UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number | 811-07527 | |||||||
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Turner Funds | ||||||||
(Exact name of registrant as specified in charter) | ||||||||
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1205 Westlakes Drive, Suite 100 Berwyn, PA |
| 19312 | ||||||
(Address of principal executive offices) |
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Michael P. Malloy Drinker Biddle & Reath LLP One Logan Square, Suite 2000 Philadelphia, PA 19103 | ||||||||
(Name and address of agent for service) | ||||||||
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Registrant’s telephone number, including area code: | 1-800-224-6312 |
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Date of fiscal year end: | September 30 |
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Date of reporting period: | September 30, 2011 |
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Item 1. Reports to Stockholders.
Annual Report
September 30, 2011
Long/short equity funds
Turner Market Neutral Fund
Turner Medical Sciences Long/Short Fund
Turner Spectrum Fund
Turner Titan Fund
U.S. growth equity funds
Turner All Cap Growth Fund
Turner Concentrated Growth Fund
Turner Emerging Growth Fund
Turner Large Growth Fund
Turner Midcap Growth Fund
Turner Small Cap Growth Fund
Global and international equity funds
Turner Global Opportunities Fund
Turner International Growth Fund
Contents
| 2 | Letter to shareholders | ||||||
| 5 | Total returns of the Turner Funds | ||||||
| 9 | Investment review: Turner Market Neutral Fund | ||||||
| 10 | Investment review: Turner Medical Sciences Long/Short Fund | ||||||
| 11 | Investment review: Turner Spectrum Fund | ||||||
| 12 | Investment review: Turner Titan Fund | ||||||
| 13 | Investment review: Turner All Cap Growth Fund | ||||||
| 14 | Investment review: Turner Concentrated Growth Fund | ||||||
| 15 | Investment review: Turner Emerging Growth Fund | ||||||
| 16 | Investment review: Turner Large Growth Fund | ||||||
| 17 | Investment review: Turner Midcap Growth Fund | ||||||
| 18 | Investment review: Turner Small Cap Growth Fund | ||||||
| 19 | Investment review: Turner Global Opportunities Fund | ||||||
| 20 | Investment review: Turner International Growth Fund | ||||||
| 21 | Schedules of investments | ||||||
| 52 | Financial statements | ||||||
| 74 | Notes to financial statements | ||||||
| 84 | Report of independent registered public accounting firm | ||||||
| 85 | Notice to shareholders | ||||||
| 86 | Disclosure of fund expenses | ||||||
| 88 | Trustees and officers of the Trust | ||||||
Turner Funds
As of September 30, 2011, the Turner Funds offered a series of 12 mutual funds to individual and institutional investors. The minimum initial investment for Institutional Class Shares in a Turner Fund is $250,000 (except for $100,000 for the Turner Market Neutral Fund, Turner Medical Sciences Long/Short Fund, Turner Spectrum Fund, and Turner Titan Fund) for regular accounts and $100,000 for individual retirement accounts. The minimum initial investment for Investor Class Shares, Retirement Class Shares and Class C Shares is $2,500 for regular accounts and $2,000 for individual retirement accounts.
Turner Investments, based in Berwyn, Pennsylvania, serves as the investment adviser for the Funds. Turner Investments, founded in 1990, manages more than $12 billion in stock investments as of September 30, 2011.
Shareholder services
Turner Funds shareholders receive annual and semiannual reports, quarterly account statements, and a quarterly newsletter. Shareholders who have questions about their accounts may call a toll-free telephone number, 1.800.224.6312, may visit our website, www.turnerinvestments.com, or may write to Turner Funds, P.O. Box 219805, Kansas City, Missouri 64121-9805.
TURNER FUNDS 2011 ANNUAL REPORT 1
LETTER TO SHAREHOLDERS
To our shareholders
If we were to poll stock investors about whether their proverbial glass is half empty or half full now, the overwhelming answer would be half empty. The one thing that stock investors seem to be brimming with now is pessimism. For investors who have endured a series of events that has been hard on their net worth and nerves over the past 12 years, including two bear markets, one financial crisis, and one recent volatile, sharp market downturn, risk aversion is the investor preoccupation du jour. Be that as it may, we harbor a measure of optimism about the market's resiliency and the problems that have been weighing on the market recently, such as the ability of European governments to show some fiscal discipline and the ability of the U.S. economic expansion to continue.
From our glass-half-full perspective, we don't think all of the financial and economic problems besetting the United States, Europe, and the emerging nations are as bad as investors have made them out to be. For example, we think that over time European governments should muddle through to restructure their bad debts and the European Union should remain intact. (The alternative, the dissolution of the euro and the European Union, would be much too costly, in our judgment; it would result in colossal, long-lasting economic trauma for its 27 member states.) We think the U.S. and global economies are likely to avoid a recession. Our analysis is that in 2012 the U.S. economy may grow 2%; the global economy, 4%; and the emerging nations' economy, 6%. We think companies should continue to report solid profits. And we think stocks may be the most attractive they've ever been relative to other asset classes.
Stocks look cheap
For one thing, the S&P 500 Index companies are yielding an average dividend of 2.5%, well above the 10-year Treasury yield of about 2%. For another thing, stocks are fairly cheap, with the price/earnings ratio of the S&P 500 Index near 14, based on earnings of the past 12 months (the average over the past 100 years is 16, according to The New York Times). Also, S&P 500 stocks are trading at 1.9 times their book value, compared with a 15-year average of 3.1, according to J. P. Morgan. Finally, the percentage of the S&P 500's value assigned to future growth is at its lowest point in two decades, says Morgan Stanley Smith Barney; in effect, the market is pricing in a major earnings slump, which we think is unlikely.
As we see it, once we gain a little distance from the problems now weighing heavily on the market, the path of least resistance for stocks is up. In short, we think the market is primed to advance in both the near-term and the long-term.
To be sure, the path of the market lately hasn't generally been up. Even so, despite the S&P 500 Index suffering a correction (a drop of at least 10%) during the 12-month period ended September 30, 2011 that is the focus of this report, the bull market that began in March 2009 hasn't died, although its survival has admittedly been threatened at times. At its worst, from April 29 to August 8, the S&P 500 Index fell 18%, but each time it has threatened to breach bear-market territory (a drop of at least 20%), it has bounced back — an encouraging pattern that the army of bearish pessimists conveniently overlooks.
Market's results mixed
The market's performance over the whole 12-month period has been mixed, to put it mildly. In the first six months of the period the S&P 500 was anything but bearish: it soared 17.31%. In the second six months of the period, though, it plummeted 13.78%. Net-net, the April-August correction shriveled the S&P 500's positive return for the entire 12-month period to 1.14%.
Indeed, one of the distinctive characteristics of the market during the period was its volatile extremes. When investors were feeling confident, the market rallied full steam ahead. But when that confidence faltered, investors jumped ship in droves. For instance, in the first week of August, trading volume averaged 7.8 billion shares a day — volume on par with the "flash crash" of May 2010. Trading volume, along with investors' tendency to buy and sell at the slightest provocation, translated into stomach-churning gains and losses in back-to-back days, up several percent one day and down several percent the next.
Another distinctive characteristic of the market was the uncommon degree that stocks moved in lockstep. According to Bank of America Merrill Lynch, stocks reached an all-time high correlation of 90.1% in September. To put that figure into perspective, the average correlation of S&P 500 stocks between 2000 and 2006 was a mere 27%. If nothing else, a correlation of 90% makes it difficult for us to excel as stock pickers, because the fundamentals such as earnings that we use to identify winning stocks are essentially neutralized. We choose high-quality stocks for our growth and international/global funds and for the long positions in our alternative, or long/short, funds that we think can meet or exceed Wall Street's earnings expectations. But when 90% of stocks are just copycatting each other, it becomes problematic to pick the lead lion from the rest of the pride.
Nevertheless, nine of our 12 stock funds outperformed one or more of their benchmarks. Six of them produced positive returns, and the other three outperformed by losing less than their benchmarks. Our funds' gains came mainly in the first seven months of the period, through the S&P 500's 12-month peak in April. Our nine outperforming funds were the Turner All Cap Growth Fund, the Turner Emerging Growth Fund, the Turner Global Opportunities Fund, the Turner International Growth Fund, the Turner Market Neutral Fund, the Turner Medical Sciences Long/Short Fund, the Turner Midcap Growth Fund, the Turner Spectrum Fund, and the Turner Titan Fund.
2 TURNER FUNDS 2011 ANNUAL REPORT
September 30, 2011
| Total returns | |||||||
| 12-month period ended September 30, 2011 | |||||||
| Alternative equity funds | |||||||
| Turner Market Neutral Fund, Investor Class (TMNFX) | 5.20 | %† | |||||
| S&P 500 Index | -12.51 | † | |||||
| Barclays Capital U.S. Aggregate Bond Index | 7.62 | † | |||||
| Lipper Equity Market-Neutral Funds Average | -1.60 | † | |||||
| Turner Medical Sciences Long/Short Fund, Investor Class (TMSFX) | 3.40 | † | |||||
| S&P 500 Healthcare Index | -0.16 | † | |||||
| Barclays Capital U.S. Aggregate Bond Index | 7.62 | † | |||||
| Lipper Long/Short Equity Funds Average | -10.03 | † | |||||
| Turner Spectrum Fund, Institutional Class (TSPEX) | 5.82 | ||||||
| S&P 500 Index | 1.14 | ||||||
| Barclays Capital U.S. Aggregate Bond Index | 5.26 | ||||||
| Lipper Long/Short Equity Funds Average | -3.61 | ||||||
| Turner Titan Fund, Investor Class (TTLFX) | -2.40 | † | |||||
| S&P 500 Index | -12.51 | † | |||||
| Barclays Capital U.S. Aggregate Bond Index | 7.62 | † | |||||
| Lipper Long/Short Equity Funds Average | -10.03 | † | |||||
| U.S. growth equity funds | |||||||
| Turner All Cap Growth Fund (TBTBX) | 9.10 | ||||||
| Nasdaq Composite Index | 1.97 | ||||||
| Russell 3000® Growth Index | 3.39 | ||||||
| Turner Concentrated Growth Fund (TTOPX) | -3.17 | ||||||
| S&P 500 Index | 1.14 | ||||||
| Russell 1000® Growth Index | 3.78 | ||||||
| Turner Emerging Growth Fund, Investor Class (TMCGX) | 7.56 | ||||||
| Russell 2000® Growth Index | -1.12 | ||||||
| Turner Large Growth Fund, Institutional Class (TTMEX) | -0.39 | ||||||
| Russell 1000® Growth Index | 3.78 | ||||||
| Turner Midcap Growth Fund, Investor Class (TMGFX) | 1.45 | ||||||
| Russell Midcap® Growth Index | 0.80 | ||||||
| Turner Small Cap Growth Fund (TSCEX) | -3.94 | ||||||
| Russell 2000® Growth Index | -1.12 | ||||||
| International and global equity funds | |||||||
| Turner Global Opportunities Fund, Institutional Class (TGLBX) | -1.22 | ||||||
| MSCI World Growth Index | -2.94 | ||||||
| MSCI World Index | -3.84 | ||||||
| Turner International Growth Fund, Institutional Class (TIGCX) | -1.32 | ||||||
| MSCI World ex-U.S. Growth Index | -8.63 | ||||||
† Returns are from the fund's inception date, February 7, 2011.
(Please call 1.800.224.6312 or visit our website at www.turnerinvestments.com for the most recent month-end performance. For more details on the performance of each fund during the 12-month period, see the Investment review beginning on page 9.)
We eat our own cooking
We're pleased that a majority of our funds outperformed their benchmarks in such a volatile stock market. Although we wish more of our funds' results had been positive, the results are what they are — for both you and us. Most of our portfolio managers eat their own cooking and invest in our funds. So if you are a shareholder in one of our funds with a negative return for the period, you at least have the consolation of knowing we share your indigestion. As such, it's in our own best interest, as well as yours, to produce the best possible returns for our funds.
Our worst absolute returns in the period came from our international, small-cap, and concentrated growth funds, which partly reflects the steeper losses inflicted on the international and small-cap stock markets. Our international funds have tended to do best in a flat or rising market, which the international market was decidedly not in this period (it lost more than the U.S. market). And small-cap companies are like the canaries of the investing coal mine: they tend to be the most vulnerable to any market risks. (Although unlike our feathered friends, they tend to bounce back faster and stronger when the market turns positive.)
Yet as we never tire of pointing out, the true test of a stock fund isn't its performance in a given 12-month period, but its ability to generate outperformance and increase shareholders' wealth over time. Of our nine funds that have been in existence for more than a year, all share classes in seven of our funds have outperformed at least one of their benchmarks since their inception. So as we see it, a healthy majority of our funds have proven their merit through both good and bad markets — which gives us another reason to see the glass as half full.
We add long/short funds
In our efforts to provide funds with superior returns, we've added to and, in our estimation, enhanced our mutual-fund lineup. On February 7, we introduced three alternative funds to join the Turner Spectrum Fund: the Turner Market Neutral Fund, the Turner Medical Sciences Long/Short Fund, and the Turner Titan Fund, all designed to offer market-like returns in the long-term while seeking to preserve capital in down markets. Two of the three funds have delivered positive returns, even though the S&P 500 lost money in five of the eight months they've been operating.
To be sure, if the stock market were a movie actor, its performance of late hasn't been worthy of an Academy
TURNER FUNDS 2011 ANNUAL REPORT 3
LETTER TO SHAREHOLDERS (continued)
Award. But we think the 2010s may change all that. In our judgment, the stock market could give a stellar performance in this decade that may equal or exceed the long-term annual average of 9.9%. Our expectation is based partly on the statistical principle of reversion to the mean — the tendency for investment returns to adjust, or revert, to the long-term average over time. During the atypically dismal decade for stocks between 2000 and 2009 that we refer to as the Terrible 2000s, the S&P 500 Index lost 0.95% annualized.
But stocks have won the award for Best Performance by an Asset Class Historically, producing gains of more than 10% in 48 of the last 85 years — more than half the time. According to Morningstar, of all rolling 10-year monthly returns since 1926, only 29 of them have been negative, less than 4% of the total, and the rolling 10-year monthly returns that followed averaged 9.8%. Although lesser results can never be ruled out and past performance is no guarantee of future results, stocks in the 2010s have in fact benefited from a good start, in the form of the bull market that began in March 2009. Consequently, for the decade to date through September 30, the S&P 500 Index is up 2.9% annualized. So the trend in stocks' performance is improving, albeit gradually and fitfully, and we think the probabilities strongly favor stocks achieving a better, more normalized performance in this decade.
Profits have doubled
What's more, our analysis is that companies, especially those in the U.S. and emerging nations, are generally doing well now. Corporate profits have nearly doubled since 2009, and Moody's recently reported that U.S. companies are sitting on $1.2 trillion in cash, some of which we think may be spent on mergers and acquisitions, share buybacks, and dividend increases over the next 12 months.
Yes, we realize that European governments' debt problems and a lackluster U.S. economy represent formidable headwinds for stocks. But we also think the bad news has already mostly been reflected in stock prices. Any encouraging news on those two fronts, which we anticipate should surface in the months ahead, may be all the stock market needs to begin rising again, to the benefit of investors who have been patient and kept a long-term time horizon.
In anticipation of what we believe will be better times ahead for the stock market, we've focused our U.S. and international/global growth funds on three types of shares: classic growth stocks in industries such as biotechnology and wireless communications that we think have strong fundamentals; stocks of companies gaining market share in their businesses; and growth-cyclical stocks in industries like retailing and restaurants that have tended to do well historically as the economic cycle progresses. The long positions of our alternative funds contain similar types of stocks, while the short positions reflect those companies that we believe will have challenges growing their earnings.
In closing, we encourage you to resist the easy assumption that the financial/economic/stock-market glass is half empty. In truth, there is much encouraging news to be found; however, the good news unfortunately doesn't make headlines like the bad news does. We think that if the global economy can keep its head above recessionary waters and corporate earnings can continue to grow nicely, as they have so far in 2011, investors may take heart and the bull market may resume in earnest in the fourth quarter and continue into 2012. That would be the kind of investing environment best suited to our funds. We do see the glass as half full, and we are optimistic about our funds' potential to increase your — and our — wealth in this decade.
Bob Turner
Chairman and Chief Investment Officer
Turner Investments
Past performance is no guarantee of future results. The views expressed are those of Turner Investments as of September 30, 2011, and are not intended as a forecast or investment recommendations. The indexes mentioned are not available for investment.
Bob Turner
4 TURNER FUNDS 2011 ANNUAL REPORT
September 30, 2011
| Total returns of the Turner Funds | |||
Through September 30, 2011
Current performance may be lower or higher than the performance data quoted. Please call 1.800.224.6312 or visit our website at www.turnerinvestments.com for the most recent month-end performance information.
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. Past performance is no guarantee of future results. Returns shown, unless otherwise indicated, are total returns, with dividends and income reinvested. Returns spanning more than one year are annualized. Fee waivers are in effect; if they had not been in effect, performance would have been lower. The indices mentioned are unmanaged statistical composites of stock-market performance. Investing in an index is not possible.
The holdings and sector weightings of the Funds are subject to change. Forward-earnings projections are not predictors of stock price or investment performance, and do not represent past performance. There is no guarantee that the forward-earnings projections will accurately predict the actual earnings experience of any of the companies involved, and there is no guarantee that owning securities of companies with relatively high price-to-earnings ratios will cause the portfolio to outperform its benchmark or index.
The Turner Funds are distributed by Foreside Fund Services, LLC, Portland, Maine. The investor should consider the investment objectives, risks, charges, and expenses carefully before investing. This and other information can be found in the prospectus. A free prospectus, which contains detailed information, including fees and expenses, and the risks associated with investing in these Funds, can be obtained by calling 1.800.224.6312. Read the prospectus carefully before investing.
| Fund name/Index | Six months | Year to date | One year | Three years | Five years | 10 years | (Annualized*) Since inception | Total net assets ($mil) | |||||||||||||||||||||||||||
| Turner Market Neutral Fund — Institutional Class Shares | 1.84 | % | n/a | n/a | n/a | n/a | n/a | 5.30 | % | $ | 8.68 | ||||||||||||||||||||||||
| Investor Class Shares | 1.84 | n/a | n/a | n/a | n/a | n/a | 5.20 | 3.23 | |||||||||||||||||||||||||||
| Class C Shares | 1.26 | n/a | n/a | n/a | n/a | n/a | 4.60 | — | |||||||||||||||||||||||||||
| S&P 500 Index | -13.78 | n/a | n/a | n/a | n/a | n/a | -12.51 | ||||||||||||||||||||||||||||
| Barclays Capital U.S. Aggregate Bond Index | 6.20 | n/a | n/a | n/a | n/a | n/a | 7.62 | ||||||||||||||||||||||||||||
| Lipper Equity Market-Neutral Funds Average | -2.47 | n/a | n/a | n/a | n/a | n/a | -1.60 | ||||||||||||||||||||||||||||
| Inception date: 2/7/11 | |||||||||||||||||||||||||||||||||||
| Turner Medical Sciences | |||||||||||||||||||||||||||||||||||
| Long/Short Fund — | |||||||||||||||||||||||||||||||||||
| Institutional Class Shares | 0.88 | n/a | n/a | n/a | n/a | n/a | 3.50 | 45.15 | |||||||||||||||||||||||||||
| Investor Class Shares | 0.78 | n/a | n/a | n/a | n/a | n/a | 3.40 | 12.78 | |||||||||||||||||||||||||||
| Class C Shares | 0.49 | n/a | n/a | n/a | n/a | n/a | 3.00 | 2.16 | |||||||||||||||||||||||||||
| S&P 500 Healthcare Index | -2.94 | n/a | n/a | n/a | n/a | n/a | -0.16 | ||||||||||||||||||||||||||||
| Barclays Capital U.S. Aggregate Bond Index | 6.20 | n/a | n/a | n/a | n/a | n/a | 7.62 | ||||||||||||||||||||||||||||
| Lipper Long/Short Equity Funds Average | -10.34 | n/a | n/a | n/a | n/a | n/a | -10.03 | ||||||||||||||||||||||||||||
| Inception date: 2/7/11 | |||||||||||||||||||||||||||||||||||
TURNER FUNDS 2011 ANNUAL REPORT 5
LETTER TO SHAREHOLDERS (continued)
| Fund name/Index | Six months | Year to date | One year | Three years | Five years | 10 years | (Annualized*) Since inception | Total net assets ($mil) | |||||||||||||||||||||||||||
| Turner Spectrum Fund — Institutional Class Shares | -3.13 | % | -0.35 | % | 5.82 | % | n/a | n/a | n/a | 6.10 | % | $ | 448.55 | ||||||||||||||||||||||
| Investor Class Shares | -3.23 | -0.44 | 5.57 | n/a | n/a | n/a | 5.83 | 161.40 | |||||||||||||||||||||||||||
| Class C Shares(1) | -3.61 | -1.06 | 4.76 | n/a | n/a | n/a | 5.79 | 12.48 | |||||||||||||||||||||||||||
| S&P 500 Index | -13.78 | -8.68 | 1.14 | n/a | n/a | n/a | 11.92 | ||||||||||||||||||||||||||||
| Barclays Capital U.S. Aggregate Bond Index | 6.20 | 6.65 | 5.26 | n/a | n/a | n/a | 7.75 | ||||||||||||||||||||||||||||
| Lipper Long/Short Equity Funds Average | -10.34 | -8.48 | -3.61 | n/a | n/a | n/a | 6.82 | ||||||||||||||||||||||||||||
| Inception date: 5/7/09 | |||||||||||||||||||||||||||||||||||
| Turner Titan Fund — Institutional Class Shares | -3.74 | n/a | n/a | n/a | n/a | n/a | -2.30 | 11.37 | |||||||||||||||||||||||||||
| Investor Class Shares | -3.84 | n/a | n/a | n/a | n/a | n/a | -2.40 | 2.71 | |||||||||||||||||||||||||||
| Class C Shares | -4.14 | n/a | n/a | n/a | n/a | n/a | -2.80 | 0.03 | |||||||||||||||||||||||||||
| S&P 500 Index | -13.78 | n/a | n/a | n/a | n/a | n/a | -12.51 | ||||||||||||||||||||||||||||
| Barclays Capital U.S. Aggregate Bond Index | 6.20 | n/a | n/a | n/a | n/a | n/a | 7.62 | ||||||||||||||||||||||||||||
| Lipper Long/Short Equity Funds Average | -10.34 | n/a | n/a | n/a | n/a | n/a | -10.03 | ||||||||||||||||||||||||||||
| Inception date: 2/7/11 | |||||||||||||||||||||||||||||||||||
| Turner All Cap Growth Fund(2) | -19.18 | -12.74 | 9.10 | 11.09 | % | 4.16 | % | 8.84 | % | -2.32 | 33.05 | ||||||||||||||||||||||||
| NASDAQ Composite Index | -13.15 | -8.95 | 1.97 | 4.91 | 1.35 | 4.89 | -4.31 | ||||||||||||||||||||||||||||
| Russell 3000® Growth Index | -13.35 | -7.90 | 3.39 | 4.49 | 1.56 | 3.18 | -3.02 | ||||||||||||||||||||||||||||
| Inception date: 6/30/00 | |||||||||||||||||||||||||||||||||||
| Turner Concentrated Growth Fund | -21.32 | -16.62 | -3.17 | 0.46 | -3.26 | 1.12 | -0.68 | 38.94 | |||||||||||||||||||||||||||
| S&P 500 Index | -13.78 | -8.68 | 1.14 | 1.23 | -1.18 | 2.82 | 0.23 | ||||||||||||||||||||||||||||
| Russell 1000® Growth Index | -12.48 | -7.20 | 3.78 | 4.69 | 1.62 | 3.01 | -1.14 | ||||||||||||||||||||||||||||
| Inception date: 6/30/99 | |||||||||||||||||||||||||||||||||||
| Turner Emerging Growth Fund(2) — Institutional Class Shares(3) | -19.33 | -10.23 | 7.81 | n/a | n/a | n/a | 19.59 | 67.03 | |||||||||||||||||||||||||||
| Investor Class Shares | -19.43 | -10.39 | 7.56 | 0.63 | 1.35 | 8.63 | 17.37 | 159.13 | |||||||||||||||||||||||||||
| Russell 2000® Growth Index | -22.71 | -15.57 | -1.12 | 2.07 | 0.96 | 5.45 | 1.84 | ||||||||||||||||||||||||||||
| Inception date: 2/27/98 | |||||||||||||||||||||||||||||||||||
| Turner Large Growth Fund — Institutional Class Shares | -17.58 | -11.84 | -0.39 | 0.70 | -1.70 | 2.74 | 0.66 | 382.34 | |||||||||||||||||||||||||||
| Investor Class Shares(4) | -17.76 | -12.07 | -0.67 | 0.44 | -1.97 | n/a | -0.06 | 56.66 | |||||||||||||||||||||||||||
| Russell 1000® Growth Index | -12.48 | -7.20 | 3.78 | 4.69 | 1.62 | 3.01 | 0.44 | ||||||||||||||||||||||||||||
| Inception date: 2/28/01 | |||||||||||||||||||||||||||||||||||
| Turner Midcap Growth Fund(2) — Institutional Class Shares(5) | -22.14 | -14.19 | 1.74 | 5.10 | n/a | n/a | -3.90 | 245.48 | |||||||||||||||||||||||||||
| Investor Class Shares | -22.25 | -14.37 | 1.45 | 4.83 | 1.77 | 5.65 | 9.23 | 471.29 | |||||||||||||||||||||||||||
| Retirement Class Shares(6) | -22.35 | -14.53 | 1.18 | 4.58 | 1.50 | 5.25 | 5.31 | 3.97 | |||||||||||||||||||||||||||
| Russell Midcap® Growth Index | -18.03 | -11.59 | 0.80 | 5.89 | 1.64 | 6.70 | 6.00 | ||||||||||||||||||||||||||||
| Inception date: 10/1/96 | |||||||||||||||||||||||||||||||||||
6 TURNER FUNDS 2011 ANNUAL REPORT
September 30, 2011
| Fund name/Index | Six months | Year to date | One year | Three years | Five years | 10 years | (Annualized*) Since inception | Total net assets ($mil) | |||||||||||||||||||||||||||
| Turner Small Cap Growth Fund(2) | -26.24 | % | -17.86 | % | -3.94 | % | 1.71 | % | 1.24 | % | 5.93 | % | 9.89 | % | $ | 229.92 | |||||||||||||||||||
| Russell 2000® Growth Index | -22.71 | -15.57 | -1.12 | 2.07 | 0.96 | 5.45 | 4.56 | ||||||||||||||||||||||||||||
| Inception date: 2/7/94 | |||||||||||||||||||||||||||||||||||
| Turner Global Opportunities Fund — | |||||||||||||||||||||||||||||||||||
| Institutional Class Shares | -19.86 | -15.70 | -1.22 | n/a | n/a | n/a | 9.67 | 0.91 | |||||||||||||||||||||||||||
| Investor Class Shares | -19.99 | -15.89 | -1.48 | n/a | n/a | n/a | 9.33 | 0.48 | |||||||||||||||||||||||||||
| MSCI World Growth Index | -15.10 | -11.88 | -2.94 | n/a | n/a | n/a | 4.57 | ||||||||||||||||||||||||||||
| MSCI World Index | -15.95 | -11.82 | -3.84 | n/a | n/a | n/a | 2.98 | ||||||||||||||||||||||||||||
| Inception date: 5/7/10 | |||||||||||||||||||||||||||||||||||
| Turner International Growth Fund — | |||||||||||||||||||||||||||||||||||
| Institutional Class Shares | -19.63 | -16.04 | -1.32 | 4.82 | n/a | n/a | -0.66 | 6.01 | |||||||||||||||||||||||||||
| Investor Class Shares(7) | -19.84 | -16.26 | -1.67 | n/a | n/a | n/a | 15.52 | 4.91 | |||||||||||||||||||||||||||
| MSCI World ex-U.S. Growth Index | -17.98 | -15.80 | -8.63 | -0.31 | n/a | n/a | -3.56 | ||||||||||||||||||||||||||||
| Inception date: 1/31/07 | |||||||||||||||||||||||||||||||||||
(1) Commenced operations on July 14, 2009.
(2) Investing in technology and science companies and small- and mid-capitalization companies may subject the Funds to specific inherent risks, including above-average price fluctuations.
(3) Commenced operations on February 1, 2009.
(4) Commenced operations on August 1, 2005.
(5) Commenced operations on June 16, 2008.
(6) Commenced operations on September 24, 2001.
(7) Commenced operations on October 31, 2008.
* Returns of less than one year are cumulative, and not annualized.
Amounts designated as "—" have been rounded to $0 ($mil)
TURNER FUNDS 2011 ANNUAL REPORT 7
Expense Ratio†
| Gross expense ratio | Net expense ratio* | ||||||||||
| Turner Market Neutral Fund | |||||||||||
| Institutional Class Shares | 2.13 | % | 1.95 | % | |||||||
| Investor Class Shares | 2.38 | % | 2.20 | % | |||||||
| Class C Shares | 3.13 | % | 2.95 | % | |||||||
| Turner Medical Sciences Long/Short Fund | |||||||||||
| Institutional Class Shares | 2.13 | % | 1.95 | % | |||||||
| Investor Class Shares | 2.38 | % | 2.20 | % | |||||||
| Class C Shares | 3.13 | % | 2.95 | % | |||||||
| Turner Spectrum Fund | |||||||||||
| Institutional Class Shares | 2.88 | % | 1.95 | % | |||||||
| Investor Class Shares | 3.15 | % | 2.20 | % | |||||||
| Class C Shares | 3.85 | % | 2.95 | % | |||||||
| Turner Titan Fund | |||||||||||
| Institutional Class Shares | 2.13 | % | 1.95 | % | |||||||
| Investor Class Shares | 2.38 | % | 2.20 | % | |||||||
| Class C Shares | 3.13 | % | 2.95 | % | |||||||
| Turner All Cap Growth Fund | |||||||||||
| Investor Class Shares | 2.15 | % | 1.64 | % | |||||||
| Turner Concentrated Growth Fund | |||||||||||
| Investor Class Shares | 1.94 | % | 1.51 | % | |||||||
| Gross expense ratio | Net expense ratio* | ||||||||||
| Turner Emerging Growth Fund | |||||||||||
| Institutional Class Shares | 1.30 | % | 1.17 | % | |||||||
| Investor Class Shares | 1.55 | % | 1.42 | % | |||||||
| Turner Large Growth Fund | |||||||||||
| Institutional Class Shares | 0.87 | % | 0.69 | % | |||||||
| Investor Class Shares | 1.12 | % | 0.94 | % | |||||||
| Turner Midcap Growth Fund | |||||||||||
| Institutional Class Shares | 1.03 | % | 0.93 | % | |||||||
| Investor Class Shares | 1.28 | % | 1.18 | % | |||||||
| Retirement Class Shares | 1.53 | % | 1.43 | % | |||||||
| Turner Small Cap Growth Fund | |||||||||||
| Investor Class Shares | 1.52 | % | 1.25 | % | |||||||
| Turner Global Opportunities Fund | |||||||||||
| Institutional Class Shares | 8.34 | % | 1.11 | % | |||||||
| Investor Class Shares | 8.59 | % | 1.36 | % | |||||||
| Turner International Growth Fund | |||||||||||
| Institutional Class Shares | 3.93 | % | 1.10 | % | |||||||
| Investor Class Shares | 4.18 | % | 1.35 | % | |||||||
† These expense ratios are based on the most recent prospectus and may differ from those shown in the financial highlights.
* Net expense ratio reflects contractual waivers of certain fees and/or expense reimbursements. Turner may discontinue this arrangement for the Turner Market Neutral Fund, the Turner Medical Sciences Long/Short Fund and the Turner Titan Fund at any time after February 2, 2012, and for all other Funds at any time after January 31, 2012.
8 TURNER FUNDS 2011 ANNUAL REPORT
INVESTMENT REVIEW
Turner Market Neutral Fund
Fund profile
September 30, 2011
g Ticker symbol TMNFX
Investor Class Shares
g CUSIP #900297581
Investor Class Shares
g Top five holdings1
(1) Pfizer
(2) Baxter International
(3) Las Vegas Sands
(4) Watson Pharmaceuticals
(5) Hershey
g % in five largest holdings 18.8%2
g Number of holdings 761
g Price/earnings ratio 15.3
g Weighted average market capitalization $334.36 billion
g % of holdings with positive earnings surprises 81.58%
g % of holdings with negative earnings surprises 15.79%
g Net assets $3 million, Investor Class Shares
Growth of a $10,000 investment in the
Turner Market Neutral Fund, Investor Class Shares:
February 7, 2011-September 30, 20113,4
Cumulative total returns (Period ended September 30, 2011)
| Since inception4 | |||||||
| Turner Market Neutral Fund, Institutional Class Shares5 | 5.30 | % | |||||
| Turner Market Neutral Fund, Investor Class Shares5 | 5.20 | % | |||||
| Turner Market Neutral Fund, Class C Shares5 | 4.60 | % | |||||
| S&P 500 Index6 | -12.51 | % | |||||
| Barclays Capital U.S. Aggregate Bond Index7 | 7.62 | % | |||||
| Lipper Equity Market-Neutral Funds Average8 | -1.60 | % | |||||
Sector weightings2:
Manager's discussion and analysis
Good stock selection powered the Turner Market Neutral Fund, Investor Class Shares (TMNFX) to a 5.20% gain in the period from February 7 to September 30. The fund's return exceeded that of the S&P 500 Index by 17.71 percentage points and the Lipper Equity Market-Neutral Funds Average by 6.80 percentage points, but lagged the Barclays Capital U.S. Aggregate Bond Index by 2.42 percentage points. The fund seeks to generate returns that have historically been associated with stocks, with relatively low volatility and a correlation unlike that of the broad market.
Seven of the eight sectors in which the fund was invested provided extra return. The financials and health-care sectors added the most extra return. In those sectors, long and short positions in biopharmaceutical, drug, insurance, banking, and investment-management shares generated the best results. The energy and utilities sectors were the sole detractors from performance, with long and short positions in energy exploration-and-production and machinery shares generating unsatisfactory results.
1 Cash equivalent is not being considered a holding for the top five holdings, but is counted in the number of holdings. The fund composition is subject to change.
2 Percentages based on total investments.
3 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 performance in the above graph and table does not reflect the deduction of taxes the shareholder will pay on fund distributions or the redemptions of fund shares. Performance of the Institutional, Investor and Class C Shares will differ due to differences in fees.
4 The inception date of the Turner Market Neutral Fund was February 7, 2011. Cumulative returns, not annualized.
5 Fee waivers are in effect; if they had not been in effect, performance would have been lower.
6 The S&P 500 Index is a widely-recognized, market value-weighted (higher market value stocks have more influence than lower market value stocks) index of 500 stocks designed to mimic the overall equity market's industry weightings.
7 The Barclays Capital U.S. Aggregate Bond Index (prior to November 2008, the Index was known as the "Lehman Brothers U.S. Aggregate Bond Index") represents an unmanaged diversified portfolio of fixed income securities, including U.S. Treasuries, investment-grade corporate bonds and mortgage-backed and asset-backed securities.
8 The Lipper Equity Market-Neutral Funds Average represents the average annualized total return for all reporting funds in the Lipper Equity Market-Neutral Fund category.
The Turner Market Neutral Fund is subject to the risks associated with selling securities short. A short sale involves a finite opportunity for appreciation, but a theoretically unlimited risk of loss. The Fund may focus its investments from time to time on one or more economic sectors. To the extent that it does so, developments affecting companies in that sector or sectors will likely have a magnified effect on the Fund's net asset value and total return.
TURNER FUNDS 2011 ANNUAL REPORT 9
INVESTMENT REVIEW
Turner Medical Sciences Long/Short Fund
Fund profile
September 30, 2011
g Ticker symbol TMSFX
Investor Class Shares
g CUSIP #900297557
Investor Class Shares
g Top five holdings1
(1) Pfizer
(2) Merck
(3) Watson Pharmceuticals
(4) United Therapeutics
(5) Onyx Pharmaceuticals
g % in five largest holdings 14.0%2
g Number of holdings 541
g Price/earnings ratio 19.6
g Weighted average market capitalization $40.2 billion
g % of holdings with positive earnings surprises 50.94%
g % of holdings with negative earnings surprises 39.62%
g Net assets $13 million, Investor Class Shares
Growth of a $10,000 investment in the
Turner Medical Sciences Long/Short Fund,
Investor Class Shares:
February 7, 2011-September 30, 20113,4
Cumulative total returns (Period ended September 30, 2011)
| Since inception4 | |||||||
| Turner Medical Sciences Long/Short Fund, Institutional Class Shares5 | 3.50 | % | |||||
| Turner Medical Sciences Long/Short Fund, Investor Class Shares5 | 3.40 | % | |||||
| Turner Medical Sciences Long/Short Fund, Class C Shares5 | 3.00 | % | |||||
| S&P 500 Healthcare Index6 | -0.16 | % | |||||
| Barclays Capital U.S. Aggregated Bond Index7 | 7.62 | % | |||||
| Lipper Long/Short Equity Funds Average8 | -10.03 | % | |||||
Sector weightings2:
Manager's discussion and analysis
Generally good stock selection powered the Turner Medical Sciences Long/Short Fund, Investor Class Shares (TMSFX) to a 3.40% gain in the period from February 7 to September 30. The fund's return exceeded that of the S&P 500 Healthcare Index by 3.56 percentage points and the Lipper Long/Short Equity Funds Average by 13.43 percentage points, but lagged the Barclays Capital U.S. Aggregate Bond Index by 4.22 percentage points. The fund seeks to capture alpha (the estimated amount of risk-adjusted excess return expected from an investment's fundamentals), reduce volatility, and preserve capital in declining markets.
In the fund's long and short positions, stocks in three health-care industries — specialty pharmaceutical, pharmacy benefit management, and medical equipment — produced the greatest extra return. Detracting significantly from performance were long and short positions in the stocks of biotechnology firms and the makers of health-care products.
1 Cash equivalent is not being considered a holding for the top five holdings, but is counted in the number of holdings. The fund composition is subject to change.
2 Percentages based on total investments.
3 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 performance in the above graph and table does not reflect the deduction of taxes the shareholder will pay on fund distributions or the redemptions of fund shares. Performance of the Institutional, Investor and Class C Shares will differ due to differences in fees.
4 The inception date of the Turner Medical Sciences Long/Short Fund was February 7, 2011. Cumulative returns, not annualized.
5 Fee waivers are in effect; if they had not been in effect, performance would have been lower.
6 The S&P 500 Healthcare Index is an unmanaged index which includes the stocks in the health care sector of the S&P 500 Index.
7 The Barclays Capital U.S. Aggregate Bond Index (prior to November 2008, the Index was known as the "Lehman Brothers U.S. Aggregate Bond Index") represents an unmanaged diversified portfolio of fixed income securities, including U.S. Treasuries, investment-grade corporate bonds and mortgage-backed and asset-backed securities.
8 Lipper Long/Short Equity Funds Average represents the average annualized total return for all reporting funds in the Lipper Long/Short Equity Fund category.
The Turner Medical Sciences Long/Short Fund is subject to the risks associated with selling securities short. A short sale involves a finite opportunity for appreciation, but a theoretically unlimited risk of loss. The Fund is subject to the risks associated with health care-related companies. Many health care-related companies are smaller and less seasoned than companies in other sectors. Health care-related companies may also be strongly affected by scientific or technological developments and their products may quickly become obsolete. The Fund is subject to risks due to its foreign investments.
10 TURNER FUNDS 2011 ANNUAL REPORT
INVESTMENT REVIEW
Turner Spectrum Fund
Fund profile
September 30, 2011
g Ticker symbol TSPEX
Institutional Class Shares
g CUSIP #900297664
Institutional Class Shares
g Top five holdings1
(1) Pfizer
(2) Las Vegas Sands
(3) Onyx Pharmaceutials
(4) Watson Pharmaceuticals
(5) Shire ADR
g % in five largest holdings 6.3%2
g Number of holdings 4841
g Price/earnings ratio 17.75
g Weighted average market capitalization $127.12 billion
g % of holdings with positive earnings surprises 61.41%
g % of holdings with negative earnings surprises 20.54%
g Net assets $449 million, Institutional Class Shares
Growth of a $100,000 investment in the
Turner Spectrum Fund, Institutional Class Shares:
May 7, 2009-September 30, 20113,4
Average annual total returns (Periods ended September 30, 2011)
| One year | Since inception | ||||||||||
| Turner Spectrum Fund, Institutional Class Shares5 | 5.82 | % | 6.10 | %4 | |||||||
| Turner Spectrum Fund, Investor Class Shares5 | 5.57 | % | 5.83 | %4 | |||||||
| Turner Spectrum Fund, Class C Shares5 | 4.76 | % | 5.79 | %6 | |||||||
| S&P 500 Index7 | 1.14 | % | 11.92 | %4 | |||||||
| Barclays Capital U.S. Aggregate Bond Index8 | 5.26 | % | 7.75 | %4 | |||||||
| Lipper Long/Short Equity Funds Average9 | -3.61 | % | 6.82 | %4 | |||||||
Sector weightings2:
Manager's discussion and analysis
Generally good stock selection led the Turner Spectrum Fund, Institutional Class Shares (TSPEX) to a 5.82% gain in the 12-month period ended September 30. The fund's return exceeded that of the S&P 500 Index by 4.68 percentage points, the Barclays Capital U.S Aggregate Bond Index by 0.56 percentage points, and the Lipper Long/Short Equity Funds Average by 9.43 percentage points. The fund seeks to generate returns that have historically been associated with stocks, with relatively low volatility and a correlation unlike that of the broad market.
Seven of the 10 sectors in which the fund held positions contributed extra return, with the financials and health-care sectors making the greatest contributions. In those sectors, long and short positions in diversified financial-services, investment-banking, pharmaceutical, and biomedical shares added the most extra return. The sector that detracted the most from results was energy, with oil and gas shares performing poorly. The fund kept a modest net long exposure, mainly in U.S. stocks, with an 87% weighting.
1 Cash equivalent is not being considered a holding for the top five holdings, but is counted in the number of holdings. The fund composition is subject to change.
2 Percentages based on total investments.
3 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 performance in the above graph and table does not reflect the deduction of taxes the shareholder will pay on fund distributions or the redemptions of fund shares. Performance of the Institutional, Investor and Class C Shares will differ due to differences in fees.
4 The inception date of the Turner Spectrum Fund (Institutional Class Shares and Investor Class Shares) was May 7, 2009. Index returns are based on Institutional Class Shares inception date.
5 Fee waivers are in effect; if they had not been in effect, performance would have been lower.
6 The inception date of the Turner Spectrum Fund (Class C Shares) was July 14, 2009.
7 The S&P 500 Index is a widely-recognized, market value-weighted (higher market value stocks have more influence than lower market value stocks) index of 500 stocks designed to mimic the overall equity market's industry weightings.
8 The Barclays Capital U.S. Aggregate Bond Index (prior to November 2008, the Index was known as the "Lehman Brothers U.S. Aggregate Bond Index") represents an unmanaged diversified portfolio of fixed income securities, including U.S. Treasuries, investment-grade corporate bonds and mortgage-backed and asset-backed securities.
9 Lipper Long/Short Equity Funds Average represents the average annualized total return for all reporting funds in the Lipper Long/Short Equity Fund category.
ADR — American Depositary Receipt
The Turner Spectrum Fund may focus its investments from time to time on one or more economic sectors. To the extent that it does so, developments affecting companies in that sector or sectors will likely have a magnified effect on the Fund's net asset value and total return. The Fund is subject to the risks associated with selling securities short. A short sale involves a finite opportunity for appreciation, but a theoretically unlimited risk of loss. The smaller capitalization companies the Fund invests in may be more vulnerable to adverse business or economic events than larger, more established companies.
TURNER FUNDS 2011 ANNUAL REPORT 11
INVESTMENT REVIEW
Turner Titan Fund
Fund profile
September 30, 2011
g Ticker symbol TTLFX
Investor Class Shares
g CUSIP #900297524
Investor Class Shares
g Top five holdings1
(1) Broadcom, Cl A
(2) Oracle
(3) eBay
(4) Yamana Gold
(5) Las Vegas Sands
g % in five largest holdings 14.0%2
g Number of holdings 1201
g Price/earnings ratio 14.62
g Weighted average market capitalization $41.34 billion
g % of holdings with positive earnings surprises 82.50%
g % of holdings with negative earnings surprises 11.67%
g Net assets $3 million, Investor Class Shares
Growth of a $10,000 investment in the
Turner Titan Fund, Investor Class Shares:
February 7, 2011-September, 20113,4
Cumulative total returns (Period ending September 30, 2011)
| Since inception4 | |||||||
| Turner Titan Fund, Institutional Class Shares5 | -2.30 | % | |||||
| Turner Titan Fund, Investor Class Shares5 | -2.40 | % | |||||
| Turner Titan Fund, Class C Shares5 | -2.80 | % | |||||
| S&P 500 Index6 | -12.51 | % | |||||
| Barclays Capital U.S. Aggregate Bond Index7 | 7.62 | % | |||||
| Lipper Long/Short Equity Funds Average8 | -10.03 | % | |||||
Sector weightings2:
Manager's discussion and analysis
The Turner Titan Fund, Investor Class Shares (TTLFX) lost 2.40% between February 7 and September 30. The fund's return beat that of the S&P 500 Index by 10.11 percentage points and the Lipper Long/Short Equity Funds Average by 7.63 percentage points, but lagged the Barclays Capital U.S. Aggregate Bond Index by 10.02 percentage points. The fund seeks to generate returns that have historically been associated with stocks, with relatively low volatility and a correlation unlike that of the broad market.
Overall, four of the nine sectors in which the fund is invested delivered extra return. The financials and industrials sectors added the most value, with long and short positions in banking, aerospace-component, and manufacturing shares providing the greatest contributions. The greatest detractors from results were the consumer-staples and utilities sectors, with shares in nutrition and cable-television companies producing subpar returns.
1 Cash equivalent is not being considered a holding for the top five holdings, but is counted in the number of holdings. The fund composition is subject to change.
2 Percentages based on total investments.
3 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 performance in the above graph and table does not reflect the deduction of taxes the shareholder will pay on fund distributions or the redemptions of fund shares. Performance of the Institutional, Investor and Class C Shares will differ due to differences in fees.
4 The inception date of the Turner Titan Fund was February 7, 2011. Cumulative returns, not annualized.
5 Fee waivers are in effect; if they had not been in effect, performance would have been lower.
6 The S&P 500 Index is a widely-recognized, market value-weighted (higher market value stocks have more influence than lower market value stocks) index of 500 stocks designed to mimic the overall equity market's industry weightings.
7 The Barclays Capital U.S. Aggregate Bond Index (prior to November 2008, the Index was known as the "Lehman Brothers U.S. Aggregate Bond Index") represents an unmanaged diversified portfolio of fixed income securities, including U.S. Treasuries, investment-grade corporate bonds and mortgage-backed and asset-backed securities.
8 Lipper Long/Short Equity Funds Average represents the average annualized total return for all reporting funds in the Lipper Long/Short Equity Fund category.
Cl — Class
The Turner Titan Fund may focus its investments from time to time on one or more economic sectors. To the extent that it does so, developments affecting companies in that sector or sectors will likely have a magnified effect on the Fund's net asset value and total return. The Fund is subject to the risks associated with selling securities short. A short sale involves a finite opportunity for appreciation, but a theoretically unlimited risk of loss. The smaller capitalization companies the Fund invests in may be more vulnerable to adverse business or economic events than larger, more established companies.
