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 |
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(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: | (800) 224-6312 |
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Date of fiscal year end: | September 30 |
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Date of reporting period: | September 30, 2013 |
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Explanatory Note:
Registrant is filing this amendment to its Form N-CSR for the fiscal year ended September 30, 2013, originally filed with the Securities and Exchange Commission on December 6, 2013 (Accession Number 0001104659-13-088796 ). The sole purpose of this amendment is to add the Board of Trustees Considerations in Approving the Investment Advisory Agreement for the Turner Emerging Markets Fund, a section that was inadvertently omitted from the original Form N-CSR filing. Except as set forth above, this amendment does not amend, update or change any other items or disclosures found in the original Form N-CSR filing.
Item 1. Reports to Stockholders
The Annual Report to Shareholders is attached herewith.
Turner Funds
(the “Trust”)
Supplement to the Trust’s Annual Report to Shareholders
for the fiscal year ended September 30, 2013
(the “2013 Annual Report”)
The following section entitled “Board of Trustees Considerations in Approving the Advisory Agreement” is added to the 2013 Annual Report.
This Supplement is dated January 16, 2014
Board of Trustees Considerations in Approving the Advisory Agreement
On May 17, 2013, the Board of Trustees (the “Board” or “Trustees”) of the Turner Funds (the “Funds” or the “Trust”) held a meeting to decide whether to approve the advisory agreement with Turner Investments, L.P. (“Turner”) with respect to the Turner Emerging Markets Fund (the “New Fund”). In preparation for the meeting, the Board requested and reviewed a wide variety of information from Turner. The information described, among other things: Turner’s business; its organizational structure, personnel and operations; advisory services; the performance of the separate accounts/ strategies that replicated the proposed strategies of the New Fund over past periods; compliance; the proposed advisory fees and expenses to be paid by the New Fund; and information on trading. At the meeting, representatives from Turner presented additional oral information to the Trustees to help them evaluate Turner’s fees and other aspects of the advisory agreement. The Trustees discussed the written materials and Turner’s oral presentation, and deliberated on the approval of the advisory agreement in light of this information.
The Board, including all of the independent Trustees, considered, among other things: (1) the nature, extent and quality of the proposed services provided by Turner; (2) the performance of the separate accounts/ strategies over the past periods (as available); (3) the contractual and actual compensation to be paid under the agreement as compared to the compensation paid to relevant Lipper peer groups; (4) the proposed expense ratio of the New Fund, with expense waivers, as compared to expense ratios for relevant Lipper peer groups; (5) the qualifications of Turner’s personnel, portfolio management capabilities and investment methodologies; (6) Turner’s operations, compliance program and policies; (7) the financial condition of Turner; (8) the cost of services provided by Turner and Turner’s potential profitability from managing the New Fund; (9) “fall-out” benefits to Turner and its affiliates from the relationship with the New Fund; (10) the extent to which economies of scale are relevant given the New Fund’s proposed asset size and current asset growth potential; and (11) a comparison of the fees charged by Turner with fees charged by Turner to similar clients, to the extent it deemed it relevant.
The independent Trustees, in executive session, reached the following conclusions, among others, regarding Turner and the advisory agreement: the recent performance of the separate account or strategies, as applicable, was generally comparable, and in some cases better, than their respective benchmarks; the proposed advisory fees for the New Fund were generally competitive with the fees of its Lipper peer groups; and the net total expense ratio of the New Fund was generally competitive. The independent Trustees also concluded that: they were generally satisfied with the quality of services provided by Turner in advising the existing Turner Funds and believed that the proposed portfolio management team for the New Fund had the expertise to handle the new product; the fact that Turner did not expect, at least initially, to earn any significant profits from management of the New Fund and in fact would have to subsidize it for an initial period; and that the New Fund was not large enough to attain significant economies of scale.
Based on the factors considered, the independent Trustees had concluded that it was appropriate to approve the advisory agreement with respect to the New Fund.
Based on the Board’s deliberations and its evaluation of the information described above, the Trustees, including all of the independent Trustees, unanimously: (a) agreed to approve the advisory agreement and (b) determined that the compensation payable by the New Fund under the advisory agreement is fair and reasonable.
Annual Report
September 30, 2013
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 Emerging Growth Fund
Turner Large Growth Fund
Turner Midcap Growth Fund
Turner Small Cap Growth Fund
Emerging markets equity fund
Turner Emerging Markets Fund
Contents
2 | Letter to shareholders | ||||||
| 4 | Total returns of the Turner Funds | ||||||
| 7 | Investment review: Turner Market Neutral Fund | ||||||
| 8 | Investment review: Turner Medical Sciences Long/Short Fund | ||||||
| 9 | Investment review: Turner Spectrum Fund | ||||||
| 10 | Investment review: Turner Titan Fund | ||||||
| 11 | Investment review: Turner All Cap Growth Fund | ||||||
| 12 | Investment review: Turner Emerging Growth Fund | ||||||
| 13 | Investment review: Turner Large Growth Fund | ||||||
| 14 | Investment review: Turner Midcap Growth Fund | ||||||
| 15 | Investment review: Turner Small Cap Growth Fund | ||||||
| 16 | Investment review: Turner Emerging Markets Fund | ||||||
| 17 | Schedules of investments | ||||||
| 46 | Financial statements | ||||||
| 68 | Notes to financial statements | ||||||
| 78 | Report of independent registered public accounting firm | ||||||
| 79 | Notice to shareholders | ||||||
| 80 | Disclosure of fund expenses | ||||||
| 82 | Trustees and officers of the Trust | ||||||
Turner Funds
As of September 30, 2013, the Turner Funds offered a series of 10 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, the Turner Medical Sciences Long/Short Fund, the Turner Spectrum Fund and the 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, L.P., based in Berwyn, Pennsylvania, serves as the investment adviser for the Turner Funds. Turner Investments, L.P., founded in 1990, manages more than $8.8 billion in stock investments as of September 30, 2013.
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 2013 ANNUAL REPORT 1
LETTER TO SHAREHOLDERS
Dear Shareholder;
Nearly 33 years ago, I was introduced to Dr. Henry Latane. He was a finance professor from the University of North Carolina whose research focused on earnings surprise. When many were arguing that the stock market was fully efficient, his research supported the conclusion that companies which reported earnings above what was expected (surprise) outperformed the market.
This made sense to me and with a natural bias to growth stocks, I adopted and adapted this approach to investing. Specifically, over the last three decades and for the entire history of Turner Investments, our philosophy has been "earnings expectations drive stock prices". We seek to buy those companies with improving earnings and sell those where we believe earnings are deteriorating.
Generally that worked pretty well. For most of the 1990s, earnings went up and stocks followed suit. As the tech bubble burst in 2000, earnings deteriorated, particularly in tech stocks, and the market went down. By 2003, tech had stabilized while the rest of the market marched forward driven by earnings growth fueled by credit expansion. Of course as we all know too well that ended badly with the credit bubble bursting bringing about the global financial crisis. Economic growth across the globe plummeted and so did earnings. Accordingly, the stock market went down.
With global economic calamity averted, stocks began to rally in 2009 and 2010. The early move off the bottom seemed to be a "dead cat bounce" from a severely oversold position. 2011 saw markets across the globe fluctuate up or down a bit as investors tried to assess whether the global financial crisis was over. By 2012, investors had tired of miniscule money market and treasury yields and began to seek yield from equity securities which at the time were offering a yield sharply higher than bonds (S&P 500 yielding nearly 3% while 10 year treasuries yielded less than 2%). As a result, stocks with modest growth but with a high yield performed best. Those stocks generally had lower volatility, or beta, than the market overall. This persisted into the first half of 2013.
Over the years, Turner's performance has been pretty predictable, i.e. market up, growth in favor, we outperform; market down, growth out of favor, we underperform. But we stick with our pure growth, earnings driven disciplines and bounce nicely off bottoms.
After bouncing nicely in 2009 and 2010, 2011 was a mixed year for performance in congruence with a mixed year for performance for the markets overall. However, in 2012 and the first half of 2013, as the market went up, we underperformed. In fact, the fastest growing stocks sharply underperformed the slower growing stocks. The same held true for high beta versus low beta. Was Dr. Latane wrong?
I don't think so. While at the time we were frustrated that the fast growers like Michael Kors and Salesforce.com were
underperforming Wal-Mart and Microsoft, in hindsight the focus on yield was very logical. For investors to dip their toes back in the investment pond, they required a yield better than they could find in treasuries from a company that wasn't going to "blow up".
Due to this investor preference and sentiment, the market was advancing but not in our type of stocks. Fortunately that changed about midyear this year as Fed Chairman Bernanke began to discuss tapering and interest rates rose.
With the prospects for improving global economies that bring about improving earnings, our type of stocks — pure growth stocks — once again began to outperform. Dr. Latane was vindicated!
So the question now is "is the return of pure growth stock out performance of the recent quarter here to stay or is yield still desirable". While you know our preference, my answer is "somewhere in between". With treasury rates still low and with the prospects that one can lose money in these if rates go up, stocks with above average dividend yields are still desirable. However, now that isn't the end all and be all for stock investing. History has shown that as interest rates rise, pure growth stocks lead by the technology, consumer and health care sectors tend to lead the market.
Adding to that within technology, mobility and cloud computing have become big drivers of growth. New cloud based companies are growing rapidly (and coming public) at the expense of legacy based companies. In the consumer sector, internet stocks continue to charge ahead as consumers use the internet longer and in more varied ways. Finally, in the health care sector, breakthroughs in drug discovery are driving many biotech stocks higher.
What was a pretty sharp headwind for a couple years for Turner recently became a pleasant tailwind. I think this continues.
Also, I have learned over the years that when one's style is out of favor, bad decisions are magnified and good decisions are muted. Certainly, while the headwinds were in place bad decisions were made, just as they will be made with the wind shifting to our back. The key is to minimize the mistakes, learn from them and move forward with the constant search for the next great growth stock.
As for the market in general, we feel the bias is upward. Since stocks began to advance in the Spring of 2009 any setback due to macro or geopolitical events has been met by renewed buying of stocks. That's because corporations have been generating a robust free cash flow with rising earnings. They are buying back their own shares, raising their dividends and recently have begun to buy the shares of other companies (takeovers). Following two recessions in eight years, the last being a "near death" experience, corporations have become very focused on the segments of their business where they have a competitive advantage
2 TURNER FUNDS 2013 ANNUAL REPORT
September 30, 2013
and are growing that. Segments of their business which are challenged, they are shedding. Corporations have embraced technology with factory automation, mobility and the cloud to sharply reduce the cost of doing business. Because of this, free cash flow has soared, debt levels have subsided, cash balances accumulate, shares are being bought back and dividends increased. With four years of this under their belts, corporations are now beginning to invest in their growth through capital expenditures and acquisitions. This has been the safety net beneath the market. While the headlines are often scary, the underlying fundamentals of global corporations are the best they have ever been.
Last year our 25 research analysts visited with over 2800 company management teams and engaged in extensive research within their global industry. Each of our analysts affirms that the productivity/profits growth is real and should continue as long as economic growth continues.
And continue it shall. For the most part, countries across the globe are united in their quantitative easing. They understand only too well the risk of deflation and are committed to do all they can do through both monetary and fiscal policy to avoid this.
Recessions or anticipations of recessions lead to the fall of stock prices. Recessions occur when excesses are building in the system that must be corrected. Because of the severity of the global financial crises, we are nowhere near exhibiting any sign of excesses. So until that happens, economies will grow, companies will prosper, earnings will rise and stock prices should follow suit. From our perspective, hopefully stocks are more in sync with their earnings with a little less emphasis on yield.
During this bull market of the last four years, the safest, most visible, most liquid, best governed market in the world, our home market USA has overall been the best performing market. While the US may not outperform other markets as much moving forward, we still see it near the front of the pack. All the positives I outlined from corporations a few paragraphs above, manifest themselves most vividly in US companies. After years and decades of underperformance, Japan should play catch-up and be a good relative performer due to its very aggressive QE program in place. Europe is showing some green shoots of growth and thus should perform reasonably well also. Finally, Emerging Markets stocks likely will continue to face headwinds, due to downward pressure on commodity prices, slower growth in China and country specific issues with inflation, elections, governance, etc.
But at the end of the day, it really boils down to earnings. Regardless of where a company is located or what it does, if its earnings go up, its stock price generally follows suit. Dr. Latane's research of nearly 40 years ago holds true today as it was then — announce a good quarter and your stock price goes up. Do that quarter after quarter
and your stock price really goes up. From its low price in the Spring of 2009, Salesforce.com , the poster child for new technology driven growth (cloud computing), has seen its stock increase nearly nine fold, due to the combination of sharply rising revenues and earnings.
Our goal is to find as many of these as we can for your portfolio. For our long/short portfolios, our team of analysts also seeks to find those companies that are seeing their earnings deteriorate because of competition from companies like Salesforce.com. Companies with a poor earnings growth profile make up the short side of our long/short portfolios.
As always, thank you for your support. The yield headwinds presented our team with some of its greatest challenges in our 23 year history, but fortunately that seems to have changed benefitting the performance of your fund over time.
Sincerely,
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, 2013, and are not intended as a forecast or investment recommendations. The indexes mentioned are not available for investment.
Bob Turner
TURNER FUNDS 2013 ANNUAL REPORT 3
PERFORMANCE (Unaudited)
Total returns of the Turner Funds
Through September 30, 2013
Current performance may be lower or higher than the performance data quoted. Please call 1.800.224.6312 or visit our Web site 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 | 8.16 | % | 3.55 | % | 0.29 | % | n/a | n/a | n/a | 1.61 | % | $ | 3.30 | ||||||||||||||||||||||
Investor Class Shares | 7.99 | 3.26 | 0.10 | n/a | n/a | n/a | 1.35 | 0.60 | |||||||||||||||||||||||||||
Class C Shares | 7.68 | 2.79 | -0.60 | n/a | n/a | n/a | 0.63 | 0.07 | |||||||||||||||||||||||||||
S&P 500 Index | 8.31 | 19.79 | 19.34 | n/a | n/a | n/a | 12.05 | ||||||||||||||||||||||||||||
| Barclays Capital U.S. Aggregate Bond Index | -1.77 | -1.89 | -1.68 | n/a | n/a | n/a | 4.09 | ||||||||||||||||||||||||||||
| Lipper Equity Market-Neutral Funds Average | -0.15 | 0.96 | 1.47 | n/a | n/a | n/a | 1.43 | ||||||||||||||||||||||||||||
Inception date: 2/7/11 | |||||||||||||||||||||||||||||||||||
| Turner Medical Sciences Long/Short Fund — Institutional Class Shares | 10.75 | 15.63 | 13.25 | n/a | n/a | n/a | 5.56 | 16.74 | |||||||||||||||||||||||||||
Investor Class Shares | 10.60 | 15.49 | 12.99 | n/a | n/a | n/a | 5.35 | 3.06 | |||||||||||||||||||||||||||
Class C Shares | 10.18 | 14.90 | 12.15 | n/a | n/a | n/a | 4.59 | 1.37 | |||||||||||||||||||||||||||
S&P 500 Health Care Index | 10.91 | 28.45 | 28.55 | n/a | n/a | n/a | 21.26 | ||||||||||||||||||||||||||||
| Barclays Capital U.S. Aggregate Bond Index | -1.77 | -1.89 | -1.68 | n/a | n/a | n/a | 4.09 | ||||||||||||||||||||||||||||
| Lipper Long/Short Equity Funds Average | 4.77 | 10.35 | 10.07 | n/a | n/a | n/a | 3.37 | ||||||||||||||||||||||||||||
Inception date: 2/7/11 | |||||||||||||||||||||||||||||||||||
| Turner Spectrum Fund — Institutional Class Shares | 2.70 | 4.96 | 4.96 | 3.30 | % | n/a | n/a | 4.24 | 481.85 | ||||||||||||||||||||||||||
Investor Class Shares | 2.54 | 4.73 | 4.63 | 3.04 | n/a | n/a | 3.98 | 44.14 | |||||||||||||||||||||||||||
Class C Shares(1) | 2.14 | 4.17 | 3.88 | 2.27 | n/a | n/a | 3.51 | 5.57 | |||||||||||||||||||||||||||
S&P 500 Index | 8.31 | 19.79 | 19.34 | 16.27 | n/a | n/a | 17.54 | ||||||||||||||||||||||||||||
| Barclays Capital U.S. Aggregate Bond Index | -1.77 | -1.89 | -1.68 | 2.86 | n/a | n/a | 4.94 | ||||||||||||||||||||||||||||
| Lipper Long/Short Equity Funds Average | 4.77 | 10.35 | 10.07 | 6.58 | n/a | n/a | 8.33 | ||||||||||||||||||||||||||||
Inception date: 5/7/09 | |||||||||||||||||||||||||||||||||||
4 TURNER FUNDS 2013 ANNUAL REPORT
PERFORMANCE (continued) (Unaudited)
Fund name/Index | Six months* | Year to date* | One year | Three years | Five years | 10 years | (Annualized) Since inception* | Total net assets ($mil) | |||||||||||||||||||||||||||
| Turner Titan Fund — Institutional Class Shares | 5.00 | % | 7.24 | % | 3.43 | % | n/a | n/a | n/a | 2.54 | % | $ | 21.17 | ||||||||||||||||||||||
Investor Class Shares | 4.82 | 6.97 | 3.14 | n/a | n/a | n/a | 2.28 | 0.39 | |||||||||||||||||||||||||||
Class C Shares | 4.18 | 6.24 | 2.28 | n/a | n/a | n/a | 1.47 | 0.03 | |||||||||||||||||||||||||||
S&P 500 Index | 8.31 | 19.79 | 19.34 | n/a | n/a | n/a | 12.05 | ||||||||||||||||||||||||||||
| Barclays Capital U.S. Aggregate Bond Index | -1.77 | -1.89 | -1.68 | n/a | n/a | n/a | 4.09 | ||||||||||||||||||||||||||||
| Lipper Long/Short Equity Funds Average | 4.77 | 10.35 | 10.07 | n/a | n/a | n/a | 3.37 | ||||||||||||||||||||||||||||
Inception date: 2/7/11 | |||||||||||||||||||||||||||||||||||
| Turner All Cap Growth Fund(2) | 15.70 | 24.04 | 14.93 | 13.78 | 13.10 | % | 9.09 | % | 0.27 | 17.98 | |||||||||||||||||||||||||
NASDAQ Composite Index | 15.42 | 24.90 | 21.03 | 16.77 | 12.51 | 7.76 | -0.38 | ||||||||||||||||||||||||||||
Russell 3000® Growth Index | 10.86 | 21.75 | 20.30 | 17.18 | 12.16 | 7.99 | 0.73 | ||||||||||||||||||||||||||||
Inception date: 6/30/00 | |||||||||||||||||||||||||||||||||||
| Turner Emerging Growth Fund(2) — Institutional Class Shares(3) | 21.96 | 36.22 | 32.98 | 21.74 | n/a | n/a | 23.69 | 72.44 | |||||||||||||||||||||||||||
Investor Class Shares | 21.82 | 35.97 | 32.63 | 21.45 | 11.16 | 11.44 | 18.81 | 180.29 | |||||||||||||||||||||||||||
Russell 2000® Growth Index | 17.02 | 32.47 | 33.07 | 19.96 | 13.17 | 9.85 | 5.29 | ||||||||||||||||||||||||||||
Inception date: 2/27/98 | |||||||||||||||||||||||||||||||||||
| Turner Large Growth Fund — Institutional Class Shares | 11.81 | 17.44 | 14.87 | 11.91 | 7.52 | 6.50 | 3.32 | 53.97 | |||||||||||||||||||||||||||
Investor Class Shares(4) | 11.58 | 17.15 | 14.50 | 11.62 | 7.24 | n/a | 4.16 | 30.62 | |||||||||||||||||||||||||||
Russell 1000® Growth Index | 10.34 | 20.87 | 19.27 | 16.94 | 12.07 | 7.82 | 3.88 | ||||||||||||||||||||||||||||
Inception date: 2/28/01 | |||||||||||||||||||||||||||||||||||
| Turner Midcap Growth Fund(2) — Institutional Class Shares(5) | 15.05 | 27.55 | 24.69 | 13.85 | 10.99 | n/a | 4.66 | 205.68 | |||||||||||||||||||||||||||
Investor Class Shares | 14.88 | 27.30 | 24.31 | 13.57 | 10.71 | 8.34 | 10.46 | 257.24 | |||||||||||||||||||||||||||
Retirement Class Shares(6) | 14.72 | 27.07 | 24.11 | 13.31 | 10.46 | 7.99 | 7.61 | 4.24 | |||||||||||||||||||||||||||
Russell Midcap® Growth Index | 12.48 | 25.42 | 27.54 | 17.65 | 13.92 | 10.16 | 8.29 | ||||||||||||||||||||||||||||
Inception date: 10/1/96 | |||||||||||||||||||||||||||||||||||
| Turner Small Cap Growth Fund(2) | 18.60 | 33.02 | 33.79 | 18.42 | 12.71 | 9.81 | 11.91 | 233.04 | |||||||||||||||||||||||||||
Russell 2000® Growth Index | 17.02 | 32.47 | 33.07 | 19.96 | 13.17 | 9.85 | 7.08 | ||||||||||||||||||||||||||||
Inception date: 2/7/94 | |||||||||||||||||||||||||||||||||||
| Turner Emerging Markets Fund — Institutional Class Shares | n/a | n/a | n/a | n/a | n/a | n/a | 7.80 | 0.51 | |||||||||||||||||||||||||||
Investor Class Shares | n/a | n/a | n/a | n/a | n/a | n/a | 7.80 | 0.04 | |||||||||||||||||||||||||||
MSCI Emerging Markets Index | n/a | n/a | n/a | n/a | n/a | n/a | 8.19 | ||||||||||||||||||||||||||||
Inception date: 8/27/13 | |||||||||||||||||||||||||||||||||||
(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.
* Returns of less than one year are cumulative, and not annualized.
