-term securities with maturities of 60 days or less may be carried at
amortized cost, which approximates market value. Fixed income securities for
which market quotations are not readily available may be valued, pursuant to
guidelines established by the Board of Trustees, with reference to fixed
income securities whose prices are more readily obtainable and whose
durations are comparable to the securities being valued. Subject to the
foregoing, other securities for which market quotations are not readily
available are valued at fair value as determined in good faith by the Board
of Trustees.
Federal income taxes--It is each Fund's intention to qualify as a regulated
investment company by complying with the appropriate provisions of the
Internal Revenue Code of 1986, as amended. Accordingly, no provision for
Federal income taxes is required.
Security transactions and related income--Security transactions are accounted
for on the date the security is purchased or sold (trade date). Dividend
income is recognized on the ex-dividend date, and interest income is
recognized on the accrual basis. Costs used in determining realized gains and
losses on the sales of investment securities are those of the specific
securities sold during the respective holding period.
Securities purchased on a when-issued or delayed delivery basis may be
settled a month or more after the trade date. Such securities are included in
the portfolio and are subject to market fluctuations during this period. On
the date of the commitment to purchase or sell, the Funds designate specific
assets with a current value at least equal to the amount of the commitment to
be used for settling the commitment.
Net asset value per share--The net asset value per share of each Fund is
calculated on each business day, by dividing the total value of the fund's
assets, less liabilities, by the number of shares outstanding.
Repurchase agreements--Securities pledged as collateral for repurchase
agreements are held by the custodian bank until the respective agreements
mature. Provisions of the repurchase agreements ensure that the market value
of the collateral, including accrued interest thereon, is sufficient in the
event of default of the counterparty. If the counterparty defaults and the
value of the collateral declines or if the counterparty enters an insolvency
proceeding, realization of the collateral by the funds may be delayed or
limited.
Expenses--Expenses that are directly related to one of the funds are charged
to that fund. Other operating expenses of the Trust are prorated to the Funds
on the basis of relative daily net assets.
Distributions to shareholders--Distributions from net investment income are
declared and paid to Shareholders at least annually for the Large Cap Growth
Equity Fund, the Midcap Growth Fund, the Small Cap Growth Fund, the Micro Cap
Growth Fund, the Top 20 Fund, and the Technology Fund; quarterly for the
Growth Equity Fund; and declared daily and paid monthly for the Three Year
Portfolio, One Year Portfolio and the Core High Quality Fixed Income Fund.
Any net realized capital gains on sales of securities for all Funds 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. Certain book/tax differences are either temporary or permanent
in nature. To the extent these differences are permanent, they are charged or
credited to paid-in-capital or accumulated net realized gain, as appropriate,
in the period that the differences arise.
Use of estimates--The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date
of the financial statements, and the reported amounts of income and expenses
during the reported period. Actual results could differ from those estimates.
3. Organization costs and transactions with affiliates:
Organization costs have been capitalized by each Fund and are being amortized
over a period of sixty months. In the event any of the initial shares of a Fund
are redeemed by any holder thereof during the period that such Fund is
amortizing its organizational costs, the redemption proceeds payable to the
holder thereof by a Fund will be reduced by the unamortized organizational costs
in the same ratio as the number of shares outstanding at the time of redemption.
Certain officers of the Trust are also officers of SEI Investments Mutual Funds
Services (the "Administrator") and/or SEI Investments Distribution Co. (the
"Distributor"). Such officers are paid no fees by the Trust for serving as
officers and trustees of the Trust.
4. Administration, shareholder servicing, and distribution agreements:
The Trust and the Administrator are parties to an agreement under which the
Administrator provides management and administrative services for an annual fee.
For these administrative services, the Administrator is entitled to a fee from
the Trust, which is calculated daily and paid monthly, at an annual rate of .09%
of the Trust's average daily net assets up to $250 million, .07% on the next
$250 million, .06% on the next $250 million, .05% on the next $1.25 billion and
.04% of such assets in excess on $2 billion. Each Fund is subject to a minimum
annual fee of $65,000 for the first class of shares and $15,000 for each
additional class of shares, which may be reduced at the sole discretion of the
Administrator.
The Growth Equity Fund, the Midcap Growth Fund, and the Small Cap Growth Fund
have directed certain portfolio trades to brokers who paid a portion of its
expenses. For the period ended September 30, 1999, the Funds expenses were
reduced by $131,755, $27,561 and $50,019 respectively, under this arrangement.
DST Systems, Inc., (the "Transfer Agent"), serves as the transfer agent and
dividend disbursing agent for the Funds under a transfer agency agreement with
the Trust.