12 TURNER FUNDS 2011 ANNUAL REPORT
INVESTMENT REVIEW
Turner All Cap Growth Fund
Fund profile
September 30, 2011
g Ticker symbol TBTBX
g CUSIP #87252R797
g Top five holdings1
(1) Apple
(2) Alexion Pharmaceuticals
(3) ASML, NY Shares
(4) MasterCard, Cl A
(5) Whole Foods Market
g % in five largest holdings 21.6%2
g Number of holdings 361
g Price/earnings ratio 15.0
g Weighted average market capitalization $39.84 billion
g % of holdings with positive earnings surprises 94.4%
g % of holdings with negative earnings surprises 5.5%
g Net assets $33 million
Growth of a $10,000 investment in the
Turner All Cap Growth Fund:
September 30, 2001-September 30, 20113
Average annual total returns (Periods ended September 30, 2011)
| One year | Three years | Five years | 10 years | Since inception | |||||||||||||||||||
| Turner All Cap Growth Fund4 | 9.10 | % | 11.09 | % | 4.16 | % | 8.84 | % | -2.32 | % | |||||||||||||
| NASDAQ Composite Index5 | 1.97 | % | 4.91 | % | 1.35 | % | 4.89 | % | -4.31 | % | |||||||||||||
| Russell 3000® Growth Index6 | 3.39 | % | 4.49 | % | 1.56 | % | 3.18 | % | -3.02 | % | |||||||||||||
Sector weightings2:
Manager's discussion and analysis
Generally good stock selection provided the Turner All Cap Growth Fund (TBTBX) a 9.10% gain in the 12-month period ended September 30. The fund's return exceeded that of the Nasdaq Composite Index by 7.13 percentage points and the Russell 3000® Growth Index by 5.71 percentage points.
Five of the fund's eight sector positions outperformed their corresponding index sectors. Most of the return premium came from the consumer-staples, industrials, consumer-discretionary, and health-care sectors, a 41% weighting. In those sectors, coffee-roaster, supermarket, semiconductor-capital-equipment, aerospace, engine, metals, mining, and gaming shares contributed the most to results. A 2% position in financials stocks was the main detractor, with electronic-payment, credit-card, and banking shares recording poor relative returns.
1 Cash equivalent and short-term investment are not being considered a holding for the top five holdings, but are counted in the number of holdings. The fund composition is subject to change.
2 Percentages based on total investments.
3 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 performance in the above graph and table does not reflect the deduction of taxes the shareholder will pay on fund distributions or the redemptions of fund shares. The inception date of the Turner All Cap Growth Fund was June 30, 2000.
4 Fee waivers are in effect; if they had not been in effect, performance would have been lower.
5 The NASDAQ Composite Index includes more than 5,000 domestic and non-U.S. based common stocks listed on the NASDAQ stock market. The index is market-value weighted. This means that each company's security affects the index in proportion to its market value. The market value, the last sale price multiplied by total shares outstanding, is calculated throughout the trading day, and is related to the total value of the index. Because it is so broad-based, the Index is one of the most widely followed and quoted major market indices.
6 The Russell 3000® Growth Index measures the performance of the broad growth segment of the U.S. equity universe. It includes those Russell 3000® companies with higher price-to-book ratios and higher forecasted growth values.
Cl — Class
NY — New York
The Turner All Cap Growth Fund may buy and sell securities frequently as part of its investment strategy. The medium capitalization companies in which the Fund invests may be more vulnerable to adverse business or economic events than larger, more established companies.
TURNER FUNDS 2011 ANNUAL REPORT 13
INVESTMENT REVIEW
Turner Concentrated Growth Fund
Fund profile
September 30, 2011
g Ticker symbol TTOPX
g CUSIP #87252R862
g Top five holdings1
(1) Amazon.com
(2) Qualcomm
(3) Goldcorp
(4) Broadcom, Cl A
(5) Andarko Petroleum
g % in five largest holdings 27.1%2
g Number of holdings 241
g Price/earnings ratio 16.0
g Weighted average market capitalization $64.6 billion
g % of holdings with positive earnings surprises 91.6%
g % of holdings with negative earnings surprises 8.3%
g Net assets $39 million
Growth of a $10,000 investment in the
Turner Concentrated Growth Fund:
September 30, 2001-September 30, 20113
Average annual total returns (Periods ended September 30, 2011)
| One year | Three years | Five years | 10 years | Since inception | |||||||||||||||||||
| Turner Concentrated Growth Fund4 | -3.17 | % | 0.46 | % | -3.26 | % | 1.12 | % | -0.68 | % | |||||||||||||
| S&P 500 Index5 | 1.14 | % | 1.23 | % | -1.18 | % | 2.82 | % | 0.23 | % | |||||||||||||
| Russell 1000® Growth Index6 | 3.78 | % | 4.69 | % | 1.62 | % | 3.01 | % | -1.14 | % | |||||||||||||
Sector weightings2:
Manager's discussion and analysis
Significant underperformance in two major sectors impaired the total return of the Turner Concentrated Growth Fund (TTOPX) in the 12-month period ended September 30. As a result the fund, which contains a select few stocks that we think have the strongest expected earnings power and return potential, declined 3.17%, lagging the S&P 500 Index by 4.31 percentage points and the Russell 1000® Growth Index by 6.95 percentage points.
Information-technology and industrials stocks, a 55% weighting, detracted the most from performance by far. In those sectors, telecommunications, internet-infrastructure, semiconductor, data-networking, shipping, home-builder, electronics-manufacturing, and industrial-equipment shares performed poorly. Altogether, three of the fund's seven sector positions beat their corresponding index sectors. Consumer discretionary, a 19% weighting, added the most extra return. E-commerce, Internet, restaurant, luxury-clothing, and gaming stocks produced the best relative returns.
1 Cash equivalent and short-term investment are not being considered a holding for the top five holdings, but are counted in the number of holdings. The fund composition is subject to change.
2 Percentages based on total investments.
3 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 performance in the above graph and table does not reflect the deduction of taxes the shareholder will pay on fund distributions or the redemptions of fund shares. The inception date of the Turner Concentrated Growth Fund was June 30,1999.
4 Fee waivers are in effect; if they had not been in effect, performance would have been lower.
5 The S&P 500 Index is a widely-recognized, market value-weighted (higher market value stocks have more influence than lower market value stocks) index of 500 stocks designed to mimic the overall equity market's industry weightings.
6 The Russell 1000® Growth Index measures the performance of the broad growth segment of the U.S. equity universe. It includes those Russell 1000® companies with higher price-to-book ratios and higher forecasted growth values.
7 Cash equivalent includes short-term investment held as collateral for securities lending activity. Please see Note 11 in Notes to Financial Statements for more detailed information.
Cl — Class
The Turner Concentrated Growth Fund is non-diversified, which means that it may invest in the securities of fewer issuers than a diversified fund. As a result, it may be more susceptible to a single adverse economic or regulatory occurrence affecting one or more of these issuers, and may experience increased volatility. The Fund may buy and sell securities frequently as part of its investment strategy.
14 TURNER FUNDS 2011 ANNUAL REPORT
INVESTMENT REVIEW
Turner Emerging Growth Fund
Fund profile
September 30, 2011
g Ticker symbol TMCGX
Investor Class Shares
g CUSIP #872524301
Investor Class Shares
g Top five holdings1
(1) Deckers Outdoor
(2) Ariba
(3) Triumph Group
(4) TreeHouse Foods
(5) Pharmasset
g % in five largest holdings 13.3%2
g Number of holdings 971
g Price/earnings ratio 15.5
g Weighted average market capitalization $1.7 billion
g % of holdings with positive earnings surprises 65.9%
g % of holdings with negative earnings surprises 28.8%
g Net assets $159 million, Investor Class Shares
Growth of a $10,000 investment in the
Turner Emerging Growth Fund, Investor Class Shares:
September 30, 2001-September 30, 20113,4
Average annual total returns (Periods ended September 30, 2011)
| One year | Three years | Five years | 10 years | Since inception | |||||||||||||||||||
| Turner Emerging Growth Fund, Institutional Class Shares5 | 7.81 | % | — | — | — | 19.59 | %6 | ||||||||||||||||
| Turner Emerging Growth Fund, Investor Class Shares5 | 7.56 | % | 0.63 | % | 1.35 | % | 8.63 | % | 17.37 | %4 | |||||||||||||
| Russell 2000® Growth Index7 | -1.12 | % | 2.07 | % | 0.96 | % | 5.45 | % | 1.84 | %4 | |||||||||||||
Sector weightings2:
Manager's discussion and analysis
In the 12-month period ended September 30, the Turner Emerging Growth Fund, Investor Class Shares (TMCGX) gained 7.56%, outperforming the Russell 2000® Growth Index's 1.12% loss by 8.68 percentage points.
Exceptional performance in the health-care, consumer-discretionary, industrials, and consumer-staples sectors, a 56% weighting, produced the biggest return premiums. In those sectors, pharmaceutical, pharmacy-benefit-management, therapeutic, footwear, cosmetics, coal-mining, paper-manufacturing, coffee-roasting, and food-processing shares performed best. Four of the fund's nine sector positions detracted from results, with information-technology and financials detracting the most. In those sectors, which presented a 17% weighting, insurance, commercial-bank, laser, semiconductor, computer-services, and electronic-storage shares proved disappointing.
1 Cash equivalent and short-term investment are not being considered a holding for the top five holdings, but are counted in the number of holdings. The fund composition is subject to change.
2 Percentages based on total investments.
3 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 performance in the above graph and table does not reflect the deduction of taxes the shareholder will pay on fund distributions or the redemptions of fund shares. Performance of the Institutional and Investor Class Shares will differ due to differences in fees.
4 The inception date of the Turner Emerging Growth Fund (Investor Class Shares) was February 27, 1998. Index returns are based on Investor Class Shares inception date.
5 Fee waivers are in effect; if they had not been in effect, performance would have been lower.
6 The inception date of the Turner Emerging Growth Fund (Institutional Class Shares) was February 1, 2009.
7 The Russell 2000® Growth Index is a widely-recognized, capitalization-weighted (companies with larger market capitalizations have more influence than those with smaller market capitalizations) index of the 2,000 smallest U.S. companies out of the 3,000 largest U.S. companies with higher growth rates and price-to-book ratios.
8 Cash equivalent includes short-term investment held as collateral for securities lending activity. Please see Note 11 in Notes to Financial Statements for more detailed information.
Amounts designated as "—" are not applicable.
The Turner Emerging Growth Fund is also subject to taxable income and realized capital gains. Shareholder redemptions may force the Fund to sell securities at an inappropriate time, also resulting in realized gains.
TURNER FUNDS 2011 ANNUAL REPORT 15
INVESTMENT REVIEW
Turner Large Growth Fund
Fund profile
September 30, 2011
g Ticker symbol TTMEX
Institutional Class Shares
g CUSIP #900297847
Institutional Class Shares
g Top five holdings1
(1) Apple
(2) International Business Machines
(3) Qualcomm
(4) Coca-Cola
(5) Amazon.com
g % in five largest holdings 25.0%2
g Number of holdings 681
g Price/earnings ratio 13.9
g Weighted average market capitalization $76.48 billion
g % of holdings with positive earnings surprises 94.12%
g % of holdings with negative earnings surprises 5.8%
g Net assets $382 million, Institutional Class Shares
Growth of a $250,000 investment in the
Turner Large Growth Fund, Institutional Class Shares:
September 30, 2001-September 30, 20113,4
Average annual total returns (Periods ended September 30, 2011)
| One year | Three years | Five years | 10 years | Since inception | |||||||||||||||||||
| Turner Large Growth Fund, Institutional Class Shares5 | -0.39 | % | 0.70 | % | -1.70 | % | 2.74 | % | 0.66 | %4 | |||||||||||||
| Turner Large Growth Fund, Investor Class Shares5 | -0.67 | % | 0.44 | % | -1.97 | % | — | -0.06 | %6 | ||||||||||||||
| Russell 1000® Growth Index7 | 3.78 | % | 4.69 | % | 1.62 | % | 3.01 | % | 0.44 | %4 | |||||||||||||
Sector weightings2:
Manager's discussion and analysis
Double-digit gains in two defensive sectors, health care and consumer staples, weren't enough to offset weak relative returns in other sectors for the Turner Large Growth Fund, Institutional Class Shares (TTMEX) in the 12-month period ended September 30. The fund lost 0.39%, lagging the Russell 1000® Growth Index by 4.17 percentage points.
A 21% position in consumer-staples and health-care stocks generated the only positive returns, beating their corresponding index sectors. The industrials sector also beat its index sector, but only by losing less. In these sectors, supermarket, nutrition, coffee-roaster, biopharmaceutical, drug, medical-information-system, fertilizer, mining, and chemical stocks contributed the greatest value. The major detractor from performance was a loss in the energy sector, which represented 7% of the portfolio. The worst performers in that sector included coal, energy-services, and solar shares.
1 Cash equivalent and short-term investment are not being considered a holding for the top five holdings, but are counted in the number of holdings. The fund composition is subject to change.
2 Percentages based on total investments.
3 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 performance in the above graph and table does not reflect the deduction of taxes the shareholder will pay on fund distributions or the redemptions of fund shares. Performance of the Institutional and Investor Class Shares will differ due to differences in fees.
4 The inception date of the Turner Large Growth Fund (Institutional Class Shares) was February 28, 2001. Index returns are based on Institutional Class Shares inception date.
5 Fee waivers are in effect; if they had not been in effect, performance would have been lower.
6 The inception date of the Turner Large Growth Fund (Investor Class Shares) was August 1, 2005.
7 The Russell 1000® Growth Index measures the performance of the broad growth segment of the U.S. equity universe. It includes those Russell 1000® companies with higher price-to-book ratios and higher forecasted growth values.
8 Cash equivalent includes short-term investment held as collateral for securities lending activity. Please see Note 11 in Notes to Financial Statements for more detailed information.
Amounts designated as "—" are not applicable.
The Turner Large Growth Fund may buy and sell securities frequently as part of its investment strategy. The Fund is subject to the risk that large capitalization growth stocks may underperform other segments of the equity markets as a whole.
16 TURNER FUNDS 2011 ANNUAL REPORT
INVESTMENT REVIEW
Turner Midcap Growth Fund
Fund profile
September 30, 2011
g Ticker symbol TMGFX
Investor Class Shares
g CUSIP #900297409
Investor Class Shares
g Top five holdings1
(1) Broadcom, Cl A
(2) Alexion Pharmaceuticals
(3) Green Mountain Coffee Roasters
(4) Watson Pharmaceuticals
(5) Bed Bath & Beyond
g % in five largest holdings 8.5%2
g Number of holdings 941
g Price/earnings ratio 15.1
g Weighted average market capitalization $8.04 billion
g % of holdings with positive earnings surprises 87.2%
g % of holdings with negative earnings surprises 11.7%
g Net assets $471 million, Investor Class Shares
Growth of a $10,000 investment in the
Turner Midcap Growth Fund, Investor Class Shares:
September 30, 2001-September 30, 20113,4
Average annual total returns (Periods ended September 30, 2011)
| One year | Three years | Five years | 10 years | Since inception | |||||||||||||||||||
| Turner Midcap Growth Fund, Institutional Class Shares5 | 1.74 | % | 5.10 | % | — | — | -3.90 | %6 | |||||||||||||||
| Turner Midcap Growth Fund, Investor Class Shares5 | 1.45 | % | 4.83 | % | 1.77 | % | 5.65 | % | 9.23 | %4 | |||||||||||||
| Turner Midcap Growth Fund, Retirement Class Shares5 | 1.18 | % | 4.58 | % | 1.50 | % | 5.25 | % | 5.31 | %7 | |||||||||||||
| Russell Midcap® Growth Index8 | 0.80 | % | 5.89 | % | 1.64 | % | 6.70 | % | 6.00 | %4 | |||||||||||||
Sector weightings2:
Manager's discussion and analysis
In the 12-month period ended September 30, the Turner Midcap Growth Fund, Investor Class Shares (TMGFX) advanced 1.45%, a result that outperformed the Russell Midcap® Growth Index by 0.65 percentage points.
The fund's performance was most aided by favorable relative returns in the consumer-staples and health-care sectors, a 22% weighting; coffee-roasting, supermarket, and pharmaceutical stocks were key contributors. The consumer-discretionary sector, a 19% weighting, impaired results the most. Hotel, e-commerce, gaming, and fashion-accessory stocks contributed the greatest degree of underperformance.
1 Cash equivalent and short-term investment are not being considered a holding for the top five holdings, but are counted in the number of holdings. The fund composition is subject to change.
2 Percentages based on total investments.
3 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 performance in the above graph and table does not reflect the deduction of taxes the shareholder will pay on fund distributions or the redemptions of fund shares. Performance of the Institutional, Investor and Retirement Class Shares will differ due to differences in fees.
4 The inception date of the Turner Midcap Growth Fund (Investor Class Shares) was October 1, 1996. Index returns are based on Investor Class Shares inception date.
5 Fee waivers are in effect; if they had not been in effect, performance would have been lower.
6 The inception date of the Turner Midcap Growth Fund (Institutional Class Shares) was June 16, 2008.
7 The inception date of the Turner Midcap Growth Fund (Retirement Class Shares) was September 24, 2001.
8 The Russell Midcap® Growth Index is a capitalization-weighted (companies with larger market capitalizations have more influence than those with smaller market capitalizations) index of the 800 smallest U.S. companies out of the 1,000 largest companies with higher growth rates and price-to-book ratios.
9 Cash equivalent includes short-term investment held as collateral for securities lending activity. Please see Note 11 in Notes to Financial Statements for more detailed information.
Cl — Class
Amounts designated as "—" are not applicable.
The Turner Midcap Growth Fund may buy and sell securities frequently as part of its investment strategy. The medium capitalization companies in which the Fund invests may be more vulnerable to adverse business or economic events than larger, more established companies.
TURNER FUNDS 2011 ANNUAL REPORT 17
INVESTMENT REVIEW
Turner Small Cap Growth Fund
Fund profile
September 30, 2011
g Ticker symbol TSCEX
CUSIP #900297300
g Top five holdings1
(1) Cephid
(2) Finish Line, Cl A
(3) SuccessFactors
(4) HealthSpring
(5) Clean Harbors
g % in five largest holdings 5.9%2
g Number of holdings 1251
g Price/earnings ratio 13.5
g Weighted average market capitalization $1.56 billion
g % of holdings with positive earnings surprises 71.2%
g % of holdings with negative earnings surprises 21.6%
g Net assets $230 million
Growth of a $10,000 investment in the
Turner Small Cap Growth Fund:
September 30, 2001-September 30, 20113
Average annual total returns (Periods ended September 30, 2011)
| One year | Three years | Five years | 10 years | Since inception | |||||||||||||||||||
| Turner Small Cap Growth Fund4 | -3.94 | % | 1.71 | % | 1.24 | % | 5.93 | % | 9.89 | % | |||||||||||||
| Russell 2000® Growth Index5 | -1.12 | % | 2.07 | % | 0.96 | % | 5.45 | % | 4.56 | % | |||||||||||||
Sector weightings2:
Manager's discussion and analysis
The Turner Small Cap Growth Fund (TSCEX) lost 3.94% in the 12-month period ended September 30. The fund lagged its benchmark, the Russell 2000® Index, by 2.82 percentage points.
Three of the fund's sector positions — health care, industrials, and energy, a 38% weighting — beat their index counterparts, but they weren't sizable enough to contribute significantly to performance. In those sectors, diagnostic-equipment, biopharmaceutical, specialty-drug, filtration-manufacturing, gold-mining, advanced-material, oil, and coal-mining stocks delivered extra return. Financials and information-technology shares, a 28% weighting, were the biggest drags on performance. Investment-management, real-estate, data-networking, and semiconductor stocks recorded subpar results.
1 Cash equivalent and short-term investment are not being considered a holding for the top five holdings, but are counted in the number of holdings. The fund composition is subject to change.
2 Percentages based on total investments.
3 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 performance in the above graph and table does not reflect the deduction of taxes the shareholder will pay on fund distributions or the redemptions of fund shares. The inception date of the Turner Small Cap Growth Fund was February 7, 1994.
4 Fee waivers are in effect; if they had not been in effect, performance would have been lower.
5 The Russell 2000® Growth Index is a widely-recognized, capitalization-weighted (companies with larger market capitalizations have more influence than those with smaller market capitalizations) index of the 2,000 smallest U.S. companies out of the 3,000 largest U.S. companies with higher growth rates and price-to-book ratios.
6 Cash equivalent includes short-term investment held as collateral for securities lending activity. Please see Note 11 in Notes to Financial Statements for more detailed information.
Cl — Class
The Turner Small Cap Growth Fund may buy and sell securities frequently as part of its investment strategy. The smaller capitalization companies the Fund invests in may be more vulnerable to adverse business or economic events than larger, more established companies.
18 TURNER FUNDS 2011 ANNUAL REPORT
INVESTMENT REVIEW
Turner Global Opportunities Fund
Fund profile
September 30, 2011
g Ticker symbol TGLBX
Institutional Class Shares
g CUSIP #900297623
Institutional Class Shares
g Top five holdings1
(1) Apple
(2) Alexion Pharmaceuticals
(3) Shire ADR
(4) Las Vegas Sands
(5) AIA Group
g % in five largest holdings 24.6%2
g Number of holdings 271
g Price/earnings ratio 15.6
g Weighted average market capitalization $43.91 billion
g % of holdings with positive earnings surprises 70.4%
g % of holdings with negative earnings surprises 11.1%
g Net assets $0.9 million, Institutional Class Shares
Growth of a $250,000 investment in the
Turner Global Opportunities Fund,
Institutional Class Shares:
May 7, 2010-September 30, 20113
Average annual total returns (Periods ended September 30, 2011)
| One Year | Since inception | ||||||||||
| Turner Global Opportunities Fund, Institutional Class Shares4 | -1.22 | % | 9.67 | % | |||||||
| Turner Global Opportunities Fund Investor Class Shares4 | -1.48 | % | 9.33 | % | |||||||
| MSCI World Growth Index5 | -2.94 | % | 4.57 | % | |||||||
| MSCI World Index6 | -3.84 | % | 2.98 | % | |||||||
Sector weightings2:
Manager's discussion and analysis
The Turner Global Opportunities Fund, Institutional Class Shares (TGLBX) lost 1.22% for the 12-month period ended September 30. But that negative return still beat the fund's benchmarks, the MSCI World Growth Index by 1.72 percentage points and the MSCI World Index by 2.62 percentage points.
Five of eight sector positions outperformed their corresponding index sectors, but only three of those sectors produced positive returns. The best-performing sector was health care, which amounted to 10% of holdings. In that sector, pharmaceutical shares did best. The fund's performance was hurt the most by negative returns in the energy and consumer-discretionary sectors, with a combined weighting of 20%. Oil, fashion-accessories, e-commerce, wholesale-distributing, and luxury-goods stocks were the biggest laggards.
1 Cash equivalent is not being considered a holding for the top five holdings, but is counted in the number of holdings. The fund composition is subject to change.
2 Percentages based on total investments.
3 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 performance in the above graph and table does not reflect the deduction of taxes the shareholder will pay on fund distributions or the redemptions of fund shares. The inception date of the Turner Global Opportunities Fund was May 7, 2010. Performance of the Institutional and Investor Class Shares will differ due to differences in fees.
4 Fee waivers are in effect; if they had not been in effect, performance would have been lower.
5 The MSCI World Growth Index measures the performance of growth stocks in developed countries throughout the world. The index includes reinvestment of dividends, net of foreign withholding taxes.
6 The MSCI World Index is a free float-adjusted market capitalization-weighted index that is designed to measure the equity market performance of developed markets. The MSCI World Index consists of the following 24 developed market country indices: Australia, Austria, Belgium, Canada, Denmark, Finland, France, Germany, Greece, Hong Kong, Ireland, Israel, Italy, Japan, Netherlands, New Zealand, Norway, Portugal, Singapore, Spain, Sweden, Switzerland, the United Kingdom and the United States.
ADR — American Depository Receipt
The Turner Global Opportunities Fund is non-diversified, which means that it may invest in the securities of fewer issuers than a diversified fund. As a result, it may be more susceptible to a single adverse economic or regulatory occurrence affecting one or more of these issuers, and may experience increased volatility. The Fund is subject to risks due to its foreign investments.
TURNER FUNDS 2011 ANNUAL REPORT 19
INVESTMENT REVIEW
Turner International Growth Fund
Fund profile
September 30, 2011
g Ticker symbol TICGX
Institutional Class Shares
g CUSIP #900297771
Institutional Class Shares
g Top five holdings1
(1) Nestle
(2) Roche Holding
(3) Imagination Technologies Group
(4) British American Tobacco
(5) HSBC Holdings
g % in five largest holdings 13.2%2
g Number of holdings 701
g Price/earnings ratio 12.3
g Weighted average market capitalization $38.18 billion
g % of holdings with positive earnings surprises 31.4%
g % of holdings with negative earnings surprises 17.14%
g Net assets $6 million, Institutional Class Shares
Growth of a $250,000 investment in the
Turner International Growth Fund,
Institutional Class Shares:
January 31, 2007-September 30, 20113,4
Average annual total returns (Periods ended September 30, 2011)
| One year | Three years | Since inception | |||||||||||||
| Turner International Growth Fund, Institutional Class Shares5 | -1.32 | % | 4.82 | % | -0.66 | %4 | |||||||||
| Turner International Growth Fund, Investor Class Shares5 | -1.67 | % | — | 15.52 | %6 | ||||||||||
| MSCI World ex-U.S. Growth Index7 | -8.63 | % | -0.31 | % | -3.56 | %4 | |||||||||
Sector weightings2:
Manager's discussion and analysis
In the 12-month period ended September 30, the Turner International Core Growth Fund, Institutional Class Shares (TICGX) lost 1.32%, a result that outperformed the MSCI World Growth ex-U.S. Index by 7.31 percentage points.
Five of 10 sector positions contributed to the fund's results: consumer discretionary, financials, industrials, health care, and information-technology, amounting to a 58% weighting. In those sectors, clothing, restaurant, e-commerce, investment-management, mining, chemical, pharmaceutical, and semiconductor shares performed especially well. The utilities and energy sectors, a 7% weighting, provided the worst relative returns, with oil exploration-and-production, water, and telecommunication stocks underperforming.
1 Cash equivalent is not being considered a holding for the top five holdings, but is counted in the number of holdings. The fund composition is subject to change.
2 Percentages based on total investments.
3 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 performance in the above graph and table does not reflect the deduction of taxes the shareholder will pay on fund distributions or the redemptions of fund shares. Performance of the Institutional and Investor Class Shares will differ due to differences in fees.
4 The inception date of the Turner International Growth Fund (Institutional Class Shares) was January 31, 2007. Index returns are based on Institutional Class Shares inception date.
5 Fee waivers are in effect; if they had not been in effect, performance would have been lower.
6 The inception date of the Turner International Growth Fund (Investor Class Shares) was October 31, 2008.
7 The MSCI World Growth ex-U.S. Growth Index is a market capitalization-weighted index (companies with larger market capitalizations have more influence than those with smaller market capitalizations) designed to measure the combined equity market performance of developed and emerging markets countries, excluding the United States.
Amounts designated as "—" are not applicable.
The Turner International Growth Fund may buy and sell securities frequently as part of its investment strategy. The Fund is subject to risks due to its foreign investments.
20 TURNER FUNDS 2011 ANNUAL REPORT
Schedule of investments
Turner Market Neutral Fund
September 30, 2011
| Shares | Value (000) | ||||||||||
| Common stock—75.9% | |||||||||||
| Consumer discretionary—10.8% | |||||||||||
| BorgWarner* | 3,760 | $ | 227 | ||||||||
| Las Vegas Sands* | 11,030 | 423 | |||||||||
| Stanley Black & Decker | 4,360 | 214 | |||||||||
| TRW Automotive Holdings* | 6,570 | 215 | |||||||||
| Viacom, Cl B | 5,490 | 213 | |||||||||
| Total Consumer discretionary | 1,292 | ||||||||||
| Consumer staples—4.0% | |||||||||||
| Hershey | 4,030 | 239 | |||||||||
| PepsiCo^ | 3,780 | 234 | |||||||||
| Total Consumer staples | 473 | ||||||||||
| Energy—7.1% | |||||||||||
| Brigham Exploration* | 9,290 | 235 | |||||||||
| Cameron International*^ | 4,360 | 181 | |||||||||
| Quicksilver Resources* | 28,620 | 217 | |||||||||
| Valero Energy | 11,840 | 210 | |||||||||
| Total Energy | 843 | ||||||||||
| Financials—13.7% | |||||||||||
| Affiliated Managers Group* | 2,720 | 212 | |||||||||
| AON^ | 4,900 | 206 | |||||||||
| Charles Schwab | 20,460 | 231 | |||||||||
| Chubb^ | 3,810 | 228 | |||||||||
| Discover Financial Services | 8,040 | 184 | |||||||||
| LaSalle Hotel Properties | 12,240 | 235 | |||||||||
| Safeguard Scientifics* | 7,250 | 109 | |||||||||
| Western Union | 14,780 | 226 | |||||||||
| Total Financials | 1,631 | ||||||||||
| Health care—18.2% | |||||||||||
| AmerisourceBergen, Cl A | 5,910 | 220 | |||||||||
| Baxter International | 7,750 | 435 | |||||||||
| Covidien^ | 4,050 | 178 | |||||||||
| Edwards Lifesciences* | 3,310 | 236 | |||||||||
| Onyx Pharmaceuticals* | 6,490 | 195 | |||||||||
| Pfizer | 25,760 | 455 | |||||||||
| Watson Pharmaceuticals*^ | 3,630 | 248 | |||||||||
| WellPoint^ | 3,150 | 206 | |||||||||
| Total Health care | 2,173 | ||||||||||
| Shares | Value (000) | ||||||||||
| Industrials—7.3% | |||||||||||
| Actuant, Cl A | 11,950 | $ | 236 | ||||||||
| AMETEK^ | 5,700 | 188 | |||||||||
| Cummins | 2,730 | 223 | |||||||||
| Valmont Industries | 2,890 | 225 | |||||||||
| Total Industrials | 872 | ||||||||||
| Information-technology—8.2% | |||||||||||
| Acme Packet* | 5,190 | 221 | |||||||||
| Apple* | 281 | 107 | |||||||||
| Broadcom, Cl A^ | 6,770 | 226 | |||||||||
| Electronic Arts*^ | 10,220 | 209 | |||||||||
| SuccessFactors*^ | 9,280 | 213 | |||||||||
| Total Information-technology | 976 | ||||||||||
| Materials—6.6% | |||||||||||
| Airgas | 3,470 | 222 | |||||||||
| Goldcorp | 4,650 | 212 | |||||||||
| Mosaic | 2,190 | 107 | |||||||||
| Nucor | 7,580 | 240 | |||||||||
| Total Materials | 781 | ||||||||||
| Total Common stock (Cost $9,374) | 9,041 | ||||||||||
| Cash equivalent—4.5% | |||||||||||
| BlackRock TempCash Fund, Institutional Shares, 0.010%**^ | 532,682 | 533 | |||||||||
| Total Cash equivalent (Cost $533) | 533 | ||||||||||
| Total Investments—80.4% (Cost $9,907) | $ | 9,574 | |||||||||
As of September 30, 2011 all of the Fund's investments were considered Level 1. Please see Note 2 in Notes to Financial Statements for further information regarding fair value measurements.
Percentages are based on Net Assets of $11,913.***
* Non-income producing security.
** Rate shown is the 7-day effective yield as of September 30, 2011.
*** This number is listed in thousands.
^ All or a portion of the shares have been committed as collateral for open short positions.
Cl — Class
The accompanying notes are an integral part of the financial statements.
TURNER FUNDS 2011 ANNUAL REPORT 21
FINANCIAL STATEMENTS
Schedule of securities sold short
Turner Market Neutral Fund
September 30, 2011
| Shares | Value (000) | ||||||||||
| Common stock—73.5% | |||||||||||
| Consumer discretionary—11.0% | |||||||||||
| CarMax* | 9,020 | $ | 215 | ||||||||
| Discovery Communications, Cl A* | 5,840 | 220 | |||||||||
| Genuine Parts | 4,300 | 218 | |||||||||
| Johnson Controls | 8,210 | 217 | |||||||||
| Mattel | 8,700 | 225 | |||||||||
| Tupperware Brands | 4,090 | 220 | |||||||||
| Total Consumer discretionary | 1,315 | ||||||||||
| Consumer staples—5.7% | |||||||||||
| Darling International* | 17,930 | 226 | |||||||||
| General Mills | 5,890 | 226 | |||||||||
| H.J. Heinz | 4,620 | 233 | |||||||||
| Total Consumer staples | 685 | ||||||||||
| Energy—7.2% | |||||||||||
| ConocoPhillips | 3,620 | 229 | |||||||||
| National Oilwell Varco | 3,450 | 177 | |||||||||
| Oasis Petroleum* | 10,210 | 228 | |||||||||
| Ultra Petroleum* | 7,890 | 219 | |||||||||
| Total Energy | 853 | ||||||||||
| Financials—10.8% | |||||||||||
| Capital One Financial | 4,620 | 183 | |||||||||
| Franklin Resources | 2,250 | 215 | |||||||||
| Hospitality Properties Trust | 10,720 | 228 | |||||||||
| Marsh & McLennan | 7,630 | 203 | |||||||||
| Mid-America Apartment Communities | 3,840 | 231 | |||||||||
| Travelers | 4,680 | 228 | |||||||||
| Total Financials | 1,288 | ||||||||||
| Health care—14.8% | |||||||||||
| Amgen | 8,300 | 456 | |||||||||
| Becton Dickinson | 6,300 | 462 | |||||||||
| IDEXX Laboratories* | 2,850 | 196 | |||||||||
| St. Jude Medical | 11,600 | 420 | |||||||||
| Zimmer Holdings* | 4,340 | 232 | |||||||||
| Total Health care | 1,766 | ||||||||||
| Shares | Value (000) | ||||||||||
| Industrials—7.2% | |||||||||||
| C.R. Bard | 4,880 | $ | 427 | ||||||||
| Donaldson | 3,780 | 207 | |||||||||
| Nordson | 5,520 | 220 | |||||||||
| Total Industrials | 854 | ||||||||||
| Information-technology—8.6% | |||||||||||
| Dell* | 16,160 | 229 | |||||||||
| FactSet Research Systems | 2,560 | 228 | |||||||||
| Riverbed Technology* | 9,760 | 195 | |||||||||
| Tech Data* | 4,780 | 206 | |||||||||
| Vishay Intertechnology* | 19,840 | 166 | |||||||||
| Total Information-technology | 1,024 | ||||||||||
| Materials—8.2% | |||||||||||
| Alcoa | 22,330 | 214 | |||||||||
| Barrick Gold | 4,470 | 208 | |||||||||
| Carpenter Technology | 7,640 | 343 | |||||||||
| Solutia* | 16,370 | 210 | |||||||||
| Total Materials | 975 | ||||||||||
| Total Common stock (Proceeds $9,300) | 8,760 | ||||||||||
| Total Securities sold short—73.5% (Proceeds $9,300) | $ | 8,760 | |||||||||
As of September 30, 2011 all of the Fund's investments in securities sold short were considered Level 1. Please see Note 2 in Notes to Financial Statements for further information regarding fair value measurements.
Percentages are based on Net Assets of $11,913.**
* Non-income producing security.
** This number is listed in thousands.
Cl — Class
The accompanying notes are an integral part of the financial statements.
22 TURNER FUNDS 2011 ANNUAL REPORT
Schedule of investments
Turner Medical Sciences Long/Short Fund
September 30, 2011
| Shares | Value (000) | ||||||||||
| Common stock—24.5% | |||||||||||
| Biotechnology—6.5% | |||||||||||
| Achillion Pharmaceuticals* | 46,880 | $ | 221 | ||||||||
| ARIAD Pharmaceuticals* | 16,390 | 144 | |||||||||
| Cepheid* | 3,710 | 144 | |||||||||
| Cubist Pharmaceuticals* | 8,350 | 295 | |||||||||
| Infinity Pharmaceuticals* | 17,490 | 124 | |||||||||
| Medivation* | 14,560 | 247 | |||||||||
| NPS Pharmaceuticals* | 22,660 | 148 | |||||||||
| Onyx Pharmaceuticals* | 27,960 | 839 | |||||||||
| Pharmasset* | 3,850 | 317 | |||||||||
| QLT* | 62,540 | 457 | |||||||||
| Targacept* | 5,790 | 87 | |||||||||
| United Therapeutics* | 23,800 | 892 | |||||||||
| Total Biotechnology | 3,915 | ||||||||||
| Health care equipment & supplies—3.1% | |||||||||||
| ArthroCare* | 19,050 | 548 | |||||||||
| Baxter International | 10,580 | 594 | |||||||||
| Covidien | 13,170 | 581 | |||||||||
| Volcano* | 4,930 | 146 | |||||||||
| Total Health care equipment & supplies | 1,869 | ||||||||||
| Health care providers & services—0.9% | |||||||||||
| Catalyst Health Solutions* | 4,530 | 262 | |||||||||
| UnitedHealth Group | 6,380 | 294 | |||||||||
| Total Health care providers & services | 556 | ||||||||||
| Life sciences tools & services—0.5% | |||||||||||
| Bruker* | 21,920 | 296 | |||||||||
| Total Life sciences tools & services | 296 | ||||||||||
| Shares | Value (000) | ||||||||||
| Pharmaceuticals—13.5% | |||||||||||
| Medicis Pharmaceutical, Cl A | 20,300 | $ | 740 | ||||||||
| Merck | 54,610 | 1,786 | |||||||||
| Ono Pharmaceutical^^ | 12,040 | 719 | |||||||||
| Optimer Pharmaceuticals* | 12,170 | 168 | |||||||||
| Pfizer | 115,730 | 2,046 | |||||||||
| Questcor Pharmaceuticals* | 29,200 | 796 | |||||||||
| Shire ADR | 7,910 | 743 | |||||||||
| Watson Pharmaceuticals* | 16,420 | 1,121 | |||||||||
| Total Pharmaceuticals | 8,119 | ||||||||||
| Total Common stock (Cost $14,954) | 14,755 | ||||||||||
| Cash equivalent—54.7% | |||||||||||
| BlackRock TempCash Fund, Institutional Shares, 0.010%**^ | 32,856,939 | 32,857 | |||||||||
| Total Cash equivalent (Cost $32,857) | 32,857 | ||||||||||
| Total Investments—79.2% (Cost $47,811) | $ | 47,612 | |||||||||
The following is a summary of inputs used as of September 30, 2011 in valuing the Fund's investments:
| Investments in securities | Level 1 | Level 2 | Level 3 | Total | |||||||||||||||
| Common Stock | $ | 14,036 | $ | 719 | $ | — | $ | 14,755 | |||||||||||
| Cash equivalent | 32,857 | — | — | 32,857 | |||||||||||||||
| Total Investments in securities | $ | 46,893 | $ | 719 | $ | — | $ | 47,612 | |||||||||||
Please see Note 2 in the Notes to Financial Statements for further information regarding fair value measurements.
Percentages are based on Net Assets of $60,089.***
* Non-income producing security.
** Rate shown is the 7-day effective yield as of September 30, 2011.
*** This number is listed in thousands.
^ All or a portion of the shares have been committed as collateral for open short positions.
^^ Security fair valued using procedures established by the Fair Value Committee for foreign securities due to price movements in the market which exceed established thresholds. As of September 30, 2011 the total market value of these securities was $719***, representing 1.2% of Net Assets.
ADR — American Depositary Receipt
Cl — Class
The accompanying notes are an integral part of the financial statements.
TURNER FUNDS 2011 ANNUAL REPORT 23
FINANCIAL STATEMENTS
Schedule of securities sold short
Turner Medical Sciences Long/Short Fund
September 30, 2011
| Shares | Value (000) | ||||||||||
| Common stock—22.2% | |||||||||||
| Biotechnology—6.2% | |||||||||||
| Alkermes* | 21,270 | $ | 324 | ||||||||
| Amarin ADR* | 19,200 | 177 | |||||||||
| Amgen | 37,300 | 2,049 | |||||||||
| Life Technologies* | 8,590 | 330 | |||||||||
| Oncolytics Biotech* | 57,600 | 200 | |||||||||
| Sangamo BioSciences* | 30,520 | 133 | |||||||||
| Spectrum Pharmaceuticals* | 21,200 | 162 | |||||||||
| Vertex Pharmaceuticals* | 8,010 | 357 | |||||||||
| Total Biotechnology | 3,732 | ||||||||||
| Chemicals—1.3% | |||||||||||
| Sigma-Aldrich | 13,110 | 810 | |||||||||
| Total Chemicals | 810 | ||||||||||
| Health care equipment & supplies—9.6% | |||||||||||
| Becton Dickinson | 14,000 | 1,027 | |||||||||
| C.R. Bard | 10,030 | 878 | |||||||||
| DENTSPLY International | 32,710 | 1,004 | |||||||||
| IDEXX Laboratories* | 11,980 | 826 | |||||||||
| Medtronic | 17,510 | 582 | |||||||||
| St. Jude Medical | 16,110 | 583 | |||||||||
| Zimmer Holdings* | 16,020 | 857 | |||||||||
| Total Health care equipment & supplies | 5,757 | ||||||||||
| Health care providers & services—0.8% | |||||||||||
| Amedisys* | 9,920 | 147 | |||||||||
| IPC The Hospitalist* | 9,300 | 332 | |||||||||
| Total Health care providers & services | 479 | ||||||||||
| Life sciences tools & services—0.3% | |||||||||||
| Luminex* | 7,880 | 174 | |||||||||
| Total Life sciences tools & services | 174 | ||||||||||
| Shares | Value (000) | ||||||||||
| Pharmaceuticals—4.0% | |||||||||||
| AVANIR Pharmaceuticals, Cl A* | 79,030 | $ | 226 | ||||||||
| Eisai^ | 27,800 | 1,122 | |||||||||
| Endo Pharmaceuticals Holdings* | 11,550 | 323 | |||||||||
| United Laboratories International Holdings^ | 348,000 | 264 | |||||||||
| ViroPharma* | 25,500 | 461 | |||||||||
| Total Pharmaceuticals | 2,396 | ||||||||||
| Total Common stock (Proceeds $14,223) | 13,348 | ||||||||||
| Exchange traded funds—2.9% | |||||||||||
| Health Care Select Sector SPDR Fund | 18,270 | 580 | |||||||||
| iShares NASDAQ Biotechnology Index Fund | 12,670 | 1,183 | |||||||||
| Total Exchange traded funds (Proceeds $1,843) | 1,763 | ||||||||||
| Total Securities sold short—25.1% (Proceeds $16,066) | $ | 15,111 | |||||||||
The following is a summary of inputs used as of September 30, 2011 in valuing the Fund's investments in securities sold short:
| Securities sold short | Level 1 | Level 2 | Level 3 | Total | |||||||||||||||
| Common Stock | $ | 11,962 | $ | 1,386 | $ | — | $ | 13,348 | |||||||||||
| Exchange traded funds | 1,763 | — | — | 1,763 | |||||||||||||||
| Total Securities sold short | $ | 13,725 | $ | 1,386 | $ | — | $ | 15,111 | |||||||||||
Please see Note 2 in the Notes to Financial Statements for further information regarding fair value measurements.
Percentages are based on Net Assets of $60,089.**
* Non-income producing security.
** This number is listed in thousands.
^ Security fair valued using procedures established by the Fair Value Committee for foreign securities due to price movements in the market which exceed established thresholds. As of September 30, 2011 the total market value of these securities was $1,386***, representing 2.3% of Net Assets.
ADR — American Depositary Receipt
Cl — Class
SPDR — Standard & Poor's Depositary Receipt
The accompanying notes are an integral part of the financial statements.