TURNER FUNDS 2013 ANNUAL REPORT 5
(Unaudited)
Expense Ratio†
| Gross expense ratio | Net expense ratio* | ||||||||||
Turner Market Neutral Fund | |||||||||||
Institutional Class Shares | 2.58 | % | 1.95 | % | |||||||
Investor Class Shares | 2.83 | % | 2.20 | % | |||||||
Class C Shares | 3.58 | % | 2.95 | % | |||||||
| Turner Medical Sciences Long/Short Fund | |||||||||||
Institutional Class Shares | 2.17 | % | 1.95 | % | |||||||
Investor Class Shares | 2.42 | % | 2.20 | % | |||||||
Class C Shares | 3.17 | % | 2.95 | % | |||||||
Turner Spectrum Fund | |||||||||||
Institutional Class Shares | 2.40 | % | 1.95 | % | |||||||
Investor Class Shares | 2.65 | % | 2.20 | % | |||||||
Class C Shares | 3.40 | % | 2.95 | % | |||||||
Turner Titan Fund | |||||||||||
Institutional Class Shares | 2.44 | % | 1.95 | % | |||||||
Investor Class Shares | 2.69 | % | 2.20 | % | |||||||
Class C Shares | 3.44 | % | 2.95 | % | |||||||
| Gross expense ratio | Net expense ratio* | ||||||||||
Turner All Cap Growth Fund | |||||||||||
Investor Class Shares | 1.47 | % | 1.24 | % | |||||||
Turner Emerging Growth Fund | |||||||||||
Institutional Class Shares | 1.32 | % | 1.17 | % | |||||||
Investor Class Shares | 1.57 | % | 1.42 | % | |||||||
Turner Large Growth Fund | |||||||||||
Institutional Class Shares | 0.91 | % | 0.69 | % | |||||||
Investor Class Shares | 1.16 | % | 0.94 | % | |||||||
Turner Midcap Growth Fund | |||||||||||
Institutional Class Shares | 1.04 | % | 0.93 | % | |||||||
Investor Class Shares | 1.29 | % | 1.18 | % | |||||||
Retirement Class Shares | 1.54 | % | 1.43 | % | |||||||
Turner Small Cap Growth Fund | |||||||||||
Investor Class Shares | 1.53 | % | 1.25 | % | |||||||
Turner Emerging Markets Fund | |||||||||||
Institutional Class Shares | 1.91 | % | 1.06 | % | |||||||
Investor Class Shares | 2.16 | % | 1.31 | % | |||||||
† 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 at any time after January 31, 2014 for all funds, except the Turner Emerging Markets Fund, which may discontinue the arrangement at any time after January 31, 2015.
6 TURNER FUNDS 2013 ANNUAL REPORT
INVESTMENT REVIEW (Unaudited)
Turner Market Neutral Fund
Fund profile
September 30, 2013
n Ticker symbol TMNFX
Investor Class Shares
n CUSIP #900297581
Investor Class Shares
n Top five holdings1
(1) Lekoil
(2) Harley-Davidson
(3) Louisiana-Pacific
(4) Pfizer
(5) TIBCO Software
n % in five largest holdings 27.9%1,2
n Number of holdings 601
n Net assets $0.60 million, Investor Class Shares
Growth of a $10,000 investment in the
Turner Market Neutral Fund, Investor Class Shares:
February 7, 2011-September 30, 20133,4
Average annual total returns (Periods ended September 30, 2013)
| One year | Since inception4 | ||||||||||
Turner Market Neutral Fund, Institutional Class Shares5 | 0.29 | % | 1.61 | % | |||||||
Turner Market Neutral Fund, Investor Class Shares5 | 0.10 | % | 1.35 | % | |||||||
Turner Market Neutral Fund, Class C Shares5 | -0.60 | % | 0.63 | % | |||||||
S&P 500 Index6 | 19.34 | % | 12.05 | % | |||||||
Barclays Capital U.S. Aggregate Bond Index7 | -1.68 | % | 4.09 | % | |||||||
Lipper Equity Market-Neutral Funds Average8 | 1.47 | % | 1.43 | % | |||||||
Sector weightings2:
Manager's discussion and analysis
The Turner Market Neutral Fund (Institutional Class and Investor Class) generated a positive absolute return during the 12-month period ended September 30, 2013. The Class C Shares generated a slightly negative return. During the reporting period, the Fund outperformed the Barclays Capital U.S. Aggregate Bond Index but underperformed both the S&P 500 Index and the Lipper Equity Market-Neutral Funds Average. The Turner Market Neutral Fund invests in stocks of companies with any capitalization range using a long/short strategy in seeking to capture alpha, reduce volatility, and preserve capital in declining markets.
During the reporting period, top contributors to performance were long and short positions in biotechnology, investment managers, apparel, and precious metals companies. Over the same period, top detractors to performance were long and short positions in computer hardware, precious metals, entertainment, and medical supplies companies.
1 Cash equivalent is not being considered a holding for the top five holdings, but is counted in the number of holdings. Top five holdings are based on long positions. The fund composition is subject to change.
2 Percentages based on total investments of long positions.
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.
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 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 2013 ANNUAL REPORT 7
INVESTMENT REVIEW (Unaudited)
Turner Medical Sciences Long/Short Fund
Fund profile
September 30, 2013
n Ticker symbol TMSFX
Investor Class Shares
n CUSIP #900297557
Investor Class Shares
n Top five holdings1
(1) Pfizer
(2) McKesson
(3) Roche Holding AG ADR
(4) Bristol-Myers Squibb
(5) Cubist Pharmaceuticals
n % in five largest holdings 22.5%1,2
n Number of holdings 871
n Net assets $3.06 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, 20133,4
Average annual total returns (Periods ended September 30, 2013)
| One year | Since inception4 | ||||||||||
Turner Medical Sciences Long/Short Fund, Institutional Class Shares5 | 13.25 | % | 5.56 | % | |||||||
Turner Medical Sciences Long/Short Fund, Investor Class Shares5 | 12.99 | % | 5.35 | % | |||||||
Turner Medical Sciences Long/Short Fund, Class C Shares5 | 12.15 | % | 4.59 | % | |||||||
S&P 500 Health Care Index6 | 28.55 | % | 21.26 | % | |||||||
Barclays Capital U.S. Aggregate Bond Index7 | -1.68 | % | 4.09 | % | |||||||
Lipper Long/Short Equity Funds Average8 | 10.07 | % | 3.37 | % | |||||||
Sector weightings2:
Manager's discussion and analysis
The Turner Medical Sciences Long/Short Fund produced a positive absolute return for the 12-month period ended September 30, 2013. During the reporting period, the Fund outperformed the Lipper Long/Short Equity Funds Average and the Barclays Capital U.S. Aggregate Bond Index but underperformed the S&P 500 Health Care Index. The Turner Medical Sciences Long/Short Fund invests primarily (at least 80% of its net assets) in stocks of companies engaged in the health care sector using a long/short growth strategy in seeking to capture alpha, reduce volatility, and preserve capital in declining markets.
During the reporting period, top contributors to performance were long and short positions in biotechnology, medical distributors, pharmaceuticals, and health care technology companies. Over the same period, top detractors to performance were long and short positions in pharmaceuticals, biotechnology, hospital management, and health care services companies.
1 Cash equivalent is not being considered a holding for the top five holdings, but is counted in the number of holdings. Top five holdings are based on long positions. The fund composition is subject to change.
2 Percentages based on total investments of long positions.
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.
5 Fee waivers are in effect; if they had not been in effect, performance would have been lower.
6 The S&P 500 Health Care 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 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.
ADR — American Depositary Receipt
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.
8 TURNER FUNDS 2013 ANNUAL REPORT
INVESTMENT REVIEW (Unaudited)
Turner Spectrum Fund
Fund profile
September 30, 2013
n Ticker symbol TSPEX
Institutional Class Shares
n CUSIP #900297664
Institutional Class Shares
n Top five holdings1
(1) Ocwen Financial
(2) Towers Watson, Cl A
(3) McKesson
(4) Anadarko Petroleum
(5) IntercontinentalExchange
n % in five largest holdings 6.5%1,2
n Number of holdings 3941
n Net assets $481.85 million, Institutional Class Shares
Growth of a $100,000 investment in the
Turner Spectrum Fund, Institutional Class Shares:
May 7, 2009-September 30, 20133,4
Average annual total returns (Periods ended September 30, 2013)
| One year | Three years | Since inception | |||||||||||||
Turner Spectrum Fund, Institutional Class Shares5 | 4.96 | % | 3.30 | % | 4.24 | %4 | |||||||||
Turner Spectrum Fund, Investor Class Shares5 | 4.63 | % | 3.04 | % | 3.98 | %4 | |||||||||
Turner Spectrum Fund, Class C Shares5 | 3.88 | % | 2.27 | % | 3.51 | %6 | |||||||||
S&P 500 Index7 | 19.34 | % | 16.27 | % | 17.54 | %4 | |||||||||
Barclays Capital U.S. Aggregate Bond Index8 | -1.68 | % | 2.86 | % | 4.94 | %4 | |||||||||
Lipper Long/Short Equity Funds Average9 | 10.07 | % | 6.58 | % | 8.33 | %4 | |||||||||
Sector weightings2:
Manager's discussion and analysis
The Turner Spectrum Fund produced a positive absolute return for the 12-month period ended September 30, 2013. During the reporting period, the Fund outperformed the Barclays Capital U.S. Aggregate Bond Index but underperformed both the S&P 500 Index and the Lipper Long/Short Equity Funds Average. The Turner Spectrum Fund is a multi-manager mutual fund that seeks long-term capital appreciation through investments in a number of long/short equity strategies offered by Turner Investments.
During the reporting period, top contributors to performance were long positions in biotechnology, internet, and consumer finance companies. Over the same period, top detractors to performance were long and short positions in entertainment, chemicals, and computer hardware companies.
1 Cash equivalent is not being considered a holding for the top five holdings, but is counted in the number of holdings. Top five holdings are based on long positions. The fund composition is subject to change.
2 Percentages based on total investments of long positions.
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 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.
Cl — Class
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 2013 ANNUAL REPORT 9
INVESTMENT REVIEW (Unaudited)
Turner Titan Fund
Fund profile
September 30, 2013
n Ticker symbol TTLFX
Investor Class Shares
n CUSIP #900297524
Investor Class Shares
n Top five holdings1
(1) Salesforce.com
(2) IntercontinentalExchange
(3) eBay
(4) Apple
(5) Discover Financial Services
n % in five largest holdings 16.0%1,2
n Number of holdings 1071
n Net assets $0.39 million, Investor Class Shares
Growth of a $10,000 investment in the
Turner Titan Fund, Investor Class Shares:
February 7, 2011-September 30, 20133,4
Average annual total returns (Periods ended September 30, 2013)
| One year | Since inception4 | ||||||||||
Turner Titan Fund, Institutional Class Shares5 | 3.43 | % | 2.54 | % | |||||||
Turner Titan Fund, Investor Class Shares5 | 3.14 | % | 2.28 | % | |||||||
Turner Titan Fund, Class C Shares5 | 2.28 | % | 1.47 | % | |||||||
S&P 500 Index6 | 19.34 | % | 12.05 | % | |||||||
Barclays Capital U.S. Aggregate Bond Index7 | -1.68 | % | 4.09 | % | |||||||
Lipper Long/Short Equity Funds Average8 | 10.07 | % | 3.37 | % | |||||||
Sector weightings2:
Manager's discussion and analysis
The Turner Titan Fund generated a positive absolute return for the 12-month period ended September 30, 2013. During the reporting period, the Fund outperformed the Barclays Capital U.S. Aggregate Bond Index but underperformed both the S&P 500 Index and the Lipper Long/Short Equity Funds Average. The Turner Titan Fund invests in stocks of companies with primarily large capitalization ranges across all major industry sectors using a long/short strategy in seeking to capture alpha, reduce volatility, and preserve capital in declining markets.
During the reporting period, top contributors to performance were long positions in internet, biotechnology, and gaming companies. Over the same period, top detractors to performance were long and short positions in entertainment, apparel, software, and semiconductor companies.
1 Cash equivalent is not being considered a holding for the top five holdings, but is counted in the number of holdings. Top five holdings are based on long positions. The fund composition is subject to change.
2 Percentages based on total investments of long positions.
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.
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 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 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.
10 TURNER FUNDS 2013 ANNUAL REPORT
INVESTMENT REVIEW (Unaudited)
Turner All Cap Growth Fund
Fund profile
September 30, 2013
n Ticker symbol TBTBX
n CUSIP #87252R797
n Top five holdings1
(1) LinkedIn, Cl A
(2) Avago Technologies
(3) Cavium
(4) NXP Semiconductors
(5) Apple
n % in five largest holdings 23.3%1,2
n Number of holdings 381
n Net assets $17.98 million
Growth of a $10,000 investment in the
Turner All Cap Growth Fund:
September 30, 2003-September 30, 20133
Average annual total returns (Periods ended September 30, 2013)
| One year | Three years | Five years | 10 years | Since inception3 | |||||||||||||||||||
Turner All Cap Growth Fund4 | 14.93 | % | 13.78 | % | 13.10 | % | 9.09 | % | 0.27 | % | |||||||||||||
NASDAQ Composite Index5 | 21.03 | % | 16.77 | % | 12.51 | % | 7.76 | % | -0.38 | % | |||||||||||||
Russell 3000® Growth Index6 | 20.30 | % | 17.18 | % | 12.16 | % | 7.99 | % | 0.73 | % | |||||||||||||
Sector weightings2:
Manager's discussion and analysis
Outperformance in internet software and services and capital markets holdings helped the Turner All Cap Growth Fund to gain a strong absolute return in the 12-month period ended September 30, 2013. However, the fund's return lagged that of both the Russell 3000® Growth Index and the NASDAQ Composite Index on a relative basis.
From an attribution standpoint, the two sectors with the strongest outperformance to their corresponding index sectors were financial and consumer discretionary sectors. Within the sectors discussed above, hotels, restaurants, and leisure contributed to returns. The two bottom sectors that detracted from relative returns compared to their corresponding index were information technology and energy, with holdings in computers, communication equipment, and oil gas and consumable fuels holdings recording poor 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.
7 Cash equivalent includes short-term investment held as collateral for securities lending activity. Please see Note 8 in Notes to Financial Statements for more detailed information.
Cl — Class
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 2013 ANNUAL REPORT 11
INVESTMENT REVIEW (Unaudited)
Turner Emerging Growth Fund
Fund profile
September 30, 2013
n Ticker symbol TMCGX
Investor Class Shares
n CUSIP #872524301
Investor Class Shares
n Top five holdings1
(1) Middleby
(2) Cracker Barrel Old Country Store
(3) Huron Consulting Group
(4) Tyler Technologies
(5) Rex Energy
n % in five largest holdings 12.1%1,2
n Number of holdings 1091
n Net assets $180.29 million, Investor Class Shares
Growth of a $10,000 investment in the
Turner Emerging Growth Fund, Investor Class Shares:
September 30, 2003-September 30, 20133,4
Average annual total returns (Periods ended September 30, 2013)
| One year | Three years | Five years | 10 years | Since inception | |||||||||||||||||||
Turner Emerging Growth Fund, Institutional Class Shares5 | 32.98 | % | 21.74 | % | — | — | 23.69 | %6 | |||||||||||||||
Turner Emerging Growth Fund, Investor Class Shares5 | 32.63 | % | 21.45 | % | 11.16 | % | 11.44 | % | 18.81 | %4 | |||||||||||||
Russell 2000® Growth Index7 | 33.07 | % | 19.96 | % | 13.17 | % | 9.85 | % | 5.29 | %4 | |||||||||||||
Sector weightings2:
Manager's discussion and analysis
During the 12-month period ended September 30, 2013, the Turner Emerging Growth Fund posted strong absolute returns; however, the fund slightly underperformed the Russell 2000® Growth Index on a relative basis.
The two strongest returning sectors were energy and materials with those sectors outperforming their corresponding index sectors. Within those sectors, shares in oil gas and consumable fuels, and paper and forest products, did best. The health care and financial sectors detracted the most from relative results. In those sectors, health care equipment and supplies, health care specialty retail, and capital markets 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 8 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.
12 TURNER FUNDS 2013 ANNUAL REPORT
INVESTMENT REVIEW (Unaudited)
Turner Large Growth Fund
Fund profile
September 30, 2013
n Ticker symbol TTMEX
Institutional Class Shares
n CUSIP #900297847
Institutional Class Shares
n Top five holdings1
(1) Apple
(2) Google, Cl A
(3) Facebook, Cl A
(4) Visa, Cl A
(5) Gilead Sciences
n % in five largest holdings 19.7%1,2
n Number of holdings 551
n Net assets $53.97 million, Institutional Class Shares
Growth of a $250,000 investment in the
Turner Large Growth Fund, Institutional Class Shares:
September 30, 2003-September 30, 20133,4
Average annual total returns (Periods ended September 30, 2013)
| One year | Three years | Five years | 10 years | Since inception | |||||||||||||||||||
Turner Large Growth Fund, Institutional Class Shares5 | 14.87 | % | 11.91 | % | 7.52 | % | 6.50 | % | 3.32 | %4 | |||||||||||||
Turner Large Growth Fund, Investor Class Shares5 | 14.50 | % | 11.62 | % | 7.24 | % | — | 4.16 | %6 | ||||||||||||||
Russell 1000® Growth Index7 | 19.27 | % | 16.94 | % | 12.07 | % | 7.82 | % | 3.88 | %4 | |||||||||||||
Sector weightings2:
Manager's discussion and analysis
The Turner Large Growth Fund gained a healthy absolute return for the 12-month period ended September 30, 2013. However, the fund underperformed its benchmark, the Russell 1000® Growth Index, on a relative basis.
Regarding sector attribution, the consumer discretionary and financial sectors contributed the most to positive performance. In those sectors, internet software and services, hotels restaurants and leisure, and capital markets shares boosted performance. Additionally, software holdings contributed positively. The technology and health care sectors overall detracted the most from performance. Shares of computers and peripherals, communications equipment, and pharmaceuticals produced unfavorable relative 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. 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 8 in Notes to Financial Statements for more detailed information.
Amounts designated as "—" are not applicable.
Cl — Class
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.
TURNER FUNDS 2013 ANNUAL REPORT 13
INVESTMENT REVIEW (Unaudited)
Turner Midcap Growth Fund
Fund profile
September 30, 2013
n Ticker symbol TMGFX
Investor Class Shares
n CUSIP #900297409
Investor Class Shares
n Top five holdings1
(1) Wynn Resorts
(2) LinkedIn, Cl A
(3) NXP Semiconductors
(4) IntercontinentalExchange
(5) Alliance Data Systems
n % in five largest holdings 10.3%1,2
n Number of holdings 771
n Net assets $257.24 million, Investor Class Shares
Growth of a $10,000 investment in the
Turner Midcap Growth Fund, Investor Class Shares:
September 30, 2003-September 30, 20133,4
Average annual total returns (Periods ended September 30, 2013)
| One year | Three years | Five years | 10 years | Since inception | |||||||||||||||||||
Turner Midcap Growth Fund, Institutional Class Shares5 | 24.69 | % | 13.85 | % | 10.99 | % | — | 4.66 | %6 | ||||||||||||||
Turner Midcap Growth Fund, Investor Class Shares5 | 24.31 | % | 13.57 | % | 10.71 | % | 8.34 | % | 10.46 | %4 | |||||||||||||
Turner Midcap Growth Fund, Retirement Class Shares5 | 24.11 | % | 13.31 | % | 10.46 | % | 7.99 | % | 7.61 | %7 | |||||||||||||
Russell Midcap® Growth Index8 | 27.54 | % | 17.65 | % | 13.92 | % | 10.16 | % | 8.29 | %4 | |||||||||||||
Sector weightings2:
Manager's discussion and analysis
In the 12-month period ended September 30, 2013, the Turner Midcap Growth Fund advanced to produce strong absolute returns while underperforming the Russell Midcap® Growth Index on a relative basis.
The financial and materials sectors provided the greatest contribution to the fund's performance. Real estate investment trusts (REITs) and financial IT services generated the best results within these sectors. In addition, specific holdings in biotechnology within the health care sector produced superior absolute returns. The major detractors from performance were the producer durable and information technology sectors. Subpar performers in those sectors included computers and peripherals, software, machinery, and household durables 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, 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 8 in Notes to Financial Statements for more detailed information.
Amounts designated as "—" are not applicable.
Cl — Class
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.
14 TURNER FUNDS 2013 ANNUAL REPORT
INVESTMENT REVIEW (Unaudited)
Turner Small Cap Growth Fund
Fund profile
September 30, 2013
n Ticker symbol TSCEX
n CUSIP #900297300
n Top five holdings1
(1) ACADIA Pharmaceuticals
(2) NPS Pharmaceuticals
(3) QLIK Technologies
(4) Rosetta Resources
(5) Ciena
n % in five largest holdings 6.7%1,2
n Number of holdings 1061
n Net assets $233.04 million
Growth of a $10,000 investment in the
Turner Small Cap Growth Fund:
September 30, 2003-September 30, 20133
Average annual total returns (Periods ended September 30, 2013)
| One year | Three years | Five years | 10 years | Since inception3 | |||||||||||||||||||
Turner Small Cap Growth Fund4 | 33.79 | % | 18.42 | % | 12.71 | % | 9.81 | % | 11.91 | % | |||||||||||||
Russell 2000® Growth Index5 | 33.07 | % | 19.96 | % | 13.17 | % | 9.85 | % | 7.08 | % | |||||||||||||
Sector weightings2:
Manager's discussion and analysis
The Turner Small Cap Growth Fund gain a solid absolute return during the 12-month period ended September 30, 2013 and the fund just slightly beat its benchmark, the Russell 2000® Growth Index, over the same time period on a relative basis.
Two of the strongest sectors were health care and materials. Specifically, holdings in biotechnology, health care equipment and supplies, and paper and forest products beat their index counterparts. But the information technology and the financials sector shares proved the biggest drag on performance. Software, computers and peripherals, computer equipment and a handful of financial industries stocks within the real estate investment trusts (REITs), trading companies and distributors, commercial bank industries recorded subpar results relative to the benchmark.
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 8 in Notes to Financial Statements for more detailed information.
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.