Prior to January 1, 1998, administrative services were provided to the Three
Year and One Year Funds by Solon Asset Management, L.P. for an annual fee of
.07% of the average daily net assets of each Fund.
The Trust and the Distributor are parties to a Distribution Agreement dated
April 28, 1996. The Distributor receives no fees for its distribution services
under this agreement.
The Three Year and One Year Portfolios have adopted a shareholder service plan
and agreement for their Adviser Class Shares. Under the shareholder service plan
and agreement both funds pay the Distributor a shareholder servicing fee at an
annual rate of 0.25% of the average daily net assets of the Adviser Class Shares
of each fund.
TURNER FUNDS 1999 ANNUAL REPORT | 61
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- --------------------------------------------------------------------------------
5. Investment advisory agreement:
The Trust and Turner Investment Partners, Inc. the "Adviser" are parties to an
Investment Advisory Agreement dated April 28, 1996 under which the Adviser
receives an annual fee equal to .75% of the average daily net assets of the
Large Cap Growth Equity, Growth Equity, and Midcap Growth Equity Funds, 1.00% of
the Small Cap Growth and Micro Cap Growth Funds, 1.10 of the Top 20 and
Technology Funds, .25% of the Three Year and One Year Funds and .50% of the Core
High Quality Fixed Income Fund. The Adviser has voluntarily agreed to waive all
or a portion of its fees and to reimburse expenses in order to limit their total
operating expenses (as a percentage of daily net assets on an annualized basis)
to not more than 1.00% of the Large Cap Growth Equity and Growth Equity Funds,
1.25% of the Small Cap Growth, Midcap Growth Equity and Micro Cap Growth Funds,
1.35% of the Top 20 and Technology Funds, .36% and .61% of the Three Year and
One Year Funds, Institutional shares and Adviser shares, respectively, and .45%
of the Core High Quality Fixed Income Fund. Fee waivers and expense
reimbursements are voluntary and may be terminated at any time. On January 1,
1998, Turner Investment Partners, Inc., acquired substantially all of the assets
and liabilities of Solon Asset Management, L.P. (the Three Year Portfolio and
One Year Portfolio prior investment adviser).
6. Investment transactions:
The cost of security purchases and the proceeds from security sales, other than
short-term investments, for the period ended September 30, 1999, are as follows
(000):
Turner Turner Turner Turner Turner
Large Cap Growth Midcap Small Cap Micro Cap Turner
Growth Equity Growth Growth Growth Top 20
Equity Fund Fund Fund Fund Fund Fund
- --------------------------------------------------------------------------------
Purchases
Government -- -- -- -- -- --
Other 29,486 427,617 286,698 452,858 20,391 58,450
Sales
Government -- -- -- -- -- --
Other 27,386 422,503 199,990 442,558 15,633 46,112
- --------------------------------------------------------------------------------
Turner Short Duration
Government Funds Turner Core
Turner ---------------------- High Quality
Technology Three Year One Year Fixed Income
Fund Portfolio Portfolio Fund
- --------------------------------------------------------------------------
Purchases
Government -- 56,149 1,354 5,661
Other 23,591 3,201 372 142
Sales
Government -- 31,026 688 3,465
Other 17,731 6,090 191 938
- --------------------------------------------------------------------------
At September 30, 1999, the total cost of securities for Federal income tax
purposes was $8,150,595 for the Large Cap Growth Equity Fund, $15,277,927 for
the Top 20 Fund, and $7,237,620 for the Technology Fund. The cost of securities
and net realized gains or losses on securities sold for the remaining Funds was
not materially different from amounts reported for financial reporting purposes.
The aggregate gross unrealized appreciation and depreciation for securities held
by the Funds at September 30, 1999, are as follows (000):
Turner Turner Turner Turner Turner
Large Cap Growth Midcap Small Cap Micro Cap Turner
Growth Equity Growth Growth Growth Top 20
Equity Fund Fund Fund Fund Fund Fund
- --------------------------------------------------------------------------------
Aggregate gross
unrealized
appreciation 762 17,202 18,406 48,240 2,976 1,153
Aggregate gross
unrealized
depreciation (354) (4,379) (7,147) (13,159) (381) (560)
- --------------------------------------------------------------------------------
Net unrealized
appreciation
(depreciation) 408 12,823 11,259 35,081 2,595 593
- --------------------------------------------------------------------------------
Turner Short Duration
Government Funds Turner Core
Turner ----------------------- High Quality
Technology Three Year One Year Fixed Income
Fund Portfolio Portfolio Fund
- ----------------------------------------------------------------------------
Aggregate gross
unrealized
appreciation 596 91 5 8
Aggregate gross
unrealized
depreciation (384) (119) (4) (250)
- ----------------------------------------------------------------------------
Net unrealized
appreciation
(depreciation) 212 (28) 1 (242)
- ----------------------------------------------------------------------------
62 | TURNER FUNDS 1999 ANNUAL REPORT
<PAGE>
7. In Kind Transfers of Securities
During the period ended September 30, 1999, the Growth Equity Fund issued
273,210 shares of beneficial interest in exchange for portfolio assets from
certain accounts managed by Turner Investment Partners, Inc., at their then
current value of $4,270,277.