24 TURNER FUNDS 2011 ANNUAL REPORT
Schedule of investments
Turner Spectrum Fund
September 30, 2011
| Shares | Value (000) | ||||||||||
| Common stock—47.8% | |||||||||||
| Consumer discretionary—7.9% | |||||||||||
| Abercrombie & Fitch, Cl A | 11,730 | $ | 722 | ||||||||
| Amazon.com* | 3,630 | 785 | |||||||||
| Asia Entertainment & Resources | 141,720 | 765 | |||||||||
| AutoZone* | 2,850 | 910 | |||||||||
| Bed Bath & Beyond* | 17,820 | 1,021 | |||||||||
| Body Central* | 20,390 | 370 | |||||||||
| BorgWarner* | 72,910 | 4,413 | |||||||||
| Coach | 63,310 | 3,281 | |||||||||
| Comcast, Cl A | 25,700 | 537 | |||||||||
| Crocs* | 51,320 | 1,215 | |||||||||
| Deckers Outdoor* | 6,710 | 626 | |||||||||
| DSW, Cl A | 22,580 | 1,043 | |||||||||
| Express | 57,520 | 1,167 | |||||||||
| Finish Line, Cl A | 25,680 | 513 | |||||||||
| GameStop, Cl A* | 48,500 | 1,120 | |||||||||
| Honda Motor SP ADR | 37,110 | 1,082 | |||||||||
| Las Vegas Sands* | 156,270 | 5,992 | |||||||||
| Li & Fung^ | 371,830 | 621 | |||||||||
| Lithia Motors, Cl A | 26,740 | 385 | |||||||||
| LVMH Moet Hennessy Louis Vuitton^ | 7,184 | 948 | |||||||||
| MGM China Holdings* | 378,630 | 502 | |||||||||
| Motorcar Parts of America* | 52,880 | 435 | |||||||||
| NagaCorp^ | 3,588,803 | 766 | |||||||||
| Nordstrom | 10,710 | 489 | |||||||||
| Panera Bread, Cl A* | 17,220 | 1,790 | |||||||||
| Priceline.com* | 1,660 | 746 | |||||||||
| Restoque Comercio e Confeccoes de Roupas* | 68,025 | 728 | |||||||||
| Scientific Games, Cl A* | 156,789 | 1,116 | |||||||||
| Shangri-La Asia^ | 381,410 | 729 | |||||||||
| Stanley Black & Decker | 30,300 | 1,488 | |||||||||
| Starbucks | 67,710 | 2,525 | |||||||||
| Starwood Hotels & Resorts Worldwide | 79,060 | 3,069 | |||||||||
| Steven Madden* | 23,690 | 713 | |||||||||
| Swatch Group^ | 1,243 | 409 | |||||||||
| Teavana Holdings* | 41,780 | 850 | |||||||||
| TRW Automotive Holdings* | 45,490 | 1,489 | |||||||||
| Vera Bradley* | 24,910 | 898 | |||||||||
| Viacom, Cl B | 54,370 | 2,106 | |||||||||
| Williams-Sonoma | 23,020 | 709 | |||||||||
| Total Consumer discretionary | 49,073 | ||||||||||
| Shares | Value (000) | ||||||||||
| Consumer staples—2.7% | |||||||||||
| Beam* | 22,750 | $ | 945 | ||||||||
| Coca-Cola | 16,230 | 1,096 | |||||||||
| Colgate-Palmolive | 22,040 | 1,954 | |||||||||
| Costco Wholesale | 32,200 | 2,644 | |||||||||
| Dr. Pepper Snapple Group | 20,670 | 802 | |||||||||
| Hain Celestial Group* | 26,980 | 824 | |||||||||
| Hansen Natural* | 15,140 | 1,322 | |||||||||
| Hershey | 51,580 | 3,056 | |||||||||
| Mead Johnson Nutrition, Cl A | 19,180 | 1,320 | |||||||||
| PepsiCo | 26,020 | 1,611 | |||||||||
| Primo Water* | 66,900 | 377 | |||||||||
| Sanderson Farms | 10,560 | 502 | |||||||||
| Whole Foods Market | 5,360 | 350 | |||||||||
| Total Consumer staples | 16,803 | ||||||||||
| Energy—4.4% | |||||||||||
| Anadarko Petroleum | 41,520 | 2,618 | |||||||||
| Baker Hughes | 24,335 | 1,123 | |||||||||
| Brigham Exploration* | 88,230 | 2,229 | |||||||||
| Cabot Oil & Gas | 26,770 | 1,657 | |||||||||
| Cameron International* | 51,060 | 2,121 | |||||||||
| CGX Energy* | 124,273 | 83 | |||||||||
| Chesapeake Energy | 28,820 | 736 | |||||||||
| Cobalt International Energy* | 53,030 | 409 | |||||||||
| Compagnie Generale de Geophysique-Veritas SP ADR* | 18,790 | 331 | |||||||||
| Concho Resources* | 11,180 | 795 | |||||||||
| CONSOL Energy | 14,990 | 509 | |||||||||
| Dawson Geophysical* | 13,230 | 312 | |||||||||
| EV Energy Partner LP | 11,800 | 846 | |||||||||
| Gulfport Energy* | 32,340 | 782 | |||||||||
| Hercules Offshore* | 109,690 | 320 | |||||||||
| Key Energy Services* | 46,700 | 443 | |||||||||
| Nabors Industries* | 28,740 | 352 | |||||||||
| Northern Oil & Gas* | 113,430 | 2,199 | |||||||||
| Ocean Rig UDW* | 900 | 14 | |||||||||
| Quicksilver Resources* | 321,600 | 2,438 | |||||||||
| Rowan* | 28,390 | 857 | |||||||||
| Schlumberger | 28,190 | 1,684 | |||||||||
| Swift Energy* | 40,530 | 987 | |||||||||
| Valero Energy | 143,900 | 2,559 | |||||||||
| Weatherford International* | 55,240 | 674 | |||||||||
| Total Energy | 27,078 | ||||||||||
TURNER FUNDS 2011 ANNUAL REPORT 25
FINANCIAL STATEMENTS
Schedule of investments
Turner Spectrum Fund
| Shares | Value (000) | ||||||||||
| Financials—7.4% | |||||||||||
| 57th Street General Acquisition* | 102,229 | $ | 402 | ||||||||
| ACE | 12,690 | 769 | |||||||||
| Affiliated Managers Group* | 35,240 | 2,750 | |||||||||
| AIA Group^ | 573,891 | 1,625 | |||||||||
| Allied World Assurance Co. Holdings | 9,060 | 487 | |||||||||
| AON | 71,260 | 2,991 | |||||||||
| Bank of the Ozarks | 44,860 | 939 | |||||||||
| Brasil Insurance Participacoes e Administracao | 78,086 | 719 | |||||||||
| Capital & Counties Properties^ | 273,890 | 716 | |||||||||
| Charles Schwab | 142,390 | 1,605 | |||||||||
| China Construction Bank, H Shares^ | 1,465,810 | 887 | |||||||||
| Chubb | 25,680 | 1,541 | |||||||||
| Citigroup | 45,780 | 1,173 | |||||||||
| CME Group | 6,930 | 1,708 | |||||||||
| DBS Group Holdings^ | 116,620 | 1,046 | |||||||||
| DFC Global* | 46,660 | 1,019 | |||||||||
| Discover Financial Services | 176,130 | 4,040 | |||||||||
| Endurance Specialty Holdings | 15,320 | 523 | |||||||||
| Extra Space Storage | 31,400 | 585 | |||||||||
| Fidelity National Financial, Cl A | 26,100 | 396 | |||||||||
| Fortegra Financial* | 136,160 | 715 | |||||||||
| Grupo Financiero Banorte SAB de CV, Cl O | 302,810 | 895 | |||||||||
| Knight Capital Group, CI A* | 69,170 | 841 | |||||||||
| LaSalle Hotel Properties | 85,180 | 1,635 | |||||||||
| MarketAxess Holdings | 38,630 | 1,005 | |||||||||
| Montpelier Re Holdings | 31,220 | 552 | |||||||||
| MSCI, Cl A* | 27,140 | 823 | |||||||||
| Ocwen Financial* | 75,480 | 997 | |||||||||
| Oritani Financial | 94,600 | 1,217 | |||||||||
| ProAssurance | 25,610 | 1,844 | |||||||||
| Prudential^ | 41,950 | 360 | |||||||||
| Prudential Financial | 30,500 | 1,429 | |||||||||
| Safeguard Scientifics* | 50,170 | 753 | |||||||||
| Signature Bank* | 53,020 | 2,531 | |||||||||
| Tanger Factory Outlet Centers | 35,310 | 918 | |||||||||
| Texas Capital Bancshares* | 34,257 | 783 | |||||||||
| Western Union | 152,590 | 2,333 | |||||||||
| WisdomTree Investments* | 92,436 | 649 | |||||||||
| Total Financials | 46,201 | ||||||||||
| Shares | Value (000) | ||||||||||
| Health care—9.8% | |||||||||||
| Achillion Pharmaceuticals* | 135,770 | $ | 641 | ||||||||
| Air Methods* | 13,410 | 854 | |||||||||
| Alexion Pharmaceuticals* | 10,940 | 701 | |||||||||
| Allergan | 9,250 | 762 | |||||||||
| AMERIGROUP* | 23,600 | 921 | |||||||||
| AmerisourceBergen, Cl A | 60,060 | 2,238 | |||||||||
| ARIAD Pharmaceuticals* | 23,030 | 202 | |||||||||
| ArthroCare* | 68,530 | 1,972 | |||||||||
| Baxter International | 68,780 | 3,861 | |||||||||
| Bruker* | 30,800 | 417 | |||||||||
| Catalyst Health Solutions* | 16,830 | 971 | |||||||||
| Celgene* | 24,640 | 1,526 | |||||||||
| Cepheid* | 5,210 | 202 | |||||||||
| Cooper | 8,960 | 709 | |||||||||
| Covidien | 45,620 | 2,012 | |||||||||
| Cubist Pharmaceuticals* | 43,180 | 1,525 | |||||||||
| Edwards Lifesciences* | 23,010 | 1,640 | |||||||||
| Infinity Pharmaceuticals* | 24,580 | 173 | |||||||||
| McKesson | 8,400 | 611 | |||||||||
| Medicis Pharmaceutical, Cl A | 51,750 | 1,888 | |||||||||
| Medivation* | 20,460 | 347 | |||||||||
| Merck | 76,740 | 2,510 | |||||||||
| NPS Pharmaceuticals* | 31,846 | 207 | |||||||||
| Ono Pharmaceutical^ | 17,320 | 1,034 | |||||||||
| Onyx Pharmaceuticals* | 180,670 | 5,422 | |||||||||
| Optimer Pharmaceuticals* | 17,100 | 237 | |||||||||
| Pfizer | 404,860 | 7,158 | |||||||||
| Pharmasset* | 8,970 | 739 | |||||||||
| QLT* | 85,960 | 628 | |||||||||
| Questcor Pharmaceuticals* | 107,240 | 2,923 | |||||||||
| Shire ADR | 51,470 | 4,835 | |||||||||
| SXC Health Solutions* | 8,520 | 474 | |||||||||
| Targacept* | 8,130 | 122 | |||||||||
| United Therapeutics* | 64,760 | 2,428 | |||||||||
| UnitedHealth Group | 8,970 | 414 | |||||||||
| Universal American | 13,190 | 133 | |||||||||
| Volcano* | 6,930 | 205 | |||||||||
| Watson Pharmaceuticals* | 78,420 | 5,352 | |||||||||
| WellCare Health Plans* | 20,270 | 770 | |||||||||
| WellPoint | 21,800 | 1,423 | |||||||||
| Total Health care | 61,187 | ||||||||||
26 TURNER FUNDS 2011 ANNUAL REPORT
Schedule of investments
Turner Spectrum Fund
| Shares | Value (000) | ||||||||||
| Industrials—3.7% | |||||||||||
| Actuant, Cl A | 83,020 | $ | 1,640 | ||||||||
| AMETEK | 38,160 | 1,258 | |||||||||
| BE Aerospace* | 14,510 | 480 | |||||||||
| C.H. Robinson Worldwide | 8,690 | 595 | |||||||||
| Caterpillar | 5,260 | 388 | |||||||||
| Cummins | 27,250 | 2,225 | |||||||||
| Danaher | 20,470 | 859 | |||||||||
| Deere | 10,580 | 683 | |||||||||
| Delta Air Lines* | 236,400 | 1,773 | |||||||||
| DryShips | 123,930 | 290 | |||||||||
| Expeditors International of Washington | 17,970 | 729 | |||||||||
| Experian^ | 78,401 | 880 | |||||||||
| FedEx | 9,810 | 664 | |||||||||
| Greenbrier* | 39,224 | 457 | |||||||||
| Heritage-Crystal Clean* | 29,530 | 536 | |||||||||
| Hexcel* | 37,330 | 827 | |||||||||
| KBR | 14,080 | 333 | |||||||||
| Kirby* | 10,950 | 576 | |||||||||
| Lindsay | 6,780 | 365 | |||||||||
| Localiza Rent a Car | 56,530 | 746 | |||||||||
| Middleby* | 13,263 | 935 | |||||||||
| Owens Corning* | 39,020 | 846 | |||||||||
| Parker Hannifin | 8,580 | 542 | |||||||||
| Precision Castparts | 4,820 | 749 | |||||||||
| United Continental Holdings* | 75,350 | 1,460 | |||||||||
| Valmont Industries | 26,570 | 2,071 | |||||||||
| Total Industrials | 22,907 | ||||||||||
| Information-technology—7.9% | |||||||||||
| Acme Packet* | 44,780 | 1,907 | |||||||||
| Altera | 53,430 | 1,685 | |||||||||
| Anaren* | 61,250 | 1,173 | |||||||||
| Apple* | 8,309 | 3,167 | |||||||||
| ARM Holdings | 23,490 | 599 | |||||||||
| Avago Technologies | 62,500 | 2,048 | |||||||||
| Baidu ADR* | 6,140 | 656 | |||||||||
| Broadcom, Cl A | 119,530 | 3,979 | |||||||||
| Cavium* | 13,160 | 355 | |||||||||
| CEVA* | 23,000 | 559 | |||||||||
| Citrix Systems* | 13,250 | 723 | |||||||||
| Cognizant Technology Solutions, Cl A* | 12,540 | 786 | |||||||||
| Cypress Semiconductor | 32,900 | 493 | |||||||||
| Shares | Value (000) | ||||||||||
| Digimarc* | 70,782 | $ | 1,796 | ||||||||
| eBay* | 126,750 | 3,738 | |||||||||
| Electronic Arts* | 140,570 | 2,875 | |||||||||
| F5 Networks* | 15,385 | 1,093 | |||||||||
| Fortinet* | 17,790 | 299 | |||||||||
| GSI Group* | 139,620 | 1,072 | |||||||||
| Heartland Payment Systems | 27,119 | 535 | |||||||||
| HSW International* | 125,770 | 368 | |||||||||
| Imagination Technologies Group*^ | 61,070 | 395 | |||||||||
| Lam Research* | 17,060 | 648 | |||||||||
| MasterCard, Cl A | 6,150 | 1,951 | |||||||||
| NETGEAR* | 19,420 | 503 | |||||||||
| ON Semiconductor* | 67,830 | 486 | |||||||||
| Oracle | 83,840 | 2,410 | |||||||||
| Qualcomm | 33,530 | 1,631 | |||||||||
| RightNow Technologies* | 15,120 | 500 | |||||||||
| Salesforce.com* | 4,130 | 472 | |||||||||
| SanDisk* | 42,360 | 1,709 | |||||||||
| SINA* | 15,415 | 1,104 | |||||||||
| SuccessFactors* | 89,660 | 2,061 | |||||||||
| Teradata* | 13,190 | 706 | |||||||||
| Tyco International | 27,930 | 1,138 | |||||||||
| VeriFone Systems* | 47,982 | 1,680 | |||||||||
| VMware, Cl A* | 19,440 | 1,563 | |||||||||
| Total Information-technology | 48,863 | ||||||||||
| Materials—3.5% | |||||||||||
| African Minerals* | 22,331 | 133 | |||||||||
| Airgas | 24,130 | 1,540 | |||||||||
| BHP Billiton SP ADR | 7,430 | 494 | |||||||||
| Eastern Platinum* | 213,530 | 143 | |||||||||
| Goldcorp | 81,720 | 3,730 | |||||||||
| Grande Cache Coal* | 45,870 | 182 | |||||||||
| Harmony Gold Mining SP ADR | 72,830 | 854 | |||||||||
| Inmet Mining | 16,220 | 687 | |||||||||
| Mosaic | 45,910 | 2,248 | |||||||||
| Newmont Mining | 9,010 | 567 | |||||||||
| Nucor | 91,990 | 2,911 | |||||||||
| Olin | 28,250 | 509 | |||||||||
| Potash Corp. of Saskatchewan | 33,430 | 1,445 | |||||||||
| Reliance Steel & Aluminum | 14,390 | 489 | |||||||||
| Rio Tinto^ | 17,210 | 763 | |||||||||
| Rubicon Minerals* | 31,950 | 110 | |||||||||
| Senomyx* | 60,560 | 213 | |||||||||
| Temple-Inland | 27,780 | 871 | |||||||||
TURNER FUNDS 2011 ANNUAL REPORT 27
FINANCIAL STATEMENTS
Schedule of investments
Turner Spectrum Fund
| Contracts/ Shares | Value (000) | ||||||||||
| Tronox* | 1,720 | $ | 134 | ||||||||
| United States Steel | 33,830 | 745 | |||||||||
| Walter Energy | 11,920 | 715 | |||||||||
| Yamana Gold | 159,750 | 2,182 | |||||||||
| Total Materials | 21,665 | ||||||||||
| Telecommunication services—0.1% | |||||||||||
| NII Holdings* | 16,320 | 440 | |||||||||
| Total Telecommunication services | 440 | ||||||||||
| Utilities—0.4% | |||||||||||
| EQT | 30,510 | 1,628 | |||||||||
| ITC Holdings | 8,940 | 692 | |||||||||
| NiSource | 32,720 | 700 | |||||||||
| Total Utilities | 3,020 | ||||||||||
| Total Common stock (Cost $314,171) | 297,237 | ||||||||||
| Exchange traded funds—0.4% | |||||||||||
| iShares Dow Jones U.S. Real Estate Index Fund | 21,910 | 1,108 | |||||||||
| PowerShares DB U.S. Dollar Index Bullish Fund | 50,670 | 1,130 | |||||||||
| UltraShort Russell 2000 ProShares | 7,070 | 413 | |||||||||
| Total Exchange traded funds (Cost $2,694) | 2,651 | ||||||||||
| Exchange traded note—0.0% | |||||||||||
| iPath S&P 500 VIX Short-Term Futures ETN | 5,100 | 273 | |||||||||
| Total Exchange traded note (Cost $156) | 273 | ||||||||||
| Call option contracts—0.0% | |||||||||||
| Corn, 11/11 at $850 | 120 | 5 | |||||||||
| First Solar, 10/11 at $85 | 444 | 24 | |||||||||
| Soybean, 12/11 at $1,600 | 75 | 4 | |||||||||
| Total Call option contracts (Cost $332) | 33 | ||||||||||
| Shares | Value (000) | ||||||||||
| Cash equivalent—25.6% | |||||||||||
| BlackRock TempCash Fund, Institutional Shares, 0.010%** | 159,315,932 | $ | 159,316 | ||||||||
| Total Cash equivalent (Cost $159,316) | 159,316 | ||||||||||
| Total Investments—73.8% (Cost $476,669) | $ | 459,510 | |||||||||
The following is a summary of inputs used as of September 30, 2011 in valuing the Fund's investments:
| Investments in securities | Level 1 | Level 2 | Level 3 | Total | |||||||||||||||
| Common Stock | $ | 286,059 | $ | 11,178 | $ | — | $ | 297,237 | |||||||||||
| Call options contracts | 33 | — | — | 33 | |||||||||||||||
| Cash equivalent | 159,316 | — | — | 159,316 | |||||||||||||||
| Exchange traded funds | 2,651 | — | — | 2,651 | |||||||||||||||
| Exchange traded note | 273 | — | — | 273 | |||||||||||||||
| Total Investments in securities | $ | 448,332 | $ | 11,178 | $ | — | $ | 459,510 | |||||||||||
Please see Note 2 in the Notes to Financial Statements for further information regarding fair value measurements.
Percentages are based on Net Assets of $622,433.***
* Non-income producing security.
** Rate shown is the 7-day effective yield as of September 30, 2011.
*** This number is listed in thousands.
^ Security fair valued using procedures established by the Fair Value Committee for foreign securities due to price movements in the market which exceed established thresholds. As of September 30, 2011 the total market value of these securities was $11,178***, representing 1.8% of Net Assets.
ADR — American Depositary Receipt
Cl — Class
ETN — Exchange Traded Note
LP — Limited Partnership
S&P — Standard & Poor's
The accompanying notes are an integral part of the financial statements.
28 TURNER FUNDS 2011 ANNUAL REPORT
Schedule of securities sold short
Turner Spectrum Fund
September 30, 2011
| Shares | Value (000) | ||||||||||
| Common stock—37.5% | |||||||||||
| Consumer discretionary—6.0% | |||||||||||
| Aegis Group^ | 292,500 | $ | 563 | ||||||||
| Ascena Retail Group* | 10,810 | 293 | |||||||||
| Brilliance China Automotive Holdings*^ | 395,482 | 307 | |||||||||
| Buckle | 17,090 | 657 | |||||||||
| Cablevision Systems, Cl A | 33,120 | 521 | |||||||||
| CarMax* | 62,500 | 1,491 | |||||||||
| Chico's FAS | 57,830 | 661 | |||||||||
| Columbia Sportswear | 24,710 | 1,147 | |||||||||
| Compagnie Financiere Richemont, Cl A^ | 8,200 | 365 | |||||||||
| Ctrip.com International ADR* | 12,880 | 414 | |||||||||
| Dick's Sporting Goods* | 19,290 | 645 | |||||||||
| Discovery Communications, Cl A* | 83,880 | 3,156 | |||||||||
| Dunkin' Brands Group* | 26,800 | 742 | |||||||||
| Foot Locker | 26,010 | 522 | |||||||||
| Genuine Parts | 73,780 | 3,748 | |||||||||
| Group 1 Automotive | 10,060 | 358 | |||||||||
| Hennes & Mauritz AB, B Shares^ | 49,680 | 1,488 | |||||||||
| Home Inns & Hotels Management ADR* | 6,440 | 166 | |||||||||
| Jarden | 15,060 | 426 | |||||||||
| Johnson Controls | 85,920 | 2,266 | |||||||||
| Lamar Advertising, Cl A* | 82,890 | 1,412 | |||||||||
| Li Ning | 535,690 | 548 | |||||||||
| Lowe's | 28,760 | 556 | |||||||||
| Marriott International, Cl A | 65,560 | 1,786 | |||||||||
| Mattel | 108,100 | 2,799 | |||||||||
| Mohawk Industries* | 20,050 | 860 | |||||||||
| Movado Group | 42,350 | 516 | |||||||||
| O'Reilly Automotive* | 11,590 | 772 | |||||||||
| Omnicom Group | 36,740 | 1,353 | |||||||||
| Orient-Express Hotels, Cl A* | 57,630 | 398 | |||||||||
| Rent-A-Center | 14,000 | 384 | |||||||||
| Scripps Networks Interactive, Cl A | 9,490 | 353 | |||||||||
| Shutterfly* | 12,170 | 501 | |||||||||
| Steiner Leisure* | 18,160 | 740 | |||||||||
| Tupperware Brands | 37,730 | 2,028 | |||||||||
| Urban Outfitters* | 34,390 | 768 | |||||||||
| Whirlpool | 7,370 | 368 | |||||||||
| Wynn Macau^ | 459,697 | 1,087 | |||||||||
| Zumiez* | 21,200 | 371 | |||||||||
| Total Consumer discretionary | 37,536 | ||||||||||
| Shares | Value (000) | ||||||||||
| Consumer staples—1.7% | |||||||||||
| Coffee Holding | 26,460 | $ | 198 | ||||||||
| Darling International* | 123,030 | 1,549 | |||||||||
| Diamond Foods | 7,350 | 587 | |||||||||
| Feihe International* | 31,000 | 167 | |||||||||
| General Mills | 40,430 | 1,555 | |||||||||
| H.J. Heinz | 74,330 | 3,752 | |||||||||
| Kroger | 27,380 | 601 | |||||||||
| McCormick | 14,140 | 653 | |||||||||
| Nu Skin Enterprises, Cl A | 13,670 | 554 | |||||||||
| Wal-Mart Stores | 17,380 | 902 | |||||||||
| Total Consumer staples | 10,518 | ||||||||||
| Energy—4.5% | |||||||||||
| Alpha Natural Resources* | 21,400 | 379 | |||||||||
| Apache | 11,890 | 954 | |||||||||
| Approach Resources* | 29,830 | 507 | |||||||||
| BP SP ADR | 21,410 | 772 | |||||||||
| CARBO Ceramics | 2,360 | 242 | |||||||||
| ConocoPhillips | 45,350 | 2,872 | |||||||||
| Continental Resources* | 38,130 | 1,844 | |||||||||
| Diamond Offshore Drilling | 10,540 | 577 | |||||||||
| Encana | 99,540 | 1,912 | |||||||||
| Ensco SP ADR | 16,760 | 678 | |||||||||
| EOG Resources | 24,520 | 1,741 | |||||||||
| EXCO Resources | 47,160 | 506 | |||||||||
| Halliburton | 22,480 | 686 | |||||||||
| Helmerich & Payne | 10,100 | 410 | |||||||||
| HollyFrontier | 42,120 | 1,104 | |||||||||
| Marathon Oil | 34,550 | 746 | |||||||||
| National Oilwell Varco | 54,580 | 2,796 | |||||||||
| Oasis Petroleum* | 117,631 | 2,627 | |||||||||
| Patterson-UTI Energy | 32,210 | 558 | |||||||||
| Pioneer Natural Resources | 7,560 | 497 | |||||||||
| Rosetta Resources* | 19,020 | 651 | |||||||||
| SandRidge Energy* | 46,010 | 256 | |||||||||
| Southwestern Energy* | 28,890 | 963 | |||||||||
| Ultra Petroleum* | 98,900 | 2,741 | |||||||||
| Whiting Petroleum* | 22,820 | 800 | |||||||||
| Total Energy | 27,819 | ||||||||||
| Financials—7.5% | |||||||||||
| American Express | 7,495 | 337 | |||||||||
| Arch Capital Group* | 46,810 | 1,529 | |||||||||
| Artio Global Investors | 52,642 | 419 | |||||||||
TURNER FUNDS 2011 ANNUAL REPORT 29
FINANCIAL STATEMENTS
Schedule of securities sold short
Turner Spectrum Fund
| Shares | Value (000) | ||||||||||
| Banco Bradesco ADR | 49,390 | $ | 730 | ||||||||
| Banco Santander Chile ADR | 10,480 | 770 | |||||||||
| Bank of America | 63,820 | 391 | |||||||||
| Bank of Hawaii | 30,600 | 1,114 | |||||||||
| Bank of New York Mellon | 29,820 | 554 | |||||||||
| Berkshire Hathaway, Cl B* | 10,910 | 775 | |||||||||
| Capital One Financial | 91,067 | 3,609 | |||||||||
| China Merchants Bank, H Shares^ | 461,240 | 698 | |||||||||
| Cohen & Steers | 38,260 | 1,100 | |||||||||
| Commerce Bancshares | 52,330 | 1,818 | |||||||||
| Compartamos | 556,600 | 753 | |||||||||
| Credicorp | 15,140 | 1,396 | |||||||||
| Evercore Partners, Cl A | 35,020 | 798 | |||||||||
| First Cash Financial Services* | 28,560 | 1,198 | |||||||||
| Franklin Resources | 23,450 | 2,243 | |||||||||
| Green Dot, Cl A* | 16,270 | 510 | |||||||||
| Hang Seng Bank^ | 79,720 | 934 | |||||||||
| Hospitality Properties Trust | 74,580 | 1,583 | |||||||||
| IntercontinentalExchange* | 12,900 | 1,526 | |||||||||
| Investment Technology Group* | 38,390 | 376 | |||||||||
| Jones Lang LaSalle | 12,010 | 622 | |||||||||
| Land Securities Group^ | 44,010 | 437 | |||||||||
| Legg Mason | 89,410 | 2,299 | |||||||||
| LPL Investment Holdings* | 45,180 | 1,148 | |||||||||
| Marsh & McLennan | 98,100 | 2,604 | |||||||||
| Mid-America Apartment Communities | 26,740 | 1,610 | |||||||||
| Noah Holdings SP ADR* | 19,600 | 180 | |||||||||
| Northern Trust | 56,430 | 1,974 | |||||||||
| OTP Bank^ | 47,440 | 698 | |||||||||
| Progressive | 35,310 | 627 | |||||||||
| Prosperity Bancshares | 25,600 | 837 | |||||||||
| Public Storage | 6,930 | 772 | |||||||||
| Royal Bank of Canada | 29,170 | 1,334 | |||||||||
| Travelers | 47,450 | 2,312 | |||||||||
| United Laboratories International Holdings^ | 1,049,273 | 796 | |||||||||
| Unum Group | 36,480 | 765 | |||||||||
| W.R. Berkley | 26,710 | 793 | |||||||||
| Wells Fargo | 34,300 | 827 | |||||||||
| Weyerhaeuser | 48,070 | 747 | |||||||||
| Total Financials | 46,543 | ||||||||||
| Shares | Value (000) | ||||||||||
| Health care—5.4% | |||||||||||
| Alkermes* | 29,890 | $ | 456 | ||||||||
| Amarin ADR* | 63,500 | 584 | |||||||||
| Amedisys* | 13,940 | 207 | |||||||||
| Amgen | 124,410 | 6,836 | |||||||||
| AVANIRPharmaceuticals, Cl A* | 111,050 | 318 | |||||||||
| Becton Dickinson | 71,400 | 5,235 | |||||||||
| DENTSPLY International | 45,960 | 1,411 | |||||||||
| Eisai^ | 39,940 | 1,612 | |||||||||
| Endo Pharmaceuticals Holdings* | 16,230 | 454 | |||||||||
| IDEXX Laboratories* | 35,300 | 2,435 | |||||||||
| IPC The Hospitalist* | 13,070 | 466 | |||||||||
| Laboratory Corp. of America Holdings* | 7,680 | 607 | |||||||||
| Life Technologies* | 12,070 | 464 | |||||||||
| Luminex* | 11,060 | 245 | |||||||||
| MAKO Surgical* | 16,060 | 550 | |||||||||
| Medtronic | 38,080 | 1,266 | |||||||||
| Oncolytics Biotech* | 80,938 | 282 | |||||||||
| Sangamo BioSciences* | 42,890 | 187 | |||||||||
| Spectrum Pharmaceuticals* | 29,790 | 227 | |||||||||
| St. Jude Medical | 119,520 | 4,325 | |||||||||
| Tornier NV* | 20,570 | 421 | |||||||||
| Vertex Pharmaceuticals* | 19,230 | 856 | |||||||||
| ViroPharma* | 35,670 | 645 | |||||||||
| Zimmer Holdings* | 66,900 | 3,579 | |||||||||
| Total Health care | 33,668 | ||||||||||
| Industrials—3.7% | |||||||||||
| 3M | 23,330 | 1,675 | |||||||||
| C.R. Bard | 65,980 | 5,776 | |||||||||
| Chicago Bridge & Iron, NY Shares | 36,970 | 1,058 | |||||||||
| CSX | 38,460 | 718 | |||||||||
| Donaldson | 43,260 | 2,371 | |||||||||
| Honeywell International | 6,680 | 293 | |||||||||
| Lockheed Martin | 22,970 | 1,668 | |||||||||
| MSC Industrial Direct, Cl A | 6,390 | 361 | |||||||||
| Nordson | 38,300 | 1,522 | |||||||||
| Robert Half International | 55,390 | 1,175 | |||||||||
| Scotts Miracle-Gro | 62,330 | 2,780 | |||||||||
| Sensata Technologies Holding NV* | 23,990 | 635 | |||||||||
| Southwest Airlines | 173,470 | 1,395 | |||||||||
| Stericycle* | 5,320 | 429 | |||||||||
| UTI Worldwide | 30,610 | 399 | |||||||||
30 TURNER FUNDS 2011 ANNUAL REPORT
Schedule of securities sold short
Turner Spectrum Fund
| Shares | Value (000) | ||||||||||
| Waste Connections | 23,850 | $ | 807 | ||||||||
| Total Industrials | 23,062 | ||||||||||
| Information-technology—5.4% | |||||||||||
| Adobe Systems* | 24,470 | 592 | |||||||||
| Alcatel-Lucent SP ADR* | 158,620 | 449 | |||||||||
| Amphenol, Cl A | 11,450 | 467 | |||||||||
| Atmel* | 110,300 | 890 | |||||||||
| Autodesk* | 45,030 | 1,251 | |||||||||
| Blue Coat Systems* | 22,720 | 315 | |||||||||
| Ciena* | 34,040 | 381 | |||||||||
| Corning | 42,640 | 527 | |||||||||
| Cymer* | 12,020 | 447 | |||||||||
| Dell* | 150,240 | 2,126 | |||||||||
| FactSet Research Systems | 50,940 | 4,532 | |||||||||
| Fair Isaac | 34,160 | 746 | |||||||||
| Gartner* | 20,830 | 726 | |||||||||
| Global Payments | 44,840 | 1,811 | |||||||||
| Infosys SP ADR | 15,580 | 796 | |||||||||
| Juniper Networks* | 25,850 | 446 | |||||||||
| KLA-Tencor | 11,380 | 436 | |||||||||
| Lexmark International, Cl A* | 13,210 | 357 | |||||||||
| Linear Technology | 16,280 | 450 | |||||||||
| Maxim Integrated Products | 64,320 | 1,501 | |||||||||
| MICROS Systems* | 9,490 | 417 | |||||||||
| MicroStrategy, Cl A* | 4,130 | 471 | |||||||||
| NetApp* | 11,340 | 385 | |||||||||
| Nokia SP ADR | 80,350 | 455 | |||||||||
| Paychex | 48,550 | 1,280 | |||||||||
| QLogic* | 58,280 | 739 | |||||||||
| Riverbed Technology* | 93,740 | 1,871 | |||||||||
| Sanmina-SCI* | 84,530 | 565 | |||||||||
| Shanda Interactive Entertainment SP ADR* | 32,270 | 953 | |||||||||
| Sohu.com* | 5,950 | 287 | |||||||||
| STMicroelectronics NV, NY Shares | 69,290 | 450 | |||||||||
| Synaptics* | 46,190 | 1,104 | |||||||||
| Tech Data* | 45,270 | 1,957 | |||||||||
| Telefonaktiebolaget LM Ericsson SP ADR | 139,690 | 1,334 | |||||||||
| Tellabs | 84,460 | 362 | |||||||||
| Vishay Intertechnology* | 128,520 | 1,074 | |||||||||
| Xilinx | 26,090 | 716 | |||||||||
| Total Information-technology | 33,666 | ||||||||||
| Shares | Value (000) | ||||||||||
| Materials—3.3% | |||||||||||
| Agnico-Eagle Mines | 9,720 | $ | 579 | ||||||||
| Agrium | 17,840 | 1,189 | |||||||||
| Alcoa | 255,320 | 2,443 | |||||||||
| Aluminumoration of China | 50,620 | 528 | |||||||||
| Anglo American^ | 8,399 | 289 | |||||||||
| AngloGold Ashanti SP ADR | 18,490 | 765 | |||||||||
| Barrick Gold | 30,620 | 1,428 | |||||||||
| Carpenter Technology | 71,460 | 3,208 | |||||||||
| Eramet^ | 2,950 | 407 | |||||||||
| Fibria Celulose SP ADR | 71,440 | 541 | |||||||||
| Fresnillo^ | 22,070 | 540 | |||||||||
| Glencore International^ | 132,480 | 832 | |||||||||
| Molycorp* | 8,360 | 275 | |||||||||
| POSCO ADR | 7,810 | 594 | |||||||||
| Sigma-Aldrich | 18,420 | 1,138 | |||||||||
| Solutia* | 185,860 | 2,388 | |||||||||
| Taseko Mines* | 91,490 | 233 | |||||||||
| Teck Resources, Cl B | 24,480 | 715 | |||||||||
| Westlake Chemical | 28,990 | 994 | |||||||||
| Xstrata^ | 114,770 | 1,449 | |||||||||
| Total Materials | 20,535 | ||||||||||
| Total Common stock (Proceeds $252,515) | 233,347 | ||||||||||
| Exchange traded funds—7.9% | |||||||||||
| Financial Select Sector SPDR Fund | 70,080 | 829 | |||||||||
| Health Care Select Sector SPDR Fund | 25,670 | 814 | |||||||||
| Industrial Select Sector SPDR Fund | 26,500 | 774 | |||||||||
| iPath Dow Jones-UBS Copper Total Return Sub-Index | 21,870 | 879 | |||||||||
| iShares MSCI Brazil Index Fund | 20,520 | 1,068 | |||||||||
| iShares MSCI Emerging | 16,360 | 574 | |||||||||
| iShares NASDAQ Biotechnology Index Fund | 24,110 | 2,251 | |||||||||
| iShares Russell 2000 Growth Index Fund | 45,980 | 3,378 | |||||||||
| iShares Russell 2000 Growth Index Fund | 96,180 | 6,180 | |||||||||
| Materials Select Sector SPDR Trust | 102,760 | 3,013 | |||||||||
| Oil Services HOLDRs Trust | 16,300 | 1,681 | |||||||||
| PowerShares QQQ Trust | 34,600 | 1,817 | |||||||||
| SPDR Metals & Mining ETF | 36,180 | 1,622 | |||||||||
TURNER FUNDS 2011 ANNUAL REPORT 31
FINANCIAL STATEMENTS
Schedule of securities sold short
Turner Spectrum Fund
| Shares | Value (000) | ||||||||||
| SPDR S&P 500 ETF Trust, Ser 1 | 96,660 | $ | 10,939 | ||||||||
| SPDR S&P Oil & Gas Exploration & Production ETF | 96,980 | 4,151 | |||||||||
| SPDR S&P Retail ETF | 102,120 | 4,720 | |||||||||
| United States Brent Oil Fund LP | 10,300 | 697 | |||||||||
| United States Natural Gas Fund | 141,490 | 1,275 | |||||||||
| Vanguard Small-Cap Growth ETF | 39,120 | 2,616 | |||||||||
| Total Exchange traded funds (Proceeds $54,828) | 49,278 | ||||||||||
| Total Securities sold short—45.4% (Proceeds $307,343)† | $ | 282,625 | |||||||||
The following is a summary of inputs used as of September 30, 2011 in valuing the Fund's investments in securities sold short:
| Securities sold short | Level 1 | Level 2 | Level 3 | Total | |||||||||||||||
| Common Stock | $ | 220,844 | $ | 12,503 | $ | — | $ | 233,347 | |||||||||||
| Exchange traded funds | 49,278 | — | — | 49,278 | |||||||||||||||
| Total Securities sold short | $ | 270,122 | $ | 12,503 | $ | — | $ | 282,625 | |||||||||||
Please see Note 2 in the Notes to Financial Statements for further information regarding fair value measurements.
Percentages are based on Net Assets of $622,433.**
† The open short positions are collateralized by cash deposits with brokers.
* Non-income producing security.
** This number is listed in thousands.
^ Security fair valued using procedures established by the Fair Value Committee for foreign securities due to price movements in the market which exceed established thresholds. As of September 30, 2011 the total market value of these securities was $12,503**, representing 2.0% of Net Assets.
ADR — American Depositary Receipt
Cl — Class
ETF — Exchange Traded Fund
LP — Limited Partnership
NV — Naamloze Vennootschap
NY — New York
Ser — Series
S&P — Standard & Poor's
SPDR — Standard & Poor's Depositary Receipt
The accompanying notes are an integral part of the financial statements.
32 TURNER FUNDS 2011 ANNUAL REPORT
Schedule of investments
Turner Titan Fund
September 30, 2011
| Shares | Value (000) | ||||||||||
| Common stock—69.1% | |||||||||||
| Consumer discretionary—11.8% | |||||||||||
| AutoZone* | 510 | $ | 163 | ||||||||
| Bed Bath & Beyond* | 3,200 | 183 | |||||||||
| BorgWarner* | 2,350 | 142 | |||||||||
| Coach | 3,260 | 169 | |||||||||
| Las Vegas Sands* | 6,690 | 257 | |||||||||
| Panera Bread, Cl A* | 1,280 | 133 | |||||||||
| Priceline.com* | 300 | 135 | |||||||||
| Starbucks | 4,620 | 172 | |||||||||
| Starwood Hotels & Resorts Worldwide | 5,320 | 207 | |||||||||
| Viacom, Cl B | 2,900 | 112 | |||||||||
| Total Consumer discretionary | 1,673 | ||||||||||
| Consumer staples—7.9% | |||||||||||
| Beam* | 4,050 | 168 | |||||||||
| Colgate-Palmolive | 2,480 | 220 | |||||||||
| Costco Wholesale | 1,720 | 141 | |||||||||
| Dr. Pepper Snapple Group | 3,690 | 143 | |||||||||
| Hain Celestial Group* | 4,910 | 150 | |||||||||
| Hansen Natural* | 1,980 | 173 | |||||||||
| Mead Johnson Nutrition, Cl A | 1,720 | 119 | |||||||||
| Total Consumer staples | 1,114 | ||||||||||
| Energy—5.4% | |||||||||||
| Anadarko Petroleum | 2,740 | 173 | |||||||||
| Baker Hughes | 4,340 | 200 | |||||||||
| Brigham Exploration* | 4,360 | 110 | |||||||||
| Cabot Oil & Gas | 2,190 | 136 | |||||||||
| Concho Resources* | 2,080 | 148 | |||||||||
| Total Energy | 767 | ||||||||||
| Financials—5.6% | |||||||||||
| ACE | 2,300 | 139 | |||||||||
| CME Group | 680 | 167 | |||||||||
| Discover Financial Services | 8,840 | 203 | |||||||||
| Prudential Financial | 2,360 | 111 | |||||||||
| Signature Bank* | 3,630 | 173 | |||||||||
| Total Financials | 793 | ||||||||||
| Health care—7.8% | |||||||||||
| Allergan | 1,660 | 137 | |||||||||
| Celgene* | 2,790 | 173 | |||||||||
| Cooper | 1,600 | 127 | |||||||||
| Shares | Value (000) | ||||||||||
| Cubist Pharmaceuticals* | 2,370 | $ | 84 | ||||||||
| McKesson | 1,500 | 109 | |||||||||
| Shire ADR | 2,400 | 225 | |||||||||
| Watson Pharmaceuticals* | 3,550 | 242 | |||||||||
| Total Health care | 1,097 | ||||||||||
| Industrials—5.8% | |||||||||||
| C.H. Robinson Worldwide | 1,590 | 109 | |||||||||
| Caterpillar | 940 | 69 | |||||||||
| Cummins | 1,550 | 127 | |||||||||
| Danaher | 3,650 | 153 | |||||||||
| Deere | 1,920 | 124 | |||||||||
| Delta Air Lines* | 16,890 | 127 | |||||||||
| FedEx | 1,750 | 118 | |||||||||
| Total Industrials | 827 | ||||||||||
| Information-technology—20.8% | |||||||||||
| Acme Packet* | 1,620 | 69 | |||||||||
| Altera | 5,170 | 163 | |||||||||
| Apple* | 470 | 179 | |||||||||
| Avago Technologies | 5,080 | 167 | |||||||||
| Baidu ADR* | 1,090 | 117 | |||||||||
| Broadcom, Cl A | 10,870 | 362 | |||||||||
| Cognizant Technology Solutions, Cl A* | 2,270 | 142 | |||||||||
| eBay* | 9,150 | 270 | |||||||||
| Electronic Arts* | 8,560 | 175 | |||||||||
| F5 Networks* | 1,745 | 124 | |||||||||
| MasterCard, Cl A | 215 | 68 | |||||||||
| Oracle | 11,180 | 321 | |||||||||
| Qualcomm | 2,920 | 142 | |||||||||
| SanDisk* | 3,500 | 141 | |||||||||
| Tyco International | 5,010 | 204 | |||||||||
| VeriFone Systems* | 2,770 | 97 | |||||||||
| VMware, Cl A* | 2,360 | 190 | |||||||||
| Total Information-technology | 2,931 | ||||||||||
| Materials—2.8% | |||||||||||
| Potash Corp. of Saskatchewan | 3,110 | 134 | |||||||||
| Yamana Gold | 18,970 | 259 | |||||||||
| Total Materials | 393 | ||||||||||
TURNER FUNDS 2011 ANNUAL REPORT 33
FINANCIAL STATEMENTS
Schedule of investments
Turner Titan Fund
| Shares | Value (000) | ||||||||||
| Utilities—1.2% | |||||||||||
| EQT | 3,070 | $ | 164 | ||||||||
| Total Utilities | 164 | ||||||||||
| Total Common stock (Cost $10,113) | 9,759 | ||||||||||
| Cash equivalent—5.7% | |||||||||||
| BlackRock TempCash Fund, Institutional Shares, 0.010%**^ | 796,877 | 797 | |||||||||
| Total Cash equivalent (Cost $797) | 797 | ||||||||||
| Total Investments—74.8% (Cost $10,910) | $ | 10,556 | |||||||||
As of September 30, 2011 all of the Fund's investments were considered Level 1. Please see Note 2 in Notes to Financial Statements for further information regarding fair value measurements.
Percentages are based on Net Assets of $14,115.***
* Non-income producing security.
** Rate shown is the 7-day effective yield as of September 30, 2011.
*** This number is listed in thousands.
^ All or a portion of the shares have been committed as collateral for open short positions.
ADR — American Depositary Receipt
Cl — Class
The accompanying notes are an integral part of the financial statements.
34 TURNER FUNDS 2011 ANNUAL REPORT
Schedule of securities sold short
Turner Titan Fund
September 30, 2011
| Shares | Value (000) | ||||||||||
| Common stock—51.4% | |||||||||||
| Consumer discretionary—12.1% | |||||||||||
| Aegis Group^ | 53,350 | $ | 103 | ||||||||
| Compagnie Financiere Richemont, Cl A^ | 1,460 | 65 | |||||||||
| Ctrip.com International ADR* | 2,300 | 74 | |||||||||
| Discovery Communications, Cl A* | 5,410 | 204 | |||||||||
| Genuine Parts | 2,650 | 135 | |||||||||
| Hennes & Mauritz AB, B Shares^ | 3,420 | 102 | |||||||||
| Johnson Controls | 5,130 | 135 | |||||||||
| Lamar Advertising, Cl A* | 7,460 | 127 | |||||||||
| Marriott International, Cl A | 2,950 | 80 | |||||||||
| Mohawk Industries* | 1,700 | 73 | |||||||||
| O'Reilly Automotive* | 2,070 | 138 | |||||||||
| Omnicom Group | 2,980 | 110 | |||||||||
| Orient-Express Hotels, Cl A* | 10,340 | 71 | |||||||||
| Urban Outfitters* | 6,130 | 137 | |||||||||
| Wynn Macau^ | 35,200 | 83 | |||||||||
| Zumiez* | 3,900 | 68 | |||||||||
| Total Consumer discretionary | 1,705 | ||||||||||
| Consumer staples—2.0% | |||||||||||
| H.J. Heinz | 5,660 | 286 | |||||||||
| Total Consumer staples | 286 | ||||||||||
| Energy—5.0% | |||||||||||
| BP SP ADR | 3,910 | 141 | |||||||||
| ConocoPhillips | 1,630 | 103 | |||||||||
| Encana | 10,640 | 205 | |||||||||
| EOG Resources | 1,620 | 115 | |||||||||
| National Oilwell Varco | 2,660 | 136 | |||||||||
| Total Energy | 700 | ||||||||||
| Financials—8.5% | |||||||||||
| Arch Capital Group* | 3,320 | 108 | |||||||||
| Bank of New York Mellon | 5,410 | 101 | |||||||||
| Berkshire Hathaway, Cl B* | 1,950 | 139 | |||||||||
| Capital One Financial | 3,430 | 136 | |||||||||
| Commerce Bancshares | 3,900 | 135 | |||||||||
| IntercontinentalExchange* | 1,150 | 136 | |||||||||
| Legg Mason | 8,650 | 222 | |||||||||
| Northern Trust | 3,070 | 107 | |||||||||
| Royal Bank of Canada | 2,420 | 111 | |||||||||
| Total Financials | 1,195 | ||||||||||
| Shares | Value (000) | ||||||||||
| Health care—3.4% | |||||||||||
| Amgen | 2,540 | $ | 140 | ||||||||
| Becton Dickinson | 1,460 | 107 | |||||||||
| St. Jude Medical | 2,870 | 104 | |||||||||
| Zimmer Holdings* | 2,530 | 135 | |||||||||
| Total Health care | 486 | ||||||||||
| Industrials—7.3% | |||||||||||
| 3M | 2,670 | 192 | |||||||||
| C.R. Bard | 2,390 | 209 | |||||||||
| CSX | 6,940 | 129 | |||||||||
| Donaldson | 1,910 | 105 | |||||||||
| Lockheed Martin | 2,480 | 180 | |||||||||
| Robert Half International | 3,430 | 73 | |||||||||
| Scotts Miracle-Gro | 3,310 | 148 | |||||||||
| Total Industrials | 1,036 | ||||||||||
| Information-technology—9.8% | |||||||||||
| Adobe Systems* | 4,440 | 107 | |||||||||
| Atmel* | 10,580 | 85 | |||||||||
| Autodesk* | 4,940 | 137 | |||||||||
| Corning | 7,790 | 96 | |||||||||
| FactSet Research Systems | 1,160 | 103 | |||||||||
| Infosys SP ADR | 2,850 | 146 | |||||||||
| Maxim Integrated Products | 5,860 | 137 | |||||||||
| QLogic* | 5,330 | 68 | |||||||||
| Riverbed Technology* | 4,960 | 99 | |||||||||
| Sanmina-SCI* | 15,330 | 103 | |||||||||
| Shanda Interactive Entertainment SP ADR* | 2,070 | 61 | |||||||||
| Synaptics* | 4,660 | 111 | |||||||||
| Telefonaktiebolaget LM Ericsson SP ADR | 14,150 | 135 | |||||||||
| Total Information-technology | 1,388 | ||||||||||
| Materials—3.3% | |||||||||||
| Alcoa | 10,490 | 101 | |||||||||
| Westlake Chemical | 2,870 | 98 | |||||||||
| Xstrata^ | 20,660 | 261 | |||||||||
| Total Materials | 460 | ||||||||||
| Total Common stock (Proceeds $7,710) | 7,256 | ||||||||||
TURNER FUNDS 2011 ANNUAL REPORT 35
FINANCIAL STATEMENTS
Schedule of securities sold short
Turner Titan Fund
| Shares | Value (000) | ||||||||||
| Exchange traded fund—4.0% | |||||||||||
| SPDR S&P 500 ETF Trust, Ser 1 | 4,980 | $ | 564 | ||||||||
| Total Exchange traded fund (Proceeds $598) | 564 | ||||||||||
| Total Securities sold short—55.4% (Proceeds $8,308) | $ | 7,820 | |||||||||
The following is a summary of inputs used as of September 30, 2011 in valuing the Fund's investments in securities sold short:
| Securities sold short | Level 1 | Level 2 | Level 3 | Total | |||||||||||||||
| Common Stock | $ | 6,642 | $ | 614 | $ | — | $ | 7,256 | |||||||||||
| Exchange traded funds | 564 | — | — | 564 | |||||||||||||||
| Total Securities sold short | $ | 7,206 | $ | 614 | $ | — | $ | 7,820 | |||||||||||
Please see Note 2 in the Notes to Financial Statements for further information regarding fair value measurements.
Percentages are based on Net Assets of $14,115.**
* Non-income producing security.
** This number is listed in thousands.
^ Security fair valued using procedures established by the Fair Value Committee for foreign securities due to price movements in the market which exceed established thresholds. As of September 30, 2011 the total market value of these securities was $614**, representing 4.3% of Net Assets.
ADR — American Depositary Receipt
Cl — Class
ETF — Exchange Traded Fund
Ser — Series
S&P — Standard & Poor's
SPDR — Standard & Poor's Depositary Receipt
The accompanying notes are an integral part of the financial statements.