TURNER FUNDS 2013 ANNUAL REPORT 15
INVESTMENT REVIEW (Unaudited)
Turner Emerging Markets Fund
Fund profile
September 30, 2013
n Ticker symbol TEEEX
Institutional Class Shares
n CUSIP #900297516
Institutional Class Shares
n Top five holdings1
(1) Samsung Electronics
(2) Taiwan Semiconductor Manufacturing ADR
(3) Industrial & Commerical Bank of China, H Shares
(4) Banco do Brasil
(5) Tencent Holdings
n % in five largest holdings 14.2%1,2
n Number of holdings 921
n Net assets $0.51 million, Institutional Class Shares
Growth of a $250,000 investment in the
Turner Emerging Markets, Institutional Class Shares:
August 28, 2013-September 30, 20133
Cumulative total returns (Period ended September 30, 2013)
| Since inception4 | |||||||
Turner Emerging Markets Fund, Institutional Class Shares5 | 7.80 | % | |||||
Turner Emerging Markets Fund, Investor Class Shares5 | 7.80 | % | |||||
MSCI Emerging Markets Index6 | 8.19 | % | |||||
Sector weightings2:
Manager's discussion and analysis
The Turner Emerging Markets Fund generated a positive absolute return from its inception on August 28, 2013 through September 30, 2013. During that period, the Fund underperformed the MSCI Emerging Markets Index. The Turner Emerging Markets Fund is a diversified, actively managed portfolio of about 60 – 100 growth equity stocks that are economically tied to emerging markets. Emerging markets are defined as those markets included in the MSCI Emerging Markets Index.
The materials and energy sectors had a positive impact on the fund's performance during the period. Top contributors included holdings in metals and mining, pulp and paper, oil and gas production, and integrated oil companies. The fund's worst performing sectors were financials and technology. Notable detractors included commercial banks, real estate development and management, semiconductor, and information technology services companies.
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 Emerging Markets Fund was August 28, 2013. Cumulative returns, not annualized.
5 Fee waivers are in effect; if they had not been in effect, performance would have been lower.
6 The MSCI Emerging Markets Index captures large and mid cap representation, covering over 800 securities across 21 emerging market countries. The countries include: Brazil, Chile, Colombia, Czech Republic, Egypt, Hungary, India, Indonesia, Korea, Malaysia, Mexico, Morocco, Peru, Philippines, Poland, Russia, South Africa, Taiwan, Thailand and Turkey.
ADR — American Depositary Receipt
The Turner Emerging Markets Fund is subject to risks due to its foreign investments and investments in emerging market countries.
16 TURNER FUNDS 2013 ANNUAL REPORT
Schedule of investments
Turner Market Neutral Fund
September 30, 2013
Shares | Value (000) | ||||||||||
Common stock—75.6% | |||||||||||
Consumer discretionary—12.4% | |||||||||||
Harley-Davidson^ | 2,740 | $ | 176 | ||||||||
Norwegian Cruise Line Holdings* | 2,650 | 82 | |||||||||
Ralph Lauren^ | 940 | 155 | |||||||||
Walt Disney | 1,230 | 79 | |||||||||
Total Consumer discretionary | 492 | ||||||||||
Consumer staples—4.0% | |||||||||||
Church & Dwight^ | 2,620 | 157 | |||||||||
Total Consumer staples | 157 | ||||||||||
Energy—6.8% | |||||||||||
Lekoil* | 324,724 | 224 | |||||||||
PetroChina ADR^ | 400 | 44 | |||||||||
Total Energy | 268 | ||||||||||
Financials—19.5% | |||||||||||
Affiliated Managers Group*^ | 670 | 122 | |||||||||
Allstate^ | 1,440 | 73 | |||||||||
| Concentradora Fibra Hotelera Mexicana | 42,790 | 71 | |||||||||
Credicorp | 1,220 | 158 | |||||||||
Hersha Hospitality Trust^ | 19,160 | 107 | |||||||||
Ocwen Financial*^ | 1,470 | 82 | |||||||||
OFG Bancorp | 4,960 | 80 | |||||||||
Safeguard Scientifics*^ | 5,290 | 83 | |||||||||
Total Financials | 776 | ||||||||||
Health care—8.3% | |||||||||||
AstraZeneca ADR | 1,600 | 83 | |||||||||
Cooper^ | 620 | 80 | |||||||||
Pfizer | 5,720 | 165 | |||||||||
Total Health care | 328 | ||||||||||
Industrials—3.9% | |||||||||||
Eaton PLC^ | 2,250 | 155 | |||||||||
Total Industrials | 155 | ||||||||||
Information technology—16.4% | |||||||||||
Apple^ | 180 | 86 | |||||||||
Cavium*^ | 2,420 | 100 | |||||||||
Jabil Circuit^ | 3,510 | 76 | |||||||||
NXP Semiconductors*^ | 2,740 | 102 | |||||||||
Skyworks Solutions*^ | 1,790 | 44 | |||||||||
Shares | Value (000) | ||||||||||
Take-Two Interactive Software*^ | 4,350 | $ | 79 | ||||||||
TIBCO Software*^ | 6,410 | 164 | |||||||||
Total Information technology | 651 | ||||||||||
Materials—4.3% | |||||||||||
Louisiana-Pacific*^ | 9,690 | 170 | |||||||||
Total Materials | 170 | ||||||||||
| Total Common stock (Cost $2,810)** | 2,997 | ||||||||||
Cash equivalent—5.5% | |||||||||||
| BlackRock Liquidity Funds TempCash Portfolio, Dollar Shares, 0.060%‡ | 219,789 | 220 | |||||||||
| Total Cash equivalent (Cost $220)** | 220 | ||||||||||
| Total Investments—81.1% (Cost $3,030)** | 3,217 | ||||||||||
Segregated cash with brokers—87.9% | 3,484 | ||||||||||
| Securities sold short—(73.8)% (Proceeds $(2,882))** | (2,925 | ) | |||||||||
Net Other assets (liabilities)—4.8% | 189 | ||||||||||
Net Assets—100.0% | $ | 3,965 | |||||||||
* Non-income producing security.
** This number is listed in thousands.
^ All or a portion of the shares have been committed as collateral for open short positions.
‡ Rate shown is the 7-day effective yield as of September 30, 2013.
ADR — American Depositary Receipt
The accompanying notes are an integral part of the financial statements.
TURNER FUNDS 2013 ANNUAL REPORT 17
FINANCIAL STATEMENTS
Schedule of securities sold short
Turner Market Neutral Fund
September 30, 2013
Shares | Value (000) | ||||||||||
Common stock—73.8% | |||||||||||
Consumer discretionary—10.3% | |||||||||||
Hasbro | 1,790 | $ | 84 | ||||||||
Kohl's | 1,520 | 79 | |||||||||
Target | 1,170 | 75 | |||||||||
Twenty-First Century Fox | 2,430 | 81 | |||||||||
Under Armour, Cl A | 1,120 | 89 | |||||||||
Total Consumer discretionary | 408 | ||||||||||
Consumer staples—4.0% | |||||||||||
Clorox | 940 | 77 | |||||||||
Molson Coors Brewing | 1,600 | 80 | |||||||||
Total Consumer staples | 157 | ||||||||||
Energy—4.7% | |||||||||||
Apache | 1,660 | 142 | |||||||||
China Petroleum & Chemical ADR | 580 | 45 | |||||||||
Renewable Energy Group | 3 | — | |||||||||
Total Energy | 187 | ||||||||||
Financials—16.1% | |||||||||||
Arch Capital Group | 1,340 | 73 | |||||||||
Bancolombia ADR | 2,730 | 157 | |||||||||
DiamondRock Hospitality | 10,230 | 109 | |||||||||
IBERIABANK | 1,390 | 72 | |||||||||
Janus Capital Group | 5,850 | 50 | |||||||||
| Macquarie Mexico Real Estate Management | 39,160 | 67 | |||||||||
T. Rowe Price Group | 1,550 | 111 | |||||||||
Total Financials | 639 | ||||||||||
Health care—8.1% | |||||||||||
LifePoint Hospitals | 1,790 | 83 | |||||||||
Optimer Pharmaceuticals | 12,420 | 157 | |||||||||
Sirona Dental Systems | 1,210 | 81 | |||||||||
Total Health care | 321 | ||||||||||
Industrials—6.2% | |||||||||||
Parker Hannifin | 1,450 | 158 | |||||||||
Southwest Airlines | 6,140 | 89 | |||||||||
Total Industrials | 247 | ||||||||||
Information technology—20.0% | |||||||||||
Concur Technologies | 710 | 78 | |||||||||
Electronic Arts | 3,070 | 78 | |||||||||
Shares | Value (000) | ||||||||||
FactSet Research Systems | 730 | $ | 80 | ||||||||
Infosys SP ADR | 1,610 | 77 | |||||||||
Oracle | 2,560 | 85 | |||||||||
Power Integrations | 810 | 44 | |||||||||
Red Hat | 1,700 | 78 | |||||||||
Tech Data | 1,700 | 85 | |||||||||
Texas Instruments | 4,620 | 187 | |||||||||
Total Information technology | 792 | ||||||||||
Materials—4.4% | |||||||||||
American Vanguard | 6,460 | 174 | |||||||||
Total Materials | 174 | ||||||||||
| Total Common stock (Proceeds $2,882)* | 2,925 | ||||||||||
| Total Securities sold short—73.8% (Proceeds $2,882)* | $ | 2,925 | |||||||||
Percentages disclosed are based on total net assets of the Fund at September 30, 2013.
* This number is listed in thousands.
ADR — American Depositary Receipt
Cl — Class
Amounts designated as "—" have been rounded to $0.
The accompanying notes are an integral part of the financial statements.
18 TURNER FUNDS 2013 ANNUAL REPORT
Schedule of investments
Turner Medical Sciences Long/Short Fund
September 30, 2013
Shares | Value (000) | ||||||||||
Common stock—64.6% | |||||||||||
Biotechnology—13.1% | |||||||||||
Aegerion Pharmaceuticals* | 1,860 | $ | 159 | ||||||||
Agios Pharmaceuticals* | 3,240 | 91 | |||||||||
Aveo Pharmaceuticals* | 21,900 | 45 | |||||||||
Biogen Idec* | 1,290 | 311 | |||||||||
Coronado Biosciences* | 4,550 | 32 | |||||||||
Cubist Pharmaceuticals* | 9,540 | 606 | |||||||||
Dyax* | 15,460 | 106 | |||||||||
Enanta Pharmaceuticals* | 1,360 | 31 | |||||||||
Geron* | 28,080 | 94 | |||||||||
Insmed* | 7,230 | 113 | |||||||||
Neurocrine Biosciences* | 23,471 | 266 | |||||||||
NPS Pharmaceuticals*^ | 12,580 | 400 | |||||||||
Prothena* | 495 | 10 | |||||||||
Receptos* | 3,260 | 85 | |||||||||
Regeneron Pharmaceuticals* | 660 | 206 | |||||||||
Swedish Orphan Biovitrum* | 17,490 | 174 | |||||||||
Targacept* | 8,450 | 45 | |||||||||
Total Biotechnology | 2,774 | ||||||||||
Health & wellness products—1.2% | |||||||||||
Vitamin Shoppe* | 5,740 | 251 | |||||||||
Total Health & wellness products | 251 | ||||||||||
Health care equipment & supplies—21.6% | |||||||||||
Align Technology* | 4,690 | 226 | |||||||||
BioScrip* | 16,410 | 144 | |||||||||
BioTelemetry* | 8,919 | 88 | |||||||||
Bristol-Myers Squibb | 13,750 | 636 | |||||||||
Cardinal Health | 8,110 | 423 | |||||||||
Covidien | 6,090 | 371 | |||||||||
Dexcom* | 5,900 | 167 | |||||||||
Intuitive Surgical* | 400 | 151 | |||||||||
Mazor Robotics ADR* | 3,660 | 62 | |||||||||
McKesson | 6,610 | 849 | |||||||||
Omnicare | 2,030 | 113 | |||||||||
Premier, Cl A* | 4,020 | 127 | |||||||||
Prestige Brands Holdings* | 5,080 | 153 | |||||||||
ResMed | 3,980 | 210 | |||||||||
Universal Health Services, Cl B | 6,060 | 454 | |||||||||
Zimmer Holdings | 5,000 | 411 | |||||||||
Total Health care equipment & supplies | 4,585 | ||||||||||
| Contracts/ Shares | Value (000) | ||||||||||
Health care technology—2.7% | |||||||||||
Allscripts Healthcare Solutions* | 10,550 | $ | 157 | ||||||||
Cerner* | 8,070 | 424 | |||||||||
Total Health care technology | 581 | ||||||||||
Life sciences tools & services—2.0% | |||||||||||
Furiex Pharmaceuticals* | 4,710 | 207 | |||||||||
Icon* | 5,400 | 221 | |||||||||
Total Life sciences tools & services | 428 | ||||||||||
Pharmaceuticals—21.9% | |||||||||||
AbbVie | 5,700 | 255 | |||||||||
ACADIA Pharmaceuticals* | 11,830 | 325 | |||||||||
AstraZeneca ADR | 10,130 | 526 | |||||||||
DepoMed* | 36,050 | 270 | |||||||||
Dr. Reddy's Laboratories ADR | 3,010 | 114 | |||||||||
Impax Laboratories* | 14,710 | 302 | |||||||||
Pfizer | 33,060 | 949 | |||||||||
Roche Holding AG ADR | 9,480 | 640 | |||||||||
Salix Pharmaceuticals* | 2,330 | 156 | |||||||||
Shire ADR | 2,720 | 326 | |||||||||
ViroPharma* | 13,124 | 516 | |||||||||
Zoetis | 8,100 | 252 | |||||||||
Total Pharmaceuticals | 4,631 | ||||||||||
Professional services—2.1% | |||||||||||
Towers Watson, Cl A | 4,070 | 435 | |||||||||
Total Professional services | 435 | ||||||||||
| Total Common stock (Cost $11,742)** | 13,685 | ||||||||||
Call option contracts—0.1% | |||||||||||
Volcano, 10/13 at $20 | 35 | 12 | |||||||||
| Total Call option contracts (Cost $5)** | 12 | ||||||||||
Put option contracts—0.0% | |||||||||||
HCA Holdings, 10/13 at $38 | 74 | 1 | |||||||||
| Total Put option contracts (Cost $9)** | 1 | ||||||||||
TURNER FUNDS 2013 ANNUAL REPORT 19
FINANCIAL STATEMENTS
Schedule of investments
Turner Medical Sciences Long/Short Fund
Shares | Value (000) | ||||||||||
Cash equivalent—12.6% | |||||||||||
| BlackRock Liquidity Funds TempCash Portfolio, Dollar Shares, 0.060%‡ | 2,668,990 | $ | 2,669 | ||||||||
| Total Cash equivalent (Cost $2,669)** | 2,669 | ||||||||||
| Total Investments—77.3% (Cost $14,425)** | 16,367 | ||||||||||
Segregated cash with brokers—63.1% | 13,361 | ||||||||||
| Securities sold short—(38.8)% (Proceeds $(7,684))** | (8,224 | ) | |||||||||
Net Other assets (liabilities)—(1.6)% | (326 | ) | |||||||||
Net Assets—100.0% | $ | 21,178 | |||||||||
* Non-income producing security.
** This number is listed in thousands.
^ All or a portion of the shares have been committed as collateral for open short positions.
‡ Rate shown is the 7-day effective yield as of September 30, 2013.
ADR — American Depositary Receipt
Cl — Class
The accompanying notes are an integral part of the financial statements.
20 TURNER FUNDS 2013 ANNUAL REPORT
Schedule of securities sold short
Turner Medical Sciences Long/Short Fund
September 30, 2013
Shares | Value (000) | ||||||||||
Common stock—20.5% | |||||||||||
Biotechnology—1.8% | |||||||||||
Arena Pharmaceuticals | 29,950 | $ | 158 | ||||||||
ImmunoGen | 6,880 | 117 | |||||||||
Portola Pharmaceuticals | 3,876 | 104 | |||||||||
Total Biotechnology | 379 | ||||||||||
Drug stores—0.7% | |||||||||||
CVS Caremark | 2,600 | 148 | |||||||||
Total Drug stores | 148 | ||||||||||
Health care equipment & supplies—11.9% | |||||||||||
AmerisourceBergen, Cl A | 1,760 | 108 | |||||||||
Boston Scientific | 8,990 | 106 | |||||||||
Express Scripts Holding | 3,180 | 196 | |||||||||
HealthSouth | 4,590 | 158 | |||||||||
HMS Holdings | 3,120 | 67 | |||||||||
Hospira | 2,020 | 79 | |||||||||
| Laboratory Corp. of America Holdings | 2,100 | 208 | |||||||||
LifePoint Hospitals | 2,610 | 122 | |||||||||
Medtronic | 3,870 | 206 | |||||||||
Neogen | 1,760 | 107 | |||||||||
Quest Diagnostics | 3,500 | 216 | |||||||||
Sirona Dental Systems | 4,170 | 279 | |||||||||
Stericycle | 1,940 | 224 | |||||||||
Stryker | 2,210 | 149 | |||||||||
WellPoint | 3,570 | 299 | |||||||||
Total Health care equipment & supplies | 2,524 | ||||||||||
Health care facilities—1.3% | |||||||||||
Health Care REIT | 2,040 | 127 | |||||||||
National Health Investors | 1,070 | 61 | |||||||||
Ventas | 1,550 | 95 | |||||||||
Total Health care facilities | 283 | ||||||||||
Health care technology—0.3% | |||||||||||
Vocera Communications | 3,790 | 70 | |||||||||
Total Health care technology | 70 | ||||||||||
Pharmaceuticals—4.5% | |||||||||||
Eisai | 4,980 | 202 | |||||||||
Johnson & Johnson | 2,390 | 207 | |||||||||
Mallinckrodt | 1,800 | 79 | |||||||||
Merck | 1,290 | 201 | |||||||||
Shares | Value (000) | ||||||||||
Optimer Pharmaceuticals | 20,530 | $ | 260 | ||||||||
Total Pharmaceuticals | 949 | ||||||||||
| Total Common stock (Proceeds $4,306)* | 4,353 | ||||||||||
Exchange traded funds—18.3% | |||||||||||
CurrencyShares Euro Trust | 2,410 | 323 | |||||||||
Health Care Select Sector SPDR | 26,750 | 1,352 | |||||||||
| iShares NASDAQ Biotechnology Index Fund | 4,329 | 907 | |||||||||
Market Vectors Biotech ETF | 8,130 | 673 | |||||||||
| Market Vectors Pharmaceutical ETF | 12,870 | 616 | |||||||||
| Total Exchange traded funds (Cost $3,378)* | 3,871 | ||||||||||
| Total Securities sold short—38.8% (Proceeds $7,684)* | $ | 8,224 | |||||||||
Percentages disclosed are based on total net assets of the Fund at September 30, 2013.
* This number is listed in thousands.
Cl — Class
ETF — Exchange Traded Fund
SPDR — Standard & Poor's Depositary Receipt
The accompanying notes are an integral part of the financial statements.