During the period ended September 30, 1999, the Three Year Portfolio issued
1,925,533 shares of beneficial interest in exchange for portfolio assets from
certain accounts managed by Turner Investment Partners, Inc., at their then
current value of $18,947,249.
During the period ended September 30, 1999, the Core HighQuality Fixed Income
Fund issued 1,012,284 shares of beneficial interest in exchange for portfolio
assets from certain accounts managed by Turner Investment Partners, Inc., at
their then current value of $10,120,317 which includes $260,485 of net
unrealized loss.
8. Line of credit:
Pursuant to a credit agreement dated May 21, 1997, First Union National Bank
provides an uncommitted line of credit to the Large Cap Growth Equity Fund, the
Growth Equity Fund, the Midcap Growth Fund and the Small Cap Growth Fund,
Portfolios of the TIP Funds, for short-term or emergency purposes, such as
funding shareholder redemptions. These loans are for the respective benefit of
and repayable from the respective assets of each Fund. The aggregate principal
amount of all borrowings may not exceed 10% of each Fund, net assets and the
maximum principal amount that the Bank will loan is $10,000,000. Borrowings
under the line of credit are charged interest based on the federal funds rate
determined at the date of borrowing and are secured by investment securities of
the borrowing portfolio. Each Fund is individually, and not jointly, liable for
its particular advances under the line. There is no commitment fee on the unused
portion of the line of credit. There were no borrowings under the line of credit
during the period ended September 30, 1999.
TURNER FUNDS 1999 ANNUAL REPORT | 63
<PAGE>
REPORT OF INDEPENDENT AUDITORS
- --------------------------------------------------------------------------------
To the Shareholders and Board of Trustees of the TIP Funds:
We have audited the accompanying statements of net assets of the Turner Large
Cap Growth Fund, the Turner Small Cap Growth Fund, the Turner Short Duration
Government Funds -- One Year Portfolio, and the Turner Core High Quality Fixed
Income Fund and the statement of assets and liabilities of the Turner Growth
Equity Fund, the Turner Mid Cap Growth Fund, the Turner Micro Cap Growth Fund,
the Turner Top 20 Fund, the Turner Technology Fund and the Turner Short Duration
Government Funds -- Three Year Portfolio, including the schedules of portfolio
investments, as of September 30, 1999, and the related statements of operations
for the year then ended, the statements of changes in net assets for the periods
presented therein and the financial highlights for the periods ended September
30, 1996 through September 30, 1999 presented therein. We have also audited the
financial highlights for the periods ended February 28, 1995 and February 28,
1996 for the Turner Short Duration Government Funds -- Three Year Portfolio and
the Turner Short Duration Government Funds -- One Year Portfolio. These
financial statements and financial highlights are the responsibility of the
Funds' management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audits. The financial
highlights for the periods ended October 31, 1994 and October 31, 1995 for the
Turner Growth Equity Fund and the Turner Small Cap Growth Fund were audited by
other auditors whose report dated December 5, 1995 expressed an unqualified
opinion on those financial statements and financial highlights.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
September 30, 1999, by correspondence with the custodian and brokers. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of the
TIP Funds at September 30, 1999, the results of their operations for the year
then ended, the changes in their net assets for each of the periods presented
therein, and financial highlights for the periods ended September 30, 1996
through September 30, 1999 presented therein, and for the periods ended February
28, 1995 and February 28, 1996 presented therein for the Turner Short Duration
Government Funds -- Three Year Portfolio and the Turner Short Duration
Government Funds -- One Year Portfolio in conformity with generally accepted
accounting principles.
/s/ signature omitted
-----------------------------------
Philadelphia, Pennsylvania
November 8, 1999
64 | TURNER FUNDS 1999 ANNUAL REPORT
<PAGE>
- --------------------------------------------------------------------------------
Notice to Shareholders
of
Turner Funds
(Unaudited)
For shareholders that do not have a September 30, 1999 tax year end, this notice
is for informational purposes only. For shareholders with a September 30, 1999,
please consult your tax advisor as to the pertinence of this notice. For the
fiscal year ended September 30, 1999, each portfolio is designating the
following items with regard to distributions paid during the year.