36 TURNER FUNDS 2011 ANNUAL REPORT
Schedule of investments
Turner All Cap Growth Fund
September 30, 2011
| Shares | Value (000) | ||||||||||
| Common stock—99.2%† | |||||||||||
| Consumer discretionary—18.2% | |||||||||||
| Abercrombie & Fitch, Cl A | 15,630 | $ | 962 | ||||||||
| Amazon.com* | 5,440 | 1,176 | |||||||||
| Bed Bath & Beyond* | 10,000 | 573 | |||||||||
| Crocs* | 34,800 | 824 | |||||||||
| Las Vegas Sands* | 23,580 | 904 | |||||||||
| Penn National Gaming* | 18,410 | 613 | |||||||||
| Starwood Hotels & Resorts Worldwide | 12,330 | 479 | |||||||||
| Tempur-Pedic International* | 9,120 | 480 | |||||||||
| Total Consumer discretionary | 6,011 | ||||||||||
| Consumer staples—6.9% | |||||||||||
| Green Mountain Coffee Roasters* | 11,620 | 1,080 | |||||||||
| Whole Foods Market | 18,270 | 1,193 | |||||||||
| Total Consumer staples | 2,273 | ||||||||||
| Energy—3.6% | |||||||||||
| Cameron International* | 28,670 | 1,191 | |||||||||
| Total Energy | 1,191 | ||||||||||
| Financials—2.3% | |||||||||||
| Affiliated Managers Group* | 9,710 | 758 | |||||||||
| Total Financials | 758 | ||||||||||
| Health care—8.6% | |||||||||||
| Alexion Pharmaceuticals* | 23,270 | 1,491 | |||||||||
| Catalyst Health Solutions* | 14,940 | 862 | |||||||||
| Onyx Pharmaceuticals* | 16,240 | 487 | |||||||||
| Total Health care | 2,840 | ||||||||||
| Industrials—7.6% | |||||||||||
| Cummins | 7,940 | 648 | |||||||||
| Triumph Group | 17,240 | 840 | |||||||||
| United Continental Holdings* | 53,810 | 1,043 | |||||||||
| Total Industrials | 2,531 | ||||||||||
| Information-technology—47.8% | |||||||||||
| Apple* | 5,330 | 2,032 | |||||||||
| ASML Holding, NY Shares | 35,580 | 1,229 | |||||||||
| Baidu SP ADR* | 7,300 | 780 | |||||||||
| Broadcom, Cl A | 31,950 | 1,064 | |||||||||
| CEVA* | 35,610 | 866 | |||||||||
| Cypress Semiconductor | 36,090 | 540 | |||||||||
| Shares | Value (000) | ||||||||||
| eBay* | 24,270 | $ | 716 | ||||||||
| F5 Networks* | 13,600 | 966 | |||||||||
| MasterCard, Cl A | 3,800 | 1,205 | |||||||||
| Qualcomm | 23,630 | 1,149 | |||||||||
| Salesforce.com* | 9,890 | 1,130 | |||||||||
| SanDisk* | 19,120 | 771 | |||||||||
| SINA* | 5,570 | 399 | |||||||||
| SuccessFactors* | 43,390 | 998 | |||||||||
| TIBCO Software* | 47,610 | 1,066 | |||||||||
| VMware, Cl A* | 11,070 | 890 | |||||||||
| Total Information-technology | 15,801 | ||||||||||
| Materials—4.2% | |||||||||||
| CF Industries Holdings | 4,770 | 589 | |||||||||
| Potash Corp. of Saskatchewan | 18,400 | 795 | |||||||||
| Total Materials | 1,384 | ||||||||||
| Total Common stock (Cost $32,693) | 32,789 | ||||||||||
| Cash equivalent—1.0% | |||||||||||
| BlackRock TempCash Fund, Institutional Shares, 0.010%** | 334,953 | 335 | |||||||||
| Total Cash equivalent (Cost $335) | 335 | ||||||||||
| Total Investments—100.2% (Cost $33,028) | $ | 33,124 | |||||||||
As of September 30, 2011 all of the Fund's investments were considered Level 1. Please see Note 2 in Notes to Financial Statements for further information regarding fair value measurements.
Percentages are based on Net Assets of $33,053.***
* Non-income producing security.
** Rate shown is the 7-day effective yield as of September 30, 2011.
*** This number is listed in thousands.
† More narrow industries are utilized for compliance purposes, whereas broad sectors are utilized for reporting purposes.
ADR — American Depositary Receipt
Cl — Class
NY — New York
The accompanying notes are an integral part of the financial statements.
TURNER FUNDS 2011 ANNUAL REPORT 37
FINANCIAL STATEMENTS
Schedule of investments
Turner Concentrated Growth Fund
September 30, 2011
| Shares | Value (000) | ||||||||||
| Common stock—95.8%† | |||||||||||
| Consumer discretionary—19.4% | |||||||||||
| Amazon.com* | 12,590 | $ | 2,722 | ||||||||
| Chipotle Mexican Grill* | 4,180 | 1,266 | |||||||||
| Las Vegas Sands* | 21,680 | 831 | |||||||||
| Lululemon Athletica*# | 26,940 | 1,311 | |||||||||
| Starbucks | 37,800 | 1,410 | |||||||||
| Total Consumer discretionary | 7,540 | ||||||||||
| Energy—5.0% | |||||||||||
| Anadarko Petroleum | 30,750 | 1,939 | |||||||||
| Total Energy | 1,939 | ||||||||||
| Financials—3.7% | |||||||||||
| MSCI, Cl A* | 47,470 | 1,440 | |||||||||
| Total Financials | 1,440 | ||||||||||
| Health care—6.4% | |||||||||||
| Allergan | 14,800 | 1,219 | |||||||||
| Cerner* | 18,500 | 1,268 | |||||||||
| Total Health care | 2,487 | ||||||||||
| Industrials—8.6% | |||||||||||
| Caterpillar | 23,920 | 1,766 | |||||||||
| United Continental Holdings* | 81,610 | 1,582 | |||||||||
| Total Industrials | 3,348 | ||||||||||
| Information-technology—47.6% | |||||||||||
| Acme Packet* | 26,150 | 1,114 | |||||||||
| Apple* | 10,140 | 3,865 | |||||||||
| ARM Holdings | 32,020 | 816 | |||||||||
| Broadcom, Cl A | 59,770 | 1,990 | |||||||||
| eBay* | 51,110 | 1,507 | |||||||||
| F5 Networks* | 14,380 | 1,022 | |||||||||
| Finisar* | 58,460 | 1,025 | |||||||||
| MasterCard, Cl A | 3,870 | 1,227 | |||||||||
| Qualcomm | 45,240 | 2,200 | |||||||||
| Salesforce.com* | 10,420 | 1,191 | |||||||||
| SanDisk* | 33,980 | 1,371 | |||||||||
| VMware, Cl A* | 15,150 | 1,218 | |||||||||
| Total Information-technology | 18,546 | ||||||||||
| Shares | Value (000) | ||||||||||
| Materials—5.1% | |||||||||||
| Goldcorp | 43,870 | $ | 2,002 | ||||||||
| Total Materials | 2,002 | ||||||||||
| Total Common stock (Cost $35,233) | 37,302 | ||||||||||
| Cash equivalent—6.9% | |||||||||||
| BlackRock TempCash Fund, Institutional Shares, 0.010%** (1) | 2,680,579 | 2,681 | |||||||||
| Total Cash equivalent (Cost $2,681) | 2,681 | ||||||||||
| Total Investments—102.7% (Cost $37,914) | $ | 39,983 | |||||||||
As of September 30, 2011 all of the Fund's investments were considered Level 1. Please see Note 2 in Notes to Financial Statements for further information regarding fair value measurements.
Percentages are based on Net Assets of $38,939.***
* Non-income producing security.
** Rate shown is the 7-day effective yield as of September 30, 2011.
*** This number is listed in thousands.
† More narrow industries are utilized for compliance purposes, whereas broad sectors are utilized for reporting purposes.
# Security fully or partially on loan at September 30, 2011. The total value of securities on loan at September 30, 2011 was $1,309***. Certain of these securities may have been sold prior to period end and are included in receivable for investment securities sold on the Statement of Assets and Liabilities.
(1) The Fund lends securities in its portfolio pursuant to a securities lending agreement ("Lending Agreement") with Morgan Stanley. Unless otherwise agreed, security loans made pursuant to the Lending Agreement are required at all times to be secured by collateral equal to at least 100% of the market value of the securities loaned. Cash collateral received is invested pursuant to the terms of the Lending Agreement in the BlackRock TempCash Fund, Institutional Shares, a money market fund. All such investments are made at the risk of the Fund. As such, the Fund is liable for investment losses. The Fund receives an annual fee for its participation in the Lending Agreement based on projected lending activity. A partial position of this security was purchased with cash collateral received from securities lending. The total value of such security at September 30, 2011 was $1,424.***
Cl — Class
The accompanying notes are an integral part of the financial statements.
38 TURNER FUNDS 2011 ANNUAL REPORT
Schedule of investments
Turner Emerging Growth Fund
September 30, 2011
| Shares | Value (000) | ||||||||||
| Common stock—87.0% | |||||||||||
| Consumer discretionary—16.9% | |||||||||||
| 7 Days Group Holdings ADR* | 9,586 | $ | 121 | ||||||||
| Ann* | 85,380 | 1,950 | |||||||||
| Asbury Automotive Group* | 95,990 | 1,583 | |||||||||
| Body Central* | 101,040 | 1,835 | |||||||||
| Buffalo Wild Wings* | 30,070 | 1,798 | |||||||||
| Children's Place Retail Stores*# | 53,710 | 2,499 | |||||||||
| Cracker Barrel Old Country Store | 54,600 | 2,188 | |||||||||
| Crocs* | 89,620 | 2,121 | |||||||||
| Deckers Outdoor* | 104,154 | 9,713 | |||||||||
| DineEquity* | 29,500 | 1,136 | |||||||||
| Imax* | 52,620 | 762 | |||||||||
| Jos. A. Bank Clothiers*# | 39,180 | 1,827 | |||||||||
| Krispy Kreme Doughnuts* | 58,450 | 399 | |||||||||
| Maidenform Brands* | 31,860 | 746 | |||||||||
| Oxford Industries | 53,500 | 1,835 | |||||||||
| Select Comfort* | 107,750 | 1,505 | |||||||||
| Skullcandy* | 59,710 | 844 | |||||||||
| SodaStream International* | 27,960 | 924 | |||||||||
| Ulta Salon, Cosmetics & Fragrance* | 35,200 | 2,191 | |||||||||
| Vitamin Shoppe* | 58,860 | 2,204 | |||||||||
| Total Consumer discretionary | 38,181 | �� | |||||||||
| Consumer staples—4.5% | |||||||||||
| Boston Beer, Cl A*# | 22,480 | 1,634 | |||||||||
| TreeHouse Foods* | 81,377 | 5,032 | |||||||||
| United Natural Foods* | 92,348 | 3,421 | |||||||||
| Total Consumer staples | 10,087 | ||||||||||
| Energy—7.2% | |||||||||||
| Basic Energy Services* | 87,170 | 1,234 | |||||||||
| Brigham Exploration* | 106,585 | 2,692 | |||||||||
| Carrizo Oil & Gas* | 77,818 | 1,677 | |||||||||
| GeoResources*# | 58,270 | 1,037 | |||||||||
| James River Coal*# | 123,920 | 789 | |||||||||
| Key Energy Services* | 202,160 | 1,918 | |||||||||
| Kodiak Oil & Gas*# | 48,310 | 252 | |||||||||
| Lufkin Industries | 45,270 | 2,409 | |||||||||
| Rex Energy*# | 136,800 | 1,731 | |||||||||
| Swift Energy* | 106,120 | 2,583 | |||||||||
| Total Energy | 16,322 | ||||||||||
| Shares | Value (000) | ||||||||||
| Financials—2.0% | |||||||||||
| Harleysville Group | 18,790 | $ | 1,106 | ||||||||
| IBERIABANK | 24,996 | 1,176 | |||||||||
| Sovran Self Storage | 36,160 | 1,344 | |||||||||
| Umpqua Holdings | 97,470 | 857 | |||||||||
| Total Financials | 4,483 | ||||||||||
| Health care—21.0% | |||||||||||
| Achillion Pharmaceuticals*# | 151,810 | 716 | |||||||||
| Air Methods* | 40,280 | 2,565 | |||||||||
| AMERIGROUP* | 22,010 | 859 | |||||||||
| ArthroCare* | 142,856 | 4,110 | |||||||||
| Aveo Phamaceuticals* | 85,520 | 1,316 | |||||||||
| Catalyst Health Solutions* | 83,955 | 4,843 | |||||||||
| Computer Programs & Systems | 37,401 | 2,474 | |||||||||
| Cyberonics* | 74,878 | 2,119 | |||||||||
| HMS Holdings* | 102,000 | 2,488 | |||||||||
| ICON SP ADR* | 41,720 | 671 | |||||||||
| Impax Laboratories* | 94,962 | 1,701 | |||||||||
| NuVasive*# | 21,660 | 370 | |||||||||
| NxStage Medical* | 100,170 | 2,090 | |||||||||
| Orthofix International* | 54,450 | 1,879 | |||||||||
| PAREXEL International* | 71,004 | 1,344 | |||||||||
| Pharmasset* | 60,930 | 5,019 | |||||||||
| PSS World Medical*# | 52,410 | 1,032 | |||||||||
| QLT* | 29,935 | 219 | |||||||||
| Quality Systems# | 35,253 | 3,419 | |||||||||
| Questcor Pharmaceuticals* | 121,460 | 3,311 | |||||||||
| SXC Health Solutions* | 63,164 | 3,518 | |||||||||
| Volcano*# | 45,100 | 1,336 | |||||||||
| Total Health care | 47,399 | ||||||||||
| Industrials—15.9% | |||||||||||
| Chart Industries* | 22,020 | 928 | |||||||||
| Clean Harbors* | 89,780 | 4,606 | |||||||||
| Copa Holdings, Cl A | 47,391 | 2,904 | |||||||||
| EnPro Industries*# | 73,290 | 2,175 | |||||||||
| ESCO Technologies | 36,390 | 928 | |||||||||
| Genesee & Wyoming, Cl A* | 84,565 | 3,934 | |||||||||
| Greenbrier* | 152,786 | 1,780 | |||||||||
| Hub Group, Cl A* | 69,848 | 1,975 | |||||||||
| Huron Consulting Group* | 95,510 | 2,973 | |||||||||
| Kforce* | 151,060 | 1,482 | |||||||||
| Middleby* | 53,823 | 3,792 | |||||||||
| RBC Bearings* | 19,746 | 671 | |||||||||
TURNER FUNDS 2011 ANNUAL REPORT 39
FINANCIAL STATEMENTS
Schedule of investments
Turner Emerging Growth Fund
| Shares | Value (000) | ||||||||||
| Robbins & Myers | 50,824 | $ | 1,764 | ||||||||
| Titan International# | 26,560 | 398 | |||||||||
| Triumph Group | 116,344 | 5,671 | |||||||||
| Total Industrials | 35,981 | ||||||||||
| Information-technology—16.2% | |||||||||||
| ANSYS* | 60,660 | 2,975 | |||||||||
| Ariba* | 217,690 | 6,032 | |||||||||
| Bottomline Technologies* | 98,222 | 1,978 | |||||||||
| BroadSoft* | 58,300 | 1,769 | |||||||||
| Cavium*# | 36,390 | 983 | |||||||||
| CEVA* | 71,102 | 1,728 | |||||||||
| Cirrus Logic*# | 169,510 | 2,499 | |||||||||
| Coherent* | 36,654 | 1,575 | |||||||||
| Electronics for Imaging* | 126,550 | 1,705 | |||||||||
| GSI Group* | 95,650 | 735 | |||||||||
| Hittite Microwave* | 51,720 | 2,519 | |||||||||
| Kenexa* | 86,880 | 1,359 | |||||||||
| NETGEAR* | 93,840 | 2,429 | |||||||||
| Netlogic Microsystems* | 68,280 | 3,285 | |||||||||
| Power Integrations | 30,660 | 938 | |||||||||
| Rofin-Sinar Technologies* | 78,268 | 1,503 | |||||||||
| Synchronoss Technologies* | 47,970 | 1,195 | |||||||||
| Taleo, Cl A* | 59,690 | 1,535 | |||||||||
| Total Information-technology | 36,742 | ||||||||||
| Materials—3.1% | |||||||||||
| Domtar | 31,950 | 2,178 | |||||||||
| KapStone Paper & Packaging* | 93,020 | 1,292 | |||||||||
| LSB Industries* | 98,040 | 2,811 | |||||||||
| Noranda Aluminum Holding* | 102,981 | 860 | |||||||||
| Total Materials | 7,141 | ||||||||||
| Utilities—0.2% | |||||||||||
| Artesian Resources, Cl A# | 32,625 | 571 | |||||||||
| Total Utilities | 571 | ||||||||||
| Total Common stock (Cost $145,586) | 196,907 | ||||||||||
| Shares | Value (000) | ||||||||||
| Cash equivalent—17.8% | |||||||||||
| BlackRock TempCash Fund, Institutional Shares, 0.010%**(1) | 40,161,961 | $ | 40,162 | ||||||||
| Total Cash equivalent (Cost $40,162) | 40,162 | ||||||||||
| Total Investments—104.8% (Cost $185,748) | $ | 237,069 | |||||||||
As of September 30, 2011 all of the Fund's investments were considered Level 1. Please see Note 2 in Notes to Financial Statements for further information regarding fair value measurements.
Percentages are based on Net Assets of $226,162.***
* Non-income producing security.
** Rate shown is the 7-day effective yield as of September 30, 2011.
*** This number is listed in thousands.
# Security fully or partially on loan at September 30, 2011. The total value of securities on loan at September 30, 2011 was $15,491***. Certain of these securities may have been sold prior to period end and are included in receivable for investment securities sold on the Statement of Assets and Liabilities.
(1) The Fund lends securities in its portfolio pursuant to a securities lending agreement ("Lending Agreement") with Morgan Stanley. Unless otherwise agreed, security loans made pursuant to the Lending Agreement are required at all times to be secured by collateral equal to at least 100% of the market value of the securities loaned. Cash collateral received is invested pursuant to the terms of the Lending Agreement in the BlackRock TempCash Fund, Institutional Shares, a money market fund. All such investments are made at the risk of the Fund. As such, the Fund is liable for investment losses. The Fund receives an annual fee for its participation in the Lending Agreement based on projected lending activity. A partial position of this security was purchased with cash collateral received from securities lending. The total value of such security at September 30, 2011 was $16,421.***
ADR — American Depositary Receipt
Cl — Class
The accompanying notes are an integral part of the financial statements.
40 TURNER FUNDS 2011 ANNUAL REPORT
Schedule of investments
Turner Large Growth Fund
September 30, 2011
| Shares | Value (000) | ||||||||||
| Common stock—97.8%† | |||||||||||
| Consumer discretionary—17.2% | |||||||||||
| Amazon.com* | 69,090 | $ | 14,939 | ||||||||
| Bed Bath & Beyond* | 85,700 | 4,911 | |||||||||
| Chipotle Mexican Grill* | 17,340 | 5,253 | |||||||||
| Coach | 113,210 | 5,868 | |||||||||
| Comcast, Cl A | 361,220 | 7,550 | |||||||||
| Las Vegas Sands* | 304,910 | 11,690 | |||||||||
| Lululemon Athletica*# | 54,310 | 2,642 | |||||||||
| Priceline.com* | 11,770 | 5,290 | |||||||||
| Ralph Lauren | 21,990 | 2,852 | |||||||||
| Starbucks | 178,530 | 6,657 | |||||||||
| Starwood Hotels & Resorts Worldwide | 90,630 | 3,518 | |||||||||
| Tempur-Pedic International* | 53,440 | 2,812 | |||||||||
| TRW Automotive Holdings* | 51,070 | 1,672 | |||||||||
| Total Consumer discretionary | 75,654 | ||||||||||
| Consumer staples—9.2% | |||||||||||
| Coca-Cola | 232,660 | 15,718 | |||||||||
| Estee Lauder, Cl A | 35,660 | 3,132 | |||||||||
| Green Mountain Coffee Roasters* | 26,670 | 2,479 | |||||||||
| Hansen Natural* | 18,230 | 1,591 | |||||||||
| Hershey | 91,400 | 5,415 | |||||||||
| Mead Johnson Nutrition, Cl A | 123,190 | 8,479 | |||||||||
| Whole Foods Market | 57,649 | 3,765 | |||||||||
| Total Consumer staples | 40,579 | ||||||||||
| Energy—6.9% | |||||||||||
| Anadarko Petroleum | 149,100 | 9,401 | |||||||||
| Cabot Oil & Gas | 59,200 | 3,665 | |||||||||
| Cameron International* | 70,920 | 2,946 | |||||||||
| Concho Resources* | 80,250 | 5,709 | |||||||||
| Schlumberger | 139,630 | 8,340 | |||||||||
| Total Energy | 30,061 | ||||||||||
| Financials—2.8% | |||||||||||
| Affiliated Managers Group* | 72,680 | 5,673 | |||||||||
| AvalonBay Communities | 26,610 | 3,035 | |||||||||
| MSCI, Cl A* | 111,850 | 3,392 | |||||||||
| Total Financials | 12,100 | ||||||||||
| Shares | Value (000) | ||||||||||
| Health care—12.4% | |||||||||||
| Aetna | 131,580 | $ | 4,783 | ||||||||
| Alexion Pharmaceuticals* | 59,350 | 3,802 | |||||||||
| Allergan | 74,700 | 6,154 | |||||||||
| Baxter International | 56,161 | 3,153 | |||||||||
| Celgene* | 102,810 | 6,366 | |||||||||
| Cerner* | 63,420 | 4,346 | |||||||||
| Cooper | 46,360 | 3,669 | |||||||||
| Covidien | 160,280 | 7,068 | |||||||||
| Shire ADR | 93,890 | 8,819 | |||||||||
| Watson Pharmaceuticals* | 94,800 | 6,470 | |||||||||
| Total Health care | 54,630 | ||||||||||
| Industrials—8.2% | |||||||||||
| AMETEK | 65,455 | 2,158 | |||||||||
| Boeing | 125,810 | 7,613 | |||||||||
| Caterpillar | 84,700 | 6,254 | |||||||||
| Cummins | 74,720 | 6,102 | |||||||||
| Precision Castparts | 31,560 | 4,906 | |||||||||
| Union Pacific | 74,510 | 6,085 | |||||||||
| United Continental Holdings* | 154,770 | 3,000 | |||||||||
| Total Industrials | 36,118 | ||||||||||
| Information-technology—38.0% | |||||||||||
| Acme Packet* | 76,170 | 3,244 | |||||||||
| Altera | 151,720 | 4,784 | |||||||||
| Apple* | 105,820 | 40,336 | |||||||||
| ARM Holdings | 191,430 | 4,881 | |||||||||
| ASML Holding, NY Shares | 159,477 | 5,508 | |||||||||
| Broadcom, Cl A | 177,430 | 5,907 | |||||||||
| Cypress Semiconductor | 115,140 | 1,724 | |||||||||
| eBay* | 458,590 | 13,524 | |||||||||
| F5 Networks* | 37,390 | 2,657 | |||||||||
| Finisar* | 90,000 | 1,579 | |||||||||
| Fortinet* | 88,799 | 1,492 | |||||||||
| Google, Cl A* | 18,710 | 9,624 | |||||||||
| International Business Machines | 134,260 | 23,499 | |||||||||
| MasterCard, Cl A | 32,780 | 10,396 | |||||||||
| QLIK Technologies* | 71,411 | 1,547 | |||||||||
| Qualcomm | 341,320 | 16,598 | |||||||||
| Salesforce.com* | 50,530 | 5,775 | |||||||||
| SanDisk* | 90,330 | 3,645 | |||||||||
| VeriFone Systems* | 149,410 | 5,232 | |||||||||
| VMware, Cl A* | 58,890 | 4,734 | |||||||||
| Total Information-technology | 166,686 | ||||||||||
TURNER FUNDS 2011 ANNUAL REPORT 41
FINANCIAL STATEMENTS
Schedule of investments
Turner Large Growth Fund
| Shares | Value (000) | ||||||||||
| Materials—2.1% | |||||||||||
| Goldcorp | 142,470 | $ | 6,502 | ||||||||
| Mosaic | 56,130 | 2,749 | |||||||||
| Total Materials | 9,251 | ||||||||||
| Utilities—1.0% | |||||||||||
| EQT | 81,930 | 4,372 | |||||||||
| Total Utilities | 4,372 | ||||||||||
| Total Common stock (Cost $403,385) | 429,451 | ||||||||||
| Cash equivalent—3.5% | |||||||||||
| BlackRock TempCash Fund, Institutional Shares, 0.010%**(1) | 15,176,023 | 15,176 | |||||||||
| Total Cash equivalent (Cost $15,176) | 15,176 | ||||||||||
| Total Investments—101.3% (Cost $418,561) | $ | 444,627 | |||||||||
As of September 30, 2011 all of the Fund's investments were considered Level 1. Please see Note 2 in Notes to Financal Statements for further information regarding fair value measurements.
Percentages are based on Net Assets of $438,997.***
* Non-income producing security.
** Rate shown is the 7-day effective yield as of September 30, 2011.
*** This number is listed in thousands.
† More narrow industries are utilized for compliance purposes, whereas broad sectors are utilized for reporting purposes.
# Security fully or partially on loan at September 30, 2011. The total value of securities on loan at September 30, 2011 was $2,642***. Certain of these securities may have been sold prior to period end and are included in receivable for investment securities sold on the Statement of Assets and Liabilities.
(1) The Fund lends securities in its portfolio pursuant to a securities lending agreement ("Lending Agreement") with Morgan Stanley. Unless otherwise agreed, security loans made pursuant to the Lending Agreement are required at all times to be secured by collateral equal to at least 100% of the market value of the securities loaned. Cash collateral received is invested pursuant to the terms of the Lending Agreement in the BlackRock TempCash Fund, Institutional Shares, a money market fund. All such investments are made at the risk of the Fund. As such, the Fund is liable for investment losses. The Fund receives an annual fee for its participation in the Lending Agreement based on projected lending activity. A partial position of this security was purchased with cash collateral received from securities lending. The total value of such security at September 30, 2011 was $2,875.***
ADR — American Depositary Receipt
Cl — Class
NY — New York
The accompanying notes are an integral part of the financial statements.
42 TURNER FUNDS 2011 ANNUAL REPORT
Schedule of investments
Turner Midcap Growth Fund
September 30, 2011
| Shares | Value (000) | ||||||||||
| Common stock—100.3% | |||||||||||
| Consumer discretionary—20.9% | |||||||||||
| Abercrombie & Fitch, Cl A | 163,810 | $ | 10,084 | ||||||||
| Arcos Dorados Holdings, Cl A# | 229,630 | 5,325 | |||||||||
| Bed Bath & Beyond* | 213,960 | 12,262 | |||||||||
| BorgWarner*# | 141,240 | 8,549 | |||||||||
| Chipotle Mexican Grill* | 30,780 | 9,325 | |||||||||
| Coach | 159,790 | 8,282 | |||||||||
| Deckers Outdoor* | 88,860 | 8,287 | |||||||||
| Expedia | 305,510 | 7,867 | |||||||||
| Harley-Davidson | 197,630 | 6,785 | |||||||||
| Lululemon Athletica*# | 115,300 | 5,609 | |||||||||
| MGM Resorts International*# | 557,380 | 5,178 | |||||||||
| Nordstrom | 321,830 | 14,701 | |||||||||
| Penn National Gaming* | 183,310 | 6,102 | |||||||||
| Stanley Black & Decker | 115,768 | 5,684 | |||||||||
| Starwood Hotels & Resorts Worldwide | 295,900 | 11,487 | |||||||||
| Tempur-Pedic International* | 164,370 | 8,648 | |||||||||
| Under Armour, Cl A*# | 87,986 | 5,843 | |||||||||
| Wynn Resorts | 93,705 | 10,784 | |||||||||
| Total Consumer discretionary | 150,802 | ||||||||||
| Consumer staples—9.2% | |||||||||||
| Dr. Pepper Snapple Group | 214,130 | 8,304 | |||||||||
| Green Mountain Coffee Roasters*# | 138,310 | 12,854 | |||||||||
| Hansen Natural* | 105,912 | 9,245 | |||||||||
| Hershey | 172,520 | 10,220 | |||||||||
| Mead Johnson Nutrition, Cl A | 153,140 | 10,541 | |||||||||
| Whole Foods Market# | 228,680 | 14,935 | |||||||||
| Total Consumer staples | 66,099 | ||||||||||
| Energy—8.7% | |||||||||||
| Cabot Oil & Gas | 111,720 | 6,916 | |||||||||
| Cameron International* | 262,341 | 10,898 | |||||||||
| Concho Resources* | 149,138 | 10,610 | |||||||||
| El Paso | 444,290 | 7,766 | |||||||||
| Peabody Energy | 202,470 | 6,860 | |||||||||
| QEP Resources | 198,836 | 5,382 | |||||||||
| Rowan* | 237,350 | 7,166 | |||||||||
| SM Energy | 116,140 | 7,044 | |||||||||
| Total Energy | 62,642 | ||||||||||
| Shares | Value (000) | ||||||||||
| Financials—6.0% | |||||||||||
| Affiliated Managers Group* | 113,000 | $ | 8,820 | ||||||||
| AON | 166,350 | 6,984 | |||||||||
| Boston Properties | 70,410 | 6,274 | |||||||||
| MSCI, Cl A* | 141,390 | 4,288 | |||||||||
| Signature Bank* | 143,460 | 6,847 | |||||||||
| Western Union | 681,570 | 10,421 | |||||||||
| Total Financials | 43,634 | ||||||||||
| Health care—14.8% | |||||||||||
| Alexion Pharmaceuticals*# | 200,544 | 12,847 | |||||||||
| AmerisourceBergen, Cl A | 250,228 | 9,326 | |||||||||
| Catalyst Health Solutions* | 71,890 | 4,147 | |||||||||
| Cepheid* | 123,180 | 4,783 | |||||||||
| Cerner* | 151,750 | 10,398 | |||||||||
| Cooper | 72,849 | 5,766 | |||||||||
| Edwards Lifesciences* | 68,310 | 4,869 | |||||||||
| Intuitive Surgical* | 23,212 | 8,456 | |||||||||
| Medicis Pharmaceutical, Cl A | 137,530 | 5,017 | |||||||||
| Onyx Pharmaceuticals* | 141,786 | 4,255 | |||||||||
| Perrigo | 123,150 | 11,959 | |||||||||
| Pharmasset* | 33,100 | 2,727 | |||||||||
| Quality Systems# | 40,250 | 3,904 | |||||||||
| SXC Health Solutions* | 100,500 | 5,598 | |||||||||
| Watson Pharmaceuticals* | 188,060 | 12,835 | |||||||||
| Total Health care | 106,887 | ||||||||||
| Industrials—11.6% | |||||||||||
| AGCO* | 113,000 | 3,906 | |||||||||
| Clean Harbors* | 72,320 | 3,710 | |||||||||
| Cummins | 118,280 | 9,659 | |||||||||
| Expeditors International of Washington | 213,129 | 8,642 | |||||||||
| Hexcel* | 165,850 | 3,675 | |||||||||
| Joy Global | 163,142 | 10,177 | |||||||||
| Kansas City Southern* | 74,860 | 3,740 | |||||||||
| Kirby* | 72,490 | 3,816 | |||||||||
| Owens Corning* | 201,511 | 4,369 | |||||||||
| Parker Hannifin | 76,330 | 4,819 | |||||||||
| Rockwell Automation | 134,151 | 7,512 | |||||||||
| Triumph Group | 167,540 | 8,166 | |||||||||
| United Continental Holdings*# | 596,085 | 11,552 | |||||||||
| Total Industrials | 83,743 | ||||||||||
TURNER FUNDS 2011 ANNUAL REPORT 43
FINANCIAL STATEMENTS
Schedule of investments
Turner Midcap Growth Fund
| Shares | Value (000) | ||||||||||
| Information-technology—22.3% | |||||||||||
| Acme Packet* | 147,690 | $ | 6,290 | ||||||||
| Altera | 334,850 | 10,558 | |||||||||
| Avago Technologies | 340,020 | 11,143 | |||||||||
| Broadcom, Cl A | 482,771 | 16,072 | |||||||||
| Citrix Systems* | 151,210 | 8,246 | |||||||||
| Cypress Semiconductor | 581,180 | 8,700 | |||||||||
| Electronic Arts* | 492,120 | 10,064 | |||||||||
| F5 Networks* | 146,474 | 10,407 | |||||||||
| Fortinet* | 210,260 | 3,532 | |||||||||
| Lam Research* | 239,935 | 9,113 | |||||||||
| OmniVision Technologies* | 249,590 | 3,504 | |||||||||
| OpenTable* | 77,100 | 3,547 | |||||||||
| Salesforce.com* | 79,360 | 9,069 | |||||||||
| SanDisk* | 262,320 | 10,585 | |||||||||
| SINA* | 88,797 | 6,359 | |||||||||
| SuccessFactors*# | 460,120 | 10,578 | |||||||||
| Teradata* | 163,580 | 8,756 | |||||||||
| TIBCO Software* | 307,630 | 6,888 | |||||||||
| VeriFone Systems* | 202,668 | 7,097 | |||||||||
| Total Information-technology | 160,508 | ||||||||||
| Materials—6.2% | |||||||||||
| Airgas | 113,240 | 7,227 | |||||||||
| Albemarle | 52,777 | 2,132 | |||||||||
| CF Industries Holdings | 60,200 | 7,428 | |||||||||
| Cliffs Natural Resources | 116,365 | 5,954 | |||||||||
| Crown Holdings* | 166,080 | 5,084 | |||||||||
| FMC | 87,220 | 6,032 | |||||||||
| PPG Industries | 107,070 | 7,566 | |||||||||
| Silver Wheaton | 107,020 | 3,152 | |||||||||
| Total Materials | 44,575 | ||||||||||
| Telecommunication services—0.6% | |||||||||||
| NII Holdings* | 159,570 | 4,300 | |||||||||
| Total Telecommunication services | 4,300 | ||||||||||
| Total Common stock (Cost $655,990) | 723,190 | ||||||||||
| Shares | Value (000) | ||||||||||
| Cash equivalent—9.0% | |||||||||||
| BlackRock TempCash Fund, Institutional Shares, 0.010%**(1) | 64,824,075 | $ | 64,824 | ||||||||
| Total Cash equivalent (Cost $64,824) | 64,824 | ||||||||||
| Total Investments—109.3% (Cost $720,814) | $ | 788,014 | |||||||||
As of September 30, 2011 all of the Fund's investments were considered Level 1. Please see Note 2 in Notes to the Financial Statements for further information regarding fair value measurements.
Percentages are based on Net Assets of $720,738.***
* Non-income producing security.
** Rate shown is the 7-day effective yield as of September 30, 2011.
*** This number is listed in thousands.
# Security fully or partially on loan at September 30, 2011. The total value of securities on loan at September 30, 2011 was $61,219***. Certain of these securities may have been sold prior to period end and are included in receivable for investment securities sold on the Statement of Assets and Liabilities.
(1) The Fund lends securities in its portfolio pursuant to a securities lending agreement ("Lending Agreement") with Morgan Stanley. Unless otherwise agreed, security loans made pursuant to the Lending Agreement are required at all times to be secured by collateral equal to at least 100% of the market value of the securities loaned. Cash collateral received is invested pursuant to the terms of the Lending Agreement in the BlackRock TempCash Fund, Institutional Shares, a money market fund. All such investments are made at the risk of the Fund. As such, the Fund is liable for investment losses. The Fund receives an annual fee for its participation in the Lending Agreement based on projected lending activity. This security was purchased with cash collateral received from securities lending. The total value of such security at September 30, 2011 was $64,824.***
Cl — Class
The accompanying notes are an integral part of the financial statements.
44 TURNER FUNDS 2011 ANNUAL REPORT
Schedule of investments
Turner Small Cap Growth Fund
September 30, 2011
| Shares | Value (000) | ||||||||||
| Common stock—98.6% | |||||||||||
| Consumer discretionary—15.8% | |||||||||||
| BJ's Restaurants* | 38,720 | $ | 1,708 | ||||||||
| Bravo Brio Restaurant Group* | 82,140 | 1,367 | |||||||||
| Brunswick# | 114,900 | 1,613 | |||||||||
| Crocs* | 101,090 | 2,393 | |||||||||
| DSW, Cl A | 47,140 | 2,177 | |||||||||
| Express | 57,490 | 1,166 | |||||||||
| Finish Line, Cl A | 168,330 | 3,365 | |||||||||
| Gaylord Entertainment*# | 93,616 | 1,810 | |||||||||
| GNC Acquisition Holdings, Cl A* | 64,180 | 1,291 | |||||||||
| Meritage Homes* | 120,260 | 1,821 | |||||||||
| Polaris Industries | 29,740 | 1,486 | |||||||||
| Saks*# | 214,580 | 1,877 | |||||||||
| Scientific Games, Cl A* | 293,510 | 2,090 | |||||||||
| Sonic Automotive, Cl A# | 166,610 | 1,798 | |||||||||
| Sotheby's | 80,991 | 2,233 | |||||||||
| Steven Madden* | 76,605 | 2,306 | |||||||||
| Tenneco* | 73,690 | 1,887 | |||||||||
| True Religion Apparel* | 79,250 | 2,137 | |||||||||
| Wet Seal, Cl A* | 399,810 | 1,791 | |||||||||
| Total Consumer discretionary | 36,316 | ||||||||||
| Consumer staples—2.0% | |||||||||||
| Hain Celestial Group*# | 71,680 | 2,190 | |||||||||
| United Natural Foods* | 66,163 | 2,450 | |||||||||
| Total Consumer staples | 4,640 | ||||||||||
| Energy—7.1% | |||||||||||
| Carrizo Oil & Gas* | 78,970 | 1,702 | |||||||||
| CVR Energy* | 64,840 | 1,371 | |||||||||
| Dril-Quip* | 41,160 | 2,219 | |||||||||
| Energy XXI (Bermuda)* | 88,430 | 1,897 | |||||||||
| Gulfport Energy* | 99,610 | 2,409 | |||||||||
| Key Energy Services* | 141,987 | 1,347 | |||||||||
| Northern Oil & Gas* | 135,460 | 2,626 | |||||||||
| Patriot Coal*# | 107,660 | 911 | |||||||||
| Swift Energy* | 72,590 | 1,767 | |||||||||
| Total Energy | 16,249 | ||||||||||
| Financials—8.8% | |||||||||||
| Bank of the Ozarks# | 79,680 | 1,668 | |||||||||
| DFC Global* | 86,510 | 1,890 | |||||||||
| Endurance Specialty Holdings | 46,130 | 1,575 | |||||||||
| Extra Space Storage | 87,300 | 1,626 | |||||||||
| Shares | Value (000) | ||||||||||
| Knight Capital Group, CI A* | 172,425 | $ | 2,097 | ||||||||
| LaSalle Hotel Properties | 107,750 | 2,069 | |||||||||
| MarketAxess Holdings | 27,960 | 727 | |||||||||
| Ocwen Financial* | 68,424 | 904 | |||||||||
| Oritani Financial | 101,860 | 1,310 | |||||||||
| Signature Bank* | 34,420 | 1,643 | |||||||||
| Strategic Hotel & Resorts* | 305,550 | 1,317 | |||||||||
| Tanger Factory Outlet Centers | 68,650 | 1,786 | |||||||||
| Texas Capital Bancshares* | 72,910 | 1,666 | |||||||||
| Total Financials | 20,278 | ||||||||||
| Health care—19.9% | |||||||||||
| ARIAD Pharmaceuticals*# | 165,370 | 1,454 | |||||||||
| Catalyst Health Solutions* | 42,590 | 2,457 | |||||||||
| Cepheid* | 87,450 | 3,396 | |||||||||
| Chemed | 42,160 | 2,317 | |||||||||
| Cubist Pharmaceuticals* | 59,560 | 2,104 | |||||||||
| HealthSouth* | 72,780 | 1,087 | |||||||||
| HealthSpring* | 83,910 | 3,059 | |||||||||
| HMS Holdings* | 87,310 | 2,129 | |||||||||
| Impax Laboratories* | 105,355 | 1,887 | |||||||||
| Incyte*# | 137,500 | 1,921 | |||||||||
| Ironwood Pharmaceuticals* | 79,610 | 860 | |||||||||
| Medicis Pharmaceutical, Cl A | 67,720 | 2,470 | |||||||||
| Medivation* | 47,610 | 808 | |||||||||
| MEDNAX* | 24,080 | 1,508 | |||||||||
| NPS Pharmaceuticals* | 160,150 | 1,043 | |||||||||
| NuVasive*# | 35,262 | 602 | |||||||||
| NxStage Medical* | 12,784 | 267 | |||||||||
| Onyx Pharmaceuticals* | 89,170 | 2,676 | |||||||||
| Optimer Pharmaceuticals*# | 48,380 | 670 | |||||||||
| PSS World Medical*# | 56,850 | 1,119 | |||||||||
| Quality Systems# | 28,550 | 2,769 | |||||||||
| Questcor Pharmaceuticals* | 76,690 | 2,091 | |||||||||
| Salix Pharmaceuticals* | 50,150 | 1,484 | |||||||||
| Sirona Dental Systems* | 41,240 | 1,749 | |||||||||
| Targacept* | 44,730 | 671 | |||||||||
| Volcano*# | 60,810 | 1,802 | |||||||||
| WellCare Health Plans* | 37,440 | 1,422 | |||||||||
| Total Health care | 45,822 | ||||||||||
| Industrials—17.8% | |||||||||||
| Actuant, Cl A | 121,160 | 2,393 | |||||||||
| Alaska Air Group* | 43,590 | 2,454 | |||||||||
| Avis Budget Group* | 193,760 | 1,874 | |||||||||
TURNER FUNDS 2011 ANNUAL REPORT 45
FINANCIAL STATEMENTS
Schedule of investments
Turner Small Cap Growth Fund
| Shares | Value (000) | ||||||||||
| Belden | 74,950 | $ | 1,933 | ||||||||
| Chart Industries* | 28,820 | 1,215 | |||||||||
| Clean Harbors* | 58,940 | 3,024 | |||||||||
| Copa Holdings, Cl A | 38,770 | 2,375 | |||||||||
| Genesee & Wyoming, Cl A* | 58,860 | 2,738 | |||||||||
| GrafTech International*# | 197,340 | 2,506 | |||||||||
| Herman Miller | 59,550 | 1,064 | |||||||||
| Hexcel*# | 121,600 | 2,695 | |||||||||
| Hub Group, Cl A* | 80,670 | 2,280 | |||||||||
| Polypore International* | 44,357 | 2,507 | |||||||||
| Robbins & Myers | 41,695 | 1,447 | |||||||||
| Titan International# | 100,290 | 1,504 | |||||||||
| Triumph Group | 38,970 | 1,899 | |||||||||
| TrueBlue* | 179,582 | 2,035 | |||||||||
| WESCO International* | 67,330 | 2,259 | |||||||||
| Woodward | 96,131 | 2,634 | |||||||||
| Total Industrials | 40,836 | ||||||||||
| Information-technology—24.0% | |||||||||||
| ADTRAN | 82,150 | 2,174 | |||||||||
| Ancestry.com* | 47,890 | 1,125 | |||||||||
| Anixter International | 49,690 | 2,357 | |||||||||
| Ariba* | 54,890 | 1,521 | |||||||||
| BroadSoft* | 62,905 | 1,909 | |||||||||
| Cavium*# | 96,890 | 2,617 | |||||||||
| CEVA*# | 73,344 | 1,783 | |||||||||
| Cirrus Logic*# | 159,070 | 2,345 | |||||||||
| Concur Technologies*# | 45,300 | 1,686 | |||||||||
| Fairchild Semiconductor International* | 104,730 | 1,131 | |||||||||
| Finisar* | 107,630 | 1,888 | |||||||||
| Heartland Payment Systems | 88,963 | 1,754 | |||||||||
| InterDigital# | 23,420 | 1,091 | |||||||||
| j2 Global Communications | 53,660 | 1,443 | |||||||||
| Jack Henry & Associates | 71,430 | 2,070 | |||||||||
| NETGEAR* | 80,580 | 2,086 | |||||||||
| NetQin Mobile ADR* | 39,271 | 150 | |||||||||
| OmniVision Technologies* | 88,650 | 1,245 | |||||||||
| OpenTable* | 24,450 | 1,125 | |||||||||
| Plexus* | 52,950 | 1,198 | |||||||||
| Power Integrations | 47,620 | 1,458 | |||||||||
| QLIK Technologies*# | 103,791 | 2,248 | |||||||||
| RightNow Technologies* | 58,951 | 1,948 | |||||||||
| Sapient | 232,570 | 2,358 | |||||||||
| Semtech* | 83,000 | 1,751 | |||||||||
| Shares | Value (000) | ||||||||||
| SuccessFactors*# | 133,090 | $ | 3,060 | ||||||||
| Synchronoss Technologies*# | 78,080 | 1,945 | |||||||||
| Taleo, Cl A* | 114,870 | 2,955 | |||||||||
| Teradyne*# | 148,610 | 1,636 | |||||||||
| Ultratech* | 79,970 | 1,372 | |||||||||
| VeriFone Systems* | 52,795 | 1,849 | |||||||||
| Total Information-technology | 55,278 | ||||||||||
| Materials—2.6% | |||||||||||
| Allied Nevada Gold* | 53,879 | 1,929 | |||||||||
| Louisiana-Pacific*# | 234,140 | 1,194 | |||||||||
| Rock-Tenn, Cl A | 28,931 | 1,408 | |||||||||
| Thompson Creek Metals* | 243,080 | 1,476 | |||||||||
| Total Materials | 6,007 | ||||||||||
| Telecommunication services��0.6% | |||||||||||
| Cogent Communications Group* | 100,410 | 1,351 | |||||||||
| Total Telecommunication services | 1,351 | ||||||||||
| Total Common stock (Cost $232,261) | 226,777 | ||||||||||
| Cash equivalent—18.5% | |||||||||||
| BlackRock TempCash Fund, Institutional Shares, 0.010%**(1) | 42,429,599 | 42,430 | |||||||||
| Total Cash equivalent (Cost $42,430) | 42,430 | ||||||||||
| Total Investments—117.1% (Cost $274,691) | $ | 269,207 | |||||||||
As of September 30, 2011 all of the Fund's investments were considered Level 1. Please see Note 2 in Notes to Financial Statements for further information regarding fair value measurements.
Percentages are based on Net Assets of $229,919.***
* Non-income producing security.
** Rate shown is the 7-day effective yield as of September 30, 2011.
*** This number is listed in thousands.
# Security fully or partially on loan at September 30, 2011. The total value of securities on loan at September 30, 2011 was $35,898***. Certain of these securities may have been sold prior to period end and are included in receivable for investment securities sold on the Statement of Assets and Liabilities.
46 TURNER FUNDS 2011 ANNUAL REPORT
Schedule of investments
Turner Small Cap Growth Fund
(1) The Fund lends securities in its portfolio pursuant to a securities lending agreement ("Lending Agreement") with Morgan Stanley. Unless otherwise agreed, security loans made pursuant to the Lending Agreement are required at all times to be secured by collateral equal to at least 100% of the market value of the securities loaned. Cash collateral received is invested pursuant to the terms of the Lending Agreement in the BlackRock TempCash Fund, Institutional Shares, a money market fund. All such investments are made at the risk of the Fund. As such, the Fund is liable for investment losses. The Fund receives an annual fee for its participation in the Lending Agreement based on projected lending activity. A partial position of this security was purchased with cash collateral received from securities lending. The total value of such security at September 30, 2011 was $38,178.***
ADR — American Depositary Receipt
Cl — Class
The accompanying notes are an integral part of the financial statements.