TURNER FUNDS 2013 ANNUAL REPORT 21
FINANCIAL STATEMENTS
Schedule of investments
Turner Spectrum Fund
September 30, 2013
Shares | Value (000) | ||||||||||
Common stock—98.0% | |||||||||||
Consumer discretionary—17.3% | |||||||||||
Abercrombie & Fitch | 32,360 | $ | 1,145 | ||||||||
| American Axle & Manufacturing Holdings* | 73,400 | 1,447 | |||||||||
Ann* | 24,600 | 891 | |||||||||
CBS, Cl B | 47,930 | 2,644 | |||||||||
Chipotle Mexican Grill* | 2,640 | 1,132 | |||||||||
Cracker Barrel Old Country Store | 19,630 | 2,027 | |||||||||
Crimson Wine Group* | 155,870 | 1,489 | |||||||||
Dollar General* | 68,390 | 3,861 | |||||||||
Fifth & Pacific*^ | 35,502 | 892 | |||||||||
Five Below* | 36,500 | 1,597 | |||||||||
Francesca's Holdings* | 45,220 | 843 | |||||||||
General Motors* | 71,610 | 2,576 | |||||||||
Groupon* | 207,910 | 2,331 | |||||||||
Harley-Davidson | 61,790 | 3,969 | |||||||||
Home Depot^ | 75,610 | 5,735 | |||||||||
J.C. Penney* | 87,670 | 773 | |||||||||
Las Vegas Sands^ | 63,660 | 4,228 | |||||||||
Lennar, Cl A^ | 70,210 | 2,485 | |||||||||
Lin Media, Cl A* | 78,890 | 1,601 | |||||||||
Lithia Motors, Cl A | 28,440 | 2,075 | |||||||||
Louis XIII Holdings* | 4,268,815 | 3,798 | |||||||||
| Melco Crown (Philippines) Resorts* | 5,309,831 | 1,342 | |||||||||
Michael Kors Holdings* | 35,080 | 2,614 | |||||||||
Nike, Cl B | 19,380 | 1,408 | |||||||||
Norwegian Cruise Line Holdings* | 104,340 | 3,219 | |||||||||
Priceline.com*^ | 3,500 | 3,538 | |||||||||
Ralph Lauren | 10,820 | 1,782 | |||||||||
Red Robin Gourmet Burgers*^ | 39,300 | 2,794 | |||||||||
Ross Stores | 64,870 | 4,723 | |||||||||
Shutterfly* | 36,270 | 2,027 | |||||||||
Sotheby's | 18,320 | 900 | |||||||||
| Starwood Hotels & Resorts Worldwide | 44,960 | 2,988 | |||||||||
Taylor Morrison Home, Cl A* | 101,670 | 2,303 | |||||||||
Tenneco* | 51,270 | 2,589 | |||||||||
Tesla Motors* | 5,420 | 1,048 | |||||||||
Time Warner | 27,170 | 1,788 | |||||||||
Urban Outfitters* | 58,510 | 2,151 | |||||||||
Vishop Holdings ADR* | 15,270 | 867 | |||||||||
Vitamin Shoppe* | 28,400 | 1,243 | |||||||||
Walt Disney | 46,820 | 3,019 | |||||||||
Shares | Value (000) | ||||||||||
Yum! Brands | 31,150 | $ | 2,224 | ||||||||
Total Consumer discretionary | 92,106 | ||||||||||
Consumer staples—5.5% | |||||||||||
Anheuser-Busch InBev ADR | 33,060 | 3,280 | |||||||||
B&G Foods, Cl A^ | 87,630 | 3,028 | |||||||||
Beam^ | 52,770 | 3,412 | |||||||||
Colgate-Palmolive^ | 54,910 | 3,256 | |||||||||
Constellation Brands* | 75,060 | 4,307 | |||||||||
Hershey^ | 39,100 | 3,617 | |||||||||
PepsiCo | 32,280 | 2,566 | |||||||||
Prestige Brands Holdings* | 28,130 | 847 | |||||||||
Safeway | 93,900 | 3,004 | |||||||||
Sprouts Farmers Market* | 45,160 | 2,005 | |||||||||
Total Consumer staples | 29,322 | ||||||||||
Energy—9.8% | |||||||||||
Anadarko Petroleum^ | 67,100 | 6,240 | |||||||||
Athlon Energy* | 48,860 | 1,598 | |||||||||
Cabot Oil & Gas^ | 98,460 | 3,675 | |||||||||
Cobalt International Energy*^ | 230,650 | 5,734 | |||||||||
Concho Resources*^ | 11,470 | 1,248 | |||||||||
CONSOL Energy | 52,270 | 1,759 | |||||||||
EOG Resources^ | 22,380 | 3,788 | |||||||||
EPL Oil & Gas* | 55,450 | 2,058 | |||||||||
Frank's International* | 79,010 | 2,365 | |||||||||
Goodrich Petroleum* | 121,410 | 2,949 | |||||||||
Gulfport Energy*^ | 72,250 | 4,649 | |||||||||
Halliburton | 25,030 | 1,205 | |||||||||
Lekoil* | 4,299,380 | 2,966 | |||||||||
Ophir Energy* | 600,014 | 3,242 | |||||||||
Rosetta Resources*^ | 55,900 | 3,044 | |||||||||
SemGroup, Cl A | 47,780 | 2,724 | |||||||||
SunPower* | 109,050 | 2,853 | |||||||||
Total Energy | 52,097 | ||||||||||
Financials—16.7% | |||||||||||
Affiliated Managers Group*^ | 19,020 | 3,474 | |||||||||
AIA Group | 399,230 | 1,876 | |||||||||
AON | 36,960 | 2,751 | |||||||||
Banco Santander-Chile ADR | 125,250 | 3,293 | |||||||||
Bank of the Ozarks^ | 38,239 | 1,835 | |||||||||
Bryn Mawr Bank | 51,190 | 1,381 | |||||||||
Cardtronics*^ | 49,671 | 1,843 | |||||||||
Citigroup^ | 104,080 | 5,049 | |||||||||
22 TURNER FUNDS 2013 ANNUAL REPORT
Schedule of investments
Turner Spectrum Fund
Shares | Value (000) | ||||||||||
| Concentradora Fibra Hotelera Mexicana | 639,800 | $ | 1,063 | ||||||||
Countrywide | 312,017 | 2,652 | |||||||||
Credito Real* | 1,015,563 | 1,605 | |||||||||
Direct Line Insurance Group | 828,990 | 2,861 | |||||||||
Discover Financial Services^ | 80,922 | 4,090 | |||||||||
East West BanCorp | 32,610 | 1,042 | |||||||||
Education Realty Trust^ | 180,600 | 1,643 | |||||||||
Erste Group Bank | 59,720 | 1,887 | |||||||||
Fortegra Financial*^ | 193,479 | 1,647 | |||||||||
Heritage Oaks Bancorp* | 139,961 | 896 | |||||||||
Hersha Hospitality Trust | 265,990 | 1,487 | |||||||||
Infinity Property & Casualty | 31,137 | 2,011 | |||||||||
Intact Financial | 45,400 | 2,723 | |||||||||
IntercontinentalExchange*^ | 33,555 | 6,088 | |||||||||
Metropolitan Bank & Trust | 1,436,238 | 2,738 | |||||||||
Nelnet^ | 71,990 | 2,768 | |||||||||
Ocwen Financial*^ | 165,385 | 9,224 | |||||||||
OFG Bancorp | 66,860 | 1,082 | |||||||||
OmniAmerican Bancorp* | 88,265 | 2,159 | |||||||||
PacWest BanCorp | 54,530 | 1,874 | |||||||||
Portfolio Recovery Associates*^ | 88,579 | 5,309 | |||||||||
ProAssurance^ | 83,420 | 3,759 | |||||||||
Signature Bank*^ | 17,990 | 1,646 | |||||||||
Simon Property Group | 12,260 | 1,817 | |||||||||
Tetragon Financial Group | 10,188 | 102 | |||||||||
Validus Holdings | 86,360 | 3,194 | |||||||||
Total Financials | 88,869 | ||||||||||
Health care—17.6% | |||||||||||
AbbVie^ | 28,389 | 1,270 | |||||||||
ACADIA Pharmaceuticals* | 66,200 | 1,819 | |||||||||
Aegerion Pharmaceuticals* | 32,990 | 2,828 | |||||||||
Agios Pharmaceuticals* | 17,900 | 500 | |||||||||
Air Methods^ | 33,220 | 1,415 | |||||||||
Align Technology*^ | 91,500 | 4,403 | |||||||||
Allscripts Healthcare Solutions* | 52,230 | 777 | |||||||||
ArthroCare*^ | 88,167 | 3,137 | |||||||||
AstraZeneca ADR | 50,350 | 2,615 | |||||||||
Aveo Pharmaceuticals* | 122,970 | 255 | |||||||||
Biogen Idec*^ | 12,780 | 3,077 | |||||||||
BioScrip* | 81,760 | 718 | |||||||||
BioTelemetry* | 139,960 | 1,387 | |||||||||
Bristol-Myers Squibb^ | 99,560 | 4,608 | |||||||||
Cardinal Health^ | 44,970 | 2,345 | |||||||||
Shares | Value (000) | ||||||||||
Cerner* | 64,926 | $ | 3,412 | ||||||||
Coronado Biosciences* | 22,490 | 158 | |||||||||
Covidien | 30,120 | 1,836 | |||||||||
Cubist Pharmaceuticals*^ | 68,505 | 4,353 | |||||||||
DepoMed* | 201,720 | 1,509 | |||||||||
Dexcom* | 66,844 | 1,887 | |||||||||
Dr. Reddy's Laboratories ADR | 16,430 | 621 | |||||||||
Dyax* | 85,630 | 587 | |||||||||
Enanta Pharmaceuticals* | 6,730 | 154 | |||||||||
Furiex Pharmaceuticals* | 23,140 | 1,018 | |||||||||
Geron* | 138,880 | 465 | |||||||||
Gilead Sciences*^ | 15,390 | 967 | |||||||||
Icon* | 26,740 | 1,094 | |||||||||
Impax Laboratories* | 77,970 | 1,599 | |||||||||
Insmed* | 39,520 | 617 | |||||||||
Intuitive Surgical* | 2,000 | 753 | |||||||||
Mazor Robotics ADR* | 20,630 | 349 | |||||||||
McKesson^ | 51,920 | 6,660 | |||||||||
Neurocrine Biosciences*^ | 253,499 | 2,870 | |||||||||
NPS Pharmaceuticals*^ | 98,960 | 3,148 | |||||||||
Omnicare | 10,110 | 561 | |||||||||
Pfizer | 163,510 | 4,693 | |||||||||
Premier, Cl A* | 39,290 | 1,245 | |||||||||
Prothena* | 1,416 | 29 | |||||||||
Receptos* | 15,520 | 403 | |||||||||
Regeneron Pharmaceuticals* | 3,791 | 1,186 | |||||||||
ResMed | 19,800 | 1,046 | |||||||||
Roche Holding AG ADR^ | 73,030 | 4,931 | |||||||||
Salix Pharmaceuticals* | 11,620 | 777 | |||||||||
Shire ADR^ | 13,480 | 1,616 | |||||||||
Swedish Orphan Biovitrum* | 86,670 | 863 | |||||||||
Targacept* | 44,800 | 238 | |||||||||
Team Health Holdings*^ | 45,710 | 1,734 | |||||||||
Universal Health Services, Cl B | 30,000 | 2,250 | |||||||||
ViroPharma*^ | 69,329 | 2,725 | |||||||||
Zimmer Holdings | 24,920 | 2,047 | |||||||||
Zoetis | 41,130 | 1,280 | |||||||||
Total Health care | 92,835 | ||||||||||
Industrials—13.4% | |||||||||||
AMETEK | 83,320 | 3,834 | |||||||||
CAI International*^ | 123,330 | 2,870 | |||||||||
Canadian Pacific Railway^ | 19,490 | 2,403 | |||||||||
Copa Holdings, Cl A | 24,390 | 3,382 | |||||||||
Cummins | 14,620 | 1,943 | |||||||||
TURNER FUNDS 2013 ANNUAL REPORT 23
FINANCIAL STATEMENTS
Schedule of investments
Turner Spectrum Fund
Shares | Value (000) | ||||||||||
Eaton PLC | 34,760 | $ | 2,393 | ||||||||
FTI Consulting* | 29,670 | 1,122 | |||||||||
Genesee & Wyoming, Cl A* | 54,860 | 5,100 | |||||||||
Honeywell International^ | 20,150 | 1,673 | |||||||||
Hunt (JB) Transportation Services | 32,320 | 2,357 | |||||||||
Huron Consulting Group*^ | 68,350 | 3,596 | |||||||||
Macquarie Infrastructure^ | 108,360 | 5,802 | |||||||||
Manpowergroup | 42,470 | 3,089 | |||||||||
MasTec* | 64,350 | 1,950 | |||||||||
Middleby* | 9,390 | 1,962 | |||||||||
Old Dominion Freight Line*^ | 71,190 | 3,274 | |||||||||
Providence Resources* | 129,770 | 669 | |||||||||
Quanta Services*^ | 114,220 | 3,142 | |||||||||
Roadrunner Transportation System* | 122,870 | 3,470 | |||||||||
Rockwell Automation | 37,020 | 3,959 | |||||||||
Saia* | 66,525 | 2,074 | |||||||||
Spirit Airlines* | 74,600 | 2,557 | |||||||||
Terex* | 29,700 | 998 | |||||||||
Towers Watson, Cl A | 69,810 | 7,466 | |||||||||
Total Industrials | 71,085 | ||||||||||
Information technology—10.6% | |||||||||||
Apple | 11,590 | 5,526 | |||||||||
Avago Technologies | 47,290 | 2,039 | |||||||||
Cisco Systems^ | 50,670 | 1,187 | |||||||||
Citrix Systems* | 17,130 | 1,210 | |||||||||
Digimarc^ | 154,866 | 3,128 | |||||||||
eBay*^ | 92,760 | 5,175 | |||||||||
Ellie Mae* | 114,248 | 3,657 | |||||||||
Facebook, Cl A*^ | 78,780 | 3,958 | |||||||||
JDS Uniphase* | 84,260 | 1,239 | |||||||||
Leidos Holdings | 22,040 | 1,003 | |||||||||
Linx | 176,740 | 2,971 | |||||||||
Manhattan Associates*^ | 33,330 | 3,181 | |||||||||
OSI Systems*^ | 24,242 | 1,805 | |||||||||
Salesforce.com* | 64,210 | 3,333 | |||||||||
ServiceNow* | 20,060 | 1,042 | |||||||||
Stratasys* | 18,308 | 1,854 | |||||||||
Synchronoss Technologies* | 26,560 | 1,011 | |||||||||
TE Connectivity | 31,780 | 1,646 | |||||||||
Tyler Technologies*^ | 61,400 | 5,371 | |||||||||
Visa, Cl A^ | 17,320 | 3,310 | |||||||||
Xilinx | 25,490 | 1,194 | |||||||||
Yandex* | 44,440 | 1,619 | |||||||||
Total Information technology | 56,459 | ||||||||||
| Contracts/ Shares | Value (000) | ||||||||||
Materials—6.7% | |||||||||||
Augusta Resource* | 70,962 | $ | 145 | ||||||||
Augusta Resource* | 446,590 | 916 | |||||||||
Capstone Mining* | 972,300 | 2,341 | |||||||||
Chemtura* | 136,990 | 3,149 | |||||||||
Commercial Metals | 103,040 | 1,747 | |||||||||
Constellium NV, Cl A*^ | 156,500 | 3,036 | |||||||||
Eastman Chemical^ | 43,750 | 3,408 | |||||||||
Louisiana-Pacific* | 115,920 | 2,039 | |||||||||
Lyondellbasell Industries, Cl A^ | 50,330 | 3,686 | |||||||||
Methanex | 59,485 | 3,050 | |||||||||
Packaging Corp. of America | 25,870 | 1,477 | |||||||||
Rock-Tenn, Cl A | 9,811 | 994 | |||||||||
Rockwood Holdings^ | 74,930 | 5,013 | |||||||||
Royal Gold | 32,680 | 1,590 | |||||||||
Silver Wheaton | 53,340 | 1,321 | |||||||||
SilverCrest Mines* | 200,434 | 356 | |||||||||
Valspar | 25,200 | 1,598 | |||||||||
Total Materials | 35,866 | ||||||||||
Telecommunication services—0.2% | |||||||||||
SBA Communications, Cl A* | 15,410 | 1,240 | |||||||||
Total Telecommunication services | 1,240 | ||||||||||
Utilities—0.2% | |||||||||||
Pattern Energy Group* | 43,840 | 1,026 | |||||||||
Total Utilities | 1,026 | ||||||||||
| Total Common stock (Cost $461,753)** | 520,905 | ||||||||||
Call option contracts—0.1% | |||||||||||
| Cobalt International Energy, 1/14 at $27.5 | 1,448 | 322 | |||||||||
Volcano, 10/13 at $20 | 164 | 57 | |||||||||
| Total Call option contracts (Cost $405)** | 379 | ||||||||||
Put option contracts—0.0% | |||||||||||
HCA Holdings, 10/13 at $38 | 381 | 6 | |||||||||
| Total Put option contracts (Cost $46)** | 6 | ||||||||||
24 TURNER FUNDS 2013 ANNUAL REPORT
Schedule of investments
Turner Spectrum Fund
Shares | Value (000) | ||||||||||
Cash equivalent—4.6% | |||||||||||
| BlackRock Liquidity Funds TempCash Portfolio, Dollar Shares, 0.060%‡ | 24,212,676 | $ | 24,213 | ||||||||
| Total Cash equivalent (Cost $24,213)** | 24,213 | ||||||||||
| Total Investments—102.7% (Cost $486,417)** | 545,503 | ||||||||||
Segregated cash with brokers—76.7% | 407,979 | ||||||||||
| Securities sold short—(67.2)% (Proceeds $(347,049))** | (356,927 | ) | |||||||||
| Written option contracts—0.0% (Proceeds $(89))** | (58 | ) | |||||||||
Net Other assets (liabilities)—(12.2)% | (64,941 | ) | |||||||||
Net Assets—100.0% | $ | 531,556 | |||||||||
* Non-income producing security.
** This number is listed in thousands.
^ All or a portion of the shares have been committed as collateral for open short positions and open written option contacts.
‡ Rate shown is the 7-day effective yield as of September 30, 2013.
ADR — American Depositary Receipt
Cl — Class
The accompanying notes are an integral part of the financial statements.
TURNER FUNDS 2013 ANNUAL REPORT 25
FINANCIAL STATEMENTS
Schedule of securities sold short
Turner Spectrum Fund
September 30, 2013
Shares | Value (000) | ||||||||||
Common stock—48.8% | |||||||||||
Consumer discretionary—8.5% | |||||||||||
AutoZone | 4,180 | $ | 1,767 | ||||||||
Bally Technologies | 11,940 | 860 | |||||||||
Bed Bath & Beyond | 23,110 | 1,788 | |||||||||
Buckle | 28,970 | 1,566 | |||||||||
CarMax | 35,640 | 1,727 | |||||||||
Carnival | 19,480 | 636 | |||||||||
Coach | 17,680 | 964 | |||||||||
Delphi Automotive | 12,800 | 748 | |||||||||
DIRECTV | 14,480 | 865 | |||||||||
Dollar Tree | 11,480 | 656 | |||||||||
Foot Locker | 20,380 | 692 | |||||||||
Gap | 31,580 | 1,272 | |||||||||
Hasbro | 27,700 | 1,306 | |||||||||
Hennes & Mauritz AB, B Shares | 31,030 | 1,348 | |||||||||
International Game Technology | 63,050 | 1,194 | |||||||||
Johnson Controls | 25,970 | 1,078 | |||||||||
Kohl's | 17,170 | 889 | |||||||||
Lowe's | 64,250 | 3,060 | |||||||||
Lumber Liquidators Holdings | 7,860 | 838 | |||||||||
M.D.C Holdings | 73,122 | 2,194 | |||||||||
Macy's | 37,290 | 1,614 | |||||||||
Nordstrom | 21,990 | 1,236 | |||||||||
NVR | 2,380 | 2,188 | |||||||||
Panera Bread, Cl A | 5,390 | 854 | |||||||||
Target | 39,730 | 2,542 | |||||||||
Thomson Reuters | 49,708 | 1,740 | |||||||||
TJX | 11,940 | 673 | |||||||||
Tumi Holdings | 30,740 | 619 | |||||||||
Twenty-First Century Fox | 78,780 | 2,639 | |||||||||
Under Armour, Cl A | 25,150 | 1,998 | |||||||||
VF | 7,450 | 1,483 | |||||||||
Whirlpool | 8,400 | 1,230 | |||||||||
Williams-Sonoma | 20,090 | 1,129 | |||||||||
Total Consumer discretionary | 45,393 | ||||||||||
Consumer staples—3.1% | |||||||||||
Campbell Soup | 33,300 | 1,356 | |||||||||
Clorox | 32,430 | 2,650 | |||||||||
CVS Caremark | 14,230 | 808 | |||||||||
Dr Pepper Snapple Group | 46,880 | 2,101 | |||||||||
General Mills | 18,300 | 877 | |||||||||
Hormel Foods | 15,480 | 652 | |||||||||
Kraft Foods Group | 24,900 | 1,306 | |||||||||
Shares | Value (000) | ||||||||||
Molson Coors Brewing | 21,710 | $ | 1,088 | ||||||||
Procter & Gamble | 39,830 | 3,010 | |||||||||
Sysco | 40,900 | 1,302 | |||||||||
Wal-Mart Stores | 16,450 | 1,217 | |||||||||
Total Consumer staples | 16,367 | ||||||||||
Energy—6.1% | |||||||||||
Apache | 34,340 | 2,924 | |||||||||
Approach Resources | 99,490 | 2,615 | |||||||||
Bill Barrett | 119,070 | 2,990 | |||||||||
CARBO Ceramics | 11,810 | 1,170 | |||||||||
Chesapeake Energy | 143,070 | 3,703 | |||||||||
Devon Energy | 50,060 | 2,891 | |||||||||
Encana | 268,250 | 4,648 | |||||||||
Exxon Mobil | 11,150 | 959 | |||||||||
Marathon Petroleum | 14,830 | 954 | |||||||||
Northern Oil & Gas | 233,237 | 3,366 | |||||||||
Oasis Petroleum | 54,640 | 2,684 | |||||||||
Ultra Petroleum | 159,140 | 3,274 | |||||||||
Total Energy | 32,178 | ||||||||||
Financials—10.2% | |||||||||||
American Express | 64,990 | 4,907 | |||||||||
Amlin | 286,840 | 1,881 | |||||||||
Arch Capital Group | 39,450 | 2,135 | |||||||||
Assurant | 40,660 | 2,200 | |||||||||
| Banco Santander Central Hispano | 224,891 | 1,834 | |||||||||
Bancolombia ADR | 48,360 | 2,783 | |||||||||
Banregio Grupo Financiero | 317,340 | 1,806 | |||||||||
CBRE Group | 97,430 | 2,254 | |||||||||
Charles Schwab | 47,530 | 1,005 | |||||||||
Cincinnati Financial | 59,906 | 2,825 | |||||||||
Cohen & Steers | 50,880 | 1,797 | |||||||||
Comerica | 45,890 | 1,804 | |||||||||
DiamondRock Hospitality | 128,050 | 1,366 | |||||||||
First Republic Bank | 61,190 | 2,853 | |||||||||
Health Care REIT | 40,160 | 2,505 | |||||||||
IBERIABANK | 39,150 | 2,031 | |||||||||
Janus Capital Group | 175,300 | 1,492 | |||||||||
Lazard, Cl A | 57,860 | 2,084 | |||||||||
| Macquarie Mexico Real Estate Management | 614,530 | 1,051 | |||||||||
National Health Investors | 5,850 | 333 | |||||||||
Nedcor | 111,250 | 2,268 | |||||||||
26 TURNER FUNDS 2013 ANNUAL REPORT
Schedule of securities sold short
Turner Spectrum Fund
Shares | Value (000) | ||||||||||
OTP Bank Nyrt | 93,570 | $ | 1,853 | ||||||||
Progressive | 140,874 | 3,836 | |||||||||
RLI | 11,220 | 981 | |||||||||
T. Rowe Price Group | 43,070 | 3,098 | |||||||||
Ventas | 7,660 | 471 | |||||||||
Total Financials | 53,453 | ||||||||||
Health care—4.9% | |||||||||||
AmerisourceBergen, Cl A | 8,730 | 533 | |||||||||
Arena Pharmaceuticals | 335,190 | 1,766 | |||||||||
Boston Scientific | 50,330 | 591 | |||||||||
Eisai | 25,570 | 1,038 | |||||||||
Eli Lilly | 18,610 | 937 | |||||||||
Express Scripts Holding | 15,740 | 972 | |||||||||
HealthSouth | 22,820 | 787 | |||||||||
HMS Holdings | 45,310 | 975 | |||||||||
Hospira | 11,060 | 434 | |||||||||
ImmunoGen | 37,800 | 643 | |||||||||
Johnson & Johnson | 11,810 | 1,024 | |||||||||
| Laboratory Corp. of America Holdings | 11,480 | 1,138 | |||||||||
LifePoint Hospitals | 30,050 | 1,401 | |||||||||
Mallinckrodt | 8,920 | 393 | |||||||||
Medtronic | 19,150 | 1,020 | |||||||||
Merck | 7,000 | 1,092 | |||||||||
Neogen | 9,860 | 599 | |||||||||
Optimer Pharmaceuticals | 190,320 | 2,398 | |||||||||
Portola Pharmaceuticals | 20,987 | 561 | |||||||||
Quest Diagnostics | 19,140 | 1,183 | |||||||||
Sirona Dental Systems | 41,210 | 2,759 | |||||||||
Stryker | 12,330 | 833 | |||||||||
Vocera Communications | 18,820 | 350 | |||||||||
WellPoint | 29,920 | 2,502 | |||||||||
Total Health care | 25,929 | ||||||||||
Industrials—7.7% | |||||||||||
Armstrong World Industries | 13,420 | 738 | |||||||||
Atlas Air Worldwide Holdings | 21,490 | 991 | |||||||||
C.H. Robinson Worldwide | 52,650 | 3,136 | |||||||||
CSX | 71,800 | 1,848 | |||||||||
Emerson Electric | 60,500 | 3,914 | |||||||||
Fastenal | 30,980 | 1,557 | |||||||||
GrafTech International | 203,380 | 1,719 | |||||||||
Hub Group, Cl A | 88,020 | 3,453 | |||||||||
Landstar System | 34,050 | 1,906 | |||||||||
Shares | Value (000) | ||||||||||
Manitowoc | 120,000 | $ | 2,350 | ||||||||
Norfolk Southern | 52,590 | 4,067 | |||||||||
PACCAR | 18,060 | 1,005 | |||||||||
Parker Hannifin | 10,830 | 1,177 | |||||||||
Southwest Airlines | 183,450 | 2,671 | |||||||||
Stericycle | 10,410 | 1,201 | |||||||||
Textainer Group Holdings | 35,741 | 1,354 | |||||||||
Textron | 96,170 | 2,655 | |||||||||
TransDigm Group | 6,880 | 954 | |||||||||
Trinity Industries | 48,060 | 2,180 | |||||||||
Werner Enterprises | 96,832 | 2,259 | |||||||||
Total Industrials | 41,135 | ||||||||||
Information technology—4.4% | |||||||||||
Angie's List | 54,930 | 1,236 | |||||||||
Bankrate | 57,080 | 1,174 | |||||||||
| Cognizant Technology Solutions, Cl A | 31,060 | 2,551 | |||||||||
Control4 | 40,840 | 707 | |||||||||
Electronic Arts | 128,790 | 3,291 | |||||||||
FactSet Research Systems | 29,550 | 3,224 | |||||||||
Marketo | 14,670 | 468 | |||||||||
MercadoLibre | 16,250 | 2,192 | |||||||||
NetApp | 16,990 | 724 | |||||||||
NetSuite | 7,370 | 796 | |||||||||
Oracle | 39,060 | 1,296 | |||||||||
Rackspace Hosting | 13,930 | 735 | |||||||||
Tech Data | 19,680 | 982 | |||||||||
Teradata | 11,170 | 619 | |||||||||
Western Union | 128,670 | 2,401 | |||||||||
Zillow, Cl A | 14,310 | 1,207 | |||||||||
Total Information technology | 23,603 | ||||||||||
Materials—2.6% | |||||||||||
Albemarle | 40,120 | 2,525 | |||||||||
Alcoa | 342,370 | 2,780 | |||||||||
| Aluminum Corp. of China, H Shares | 1,586,040 | 589 | |||||||||
American Vanguard | 49,302 | 1,327 | |||||||||
AngloGold ADR | 44,630 | 593 | |||||||||
Barrick Gold | 182,650 | 3,400 | |||||||||
Globe Specialty Metals | 64,170 | 989 | |||||||||
Gold Fields SP ADR | 188,080 | 860 | |||||||||
Schnitzer Steel Industries, Cl A | 36,880 | 1,016 | |||||||||
Total Materials | 14,079 | ||||||||||
TURNER FUNDS 2013 ANNUAL REPORT 27
FINANCIAL STATEMENTS
Schedule of securities sold short
Turner Spectrum Fund
Shares | Value (000) | ||||||||||
Telecommunication services—0.1% | |||||||||||
Aruba Networks | 29,020 | $ | 483 | ||||||||
Total Telecommunication services | 483 | ||||||||||
Utilities—1.2% | |||||||||||
Hong Kong & China Gas | 1,235,781 | 2,973 | |||||||||
National Fuel Gas | 53,370 | 3,670 | |||||||||
Total Utilities | 6,643 | ||||||||||
| Total Common stock (Proceeds $258,077)* | 259,263 | ||||||||||
Exchange traded funds—18.4% | |||||||||||
CurrencyShares Euro Trust | 13,610 | 1,822 | |||||||||
Health Care Select Sector SPDR | 146,240 | 7,395 | |||||||||
iShares Core S&P Small-Cap ETF | 91,160 | 9,095 | |||||||||
| iShares NASDAQ Biotechnology Index Fund | 23,671 | 4,961 | |||||||||
| iShares Russell 2000 Growth Index Fund | 75,800 | 9,539 | |||||||||
iShares Russell 2000 Index Fund | 126,380 | 13,475 | |||||||||
Market Vectors Biotech ETF | 54,532 | 4,512 | |||||||||
Market Vectors Oil Service ETF | 51,540 | 2,427 | |||||||||
| Market Vectors Pharmaceutical ETF | 70,340 | 3,365 | |||||||||
| Market Vectors Semiconductor ETF | 30,580 | 1,220 | |||||||||
PowerShares QQQ Trust | 38,610 | 3,044 | |||||||||
SPDR S&P 500 ETF Trust | 50,420 | 8,476 | |||||||||
SPDR S&P Homebuilders ETF | 107,200 | 3,277 | |||||||||
SPDR S&P Retail ETF | 34,540 | 2,835 | |||||||||
Vanguard Small-Cap ETF | 108,430 | 11,113 | |||||||||
| Vanguard Small-Cap Growth ETF | 97,050 | 11,108 | |||||||||
| Total Exchange traded funds (Proceeds $88,972)* | 97,664 | ||||||||||
| Total Securities sold short—67.2% (Proceeds $347,049)* | $ | 356,927 | |||||||||
Percentages disclosed are based on total net assets of the Fund at September 30, 2013.