<TABLE>
<CAPTION>
Long Term
(20% Rate) Ordinary
Capital Gain Income Tax Exempt Total Qualifying
Fund Distributions Distributions Interest Distributions Dividends (1)
---- ------------- ------------- ---------- ------------- -------------
<S> <C> <C> <C> <C> <C>
Turner Large Cap Growth Equity Fund ......... 0.00% 0.00% 0.00% 0.00% 0.00%
Turner Growth Equity Fund ................... 66.75% 33.25% 0.00% 100.00% 4.38%
Turner Midcap Growth Fund ................... 0.00% 0.00% 0.00% 0.00% 0.00%
Turner Small Cap Growth Fund ................ 0.00% 0.00% 0.00% 0.00% 0.00%
Turner Micro Cap Growth Fund ................ 0.00% 0.00% 0.00% 0.00% 0.00%
Turner Top 20 Fund .......................... 0.00% 0.00% 0.00% 0.00% 0.00%
Turner Technology Fund ...................... 0.00% 0.00% 0.00% 0.00% 0.00%
Turner Short Duration Government
Funds-Three Year Portfolio ............. 3.43% 96.57% 0.00% 100.00% 0.00%
Turner Short Duration Government
Funds-One Year Portfolio ............... 0.00% 100.00% 0.00% 100.00% 0.00%
Turner Core High Quality Fixed Income ....... 0.00% 100.00% 0.00% 100.00% 0.00%
</TABLE>
(1) Qualifying dividends represent dividends which qualify for the corporate
dividends received deduction and is reflected as a percentage of "Ordinary
Income Distributions".
TURNER FUNDS 1999 ANNUAL REPORT | 65
<PAGE>
- --------------------------------------------------------------------------------
NOTES
<PAGE>
- --------------------------------------------------------------------------------
NOTES
<PAGE>
[LOGO OMITTED]
TURNER
--------
FUNDS
--------------------------------
Turner Funds
1235 Westlake Drive
Berwyn, Pennsylvania 19312
Telephone: 1-800=224-6312
Email: [email protected]
Web Site: www.turner-invest.com
<PAGE>
Turner Funds, Portfolios of the TIP Funds
and Alpha Select Funds
PB
TIP Funds trustees
(Responsible for managing the business and affairs of the TIP Funds, which
include the following portfolios: the Turner Large Cap Growth Equity Fund, the
Turner Growth Equity Fund, the Turner Midcap Growth Fund, the Turner Small Cap
Growth Fund, the Turner Micro Cap Growth Fund, and the Turner Short Duration
Government Funds-Three Year Portfolio)
Richard A. Hocker
Chief Investment Officer and Senior Vice President
Penn Capital Management Co., Inc.
Michael E. Jones
Senior Vice President, Investment Adviser, and Portfolio Manager
Clover Capital Management, Inc.
Alfred C. Salvato
Treasurer
Thomas Jefferson University Health Care Pension Fund
Janet F. Sansone
Corporate Vice President, Human Resources
Frontier Corporation
Robert E. Turner
Chairman and Chief Investment Officer
Turner Investment Partners, Inc.
Dr. John T. Wholihan
Professor and Dean, College of Business
Loyola Marymount University
<PAGE>
Alpha Select Funds trustees
(Responsible for managing the business and affairs
of the Alpha Select Funds, which include the following portfolios: the Turner
Short Duration Government Funds-One
Year Portfolio)
Ronald Filante
Associate Professor of Finance
Pace University
Katherine Griswold
Director of Benefits Trusts
Southern New England Telephone Company
Alfred C. Salvato
Treasurer
Thomas Jefferson University Health Care Pension Fund
Robert E. Turner
Chairman and Chief Investment Officer
Turner Investment Partners, Inc.
Investment adviser
Turner Investment Partners, Inc.
Berwyn, Pennsylvania
Distributor
SEI Investments Distribution Co.
Oaks, Pennsylvania
Administrator
SEI Investments Mutual Fund Services
Oaks, Pennsylvania
Legal counsel
Morgan, Lewis & Bockius LLP
Philadelphia
Independent auditors
Ernst & Young LLP
Philadelphia
This report was prepared for shareholders of the Turner Funds, Portfolios of
both TIP Funds and Alpha Select Funds. It may be distributed to others only if
preceded or accompanied by a Turner Funds' Prospectus, which contains detailed
information. All Turner Funds are offered by prospectus only.