TURNER FUNDS 2011 ANNUAL REPORT 47
FINANCIAL STATEMENTS
Schedule of investments
Turner Global Opportunities Fund
September 30, 2011
| Shares | Value (000) | ||||||||||
| Common stock—97.4%† | |||||||||||
| Consumer discretionary—17.7% | |||||||||||
| Amazon.com* | 200 | $ | 43 | ||||||||
| Arcos Dorados Holdings, Cl A | 2,280 | 53 | |||||||||
| Las Vegas Sands* | 1,560 | 60 | |||||||||
| Lululemon Athletica* | 940 | 45 | |||||||||
| LVMH Moet Hennessy Louis Vuitton^ | 339 | 45 | |||||||||
| Total Consumer discretionary | 246 | ||||||||||
| Consumer staples—9.9% | |||||||||||
| Green Mountain Coffee Roasters* | 350 | 33 | |||||||||
| Remy Cointreau^ | 820 | 56 | |||||||||
| Whole Foods Market | 740 | 48 | |||||||||
| Total Consumer staples | 137 | ||||||||||
| Energy—2.1% | |||||||||||
| Cameron International* | 700 | 29 | |||||||||
| Total Energy | 29 | ||||||||||
| Financials—8.1% | |||||||||||
| AIA Group^ | 20,594 | 58 | |||||||||
| DBS Group Holdings^ | 6,100 | 55 | |||||||||
| Total Financials | 113 | ||||||||||
| Health care—10.3% | |||||||||||
| Alexion Pharmaceuticals* | 1,200 | 77 | |||||||||
| Shire ADR^ | 2,130 | 66 | |||||||||
| Total Health care | 143 | ||||||||||
| Industrials—6.0% | |||||||||||
| Caterpillar | 480 | 36 | |||||||||
| FANUC^ | 350 | 48 | |||||||||
| Total Industrials | 84 | ||||||||||
| Information-technology—40.6% | |||||||||||
| Acme Packet* | 650 | 28 | |||||||||
| Apple* | 220 | 84 | |||||||||
| ARM Holdings | 1,900 | 48 | |||||||||
| ASML Holding, NY Shares | 1,430 | 49 | |||||||||
| Baidu SP ADR* | 480 | 51 | |||||||||
| Broadcom, Cl A | 1,590 | 53 | |||||||||
| F5 Networks* | 670 | 48 | |||||||||
| Imagination Technologies Group*^ | 8,610 | 56 | |||||||||
| Qualcomm | 1,010 | 49 | |||||||||
| Shares | Value (000) | ||||||||||
| Salesforce.com* | 380 | $ | 43 | ||||||||
| SanDisk* | 1,330 | 54 | |||||||||
| Total Information-technology | 563 | ||||||||||
| Materials—2.7% | |||||||||||
| Mosaic | 750 | 37 | |||||||||
| Total Materials | 37 | ||||||||||
| Total Common stock (Cost $1,308) | 1,352 | ||||||||||
| Cash equivalent—3.6% | |||||||||||
| BlackRock TempCash Fund, Institutional Shares, 0.010%** | 49,693 | 50 | |||||||||
| Total Cash equivalent (Cost $50) | 50 | ||||||||||
| Total Investments—101.0% (Cost $1,358) | $ | 1,402 | |||||||||
The following is a summary of inputs used as of September 30, 2011 in valuing the Fund's investments:
| Investments in securities | Level 1 | Level 2 | Level 3 | Total | |||||||||||||||
| Common Stock | $ | 967 | $ | 385 | $ | — | $ | 1,352 | |||||||||||
| Cash equivalent | 50 | — | — | 50 | |||||||||||||||
| Total Investments in securities | $ | 1,017 | $ | 385 | $ | — | $ | 1,402 | |||||||||||
Please see Note 2 in the Notes to Financial Statements for further information regarding fair value measurements.
Percentages are based on Net Assets of $1,388.***
* Non-income producing security.
** Rate shown is the 7-day effective yield as of September 30, 2011.
*** This number is listed in thousands.
† More narrow industries are utilized for compliance purposes, whereas broad sectors are utilized for reporting purposes.
^ Security fair valued using procedures established by the Fair Value Committee for foreign securities due to price movements in the market which exceed established thresholds. As of September 30, 2011 the total market value of these securities was $385***, representing 27.7% of Net Assets.
ADR — American Depositary Receipt
Cl — Class
NY — New York
The accompanying notes are an integral part of the financial statements.
48 TURNER FUNDS 2011 ANNUAL REPORT
Schedule of investments
Turner Global Opportunities Fund
| Country Allocation as of 9/30/11†† | |||||||
| United States | 58.3 | % | |||||
| United Kingdom | 7.4 | ||||||
| France | 7.2 | ||||||
| Jersey | 4.7 | ||||||
| Hong Kong | 4.1 | ||||||
| Singapore | 3.9 | ||||||
| British Virgin Islands | 3.8 | ||||||
| Cayman Islands | 3.7 | ||||||
| Netherlands | 3.5 | ||||||
| Japan | 3.4 | ||||||
| Total | 100.0 | % | |||||
†† Percentages are based on total investments.
TURNER FUNDS 2011 ANNUAL REPORT 49
FINANCIAL STATEMENTS
Schedule of investments
Turner Internatonal Growth Fund
September 30, 2011
| Shares | Value (000) | ||||||||||
| Common stock—97.5% | |||||||||||
| Consumer discretionary—11.0% | |||||||||||
| Arcos Dorados Holdings, Cl A | 3,300 | $ | 76 | ||||||||
| Honda Motor^ | 4,790 | 140 | |||||||||
| Hyundai Motor^ | 870 | 152 | |||||||||
| InterContinental Hotels Group^ | 7,190 | 117 | |||||||||
| Lululemon Athletica* | 3,450 | 168 | |||||||||
| MGM China Holdings* | 61,200 | 81 | |||||||||
| Prada* | 11,900 | 50 | |||||||||
| Rakuten^ | 150 | 175 | |||||||||
| Sands China*^ | 52,054 | 122 | |||||||||
| Swatch Group^ | 346 | 114 | |||||||||
| Total Consumer discretionary | 1,195 | ||||||||||
| Consumer staples—14.4% | |||||||||||
| British American Tobacco^ | 6,250 | 264 | |||||||||
| Compania Cervecerias Unidas | 16,530 | 173 | |||||||||
| Diageo^ | 10,810 | 206 | |||||||||
| FamilyMart^ | 5,710 | 218 | |||||||||
| Nestle^ | 6,033 | 332 | |||||||||
| Remy Cointreau^ | 1,490 | 103 | |||||||||
| SABMiller^ | 5,273 | 172 | |||||||||
| Shoprite Holdings^ | 7,594 | 107 | |||||||||
| Total Consumer staples | 1,575 | ||||||||||
| Energy—5.5% | |||||||||||
| BG Group^ | 9,770 | 187 | |||||||||
| Harum Energy^ | 106,630 | 85 | |||||||||
| Subsea 7*^ | 8,370 | 159 | |||||||||
| Suncor Energy | 6,790 | 174 | |||||||||
| Total Energy | 605 | ||||||||||
| Financials—9.9% | |||||||||||
| AIA Group^ | 42,459 | 120 | |||||||||
| Capital & Counties Properties^ | 57,660 | 151 | |||||||||
| China Construction Bank, H Shares^ | 133,260 | 81 | |||||||||
| DBS Group Holdings^ | 10,910 | 98 | |||||||||
| HDFC Bank ADR | 1,950 | 57 | |||||||||
| HSBC Holdings^ | 32,320 | 247 | |||||||||
| Sberbank of Russia SP ADR*^ | 8,980 | 77 | |||||||||
| Standard Chartered^ | 7,383 | 147 | |||||||||
| UBS*^ | 9,060 | 104 | |||||||||
| Total Financials | 1,082 | ||||||||||
| Shares | Value (000) | ||||||||||
| Health care—7.7% | |||||||||||
| Covidien | 2,740 | $ | 121 | ||||||||
| Roche Holding^ | 1,930 | 311 | |||||||||
| Shire ADR^ | 7,150 | 223 | |||||||||
| SXC Health Solutions* | 3,230 | 180 | |||||||||
| Total Health care | 835 | ||||||||||
| Industrials—14.8% | |||||||||||
| Canadian National Railway | 2,669 | 178 | |||||||||
| Copa Holdings, Cl A | 2,570 | 157 | |||||||||
| Experian^ | 16,364 | 184 | |||||||||
| FANUC^ | 1,000 | 138 | |||||||||
| GEA Group^ | 7,390 | 172 | |||||||||
| Komatsu^ | 6,190 | 134 | |||||||||
| Safran^ | 5,330 | 163 | |||||||||
| Siemens^ | 1,160 | 104 | |||||||||
| United Tractors^ | 55,360 | 137 | |||||||||
| Volvo, B Shares^ | 10,150 | 100 | |||||||||
| Wolseley^ | 6,077 | 151 | |||||||||
| Total Industrials | 1,618 | ||||||||||
| Information-technology—13.7% | |||||||||||
| ARM Holdings^ | 23,270 | 199 | |||||||||
| ASML Holding^ | 5,870 | 203 | |||||||||
| Avago Technologies | 5,000 | 164 | |||||||||
| Canon^ | 3,620 | 164 | |||||||||
| Imagination Technologies Group*^ | 41,480 | 268 | |||||||||
| Omron^ | 7,100 | 140 | |||||||||
| Samsung Electronics^ | 240 | 168 | |||||||||
| SAP^ | 3,840 | 195 | |||||||||
| Total Information-technology | 1,501 | ||||||||||
| Materials—17.6% | |||||||||||
| Air Liquide^ | 1,749 | 204 | |||||||||
| BHP Billiton PLC^ | 4,570 | 122 | |||||||||
| BHP Billiton, Ltd.^ | 7,060 | 234 | |||||||||
| Christian Hansen Holding^ | 8,640 | 179 | |||||||||
| Goldcorp | 4,130 | 189 | |||||||||
| Linde^ | 1,000 | 134 | |||||||||
| Mexichem SAB de CV | 24,500 | 74 | |||||||||
| Phosagro OAO GDR Registered* | 6,530 | 78 | |||||||||
| Potash Corp. of Saskatchewan | 2,862 | 124 | |||||||||
| Rexam^ | 22,830 | 110 | |||||||||
| Rio Tinto, Ltd.^ | 1,650 | 97 | |||||||||
| Rio Tinto PLC^ | 3,140 | 139 | |||||||||
50 TURNER FUNDS 2011 ANNUAL REPORT
Schedule of investments
Turner Internatonal Growth Fund
| Shares | Value (000) | ||||||||||
| Silver Wheaton | 3,490 | $ | 103 | ||||||||
| YAMATO KOGYO^ | 5,030 | 132 | |||||||||
| Total Materials | 1,919 | ||||||||||
| Telecommunication services—1.4% | |||||||||||
| Tim Participacoes | 34,005 | 157 | |||||||||
| Total Telecommunication services | 157 | ||||||||||
| Utilities—1.5% | |||||||||||
| Empresa Nacional de Electricidad | 113,170 | 164 | |||||||||
| Total Utilities | 164 | ||||||||||
| Total Common stock (Cost $11,955) | 10,651 | ||||||||||
| Cash equivalent—1.1% | |||||||||||
| BlackRock TempCash Fund, Institutional Shares, 0.010%** | 124,296 | 124 | |||||||||
| Total Cash equivalent (Cost $124) | 124 | ||||||||||
| Total Investments—98.6% (Cost $12,079) | $ | 10,775 | |||||||||
The following is a summary of inputs used as of September 30, 2011 in valuing the Fund's investments:
| Investments in securities | Level 1 | Level 2 | Level 3 | Total | |||||||||||||||
| Common Stock | $ | 2,469 | $ | 8,182 | $ | — | $ | 10,651 | |||||||||||
| Cash equivalent | 124 | — | — | 124 | |||||||||||||||
| Total Investments in securities | $ | 2,593 | $ | 8,182 | $ | — | $ | 10,775 | |||||||||||
Please see Note 2 in the Notes to Financial Statements for further information regarding fair value measurements.
Percentages are based on Net Assets of $10,924.***
* Non-income producing security.
** Rate shown is the 7-day effective yield as of September 30, 2011.
*** This number is listed in thousands.
^ Security fair valued using procedures established by the Fair Value Committee for foreign securities due to price movements in the market which exceed established thresholds. As of September 30, 2011 the total market value of these securities was $8,182***, representing 74.9% of Net Assets.
ADR — American Depositary Receipt
Cl — Class
GDR — Global Depository Receipt
The accompanying notes are an integral part of the financial statements.
| Country Allocation as of 9/30/11† | |||||||
| United Kingdom | 21.6 | % | |||||
| Japan | 11.5 | ||||||
| Canada | 8.8 | ||||||
| Switzerland | 8.0 | ||||||
| Germany | 5.6 | ||||||
| Jersey | 5.2 | ||||||
| France | 4.4 | ||||||
| Chile | 3.1 | ||||||
| Australia | 3.1 | ||||||
| Republic of Korea (South) | 3.0 | ||||||
| United States | 2.7 | ||||||
| Singapore | 2.4 | ||||||
| Indonesia | 2.1 | ||||||
| Cayman Islands | 1.9 | ||||||
| Netherlands | 1.9 | ||||||
| Denmark | 1.7 | ||||||
| Luxembourg | 1.5 | ||||||
| Panama | 1.5 | ||||||
| Brazil | 1.4 | ||||||
| Russian Federation | 1.4 | ||||||
| Ireland (Republic of) | 1.1 | ||||||
| Hong Kong | 1.1 | ||||||
| South Africa | 1.0 | ||||||
| Sweden | 0.9 | ||||||
| China | 0.7 | ||||||
| British Virgin Islands | 0.7 | ||||||
| Mexico | 0.7 | ||||||
| India | 0.5 | ||||||
| Italy | 0.5 | ||||||
| Total | 100.0 | % | |||||
† Percentages are based on total investments.
TURNER FUNDS 2011 ANNUAL REPORT 51
FINANCIAL STATEMENTS
Statements of assets and liabilities (000)
September 30, 2011
| Turner Market Neutral Fund | Turner Medical Sciences Long/Short Fund | Turner Spectrum Fund | |||||||||||||
| Assets: | |||||||||||||||
| Investment securities, at cost | $ | 9,907 | $ | 47,811 | $ | 476,669 | |||||||||
| Investment securities, at value | $ | 9,574 | $ | 47,612 | $ | 459,510 | |||||||||
| Deposits with brokers for securities sold short | 11,376 | 26,090 | 329,212 | ||||||||||||
| Deposits with brokers for options | — | — | 75,500 | ||||||||||||
| Foreign currency, at value | — | — | 23 | ||||||||||||
| Receivable for investment securities sold | 5,158 | 7,010 | 160,914 | ||||||||||||
| Receivable for capital shares sold | 28 | 515 | 3,705 | ||||||||||||
| Prepaid expenses | 46 | 61 | 516 | ||||||||||||
| Receivable for dividend income | 7 | 11 | 141 | ||||||||||||
| Reclaim receivable | — | — | 12 | ||||||||||||
| Total assets | 26,189 | 81,299 | 1,029,533 | ||||||||||||
| Liabilities: | |||||||||||||||
| Securities sold short, proceeds | 9,300 | 16,066 | 307,343 | ||||||||||||
| Securities sold short, at value | 8,760 | 15,111 | 282,625 | ||||||||||||
| Cash overdraft | 1 | 1 | — | ||||||||||||
| Payable for investment securities purchased | 5,475 | 5,970 | 120,733 | ||||||||||||
| Obligation to return securities lending collateral | — | — | — | ||||||||||||
| Payable for capital shares redeemed | — | 29 | 2,689 | ||||||||||||
| Dividends payable on securities sold short (Note 2) | 3 | 1 | 79 | ||||||||||||
| Broker fees and charges on short sales payable | 2 | 11 | 129 | ||||||||||||
| Payable due to investment adviser | 21 | 54 | 519 | ||||||||||||
| Payable due to administrator | 1 | 5 | 56 | ||||||||||||
| Payable due to shareholder servicing | 1 | 3 | 35 | ||||||||||||
| Payable due to distributor | — | 1 | 8 | ||||||||||||
| Payable due to transfer agent | 1 | 5 | 29 | ||||||||||||
| Payable due to custodian | 9 | 13 | 99 | ||||||||||||
| Payable due to trustees | — | — | 4 | ||||||||||||
| Other accrued expenses | 2 | 6 | 95 | ||||||||||||
| Total liabilities | 14,276 | 21,210 | 407,100 | ||||||||||||
| Net assets | $ | 11,913 | $ | 60,089 | $ | 622,433 | |||||||||
| *Includes market value of securities on loan | $ | — | $ | — | $ | — | |||||||||
| Net assets: | |||||||||||||||
| Portfolio capital | $ | 11,737 | $ | 60,541 | $ | 619,937 | |||||||||
| Undistributed net investment income (accumulated net investment loss) | (1 | ) | (21 | ) | (380 | ) | |||||||||
| Accumulated net realized gain (loss) on investments, securities sold short, written options and foreign currency translations | (30 | ) | (1,183 | ) | (4,675 | ) | |||||||||
| Net unrealized appreciation on investments, written options, securities sold short, foreign currencies and translation of other assets and liabilities denominated in foreign currencies | 207 | 752 | 7,551 | ||||||||||||
| Net assets | $ | 11,913 | $ | 60,089 | $ | 622,433 | |||||||||
| Outstanding shares of beneficial interest Institutional Class Shares (1)(2) | 823,886 | 4,361,150 | 39,183,740 | ||||||||||||
| Outstanding shares of beneficial interest Investor Class Shares (1)(2) | 307,425 | 1,235,463 | 14,187,656 | ||||||||||||
| Outstanding shares of beneficial interest Class C Shares (1)(2) | 30 | 210,270 | 1,111,171 | ||||||||||||
| Net assets — Institutional Class Shares (2) | $ | 8,679,484 | $ | 45,147,201 | $ | 448,554,331 | |||||||||
| Net assets — Investor Class Shares (2) | $ | 3,233,057 | $ | 12,776,940 | $ | 161,400,629 | |||||||||
| Net assets — Class C Shares (2) | $ | 310 | $ | 2,164,769 | $ | 12,478,379 | |||||||||
| Net asset value, offering and redemption price per share — Institutional Class Shares | $ | 10.53 | $ | 10.35 | $ | 11.45 | |||||||||
| Net asset value, offering and redemption price per share — Investor Class Shares | $ | 10.52 | $ | 10.34 | $ | 11.38 | |||||||||
| Net asset value, offering and redemption price per share — Class C Shares | $ | 10.46 | † | $ | 10.30 | $ | 11.23 | ||||||||
(1) Unlimited authorization — par value $0.00001.
(2) Shares and Net Assets have not been rounded
† Differences in net asset value recalculation and net asset value stated are caused by rounding differences.
Amounts designated as "—" are either not applicable, $0 or have been rounded to $0.
The accompanying notes are an integral part of the financial statements.
52 TURNER FUNDS 2011 ANNUAL REPORT
| Turner Titan Fund | Turner All Cap Growth Fund | Turner Concentrated Growth Fund | |||||||||||||
| Assets: | |||||||||||||||
| Investment securities, at cost | $ | 10,910 | $ | 33,028 | $ | 37,914 | |||||||||
| Investment securities, at value | $ | 10,556 | $ | 33,124 | $ | 39,983 | * | ||||||||
| Deposits with brokers for securities sold short | 10,029 | — | — | ||||||||||||
| Deposits with brokers for options | — | — | — | ||||||||||||
| Foreign currency, at value | — | — | — | ||||||||||||
| Receivable for investment securities sold | 3,887 | — | 5,285 | ||||||||||||
| Receivable for capital shares sold | 71 | 3 | 126 | ||||||||||||
| Prepaid expenses | 69 | 27 | 28 | ||||||||||||
| Receivable for dividend income | 5 | 3 | 10 | ||||||||||||
| Reclaim receivable | — | — | — | ||||||||||||
| Total assets | 24,617 | 33,157 | 45,432 | ||||||||||||
| Liabilities: | |||||||||||||||
| Securities sold short, proceeds | 8,308 | — | — | ||||||||||||
| Securities sold short, at value | 7,820 | — | — | ||||||||||||
| Cash overdraft | — | — | — | ||||||||||||
| Payable for investment securities purchased | 2,612 | — | 4,962 | ||||||||||||
| Obligation to return securities lending collateral | — | — | 1,424 | ||||||||||||
| Payable for capital shares redeemed | 5 | 41 | 39 | ||||||||||||
| Dividends payable on securities sold short (Note 2) | — | — | — | ||||||||||||
| Broker fees and charges on short sales payable | 1 | — | — | ||||||||||||
| Payable due to investment adviser | 42 | 34 | 31 | ||||||||||||
| Payable due to administrator | 1 | 3 | 4 | ||||||||||||
| Payable due to shareholder servicing | 1 | 7 | 9 | ||||||||||||
| Payable due to distributor | — | — | — | ||||||||||||
| Payable due to transfer agent | 1 | 5 | 5 | ||||||||||||
| Payable due to custodian | 17 | 6 | 6 | ||||||||||||
| Payable due to trustees | — | — | — | ||||||||||||
| Other accrued expenses | 2 | 8 | 13 | ||||||||||||
| Total liabilities | 10,502 | 104 | 6,493 | ||||||||||||
| Net assets | $ | 14,115 | $ | 33,053 | $ | 38,939 | |||||||||
| *Includes market value of securities on loan | $ | — | $ | — | $ | 1,309 | |||||||||
| Net assets: | |||||||||||||||
| Portfolio capital | $ | 14,647 | $ | 46,511 | $ | 64,763 | |||||||||
| Undistributed net investment income (accumulated net investment loss) | — | 3 | 14 | ||||||||||||
| Accumulated net realized gain (loss) on investments, securities sold short, written options and foreign currency translations | (666 | ) | (13,557 | ) | (27,907 | ) | |||||||||
| Net unrealized appreciation on investments, written options, securities sold short, foreign currencies and translation of other assets and liabilities denominated in foreign currencies | 134 | 96 | 2,069 | ||||||||||||
| Net assets | $ | 14,115 | $ | 33,053 | $ | 38,939 | |||||||||
| Outstanding shares of beneficial interest Institutional Class Shares (1)(2) | 1,163,682 | — | — | ||||||||||||
| Outstanding shares of beneficial interest Investor Class Shares (1)(2) | 277,721 | 4,307,161 | 6,063,764 | ||||||||||||
| Outstanding shares of beneficial interest Class C Shares (1)(2) | 3,023 | — | — | ||||||||||||
| Net assets — Institutional Class Shares (2) | $ | 11,374,171 | $ | — | $ | — | |||||||||
| Net assets — Investor Class Shares (2) | $ | 2,711,371 | $ | 33,052,759 | $ | 38,939,181 | |||||||||
| Net assets — Class C Shares (2) | $ | 29,374 | $ | — | $ | — | |||||||||
| Net asset value, offering and redemption price per share — Institutional Class Shares | $ | 9.77 | $ | — | $ | — | |||||||||
| Net asset value, offering and redemption price per share — Investor Class Shares | $ | 9.76 | $ | 7.67 | $ | 6.42 | |||||||||
| Net asset value, offering and redemption price per share — Class C Shares | $ | 9.72 | $ | — | $ | — | |||||||||
TURNER FUNDS 2011 ANNUAL REPORT 53
FINANCIAL STATEMENTS
Statements of assets and liabilities (000)
September 30, 2011
| Turner Emerging Growth Fund | Turner Large Growth Fund | Turner Midcap Growth Fund | |||||||||||||
| Assets: | |||||||||||||||
| Investment securities, at cost | $ | 185,748 | $ | 418,561 | $ | 720,814 | |||||||||
| Investment securities, at value | $ | 237,069 | * | $ | 444,627 | * | $ | 788,014 | * | ||||||
| Foreign currency, at value | — | — | — | ||||||||||||
| Receivable for investment securities sold | 5,863 | 21,780 | 17,046 | ||||||||||||
| Receivable for capital shares sold | 3,277 | 1,653 | 2,921 | ||||||||||||
| Prepaid expenses | 148 | 192 | 220 | ||||||||||||
| Receivable for dividend income | 68 | 365 | 378 | ||||||||||||
| Receivable from investment adviser | — | — | — | ||||||||||||
| Reclaim receivable | — | — | — | ||||||||||||
| Total assets | 246,425 | 468,617 | 808,579 | ||||||||||||
| Liabilities: | |||||||||||||||
| Cash overdraft | — | — | 4,508 | ||||||||||||
| Payable for investment securities purchased | 681 | 24,005 | 15,320 | ||||||||||||
| Obligation to return securities lending collateral | 16,421 | 2,875 | 64,824 | ||||||||||||
| Payable for capital shares redeemed | 2,791 | 2,265 | 2,257 | ||||||||||||
| Payable due to investment adviser | 177 | 254 | 471 | ||||||||||||
| Payable due to administrator | 20 | 47 | 74 | ||||||||||||
| Payable due to shareholder servicing | 36 | 13 | 83 | ||||||||||||
| Payable due to distributor | — | — | 1 | ||||||||||||
| Payable due to transfer agent | 30 | 37 | 64 | ||||||||||||
| Payable due to custodian | 28 | 30 | 36 | ||||||||||||
| Payable due to trustees | 2 | 3 | 5 | ||||||||||||
| Other accrued expenses | 77 | 91 | 198 | ||||||||||||
| Total liabilities | 20,263 | 29,620 | 87,841 | ||||||||||||
| Net assets | $ | 226,162 | $ | 438,997 | $ | 720,738 | |||||||||
| *Includes market value of securities on loan | $ | 15,491 | $ | 2,642 | $ | 61,219 | |||||||||
| Net assets: | |||||||||||||||
| Portfolio capital | $ | 185,630 | $ | 593,293 | $ | 747,796 | |||||||||
| Undistributed net investment income (accumulated net investment loss) | (41 | ) | 42 | 64 | |||||||||||
| Accumulated net realized gain (loss) from investments and foreign currency transactions | (10,748 | ) | (180,404 | ) | (94,322 | ) | |||||||||
| Net unrealized appreciation on investments, foreign currencies and translation of other assets and liabilities denominated in foreign currencies | 51,321 | 26,066 | 67,200 | ||||||||||||
| Net assets | $ | 226,162 | $ | 438,997 | $ | 720,738 | |||||||||
| Outstanding shares of beneficial interest Institutional Class Shares (1)(2) | 1,462,817 | 36,422,439 | 8,071,275 | ||||||||||||
| Outstanding shares of beneficial interest Investor Class Shares (1)(2) | 3,495,728 | 5,435,971 | 15,624,460 | ||||||||||||
| Outstanding shares of beneficial interest Retirement Class Shares (1)(2) | — | — | 136,746 | ||||||||||||
| Net assets — Institutional Class Shares (2) | $ | 67,034,562 | $ | 382,336,487 | $ | 245,479,794 | |||||||||
| Net assets — Investor Class Shares (2) | $ | 159,127,339 | $ | 56,660,682 | $ | 471,286,043 | |||||||||
| Net assets — Retirement Class Shares (2) | $ | — | $ | — | $ | 3,972,156 | |||||||||
| Net asset value, offering and redemption price per share — Institutional Class Shares | $ | 45.83 | $ | 10.50 | $ | 30.42 | † | ||||||||
| Net asset value, offering and redemption price per share — Investor Class Shares | $ | 45.52 | $ | 10.42 | $ | 30.16 | |||||||||
| Net asset value, offering and redemption price per share — Retirement Class Shares | $ | — | $ | — | $ | 29.05 | |||||||||
(1) Unlimited authorization — par value $0.00001.
(2) Shares and Net Assets have not been rounded
† Differences in net asset value recalculation and net asset value stated are caused by rounding differences.
Amounts designated as "—" are either not applicable, $0 or have been rounded to $0.
The accompanying notes are an integral part of the financial statements.
54 TURNER FUNDS 2011 ANNUAL REPORT
| Turner Small Cap Growth Fund | Turner Global Opportunities Fund | Turner International Growth Fund | |||||||||||||
| Assets: | |||||||||||||||
| Investment securities, at cost | $ | 274,691 | $ | 1,358 | $ | 12,079 | |||||||||
| Investment securities, at value | $ | 269,207 | * | $ | 1,402 | $ | 10,775 | ||||||||
| Foreign currency, at value | — | 1 | 48 | ||||||||||||
| Receivable for investment securities sold | 3,955 | — | 531 | ||||||||||||
| Receivable for capital shares sold | 61 | — | — | ||||||||||||
| Prepaid expenses | 160 | 19 | 14 | ||||||||||||
| Receivable for dividend income | 88 | 1 | 27 | ||||||||||||
| Receivable from investment adviser | — | — | 3 | ||||||||||||
| Reclaim receivable | — | — | 11 | ||||||||||||
| Total assets | 273,471 | 1,423 | 11,409 | ||||||||||||
| Liabilities: | |||||||||||||||
| Cash overdraft | — | — | — | ||||||||||||
| Payable for investment securities purchased | 4,079 | 21 | 463 | ||||||||||||
| Obligation to return securities lending collateral | 38,178 | — | — | ||||||||||||
| Payable for capital shares redeemed | 818 | — | 8 | ||||||||||||
| Payable due to investment adviser | 255 | 9 | — | ||||||||||||
| Payable due to administrator | 24 | — | 1 | ||||||||||||
| Payable due to shareholder servicing | 78 | — | 1 | ||||||||||||
| Payable due to distributor | — | — | — | ||||||||||||
| Payable due to transfer agent | 22 | — | 1 | ||||||||||||
| Payable due to custodian | 36 | 5 | 10 | ||||||||||||
| Payable due to trustees | 2 | — | — | ||||||||||||
| Other accrued expenses | 60 | — | 1 | ||||||||||||
| Total liabilities | 43,552 | 35 | 485 | ||||||||||||
| Net assets | $ | 229,919 | $ | 1,388 | $ | 10,924 | |||||||||
| *Includes market value of securities on loan | $ | 35,898 | $ | — | $ | — | |||||||||
| Net assets: | |||||||||||||||
| Portfolio capital | $ | 245,400 | $ | 1,313 | $ | 12,989 | |||||||||
| Undistributed net investment income (accumulated net investment loss) | — | (2 | ) | (2 | ) | ||||||||||
| Accumulated net realized gain (loss) from investments and foreign currency transactions | (9,997 | ) | 33 | (759 | ) | ||||||||||
| Net unrealized appreciation on investments, foreign currencies and translation of other assets and liabilities denominated in foreign currencies | (5,484 | ) | 44 | (1,304 | ) | ||||||||||
| Net assets | $ | 229,919 | $ | 1,388 | $ | 10,924 | |||||||||
| Outstanding shares of beneficial interest Institutional Class Shares (1)(2) | — | 79,964 | 653,121 | ||||||||||||
| Outstanding shares of beneficial interest Investor Class Shares (1)(2) | 8,261,372 | 42,207 | 535,636 | ||||||||||||
| Outstanding shares of beneficial interest Retirement Class Shares (1)(2) | — | — | — | ||||||||||||
| Net assets — Institutional Class Shares (2) | $ | — | $ | 909,759 | $ | 6,012,473 | |||||||||
| Net assets — Investor Class Shares (2) | $ | 229,919,150 | $ | 478,240 | $ | 4,911,587 | |||||||||
| Net assets — Retirement Class Shares (2) | $ | — | $ | — | $ | — | |||||||||
| Net asset value, offering and redemption price per share — Institutional Class Shares | $ | — | $ | 11.38 | $ | 9.21 | |||||||||
| Net asset value, offering and redemption price per share — Investor Class Shares | $ | 27.83 | $ | 11.33 | $ | 9.17 | |||||||||
| Net asset value, offering and redemption price per share — Retirement Class Shares | $ | — | $ | — | $ | — | |||||||||
TURNER FUNDS 2011 ANNUAL REPORT 55
FINANCIAL STATEMENTS
Statements of operations (000)
| Turner Market Neutral Fund | Turner Medical Sciences Long/Short Fund | Turner Spectrum Fund | |||||||||||||
| 2/7/11(1) thru 9/30/11 | 2/7/11(1) thru 9/30/11 | year ended 9/30/11 | |||||||||||||
| Investment Income: | |||||||||||||||
| Dividend | $ | 25 | $ | 36 | $ | 2,427 | |||||||||
| Securities lending | — | — | — | ||||||||||||
| Foreign taxes withheld | — | — | (54 | ) | |||||||||||
| Total Investment Income | 25 | 36 | 2,373 | ||||||||||||
| Expenses: | |||||||||||||||
| Investment advisory fees | 55 | 270 | 6,101 | ||||||||||||
| Administrator fees | 5 | 25 | 566 | ||||||||||||
| Shareholder service fees (2) | 2 | 6 | 230 | ||||||||||||
| Shareholder service fees (3) | — | 2 | 24 | ||||||||||||
| Distribution fees (3) | — | 6 | 72 | ||||||||||||
| Chief compliance officer fees | — | 1 | 27 | ||||||||||||
| Accounting agent fees | 6 | 6 | 33 | ||||||||||||
| Dividend expense | 16 | 28 | 1,148 | ||||||||||||
| Broker fees and charges on short sales | 9 | 86 | 1,302 | ||||||||||||
| Custodian fees | 7 | 17 | 336 | ||||||||||||
| Transfer agent fees | 2 | 11 | 150 | ||||||||||||
| Registration fees | 35 | 36 | 107 | ||||||||||||
| Professional fees | 2 | 6 | 119 | ||||||||||||
| Trustees' fees | — | 2 | 46 | ||||||||||||
| Insurance and other fees | 8 | 11 | 164 | ||||||||||||
| Total expenses | 147 | 513 | 10,425 | ||||||||||||
| Less: | |||||||||||||||
| Investment advisory fee waiver | (55 | ) | (146 | ) | (2,216 | ) | |||||||||
| Reimbursement of other operating expenses | (17 | ) | — | — | |||||||||||
| Net expenses | 75 | 367 | 8,209 | ||||||||||||
| Net investment loss | (50 | ) | (331 | ) | (5,836 | ) | |||||||||
| Net realized gain (loss) from securities sold | (729 | ) | (2,665 | ) | 11,610 | ||||||||||
| Net realized gain (loss) from securities sold short | 740 | 1,649 | 5,620 | ||||||||||||
| Net realized gain (loss) on written options contracts | — | — | (6,481 | ) | |||||||||||
| Net realized gain (loss) on foreign currency transactions | — | (1 | ) | 110 | |||||||||||
| Net change in unrealized appreciation (depreciation) on investments | (333 | ) | (199 | ) | (25,740 | ) | |||||||||
| Net change in unrealized appreciation (depreciation) on securities sold short | 540 | 955 | 26,382 | ||||||||||||
| Net change in unrealized appreciation (depreciation) on written option contracts | — | — | 56 | ||||||||||||
| Net change in unrealized appreciation (depreciation) on foreign currencies and translation of other assets and liabilities denominated in foreign currencies | — | (4 | ) | (9 | ) | ||||||||||
| Net realized and unrealized gain (loss) on investments, options and foreign currencies | 218 | (265 | ) | 11,548 | |||||||||||
| Net increase (decrease) in net assets resulting from operations | $ | 168 | $ | (596 | ) | $ | 5,712 | ||||||||
(1) Commencement of operations.
(2) Attributable to Investor Class Shares only.
(3) Attributable to Class C Shares only.
Amounts designated as "—" are either not applicable, $0 or have been rounded to $0.
The accompanying notes are an integral part of the financial statements.
56 TURNER FUNDS 2011 ANNUAL REPORT
| Turner Titan Fund | Turner All Cap Growth Fund | Turner Concentrated Growth Fund | |||||||||||||
| 2/7/11(1) thru 9/30/11 | year ended 9/30/11 | year ended 9/30/11 | |||||||||||||
| Investment Income: | |||||||||||||||
| Dividend | $ | 21 | $ | 186 | $ | 199 | |||||||||
| Securities lending | — | 7 | 7 | ||||||||||||
| Foreign taxes withheld | — | — | (5 | ) | |||||||||||
| Total Investment Income | 21 | 193 | 201 | ||||||||||||
| Expenses: | |||||||||||||||
| Investment advisory fees | 68 | 645 | 722 | ||||||||||||
| Administrator fees | 6 | 60 | 70 | ||||||||||||
| Shareholder service fees (2) | 1 | 104 | 121 | ||||||||||||
| Shareholder service fees (3) | — | — | — | ||||||||||||
| Distribution fees (3) | — | — | — | ||||||||||||
| Chief compliance officer fees | — | 3 | 3 | ||||||||||||
| Accounting agent fees | 7 | 3 | 3 | ||||||||||||
| Dividend expense | 8 | — | — | ||||||||||||
| Broker fees and charges on short sales | 8 | — | — | ||||||||||||
| Custodian fees | 20 | 19 | 20 | ||||||||||||
| Transfer agent fees | 3 | 30 | 31 | ||||||||||||
| Registration fees | 34 | 18 | 20 | ||||||||||||
| Professional fees | 2 | 12 | 15 | ||||||||||||
| Trustees' fees | — | 5 | 6 | ||||||||||||
| Insurance and other fees | 9 | 20 | 29 | ||||||||||||
| Total expenses | 166 | 919 | 1,040 | ||||||||||||
| Less: | |||||||||||||||
| Investment advisory fee waiver | (68 | ) | (169 | ) | (194 | ) | |||||||||
| Reimbursement of other operating expenses | (9 | ) | — | — | |||||||||||
| Net expenses | 89 | 750 | 846 | ||||||||||||
| Net investment loss | (68 | ) | (557 | ) | (645 | ) | |||||||||
| Net realized gain (loss) from securities sold | (1,545 | ) | 7,305 | 5,557 | |||||||||||
| Net realized gain (loss) from securities sold short | 938 | — | — | ||||||||||||
| Net realized gain (loss) on written options contracts | — | — | — | ||||||||||||
| Net realized gain (loss) on foreign currency transactions | — | — | — | ||||||||||||
| Net change in unrealized appreciation (depreciation) on investments | (354 | ) | (6,586 | ) | (5,758 | ) | |||||||||
| Net change in unrealized appreciation (depreciation) on securities sold short | 488 | — | — | ||||||||||||
| Net change in unrealized appreciation (depreciation) on written option contracts | — | — | — | ||||||||||||
| Net change in unrealized appreciation (depreciation) on foreign currencies and translation of other assets and liabilities denominated in foreign currencies | — | — | — | ||||||||||||
| Net realized and unrealized gain (loss) on investments, options and foreign currencies | (473 | ) | 719 | (201 | ) | ||||||||||
| Net increase (decrease) in net assets resulting from operations | $ | (541 | ) | $ | 162 | $ | (846 | ) | |||||||
TURNER FUNDS 2011 ANNUAL REPORT 57
FINANCIAL STATEMENTS
Statements of operations (000)
| Turner Emerging Growth Fund | Turner Large Growth Fund | Turner Midcap Growth Fund | |||||||||||||
| year ended 9/30/11 | year ended 9/30/11 | year ended 9/30/11 | |||||||||||||
| Investment Income: | |||||||||||||||
| Dividend | $ | 1,720 | $ | 3,722 | $ | 7,929 | |||||||||
| Securities lending | 315 | 75 | 201 | ||||||||||||
| Foreign taxes withheld | (22 | ) | (32 | ) | (78 | ) | |||||||||
| Total Investment Income | 2,013 | 3,765 | 8,052 | ||||||||||||
| Expenses: | |||||||||||||||
| Investment advisory fees | 5,241 | 3,415 | 7,644 | ||||||||||||
| Administrator fees | 731 | 794 | 1,422 | ||||||||||||
| Shareholder service fees (1) | 506 | 308 | 1,881 | ||||||||||||
| Shareholder service fees (2) | — | — | 13 | ||||||||||||
| Distribution fees (2) | — | — | 13 | ||||||||||||
| Chief compliance officer fees | 37 | 37 | 69 | ||||||||||||
| Accounting agent fees | 5 | 5 | 7 | ||||||||||||
| Custodian fees | 54 | 66 | 82 | ||||||||||||
| Transfer agent fees | 197 | 229 | 420 | ||||||||||||
| Registration fees | 48 | 54 | 76 | ||||||||||||
| Professional fees | 149 | 165 | 303 | ||||||||||||
| Trustees' fees | 64 | 66 | 121 | ||||||||||||
| Insurance and other fees | 206 | 207 | 427 | ||||||||||||
| Total expenses before reductions | 7,238 | 5,346 | 12,478 | ||||||||||||
| Less: | |||||||||||||||
| Investment advisory fee waiver | (712 | ) | (1,112 | ) | (1,070 | ) | |||||||||
| Reimbursements of other operating expenses | — | — | — | ||||||||||||
| Net expenses | 6,526 | 4,234 | 11,408 | ||||||||||||
| Net investment income (loss) | (4,513 | ) | (469 | ) | (3,356 | ) | |||||||||
| Net realized gain from securities sold | 111,565 | † | 100,361 | 268,940 | |||||||||||
| Net realized gain (loss) on foreign currency transactions | — | — | 1 | ||||||||||||
| Net change in unrealized appreciation (depreciation) on investments | (54,358 | ) | (106,427 | ) | (194,104 | ) | |||||||||
| Net realized and unrealized gain (loss) from investments, options and foreign currencies | 57,207 | (6,066 | ) | 74,837 | |||||||||||
| Net increase (decrease) in net assets resulting from operations | $ | 52,694 | $ | (6,535 | ) | $ | 71,481 | ||||||||
(1) Attributable to Investor Class Shares only.
(2) Attributable to Retirement Class Shares only.
† Includes realized gains and losses as a result of in-kind transactions (See Note 13 in the Notes to Financial Statements).
Amounts designated as "—" are either not applicable, $0 or have been rounded to $0.
The accompanying notes are an integral part of the financial statements.
58 TURNER FUNDS 2011 ANNUAL REPORT
| Turner Small Cap Growth Fund | Turner Global Opportunities Fund | Turner International Growth Fund | |||||||||||||
| year ended 9/30/11 | year ended 9/30/11 | year ended 9/30/11 | |||||||||||||
| Investment Income: | |||||||||||||||
| Dividend | $ | 1,074 | $ | 14 | $ | 162 | |||||||||
| Securities lending | 510 | — | — | ||||||||||||
| Foreign taxes withheld | — | — | (16 | ) | |||||||||||
| Total Investment Income | 1,584 | 14 | 146 | ||||||||||||
| Expenses: | |||||||||||||||
| Investment advisory fees | 3,207 | 13 | 69 | ||||||||||||
| Administrator fees | 447 | 2 | 11 | ||||||||||||
| Shareholder service fees (1) | 769 | 1 | 4 | ||||||||||||
| Shareholder service fees (2) | — | — | — | ||||||||||||
| Distribution fees (2) | — | — | — | ||||||||||||
| Chief compliance officer fees | 22 | — | — | ||||||||||||
| Accounting agent fees | 5 | 11 | 19 | ||||||||||||
| Custodian fees | 58 | 7 | 47 | ||||||||||||
| Transfer agent fees | 122 | 4 | 6 | ||||||||||||
| Registration fees | 25 | 19 | 32 | ||||||||||||
| Professional fees | 95 | — | 2 | ||||||||||||
| Trustees' fees | 39 | — | 1 | ||||||||||||
| Insurance and other fees | 106 | 3 | 6 | ||||||||||||
| Total expenses before reductions | 4,895 | 60 | 197 | ||||||||||||
| Less: | |||||||||||||||
| Investment advisory fee waiver | (882 | ) | (13 | ) | (69 | ) | |||||||||
| Reimbursements of other operating expenses | — | (27 | ) | (34 | ) | ||||||||||
| Net expenses | 4,013 | 20 | 94 | ||||||||||||
| Net investment income (loss) | (2,429 | ) | (6 | ) | 52 | ||||||||||
| Net realized gain from securities sold | 60,910 | 82 | 469 | ||||||||||||
| Net realized gain (loss) on foreign currency transactions | — | (3 | ) | (46 | ) | ||||||||||
| Net change in unrealized appreciation (depreciation) on investments | (70,484 | ) | (115 | ) | (2,125 | ) | |||||||||
| Net realized and unrealized gain (loss) from investments, options and foreign currencies | (9,574 | ) | (36 | ) | (1,702 | ) | |||||||||
| Net increase (decrease) in net assets resulting from operations | $ | (12,003 | ) | $ | (42 | ) | $ | (1,650 | ) | ||||||
TURNER FUNDS 2011 ANNUAL REPORT 59
FINANCIAL STATEMENTS
Statements of changes in net assets (000)
| Turner Market Neutral Fund | Turner Medical Sciences Long/Short Fund | ||||||||||
| 2/7/11(1) thru 9/30/11 | 2/7/11(1) thru 9/30/11 | ||||||||||
| Investment Activities: | |||||||||||
| Net investment loss | $ | (50 | ) | $ | (331 | ) | |||||
| Net realized gain (loss) from securities sold and securities sold short | 11 | (1,016 | ) | ||||||||
| Net realized gain (loss) on written options contracts | — | — | |||||||||
| Net realized gain (loss) on foreign currency transactions | — | (1 | ) | ||||||||
| Net change in unrealized appreciation on investments and securities sold short | 207 | 756 | |||||||||
| Net change in unrealized appreciation (depreciation) on written options contracts | — | — | |||||||||
| Net change in unrealized appreciation (depreciation) on foreign currencies and translation | — | (4 | ) | ||||||||
| Net increase (decrease) in net assets resulting from operations | 168 | (596 | ) | ||||||||
| Dividends and distributions to shareholders: | |||||||||||
| Net investment income | |||||||||||
| Investor Class Shares | — | — | |||||||||
| Realized capital gains | |||||||||||
| Institutional Class Shares | — | — | |||||||||
| Investor Class Shares | — | — | |||||||||
| Class C Shares | — | — | |||||||||
| Total dividends and distributions | — | — | |||||||||
| Capital share transactions: | |||||||||||
| Institutional Class Shares | |||||||||||
| Proceeds from shares issued | 8,554 | 54,974 | |||||||||
| Proceeds from shares issued in lieu of cash distributions | — | — | |||||||||
| Cost of shares redeemed | (14 | ) | (9,281 | ) | |||||||
| Net increase in net assets from Institutional Class Shares transactions | 8,540 | 45,693 | |||||||||
| Investor Class Shares | |||||||||||
| Proceeds from shares issued | 4,072 | 13,724 | |||||||||
| Proceeds from shares issued in lieu of cash distributions | — | — | |||||||||
| Cost of shares redeemed | (867 | ) | (911 | ) | |||||||
| Net increase in net assets from Investor Class Shares transactions | 3,205 | 12,813 | |||||||||
| Class C Shares | |||||||||||
| Proceeds from shares issued | — | 2,283 | |||||||||
| Proceeds from shares issued in lieu of cash distributions | — | — | |||||||||
| Cost of shares redeemed | — | (104 | ) | ||||||||
| Net increase in net assets from Class C Shares transactions | — | 2,179 | |||||||||
| Net increase in net assets from capital share transactions | 11,745 | 60,685 | |||||||||
| Total increase in net assets | 11,913 | 60,089 | |||||||||
| Net Assets: | |||||||||||
| Beginning of period | — | — | |||||||||
| End of period | $ | 11,913 | $ | 60,089 | |||||||
| Accumulated net investment loss | $ | (1 | ) | $ | (21 | ) | |||||
| Share issued and redeemed: | |||||||||||
| Institutional Class Shares | |||||||||||
| Issued | 825 | 5,247 | |||||||||
| Issued in lieu of cash distributions | — | — | |||||||||
| Redeemed | (1 | ) | (886 | ) | |||||||
| Net increase in Institutional Class Shares | 824 | 4,361 | |||||||||
| Investor Class Shares | |||||||||||
| Issued | 390 | 1,322 | |||||||||
| Issued in lieu of cash distributions | — | — | |||||||||
| Redeemed | (83 | ) | (87 | ) | |||||||
| Net increase in Investor Class Shares | 307 | 1,235 | |||||||||
| Class C Shares | |||||||||||
| Issued | — | 220 | |||||||||
| Redeemed | — | (10 | ) | ||||||||
| Net increase in Class C Shares | — | 210 | |||||||||
| Net increase in share transactions | 1,131 | 5,806 | |||||||||
(1) Commencement of operations.