* This number is listed in thousands.
ADR — American Depositary Receipt
Cl — Class
ETF — Exchange Traded Fund
SPDR — Standard & Poor's Depositary Receipt
The accompanying notes are an integral part of the financial statements.
28 TURNER FUNDS 2013 ANNUAL REPORT
Schedule of open written option contracts
Turner Spectrum Fund
September 30, 2013
Contracts | Value (000) | ||||||||||
Written option contracts—0.0% | |||||||||||
Written call option contracts—0.0% | |||||||||||
| Cobalt International Energy, 1/14 at $37.5 | 1,448 | $ | 58 | ||||||||
| Total Written call option contracts (Premiums received $89)* | 58 | ||||||||||
| Total Written option contracts (Premiums received $89)* | $ | 58 | |||||||||
Percentages disclosed are based on total net assets of the Fund at September 30, 2013.
* This number is listed in thousands.
The accompanying notes are an integral part of the financial statements.
TURNER FUNDS 2013 ANNUAL REPORT 29
FINANCIAL STATEMENTS
Schedule of investments
Turner Titan Fund
September 30, 2013
Shares | Value (000) | ||||||||||
Common stock—86.7% | |||||||||||
Consumer discretionary—16.1% | |||||||||||
Dollar General* | 4,720 | $ | 266 | ||||||||
Groupon* | 20,300 | 228 | |||||||||
Harley-Davidson | 4,200 | 270 | |||||||||
Home Depot | 4,930 | 374 | |||||||||
Las Vegas Sands^ | 4,960 | 329 | |||||||||
Michael Kors Holdings* | 3,670 | 273 | |||||||||
Norwegian Cruise Line Holdings* | 10,350 | 319 | |||||||||
Priceline.com*^ | 270 | 273 | |||||||||
Ross Stores | 3,810 | 277 | |||||||||
Shutterfly* | 3,620 | 202 | |||||||||
Time Warner | 5,940 | 392 | |||||||||
Walt Disney | 4,140 | 267 | |||||||||
Total Consumer discretionary | 3,470 | ||||||||||
Consumer staples—6.0% | |||||||||||
Beam | 4,180 | 270 | |||||||||
Constellation Brands* | 7,535 | 433 | |||||||||
Hershey | 3,440 | 318 | |||||||||
Safeway | 8,410 | 269 | |||||||||
Total Consumer staples | 1,290 | ||||||||||
Energy—5.9% | |||||||||||
Anadarko Petroleum | 2,850 | 265 | |||||||||
Cobalt International Energy* | 6,230 | 155 | |||||||||
Concho Resources*^ | 2,520 | 274 | |||||||||
EOG Resources | 1,910 | 324 | |||||||||
Halliburton^ | 5,490 | 264 | |||||||||
Total Energy | 1,282 | ||||||||||
Financials—11.0% | |||||||||||
Affiliated Managers Group* | 1,430 | 261 | |||||||||
Banco Santander-Chile ADR | 8,180 | 215 | |||||||||
Citigroup^ | 8,420 | 408 | |||||||||
Discover Financial Services^ | 10,570 | 534 | |||||||||
East West BanCorp | 7,130 | 228 | |||||||||
IntercontinentalExchange*^ | 3,970 | 721 | |||||||||
Total Financials | 2,367 | ||||||||||
Health care—10.1% | |||||||||||
Biogen Idec*^ | 1,365 | 329 | |||||||||
Bristol-Myers Squibb | 6,900 | 319 | |||||||||
Cerner* | 5,540 | 291 | |||||||||
Cubist Pharmaceuticals* | 3,340 | 212 | |||||||||
Shares | Value (000) | ||||||||||
Gilead Sciences*^ | 3,370 | $ | 212 | ||||||||
McKesson | 3,360 | 431 | |||||||||
Roche Holding AG ADR | 5,680 | 384 | |||||||||
Total Health care | 2,178 | ||||||||||
Industrials—12.2% | |||||||||||
AMETEK | 7,085 | 326 | |||||||||
Cummins | 3,180 | 423 | |||||||||
Eaton PLC^ | 7,630 | 525 | |||||||||
FTI Consulting* | 6,070 | 229 | |||||||||
Honeywell International | 4,420 | 367 | |||||||||
Rockwell Automation | 3,000 | 321 | |||||||||
Spirit Airlines* | 6,390 | 219 | |||||||||
Terex* | 6,480 | 218 | |||||||||
Total Industrials | 2,628 | ||||||||||
Information technology—22.9% | |||||||||||
Apple | 1,340 | 639 | |||||||||
Avago Technologies | 10,360 | 447 | |||||||||
Cisco Systems^ | 11,200 | 262 | |||||||||
Citrix Systems* | 3,760 | 265 | |||||||||
eBay*^ | 11,900 | 663 | |||||||||
Facebook, Cl A*^ | 8,580 | 431 | |||||||||
JDS Uniphase* | 18,280 | 269 | |||||||||
Salesforce.com* | 14,180 | 735 | |||||||||
ServiceNow* | 4,340 | 225 | |||||||||
TE Connectivity | 6,290 | 326 | |||||||||
Visa, Cl A^ | 1,400 | 268 | |||||||||
Xilinx | 5,560 | 261 | |||||||||
Yandex* | 4,410 | 161 | |||||||||
Total Information technology | 4,952 | ||||||||||
Materials—1.2% | |||||||||||
Eastman Chemical | 3,410 | 266 | |||||||||
Total Materials | 266 | ||||||||||
Telecommunication services—1.3% | |||||||||||
SBA Communications, Cl A* | 3,380 | 273 | |||||||||
Total Telecommunication services | 273 | ||||||||||
| Total Common stock (Cost $16,833)** | 18,706 | ||||||||||
30 TURNER FUNDS 2013 ANNUAL REPORT
Schedule of investments
Turner Titan Fund
Shares | Value (000) | ||||||||||
Cash equivalent—8.9% | |||||||||||
| BlackRock Liquidity Funds TempCash Portfolio, Dollar Shares, 0.060%‡ | 1,920,923 | $ | 1,921 | ||||||||
| Total Cash equivalent (Cost $1,921)** | 1,921 | ||||||||||
| Total Investments—95.6% (Cost $18,754)** | 20,627 | ||||||||||
Segregated cash with brokers—58.6% | 12,643 | ||||||||||
| Securities sold short—(53.7)% (Proceeds $(11,531))** | (11,593 | ) | |||||||||
Net Other assets (liabilities)—(0.5)% | (98 | ) | |||||||||
Net Assets—100.0% | $ | 21,579 | |||||||||
* Non-income producing security.
** This number is listed in thousands.
^ All or a portion of the shares have been committed as collateral for open short positions.
‡ Rate shown is the 7-day effective yield as of September 30, 2013.
ADR — American Depositary Receipt
Cl — Class
The accompanying notes are an integral part of the financial statements.
TURNER FUNDS 2013 ANNUAL REPORT 31
FINANCIAL STATEMENTS
Schedule of securities sold short
Turner Titan Fund
September 30, 2013
Shares | Value (000) | ||||||||||
Common stock—44.0% | |||||||||||
Consumer discretionary—8.5% | |||||||||||
Bed Bath & Beyond | 2,160 | $ | 167 | ||||||||
Carnival | 4,270 | 139 | |||||||||
Coach | 3,860 | 210 | |||||||||
Delphi Automotive | 2,750 | 161 | |||||||||
International Game Technology | 7,700 | 146 | |||||||||
Lowe's | 5,700 | 271 | |||||||||
Macy's | 3,700 | 160 | |||||||||
Target | 2,490 | 159 | |||||||||
Twenty-First Century Fox | 8,180 | 275 | |||||||||
Under Armour, Cl A | 1,970 | 157 | |||||||||
Total Consumer discretionary | 1,845 | ||||||||||
Consumer staples—5.0% | |||||||||||
Clorox | 2,880 | 235 | |||||||||
Dr Pepper Snapple Group | 4,730 | 212 | |||||||||
Kraft Foods Group | 5,500 | 288 | |||||||||
Procter & Gamble | 4,610 | 349 | |||||||||
Total Consumer staples | 1,084 | ||||||||||
Energy—2.7% | |||||||||||
Exxon Mobil | 2,400 | 206 | |||||||||
Marathon Petroleum | 3,240 | 209 | |||||||||
Ultra Petroleum | 7,840 | 161 | |||||||||
Total Energy | 576 | ||||||||||
Financials—6.2% | |||||||||||
American Express | 3,480 | 263 | |||||||||
Charles Schwab | 10,370 | 219 | |||||||||
First Republic Bank | 6,870 | 320 | |||||||||
Progressive | 8,110 | 221 | |||||||||
T. Rowe Price Group | 4,470 | 322 | |||||||||
Total Financials | 1,345 | ||||||||||
Health care—4.1% | |||||||||||
Eli Lilly | 4,080 | 205 | |||||||||
LifePoint Hospitals | 3,410 | 159 | |||||||||
Sirona Dental Systems | 4,440 | 298 | |||||||||
WellPoint | 2,550 | 213 | |||||||||
Total Health care | 875 | ||||||||||
Industrials—5.1% | |||||||||||
Armstrong World Industries | 2,950 | 162 | |||||||||
Manitowoc | 7,970 | 156 | |||||||||
Shares | Value (000) | ||||||||||
Parker Hannifin | 2,330 | $ | 253 | ||||||||
Southwest Airlines | 21,930 | 320 | |||||||||
TransDigm Group | 1,510 | 209 | |||||||||
Total Industrials | 1,100 | ||||||||||
Information technology—11.9% | |||||||||||
Angie's List | 5,920 | 133 | |||||||||
| Cognizant Technology Solutions, Cl A | 1,950 | 160 | |||||||||
Electronic Arts | 16,640 | 425 | |||||||||
FactSet Research Systems | 1,960 | 214 | |||||||||
Marketo | 3,210 | 102 | |||||||||
MercadoLibre | 2,060 | 278 | |||||||||
NetApp | 3,730 | 159 | |||||||||
NetSuite | 1,620 | 175 | |||||||||
Oracle | 8,570 | 284 | |||||||||
Rackspace Hosting | 3,040 | 160 | |||||||||
Tech Data | 4,260 | 213 | |||||||||
Teradata | 2,470 | 137 | |||||||||
Zillow, Cl A | 1,620 | 137 | |||||||||
Total Information technology | 2,577 | ||||||||||
Telecommunication services—0.5% | |||||||||||
Aruba Networks | 6,370 | 106 | |||||||||
Total Telecommunication services | 106 | ||||||||||
| Total Common stock (Proceeds $9,497)* | 9,508 | ||||||||||
Exchange traded funds—9.7% | |||||||||||
| iShares Russell 2000 Growth Index Fund | 3,420 | 430 | |||||||||
Market Vectors Biotech ETF | 3,890 | 322 | |||||||||
Market Vectors Semiconductor ETF | 6,700 | 267 | |||||||||
SPDR S&P 500 ETF Trust | 6,340 | 1,066 | |||||||||
| Total Exchange traded funds (Proceeds $2,034)* | 2,085 | ||||||||||
| Total Securities sold short—53.7% (Proceeds $11,531)* | $ | 11,593 | |||||||||
Percentages disclosed are based on total net assets of the Fund at September 30, 2013.
* This number is listed in thousands.
Cl — Class
ETF — Exchange Traded Fund
SPDR — Standard & Poor's Depositary Receipt
The accompanying notes are an integral part of the financial statements.
32 TURNER FUNDS 2013 ANNUAL REPORT
Schedule of investments
Turner All Cap Growth Fund
September 30, 2013
Shares | Value (000) | ||||||||||
Common stock—99.2%† | |||||||||||
Consumer discretionary—24.7% | |||||||||||
Dunkin' Brands Group | 7,130 | $ | 323 | ||||||||
Fifth & Pacific* | 12,740 | 320 | |||||||||
Fossil* | 2,380 | 277 | |||||||||
HomeAway* | 11,380 | 319 | |||||||||
LinkedIn, Cl A* | 4,370 | 1,074 | |||||||||
Michael Kors Holdings* | 7,170 | 534 | |||||||||
Ralph Lauren | 3,500 | 577 | |||||||||
Shutterfly* | 6,420 | 359 | |||||||||
Wynn Resorts | 4,210 | 665 | |||||||||
Total Consumer discretionary | 4,448 | ||||||||||
Consumer staples—3.5% | |||||||||||
Beam | 9,770 | 632 | |||||||||
Total Consumer staples | 632 | ||||||||||
Energy—3.2% | |||||||||||
Cobalt International Energy* | 9,990 | 248 | |||||||||
Schlumberger | 3,770 | 333 | |||||||||
Total Energy | 581 | ||||||||||
Financials—9.1% | |||||||||||
Affiliated Managers Group* | 3,390 | 619 | |||||||||
Citigroup | 6,830 | 331 | |||||||||
IntercontinentalExchange*^ | 3,810 | 692 | |||||||||
Total Financials | 1,642 | ||||||||||
Health care—13.9% | |||||||||||
Biogen Idec* | 1,110 | 267 | |||||||||
Gilead Sciences* | 7,010 | 441 | |||||||||
NPS Pharmaceuticals* | 25,260 | 804 | |||||||||
Regeneron Pharmaceuticals* | 1,960 | 613 | |||||||||
Roche Holding AG ADR | 5,420 | 366 | |||||||||
Total Health care | 2,491 | ||||||||||
Information technology—41.6% | |||||||||||
Apple | 1,690 | 806 | |||||||||
Avago Technologies | 22,010 | 948 | |||||||||
Cavium* | 21,620 | 891 | |||||||||
Ciena* | 16,400 | 410 | |||||||||
JDS Uniphase* | 16,090 | 237 | |||||||||
Maxim Integrated Products | 4,450 | 133 | |||||||||
Monolithic Power Systems | 19,240 | 583 | |||||||||
NXP Semiconductors* | 21,890 | 815 | |||||||||
Peregrine Semiconductor*^ | 57,910 | 519 | |||||||||
Shares | Value (000) | ||||||||||
QLIK Technologies* | 17,120 | $ | 586 | ||||||||
ServiceNow* | 7,020 | 365 | |||||||||
Splunk* | 3,770 | 226 | |||||||||
Visa, Cl A | 2,690 | 514 | |||||||||
Yandex* | 5,280 | 192 | |||||||||
Yelp*^ | 3,480 | 230 | |||||||||
Total Information technology | 7,455 | ||||||||||
Materials—1.9% | |||||||||||
Eastman Chemical | 4,430 | 345 | |||||||||
Total Materials | 345 | ||||||||||
Telecommunication services—1.3% | |||||||||||
SBA Communications, Cl A* | 3,010 | 242 | |||||||||
Total Telecommunication services | 242 | ||||||||||
| Total Common stock (Cost $14,262)** | 17,836 | ||||||||||
Cash equivalent—8.8% | |||||||||||
| BlackRock Liquidity Funds TempCash Portfolio, Dollar Shares, 0.060%‡ (1) | 1,584,478 | 1,584 | |||||||||
| Total Cash equivalent (Cost $1,584)** | 1,584 | ||||||||||
| Total Investments—108.0% (Cost $15,846)** | 19,420 | ||||||||||
Net Other assets (liabilities)—(8.0)% | (1,445 | ) | |||||||||
Net Assets—100.0% | $ | 17,975 | |||||||||
* Non-income producing security.
** This number is listed in thousands.
(1) A portion of the Fund's position in this security was purchased with cash collateral received from securities lending. The total value of such security at September 30, 2013 was $1,470**.
^ Security fully or partially on loan at September 30, 2013. The total value of securities on loan at September 30, 2013 was $1,434**. 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.
† More narrow industries are utilized for compliance purposes, whereas broad sectors are utilized for reporting purposes.
‡ Rate shown is the 7-day effective yield as of September 30, 2013.
ADR — American Depositary Receipt
Cl — Class
The accompanying notes are an integral part of the financial statements.