Amounts designated as "—" are either not applicable, $0 or have been rounded to $0.
The accompanying notes are an integral part of the financial statements.
60 TURNER FUNDS 2011 ANNUAL REPORT
| Turner Spectrum Fund | Turner Titan Fund | ||||||||||||||
| year ended 9/30/11 | year ended 9/30/10 | 2/7/11(1) thru 9/30/11 | |||||||||||||
| Investment Activities: | |||||||||||||||
| Net investment loss | $ | (5,836 | ) | $ | (1,410 | ) | $ | (68 | ) | ||||||
| Net realized gain (loss) from securities sold and securities sold short | 17,230 | (6,861 | ) | (607 | ) | ||||||||||
| Net realized gain (loss) on written options contracts | (6,481 | ) | 247 | — | |||||||||||
| Net realized gain (loss) on foreign currency transactions | 110 | (138 | ) | — | |||||||||||
| Net change in unrealized appreciation on investments and securities sold short | 642 | 6,237 | 134 | ||||||||||||
| Net change in unrealized appreciation (depreciation) on written options contracts | 56 | (56 | ) | — | |||||||||||
| Net change in unrealized appreciation (depreciation) on foreign currencies and translation | (9 | ) | (2 | ) | — | ||||||||||
| Net increase (decrease) in net assets resulting from operations | 5,712 | (1,983 | ) | (541 | ) | ||||||||||
| Dividends and distributions to shareholders: | |||||||||||||||
| Net investment income | |||||||||||||||
| Investor Class Shares | — | — | — | ||||||||||||
| Realized capital gains | |||||||||||||||
| Institutional Class Shares | — | (92 | ) | — | |||||||||||
| Investor Class Shares | — | (47 | ) | — | |||||||||||
| Class C Shares | — | (3 | ) | — | |||||||||||
| Total dividends and distributions | — | (142 | ) | — | |||||||||||
| Capital share transactions: | |||||||||||||||
| Institutional Class Shares | |||||||||||||||
| Proceeds from shares issued | 326,173 | 187,039 | 12,002 | ||||||||||||
| Proceeds from shares issued in lieu of cash distributions | — | 84 | — | ||||||||||||
| Cost of shares redeemed | (62,344 | ) | (14,332 | ) | (154 | ) | |||||||||
| Net increase in net assets from Institutional Class Shares transactions | 263,829 | 172,791 | 11,848 | ||||||||||||
| Investor Class Shares | |||||||||||||||
| Proceeds from shares issued | 140,625 | 57,936 | 2,777 | ||||||||||||
| Proceeds from shares issued in lieu of cash distributions | — | 47 | — | ||||||||||||
| Cost of shares redeemed | (31,909 | ) | (10,048 | ) | — | ||||||||||
| Net increase in net assets from Investor Class Shares transactions | 108,716 | 47,935 | 2,777 | ||||||||||||
| Class C Shares | |||||||||||||||
| Proceeds from shares issued | 6,802 | 7,401 | 31 | ||||||||||||
| Proceeds from shares issued in lieu of cash distributions | — | 3 | — | ||||||||||||
| Cost of shares redeemed | (1,682 | ) | (197 | ) | — | ||||||||||
| Net increase in net assets from Class C Shares transactions | 5,120 | 7,207 | 31 | ||||||||||||
| Net increase in net assets from capital share transactions | 377,665 | 227,933 | 14,656 | ||||||||||||
| Total increase in net assets | 383,377 | 225,808 | 14,115 | ||||||||||||
| Net Assets: | |||||||||||||||
| Beginning of period | 239,056 | 13,248 | — | ||||||||||||
| End of period | $ | 622,433 | $ | 239,056 | $ | 14,115 | |||||||||
| Accumulated net investment loss | $ | (380 | ) | $ | (220 | ) | $ | — | |||||||
| Share issued and redeemed: | |||||||||||||||
| Institutional Class Shares | |||||||||||||||
| Issued | 27,953 | 17,118 | 1,179 | ||||||||||||
| Issued in lieu of cash distributions | — | 8 | — | ||||||||||||
| Redeemed | (5,366 | ) | (1,333 | ) | (15 | ) | |||||||||
| Net increase in Institutional Class Shares | 22,587 | 15,793 | 1,164 | ||||||||||||
| Investor Class Shares | |||||||||||||||
| Issued | 12,099 | 5,370 | 278 | ||||||||||||
| Issued in lieu of cash distributions | — | 4 | — | ||||||||||||
| Redeemed | (2,770 | ) | (938 | ) | — | ||||||||||
| Net increase in Investor Class Shares | 9,329 | 4,436 | 278 | ||||||||||||
| Class C Shares | |||||||||||||||
| Issued | 588 | 688 | 3 | ||||||||||||
| Redeemed | (146 | ) | (19 | ) | — | ||||||||||
| Net increase in Class C Shares | 442 | 669 | 3 | ||||||||||||
| Net increase in share transactions | 32,358 | 20,898 | 1,445 | ||||||||||||
TURNER FUNDS 2011 ANNUAL REPORT 61
FINANCIAL STATEMENTS
Statements of changes in net assets (000)
| Turner All Cap Growth Fund | Turner Concentrated Growth Fund | ||||||||||||||||||
| year ended 9/30/11 | year ended 9/30/10 | year ended 9/30/11 | year ended 9/30/10 | ||||||||||||||||
| Investment Activities: | |||||||||||||||||||
| Net investment income (loss) | $ | (557 | ) | $ | (344 | ) | $ | (645 | ) | $ | (468 | ) | |||||||
| Net realized gain from securities sold and securities sold short | 7,305 | 3,912 | 5,557 | 4,512 | |||||||||||||||
| Net change in unrealized appreciation (depreciation) on investments and securities sold short | (6,586 | ) | 261 | (5,758 | ) | (1,040 | ) | ||||||||||||
| Net increase (decrease) in net assets resulting from operations | 162 | 3,829 | (846 | ) | 3,004 | ||||||||||||||
| Dividends and distributions to shareholders: | |||||||||||||||||||
| Net investment income | |||||||||||||||||||
| Investor Class Shares | — | (23 | )^ | — | (121 | )^ | |||||||||||||
| Realized capital gains | |||||||||||||||||||
| Institutional Class Shares | — | — | — | — | |||||||||||||||
| Investor Class Shares | — | — | — | — | |||||||||||||||
| Total dividends and distributions | — | (23 | ) | — | (121 | ) | |||||||||||||
| Capital share transactions: | |||||||||||||||||||
| Institutional Class Shares | |||||||||||||||||||
| Proceeds from shares issued | — | — | — | — | |||||||||||||||
| Proceeds from Fund acquisition (Note 14) | — | — | — | — | |||||||||||||||
| Proceeds from shares issued in lieu of cash distributions | — | — | — | — | |||||||||||||||
| Cost of shares redeemed | — | — | — | — | |||||||||||||||
| Net increase (decrease) in net assets from Institutional Class Shares transactions | — | — | — | — | |||||||||||||||
| Investor Class Share | |||||||||||||||||||
| Proceeds from shares issued | 46,094 | 7,014 | 15,634 | 12,686 | |||||||||||||||
| Proceeds from Fund acquisition (Note 14) | — | — | — | — | |||||||||||||||
| Proceeds from shares issued in lieu of cash distributions | — | 22 | — | 119 | |||||||||||||||
| Cost of shares redeemed | (36,430 | ) | (13,939 | ) | (18,773 | ) | (12,737 | ) | |||||||||||
| Net increase (decrease) in net assets from Investor Class Shares transactions | 9,664 | (6,903 | ) | (3,139 | ) | 68 | |||||||||||||
| Net increase (decrease) in net assets from capital share transactions | 9,664 | (6,903 | ) | (3,139 | ) | 68 | |||||||||||||
| Total increase (decrease) in net assets | 9,826 | (3,097 | ) | (3,985 | ) | 2,951 | |||||||||||||
| Net Assets: | |||||||||||||||||||
| Beginning of period | 23,227 | 26,324 | 42,924 | 39,973 | |||||||||||||||
| End of period | $ | 33,053 | $ | 23,227 | $ | 38,939 | $ | 42,924 | |||||||||||
| Undistributed net investment income (accumulated net investment income) | $ | 3 | $ | — | $ | 14 | $ | — | |||||||||||
| Share issued and redeemed: | |||||||||||||||||||
| Institutional Class Shares | |||||||||||||||||||
| Issued | — | — | — | — | |||||||||||||||
| Shares from Fund acquisition (Note 14) | — | — | — | — | |||||||||||||||
| Issued in lieu of cash distributions | — | — | — | — | |||||||||||||||
| Redeemed | — | — | — | — | |||||||||||||||
| Net increase (decrease) in Institutional Class Shares | — | — | — | — | |||||||||||||||
| Investor Class Shares | |||||||||||||||||||
| Issued | 5,106 | 1,076 | 2,038 | 2,002 | |||||||||||||||
| Shares from Fund acquisition (Note 14) | — | — | — | — | |||||||||||||||
| Issued in lieu of cash distributions | — | 4 | — | 18 | |||||||||||||||
| Redeemed | (4,102 | ) | (2,198 | ) | (2,445 | ) | (2,036 | ) | |||||||||||
| Net increase (decrease) in Investor Class Shares | 1,004 | (1,118 | ) | (407 | ) | (16 | ) | ||||||||||||
| Net increase (decrease) in share transactions | 1,004 | (1,118 | ) | (407 | ) | (16 | ) | ||||||||||||
† Includes realized gains, losses or redemptions as a result of in-kind transactions (See Note 13 to Financial Statements.)
^ Includes return of capital of $1 (000).
Amounts designated as "—" are either not applicable, $0 or have been rounded to $0.
The accompanying notes are an integral part of the financial statements.
62 TURNER FUNDS 2011 ANNUAL REPORT
| Turner Emerging Growth Fund | Turner Large Growth Fund | ||||||||||||||||||
| year ended 9/30/11 | year ended 9/30/10 | year ended 9/30/11 | year ended 9/30/10 | ||||||||||||||||
| Investment Activities: | |||||||||||||||||||
| Net investment income (loss) | $ | (4,513 | ) | $ | (3,867 | ) | $ | (469 | ) | $ | 751 | ||||||||
| Net realized gain from securities sold and securities sold short | 111,565 | † | 31,561 | 100,361 | 28,303 | † | |||||||||||||
| Net change in unrealized appreciation (depreciation) on investments and securities sold short | (54,358 | ) | 22,753 | (106,427 | ) | 6,444 | |||||||||||||
| Net increase (decrease) in net assets resulting from operations | 52,694 | 50,447 | (6,535 | ) | 35,498 | ||||||||||||||
| Dividends and distributions to shareholders: | |||||||||||||||||||
| Net investment income | |||||||||||||||||||
| Investor Class Shares | — | — | (671 | ) | — | ||||||||||||||
| Realized capital gains | |||||||||||||||||||
| Institutional Class Shares | — | — | — | (1,623 | ) | ||||||||||||||
| Investor Class Shares | — | — | — | (664 | ) | ||||||||||||||
| Total dividends and distributions | — | — | (671 | ) | (2,287 | ) | |||||||||||||
| Capital share transactions: | |||||||||||||||||||
| Institutional Class Shares | |||||||||||||||||||
| Proceeds from shares issued | 83,629 | 44,818 | 87,039 | 279,938 | |||||||||||||||
| Proceeds from Fund acquisition (Note 14) | — | — | 140,336 | — | |||||||||||||||
| Proceeds from shares issued in lieu of cash distributions | — | — | 612 | 1,398 | |||||||||||||||
| Cost of shares redeemed | (330,208 | )† | (41,796 | ) | (209,772 | ) | (312,150 | )† | |||||||||||
| Net increase (decrease) in net assets from Institutional Class Shares transactions | (246,579 | ) | 3,022 | 18,215 | (30,814 | ) | |||||||||||||
| Investor Class Share | |||||||||||||||||||
| Proceeds from shares issued | 37,791 | 16,414 | 21,626 | 158,361 | |||||||||||||||
| Proceeds from Fund acquisition (Note 14) | — | — | 1,518 | — | |||||||||||||||
| Proceeds from shares issued in lieu of cash distributions | — | — | — | 597 | |||||||||||||||
| Cost of shares redeemed | (71,012 | ) | (49,217 | ) | (136,556 | ) | (254,148 | ) | |||||||||||
| Net increase (decrease) in net assets from Investor Class Shares transactions | (33,221 | ) | (32,803 | ) | (113,412 | ) | (95,190 | ) | |||||||||||
| Net increase (decrease) in net assets from capital share transactions | (279,800 | ) | (29,781 | ) | (95,197 | ) | (126,004 | ) | |||||||||||
| Total increase (decrease) in net assets | (227,106 | ) | 20,666 | (102,403 | ) | (92,793 | ) | ||||||||||||
| Net Assets: | |||||||||||||||||||
| Beginning of period | 453,268 | 432,602 | 541,400 | 634,193 | |||||||||||||||
| End of period | $ | 226,162 | $ | 453,268 | $ | 438,997 | $ | 541,400 | |||||||||||
| Undistributed net investment income (accumulated net investment income) | $ | (41 | ) | $ | — | $ | 42 | $ | 539 | ||||||||||
| Share issued and redeemed: | |||||||||||||||||||
| Institutional Class Shares | |||||||||||||||||||
| Issued | 1,614 | 1,099 | 7,643 | 27,088 | |||||||||||||||
| Shares from Fund acquisition (Note 14) | — | — | 10,966 | — | |||||||||||||||
| Issued in lieu of cash distributions | — | — | 51 | 132 | |||||||||||||||
| Redeemed | (6,655 | )† | (1,049 | ) | (18,016 | ) | (29,854 | )† | |||||||||||
| Net increase (decrease) in Institutional Class Shares | (5,041 | ) | 50 | 644 | (2,634 | ) | |||||||||||||
| Investor Class Shares | |||||||||||||||||||
| Issued | 729 | 411 | 1,406 | 15,470 | |||||||||||||||
| Shares from Fund acquisition (Note 14) | — | — | 119 | — | |||||||||||||||
| Issued in lieu of cash distributions | — | — | — | 56 | |||||||||||||||
| Redeemed | (1,411 | ) | (1,240 | ) | (11,700 | ) | (25,538 | ) | |||||||||||
| Net increase (decrease) in Investor Class Shares | (682 | ) | (829 | ) | (10,175 | ) | (10,012 | ) | |||||||||||
| Net increase (decrease) in share transactions | (5,723 | ) | (779 | ) | (9,531 | ) | (12,646 | ) | |||||||||||
TURNER FUNDS 2011 ANNUAL REPORT 63
FINANCIAL STATEMENTS
Statements of changes in net assets (000)
| Turner Midcap Growth Fund | Turner Small Cap Growth Fund | ||||||||||||||||||
| year ended 9/30/11 | year ended 9/30/10 | year ended 9/30/11 | year ended 9/30/10 | ||||||||||||||||
| Investment Activities: | |||||||||||||||||||
| Net investment income (loss) | $ | (3,356 | ) | $ | (4,906 | ) | $ | (2,429 | ) | $ | (1,976 | ) | |||||||
| Net realized gain (loss) from securities sold | 268,940 | 107,778 | 60,910 | 25,168 | |||||||||||||||
| Net realized gain (loss) on foreign currency transactions | 1 | — | — | — | |||||||||||||||
| Net change in unrealized appreciation (depreciation) on investments | (194,104 | ) | 24,016 | (70,484 | ) | 14,979 | |||||||||||||
| Net increase (decrease) in net assets resulting from operations | 71,481 | 126,888 | (12,003 | ) | 38,171 | ||||||||||||||
| Dividends and distributions to shareholders: | |||||||||||||||||||
| Net investment income | |||||||||||||||||||
| Institutional Class Shares | — | — | — | — | |||||||||||||||
| Investor Class Shares | — | — | — | — | |||||||||||||||
| Total dividends and distributions | — | — | — | — | |||||||||||||||
| Capital share transactions: | |||||||||||||||||||
| Institutional Class Shares | |||||||||||||||||||
| Proceeds from shares issued | 172,552 | 61,281 | — | — | |||||||||||||||
| Proceeds from shares issued in lieu of cash distributions | — | — | — | — | |||||||||||||||
| Cost of shares redeemed | (76,894 | ) | (48,879 | ) | — | — | |||||||||||||
| Net increase (decrease) in net assets from Institutional Class Shares transactions | 95,658 | 12,402 | — | — | |||||||||||||||
| Investor Class Shares | |||||||||||||||||||
| Proceeds from shares issued | 221,546 | 189,151 | 120,040 | 56,625 | |||||||||||||||
| Proceeds from shares issued in lieu of cash distributions | — | — | — | — | |||||||||||||||
| Cost of shares redeemed | (587,846 | ) | (407,498 | ) | (153,043 | ) | (70,731 | ) | |||||||||||
| Net increase (decrease) in net assets from Investor Class Shares transactions | (366,300 | ) | (218,347 | ) | (33,003 | ) | (14,106 | ) | |||||||||||
| Retirement Class Shares | |||||||||||||||||||
| Proceeds from shares issued | 1,745 | 793 | — | — | |||||||||||||||
| Cost of shares redeemed | (2,541 | ) | (642 | ) | — | — | |||||||||||||
| Net increase (decrease) in net assets from Retirement Class Shares transactions | (796 | ) | 151 | — | — | ||||||||||||||
| Net increase (decrease) in net assets from capital share transactions | (271,438 | ) | (205,794 | ) | (33,003 | ) | (14,106 | ) | |||||||||||
| Total increase (decrease) in net assets | (199,957 | ) | (78,906 | ) | (45,006 | ) | 24,065 | ||||||||||||
| Net Assets: | |||||||||||||||||||
| Beginning of period | 920,695 | 999,601 | 274,925 | 250,860 | |||||||||||||||
| End of period | $ | 720,738 | $ | 920,695 | $ | 229,919 | $ | 274,925 | |||||||||||
| Undistributed net investment income (accumulated net investment income) | $ | 64 | $ | — | $ | — | $ | — | |||||||||||
| Share issued and redeemed: | |||||||||||||||||||
| Institutional Class Shares | |||||||||||||||||||
| Issued | 4,733 | 2,060 | — | — | |||||||||||||||
| Issued in lieu of cash distributions | — | — | — | — | |||||||||||||||
| Redeemed | (2,179 | ) | (1,752 | ) | — | — | |||||||||||||
| Net increase (decrease) in Institutional Class Shares | 2,554 | 308 | — | — | |||||||||||||||
| Investor Class Shares | |||||||||||||||||||
| Issued | 6,010 | 6,754 | 3,352 | 2,130 | |||||||||||||||
| Redeemed | (15,652 | ) | (14,508 | ) | (4,580 | ) | (2,609 | ) | |||||||||||
| Net increase (decrease) in Investor Class Shares | (9,642 | ) | (7,754 | ) | (1,228 | ) | (479 | ) | |||||||||||
| Retirement Class Shares | |||||||||||||||||||
| Issued | 50 | 29 | — | — | |||||||||||||||
| Redeemed | (72 | ) | (24 | ) | — | — | |||||||||||||
| Net increase (decrease) in Retirement Class Shares | (22 | ) | 5 | — | — | ||||||||||||||
| Net increase (decrease) in share transactions | (7,110 | ) | (7,441 | ) | (1,228 | ) | (479 | ) | |||||||||||
(1) Commencement of operations.
Amounts designated as "—" are either not applicable, $0 or have been rounded to $0.
The accompanying notes are an integral part of the financial statements.
64 TURNER FUNDS 2011 ANNUAL REPORT
| Turner Global Opportunities Fund | Turner International Growth Fund | ||||||||||||||||||
| year ended 9/30/11 | 5/7/10(1) thru 9/30/10 | year ended 9/30/11 | year ended 9/30/10 | ||||||||||||||||
| Investment Activities: | |||||||||||||||||||
| Net investment income (loss) | $ | (6 | ) | $ | (1 | ) | $ | 52 | $ | 24 | |||||||||
| Net realized gain (loss) from securities sold | 82 | (4 | ) | 469 | 465 | ||||||||||||||
| Net realized gain (loss) on foreign currency transactions | (3 | ) | (1 | ) | (46 | ) | (12 | ) | |||||||||||
| Net change in unrealized appreciation (depreciation) on investments | (115 | ) | 159 | (2,125 | ) | 187 | |||||||||||||
| Net increase (decrease) in net assets resulting from operations | (42 | ) | 153 | (1,650 | ) | 664 | |||||||||||||
| Dividends and distributions to shareholders: | |||||||||||||||||||
| Net investment income | |||||||||||||||||||
| Institutional Class Shares | — | — | (48 | ) | (59 | ) | |||||||||||||
| Investor Class Shares | — | — | (1 | ) | — | ||||||||||||||
| Total dividends and distributions | — | — | (49 | ) | (59 | ) | |||||||||||||
| Capital share transactions: | |||||||||||||||||||
| Institutional Class Shares | |||||||||||||||||||
| Proceeds from shares issued | 418 | 1,000 | 1,511 | 518 | |||||||||||||||
| Proceeds from shares issued in lieu of cash distributions | — | — | 48 | 59 | |||||||||||||||
| Cost of shares redeemed | (717 | ) | — | (141 | ) | — | |||||||||||||
| Net increase (decrease) in net assets from Institutional Class Shares transactions | (299 | ) | 1,000 | 1,418 | 577 | ||||||||||||||
| Investor Class Shares | |||||||||||||||||||
| Proceeds from shares issued | 973 | — | 6,586 | 135 | |||||||||||||||
| Proceeds from shares issued in lieu of cash distributions | — | — | 1 | — | |||||||||||||||
| Cost of shares redeemed | (397 | ) | — | (511 | ) | (36 | ) | ||||||||||||
| Net increase (decrease) in net assets from Investor Class Shares transactions | 576 | — | 6,076 | 99 | |||||||||||||||
| Retirement Class Shares | |||||||||||||||||||
| Proceeds from shares issued | — | — | — | — | |||||||||||||||
| Cost of shares redeemed | — | — | — | — | |||||||||||||||
| Net increase (decrease) in net assets from Retirement Class Shares transactions | — | — | — | — | |||||||||||||||
| Net increase (decrease) in net assets from capital share transactions | 277 | 1,000 | 7,494 | 676 | |||||||||||||||
| Total increase (decrease) in net assets | 235 | 1,153 | 5,795 | 1,281 | |||||||||||||||
| Net Assets: | |||||||||||||||||||
| Beginning of period | 1,153 | — | 5,129 | 3,848 | |||||||||||||||
| End of period | $ | 1,388 | $ | 1,153 | $ | 10,924 | $ | 5,129 | |||||||||||
| Undistributed net investment income (accumulated net investment income) | $ | (2 | ) | $ | — | $ | (2 | ) | $ | (14 | ) | ||||||||
| Share issued and redeemed: | |||||||||||||||||||
| Institutional Class Shares | |||||||||||||||||||
| Issued | 31 | 100 | 127 | 60 | |||||||||||||||
| Issued in lieu of cash distributions | — | — | 6 | 7 | |||||||||||||||
| Redeemed | (51 | ) | — | (13 | ) | — | |||||||||||||
| Net increase (decrease) in Institutional Class Shares | (20 | ) | 100 | 120 | 67 | ||||||||||||||
| Investor Class Shares | |||||||||||||||||||
| Issued | 71 | — | 572 | 16 | |||||||||||||||
| Redeemed | (29 | ) | — | (48 | ) | (4 | ) | ||||||||||||
| Net increase (decrease) in Investor Class Shares | 42 | — | 524 | 12 | |||||||||||||||
| Retirement Class Shares | |||||||||||||||||||
| Issued | — | — | — | — | |||||||||||||||
| Redeemed | — | — | — | — | |||||||||||||||
| Net increase (decrease) in Retirement Class Shares | — | — | — | — | |||||||||||||||
| Net increase (decrease) in share transactions | 22 | 100 | 644 | 79 | |||||||||||||||
TURNER FUNDS 2011 ANNUAL REPORT 65
FINANCIAL STATEMENTS
Statements of cash flows (000)
| Turner Market Neutral Fund | Turner Medical Sciences Long/Short Fund | ||||||||||
| 2/7/11(1) thru 9/30/11 | 2/7/11(1) thru 9/30/11 | ||||||||||
| Cash flows from operating activities: | |||||||||||
| Net increase (decrease) in net assets resulting from operations | $ | 168 | $ | (596 | ) | ||||||
| Adjustments to reconcile net increase in net assets resulting from operations to net cash used in operating activities | |||||||||||
| Purchases of long-term portfolio investments | (63,163 | ) | (85,926 | ) | |||||||
| Proceeds from sales of long-term portfolio investments | 53,059 | 68,312 | |||||||||
| Purchases of short-term portfolio investments | (21,248 | ) | (78,503 | ) | |||||||
| Proceeds from sales of short-term investments | 20,716 | 45,641 | |||||||||
| Payments to cover securities sold short | (52,788 | ) | (69,257 | ) | |||||||
| Proceeds from securities sold short | 62,828 | 86,972 | |||||||||
| Realized (gain) loss from securities sold and securities sold short | (11 | ) | 1,016 | ||||||||
| Change in unrealized (appreciation) depreciation on investments | 333 | 199 | |||||||||
| Change in unrealized (appreciation) depreciation on securities sold short | (540 | ) | (955 | ) | |||||||
| Increase in deposits with brokers for securities sold short and options | (11,376 | ) | (26,090 | ) | |||||||
| Increase in receivable for investment securities sold | (5,158 | ) | (7,010 | ) | |||||||
| Increase in prepaid expenses | (46 | ) | (61 | ) | |||||||
| Increase in receivable for dividend income | (7 | ) | (11 | ) | |||||||
| Increase in payable for investment securities purchased | 5,475 | 5,970 | |||||||||
| Increase in broker fees and charges on short sales payable | 2 | 11 | |||||||||
| Increase in payable due to investment adviser | 21 | 54 | |||||||||
| Increase in payable due to shareholder servicing | 1 | 3 | |||||||||
| Increase in payable due to distributor | — | 1 | |||||||||
| Increase in payable due to administrator | 1 | 5 | |||||||||
| Increase in dividends payable on securities sold short | 3 | 1 | |||||||||
| Increase in other accrued expenses | 12 | 24 | |||||||||
| Net cash used in operating activities | (11,718 | ) | (60,200 | ) | |||||||
| Cash flows from financing activities: | |||||||||||
| Proceeds from shares issued | 12,598 | 70,466 | |||||||||
| Cost of shares reedemed | (881 | ) | (10,267 | ) | |||||||
| Distributions from capital gains | — | — | |||||||||
| Net cash provided by financing activities | 11,717 | 60,199 | |||||||||
| Net decrease in cash | (1 | ) | (1 | ) | |||||||
| Cash, beginning of period | — | — | |||||||||
| Cash, end of period | $ | (1 | ) | $ | (1 | ) | |||||
| Non-cash Capital shares sold receivable | $ | (28 | ) | $ | (515 | ) | |||||
| Capital shares redeemed payable | — | 29 | |||||||||
| Reinvestments of distributions | — | — | |||||||||
(1) Commencement of operations.
Amounts designated as "—" are either not applicable, $0 or have been rounded to $0.
The accompanying notes are an integral part of the financial statements.
66 TURNER FUNDS 2011 ANNUAL REPORT
Statements of cash flows (000)
| Turner Spectrum Fund | Turner Titan Fund | ||||||||||
| period ended 9/30/11 | 2/7/11(1) thru 9/30/11 | ||||||||||
| Cash flows from operating activities: | |||||||||||
| Net increase (decrease) in net assets resulting from operations | $ | 5,712 | $ | (541 | ) | ||||||
| Adjustments to reconcile net increase in net assets resulting from operations to net cash used in operating activities | |||||||||||
| Purchases of long-term portfolio investments | (3,126,860 | ) | (46,228 | ) | |||||||
| Proceeds from sales of long-term portfolio investments | 2,980,788 | 34,568 | |||||||||
| Purchases of short-term portfolio investments | (1,356,365 | ) | (22,132 | ) | |||||||
| Proceeds from sales of short-term investments | 1,230,409 | 21,336 | |||||||||
| Payments to cover securities sold short | (2,411,480 | ) | (29,505 | ) | |||||||
| Proceeds from securities sold short | 2,609,758 | 38,752 | |||||||||
| Realized loss on written option contracts | 6,481 | — | |||||||||
| Realized (gain) loss from securities sold and securities sold short | (17,230 | ) | 607 | ||||||||
| Premiums received from written option contracts | 35,658 | — | |||||||||
| Premiums paid to closed option contracts | (42,379 | ) | — | ||||||||
| Change in unrealized depreciation on investments | 25,740 | 354 | |||||||||
| Change in unrealized (appreciation) depreciation on written option contracts | (56 | ) | — | ||||||||
| Change in unrealized (appreciation) depreciation on securities sold short | (26,382 | ) | (488 | ) | |||||||
| Increase in deposits with brokers for securities sold short and options | (243,624 | ) | (10,029 | ) | |||||||
| Increase in receivable for investment securities sold | (131,157 | ) | (3,887 | ) | |||||||
| Increase in prepaid expenses | (452 | ) | (69 | ) | |||||||
| Increase in receivable for dividend income | (79 | ) | (5 | ) | |||||||
| Increase in foreign currency cash | (23 | ) | — | ||||||||
| Increase in reclaim receivable | (11 | ) | — | ||||||||
| Increase in payable for investment securities purchased | 82,330 | 2,612 | |||||||||
| Increase in broker fees and charges on short sales payable | 59 | 1 | |||||||||
| Increase in payable due to investment adviser | 538 | 42 | |||||||||
| Increase in payable due to shareholder servicing | 13 | 1 | |||||||||
| Increase in payable due to distributor | 4 | — | |||||||||
| Increase in payable due to administrator | 56 | 1 | |||||||||
| Increase in dividends payable on securities sold short | 21 | — | |||||||||
| Increase in other accrued expenses | 162 | 20 | |||||||||
| Net cash used in operating activities | (378,369 | ) | (14,590 | ) | |||||||
| Cash flows from financing activities: | |||||||||||
| Proceeds from shares issued | 471,708 | 14,739 | |||||||||
| Cost of shares reedemed | (93,339 | ) | (149 | ) | |||||||
| Net cash provided by financing activities | 378,369 | 14,590 | |||||||||
| Net increase in cash | — | — | |||||||||
| Cash, beginning of period | — | — | |||||||||
| Cash, end of period | $ | — | $ | — | |||||||
| Non-cash Capital shares sold receivable | $ | (1,892 | ) | $ | (71 | ) | |||||
| Capital shares redeemed payable | 2,596 | 5 | |||||||||
| Reinvestments of distributions | 134 | — | |||||||||
(1) Commencement of operations.
Amounts designated as "—" are either not applicable, $0 or have been rounded to $0.
The accompanying notes are an integral part of the financial statements.
TURNER FUNDS 2011 ANNUAL REPORT 67
FINANCIAL STATEMENTS
Financial highlights
For a share outstanding throughout each period
| Net asset value, beginning of period | Net investment income (loss) | Realized and unrealized gains (losses) on investments | Total from investment operations | Dividends from net investment income | Distributions from capital gains (losses) | Total dividends and distributions | Net asset value, end of period | ||||||||||||||||||||||||||||
| Turner Market Neutral Fund — Institutional Class Shares | |||||||||||||||||||||||||||||||||||
| 2011 | (1) | $ | 10.00 | �� | (0.09 | ) (2) | 0.62 | 0.53 | — | — | — | $ | 10.53 | ||||||||||||||||||||||
| Turner Market Neutral Fund — Investor Class Shares | |||||||||||||||||||||||||||||||||||
| 2011 | (1) | $ | 10.00 | (0.10 | ) (2) | 0.62 | 0.52 | — | — | — | $ | 10.52 | |||||||||||||||||||||||
| Turner Market Neutral Fund — Class C Shares | |||||||||||||||||||||||||||||||||||
| 2011 | (1) | $ | 10.00 | (0.15 | ) (2) | 0.61 | 0.46 | — | — | — | $ | 10.46 | |||||||||||||||||||||||
| Turner Medical Sciences Long/Short Fund — Institutional Class Shares | |||||||||||||||||||||||||||||||||||
| 2011 | (1) | $ | 10.00 | (0.12 | ) (2) | 0.47 | 0.35 | — | — | — | $ | 10.35 | |||||||||||||||||||||||
| Turner Medical Sciences Long/Short Fund — Investor Class Shares | |||||||||||||||||||||||||||||||||||
| 2011 | (1) | $ | 10.00 | (0.13 | ) (2) | 0.47 | 0.34 | — | — | — | $ | 10.34 | |||||||||||||||||||||||
| Turner Medical Sciences Long/Short Fund — Class C Shares | |||||||||||||||||||||||||||||||||||
| 2011 | (1) | $ | 10.00 | (0.18 | ) (2) | 0.48 | 0.30 | — | — | — | $ | 10.30 | |||||||||||||||||||||||
| Turner Spectrum Fund — Institutional Class Shares | |||||||||||||||||||||||||||||||||||
| 2011 | $ | 10.82 | (0.16 | ) (2) | 0.79 | 0.63 | — | — | — | $ | 11.45 | ||||||||||||||||||||||||
| 2010 | $ | 10.81 | (0.13 | ) (2) | 0.21 | (4) | 0.08 | — | (0.07 | ) | (0.07 | ) | $ | 10.82 | |||||||||||||||||||||
| 2009 | (7) | $ | 10.00 | (0.07 | ) (2) | 0.88 | 0.81 | — | — | — | $ | 10.81 | |||||||||||||||||||||||
| Turner Spectrum Fund — Investor Class Shares | |||||||||||||||||||||||||||||||||||
| 2011 | $ | 10.78 | (0.19 | ) (2) | 0.79 | 0.60 | — | — | — | $ | 11.38 | ||||||||||||||||||||||||
| 2010 | $ | 10.80 | (0.16 | ) (2) | 0.21 | (4) | 0.05 | — | (0.07 | ) | (0.07 | ) | $ | 10.78 | |||||||||||||||||||||
| 2009 | (7) | $ | 10.00 | (0.09 | ) (2) | 0.89 | 0.80 | — | — | — | $ | 10.80 | |||||||||||||||||||||||
| Turner Spectrum Fund — Class C Shares | |||||||||||||||||||||||||||||||||||
| 2011 | $ | 10.72 | (0.27 | ) (2) | 0.78 | 0.51 | — | — | — | $ | 11.23 | ||||||||||||||||||||||||
| 2010 | $ | 10.80 | (0.24 | ) (2) | 0.23 | (4) | (0.01 | ) | — | (0.07 | ) | (0.07 | ) | $ | 10.72 | ||||||||||||||||||||
| 2009 | (10) | $ | 9.98 | (0.07 | ) (2) | 0.89 | 0.82 | — | — | — | $ | 10.80 | |||||||||||||||||||||||
| Turner Titan Fund — Institutional Class Shares | |||||||||||||||||||||||||||||||||||
| 2011 | (1) | $ | 10.00 | (0.10 | ) (2) | (0.13 | ) | (0.23 | ) | — | — | — | $ | 9.77 | |||||||||||||||||||||
| Turner Titan Fund — Investor Class Shares | |||||||||||||||||||||||||||||||||||
| 2011 | (1) | $ | 10.00 | (0.11 | ) (2) | (0.13 | ) | (0.24 | ) | — | — | — | $ | 9.76 | |||||||||||||||||||||
| Turner Titan Fund — Class C Shares | |||||||||||||||||||||||||||||||||||
| 2011 | (1) | $ | 10.00 | (0.16 | ) (2) | (0.12 | ) | (0.28 | ) | — | — | — | $ | 9.72 | |||||||||||||||||||||
* Amount represents less than $0.01 per share
† Inclusive of fees paid indirectly, waivers and/or reimbursements.
†† Excludes effect of in-kind transfers and mergers, as applicable. Not annualized for periods less than one year.
††† Total return is for the period indicated and has not been annualized.
(1) Commenced operations on February 7, 2011. All ratios for the period have been annualized.
(2) Based on average shares outstanding.
(3) Dividend expense totaled 0.44% of average net assets for the period ended September 30, 2011, 0.34% of which was waived. Broker fees and charges on short sales totaled 0.25% of average net assets for the period ended September 30, 2011, 0.19% of which was waived. If dividend expense and broker fees and charges on short sales had not been contractually waived, the ratios of net expenses to average net assets would have been 2.48%, 2.73% and 3.48% for the Institutional, Investor and Class C Shares, respectively.
(4) Dividend expense totaled 0.15% of average net assets for the period ended September 30, 2011, 0.12% of which was waived. Broker fees and charges on short sales totaled 0.47% of average net assets for the period ended September 30, 2011, 0.39% of which was waived. If dividend expense and broker fees and charges on short sales had not been contractually waived, the ratios of net expenses to average net assets would have been 2.44%, 2.65% and 3.44% for the Institutional, Investor and Class C Shares, respectively.
(5) The amount shown for a share outstanding throughout the period and the aggregate net losses on investments for the period are not in accord, because of the sales and repurchases of fund shares in relation to fluctuating market value of the investments of the Fund.
(6) Dividend expense totaled 0.28% of average net assets for the year ended September 30, 2011, 0.22% of which was waived. Broker fees and charges on short sales totaled 0.32% of average net assets for the year ended September 30, 2011, 0.25% of which was waived. If dividend expense and broker fees and charges on short sales had not been contractually waived, the ratios of net expenses to average net assets would have been 2.40%, 2.65% and 3.40% for the Institutional, Investor and Class C Shares, respectively.
(7) Dividend expense totaled 0.45% of average net assets for the year ended September 30, 2010, 0.42% of which was waived. Broker fees and charges on short sales totaled 0.38% of average net assets for the year ended September 30, 2010, 0.37% of which was waived beginning on January 13, 2010. If dividend expense and broker fees and charges on short sales had not been contractually waived, the ratios of net expenses to average net assets would have been 2.70%, 2.96% and 3.71% for the Institutional, Investor and Class C Shares, respectively.
(8) Commenced operations on May 7, 2009. All ratios for the period have been annualized.
(9) Dividend expense totaled 0.70% of average net assets for the period ended September 30, 2009. If dividend expense had not been contractually waived, the ratios of net expenses to average net assets would have been 3.14%, 3.41% and 3.05% for the Institutional, Investor and Class C Shares, respectively. If broker fees and charges on short sales had not been included, the ratios of net expenses to average net assets would have been 1.94%, 2.20% and 1.95% for the Institutional, Investor and Class C Shares, respectively.
(10) Commenced operations on July 14, 2009. All ratios for the period have been annualized.
(11) Dividend expense totaled 0.28% of average net assets for the period ended September 30, 2011, 0.22% of which was waived. Broker fees and charges on short sales totaled 0.32% of average net assets for the period ended September 30, 2011, 0.25% of which was waived. If dividend expense and broker fees and charges on short sales had not been contractually waived, the ratios of net expenses to average net assets would have been 2.20%, 2.44% and 3.20% for the Institutional, Investor and Class C Shares, respectively.
Amounts designated as "—" are either $0, not applicable or have been rounded to $0.
The accompanying notes are an integral part of the financial statements.
68 TURNER FUNDS 2011 ANNUAL REPORT
| Total return | Net assets end of period (000) | Ratio of net expenses to average net assets† | Ratio of net expenses to average net assets | Ratio of total expenses to average net assets | Ratio of net investment income (loss) to average net assets† | Portfolio turnover rate†† | |||||||||||||||||||||||||
| Turner Market Neutral Fund — Institutional Class Shares | |||||||||||||||||||||||||||||||
| 2011 | (1) | 5.30 | %††† | $ | 8,679 | 1.95 | % (3) | 1.95 | % (3) | 3.92 | % | (1.27 | )% | 1,184 | % | ||||||||||||||||
| Turner Market Neutral Fund — Investor Class Shares | |||||||||||||||||||||||||||||||
| 2011 | (1) | 5.20 | %††† | $ | 3,233 | 2.20 | % (3) | 2.20 | % (3) | 4.18 | % | (1.54 | )% | 1,184 | % | ||||||||||||||||
| Turner Market Neutral Fund — Class C Shares | |||||||||||||||||||||||||||||||
| 2011 | (1) | 4.60 | %††† | $ | — | 2.95 | % (3) | 2.95 | % (3) | 4.77 | % | (2.26 | )% | 1,184 | % | ||||||||||||||||
| Turner Medical Sciences Long/Short Fund — Institutional Class Shares | |||||||||||||||||||||||||||||||
| 2011 | (1) | 3.50 | %††† | $ | 45,147 | 1.93 | % (4) | 1.93 | % (4) | 2.74 | % | (1.74 | )% | 608 | % | ||||||||||||||||
| Turner Medical Sciences Long/Short Fund — Investor Class Shares | |||||||||||||||||||||||||||||||
| 2011 | (1) | 3.40 | %††† | $ | 12,777 | 2.14 | % (4) | 2.14 | % (4) | 2.89 | % | (1.93 | )% | 608 | % | ||||||||||||||||
| Turner Medical Sciences Long/Short Fund — Class C Shares | |||||||||||||||||||||||||||||||
| 2011 | (1) | 3.00 | %††† | $ | 2,165 | 2.93 | % (4) | 2.93 | % (4) | 3.63 | % | (2.71 | )% | 608 | % | ||||||||||||||||
| Turner Spectrum Fund — Institutional Class Shares | |||||||||||||||||||||||||||||||
| 2011 | 5.82 | % | $ | 448,554 | 1.93 | % (6) | 1.93 | % (6) | 2.48 | % | (1.34 | )% | 1,153 | % | |||||||||||||||||
| 2010 | 0.77 | % | $ | 179,526 | 1.91 | % (7) | 1.91 | % (7) | 2.85 | % | (1.23 | )% | 1,808 | % | |||||||||||||||||
| 2009 | (7) | 8.10 | %††† | $ | 8,681 | 2.44 | % (9) | 2.44 | % (9) | 5.63 | % | (1.78 | )% | 663 | % | ||||||||||||||||
| Turner Spectrum Fund — Investor Class Shares | |||||||||||||||||||||||||||||||
| 2011 | 5.57 | % | $ | 161,401 | 2.18 | % (6) | 2.18 | % (6) | 2.70 | % | (1.61 | )% | 1,153 | % | |||||||||||||||||
| 2010 | 0.49 | % | $ | 52,361 | 2.17 | % (7) | 2.17 | % (7) | 3.12 | % | (1.52 | )% | 1,808 | % | |||||||||||||||||
| 2009 | (7) | 8.00 | %††† | $ | 4,567 | 2.71 | % (9) | 2.71 | % (9) | 5.84 | % | (2.09 | )% | 663 | % | ||||||||||||||||
| Turner Spectrum Fund — Class C Shares | |||||||||||||||||||||||||||||||
| 2011 | 4.76 | % | $ | 12,478 | 2.93 | % (6) | 2.93 | % (6) | 3.39 | % | (2.33 | )% | 1,153 | % | |||||||||||||||||
| 2010 | (0.07 | )% | $ | 7,169 | 2.92 | % (7) | 2.92 | % (7) | 3.82 | % | (2.19 | )% | 1,808 | % | |||||||||||||||||
| 2009 | (10) | 8.22 | %††† | $ | — | 2.35 | % (9) | 2.35 | % (9) | 5.28 | % | (3.12 | )% | 663 | % | ||||||||||||||||
| Turner Titan Fund — Institutional Class Shares | |||||||||||||||||||||||||||||||
| 2011 | (1) | (2.30 | )%††† | $ | 11,374 | 1.92 | % (11) | 1.92 | % (11) | 3.54 | % | (1.47 | )% | 647 | % | ||||||||||||||||
| Turner Titan Fund — Investor Class Shares | |||||||||||||||||||||||||||||||
| 2011 | (1) | (2.40 | )%††† | $ | 2,711 | 2.16 | % (11) | 2.16 | % (11) | 4.66 | % | (1.65 | )% | 647 | % | ||||||||||||||||
| Turner Titan Fund — Class C Shares | |||||||||||||||||||||||||||||||
| 2011 | (1) | (2.80 | )%††† | $ | 29 | 2.92 | % (11) | 2.92 | % (11) | 2.31 | % | (2.44 | )% | 647 | % | ||||||||||||||||
TURNER FUNDS 2011 ANNUAL REPORT 69
FINANCIAL STATEMENTS
Financial highlights
For a share outstanding throughout each period
| Net asset value, beginning of period | Net investment income (loss) | Realized and unrealized gains (losses) on investments | Total from investment operations | Dividends from net investment income | Distributions from capital gains (losses) | Total dividends and distributions | Net asset value, end of period | ||||||||||||||||||||||||||||
| Turner All Cap Growth Fund — Investor Class Shares | |||||||||||||||||||||||||||||||||||
| 2011 | $ | 7.03 | (0.11 | ) (1) | 0.75 | 0.64 | — | — | — | $ | 7.67 | ||||||||||||||||||||||||
| 2010 | $ | 5.95 | (0.09 | ) (1) | 1.18 | 1.09 | (0.01 | ) | — | (0.01 | ) | $ | 7.03 | ||||||||||||||||||||||
| 2009 | $ | 5.60 | — | * (1) | 0.35 | 0.35 | — | — | — | $ | 5.95 | ||||||||||||||||||||||||
| 2008 | $ | 8.72 | (0.07 | ) (1) | (3.05 | ) | (3.12 | ) | — | — | — | $ | 5.60 | ||||||||||||||||||||||
| 2007 | $ | 6.26 | (0.07 | ) (1) | 2.53 | 2.46 | — | — | — | $ | 8.72 | ||||||||||||||||||||||||
| Turner Concentrated Growth Fund — Investor Class Shares | |||||||||||||||||||||||||||||||||||
| 2011 | $ | 6.63 | (0.10 | ) (1) | (0.11 | ) | (0.21 | ) | — | — | — | $ | 6.42 | ||||||||||||||||||||||
| 2010 | $ | 6.16 | (0.07 | ) (1) | 0.56 | 0.49 | (0.02 | ) | — | (0.02 | ) | $ | 6.63 | ||||||||||||||||||||||
| 2009 | $ | 6.35 | 0.02 | (1) | (0.21 | ) | (0.19 | ) | — | — | — | $ | 6.16 | ||||||||||||||||||||||
| 2008 | $ | 10.12 | (0.07 | ) (1) | (3.70 | ) | (3.77 | ) | — | — | — | $ | 6.35 | ||||||||||||||||||||||
| 2007 | $ | 7.60 | (0.05 | ) (1) | 2.57 | 2.52 | — | — | — | $ | 10.12 | ||||||||||||||||||||||||
| Turner Emerging Growth Fund — Institutional Class Shares | |||||||||||||||||||||||||||||||||||
| 2011 | $ | 42.51 | (0.40 | ) (1) | 3.72 | 3.32 | — | — | — | $ | 45.83 | ||||||||||||||||||||||||
| 2010 | $ | 37.78 | (0.31 | ) (1) | 5.04 | 4.73 | — | — | — | $ | 42.51 | ||||||||||||||||||||||||
| 2009 | (2) | $ | 28.45 | (0.12 | ) (1) | 9.45 | (3) | 9.33 | — | — | — | $ | 37.78 | ||||||||||||||||||||||
| Turner Emerging Growth Fund — Investor Class Shares | |||||||||||||||||||||||||||||||||||
| 2011 | $ | 42.32 | (0.52 | ) (1) | 3.72 | 3.20 | — | — | — | $ | 45.52 | ||||||||||||||||||||||||
| 2010 | $ | 37.71 | (0.41 | ) (1) | 5.02 | 4.61 | — | — | — | $ | 42.32 | ||||||||||||||||||||||||
| 2009 | $ | 46.42 | (0.22 | ) (1) | (7.31 | ) | (7.53 | ) | — | (1.18 | ) | (1.18 | ) | $ | 37.71 | ||||||||||||||||||||
| 2008 | $ | 64.06 | (0.35 | ) (1) | (8.54 | ) | (8.89 | ) | (0.25 | ) | (8.50 | ) | (8.75 | ) | $ | 46.42 | |||||||||||||||||||
| 2007 | $ | 55.97 | (0.30 | ) (1) | 13.61 | 13.31 | — | (5.22 | ) | (5.22 | ) | $ | 64.06 | ||||||||||||||||||||||
| Turner Large Growth Fund — Institutional Class Shares | |||||||||||||||||||||||||||||||||||
| 2011 | $ | 10.56 | — | * (1) | (0.04 | ) | (0.04 | ) | (0.02 | ) | — | (0.02 | ) | $ | 10.50 | ||||||||||||||||||||
| 2010 | $ | 9.93 | 0.02 | (1) | 0.65 | 0.67 | (0.04 | ) | — | (0.04 | ) | $ | 10.56 | ||||||||||||||||||||||
| 2009 | $ | 10.41 | 0.05 | (1) | (0.48 | ) | (0.43 | ) | (0.05 | ) | — | (0.05 | ) | $ | 9.93 | ||||||||||||||||||||
| 2008 | $ | 14.39 | 0.06 | (1) | (4.01 | ) | (3.95 | ) | (0.03 | ) | — | (0.03 | ) | $ | 10.41 | ||||||||||||||||||||
| 2007 | $ | 11.65 | 0.02 | (1) | 2.77 | 2.79 | (0.05 | ) | — | (0.05 | ) | $ | 14.39 | ||||||||||||||||||||||
| Turner Large Growth Fund — Investor Class Shares | |||||||||||||||||||||||||||||||||||
| 2011 | $ | 10.49 | (0.03 | ) (1) | (0.04 | ) | (0.07 | ) | — | — | — | $ | 10.42 | ||||||||||||||||||||||
| 2010 | $ | 9.87 | — | * (1) | 0.64 | 0.64 | (0.02 | ) | — | (0.02 | ) | $ | 10.49 | ||||||||||||||||||||||
| 2009 | $ | 10.34 | 0.03 | (1) | (0.47 | ) | (0.44 | ) | (0.03 | ) | — | (0.03 | ) | $ | 9.87 | ||||||||||||||||||||
| 2008 | $ | 14.33 | 0.02 | (1) | (3.99 | ) | (3.97 | ) | (0.02 | ) | — | (0.02 | ) | $ | 10.34 | ||||||||||||||||||||
| 2007 | $ | 11.61 | 0.02 | (1) | 2.73 | 2.75 | (0.03 | ) | — | (0.03 | ) | $ | 14.33 | ||||||||||||||||||||||
| Turner Midcap Growth Fund — Institutional Class Shares | |||||||||||||||||||||||||||||||||||
| 2011 | $ | 29.90 | (0.06 | ) (1) | 0.58 | 0.52 | — | — | — | $ | 30.42 | ||||||||||||||||||||||||
| 2010 | $ | 26.12 | (0.08 | ) (1) | 3.86 | 3.78 | — | — | — | $ | 29.90 | ||||||||||||||||||||||||
| 2009 | $ | 26.20 | (0.01 | ) (1) | (0.07 | ) | (0.08 | ) | — | — | — | $ | 26.12 | ||||||||||||||||||||||
| 2008 | (4) | $ | 34.67 | (0.01 | ) (1) | (8.46 | ) | (8.47 | ) | — | — | — | $ | 26.20 | |||||||||||||||||||||
| Turner Midcap Growth Fund — Investor Class Shares | |||||||||||||||||||||||||||||||||||
| 2011 | $ | 29.73 | (0.13 | ) (1) | 0.56 | 0.43 | — | — | — | $ | 30.16 | ||||||||||||||||||||||||
| 2010 | $ | 26.03 | �� | (0.15 | ) (1) | 3.85 | 3.70 | — | — | — | $ | 29.73 | |||||||||||||||||||||||
| 2009 | $ | 26.18 | (0.06 | ) (1) | (0.09 | ) | (0.15 | ) | — | — | — | $ | 26.03 | ||||||||||||||||||||||
| 2008 | $ | 35.71 | (0.14 | ) (1) | (9.39 | ) | (9.53 | ) | — | — | — | $ | 26.18 | ||||||||||||||||||||||
| 2007 | $ | 27.63 | (0.20 | ) (1) | 8.28 | 8.08 | — | — | — | $ | 35.71 | ||||||||||||||||||||||||
* Amount represents less than $0.01 per share
† Inclusive of fees paid indirectly, waivers and/or reimbursements.
†† Excludes effect of in-kind transfers and mergers, as applicable. Not annualized for periods less than one year.
††† Total return is for the period indicated and has not been annualized.
(1) Based on average shares outstanding.
(2) Commenced operations on February 1, 2009. All ratios for the period have been annualized.
(3) The amount shown for a share outstanding throughout the period does not accord with the aggregate net losses on investments for the period because of the sales and repurchases of fund shares in relation to fluctuating market value of the investments of the Fund.
(4) Commenced operations on June 16, 2008. All ratios for the period have been annualized.
Amounts designated as "—" are either $0, not applicable or have been rounded to $0.
The accompanying notes are an integral part of the financial statements.
70 TURNER FUNDS 2011 ANNUAL REPORT
| Total return | Net assets end of period (000) | Ratio of net expenses to average net assets† | Ratio of net expenses to average net assets | Ratio of total expenses to average net assets | Ratio of net investment income (loss) to average net assets† | Portfolio turnover rate†† | |||||||||||||||||||||||||
| Turner All Cap Growth Fund — Investor Class Shares | |||||||||||||||||||||||||||||||
| 2011 | 9.10 | % | $ | 33,053 | 1.73 | % | 1.73 | % | 2.12 | % | (1.29 | )% | 205 | % | |||||||||||||||||
| 2010 | 18.25 | % | $ | 23,227 | 1.64 | % | 1.64 | % | 2.15 | % | (1.38 | )% | 115 | % | |||||||||||||||||
| 2009 | 6.25 | % | $ | 26,324 | 0.62 | % | 0.63 | % | 1.23 | % | 0.09 | % | 220 | % | |||||||||||||||||
| 2008 | (35.78 | )% | $ | 32,759 | 1.52 | % | 1.54 | % | 1.90 | % | (0.89 | )% | 323 | % | |||||||||||||||||
| 2007 | 39.30 | % | $ | 70,145 | 1.27 | % | 1.27 | % | 1.73 | % | (0.98 | )% | 173 | % | |||||||||||||||||
| Turner Concentrated Growth Fund — Investor Class Shares | |||||||||||||||||||||||||||||||
| 2011 | (3.17 | )% | $ | 38,939 | 1.69 | % | 1.69 | % | 2.08 | % | (1.29 | )% | 203 | % | |||||||||||||||||
| 2010 | 7.94 | % | $ | 42,924 | 1.51 | % | 1.51 | % | 1.94 | % | (1.14 | )% | 215 | % | |||||||||||||||||
| 2009 | (2.99 | )% | $ | 39,973 | 0.82 | % | 0.82 | % | 1.34 | % | 0.38 | % | 208 | % | |||||||||||||||||
| 2008 | (37.25 | )% | $ | 42,581 | 1.53 | % | 1.54 | % | 1.91 | % | (0.83 | )% | 348 | % | |||||||||||||||||
| 2007 | 33.16 | % | $ | 61,401 | 1.11 | % | 1.11 | % | 1.46 | % | (0.57 | )% | 220 | % | |||||||||||||||||
| Turner Emerging Growth Fund — Institutional Class Shares | |||||||||||||||||||||||||||||||
| 2011 | 7.81 | % | $ | 67,035 | 1.15 | % | 1.15 | % | 1.27 | % | (0.77 | )% | 74 | % | |||||||||||||||||
| 2010 | 12.52 | % | $ | 276,445 | 1.15 | % | 1.15 | % | 1.28 | % | (0.77 | )% | 96 | % | |||||||||||||||||
| 2009 | (2) | 32.79 | %††† | $ | 243,790 | 1.15 | % | 1.15 | % | 1.33 | % | (0.54 | )% | 78 | % | ||||||||||||||||
| Turner Emerging Growth Fund — Investor Class Shares | |||||||||||||||||||||||||||||||
| 2011 | 7.56 | % | $ | 159,127 | 1.40 | % | 1.40 | % | 1.55 | % | (1.01 | )% | 74 | % | |||||||||||||||||
| 2010 | 12.22 | % | $ | 176,823 | 1.40 | % | 1.40 | % | 1.53 | % | (1.02 | )% | 96 | % | |||||||||||||||||
| 2009 | (15.58 | )% | $ | 188,812 | 1.40 | % | 1.40 | % | 1.56 | % | (0.71 | )% | 78 | % | |||||||||||||||||
| 2008 | (16.08 | )% | $ | 529,578 | 1.40 | % | 1.40 | % | 1.49 | % | (0.66 | )% | 71 | % | |||||||||||||||||
| 2007 | 25.08 | % | $ | 638,037 | 1.40 | % | 1.40 | % | 1.48 | % | (0.50 | )% | 88 | % | |||||||||||||||||
| Turner Large Growth Fund — Institutional Class Shares | |||||||||||||||||||||||||||||||
| 2011 | (0.39 | )% | $ | 382,336 | 0.69 | % | 0.69 | % | 0.89 | % | (0.03 | )% | 182 | % | |||||||||||||||||
| 2010 | 6.76 | % | $ | 377,650 | 0.69 | % | 0.69 | % | 0.87 | % | 0.20 | % | 178 | % | |||||||||||||||||
| 2009 | (3.97 | )% | $ | 381,277 | 0.69 | % | 0.69 | % | 0.92 | % | 0.65 | % | 126 | % | |||||||||||||||||
| 2008 | (27.53 | )% | $ | 360,083 | 0.69 | % | 0.69 | % | 0.90 | % | 0.42 | % | 200 | % | |||||||||||||||||
| 2007 | 24.00 | % | $ | 237,778 | 0.68 | % | 0.68 | % | 1.06 | % | 0.42 | % | 103 | % | |||||||||||||||||
| Turner Large Growth Fund — Investor Class Shares | |||||||||||||||||||||||||||||||
| 2011 | (0.67 | )% | $ | 56,661 | 0.94 | % | 0.94 | % | 1.13 | % | (0.28 | )% | 182 | % | |||||||||||||||||
| 2010 | 6.51 | % | $ | 163,750 | 0.94 | % | 0.94 | % | 1.12 | % | (0.05 | )% | 178 | % | |||||||||||||||||
| 2009 | (4.21 | )% | $ | 252,916 | 0.94 | % | 0.94 | % | 1.17 | % | 0.41 | % | 126 | % | |||||||||||||||||
| 2008 | (27.76 | )% | $ | 260,692 | 0.94 | % | 0.94 | % | 1.15 | % | 0.15 | % | 200 | % | |||||||||||||||||
| 2007 | 23.68 | % | $ | 37,541 | 0.94 | % | 0.94 | % | 1.31 | % | 0.15 | % | 103 | % | |||||||||||||||||
| Turner Midcap Growth Fund — Institutional Class Shares | |||||||||||||||||||||||||||||||
| 2011 | 1.74 | % | $ | 245,480 | 0.93 | % | 0.93 | % | 1.05 | % | (0.18 | )% | 104 | % | |||||||||||||||||
| 2010 | 14.47 | % | $ | 164,993 | 0.93 | % | 0.93 | % | 1.03 | % | (0.29 | )% | 90 | % | |||||||||||||||||
| 2009 | (0.31 | )% | $ | 136,069 | 0.93 | % | 0.93 | % | 1.08 | % | (0.05 | )% | 120 | % | |||||||||||||||||
| 2008 | (4) | (24.43 | )%††† | $ | 137,451 | 0.93 | % | 0.94 | % | 1.03 | % | (0.09 | )% | 157 | % | ||||||||||||||||
| Turner Midcap Growth Fund — Investor Class Shares | |||||||||||||||||||||||||||||||
| 2011 | 1.45 | % | $ | 471,286 | 1.18 | % | 1.18 | % | 1.28 | % | (0.38 | )% | 104 | % | |||||||||||||||||
| 2010 | 14.21 | % | $ | 751,124 | 1.18 | % | 1.18 | % | 1.28 | % | (0.54 | )% | 90 | % | |||||||||||||||||
| 2009 | (0.57 | )% | $ | 859,640 | 1.18 | % | 1.18 | % | 1.33 | % | (0.29 | )% | 120 | % | |||||||||||||||||
| 2008 | (26.69 | )% | $ | 994,545 | 1.18 | % | 1.18 | % | 1.25 | % | (0.44 | )% | 157 | % | |||||||||||||||||
| 2007 | 29.24 | % | $ | 1,340,172 | 1.18 | % | 1.18 | % | 1.24 | % | (0.63 | )% | 155 | % | |||||||||||||||||
TURNER FUNDS 2011 ANNUAL REPORT 71
FINANCIAL STATEMENTS
Financial highlights
For a share outstanding throughout each period
| Net asset value, beginning of period | Net investment income (loss) | Realized and unrealized gains (losses) on investments | Total from investment operations | Dividends from net investment income | Distributions from capital gains (losses) | Total dividends and distributions | Net asset value, end of period | ||||||||||||||||||||||||||||
| Turner Midcap Growth Fund — Retirement Class Shares | |||||||||||||||||||||||||||||||||||
| 2011 | $ | 28.71 | (0.22 | ) (1) | 0.56 | 0.34 | — | — | — | $ | 29.05 | ||||||||||||||||||||||||
| 2010 | $ | 25.20 | (0.21 | ) (1) | 3.72 | 3.51 | — | — | — | $ | 28.71 | ||||||||||||||||||||||||
| 2009 | $ | 25.40 | (0.11 | ) (1) | (0.09 | ) | (0.20 | ) | — | — | — | $ | 25.20 | ||||||||||||||||||||||
| 2008 | $ | 34.74 | (0.22 | ) (1) | (9.12 | ) | (9.34 | ) | — | — | — | $ | 25.40 | ||||||||||||||||||||||
| 2007 | $ | 26.96 | (0.30 | ) (1) | 8.08 | 7.78 | — | — | — | $ | 34.74 | ||||||||||||||||||||||||
| Turner Small Cap Growth Fund — Investor Class Shares | |||||||||||||||||||||||||||||||||||
| 2011 | $ | 28.97 | (0.26 | ) (1) | (0.88 | ) | (1.14 | ) | — | — | — | $ | 27.83 | ||||||||||||||||||||||
| 2010 | $ | 25.17 | (0.20 | ) (1) | 4.00 | 3.80 | — | — | — | $ | 28.97 | ||||||||||||||||||||||||
| 2009 | $ | 26.45 | (0.07 | ) (1) | (1.21 | ) | (1.28 | ) | — | — | — | $ | 25.17 | ||||||||||||||||||||||
| 2008 | $ | 32.98 | (0.15 | ) (1) | (6.38 | ) | (6.53 | ) | — | — | — | $ | 26.45 | ||||||||||||||||||||||
| 2007 | $ | 26.17 | (0.20 | ) (1) | 7.01 | 6.81 | — | — | — | $ | 32.98 | ||||||||||||||||||||||||
| Turner Global Opportunities Fund — Institutional Class Shares | |||||||||||||||||||||||||||||||||||
| 2011 | $ | 11.52 | (0.04 | ) (1) | (0.10 | ) | (0.14 | ) | — | — | — | $ | 11.38 | ||||||||||||||||||||||
| 2010 | (2) | $ | 10.00 | (0.01 | ) (1) | 1.53 | 1.52 | — | — | — | $ | 11.52 | |||||||||||||||||||||||
| Turner Global Opportunities Fund — Investor Class Shares | |||||||||||||||||||||||||||||||||||
| 2011 | $ | 11.50 | (0.06 | ) (1) | (0.11 | ) | (0.17 | ) | — | — | — | $ | 11.33 | ||||||||||||||||||||||
| 2010 | (2) | $ | 10.00 | (0.03 | ) (1) | 1.53 | 1.50 | — | — | — | $ | 11.50 | |||||||||||||||||||||||
| Turner International Growth Fund — Institutional Class Shares | |||||||||||||||||||||||||||||||||||
| 2011 | $ | 9.41 | 0.08 | (1) | (0.19 | ) | (0.11 | ) | (0.09 | ) | — | (0.09 | ) | $ | 9.21 | ||||||||||||||||||||
| 2010 | $ | 8.24 | 0.04 | (1) | 1.26 | 1.30 | (0.13 | ) | — | (0.13 | ) | $ | 9.41 | ||||||||||||||||||||||
| 2009 | $ | 8.34 | 0.08 | (1) | (0.07 | ) (3) | 0.01 | (0.11 | ) | — | (0.11 | ) | $ | 8.24 | |||||||||||||||||||||
| 2008 | $ | 12.21 | 0.12 | (1) | (3.87 | ) | (3.75 | ) | (0.02 | ) | (0.10 | ) | (0.12 | ) | $ | 8.34 | |||||||||||||||||||
| 2007 | (4) | $ | 10.00 | 0.07 | (1) | 2.14 | 2.21 | — | — | — | $ | 12.21 | |||||||||||||||||||||||
| Turner International Growth Fund — Investor Class Shares | |||||||||||||||||||||||||||||||||||
| 2011 | $ | 9.39 | 0.05 | (1) | (0.20 | ) | (0.15 | ) | (0.07 | ) | — | (0.07 | ) | $ | 9.17 | ||||||||||||||||||||
| 2010 | $ | 8.24 | 0.05 | (1) | 1.23 | 1.28 | (0.13 | ) | — | (0.13 | ) | $ | 9.39 | ||||||||||||||||||||||
| 2009 | (5) | $ | 6.27 | 0.07 | (1) | 2.01 | 2.08 | (0.11 | ) | — | (0.11 | ) | $ | 8.24 | |||||||||||||||||||||
† Inclusive of fees paid indirectly, waivers and/or reimbursements.
†† Excludes effect of in-kind transfers and mergers, as applicable. Not annualized for periods less than one year.
††† Total return is for the period indicated and has not been annualized.
(1) Based on average shares outstanding.
(2) Commenced operations on May 7, 2010. All ratios for the period have been annualized.
(3) The amount shown for a share outstanding throughout the period does not accord with the aggregate net losses on investments for the period because of the sales and repurchases of fund shares in relation to fluctuating market value of the investments of the Fund.
(4) Commenced operations on January 31, 2007. All ratios for the period have been annualized.
(5) Commenced operations on October 31, 2008. All ratios for the period have been annualized.
Amounts designated as "—" are either $0, not applicable or have been rounded to $0.
The accompanying notes are an integral part of the financial statements.
72 TURNER FUNDS 2011 ANNUAL REPORT
| Total return | Net assets end of period (000) | Ratio of net expenses to average net assets† | Ratio of net expenses to average net assets | Ratio of total expenses to average net assets | Ratio of net investment income (loss) to average net assets† | Portfolio turnover rate†† | |||||||||||||||||||||||||
| Turner Midcap Growth Fund — Retirement Class Shares | |||||||||||||||||||||||||||||||
| 2011 | 1.18 | % | $ | 3,972 | 1.43 | % | 1.43 | % | 1.54 | % | (0.63 | )% | 104 | % | |||||||||||||||||
| 2010 | 13.93 | % | $ | 4,578 | 1.43 | % | 1.43 | % | 1.53 | % | (0.79 | )% | 90 | % | |||||||||||||||||
| 2009 | (0.79 | )% | $ | 3,892 | 1.43 | % | 1.43 | % | 1.58 | % | (0.55 | )% | 120 | % | |||||||||||||||||
| 2008 | (26.89 | )% | $ | 5,784 | 1.43 | % | 1.43 | % | 1.50 | % | (0.69 | )% | 157 | % | |||||||||||||||||
| 2007 | 28.86 | % | $ | 6,212 | 1.49 | % | 1.49 | % | 1.56 | % | (0.98 | )% | 155 | % | |||||||||||||||||
| Turner Small Cap Growth Fund — Investor Class Shares | |||||||||||||||||||||||||||||||
| 2011 | (3.94 | )% | $ | 229,919 | 1.25 | % | 1.25 | % | 1.53 | % | (0.76 | )% | 119 | % | |||||||||||||||||
| 2010 | 15.10 | % | $ | 274,925 | 1.25 | % | 1.25 | % | 1.52 | % | (0.74 | )% | 89 | % | |||||||||||||||||
| 2009 | (4.84 | )% | $ | 250,860 | 1.25 | % | 1.25 | % | 1.58 | % | (0.36 | )% | 113 | % | |||||||||||||||||
| 2008 | (19.80 | )% | $ | 249,434 | 1.25 | % | 1.26 | % | 1.51 | % | (0.48 | )% | 141 | % | |||||||||||||||||
| 2007 | 26.02 | % | $ | 317,930 | 1.25 | % | 1.25 | % | 1.48 | % | (0.65 | )% | 134 | % | |||||||||||||||||
| Turner Global Opportunities Fund — Institutional Class Shares | |||||||||||||||||||||||||||||||
| 2011 | (1.22 | )% | $ | 910 | 1.10 | % | 1.10 | % | 3.63 | % | (0.31 | )% | 178 | % | |||||||||||||||||
| 2010 | (2) | 15.20 | %††† | $ | 1,153 | 1.10 | % | 1.10 | % | 8.33 | % | (0.31 | )% | 37 | % | ||||||||||||||||
| Turner Global Opportunities Fund — Investor Class Shares | |||||||||||||||||||||||||||||||
| 2011 | (1.48 | )% | $ | 478 | 1.35 | % | 1.35 | % | 3.16 | % | (0.44 | )% | 178 | % | |||||||||||||||||
| 2010 | (2) | 15.00 | %††† | $ | — | 1.56 | % | 1.56 | % | 8.92 | % | (0.77 | )% | 37 | % | ||||||||||||||||
| Turner International Growth Fund — Institutional Class Shares | |||||||||||||||||||||||||||||||
| 2011 | (1.32 | )% | $ | 6,012 | 1.10 | % | 1.10 | % | 2.41 | % | 0.70 | % | 210 | % | |||||||||||||||||
| 2010 | 15.88 | % | $ | 5,019 | 1.10 | % | 1.10 | % | 3.93 | % | 0.51 | % | 120 | % | |||||||||||||||||
| 2009 | 0.71 | % | $ | 3,848 | 1.10 | % | 1.10 | % | 5.24 | % | 1.31 | % | 139 | % | |||||||||||||||||
| 2008 | (31.04 | )% | $ | 3,335 | 1.10 | % | 1.11 | % | 3.05 | % | 1.10 | % | 245 | % | |||||||||||||||||
| 2007 | (4) | 22.10 | %††† | $ | 2,409 | 1.10 | % | 1.10 | % | 4.63 | % | 0.99 | % | 111 | % | ||||||||||||||||
| Turner International Growth Fund — Investor Class Shares | |||||||||||||||||||||||||||||||
| 2011 | (1.67 | )% | $ | 4,912 | 1.35 | % | 1.35 | % | 2.46 | % | 0.44 | % | 210 | % | |||||||||||||||||
| 2010 | 15.61 | % | $ | 110 | 1.35 | % | 1.35 | % | 4.15 | % | 0.61 | % | 120 | % | |||||||||||||||||
| 2009 | (5) | 33.95 | %††† | $ | — | 1.29 | % | 1.29 | % | 5.59 | % | 1.14 | % | 139 | % | ||||||||||||||||
TURNER FUNDS 2011 ANNUAL REPORT 73
NOTES TO FINANCIAL STATEMENTS
Notes to financial statements
September 30, 2011
1. Organization:
Turner Funds (the "Trust"), a Massachusetts business trust, is registered under the Investment Company Act of 1940, as amended, as an open-end management investment company with twelve active portfolios as of September 30, 2011. The financial statements included herein are those of the Turner Market Neutral Fund (the "Market Neutral Fund"), the Turner Medical Sciences Long/Short Fund (the "Medical Sciences Long/Short Fund"), the Turner Spectrum Fund (the "Spectrum Fund"), the Turner Titan Fund (the "Titan Fund"), the Turner All Cap Growth Fund (the "All Cap Growth Fund"), the Turner Concentrated Growth Fund (the "Concentrated Growth Fund"), the Turner Emerging Growth Fund (the "Emerging Growth Fund"), the Turner Large Growth Fund (the "Large Growth Fund"), the Turner Midcap Growth Fund (the "Midcap Growth Fund"), the Turner Small Cap Growth Fund (the "Small Cap Growth Fund"), the Turner Global Opportunities Fund (the "Global Opportunities Fund"), and the Turner International Growth Fund (the "International Growth Fund"), each a "Fund" and collectively the "Funds." The Market Neutral Fund, Medical Sciences Long/Short Fund and Titan Fund commenced operations on February 7, 2011.
Each Fund is registered as a diversified portfolio of the Trust with the exception of the Concentrated Growth Fund and Global Opportunities Fund, which are non-diversified.
The Funds are registered to offer different classes of shares: Institutional Class Shares, Investor Class Shares, Retirement Class Shares, Class C Shares, or a combination of the four. The assets of each Fund are segregated, and a shareholder's interest is limited to the Fund in which shares are held. The Funds' prospectuses provide a description of each Fund's investment objectives, policies, and strategies along with information on the classes of shares currently being offered.
The Emerging Growth Fund and Small Cap Growth Fund were closed to new investors on March 7, 2000 and July 31, 2004, respectively. Effective August 24, 2009 and April 14, 2011, the Small Cap Growth Fund and Emerging Growth Fund were reopened to new investors and existing shareholders, respectively.
2. Significant accounting policies:
The following is a summary of the significant accounting policies followed by the Funds.
Use of estimates—The preparation of financial statements in conformity with U.S. generally accepted accounting principles ("GAAP") 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 increases and decreases in net assets from operations during the reporting period. Actual results could differ from those estimates.
Security valuation—Securities listed on a securities exchange, market or automated quotation system for which quotations are readily available (except for securities traded on NASDAQ) are valued at the last quoted sale price on the primary exchange or market (foreign or domestic) on which they are traded, or, if there is no such reported sale, at the most recent quoted bid price for long positions and the most recent quoted ask price for short positions. For securities traded on NASDAQ, the NASDAQ Official Closing Price will be used. The prices for foreign securities are reported in local currency and converted to U.S. dollars using currency exchange rates. Prices for most securities held in the Funds are provided daily by recognized independent pricing agents. If a security price cannot be obtained from an independent, third-party pricing agent, the Funds seek to obtain bid and ask prices from two broker-dealers who make a market in the security and determine the average of the two.
Securities for which market prices are not "readily available" are valued in accordance with Fair Value Procedures established by the Board of Trustees (the "Board"). The Funds' Fair Value Procedures are implemented through a Fair Value Committee (the "Committee") designated by the Board. Some of the more common reasons that may necessitate that a security be valued using Fair Value Procedures include: the security's trading has been halted or suspended; the security has been delisted from a national exchange; the security's primary trading market is temporarily closed at a time when under normal conditions it would be open; the security has not been traded for an extended period of time; the security's primary pricing source is not able or willing to provide a price; or trading of the security is subject to local government-imposed restrictions. When a security is valued in accordance with the Fair Value Procedures, the Committee will determine the value after taking into consideration relevant information reasonably available to the Committee.
For securities that principally trade on a foreign market or exchange, a significant gap in time can exist between the time of a particular security's last trade and the time at which a Fund calculates its net asset value. The closing prices of such securities may no longer reflect their market value at the time the Fund calculates net asset value if an event that could materially affect the value of those securities (a "Significant Event") has occurred between the time of the security's last close and the time that the Fund calculates net asset value. A Significant Event may relate to a single issuer or to an entire market sector. If the Adviser, as defined in Note 3, of a Fund becomes aware of a Significant Event that has
74 TURNER FUNDS 2011 ANNUAL REPORT
occurred with respect to a security or group of securities after the closing of the exchange or market on which the security or securities principally trade, but before the time at which the Fund calculates net asset value, it may request that a Committee meeting be called. In addition, the Fund's Sub-Administrator, as defined in Note 3, monitors price movements among certain selected indices, securities and/or baskets of securities that may be an indicator that the closing prices received earlier from foreign exchanges or markets may not reflect market value at the time the Fund calculates net asset value. If price movements in a monitored index or security exceed levels established by the Administrator, as defined in Note 3, and approved by the Committee, the Adviser determines whether such securities should be fair valued.
The Funds use Interactive Data Pricing and Reference Data, Inc. ("Interactive Data") as a third party fair valuation vendor for securities principally traded on a foreign market or exchange. Interactive Data provides a fair value for foreign securities in the Funds based on certain factors and methodologies (involving, generally, tracking valuation correlations between the U.S. market and each non-U.S. security) applied by Interactive Data in the event that there is a movement in the U.S. market that exceeds a specific threshold established by the Committee. The Committee establishes a "confidence interval" which is used to determine the level of correlation between the value of a foreign security and movements in the U.S. market before a particular security is fair valued when the threshold is exceeded. In the event that the threshold established by the Committee is exceeded on a specific day, the Funds value their non-U.S. securities that exceed the applicable "confidence interval" based upon the fair values provided by Interactive Data. In such event, it is not necessary to hold a Committee meeting. In the event that the Adviser believes that the fair values provided by Interactive Data are not reliable, or believes that a foreign security held by a Fund should be fair valued for any other reason, the Adviser contacts the Funds' Sub-Administrator and may request that a meeting of the Committee be held.
If a local market in which the Funds own securities is closed for one or more days or a portion of a day, the Funds shall value all securities held in that corresponding currency based on the fair value prices provided by Interactive Data using the predetermined confidence interval discussed above.
In accordance with the authoritative guidance on fair value measurements and disclosures under GAAP, fair value is defined as the price that a fund would receive upon selling an investment in a timely transaction to an independent buyer in the principal or most advantageous market.
The Trust has a three-tier fair value hierarchy that is dependent upon the various "inputs" used to determine the value of the Funds' investments. These inputs are summarized in the three broad levels listed below:
Level 1 – quoted prices in active markets for identical investments.
Level 2 – other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, credit risks, etc.).
Level 3 – significant unobservable inputs (including a fund's own assumptions in determining the fair value of investments).
For the year ended September 30, 2011, there have been no significant changes to the Funds' fair valuation methodologies. Fair value measurement classifications are summarized in each Fund's Schedule of investments, Schedule of securities sold short or Schedule of open options written. Changes in valuation techniques may result in transfers in or out of an investment's assigned level within the hierarchy during the reporting period. For each Fund there were no significant transfers between the levels during the reporting period, based on the input levels assigned under the hierarchy at the beginning and end of the reporting period, except for the Global Opportunities Fund and International Growth Fund. The Global Opportunities Fund and International Growth Fund had significant transfers from Level 1 to Level 2 for securities which exceeded the established "confidence interval" and used fair values provided by Interactive Data.
New Accounting Pronouncement—In May 2011, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update 2011-04 "Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and International Financial Reporting Standards ("IFRS") ("ASU 2011-04"), which includes common requirements for measurement of and disclosure about fair value between U.S. GAAP and IFRS. ASU 2011-04 will require reporting entities to disclose quantitative information about the unobservable inputs used in the fair value measurements categorized within Level 3 of the fair value hierarchy. In addition, ASU 2011-04 will require reporting entities to make disclosures about amounts and reasons for all transfers in and out of Levels 1 and 2 of the fair value hierarchy. The new and revised disclosures are effective for interim and annual reporting periods beginning after December 15, 2011. Management is currently evaluating the implications of ASU 2011-04, and its impact on the financial statements and related disclosures has not yet been determined.
TURNER FUNDS 2011 ANNUAL REPORT 75
NOTES TO FINANCIAL STATEMENTS
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. Costs used in determining realized gains and losses on the sales of investment securities are those of the specific securities lots sold.
Securities sold short—Consistent with each Fund's investment objectives, the Funds may engage in short sales. Short sales are transactions under which a Fund sells a security it does not own. To complete such a transaction, the Fund must borrow the security to make delivery to the buyer. The Fund is then obligated to replace the security borrowed by purchasing the security at the market price at the time of the replacement. The price at such time may be more or less than the price at which the security was sold by the Fund. Until the security is replaced, the Fund is required to pay the lender amounts equal to any dividends that accrue during the period of the loan. Dividends are shown as an expense for financial reporting purposes. To borrow the security, the Fund also may be required to pay a fee, which is shown as an expense for financial reporting purposes. The proceeds of the short sale are retained by the broker, to the extent necessary to meet margin requirements, until the short position is closed out. A gain, limited to the price at which the Fund sold the security short, or a loss, unlimited in size, will be recognized upon the close of a short sale.
Until a Fund closes its short position or replaces the borrowed security, the Fund will: (a) maintain a segregated account containing cash or liquid securities at such a level that (i) the amount deposited in the account plus the amount deposited with the brokers as collateral will equal the current value of the security sold short; and (ii) the amount deposited in the segregated account plus the amount deposited with the broker as collateral will not be less than the market value of the security at the time the security was sold short, or (b) otherwise cover the short positions. The Market Neutral Fund, Medical Sciences Long/Short Fund, Spectrum Fund and Titan Fund engaged in short sales during the year ended September 30, 2011.
Option transactions—Consistent with each Fund's investment objectives, the Funds may write covered call options as a means of increasing the yield on their portfolios and as a means of providing limited protection against decreases in their market value. The Funds may purchase put and call options to protect against a decline in the market value of the securities in their portfolio or to anticipate an increase in the market value of securities that the Funds may seek to purchase in the future. A put option gives the purchaser of the option the right to sell, and the writer of the option the obligation to buy, the underlying security at any time during the option period. A call option gives the purchaser of the option the right to buy, and the writer of the option the obligation to sell, the underlying security at any time during the option period. The premium paid to the writer is the consideration for undertaking the obligations under the option contract. The initial purchase (sale) of an option contract is an "opening transaction." In order to close out an option position, the Fund may enter into a "closing transaction," which is simply the sale (purchase) of an option contract on the same security with the same exercise price and expiration date as the option contract originally opened. If the Fund is unable to effect a closing purchase transaction with respect to an option it has written, it will not be able to sell the underlying security until the option expires or the Fund delivers the security upon exercise. When the Fund writes (sells) an option, an amount equal to the premium received by the Fund is included in the Statement of Assets and Liabilities as an asset and an equivalent liability. The amount of the liability is subsequently marked-to-market to reflect the current value of the option written. Option contracts are valued at the last quoted sales price. If there is no such reported sale on the valuation date, long positions are valued at the most recent bid price, and short positions are valued at the most recent ask price. When an option expires on its stipulated expiration date or the Fund enters into a closing purchase transaction, the Fund realizes a gain or loss if the cost of the closing purchase transaction differs from the premium received when the option was sold without regard to any unrealized gain or loss on the underlying security, and the liability related to such option is eliminated. When an option is exercised, the premium originally received decreases the cost basis of the security (or increases the proceeds on a sale of the security). Realized and unrealized gains and losses on written option transactions are shown on the Statement of Operations as net realized gain (loss) on written option contracts and net change in unrealized appreciation (depreciation) on written option contracts, respectively. Realized and unrealized gains and (losses) on purchased options in the Spectrum Fund for the year ended September 30, 2011 were $1,500 and $(257), respectively (000). Realized and unrealized gains and (losses) on purchased options in the All Cap Growth Fund for the year ended September 30, 2011 were $(123) and $8, respectively (000). These amounts are shown on the Statement of Operations as net realized gain (loss) from securities sold and net change in unrealized appreciation (depreciation) on investments, respectively. The primary risk exposure from the written and purchased option contracts is equity exposure. The Spectrum Fund and the All Cap Growth Fund engaged in limited option activity for the year ended September 30, 2011. This
76 TURNER FUNDS 2011 ANNUAL REPORT
activity represented less than 2% of each Fund's respective quarterly net assets.
Foreign currency translation—The books and records of the Market Neutral Fund, Medical Sciences Long/Short Fund, Spectrum Fund, Titan Fund, Global Opportunities Fund and International Growth Fund are maintained in U.S. dollars. Investment securities and other assets and liabilities denominated in a foreign currency are translated into U.S. dollars on the date of valuation. The Market Neutral Fund, Medical Sciences Long/Short Fund, Spectrum Fund, Titan Fund, Global Opportunities Fund and International Growth Fund do not isolate that portion of realized or unrealized gains and losses resulting from changes in the foreign exchange rate from fluctuations arising from changes in the market prices of the securities. These gains and losses are included in net realized and unrealized gains and losses on investments in the Statements of Operations. Net realized and unrealized gains and losses on foreign currency transactions represent net foreign exchange gains or losses from foreign currency exchange contracts, disposition of foreign currencies, currency gains or losses realized between trade and settlement dates on securities transactions and the difference between the amount of the investment income and foreign withholding taxes recorded on the Market Neutral Fund, Medical Sciences Long/Short Fund, Spectrum Fund, Titan Fund, Global Opportunities Fund and International Growth Fund's books and the U.S. dollar equivalent amounts actually received or paid.
Expenses—Expenses that are specifically attributed to one of the Funds are charged to that Fund. Certain other expenses of the Funds are prorated among the Funds on the basis of relative daily net assets.
Classes—Class specific expenses are borne by that class. Income, non-class specific expenses and realized/unrealized gains and losses are allocated to the respective classes on the basis of the relative daily net assets.
Dividends and distributions—The Funds declare and distribute net investment income, if any, annually, as a dividend to shareholders. Any net realized capital gains on sales of securities for all Funds are distributed to shareholders at least annually. The Funds may utilize equalization accounting for tax purposes and designate earnings and profits, including net realized gains distributed to shareholders on redemption of shares, as a part of the dividends paid deduction for income tax purposes.
3. Transactions with affiliates:
Certain officers and trustees of the Trust are also officers or employees of Turner Investment Partners, Inc. ("Turner," the "Adviser," or the "Administrator") or Citi Fund Services Ohio, Inc. ("Citi" or the "Sub-Administrator"), the Trust's Sub-Administrator. With the exception of the Trust's Chief Compliance Officer, such officers are paid no fees by the Trust for serving as officers and trustees of the Trust.
Foreside Fund Services, LLC (the "Distributor") provides distribution services to the Funds under a Distribution Services Agreement.
4. Administration, shareholder servicing, distribution and transfer agent agreements:
Turner provides administrative services to the Funds under an Administration Agreement with the Trust. For its services, Turner receives an annual fee of 0.15% of the aggregate average daily net assets of the Trust up to $2 billion and 0.12% of the aggregate average daily net assets of the Trust over $2 billion. Under a separate Sub-Administration Agreement between Turner and Citi, effective October 1, 2010, Citi provides sub-administrative services to the Trust. For the year ended September 30, 2011, Citi was paid $877 (000) by Turner.
The Funds have adopted a Distribution Plan for Retirement Class Shares and Class C Shares (the "Distribution Plan") under which firms, including the Distributor, that provide distribution services may receive compensation. Under the Distribution Plan, which was adopted pursuant to Rule 12b-1 under the Investment Company Act of 1940, as amended, the Distributor is entitled to receive aggregate fees for distribution services not exceeding 0.75% of the Fund's average daily net assets attributable to Retirement Class or Class C Shares that are subject to the arrangement in return for providing a broad range of distribution services. Currently, the Retirement Class Shares of the Midcap Growth Fund pay the Distributor 0.25% and the Class C Shares of the Market Neutral Fund, Medical Sciences Long/Short Fund, Spectrum Fund and Titan Fund pay the Distributor 0.75% in distribution fees.
The Funds have also adopted Shareholder Services Plans (the "Shareholder Services Plans"). Under the Shareholder Services Plans, service providers are entitled to receive aggregate fees for shareholder services not exceeding 0.25% of each Fund's average daily net assets attributable to Investor Class Shares, Retirement Class Shares and Class C Shares that are subject to the arrangement in return for providing shareholder services. Currently, Investor Class Shares of each Fund, Retirement Class Shares of the Midcap Growth Fund and Class C Shares of the Market Neutral Fund, Medical Sciences Long/Short Fund, Spectrum Fund and Titan Fund pay 0.25% in shareholder servicing fees.
DST Systems, Inc. serves as the transfer agent and dividend disbursing agent for the Funds under a Transfer Agency Agreement with the Trust.
5. Investment advisory agreement:
The Trust and Turner are parties to an Investment Advisory Agreement dated April 28, 1996 under which Turner
TURNER FUNDS 2011 ANNUAL REPORT 77
NOTES TO FINANCIAL STATEMENTS
receives a fee that is calculated daily and paid monthly, based on the average daily net assets of the Funds.
For its services, Turner receives annual fees, which are calculated daily and paid monthly, based on average daily net assets of the Funds. Turner has contractually agreed to waive all or a portion of its fees and to reimburse expenses in order to limit total Fund operating expenses (excluding acquired fund fees and expenses and interest expenses relating to short sales, except for the Market Neutral Fund, Medical Sciences Long/Short Fund, Spectrum Fund and Titan Fund, for which Turner includes acquired fund fees and expenses and interest expenses relating to short sales in its contractual waiver) to a specified percentage of the average daily net assets of each Fund, except the All Cap Growth Fund and Concentrated Growth Fund, on an annualized basis through certain dates disclosed in the following table:
| Advisory fee | Expense cap | Date (through) | |||||||||||||
| Market Neutral Fund | |||||||||||||||
| Institutional Class | 1.50 | % | 1.95 | % | February 2, 2012 | ||||||||||
| Investor Class | 1.50 | % | 2.20 | % | February 2, 2012 | ||||||||||
| Class C | 1.50 | % | 2.95 | % | February 2, 2012 | ||||||||||
| Medical Sciences Long/Short Fund | |||||||||||||||
| Institutional Class | 1.50 | % | 1.95 | % | February 2, 2012 | ||||||||||
| Investor Class | 1.50 | % | 2.20 | % | February 2, 2012 | ||||||||||
| Class C | 1.50 | % | 2.95 | % | February 2, 2012 | ||||||||||
| Spectrum Fund | |||||||||||||||
| Institutional Class | 1.50 | % | 1.95 | % | January 31, 2012 | ||||||||||
| Investor Class | 1.50 | % | 2.20 | % | January 31, 2012 | ||||||||||
| Class C | 1.50 | % | 2.95 | % | January 31, 2012 | ||||||||||
| Titan Fund | |||||||||||||||
| Institutional Class | 1.50 | % | 1.95 | % | February 2, 2012 | ||||||||||
| Investor Class | 1.50 | % | 2.20 | % | February 2, 2012 | ||||||||||
| Class C | 1.50 | % | 2.95 | % | February 2, 2012 | ||||||||||
| Emerging Growth Fund | |||||||||||||||
| Institutional Class | 1.00 | % | 1.15 | % | January 31, 2012 | ||||||||||
| Investor Class | 1.00 | % | 1.40 | % | January 31, 2012 | ||||||||||
| Large Growth Fund | |||||||||||||||
| Institutional Class | 0.60 | % | 0.69 | % | January 31, 2012 | ||||||||||
| Investor Class | 0.60 | % | 0.94 | % | January 31, 2012 | ||||||||||
| Midcap Growth Fund | |||||||||||||||
| Institutional Class | 0.75 | % | 0.93 | % | January 31, 2012 | ||||||||||
| Investor Class | 0.75 | % | 1.18 | % | January 31, 2012 | ||||||||||
| Retirement Class | 0.75 | % | 1.43 | % | January 31, 2012 | ||||||||||
| Small Cap Growth Fund | |||||||||||||||
| Investor Class | 1.00 | % | 1.25 | % | January 31, 2012 | ||||||||||
| Global Opportunities Fund | |||||||||||||||
| Institutional Class | 0.75 | % | 1.10 | % | January 31, 2012 | ||||||||||
| Investor Class | 0.75 | % | 1.35 | % | January 31, 2012 | ||||||||||
| International Growth Fund | |||||||||||||||
| Institutional Class | 0.85 | % | 1.10 | % | January 31, 2012 | ||||||||||
| Investor Class | 0.85 | % | 1.35 | % | January 31, 2012 | ||||||||||
For the remaining Funds, the All Cap Growth Fund and the Concentrated Growth Fund, the advisory fee is comprised of a base fee and performance adjustment that increases or decreases the total fee depending upon the performance of the Fund relative to its performance benchmark. The Fund's base fee (1.10% for both the All Cap Growth Fund and the Concentrated Growth Fund) is accrued daily and paid monthly, based on the Fund's average net assets during the current month.
The performance adjustment is calculated and paid monthly by comparing a Fund's performance to that of its performance benchmark over the current month plus the previous 11 months (the "performance period"). The annual performance adjustment rate is multiplied by the average net assets of the Fund over the entire performance period, which is then multiplied by a fraction, the numerator of which is the number of days in the month and the denominator of which is 365 (366 in leap years). The resulting amount is then added to (in the case of overperformance) or subtracted from (in the case of underperformance) a Fund's base advisory fee.
In cases where the advisory fee is comprised of a base fee and a performance adjustment, Turner has voluntarily agreed to waive all or a portion of its fees and to reimburse expenses in order to keep such Fund's "other expenses" (excluding distribution fees, acquired fund fees and expenses and interest expenses relating to short sales) from exceeding a specified percentage of the average daily net assets of the Fund on an annualized basis. Accordingly, the base advisory fee, annual adjustment rate, over/under performance relative to the benchmark threshold, and other expense cap are as follows:
| Base advisory fee | Annual adjustment rate | Benchmark threshold(1) | Other expenses cap | ||||||||||||||||
| All Cap Growth Fund | 1.10 | % | +/-0.40% | +/-2.50% | 0.25 | % | |||||||||||||
| Concentrated Growth Fund | 1.10 | % | +/-0.40% | +/-2.50% | 0.25 | % | |||||||||||||
(1) See the Funds' Prospectus and Statement of Additional Information for more information regarding each Fund's performance benchmark.
78 TURNER FUNDS 2011 ANNUAL REPORT
During the year ended September 30, 2011, the Funds' advisory fees, before waivers, were adjusted in accordance with the policy described above (000):
| Base adviser fee | Performance adjustment | Net adviser fee before waivers | |||||||||||||
| All Cap Growth Fund | $ | 476,306 | $ | 168,931 | $ | 645,237 | |||||||||
| Concentrated Growth Fund | 550,049 | 171,461 | 721,510 | ||||||||||||
6. Redemption fees:
Sales or exchanges out of the All Cap Growth Fund and the Large Growth Fund within 90 days of purchase are not currently subject to a redemption fee of 2.00%, but may be in the future. The Funds will provide notice to shareholders before they implement the redemption fee.
7. Contingent deferred sales charges (Class C Shares):
A 1.00% contingent deferred sales charge ("CDSC") will be deducted with respect to the Market Neutral Fund, Medical Sciences Long/Short Fund, Spectrum Fund and Titan Fund Class C Shares, redeemed within 12 months of purchase. The CDSC will be based on the lower of the original purchase price or the value of the Class C Shares redeemed. The CDSC may be waived for certain investors, as described in the Market Neutral Fund, Medical Sciences Long/Short Fund, Spectrum Fund and Titan Fund Class C statutory prospectus.
8. Investment transactions:
The cost of security purchases and the proceeds from security sales, other than short-term investments, for the year ended September 30, 2011 were as follows (000):
| Purchases | Sales | ||||||||||
| Market Neutral Fund | $ | 63,163 | $ | 53,059 | |||||||
| Medical Sciences Long/Short Fund | 85,926 | 68,312 | |||||||||
| Spectrum Fund | 3,126,860 | 2,980,788 | |||||||||
| Titan Fund | 46,228 | 34,568 | |||||||||
| All Cap Growth Fund | 94,228 | 84,885 | |||||||||
| Concentrated Growth Fund | 97,448 | 100,620 | |||||||||
| Emerging Growth Fund | 363,666 | 413,514 | |||||||||
| Large Growth Fund | 1,004,461 | 1,143,654 | |||||||||
| Midcap Growth Fund | 1,038,614 | 1,303,849 | |||||||||
| Small Cap Growth Fund | 372,493 | 408,344 | |||||||||
| Global Opportunities Fund | 3,114 | 2,886 | |||||||||
| International Growth Fund | 23,876 | 16,481 | |||||||||
9. Federal tax policies and information:
Each of the Funds is classified as a separate taxable entity for Federal income tax purposes. Each of the Funds intends to continue to qualify as a separate "regulated investment company" under the Internal Revenue Code and make the requisite distributions to shareholders that will be sufficient to relieve it from Federal income tax and Federal excise tax. Therefore, no Federal tax provision is required.