TURNER FUNDS 2013 ANNUAL REPORT 33
FINANCIAL STATEMENTS
Schedule of investments
Turner Emerging Growth Fund
September 30, 2013
Shares | Value (000) | ||||||||||
Common stock—99.7% | |||||||||||
Consumer discretionary—17.5% | |||||||||||
| American Axle & Manufacturing Holdings* | 143,670 | $ | 2,833 | ||||||||
Ann* | 91,730 | 3,322 | |||||||||
Asbury Automotive Group* | 57,299 | 3,048 | |||||||||
Buffalo Wild Wings* | 18,020 | 2,004 | |||||||||
Cracker Barrel Old Country Store | 74,620 | 7,704 | |||||||||
Dorman Products | 16,340 | 810 | |||||||||
E.W. Scripps* | 83,950 | 1,540 | |||||||||
Fox Factory Holding* | 123,540 | 2,381 | |||||||||
ITT Educational Services*^ | 41,340 | 1,282 | |||||||||
Krispy Kreme Doughnuts* | 55,607 | 1,075 | |||||||||
Lithia Motors, Cl A | 33,780 | 2,465 | |||||||||
Louis XIII Holdings* | 1,411,503 | 1,256 | |||||||||
Meritage Homes* | 6,440 | 277 | |||||||||
Movado Group | 24,439 | 1,069 | |||||||||
Multimedia Games Holdings* | 58,481 | 2,021 | |||||||||
Oxford Industries | 38,703 | 2,631 | |||||||||
Red Robin Gourmet Burgers* | 39,260 | 2,791 | |||||||||
Shutterfly* | 32,040 | 1,790 | |||||||||
Vitamin Shoppe* | 92,519 | 4,048 | |||||||||
Total Consumer discretionary | 44,347 | ||||||||||
Consumer staples—7.9% | |||||||||||
B&G Foods, Cl A | 137,430 | 4,748 | |||||||||
Boston Beer, Cl A*^ | 18,340 | 4,479 | |||||||||
Nexstar Broadcasting Group | 60,260 | 2,682 | |||||||||
Susser Holdings* | 42,304 | 2,248 | |||||||||
TreeHouse Foods* | 10,947 | 732 | |||||||||
United Natural Foods* | 74,778 | 5,027 | |||||||||
Total Consumer staples | 19,916 | ||||||||||
Energy—9.4% | |||||||||||
Bonanza Creek Energy* | 59,590 | 2,876 | |||||||||
Diamondback Energy* | 94,220 | 4,018 | |||||||||
EPL Oil & Gas* | 60,760 | 2,255 | |||||||||
Goodrich Petroleum* | 139,880 | 3,398 | |||||||||
Kodiak Oil & Gas* | 189,320 | 2,283 | |||||||||
PDC Energy* | 20,430 | 1,216 | |||||||||
Rex Energy* | 251,040 | 5,597 | |||||||||
SunPower*^ | 79,840 | 2,089 | |||||||||
Total Energy | 23,732 | ||||||||||
Shares | Value (000) | ||||||||||
Financials—6.5% | |||||||||||
Campus Crest Communities | 79,940 | $ | 863 | ||||||||
Cardtronics* | 99,389 | 3,686 | |||||||||
Hanmi Financial | 78,830 | 1,306 | |||||||||
Home Loan Servicing Solutions | 117,120 | 2,578 | |||||||||
Independent Bank* | 99,760 | 998 | |||||||||
OFG Bancorp | 112,480 | 1,821 | |||||||||
Stewart Information Services | 62,290 | 1,993 | |||||||||
Sun Communities | 29,180 | 1,244 | |||||||||
Umpqua Holdings^ | 116,260 | 1,886 | |||||||||
Total Financials | 16,375 | ||||||||||
Health care—18.7% | |||||||||||
Acadia Healthcare* | 73,150 | 2,884 | |||||||||
ACADIA Pharmaceuticals*^ | 79,056 | 2,172 | |||||||||
Aegerion Pharmaceuticals* | 42,360 | 3,630 | |||||||||
Agios Pharmaceuticals*^ | 27,810 | 778 | |||||||||
Air Methods | 83,570 | 3,560 | |||||||||
Akorn* | 140,650 | 2,768 | |||||||||
Analogic | 24,450 | 2,021 | |||||||||
ArthroCare* | 88,258 | 3,140 | |||||||||
BioScrip* | 147,050 | 1,291 | |||||||||
BioTelemetry* | 197,740 | 1,960 | |||||||||
Cyberonics* | 69,514 | 3,527 | |||||||||
Enanta Pharmaceuticals*^ | 54,970 | 1,260 | |||||||||
Endologix* | 35,540 | 573 | |||||||||
Furiex Pharmaceuticals* | 17,760 | 781 | |||||||||
Molina Healthcare* | 49,610 | 1,766 | |||||||||
Neurocrine Biosciences* | 134,892 | 1,527 | |||||||||
NPS Pharmaceuticals* | 110,790 | 3,524 | |||||||||
PAREXEL International* | 29,084 | 1,461 | |||||||||
Proto Labs*^ | 31,947 | 2,440 | |||||||||
Receptos*^ | 70,200 | 1,823 | |||||||||
Santarus* | 123,960 | 2,798 | |||||||||
Sarepta Therapeutics*^ | 33,570 | 1,586 | |||||||||
Total Health care | 47,270 | ||||||||||
Industrials—16.5% | |||||||||||
Chart Industries* | 31,268 | 3,847 | |||||||||
Copa Holdings, Cl A | 32,811 | 4,550 | |||||||||
Energy Recovery* | 80,048 | 580 | |||||||||
EnPro Industries* | 38,100 | 2,294 | |||||||||
Genesee & Wyoming, Cl A* | 36,180 | 3,364 | |||||||||
Huron Consulting Group* | 131,851 | 6,937 | |||||||||
Hyster-Yale Materials Handling | 12,385 | 1,111 | |||||||||
34 TURNER FUNDS 2013 ANNUAL REPORT
Schedule of investments
Turner Emerging Growth Fund
Shares | Value (000) | ||||||||||
Middleby* | 38,403 | $ | 8,022 | ||||||||
On Assignment* | 113,430 | 3,743 | |||||||||
PGT* | 117,820 | 1,168 | |||||||||
Primoris Services | 58,570 | 1,492 | |||||||||
| Roadrunner Transportation System* | 64,350 | 1,817 | |||||||||
Trex* | 22,755 | 1,127 | |||||||||
WageWorks* | 34,420 | 1,736 | |||||||||
Total Industrials | 41,788 | ||||||||||
Information technology—21.3% | |||||||||||
Ambarella* | 62,141 | 1,213 | |||||||||
ANSYS* | 33,210 | 2,873 | |||||||||
Benefitfocus* | 5,280 | 260 | |||||||||
Bottomline Technologies* | 71,972 | 2,007 | |||||||||
CalAmp* | 47,750 | 842 | |||||||||
Callidus Software* | 141,792 | 1,300 | |||||||||
Canadian Solar*^ | 79,480 | 1,350 | |||||||||
Coherent | 35,294 | 2,169 | |||||||||
Diodes* | 59,970 | 1,469 | |||||||||
Electronics for Imaging* | 141,660 | 4,488 | |||||||||
Ellie Mae* | 61,570 | 1,971 | |||||||||
Heartland Payment Systems^ | 49,380 | 1,961 | |||||||||
Immersion* | 33,290 | 439 | |||||||||
Imperva* | 49,730 | 2,090 | |||||||||
Interactive Intelligence Group* | 25,210 | 1,601 | |||||||||
Manhattan Associates* | 38,800 | 3,703 | |||||||||
Methode Electronics | 61,250 | 1,715 | |||||||||
Monolithic Power Systems | 69,900 | 2,117 | |||||||||
Monotype Imaging Holdings | 62,330 | 1,786 | |||||||||
NETGEAR* | 58,570 | 1,807 | |||||||||
OSI Systems* | 37,310 | 2,778 | |||||||||
QIWI ADR | 28,137 | 880 | |||||||||
SPS Commerce* | 18,730 | 1,253 | |||||||||
Synchronoss Technologies* | 86,000 | 3,273 | |||||||||
Trulia* | 21,620 | 1,017 | |||||||||
Tyler Technologies* | 64,370 | 5,631 | |||||||||
Web.com Group* | 52,850 | 1,709 | |||||||||
Total Information technology | 53,702 | ||||||||||
Materials—1.6% | |||||||||||
KapStone Paper & Packaging | 86,000 | 3,681 | |||||||||
Rentech Nitrogen Partners^ | 11,741 | 288 | |||||||||
Total Materials | 3,969 | ||||||||||
Shares | Value (000) | ||||||||||
Utilities—0.3% | |||||||||||
Artesian Resources, Cl A | 36,475 | $ | 812 | ||||||||
Total Utilities | 812 | ||||||||||
| Total Common stock (Cost $154,979)** | 251,911 | ||||||||||
Cash equivalent—11.2% | |||||||||||
| BlackRock Liquidity Funds TempCash Portfolio, Dollar Shares, 0.060%‡ (1) | 28,399,583 | 28,400 | |||||||||
| Total Cash equivalent (Cost $28,400)** | 28,400 | ||||||||||
| Total Investments—110.9% (Cost $183,379)** | 280,311 | ||||||||||
Net Other assets (liabilities)—(10.9)% | (27,578 | ) | |||||||||
Net Assets—100.0% | $ | 252,733 | |||||||||
* Non-income producing security.
** This number is listed in thousands.
(1) A portion of the Fund's position in this security was purchased with cash collateral received from securities lending. The total value of such security at September 30, 2013 was $22,358**.
^ Security fully or partially on loan at September 30, 2013. The total value of securities on loan at September 30, 2013 was $21,994**. 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.
‡ Rate shown is the 7-day effective yield as of September 30, 2013.
ADR — American Depositary Receipt
Cl — Class
The accompanying notes are an integral part of the financial statements.
TURNER FUNDS 2013 ANNUAL REPORT 35
FINANCIAL STATEMENTS
Schedule of investments
Turner Large Growth Fund
September 30, 2013
Shares | Value (000) | ||||||||||
Common stock—100.0%† | |||||||||||
Consumer discretionary—23.3% | |||||||||||
Amazon.com* | 7,510 | $ | 2,348 | ||||||||
Chipotle Mexican Grill* | 2,400 | 1,029 | |||||||||
Comcast, Cl A | 37,510 | 1,694 | |||||||||
Home Depot | 24,600 | 1,866 | |||||||||
Las Vegas Sands | 29,590 | 1,965 | |||||||||
Lennar, Cl A | 48,150 | 1,705 | |||||||||
Liberty Global, Cl A* | 20,340 | 1,614 | |||||||||
LinkedIn, Cl A* | 5,230 | 1,287 | |||||||||
Michael Kors Holdings* | 20,090 | 1,497 | |||||||||
Ralph Lauren | 7,745 | 1,276 | |||||||||
Starbucks | 24,300 | 1,870 | |||||||||
Walt Disney | 24,580 | 1,585 | |||||||||
Total Consumer discretionary | 19,736 | ||||||||||
Consumer staples—6.2% | |||||||||||
Beam | 23,270 | 1,504 | |||||||||
Colgate-Palmolive | 35,690 | 2,117 | |||||||||
Estee Lauder, Cl A | 11,490 | 803 | |||||||||
Whole Foods Market | 13,898 | 813 | |||||||||
Total Consumer staples | 5,237 | ||||||||||
Energy—4.9% | |||||||||||
Cobalt International Energy* | 27,650 | 687 | |||||||||
Concho Resources* | 14,358 | 1,562 | |||||||||
Schlumberger | 21,150 | 1,869 | |||||||||
Total Energy | 4,118 | ||||||||||
Financials—5.3% | |||||||||||
Affiliated Managers Group* | 6,670 | 1,218 | |||||||||
Citigroup | 36,770 | 1,784 | |||||||||
IntercontinentalExchange*^ | 8,080 | 1,466 | |||||||||
Total Financials | 4,468 | ||||||||||
Health care—11.4% | |||||||||||
Biogen Idec* | 8,220 | 1,979 | |||||||||
Bristol-Myers Squibb | 35,590 | 1,647 | |||||||||
Cerner* | 21,630 | 1,137 | |||||||||
Gilead Sciences* | 38,190 | 2,399 | |||||||||
McKesson | 11,610 | 1,490 | |||||||||
Pharmacyclics* | 7,150 | 990 | |||||||||
Total Health care | 9,642 | ||||||||||
Shares | Value (000) | ||||||||||
Industrials—8.8% | |||||||||||
AMETEK | 38,450 | $ | 1,770 | ||||||||
Canadian Pacific Railway | 11,470 | 1,414 | |||||||||
Honeywell International | 18,160 | 1,509 | |||||||||
Pentair | 20,440 | 1,327 | |||||||||
Precision Castparts | 6,330 | 1,438 | |||||||||
Total Industrials | 7,458 | ||||||||||
Information technology—36.9% | |||||||||||
Amphenol | 11,780 | 912 | |||||||||
Apple | 13,070 | 6,230 | |||||||||
ASML Holding, NY Shares | 7,580 | 749 | |||||||||
Cavium* | 24,280 | 1,000 | |||||||||
Cisco Systems | 71,430 | 1,673 | |||||||||
eBay* | 2,435 | 136 | |||||||||
Ericsson (L.M.) Telephone ADR | 103,860 | 1,387 | |||||||||
Facebook, Cl A* | 53,560 | 2,690 | |||||||||
Google, Cl A* | 3,815 | 3,341 | |||||||||
Intel | 59,090 | 1,354 | |||||||||
JDS Uniphase* | 44,440 | 654 | |||||||||
NXP Semiconductors* | 39,610 | 1,474 | |||||||||
Salesforce.com* | 37,300 | 1,936 | |||||||||
ServiceNow* | 20,230 | 1,051 | |||||||||
Splunk* | 15,470 | 929 | |||||||||
Stratasys*^ | 12,480 | 1,264 | |||||||||
Tableau Software, Cl A* | 9,140 | 651 | |||||||||
Visa, Cl A | 13,650 | 2,609 | |||||||||
Workday, Cl A* | 14,360 | 1,162 | |||||||||
Total Information technology | 31,202 | ||||||||||
Materials—3.2% | |||||||||||
Methanex | 14,790 | 758 | |||||||||
Monsanto | 18,455 | 1,926 | |||||||||
Total Materials | 2,684 | ||||||||||
| Total Common stock (Cost $72,623)** | 84,545 | ||||||||||
36 TURNER FUNDS 2013 ANNUAL REPORT
Schedule of investments
Turner Large Growth Fund
Shares | Value (000) | ||||||||||
Cash equivalent—3.5% | |||||||||||
| BlackRock Liquidity Funds TempCash Portfolio, Dollar Shares, 0.060%‡ (1) | 2,961,731 | $ | 2,962 | ||||||||
| Total Cash equivalent (Cost $2,962)** | 2,962 | ||||||||||
| Total Investments—103.5% (Cost $75,585)** | 87,507 | ||||||||||
Net Other assets (liabilities)—(3.5)% | (2,919 | ) | |||||||||
Net Assets—100.0% | $ | 84,588 | |||||||||
* Non-income producing security.
** This number is listed in thousands.
(1) A portion of the Fund's position in this security was purchased with cash collateral received from securities lending. The total value of such security at September 30, 2013 was $2,763**.
^ Security fully or partially on loan at September 30, 2013. The total value of securities on loan at September 30, 2013 was $2,707**. 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.
† More narrow industries are utilized for compliance purposes, whereas broad sectors are utilized for reporting purposes.
‡ Rate shown is the 7-day effective yield as of September 30, 2013.
ADR — American Depositary Receipt
Cl — Class
NY — New York
The accompanying notes are an integral part of the financial statements.
TURNER FUNDS 2013 ANNUAL REPORT 37
FINANCIAL STATEMENTS
Schedule of investments
Turner Midcap Growth Fund
September 30, 2013
Shares | Value (000) | ||||||||||
Common stock—95.6%† | |||||||||||
Consumer discretionary—26.7% | |||||||||||
BorgWarner | 88,650 | $ | 8,988 | ||||||||
Dunkin' Brands Group | 139,480 | 6,313 | |||||||||
Fifth & Pacific* | 225,980 | 5,679 | |||||||||
Fossil* | 52,460 | 6,098 | |||||||||
Harley-Davidson | 89,280 | 5,735 | |||||||||
HomeAway* | 228,450 | 6,397 | |||||||||
Liberty Global, Cl A* | 84,700 | 6,721 | |||||||||
LinkedIn, Cl A* | 39,810 | 9,796 | |||||||||
Michael Kors Holdings* | 101,550 | 7,568 | |||||||||
Polaris Industries | 67,600 | 8,733 | |||||||||
PVH | 19,150 | 2,273 | |||||||||
Ralph Lauren | 41,450 | 6,828 | |||||||||
Shutterfly* | 115,240 | 6,440 | |||||||||
| Starwood Hotels & Resorts Worldwide | 89,550 | 5,951 | |||||||||
Toll Brothers* | 109,650 | 3,556 | |||||||||
Tractor Supply | 117,440 | 7,888 | |||||||||
TripAdvisor* | 44,260 | 3,357 | |||||||||
Urban Outfitters* | 146,760 | 5,396 | |||||||||
Wynn Resorts | 68,405 | 10,808 | |||||||||
Total Consumer discretionary | 124,525 | ||||||||||
Consumer staples—4.4% | |||||||||||
Beam | 130,540 | 8,439 | |||||||||
Church & Dwight | 83,840 | 5,035 | |||||||||
Kroger | 176,730 | 7,129 | |||||||||
Total Consumer staples | 20,603 | ||||||||||
Energy—6.1% | |||||||||||
Cabot Oil & Gas | 215,430 | 8,039 | |||||||||
Cobalt International Energy* | 156,800 | 3,898 | |||||||||
Concho Resources* | 68,338 | 7,436 | |||||||||
Gulfport Energy* | 73,090 | 4,703 | |||||||||
Rosetta Resources* | 84,390 | 4,596 | |||||||||
Total Energy | 28,672 | ||||||||||
Financials—8.2% | |||||||||||
Affiliated Managers Group* | 43,380 | 7,923 | |||||||||
AON | 48,100 | 3,581 | |||||||||
Cardtronics* | 191,040 | 7,088 | |||||||||
IntercontinentalExchange*^ | 52,430 | 9,511 | |||||||||
Markel* | 10,530 | 5,452 | |||||||||
Signature Bank* | 51,160 | 4,682 | |||||||||
Total Financials | 38,237 | ||||||||||
Shares | Value (000) | ||||||||||
Health care—12.6% | |||||||||||
Actavis*^ | 48,520 | $ | 6,987 | ||||||||
Alexion Pharmaceuticals* | 37,704 | 4,380 | |||||||||
BioMarin Pharmaceuticals* | 44,630 | 3,223 | |||||||||
Cerner* | 88,890 | 4,671 | |||||||||
Cooper | 39,620 | 5,138 | |||||||||
Covance* | 39,090 | 3,380 | |||||||||
Cubist Pharmaceuticals* | 85,290 | 5,420 | |||||||||
DaVita* | 70,400 | 4,006 | |||||||||
HCA Holdings | 97,140 | 4,153 | |||||||||
NPS Pharmaceuticals* | 245,570 | 7,811 | |||||||||
Regeneron Pharmaceuticals* | 20,070 | 6,279 | |||||||||
Vertex Pharmaceuticals* | 43,060 | 3,265 | |||||||||
Total Health care | 58,713 | ||||||||||
Industrials—7.9% | |||||||||||
Delta Air Lines | 234,280 | 5,527 | |||||||||
Genesee & Wyoming, Cl A* | 60,140 | 5,591 | |||||||||
MasTec* | 182,540 | 5,531 | |||||||||
Robert Half International | 119,580 | 4,667 | |||||||||
Rockwell Automation | 52,900 | 5,658 | |||||||||
Roper Industries | 40,720 | 5,410 | |||||||||
WESCO International* | 59,950 | 4,588 | |||||||||
Total Industrials | 36,972 | ||||||||||
Information technology—21.4% | |||||||||||
Alliance Data Systems* | 42,720 | 9,034 | |||||||||
Avago Technologies | 164,930 | 7,112 | |||||||||
Cavium* | 214,929 | 8,855 | |||||||||
Ciena* | 293,300 | 7,327 | |||||||||
Citrix Systems* | 106,130 | 7,494 | |||||||||
FireEye* | 57,710 | 2,397 | |||||||||
JDS Uniphase* | 299,600 | 4,407 | |||||||||
KLA-Tencor | 76,850 | 4,676 | |||||||||
Maxim Integrated Products | 204,410 | 6,091 | |||||||||
NXP Semiconductors* | 261,830 | 9,742 | |||||||||
ServiceNow* | 170,160 | 8,840 | |||||||||
Splunk* | 95,330 | 5,724 | |||||||||
Tableau Software, Cl A* | 24,610 | 1,753 | |||||||||
Trimble Navigation* | 86,370 | 2,566 | |||||||||
Ultratech* | 171,390 | 5,193 | |||||||||
Workday, Cl A* | 83,282 | 6,740 | |||||||||
Yelp*^ | 32,110 | 2,125 | |||||||||
Total Information technology | 100,076 | ||||||||||
38 TURNER FUNDS 2013 ANNUAL REPORT
Schedule of investments
Turner Midcap Growth Fund
Shares | Value (000) | ||||||||||
Materials—7.0% | |||||||||||
Crown Holdings* | 120,920 | $ | 5,112 | ||||||||
Eastman Chemical | 114,460 | 8,917 | |||||||||
| International Flavors & Fragrances | 63,170 | 5,199 | |||||||||
Methanex | 75,700 | 3,881 | |||||||||
PPG Industries | 25,360 | 4,237 | |||||||||
Rock-Tenn, Cl A | 54,440 | 5,513 | |||||||||
Total Materials | 32,859 | ||||||||||
Telecommunication services—1.3% | |||||||||||
SBA Communications, Cl A* | 75,770 | 6,096 | |||||||||
Total Telecommunication services | 6,096 | ||||||||||
| Total Common stock (Cost $340,293)** | 446,753 | ||||||||||
Cash equivalent—5.5% | |||||||||||
| BlackRock Liquidity Funds TempCash Portfolio, Dollar Shares, 0.060%‡ (1) | 25,719,251 | 25,719 | |||||||||
| Total Cash equivalent (Cost $25,719)** | 25,719 | ||||||||||
| Total Investments—101.1% (Cost $366,012)** | 472,472 | ||||||||||
Net Other assets (liabilities)—(1.1)% | (5,318 | ) | |||||||||
Net Assets—100.0% | $ | 467,154 | |||||||||
* Non-income producing security.
** This number is listed in thousands.
(1) A portion of the Fund's position in this security was purchased with cash collateral received from securities lending. The total value of such security at September 30, 2013 was $19,306**.
^ Security fully or partially on loan at September 30, 2013. The total value of securities on loan at September 30, 2013 was $18,860**. 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.
† More narrow industries are utilized for compliance purposes, whereas broad sectors are utilized for reporting purposes.
‡ Rate shown is the 7-day effective yield as of September 30, 2013.
Cl — Class
The accompanying notes are an integral part of the financial statements.
TURNER FUNDS 2013 ANNUAL REPORT 39
FINANCIAL STATEMENTS
Schedule of investments
Turner Small Cap Growth Fund
September 30, 2013
Shares | Value (000) | ||||||||||
Common stock—99.1% | |||||||||||
Consumer discretionary—18.3% | |||||||||||
American Public Education* | 48,720 | $ | 1,842 | ||||||||
Ann* | 72,988 | 2,644 | |||||||||
Arctic Cat | 28,430 | 1,622 | |||||||||
Brunswick | 60,080 | 2,398 | |||||||||
Chuy's Holdings* | 45,190 | 1,622 | |||||||||
Fifth & Pacific* | 85,120 | 2,139 | |||||||||
Five Below*^ | 50,690 | 2,218 | |||||||||
Francesca's Holdings*^ | 67,290 | 1,254 | |||||||||
HomeAway* | 61,730 | 1,728 | |||||||||
Imax*^ | 65,020 | 1,966 | |||||||||
Meritage Homes* | 46,820 | 2,011 | |||||||||
Pier 1 Imports | 113,250 | 2,211 | |||||||||
SHFL entertainment* | 116,684 | 2,684 | |||||||||
Shutterfly* | 47,510 | 2,655 | |||||||||
Sotheby's | 59,994 | 2,947 | |||||||||
Tenneco* | 59,160 | 2,987 | |||||||||
Texas Roadhouse | 92,920 | 2,442 | |||||||||
Vail Resorts | 37,330 | 2,590 | |||||||||
Vitamin Shoppe* | 36,280 | 1,587 | |||||||||
Zumiez* | 40,560 | 1,117 | |||||||||
Total Consumer discretionary | 42,664 | ||||||||||
Consumer staples—5.7% | |||||||||||
B&G Foods, Cl A | 61,130 | 2,112 | |||||||||
Hain Celestial Group* | 21,410 | 1,651 | |||||||||
Prestige Brands Holdings* | 60,260 | 1,815 | |||||||||
Rite Aid* | 623,620 | 2,969 | |||||||||
Susser Holdings* | 37,390 | 1,987 | |||||||||
United Natural Foods* | 40,873 | 2,747 | |||||||||
Total Consumer staples | 13,281 | ||||||||||
Energy—4.0% | |||||||||||
Dril-Quip* | 18,460 | 2,118 | |||||||||
Kodiak Oil & Gas* | 183,190 | 2,209 | |||||||||
Rosetta Resources* | 58,590 | 3,192 | |||||||||
SemGroup, Cl A | 33,150 | 1,890 | |||||||||
Total Energy | 9,409 | ||||||||||
Financials—7.9% | |||||||||||
Bank of the Ozarks | 51,310 | 2,462 | |||||||||
Cardtronics* | 66,960 | 2,484 | |||||||||
Corporate Office Properties | 63,460 | 1,466 | |||||||||
Education Realty Trust | 184,380 | 1,678 | |||||||||
Shares | Value (000) | ||||||||||
eHealth* | 32,280 | $ | 1,041 | ||||||||
Hersha Hospitality Trust | 277,560 | 1,552 | |||||||||
Infinity Property & Casualty | 19,610 | 1,267 | |||||||||
Portfolio Recovery Associates* | 51,260 | 3,072 | |||||||||
Synovus Financial | 588,050 | 1,941 | |||||||||
Wisdomtree Investments* | 127,590 | 1,481 | |||||||||
Total Financials | 18,444 | ||||||||||
Health care—17.8% | |||||||||||
Acadia Healthcare* | 47,750 | 1,883 | |||||||||
ACADIA Pharmaceuticals*^ | 136,394 | 3,748 | |||||||||
Aegerion Pharmaceuticals* | 21,000 | 1,800 | |||||||||
Air Methods | 56,080 | 2,389 | |||||||||
Akorn* | 107,676 | 2,119 | |||||||||
Align Technology* | 62,670 | 3,016 | |||||||||
Bruker* | 82,540 | 1,704 | |||||||||
Cepheid* | 54,360 | 2,122 | |||||||||
Cubist Pharmaceuticals* | 40,470 | 2,572 | |||||||||
Cyberonics* | 25,430 | 1,290 | |||||||||
Neurocrine Biosciences* | 96,990 | 1,098 | |||||||||
NPS Pharmaceuticals* | 110,770 | 3,524 | |||||||||
Proto Labs*^ | 27,770 | 2,121 | |||||||||
Questcor Pharmaceuticals | 22,540 | 1,307 | |||||||||
Sarepta Therapeutics*^ | 29,080 | 1,373 | |||||||||
Team Health Holdings* | 50,920 | 1,932 | |||||||||
Teleflex | 28,923 | 2,380 | |||||||||
ViroPharma* | 68,200 | 2,680 | |||||||||
West Pharmaceutical Services | 61,100 | 2,514 | |||||||||
Total Health care | 41,572 | ||||||||||
Industrials—15.6% | |||||||||||
Belden | 34,690 | 2,222 | |||||||||
CAI International* | 90,570 | 2,108 | |||||||||
Chart Industries* | 13,280 | 1,634 | |||||||||
Clean Harbors* | 33,350 | 1,956 | |||||||||
Generac Holdings | 62,170 | 2,651 | |||||||||
HEICO | 42,260 | 2,862 | |||||||||
Hexcel* | 73,300 | 2,844 | |||||||||
MasTec* | 75,010 | 2,273 | |||||||||
Old Dominion Freight Line* | 43,525 | 2,002 | |||||||||
On Assignment* | 72,920 | 2,406 | |||||||||
Saia* | 70,590 | 2,201 | |||||||||
Thermon Group Holdings* | 88,975 | 2,056 | |||||||||
US Airways Group*^ | 104,013 | 1,972 | |||||||||
USG*^ | 80,780 | 2,309 | |||||||||
40 TURNER FUNDS 2013 ANNUAL REPORT
Schedule of investments
Turner Small Cap Growth Fund
Shares | Value (000) | ||||||||||
Watts Water Technologies | 35,786 | $ | 2,017 | ||||||||
Woodward | 66,811 | 2,728 | |||||||||
Total Industrials | 36,241 | ||||||||||
Information technology—23.9% | |||||||||||
Aspen Technology* | 88,740 | 3,066 | |||||||||
Bottomline Technologies* | 55,280 | 1,541 | |||||||||
Cavium* | 71,960 | 2,965 | |||||||||
Ciena* | 125,010 | 3,123 | |||||||||
Cognex | 55,540 | 1,742 | |||||||||
CommVault Systems* | 29,050 | 2,551 | |||||||||
Cornerstone OnDemand* | 46,770 | 2,406 | |||||||||
Ellie Mae* | 59,100 | 1,892 | |||||||||
| Fairchild Semiconductor International* | 136,290 | 1,893 | |||||||||
Guidewire Software* | 61,580 | 2,901 | |||||||||
Infoblox* | 56,430 | 2,360 | |||||||||
Ixia* | 81,450 | 1,276 | |||||||||
MAXIMUS | 45,700 | 2,058 | |||||||||
Monolithic Power Systems | 89,660 | 2,715 | |||||||||
OSI Systems* | 32,990 | 2,457 | |||||||||
QLIK Technologies* | 93,411 | 3,199 | |||||||||
RF Micro Devices* | 302,630 | 1,707 | |||||||||
Semtech* | 74,150 | 2,224 | |||||||||
Synaptics* | 39,200 | 1,736 | |||||||||
Synchronoss Technologies* | 69,086 | 2,629 | |||||||||
Take-Two Interactive Software* | 116,360 | 2,113 | |||||||||
The Ultimate Software Group* | 18,130 | 2,672 | |||||||||
Wex* | 26,410 | 2,317 | |||||||||
Yelp*^ | 32,500 | 2,151 | |||||||||
Total Information technology | 55,694 | ||||||||||
Materials—5.9% | |||||||||||
Boise | 216,500 | 2,728 | |||||||||
Chemtura* | 105,180 | 2,418 | |||||||||
Commercial Metals | 111,470 | 1,889 | |||||||||
Kaiser Aluminum | 26,340 | 1,877 | |||||||||
Louisiana-Pacific* | 128,810 | 2,266 | |||||||||
PolyOne | 81,910 | 2,515 | |||||||||
Total Materials | 13,693 | ||||||||||
| Total Common stock (Cost $166,150)** | 230,998 | ||||||||||
Shares | Value (000) | ||||||||||
Cash equivalent—8.2% | |||||||||||
| BlackRock Liquidity Funds TempCash Portfolio, Dollar Shares, 0.060%‡ (1) | 19,049,679 | $ | 19,050 | ||||||||
| Total Cash equivalent (Cost $19,050)** | 19,050 | ||||||||||
| Total Investments—107.3% (Cost $185,200)** | 250,048 | ||||||||||
Net Other assets (liabilities)—(7.3)% | (17,009 | ) | |||||||||
Net Assets—100.0% | $ | 233,039 | |||||||||
* Non-income producing security.
** This number is listed in thousands.
(1) A portion of the Fund's position in this security was purchased with cash collateral received from securities lending. The total value of such security at September 30, 2013 was $14,943**.
^ Security fully or partially on loan at September 30, 2013. The total value of securities on loan at September 30, 2013 was $14,643**. 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.
‡ Rate shown is the 7-day effective yield as of September 30, 2013.
Cl — Class
The accompanying notes are an integral part of the financial statements.
TURNER FUNDS 2013 ANNUAL REPORT 41
FINANCIAL STATEMENTS
Schedule of investments
Turner Emerging Markets Fund
September 30, 2013
Shares | Value (000) | ||||||||||
Common stock—97.6%† | |||||||||||
Consumer discretionary—8.7% | |||||||||||
Grupo Sanborns | 2,320 | $ | 5 | ||||||||
Hyundai Motor | 40 | 9 | |||||||||
Hyundai Precision Industry | 30 | 8 | |||||||||
Louis XIII Holdings* | 2,411 | 2 | |||||||||
| Melco Crown (Philippines) Resorts* | 7,860 | 2 | |||||||||
Naspers | 50 | 5 | |||||||||
Tata Motors ADR | 260 | 7 | |||||||||
Tencent Holdings | 190 | 10 | |||||||||
Total Consumer discretionary | 48 | ||||||||||
Consumer staples—7.7% | |||||||||||
Arca Continental | 797 | 5 | |||||||||
| Companhia de Bebidas das Americas ADR | 170 | 7 | |||||||||
Cosan, Cl A | 470 | 6 | |||||||||
HengAn International Group | 549 | 6 | |||||||||
ITC, Participatory Note | 1,050 | 6 | |||||||||
LG Household & Health Care | 12 | 6 | |||||||||
Magnit | 90 | 6 | |||||||||
Total Consumer staples | 42 | ||||||||||
Energy—13.8% | |||||||||||
Afren | 1,700 | 4 | |||||||||
China Oilfield Services | 1,910 | 5 | |||||||||
CNOOC | 3,720 | 8 | |||||||||
Cobalt International Energy* | 210 | 5 | |||||||||
Eurasia Drilling, Registered Shares | 140 | 6 | |||||||||
Ezion Holdings | 1,000 | 2 | |||||||||
KrisEnergy | 5,070 | 5 | |||||||||
Lekoil* | 2,970 | 2 | |||||||||
OAO Rosneft Oil | 1,200 | 10 | |||||||||
Ophir Energy* | 787 | 4 | |||||||||
Petroleo Brasileiro | 1,180 | 9 | |||||||||
Sapurakencana Petroleum* | 5,420 | 6 | |||||||||
Sasol | 70 | 3 | |||||||||
| SK Innovation | 50 | 7 | |||||||||
Total Energy | 76 | ||||||||||
Financials—27.1% | |||||||||||
AIA Group | 1,473 | 7 | |||||||||
Banco do Brasil | 930 | 11 | |||||||||
Banco Santander-Chile ADR | 210 | 6 | |||||||||
Shares | Value (000) | ||||||||||
BR Malls Participacoes | 390 | $ | 4 | ||||||||
CETIP | 457 | 5 | |||||||||
CITIC Securities, H Shares | 3,063 | 6 | |||||||||
| Concentradora Fibra Hotelera Mexicana | 3,010 | 5 | |||||||||
Credicorp | 60 | 8 | |||||||||
Credito Real* | 4,205 | 7 | |||||||||
CTBC Financial Holding | 10,020 | 7 | |||||||||
Erste Group Bank | 109 | 3 | |||||||||
Growthpoint Properties | 1,709 | 4 | |||||||||
HDFC Bank ADR | 80 | 2 | |||||||||
| Industrial & Commercial Bank of China, H Shares | 22,320 | 15 | |||||||||
Kasikornbank | 1,290 | 7 | |||||||||
KWG Property Holding | 7,170 | 5 | |||||||||
Metro Pacific Investments | 32,436 | 3 | |||||||||
Metropolitan Bank & Trust | 2,639 | 5 | |||||||||
| Ping An Insurance Group, H Shares | 1,020 | 8 | |||||||||
Qatar National Bank | 80 | 4 | |||||||||
Sberbank of Russia ADR | 610 | 7 | |||||||||
Shinhan Financial Group | 190 | 8 | |||||||||
Turkiye Garanti Bankasi | 1,200 | 5 | |||||||||
UEM Sunrise Berhad | 5,160 | 4 | |||||||||
Yes Bank, Participatory Note | 540 | 2 | |||||||||
Total Financials | 148 | ||||||||||
Health care—2.7% | |||||||||||
Aspen Pharmacare Holdings | 250 | 6 | |||||||||
| Glenmark Pharmaceuticals, Participatory Note | 660 | 6 | |||||||||
Kalbe Farma | 27,110 | 3 | |||||||||
Total Health care | 15 | ||||||||||
Industrials—8.0% | |||||||||||
| China Railway Construction, H Shares | 3,740 | 4 | |||||||||
CIMC Enric Holdings | 2,737 | 4 | |||||||||
Copa Holdings, Cl A | 55 | 7 | |||||||||
Gamuda | 3,192 | 5 | |||||||||
| Hyundai Engineering & Construction | 101 | 6 | |||||||||
| Larsen & Toubro, Participatory Note | 220 | 3 | |||||||||
Localiza Rent a Car | 440 | 6 | |||||||||
42 TURNER FUNDS 2013 ANNUAL REPORT
Schedule of investments
Turner Emerging Markets Fund
Shares | Value (000) | ||||||||||
| Mills Estruturas e Servicos de Engenharia | 399 | $ | 5 | ||||||||
PT Jasa Marga Persero | 8,740 | 4 | |||||||||
Total Industrials | 44 | ||||||||||
Information technology—18.2% | |||||||||||
AAC Technologies Holdings | 990 | 4 | |||||||||
Duksan Hi-Metal | 140 | 3 | |||||||||
Epistar | 3,400 | 6 | |||||||||
| HCL Technologies, Participatory Note | 430 | 7 | |||||||||
Hon Hai Precision Industry | 2,523 | 6 | |||||||||
Largan Precision | 150 | 5 | |||||||||
Linx | 459 | 8 | |||||||||
MediaTek | 489 | 6 | |||||||||
Samsung Electronics | 20 | 27 | |||||||||
Sonda | 2,250 | 6 | |||||||||
| Taiwan Semiconductor Manufacturing ADR | 900 | 16 | |||||||||
Yandex* | 170 | 6 | |||||||||
Total Information technology | 100 | ||||||||||
Materials—7.8% | |||||||||||
African Rainbow Minerals | 220 | 4 | |||||||||
Anhui Conch Cement | 1,720 | 6 | |||||||||
Cemex* | 5,510 | 5 | |||||||||
China Molybdenum, H Shares | 4,430 | 2 | |||||||||
Formosa Chemicals & Fibre | 1,750 | 5 | |||||||||
Indocement Tunggal Prakarsa | 3,040 | 5 | |||||||||
LG Chem | 20 | 6 | |||||||||
Mexichem | 956 | 4 | |||||||||
Mondi | 344 | 6 | |||||||||
Total Materials | 43 | ||||||||||
Telecommunication services—3.6% | |||||||||||
Axiata Group | 2,018 | 4 | |||||||||
China Unicom (Hong Kong) | 3,430 | 5 | |||||||||
MTN Group | 310 | 6 | |||||||||
Tim Participacoes | 1,000 | 5 | |||||||||
Total Telecommunication services | 20 | ||||||||||
| Total Common stock (Cost $497)** | 536 | ||||||||||
Shares | Value (000) | ||||||||||
Cash equivalent—2.2% | |||||||||||
| BlackRock Liquidity Funds TempCash Portfolio, Dollar Shares, 0.060%^ | 12,482 | $ | 12 | ||||||||
| Total Cash equivalent (Cost $12)** | 12 | ||||||||||
| Total Investments—100.0% (Cost $509)** | 548 | ||||||||||
Net Other assets (liabilities)—0.2% | 1 | ||||||||||
Net Assets—100.0% | $ | 549 | |||||||||
* Non-income producing security.
** This number is listed in thousands.
^ Rate shown is the 7-day effective yield as of September 30, 2013.
† More narrow industries are utilized for compliance purposes, whereas broad sectors are utilized for reporting purposes.
ADR — American Depositary Receipt
Cl — Class
Amounts designated as "—" have been rounded to $0.
The accompanying notes are an integral part of the financial statements.
TURNER FUNDS 2013 ANNUAL REPORT 43
FINANCIAL STATEMENTS
Schedule of investments
Turner Emerging Markets Fund
Country Allocation as of 9/30/13†† | |||||||
Brazil | 10.8 | % | |||||
China | 9.1 | ||||||
Taiwan, Province Of China | 9.1 | ||||||
Korea, Republic Of | 7.8 | ||||||
Hong Kong | 6.7 | ||||||
South Africa | 6.4 | ||||||
Republic of Korea (South) | 6.3 | ||||||
India | 6.1 | ||||||
Mexico | 5.8 | ||||||
Russian Federation | 4.1 | ||||||
Malaysia | 3.5 | ||||||
United States | 3.5 | ||||||
Bermuda | 2.7 | ||||||
Indonesia | 2.1 | ||||||
Chile | 2.1 | ||||||
Philippines | 1.9 | ||||||
Cayman Islands | 1.8 | ||||||
United Kingdom | 1.5 | ||||||
Panama | 1.4 | ||||||
Thailand | 1.3 | ||||||
Singapore | 1.3 | ||||||
Netherlands | 1.1 | ||||||
Cyprus | 1.0 | ||||||
Turkey | 0.9 | ||||||
Qatar | 0.7 | ||||||
Austria | 0.6 | ||||||
Nigeria | 0.4 | ||||||
Total | 100.0 | % | |||||
†† Country allocation based on country of incorporation. Percentages are based on total investments.