The amounts of dividends from net investment income and distributions from net realized capital gains, if any, are determined in accordance with Federal income tax regulations, which may differ from those amounts determined under GAAP. These book/tax differences are either temporary or permanent in nature. These differences are primarily due to wash sales, REIT adjustments, expired capital loss carryforwards, foreign currency transactions, redemption-in-kind transactions, net operating losses and investments in partnerships and passive foreign investment companies. The character and timing of dividends from net investment income and distributions from net realized gains distributed during the fiscal year may differ from the year that the income or realized gains (losses) were recorded by the Funds. To the extent these differences are permanent, adjustments are made to the appropriate equity accounts in the period that the differences arise.
Accordingly, the following permanent differences have been reclassified to/from the following accounts during the fiscal year ended September 30, 2011 (000):
| Fund | Undistributed net investment income | Accumulated net realized gain (loss) | Portfolio Capital | ||||||||||||
| Market Neutral Fund | $ | 49 | $ | (41 | ) | (8 | ) | ||||||||
| Medical Sciences Long/Short Fund | 310 | (166 | ) | (144 | ) | ||||||||||
| Spectrum Fund | 5,676 | (8,138 | ) | 2,462 | |||||||||||
| Titan Fund | 68 | (59 | ) | (9 | ) | ||||||||||
| All Cap Growth Fund | 560 | 3 | (563 | ) | |||||||||||
| Concentrated Growth Fund | 659 | 7,298 | (7,957 | ) | |||||||||||
| Emerging Growth Fund | 4,472 | (34,920 | ) | 30,448 | |||||||||||
| Large Growth Fund | 643 | 29 | (672 | ) | |||||||||||
| Midcap Growth Fund | 3,420 | 252 | (3,672 | ) | |||||||||||
| Small Cap Growth Fund | 2,429 | — | (2,429 | ) | |||||||||||
| Global Opportunities Fund | 4 | (42 | ) | 38 | |||||||||||
| International Growth Fund | 9 | (9 | ) | — | |||||||||||
TURNER FUNDS 2011 ANNUAL REPORT 79
NOTES TO FINANCIAL STATEMENTS
The tax character of dividends and distributions declared during the years ended September 30, 2011 and September 30, 2010 were as follows (000):
| Ordinary income | Long-term capital gain | Return of capital | Total | ||||||||||||||||
| Market Neutral Fund | |||||||||||||||||||
| 2011 | $ | — | $ | — | $ | — | $ | — | |||||||||||
| 2010 | — | — | — | — | |||||||||||||||
| Medical Sciences Long/Short Fund | |||||||||||||||||||
| 2011 | $ | — | $ | — | $ | — | $ | — | |||||||||||
| 2010 | — | — | — | — | |||||||||||||||
| Spectrum Fund | |||||||||||||||||||
| 2011 | $ | — | $ | — | $ | — | $ | — | |||||||||||
| 2010 | 142 | — | — | 142 | |||||||||||||||
| Titan Fund | |||||||||||||||||||
| 2011 | $ | — | $ | — | $ | — | $ | — | |||||||||||
| 2010 | — | — | — | — | |||||||||||||||
| All Cap Growth Fund | |||||||||||||||||||
| 2011 | $ | — | $ | — | $ | — | $ | — | |||||||||||
| 2010 | 22 | — | 1 | 23 | |||||||||||||||
| Ordinary income | Long-term capital gain | Return of capital | Total | ||||||||||||||||
| Concentrated Growth Fund | |||||||||||||||||||
| 2011 | $ | — | $ | — | $ | — | $ | — | |||||||||||
| 2010 | 120 | — | 1 | 121 | |||||||||||||||
| Emerging Growth Fund | |||||||||||||||||||
| 2011 | $ | — | $ | — | $ | — | $ | — | |||||||||||
| 2010 | — | — | — | — | |||||||||||||||
| Large Growth Fund | |||||||||||||||||||
| 2011 | $ | 671 | $ | — | $ | — | $ | 671 | |||||||||||
| 2010 | 2,287 | — | — | 2,287 | |||||||||||||||
| Midcap Growth Fund | |||||||||||||||||||
| 2011 | $ | — | $ | — | $ | — | $ | — | |||||||||||
| 2010 | — | — | — | — | |||||||||||||||
| Small Cap Growth Fund | |||||||||||||||||||
| 2011 | $ | — | $ | — | $ | — | $ | — | |||||||||||
| 2010 | — | — | — | — | |||||||||||||||
| Global Opportunities Fund | |||||||||||||||||||
| 2011 | $ | — | $ | — | $ | — | $ | — | |||||||||||
| 2010 | — | — | — | — | |||||||||||||||
| International Growth Fund | |||||||||||||||||||
| 2011 | $ | 49 | $ | — | $ | — | $ | 49 | |||||||||||
| 2010 | 59 | — | — | 59 | |||||||||||||||
As of September 30, 2011, the components of distributable earnings (accumulated losses) on a tax basis were as follows (000):
| Undistributed ordinary income | Undistributed long term capital gains | Capital loss carryforward | Post- October losses | Post- October currency losses | Unrealized appreciation (depreciaton) | Other temporary differences | Total distributable earnings (accumulated losses) | ||||||||||||||||||||||||||||
| Market Neutral Fund | $ | 267 | $ | — | $ | — | $ | — | $ | — | $ | (91 | ) | $ | — | $ | 176 | ||||||||||||||||||
| Medical Sciences Long/Short Fund | — | — | — | — | — | (452 | ) | — | (452 | ) | |||||||||||||||||||||||||
| Spectrum Fund | 29,763 | — | — | — | (225 | ) | (27,042 | ) | — | 2,496 | |||||||||||||||||||||||||
| Titan Fund | 151 | — | — | — | — | (683 | ) | — | (532 | ) | |||||||||||||||||||||||||
| All Cap Growth Fund | — | — | (13,404 | ) | — | — | (54 | ) | — | (13,458 | ) | ||||||||||||||||||||||||
| Concentrated Growth Fund | — | — | (27,895 | ) | — | — | 2,071 | — | (25,824 | ) | |||||||||||||||||||||||||
| Emerging Growth Fund | — | — | (10,442 | ) | — | — | 50,974 | — | 40,532 | ||||||||||||||||||||||||||
| Large Growth Fund | — | — | (178,397 | ) | — | — | 24,101 | — | (154,296 | ) | |||||||||||||||||||||||||
| Midcap Growth Fund | — | — | (93,627 | ) | — | — | 66,569 | — | (27,058 | ) | |||||||||||||||||||||||||
| Small Cap Growth Fund | — | — | (5,854 | ) | — | — | (9,627 | ) | — | (15,481 | ) | ||||||||||||||||||||||||
| Global Opportunities Fund | 14 | 28 | — | — | (3 | ) | 36 | — | 75 | ||||||||||||||||||||||||||
| International Growth Fund | — | — | (513 | ) | — | — | (1,552 | ) | — | (2,065 | ) | ||||||||||||||||||||||||
Post-October losses represent losses realized on investment transactions from November 1, 2010 through September 30, 2011 that, in accordance with Federal income tax regulations, a Fund may elect to defer and treat as having arisen in the following fiscal year. For Federal income tax purposes, capital loss carryforwards may be carried forward and applied against future capital gains.
80 TURNER FUNDS 2011 ANNUAL REPORT
At September 30, 2011, the Funds had capital loss carryforwards available to offset future realized capital gains through the indicated expiration dates (000):
| Expiring September 30, | |||||||||||||||||||
| 2016 | 2017 | 2018 | Total | ||||||||||||||||
| Market Neutral Fund | $ | — | $ | — | $ | — | $ | — | |||||||||||
| Medical Sciences Long/Short Fund | — | — | — | — | |||||||||||||||
| Spectrum Fund | — | — | — | — | |||||||||||||||
| Titan Fund | — | — | — | — | |||||||||||||||
| All Cap Growth Fund | — | 11,014 | 2,390 | 13,404 | |||||||||||||||
| Concentrated Growth Fund | 172 | — | 27,723 | 27,895 | |||||||||||||||
| Emerging Growth Fund | — | — | 10,442 | 10,442 | |||||||||||||||
| Large Growth Fund | — | 88,955 | 89,442 | 178,397 | |||||||||||||||
| Midcap Growth Fund | — | 4,041 | 89,586 | 93,627 | |||||||||||||||
| Small Cap Growth Fund | — | — | 5,854 | 5,854 | |||||||||||||||
| Global Opportunities Fund | — | — | — | — | |||||||||||||||
| International Growth Fund | — | 437 | 77 | 514 | |||||||||||||||
As of March 7, 2011, the Large Growth Fund credited accumulated net realized loss $12,828 (000) and charged paid-in-capital $123,626 (000) and unrealized appreciation $31,165 (000) due to the Turner Large Cap Growth Fund ("Large Cap Growth Fund") merger with the Large Growth Fund. Internal Revenue Code Section 382 limits the amount of annual capital loss carryover available for use. However, if the Large Growth Fund recognizes sufficient capital gains before the relevant expiration dates, Section 382 should not preclude the use of these capital loss carryforwards.
The Regulated Investment Company Modernization Act of 2010 (the "Modernization Act") was signed into law on December 22, 2010. The Modernization Act makes a number of changes to the provisions in the Internal Revenue Code of 1986, as amended, relating to regulated investment companies ("RICs") that will generally become effective for taxable years beginning after December 22, 2010. The Modernization Act allows RICs to generally carryover net capital losses indefinitely, effective for losses arising in taxable years beginning after December 22, 2010. Such losses will retain their character as either long-term capital losses or short-term capital losses. Under pre-enactment law, capital losses could be carried forward for eight years as short-term losses irrespective of the character of the original loss. Loss carryovers from years beginning prior to December 23, 2010 will still expire subject to the eight-year limitation. The Modernization Act further provides that losses arising in taxable years beginning after December 22, 2010 would be utilized prior to loss carryovers arising in taxable years beginning prior to December 23, 2010. As a result of this ordering rule, capital loss carryforwards relating to the taxable years beginning prior to the effective date of the Act may have increased likelihood to expire unused.
At September 30, 2011, the total cost of securities for Federal income tax purposes and the aggregate gross unrealized appreciation and depreciation for the investments held by the Fund, excluding securities sold short and written options, were as follows (000):
| Federal tax cost | Unrealized appreciation | Unrealized depreciation | Net unrealized appreciation/ (depreciation) | ||||||||||||||||
| Market Neutral Fund | $ | 10,101 | $ | 64 | $ | (591 | ) | $ | (527 | ) | |||||||||
| Medical Sciences Long/Short Fund | 48,889 | 265 | (1,542 | ) | (1,277 | ) | |||||||||||||
| Spectrum Fund | 505,163 | 4,727 | (50,380 | ) | (45,653 | ) | |||||||||||||
| Titan Fund | 11,691 | 93 | (1,228 | ) | (1,135 | ) | |||||||||||||
| All Cap Growth Fund | 33,178 | 3,100 | (3,154 | ) | (54 | ) | |||||||||||||
| Concentrated Growth Fund | 37,912 | 3,817 | (1,746 | ) | 2,071 | ||||||||||||||
| Emerging Growth Fund | 186,095 | 64,003 | (13,029 | ) | 50,974 | ||||||||||||||
| Large Growth Fund | 420,526 | 52,709 | (28,608 | ) | 24,101 | ||||||||||||||
| Midcap Growth Fund | 721,445 | 129,144 | (62,575 | ) | 66,569 | ||||||||||||||
| Small Cap Growth Fund | 278,834 | 26,038 | (35,665 | ) | (9,627 | ) | |||||||||||||
| Global Opportunities Fund | 1,366 | 138 | (102 | ) | 36 | ||||||||||||||
| International Growth Fund | 12,324 | 139 | (1,688 | ) | (1,549 | ) | |||||||||||||
TURNER FUNDS 2011 ANNUAL REPORT 81
NOTES TO FINANCIAL STATEMENTS
Management has analyzed the Funds' tax positions taken on Federal income tax returns for all open tax years and has concluded that as of September 30, 2011, no provision for income tax would be required in the Funds' financial statements. The Funds' Federal and State income and Federal excise tax returns for tax years for which the applicable statutes of limitations have not expired are subject to examination by the Internal Revenue Service and state taxing authorities.
10. Concentration/risks:
Certain Funds invest a high percentage of their assets in specific sectors of the market in order to achieve a potentially greater investment return. As a result, these Funds may be more susceptible to economic, political, and regulatory developments in a particular sector of the market, positive or negative, and may experience increased volatility on the Fund's net asset value and magnified effect on the total return.
The Funds enter into contracts that contain a variety of indemnifications. The Funds' maximum exposure under these arrangements is unknown. However, the Funds have not had prior claims or losses pursuant to these contracts and expect the risk of loss to be remote.
11. Loans of portfolio securities:
The Funds may lend securities in their portfolio pursuant to a securities lending agreement ("Lending Agreement") with Morgan Stanley. Unless otherwise agreed, security loans, made pursuant to the Lending Agreement are required at all times to be secured by collateral equal to at least 100% of the market value of the securities loaned. Cash collateral received is invested in the BlackRock TempCash Fund, Institutional Shares, a money market fund. All such investments are made at the risk of the Funds and, as such, the Funds are liable for investment losses. The Funds receive an annual fee for their participation in the Lending Agreement based on projected lending activity.
In the event of bankruptcy of the borrower, realization/retention of the collateral may be subject to legal proceedings.
12. Derivative contracts:
Written Options—A summary of option contracts written during the year ended September 30, 2011 for the Spectrum Fund is as follows:
| Option contracts | Option premiums (000) | ||||||||||
| Options outstanding at beginning of year | 2,729 | $ | 240 | ||||||||
| Options written | 273,477 | 35,658 | |||||||||
| Options cancelled in a closing purchase transaction | (269,089 | ) | (35,110 | ) | |||||||
| Options exercised | (1,075 | ) | (140 | ) | |||||||
| Options expired | (6,042 | ) | (648 | ) | |||||||
| Options outstanding at end of year | — | $ | — | ||||||||
13. In-kind transactions:
During the year ended September 30, 2010, the Large Growth Fund distributed securities in lieu of cash for shareholder redemptions. The shareholders received a pro-rata portion of the Large Growth Fund's holdings based on shares outstanding. The value of the redemption was as follows (000):
| Date | Redemption (000) | Securities (000) | Cash (000) | Realized loss (000) | Fund shares redeemed | ||||||||||||||||||
| 11/9/09 | $ | 15,554 | $ | 15,292 | $ | 262 | $ | 1,493 | 1,518,966 | ||||||||||||||
During the year ended September 30, 2011, the Emerging Growth Fund distributed securities in lieu of cash for shareholder redemptions. The shareholders received a pro-rata portion of the Emerging Growth Fund's holdings based on shares outstanding. The value of the redemption was as follows (000):
| Date | Redemption (000) | Securities (000) | Cash (000) | Realized gain (000) | Fund shares redeemed | ||||||||||||||||||
| 9/1/11 | $ | 260,853 | $ | 238,656 | $ | 22,197 | $ | 35,229 | 5,266,997 | ||||||||||||||
These transactions were completed pursuant to procedures adopted by the Board. These procedures are designed to minimize or eliminate any adverse tax implications to the Funds and their shareholders.
14. Fund Merger:
On March 7, 2011, the Large Growth Fund acquired all of the net assets of the Large Cap Growth Fund, an open-end investment company, pursuant to a Plan of Reorganization approved by the Large Cap Growth Fund shareholders on February 28, 2011. The purpose of the transaction was to combine the two Funds managed by the Adviser with similar investment objectives and policies. The acquisition was accomplished by a tax-free exchange of 10,966,460 Institutional Class shares and 119,229 Investor Class shares of the Large Growth Fund, valued at $140,366 (000) and $1,518 (000), respectively, for 23,818,691 Institutional Class shares and 258,725 Investor Class shares of the Large Cap Growth Fund outstanding on March 7, 2011. The exchange ratios (Large Growth Fund shares issued/Large Cap Growth
82 TURNER FUNDS 2011 ANNUAL REPORT
Fund shares outstanding) were 0.46:1 and 0.46:1 for the Institutional Class and Investor Class, respectively.
The investment portfolio of the Large Cap Growth Fund, with a fair value of $141,865 (000) and identified cost of $110,700 (000) at March 7, 2011, was the principal asset acquired by the Large Growth Fund. For financial reporting purposes, assets received and shares issued by the Large Growth Fund were recorded at fair value; however, the cost basis of the investments received from the Large Cap Growth Fund was carried forward to align ongoing reporting of the Large Growth Fund's realized and unrealized gains and losses with amounts distributable to shareholders for tax purposes.
Upon the business combination of the Funds on March 7, 2011, the net assets of the Large Cap Growth Fund, which included portfolio capital of $123,626 (000), accumulated net investment loss of $39 (000), accumulated realized losses of $12,868 (000) and unrealized gains of $31,165 (000), combined with the Large Growth Fund were $666,940 (000). The undistributed net investment income and unrealized gains of the Large Cap Growth Fund may be distributed by the Large Growth Fund in future periods. Immediately prior to the merger, the net assets (000) of the Large Cap Growth Fund and the Large Growth Fund were $141,884 and $525,056, respectively. All fees and expenses incurred by the Large Cap Growth Fund and the Large Growth Fund directly in connection with the Plan of Reorganization were borne by the Adviser.
Assuming the acquisition had been completed on October 1, 2010, the beginning of the annual reporting period of the Large Growth Fund, the Fund's pro forma results of operations for the year ended September 30, 2011, are as follows (000):
| Net investment income/(loss): | $ | (393 | ) | ||||
| Net realized/unrealized gains/(losses): | 39,672 | ||||||
| Change in net assets resulting from operations: | $ | 39,279 | |||||
Because the combined investment portfolios have been managed as a single integrated portfolio since the acquisition was completed, it is not practicable to separate the amounts of revenue and earnings of the Large Cap Growth Fund that have been included in the Large Growth Fund Statement of Operations since March 7, 2011.
15. Subsequent Events:
Effective January 1, 2012, Turner, Adviser and Administrator to the Funds, will change its legal structure from a corporation organized in the Commonwealth of Pennsylvania to a limited partnership organized in the Commonwealth of Pennsylvania (the "Reorganization"). There will be no change in the control, ownership, operations, or management of the Adviser and Administrator as a result of the Reorganization.
In connection with the Reorganization, on November 18, 2011, the Board approved an Assignment and Assumption Agreement for the Funds' Investment Advisory Agreement, which, effective January 1, 2012, will transfer all obligations under the Investment Advisory Agreement with Turner to the successor entity, Turner Investments, L.P. Turner Investments, L.P. will also assume all fee waiver and expense limitation agreements from Turner. On November 18, 2011, the Board also approved the assignment of the Administration Agreement between the Funds and Turner to Turner Investments, L.P., effective January 1, 2012, in connection with the Reorganization.
The Trust has evaluated the need for disclosures and/or adjustments resulting from subsequent events through the date the financial statements were issued. Based on this evaluation, other than the item noted above, no additional disclosures were required, and no adjustments were required to the financial statements as of September 30, 2011.
TURNER FUNDS 2011 ANNUAL REPORT 83
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Board of Trustees and Shareholders
Turner Funds:
We have audited the accompanying statements of assets and liabilities, including the schedules of investments, of the Turner Market Neutral Fund, Turner Medical Sciences Long/Short Fund, Turner Spectrum Fund, Turner Titan Fund, Turner All Cap Growth Fund, Turner Concentrated Growth Fund, Turner Emerging Growth Fund, Turner Large Growth Fund, Turner Midcap Growth Fund, Turner Small Cap Growth Fund, Turner Global Opportunities Fund, and Turner International Growth Fund, (collectively, the Funds), as of September 30, 2011, and the related statements of operations for the year or period then ended, the statements of changes in net assets for each of the years or periods in the two-year period then ended, the statement of cash flows for the year or period then ended for the Turner Market Neutral Fund, Turner Medical Sciences Long/Short Fund, Turner Spectrum Fund, Turner Titan Fund, and the financial highlights for each of the years or periods in the five-year period then ended. 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.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). 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, 2011, by correspondence with the custodian and brokers or by other appropriate auditing procedures. 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 each of the Funds as of September 30, 2011, the results of their operations, the changes in their net assets and their cash flows for the Turner Market Neutral Fund, Turner Medical Sciences Long/Short Fund, Turner Spectrum Fund, and Turner Titan Fund, and the financial highlights for the years or periods described in the first paragraph, in conformity with U.S. generally accepted accounting principles.
Philadelphia, Pennsylvania
November 29, 2011
84 TURNER FUNDS 2011 ANNUAL REPORT
NOTICE TO SHAREHOLDERS (Unaudited)
For shareholders that do not have a September 30, 2011 tax year end, this notice is for informational purposes only. For shareholders with a September 30, 2011 year end, please consult your tax advisor as to the pertinence of this notice. For the fiscal period ended September 30, 2011, each portfolio is designating the following items with regard to distributions paid during the year.
| Long term capital gain distribution | Ordinary income distributions | Total distributions | Dividends qualifying for corporate dividends receivable deduction(1) | Qualifying dividend income(2) | Qualifying interest income(3) | Qualifying short-term capital gain(4) | |||||||||||||||||||||||||
| Turner Market Neutral Fund | 0.00 | % | 0.00 | % | 0.00 | % | 0.00 | % | 0.00 | % | 0.00 | % | 0.00 | % | |||||||||||||||||
| Turner Medical Sciences Long/Short Fund | 0.00 | % | 0.00 | % | 0.00 | % | 0.00 | % | 0.00 | % | 0.00 | % | 0.00 | % | |||||||||||||||||
| Turner Spectrum Fund | 0.00 | % | 0.00 | % | 0.00 | % | 0.00 | % | 0.00 | % | 0.00 | % | 0.00 | % | |||||||||||||||||
| Turner Titan Fund | 0.00 | % | 0.00 | % | 0.00 | % | 0.00 | % | 0.00 | % | 0.00 | % | 0.00 | % | |||||||||||||||||
| Turner All Cap Growth Fund | 0.00 | % | 0.00 | % | 0.00 | % | 0.00 | % | 0.00 | % | 0.00 | % | 0.00 | % | |||||||||||||||||
| Turner Concentrated Growth Fund | 0.00 | % | 0.00 | % | 0.00 | % | 0.00 | % | 0.00 | % | 0.00 | % | 0.00 | % | |||||||||||||||||
| Turner Emerging Growth Fund | 0.00 | % | 0.00 | % | 0.00 | % | 0.00 | % | 0.00 | % | 0.00 | % | 0.00 | % | |||||||||||||||||
| Turner Large Growth Fund | 0.00 | % | 100.00 | % | 100.00 | % | 100.00 | % | 100.00 | % | 0.00 | % | 0.00 | % | |||||||||||||||||
| Turner Midcap Growth Fund | 0.00 | % | 0.00 | % | 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 | % | 0.00 | % | 0.00 | % | |||||||||||||||||
| Turner Global Opportunities Fund | 0.00 | % | 0.00 | % | 0.00 | % | 0.00 | % | 0.00 | % | 0.00 | % | 0.00 | % | |||||||||||||||||
| Turner International Growth Fund | 0.00 | % | 100.00 | % | 100.00 | % | 7.58 | % | 100.00 | % | 0.00 | % | 0.00 | % | |||||||||||||||||
(1) Qualifying dividends represent dividends which qualify for the corporate dividends received deduction and are reflected as a percentage of "Ordinary Income Distributions".
(2) The percentage in this column represents the amount of "Qualifying Dividend Income" as created by the Jobs and Growth Tax Relief Reconciliation Act of 2003 and is reflected as a percentage of "Ordinary Income Distributions". It is the intention of each of the aforementioned funds to designate the maximum amount permitted by law.
(3) The percentage of this column represents the amount of "Qualifying Interest Income" as created by the American Jobs Creation Act of 2004 and is reflected as a percentage of net investment income distributions that is exempt from U.S. withholding tax when paid to foreign investors. This provision of the Internal Revenue Code will be expiring for tax years beginning after December 31, 2009.
(4) The percentage in this column represents the amount of "Qualifying Short-Term Capital Gain" as created by the American Jobs Creation Act of 2004 and is reflected as a percentage of short-term capital gain distributions that is exempt from U.S. withholding tax when paid to foreign investors. This provision of the Internal Revenue Code will be expiring for tax years beginning after December 31, 2009.
* The Turner International Growth Fund intends to pass through a foreign tax credit to shareholders. For the fiscal year ended 2011, the total amount of foreign source income is $145,793. The total amount of foreign tax paid is $15,868. Your allocable share of the foreign tax credit will be reported on the Form 1099-DIV.
The information reported herein may differ from the information and distributions taxable to the Shareholders for the calendar year ending December 31, 2011. Complete information will be computed and reported in conjunction with your 2010 Form 1099-DIV.
TURNER FUNDS 2011 ANNUAL REPORT 85
DISCLOSURE OF FUND EXPENSES (Unaudited)
All mutual funds have operating expenses. As a shareholder of a mutual fund, your investment is affected by these on-going costs, which include (among others) costs for portfolio management, distribution (12b-1) and/or shareholder services and other expenses. It is important for you to understand the impact of these costs on your investment returns. Operating expenses such as these are deducted from a mutual fund's gross income and directly reduce its final investment return. These expenses are expressed as a percentage of a mutual fund's average net assets; this percentage is known as a mutual fund's expense ratio.
The following examples use the expense ratio and are intended to help you understand the ongoing costs (in dollars) of investing in your Fund and to compare these costs with those other mutual funds. The examples are based on an investment of $1,000 made at the beginning of the period shown and held for the entire period.
The table below and on the next page illustrates your Fund's costs in two ways:
• Actual Fund Return. This section helps you estimate the actual expenses after fee waivers that your Fund incurred over the period. The "Expenses Paid During Period" column shows the actual dollar expense cost incurred by a $1,000 investment in the Fund, and the "Ending Account Value" number is derived from deducting that expense cost from the Fund's gross investment return.
You can use this information, together with the actual amount you invested in the Fund, to estimate the expenses you paid over that period. Simply divide your actual account value by $1,000 to arrive at a ratio (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply that ratio by the number shown for your Fund under "Expenses Paid During Period."
• Hypothetical 5% Return. This section helps you compare your Fund's cost with those of other mutual funds. It provides information about hypothetical account values and expenses based on the Fund's actual expense ratio (column 3) and an assumed rate of return of 5% per year before expenses, which is not the Fund's actual return. This section is useful in making comparisons because the Securities and Exchange Commission requires all mutual funds to make this 5% calculation. You can assess your Fund's comparative cost by comparing the hypothetical result for your Fund in the "Expenses Paid During Period" column with those that appear in the same charts in the shareholder reports for other mutual funds.
Note: Because the return is set at 5% for comparison purposes — NOT your Fund's actual return — the hypothetical account values and expenses may not be used to estimate your actual ending account balance or expenses you paid for the period.
| Beginning Account Value 4/1/11 | Ending Account Value 9/30/11 | Annualized Expense Ratios | Expenses Paid During Period* | ||||||||||||||||
| Turner Market Neutral Fund — Institutional Class Shares | |||||||||||||||||||
| Actual Fund Return | $ | 1,000.00 | $ | 1,018.40 | 1.92 | % | $ | 9.71 | |||||||||||
| Hypothetical 5% Return | 1,000.00 | 1,015.44 | 1.92 | 9.70 | |||||||||||||||
| Turner Market Neutral Fund — Investor Class Shares | |||||||||||||||||||
| Actual Fund Return | 1,000.00 | 1,018.40 | 2.17 | 10.98 | |||||||||||||||
| Hypothetical 5% Return | 1,000.00 | 1,014.19 | 2.17 | 10.96 | |||||||||||||||
| Turner Market Neutral Fund — Class C Shares | |||||||||||||||||||
| Actual Fund Return | 1,000.00 | 1,012.60 | 2.92 | 14.73 | |||||||||||||||
| Hypothetical 5% Return | 1,000.00 | 1,010.43 | 2.92 | 14.72 | |||||||||||||||
| Turner Medical Sciences Long/Short Fund — Institutional Class Shares | |||||||||||||||||||
| Actual Fund Return | 1,000.00 | 1,008.80 | 1.92 | 9.67 | |||||||||||||||
| Hypothetical 5% Return | 1,000.00 | 1,015.44 | 1.92 | 9.70 | |||||||||||||||
| Turner Medical Sciences Long/Short Fund — Investor Class Shares | |||||||||||||||||||
| Actual Fund Return | 1,000.00 | 1,007.80 | 2.17 | 10.92 | |||||||||||||||
| Hypothetical 5% Return | 1,000.00 | 1,014.19 | 2.17 | 10.96 | |||||||||||||||
| Beginning Account Value 4/1/11 | Ending Account Value 9/30/11 | Annualized Expense Ratios | Expenses Paid During Period* | ||||||||||||||||
| Turner Medical Sciences Long/Short Fund — Class C Shares | |||||||||||||||||||
| Actual Fund Return | $ | 1,000.00 | $ | 1,004.90 | 2.92 | % | $ | 14.68 | |||||||||||
| Hypothetical 5% Return | 1,000.00 | 1,010.43 | 2.92 | 14.72 | |||||||||||||||
| Turner Spectrum Fund — Institutional Class Shares | |||||||||||||||||||
| Actual Fund Return | 1,000.00 | 968.70 | 1.92 | 9.48 | |||||||||||||||
| Hypothetical 5% Return | 1,000.00 | 1,015.44 | 1.92 | 9.70 | |||||||||||||||
| Turner Spectrum Fund — Investor Class Shares | |||||||||||||||||||
| Actual Fund Return | 1,000.00 | 967.70 | 2.17 | 10.70 | |||||||||||||||
| Hypothetical 5% Return | 1,000.00 | 1,014.19 | 2.17 | 10.96 | |||||||||||||||
| Turner Spectrum Fund — Class C Shares | |||||||||||||||||||
| Actual Fund Return | 1,000.00 | 963.90 | 2.92 | 14.38 | |||||||||||||||
| Hypothetical 5% Return | 1,000.00 | 1,010.43 | 2.92 | 14.72 | |||||||||||||||
| Turner Titan Fund — Institutional Class Shares | |||||||||||||||||||
| Actual Fund Return | 1,000.00 | 962.60 | 1.92 | 9.45 | |||||||||||||||
| Hypothetical 5% Return | 1,000.00 | 1,015.44 | 1.92 | 9.70 | |||||||||||||||
86 TURNER FUNDS 2011 ANNUAL REPORT
(Unaudited)
| Beginning Account Value 4/1/11 | Ending Account Value 9/30/11 | Annualized Expense Ratios | Expenses Paid During Period* | ||||||||||||||||
| Turner Titan Fund — Investor Class Shares | |||||||||||||||||||
| Actual Fund Return | $ | 1,000.00 | $ | 961.60 | 2.17 | % | $ | 10.67 | |||||||||||
| Hypothetical 5% Return | 1,000.00 | 1,014.19 | 2.17 | 10.96 | |||||||||||||||
| Turner Titan Fund — Class C Shares | |||||||||||||||||||
| Actual Fund Return | 1,000.00 | 958.60 | 2.92 | 14.34 | |||||||||||||||
| Hypothetical 5% Return | 1,000.00 | 1,010.43 | 2.92 | 14.72 | |||||||||||||||
| Turner All Cap Growth Fund — Investor Class Shares | |||||||||||||||||||
| Actual Fund Return | 1,000.00 | 808.20 | 1.84 | 8.34 | |||||||||||||||
| Hypothetical 5% Return | 1,000.00 | 1,015.84 | 1.84 | 9.30 | |||||||||||||||
| Turner Concentrated Growth Fund — Investor Class Shares | |||||||||||||||||||
| Actual Fund Return | 1,000.00 | 786.80 | 1.78 | 7.97 | |||||||||||||||
| Hypothetical 5% Return | 1,000.00 | 1,016.14 | 1.78 | 9.00 | |||||||||||||||
| Turner Emerging Growth Fund — Institutional Class Shares | |||||||||||||||||||
| Actual Fund Return | 1,000.00 | 806.70 | 1.15 | 5.21 | |||||||||||||||
| Hypothetical 5% Return | 1,000.00 | 1,019.30 | 1.15 | 5.82 | |||||||||||||||
| Turner Emerging Growth Fund — Investor Class Shares | |||||||||||||||||||
| Actual Fund Return | 1,000.00 | 805.70 | 1.40 | 6.34 | |||||||||||||||
| Hypothetical 5% Return | 1,000.00 | 1,018.05 | 1.40 | 7.08 | |||||||||||||||
| Turner Large Growth Fund — Institutional Class Shares | |||||||||||||||||||
| Actual Fund Return | 1,000.00 | 824.20 | 0.69 | 3.16 | |||||||||||||||
| Hypothetical 5% Return | 1,000.00 | 1,021.61 | 0.69 | 3.50 | |||||||||||||||
| Turner Large Growth Fund — Investor Class Shares | |||||||||||||||||||
| Actual Fund Return | 1,000.00 | 822.40 | 0.94 | 4.29 | |||||||||||||||
| Hypothetical 5% Return | 1,000.00 | 1,020.36 | 0.94 | 4.76 | |||||||||||||||
| Beginning Account Value 4/1/11 | Ending Account Value 9/30/11 | Annualized Expense Ratios | Expenses Paid During Period* | ||||||||||||||||
| Turner Midcap Growth Fund — Institutional Class Shares | |||||||||||||||||||
| Actual Fund Return | $ | 1,000.00 | $ | 778.60 | 0.93 | % | $ | 4.15 | |||||||||||
| Hypothetical 5% Return | 1,000.00 | 1,020.41 | 0.93 | 4.71 | |||||||||||||||
| Turner Midcap Growth Fund — Investor Class Shares | |||||||||||||||||||
| Actual Fund Return | 1,000.00 | 777.50 | 1.18 | 5.26 | |||||||||||||||
| Hypothetical 5% Return | 1,000.00 | 1,019.15 | 1.18 | 5.97 | |||||||||||||||
| Turner Midcap Growth Fund — Retirement Class Shares | |||||||||||||||||||
| Actual Fund Return | 1,000.00 | 776.50 | 1.43 | 6.37 | |||||||||||||||
| Hypothetical 5% Return | 1,000.00 | 1,017.90 | 1.43 | 7.23 | |||||||||||||||
| Turner Small Cap Growth Fund — Investor Class Shares | |||||||||||||||||||
| Actual Fund Return | 1,000.00 | 737.60 | 1.25 | 5.44 | |||||||||||||||
| Hypothetical 5% Return | 1,000.00 | 1,018.80 | 1.25 | 6.33 | |||||||||||||||
| Turner Global Opportunities Fund — Institutional Class Shares | |||||||||||||||||||
| Actual Fund Return | 1,000.00 | 801.40 | 1.10 | 4.97 | |||||||||||||||
| Hypothetical 5% Return | 1,000.00 | 1,019.55 | 1.10 | 5.57 | |||||||||||||||
| Turner Global Opportunities Fund — Investor Class Shares | |||||||||||||||||||
| Actual Fund Return | 1,000.00 | 800.10 | 1.35 | 6.09 | |||||||||||||||
| Hypothetical 5% Return | 1,000.00 | 1,018.30 | 1.35 | 6.83 | |||||||||||||||
| Turner International Growth Fund — Institutional Class Shares | |||||||||||||||||||
| Actual Fund Return | 1,000.00 | 803.70 | 1.10 | 4.97 | |||||||||||||||
| Hypothetical 5% Return | 1,000.00 | 1,019.55 | 1.10 | 5.57 | |||||||||||||||
| Turner International Growth Fund — Investor Class Shares | |||||||||||||||||||
| Actual Fund Return | 1,000.00 | 801.60 | 1.35 | 6.10 | |||||||||||||||
| Hypothetical 5% Return | 1,000.00 | 1,018.30 | 1.35 | 6.83 | |||||||||||||||
* Unless otherwise indicated, expenses are equal to the Fund's annualized expense ratio multiplied by the average account value over the period, multiplied by 183/365 (to reflect the one-half year period from 4/1/11 — 9/30/11).
TURNER FUNDS 2011 ANNUAL REPORT 87
TRUSTEE AND OFFICERS OF THE TRUST
| Name, address and age(1) | Position held with Trust and length of service(2) | Principal occupation(s) during past 5 years | Number of portfolios in complex overseen by trustee | Other directorships held | |||||||||||||||
| Interested Trustee* | |||||||||||||||||||
| Thomas R. Trala, Jr. (44) | Trustee (since 2010); President (since 2004) | Executive Managing Director (since 2010) and Chief Operating Officer (since 2004), Turner. | 12 | None | |||||||||||||||
* Mr. Trala is deemed to be an "Interested Trustee" by virtue of his relationship with Turner.
| Non-Interested Trustees | |||||||||||||||||||
| Alfred C. Salvato (53) | Chairman of the Board (since 2004); Trustee (since 1996) | Chief Investment Officer (since 2003) and Treasurer (since 1995), Thomas Jefferson University. | 12 | None | |||||||||||||||
| Janet F. Sansone (66) | Trustee (since 1996) | Chief Management Officer, United States Government Printing Office (2008-2010); Self-employed Consultant (since 1999). | 12 | None | |||||||||||||||
| John T. Wholihan (73) | Trustee (since 1996) | Dean Emeritus (since 2007), Professor (since 1984) and Dean (1984-2007), College of Business Administration, Loyola Marymount University. | 12 | None | |||||||||||||||
| Executive Officers | |||||||||||||||||||
| Ty S. Edwards 3435 Stelzer Road, Columbus, OH 43219 (45) | Controller and Chief Financial Officer (since 2010) | Senior Vice President, Financial Services, Citi Fund Services (since 2010); Director, Product Management, Columbia Management (2007-2009); Deputy Treasurer, Columbia Funds, (2006-2007); Director, Fund Administration, Columbia Management (2004-2007). | N/A | N/A | |||||||||||||||
| Brian F. McNally (53) | Vice-President (since 2002), Secretary and Chief Compliance Officer (since 2004) | General Counsel and Chief Compliance Officer (since 2004), Deputy General Counsel (2002-2004), Turner. | N/A | Director, Turner Funds Plc, an Ireland-based UCIT fund family (since August 2008). | |||||||||||||||
| Calvin Fisher (38) | Vice-President and Assistant Secretary (since 2006) | Senior Associate — Mutual Fund Administration and Compliance (since 2011); Director — Mutual Fund Administration and Compliance (since 2005-2011); Manager, Mutual Fund Administration (since 2001-2005), Turner. | N/A | N/A | |||||||||||||||
(1) Each Trustee and executive officer, unless noted otherwise, may be contacted by writing to such Trustee or officer c/o Turner Funds, 1205 Westlakes Drive, Suite 100, Berwyn, PA 19312, Attn: Turner Chief Legal Officer.
(2) Each officer serves a one-year term. All Trustees elected to office on or after February 19, 2010, are subject to a 12 year term of office ending on December 31st of the 12 year anniversary of the year in which he or she was first elected to the position of Trustee, subject to a one-time renewal for a second 12 year term by vote of a majority of the Trustees, including a majority of the "non-interested" trustees. Additionally, each Trustee who had not reached the age of 70 as of December 31, 2009, is subject to a retirement age of 75, so that any Trustee who reaches such age shall resign as of the December 31st immediately following his or her 75th birthday. All other Trustees serve until his or her respective successor has been duly elected and qualified.
The Trust's Statement of Additional Information ("SAI") includes additional information about the Trustees and Officers. The SAI may be obtained without charge by calling 1.800.224.6312.
88 TURNER FUNDS 2011 ANNUAL REPORT
Turner Funds
Turner Funds' trustees
Alfred C. Salvato
Chief Investment Officer & Treasurer
Thomas Jefferson University
Janet F. Sansone
Executive Director
JFS Consulting
Thomas R. Trala, Jr.
Executive Managing Director & Chief Operating Officer
Turner Investment Partners, Inc.
Dr. John T. Wholihan
Professor (Retired), Dean Emeritus, College of Business
Loyola Marymount University
Investment advisers
Turner Investment Partners, Inc.
Berwyn, Pennsylvania
Distributor
Foreside Fund Services, LLC
Portland, Maine
Administrator
Turner Investment Partners, Inc.
Berwyn, Pennsylvania
Independent Registered Public Accounting Firm
KPMG LLP
Philadelphia, Pennsylvania
This report was prepared for shareholders of the Turner 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.
The Funds file their complete schedules of portfolio holdings with the Securities and Exchange Commission (the "Commission") for the first and third quarters of each fiscal year on Form N-Q within sixty days after the end of the period. The Funds' Forms N-Q are available on the Commission's website at http://www.sec.gov, and may be reviewed and copied at the Commission's Public Reference Room in Washington, DC. Information on the operation of the Public Reference Room may be obtained by calling 1-800-SEC-0330.
The Board of Trustees of the Turner Funds has delegated responsibility for decisions regarding proxy voting for securities held by each Fund to Turner Investment Partners, Inc. Turner Investment Partners, Inc., will vote such proxies in accordance with its proxy policies and procedures, which are included in Appendix B to the SAI. The Board of Trustees will periodically review each Fund's proxy voting record.
A description of the policies and procedures that the Funds use to determine how to vote proxies relating to portfolio securities, as well as information relating to how the Fund voted proxies relating to portfolio securities during the most recent 12-month period ended June 30, is available (i) via the Funds' website, www.turnerinvestments.com; (ii) on the Commission's website at http://www.sec.gov; and (iii) without charge by calling 1.800.224.6312.
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92 TURNER FUNDS 2011 ANNUAL REPORT
Turner Funds
P.O. Box 219805
Kansas City, Missouri 64121-9805
Telephone: 1.800.224.6312
Email: mutualfunds@turnerinvestments.com
Web Site: www.turnerinvestments.com
TUR-AR-002-0308
Item 2. Code of Ethics.
The registrant has adopted a code of ethics that applies to the registrant’s Principal Executive Officer, Principal Financial Officer, and Principal Accounting Officer.
Item 3. Audit Committee Financial Expert.
The Board of Trustees of the Turner Funds has determined that the Board’s Audit Committee does not have an “audit committee financial expert,” as the Securities and Exchange Commission has defined that term. After carefully considering all of the factors involved in the definition of “audit committee financial expert,” the Board determined that none of the members of the Audit Committee possessed all five attributes in the definition, although some members of the Audit Committee possessed some of the attributes. The Board also determined that the Audit Committee members have general financial expertise, and given the size and types of the Turner Funds and in light of the nature of the accounting and valuation issues presented over the past several years, it did not appear that the Audit Committee members lacked any necessary skill to serve on the Audit Committee.
Item 4. Principal Accountant Fees and Services.
Fees billed by KPMG LLP (“KPMG”) Related to the Trust
KPMG billed the Trust the aggregate fees for services rendered to the Trust for the last two fiscal years as follows:
|
| 2011 |
| 2010 |
| ||||||||||
|
| All fees and |
| All fees and |
| All other fees |
| All fees and |
| All fees and |
| All other fees |
| ||
(a) Audit Fees (1) |
| $ | 262,250 |
| N/A |
| N/A |
| $ | 246,250 |
| N/A |
| N/A |
|
(b) Audit-Related Fees |
| N/A |
| N/A |
| N/A |
| N/A |
| N/A |
| N/A |
| ||
(c) Tax Fees (2) |
| $ | 120,328 |
| N/A |
| N/A |
| $ | 108,075 |
| N/A |
| N/A |
|
(d) All Other Fees (3) |
| N/A |
| N/A |
| N/A |
| N/A |
| N/A |
| N/A |
| ||
Notes:
(1) Audit Fees include fees related to the audit of the registrant’s annual financial statements and services normally provided by the accountant in connection with statutory and regulatory filings.
(2) Tax Fees consist of tax compliance services for the Trust. These services primarily included review of federal income tax returns and excise tax returns, as well as services relating to excise tax distribution requirements
(3) All Other Fees consist of fees for services provided in connection with an assessment of the advisor’s anti-money laundering program.
(e)(1) The Audit Committee does not have pre-approval policies and procedures. Instead, the Audit Committee approves on a case-by-case basis each audit or non-audit service before the accountant is engaged by the registrant.
(e)(2) Percentage of fees billed applicable to non-audit services pursuant to waiver of pre-approval requirement were as follows:
|
| 2011 |
| 2010 |
|
Audit-Related Fees |
| 0.00 | % | 0.00 | % |
Tax Fees |
| 0.00 | % | 0.00 | % |
All Other Fees |
| 0.00 | % | 0.00 | % |
(f) Not applicable.
(g) The aggregate non-audit fees and services billed by KPMG for the last two fiscal years were $120,328 and $108,075 for 2011 and 2010, respectively, as described above.
(h) The registrant’s Audit Committee has considered whether the provision of non-audit services that were rendered to the registrant’s Investment Adviser and any entity controlling, controlled by, or under common control with the Investment Adviser that provides on-going services to the registrant that were not pre-approved pursuant to paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X is compatible with maintaining the principal accountant’s independence.
Item 5. Audit Committee of Listed Registrants.
Not applicable to open-end management investment companies.
Item 6. Schedule of Investments.
Schedule of Investments is included as part of report to shareholders filed under Item 1.
Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies.
Not applicable to open-end management investment companies.
Item 8. Portfolio Managers of Closed-End Management Investment Companies.
Not applicable to open-end management investment companies.
Item 9. Purchases of Equity Securities by Closed-End Management Investment Company and Affiliated Purchasers.
Not applicable to open-end management investment companies.
Item 10. Submission of Matters to a Vote of Security Holders.
There have been no material changes to the procedures by which shareholders may recommend nominees to the registrant’s Board of Trustees since the registrant’s last proxy solicitation.
Item 11. Controls and Procedures.
(a) The registrant’s Principal Executive Officer and Principal Financial Officer concluded that the registrant’s disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940 as amended (the “Act”)) were effective as of a date within 90 days of the filing date of this report, based on their evaluation of the effectiveness of the registrant’s disclosure controls and procedures required by Rule 30a-3(b) under the Act and Rule 13a-15(b) or 15d-15(b) under the Securities and Exchange Act of 1934.
(b) There were no changes in the registrant’s internal control over financial reporting (as defined in Rule 30a-3(d) of the Act) that occurred during the registrant’s last fiscal quarter that have materially affected, or are reasonably likely to materially affect, the registrant’s internal control over financial reporting.
Item 12. Exhibits.
(a)(1) Code of Ethics attached hereto.
(a)(2) A separate certification for the Principal Executive Officer and the Principal Financial Officer of the registrant as required by Rule 30a-2(a) under the Investment Company Act of 1940, as amended (17 CFR 270.30a-2(a)), are filed herewith.
(b) Officer certifications as required by Rule 30a-2(b) under the Investment Company Act of 1940, as amended (17 CFR 270.30a-2(b)), also accompany this filing as an Exhibit.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Registrant | Turner Funds |
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By (Signature and Title) | /s/ Thomas R. Trala, Jr. |
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| Thomas R. Trala, Jr., President |
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Date | 11/23/2011 |
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Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. | |||||
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By (Signature and Title) | /s/ Thomas R. Trala, Jr. |
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| Thomas R. Trala, Jr., President |
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Date | 11/23/2011 |
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By (Signature and Title) | /s/ Ty Edwards |
| |||
| Ty Edwards, Treasurer |
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Date | 11/29/2011 |
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