44 TURNER FUNDS 2013 ANNUAL REPORT
THIS PAGE WAS INTENTIONALLY LEFT BLANK
TURNER FUNDS 2013 ANNUAL REPORT 45
FINANCIAL STATEMENTS
Statements of assets and liabilities (000)
September 30, 2013
| Turner Market Neutral Fund | Turner Medical Sciences Long/Short Fund | Turner Spectrum Fund | |||||||||||||
Assets: | |||||||||||||||
Investment securities, at cost | $ | 3,030 | $ | 14,425 | $ | 486,417 | |||||||||
Investment securities, at value | $ | 3,217 | $ | 16,367 | $ | 545,503 | |||||||||
Deposits with brokers for securities sold short | 3,484 | 13,361 | 407,979 | ||||||||||||
Foreign currency, at value | — | — | 11 | ||||||||||||
Receivable for investment securities sold | 653 | 861 | 48,574 | ||||||||||||
Receivable for capital shares sold | — | — | 713 | ||||||||||||
Prepaid expenses | 6 | 4 | 67 | ||||||||||||
Receivable for dividend income | 5 | 8 | 111 | ||||||||||||
Receivable from investment adviser | 6 | — | 16 | ||||||||||||
Reclaim receivable | — | — | 8 | ||||||||||||
Total assets | 7,371 | 30,601 | 1,002,982 | ||||||||||||
Liabilities: | |||||||||||||||
Securities sold short, at proceeds | 2,882 | 7,684 | 347,049 | ||||||||||||
Written options, premiums received | — | — | 89 | ||||||||||||
Securities sold short, at value | 2,925 | 8,224 | 356,927 | ||||||||||||
Written options, at value | — | — | 58 | ||||||||||||
Cash overdraft | — | — | 9,718 | ||||||||||||
Foreign currency overdraft, at value | — | 3 | — | ||||||||||||
Payable for investment securities purchased | 463 | 1,153 | 59,851 | ||||||||||||
Obligation to return securities lending collateral | — | — | — | ||||||||||||
Payable for capital shares redeemed | — | 2 | 44,178 | ||||||||||||
Dividends payable on securities sold short (Note 2) | 3 | 7 | 207 | ||||||||||||
Broker fees and charges on short securities payable | 2 | 14 | 181 | ||||||||||||
Payable due to investment adviser | — | — | — | ||||||||||||
Payable due to administrator | — | 2 | 61 | ||||||||||||
Payable due to shareholder servicing | — | 1 | 10 | ||||||||||||
Payable due to distributor | — | 1 | 3 | ||||||||||||
Payable due to transfer agent | 2 | 3 | 49 | ||||||||||||
Payable due to custodian | 5 | 4 | 25 | ||||||||||||
Other accrued expenses | 6 | 9 | 158 | ||||||||||||
Total liabilities | 3,406 | 9,423 | 471,426 | ||||||||||||
Net assets | $ | 3,965 | $ | 21,178 | $ | 531,556 | |||||||||
*Includes market value of securities on loan | $ | — | $ | — | $ | — | |||||||||
Net assets: | |||||||||||||||
Portfolio capital | $ | 7,027 | $ | 20,122 | $ | 526,841 | |||||||||
Distributions in excess of investment income | (157 | ) | (153 | ) | (5,895 | ) | |||||||||
| Accumulated net realized gain (loss) from investments, securities sold short, written options and foreign currency transactions | (3,049 | ) | (193 | ) | (38,626 | ) | |||||||||
| Net unrealized appreciation on investments, securities sold short, foreign currencies and translation of other assets and liabilities denominated in foreign currencies | 144 | 1,402 | 49,236 | ||||||||||||
Net assets | $ | 3,965 | $ | 21,178 | $ | 531,556 | |||||||||
Outstanding shares of beneficial interest Institutional Class Shares (1) | 323 | 1,450 | 42,141 | ||||||||||||
Outstanding shares of beneficial interest Investor Class Shares (1) | 59 | 267 | 3,906 | ||||||||||||
Outstanding shares of beneficial interest Class C Shares (1) | 7 | 122 | 507 | ||||||||||||
Net assets — Institutional Class Shares | $ | 3,296 | $ | 16,742 | $ | 481,845 | |||||||||
Net assets — Investor Class Shares | $ | 601 | $ | 3,062 | $ | 44,139 | |||||||||
Net assets — Class C Shares | $ | 68 | $ | 1,374 | $ | 5,572 | |||||||||
Net asset value, offering and redemption price per share — Institutional Class Shares | $ | 10.21 | † | $ | 11.54 | † | $ | 11.43 | |||||||
Net asset value, offering and redemption price per share — Investor Class Shares | $ | 10.14 | † | $ | 11.48 | † | $ | 11.30 | |||||||
Net asset value, offering and redemption price per share — Class C Shares | $ | 9.95 | † | $ | 11.26 | $ | 10.98 | † | |||||||
46 TURNER FUNDS 2013 ANNUAL REPORT
| Turner Titan Fund | Turner All Cap Growth Fund | ||||||||||
Assets: | |||||||||||
Investment securities, at cost | $ | 18,754 | $ | 15,846 | |||||||
Investment securities, at value | $ | 20,627 | $ | 19,420 | * | ||||||
Deposits with brokers for securities sold short | 12,643 | — | |||||||||
Foreign currency, at value | — | — | |||||||||
Receivable for investment securities sold | 2,444 | — | |||||||||
Receivable for capital shares sold | 22 | 21 | |||||||||
Prepaid expenses | 9 | 7 | |||||||||
Receivable for dividend income | 3 | 4 | |||||||||
Receivable from investment adviser | — | 4 | |||||||||
Reclaim receivable | — | — | |||||||||
Total assets | 35,748 | 19,456 | |||||||||
Liabilities: | |||||||||||
Securities sold short, at proceeds | 11,531 | — | |||||||||
Written options, premiums received | — | — | |||||||||
Securities sold short, at value | 11,593 | — | |||||||||
Written options, at value | — | — | |||||||||
Cash overdraft | — | — | |||||||||
Foreign currency overdraft, at value | — | — | |||||||||
Payable for investment securities purchased | 2,541 | — | |||||||||
Obligation to return securities lending collateral | — | 1,470 | |||||||||
Payable for capital shares redeemed | 6 | — | |||||||||
Dividends payable on securities sold short (Note 2) | 3 | — | |||||||||
Broker fees and charges on short securities payable | — | — | |||||||||
Payable due to investment adviser | 4 | — | |||||||||
Payable due to administrator | 2 | 2 | |||||||||
Payable due to shareholder servicing | — | 4 | |||||||||
Payable due to distributor | — | — | |||||||||
Payable due to transfer agent | 3 | 2 | |||||||||
Payable due to custodian | 5 | 1 | |||||||||
Other accrued expenses | 12 | 2 | |||||||||
Total liabilities | 14,169 | 1,481 | |||||||||
Net assets | $ | 21,579 | $ | 17,975 | |||||||
*Includes market value of securities on loan | $ | — | $ | 1,434 | |||||||
Net assets: | |||||||||||
Portfolio capital | $ | 20,930 | $ | 24,736 | |||||||
Distributions in excess of investment income | (260 | ) | (25 | ) | |||||||
| Accumulated net realized gain (loss) from investments, securities sold short, written options and foreign currency transactions | (902 | ) | (10,310 | ) | |||||||
| Net unrealized appreciation on investments, securities sold short, foreign currencies and translation of other assets and liabilities denominated in foreign currencies | 1,811 | 3,574 | |||||||||
Net assets | $ | 21,579 | $ | 17,975 | |||||||
Outstanding shares of beneficial interest Institutional Class Shares (1) | 2,014 | — | |||||||||
Outstanding shares of beneficial interest Investor Class Shares (1) | 37 | 1,741 | |||||||||
Outstanding shares of beneficial interest Class C Shares (1) | 3 | — | |||||||||
Net assets — Institutional Class Shares | $ | 21,166 | $ | — | |||||||
Net assets — Investor Class Shares | $ | 387 | $ | 17,975 | |||||||
Net assets — Class C Shares | $ | 26 | $ | — | |||||||
Net asset value, offering and redemption price per share — Institutional Class Shares | $ | 10.51 | $ | — | |||||||
Net asset value, offering and redemption price per share — Investor Class Shares | $ | 10.44 | † | $ | 10.32 | ||||||
Net asset value, offering and redemption price per share — Class C Shares | $ | 10.22 | † | $ | — | ||||||
(1) Unlimited authorization — par value $0.00001.
† Difference in net asset value recalculation and net asset value stated is 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.
TURNER FUNDS 2013 ANNUAL REPORT 47
FINANCIAL STATEMENTS
Statements of assets and liabilities (000)
September 30, 2013
| Turner Emerging Growth Fund | Turner Large Growth Fund | Turner Midcap Growth Fund | |||||||||||||
Assets: | |||||||||||||||
Investment securities, at cost | $ | 183,379 | $ | 75,585 | $ | 366,012 | |||||||||
Investment securities, at value | $ | 280,311 | * | $ | 87,507 | * | $ | 472,472 | * | ||||||
Cash | — | — | — | ||||||||||||
Foreign currency, at value | — | — | — | ||||||||||||
Receivable for investment securities sold | 253 | 424 | 17,118 | ||||||||||||
Receivable for capital shares sold | 181 | 25 | 546 | ||||||||||||
Prepaid expenses | 24 | 15 | 51 | ||||||||||||
Receivable for dividend income | 142 | 39 | 110 | ||||||||||||
Receivable from investment adviser | — | — | — | ||||||||||||
Total assets | 280,911 | 88,010 | 490,297 | ||||||||||||
Liabilities: | |||||||||||||||
Cash overdraft | — | — | 7 | ||||||||||||
Payable for investment securities purchased | 510 | 449 | 2,895 | ||||||||||||
Obligation to return securities lending collateral | 22,358 | 2,763 | 19,306 | ||||||||||||
Payable for capital shares redeemed | 5,022 | 102 | 454 | ||||||||||||
Payable due to investment adviser | 175 | 25 | 241 | ||||||||||||
Payable due to administrator | 27 | 8 | 49 | ||||||||||||
Payable due to shareholder servicing | 37 | 6 | 53 | ||||||||||||
Payable due to distributor | — | — | 1 | ||||||||||||
Payable due to transfer agent | 10 | 15 | 31 | ||||||||||||
Payable due to custodian | 2 | 5 | 5 | ||||||||||||
Other accrued expenses | 37 | 49 | 101 | ||||||||||||
Total liabilities | 28,178 | 3,422 | 23,143 | ||||||||||||
Net assets | $ | 252,733 | $ | 84,588 | $ | 467,154 | |||||||||
*Includes market value of securities on loan | $ | 21,994 | $ | 2,707 | $ | 18,860 | |||||||||
Net assets: | |||||||||||||||
Portfolio capital | $ | 122,112 | $ | 138,999 | $ | 290,522 | |||||||||
Undistributed net investment income (distributions in excess of investment income) | (1,286 | ) | 10 | 1 | |||||||||||
Accumulated net realized gain (loss) from investment transactions | 34,975 | (66,343 | ) | 70,171 | |||||||||||
Net unrealized appreciation on investments | 96,932 | 11,922 | 106,460 | ||||||||||||
Net assets | $ | 252,733 | $ | 84,588 | $ | 467,154 | |||||||||
Outstanding shares of beneficial interest Institutional Class Shares (1) | 1,110 | 3,677 | 4,736 | ||||||||||||
Outstanding shares of beneficial interest Investor Class Shares (1) | 2,800 | 2,104 | 6,003 | ||||||||||||
Outstanding shares of beneficial interest Retirement Class Shares (1) | — | — | 103 | ||||||||||||
Net assets — Institutional Class Shares | $ | 72,442 | $ | 53,965 | $ | 205,679 | |||||||||
Net assets — Investor Class Shares | $ | 180,291 | $ | 30,623 | $ | 257,240 | |||||||||
Net assets — Retirement Class Shares | $ | — | $ | — | $ | 4,235 | |||||||||
Net asset value, offering and redemption price per share — Institutional Class Shares | $ | 65.25 | † | $ | 14.68 | $ | 43.43 | ||||||||
Net asset value, offering and redemption price per share — Investor Class Shares | $ | 64.38 | † | $ | 14.55 | $ | 42.85 | ||||||||
Net asset value, offering and redemption price per share — Retirement Class Shares | $ | — | $ | — | $ | 41.07 | † | ||||||||
48 TURNER FUNDS 2013 ANNUAL REPORT
| Turner Small Cap Growth Fund | Turner Emerging Markets Fund | ||||||||||
Assets: | |||||||||||
Investment securities, at cost | $ | 185,200 | $ | 509 | |||||||
Investment securities, at value | $ | 250,048 | * | $ | 548 | ||||||
Cash | — | 1 | |||||||||
Foreign currency, at value | — | 1 | |||||||||
Receivable for investment securities sold | 1,223 | 5 | |||||||||
Receivable for capital shares sold | 68 | — | |||||||||
Prepaid expenses | 22 | — | |||||||||
Receivable for dividend income | 86 | — | |||||||||
Receivable from investment adviser | — | 6 | |||||||||
Total assets | 251,447 | 561 | |||||||||
Liabilities: | |||||||||||
Cash overdraft | — | — | |||||||||
Payable for investment securities purchased | 2,729 | 10 | |||||||||
Obligation to return securities lending collateral | 14,943 | — | |||||||||
Payable for capital shares redeemed | 460 | — | |||||||||
Payable due to investment adviser | 142 | — | |||||||||
Payable due to administrator | 25 | — | |||||||||
Payable due to shareholder servicing | 47 | — | |||||||||
Payable due to distributor | — | — | |||||||||
Payable due to transfer agent | 12 | 1 | |||||||||
Payable due to custodian | 5 | 1 | |||||||||
Other accrued expenses | 45 | — | |||||||||
Total liabilities | 18,408 | 12 | |||||||||
Net assets | $ | 233,039 | $ | 549 | |||||||
*Includes market value of securities on loan | $ | 14,643 | $ | — | |||||||
Net assets: | |||||||||||
Portfolio capital | $ | 133,650 | $ | 510 | |||||||
Undistributed net investment income (distributions in excess of investment income) | — | (1 | ) | ||||||||
Accumulated net realized gain (loss) from investment transactions | 34,541 | 1 | |||||||||
Net unrealized appreciation on investments | 64,848 | 39 | |||||||||
Net assets | $ | 233,039 | $ | 549 | |||||||
Outstanding shares of beneficial interest Institutional Class Shares (1) | — | 48 | |||||||||
Outstanding shares of beneficial interest Investor Class Shares (1) | 5,206 | 3 | |||||||||
Outstanding shares of beneficial interest Retirement Class Shares (1) | — | — | |||||||||
Net assets — Institutional Class Shares | $ | — | $ | 512 | |||||||
Net assets — Investor Class Shares | $ | 233,039 | $ | 37 | |||||||
Net assets — Retirement Class Shares | $ | — | $ | — | |||||||
Net asset value, offering and redemption price per share — Institutional Class Shares | $ | — | $ | 10.78 | † | ||||||
Net asset value, offering and redemption price per share — Investor Class Shares | $ | 44.76 | $ | 10.78 | † | ||||||
Net asset value, offering and redemption price per share — Retirement Class Shares | $ | — | $ | — | |||||||
(1) Unlimited authorization — par value $0.00001.
† Difference in net asset value recalculation and net asset value stated is 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.
TURNER FUNDS 2013 ANNUAL REPORT 49
FINANCIAL STATEMENTS
Statements of operations (000)
| Turner Market Neutral Fund | Turner Medical Sciences Long/Short Fund | Turner Spectrum Fund | |||||||||||||
| year ended 9/30/13 | year ended 9/30/13 | year ended 9/30/13 | |||||||||||||
Investment income: | |||||||||||||||
Dividend | $ | 242 | $ | 193 | $ | 10,433 | |||||||||
Securities lending | — | — | — | ||||||||||||
Foreign taxes withheld | (1 | ) | (1 | ) | (109 | ) | |||||||||
Total investment income | 241 | 192 | 10,324 | ||||||||||||
Expenses: | |||||||||||||||
Investment advisory fees | 340 | 435 | 12,012 | ||||||||||||
Administrator fees | 33 | 43 | 1,190 | ||||||||||||
Shareholder service fees (1) | 4 | 11 | 222 | ||||||||||||
Shareholder service fees (2) | — | 4 | 18 | ||||||||||||
Distribution fees (2) | 1 | 12 | 54 | ||||||||||||
Accounting agent fees | 13 | 9 | 21 | ||||||||||||
Dividend expense | 95 | 116 | 3,592 | ||||||||||||
Broker fees and charges on short sales | 87 | 117 | 3,575 | ||||||||||||
Custodian fees | 23 | 21 | 162 | ||||||||||||
Transfer agent fees | 15 | 23 | 495 | ||||||||||||
Registration fees | 41 | 52 | 144 | ||||||||||||
Professional fees | 5 | 8 | 233 | ||||||||||||
Trustees' fees | 4 | 5 | 146 | ||||||||||||
Insurance and other fees | 15 | 21 | 453 | ||||||||||||
Total expenses | 676 | 877 | 22,317 | ||||||||||||
Less: | |||||||||||||||
Investment advisory fee waiver | (232 | ) | (292 | ) | (6,574 | ) | |||||||||
Net expenses | 444 | 585 | 15,743 | ||||||||||||
Net investment loss | (203 | ) | (393 | ) | (5,419 | ) | |||||||||
Net realized gain from securities sold | 2,933 | 6,068 | 130,454 | ||||||||||||
Net realized loss from securities sold short | (4,795 | ) | (2,767 | ) | (108,005 | ) | |||||||||
Net realized gain on written options contracts | — | — | 65 | ||||||||||||
Net realized loss on foreign currency transactions | (14 | ) | (6 | ) | (284 | ) | |||||||||
Net change in unrealized appreciation (depreciation) on investments | 57 | (120 | ) | 26,182 | |||||||||||
Net change in unrealized appreciation (depreciation) on securities sold short | 80 | (277 | ) | (9,906 | ) | ||||||||||
Net change in unrealized appreciation (depreciation) on written options contracts | — | — | 31 | ||||||||||||
| Net change in unrealized appreciation (depreciation) on foreign currencies and translation of other assets and liabilities denominated in foreign currencies | — | 2 | (2 | ) | |||||||||||
Net realized and unrealized gain (loss) from investments, options and foreign currencies | (1,739 | ) | 2,900 | 38,535 | |||||||||||
Net increase (decrease) in net assets resulting from operations | $ | (1,942 | ) | $ | 2,507 | $ | 33,116 | ||||||||
50 TURNER FUNDS 2013 ANNUAL REPORT
| Turner Titan Fund | Turner All Cap Growth Fund | ||||||||||
| year ended 9/30/13 | year ended 9/30/13 | ||||||||||
Investment income: | |||||||||||
Dividend | $ | 494 | $ | 132 | |||||||
Securities lending | — | 5 | |||||||||
Foreign taxes withheld | (1 | ) | — | ||||||||
Total investment income | 493 | 137 | |||||||||
Expenses: | |||||||||||
Investment advisory fees | 627 | 115 | |||||||||
Administrator fees | 62 | 29 | |||||||||
Shareholder service fees (1) | 4 | 48 | |||||||||
Shareholder service fees (2) | 1 | — | |||||||||
Distribution fees (2) | 3 | — | |||||||||
Accounting agent fees | 13 | 3 | |||||||||
Dividend expense | 57 | — | |||||||||
Broker fees and charges on short sales | 113 | — | |||||||||
Custodian fees | 30 | 12 | |||||||||
Transfer agent fees | 26 | 28 | |||||||||
Registration fees | 40 | 17 | |||||||||
Professional fees | 13 | 6 | |||||||||
Trustees' fees | 8 | 4 | |||||||||
Insurance and other fees | 23 | 13 | |||||||||
Total expenses | 1,020 | 275 | |||||||||
Less: | |||||||||||
Investment advisory fee waiver | (198 | ) | (113 | ) | |||||||
Net expenses | 822 | 162 | |||||||||
Net investment loss | (329 | ) | (25 | ) | |||||||
Net realized gain from securities sold | 7,480 | 2,004 | |||||||||
Net realized loss from securities sold short | (7,238 | ) | — | ||||||||
Net realized gain on written options contracts | — | — | |||||||||
Net realized loss on foreign currency transactions | (6 | ) | — | ||||||||
Net change in unrealized appreciation (depreciation) on investments | 917 | 61 | |||||||||
Net change in unrealized appreciation (depreciation) on securities sold short | (103 | ) | — | ||||||||
Net change in unrealized appreciation (depreciation) on written options 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) from investments, options and foreign currencies | 1,050 | 2,065 | |||||||||
Net increase (decrease) in net assets resulting from operations | $ | 721 | $ | 2,040 | |||||||
(1) Attributable to Investor Class Shares only.
(2) 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.
TURNER FUNDS 2013 ANNUAL REPORT 51
FINANCIAL STATEMENTS
Statements of operations (000)
| Turner Emerging Growth Fund | Turner Large Growth Fund | Turner Midcap Growth Fund | |||||||||||||
| year ended 9/30/13 | year ended 9/30/13 | year ended 9/30/13 | |||||||||||||
Investment income: | |||||||||||||||
Dividend | $ | 1,924 | $ | 1,809 | $ | 3,146 | |||||||||
Securities lending | 242 | 144 | 275 | ||||||||||||
Foreign taxes withheld | (1 | ) | (2 | ) | — | ||||||||||
Total investment income | 2,165 | 1,951 | 3,421 | ||||||||||||
Expenses: | |||||||||||||||
Investment advisory fees | 2,295 | 972 | 3,741 | ||||||||||||
Administrator fees | 343 | 239 | 741 | ||||||||||||
Shareholder service fees (2) | 416 | 94 | 743 | ||||||||||||
Shareholder service fees (3) | — | — | 11 | ||||||||||||
Distribution fees (3) | — | — | 11 | ||||||||||||
Accounting agent fees | 3 | 3 | 3 | ||||||||||||
Custodian fees | 21 | 37 | 72 | ||||||||||||
Transfer agent fees | 107 | 97 | 280 | ||||||||||||
Registration fees | 35 | 43 | 61 | ||||||||||||
Professional fees | 66 | 40 | 137 | ||||||||||||
Trustees' fees | 39 | 27 | 84 | ||||||||||||
Insurance and other fees | 100 | 105 | 257 | ||||||||||||
Total expenses | 3,425 | 1,657 | 6,141 | ||||||||||||
Less: | |||||||||||||||
Investment advisory fee waiver | (366 | ) | (446 | ) | (738 | ) | |||||||||
Reimbursement of other operating expenses | — | — | — | ||||||||||||
Shareholder services waiver | — | — | — | ||||||||||||
Net expenses | 3,059 | 1,211 | 5,403 | ||||||||||||
Net investment income (loss) | (894 | ) | 740 | (1,982 | ) | ||||||||||
Net realized gain from securities sold | 36,788 | 33,884 | 82,710 | ||||||||||||
Net change in unrealized appreciation (depreciation) on investments | 29,719 | (19,979 | ) | 19,404 | |||||||||||
Net realized and unrealized gain from investments | 66,507 | 13,905 | 102,114 | ||||||||||||
Net increase in net assets resulting from operations | $ | 65,613 | $ | 14,645 | $ | 100,132 | |||||||||
52 TURNER FUNDS 2013 ANNUAL REPORT
| Turner Small Cap Growth Fund | Turner Emerging Markets Fund | ||||||||||
| year ended 9/30/13 | 8/28/13(1) thru 9/30/13 | ||||||||||
Investment income: | |||||||||||
Dividend | $ | 1,645 | $ | 1 | |||||||
Securities lending | 246 | — | |||||||||
Foreign taxes withheld | (3 | ) | — | ||||||||
Total investment income | 1,888 | 1 | |||||||||
Expenses: | |||||||||||
Investment advisory fees | 2,299 | — | |||||||||
Administrator fees | 343 | — | |||||||||
Shareholder service fees (2) | 561 | — | |||||||||
Shareholder service fees (3) | — | — | |||||||||
Distribution fees (3) | — | — | |||||||||
Accounting agent fees | 4 | 1 | |||||||||
Custodian fees | 38 | 4 | |||||||||
Transfer agent fees | 107 | 2 | |||||||||
Registration fees | 26 | — | |||||||||
Professional fees | 66 | — | |||||||||
Trustees' fees | 40 | — | |||||||||
Insurance and other fees | 96 | — | |||||||||
Total expenses | 3,580 | 7 | |||||||||
Less: | |||||||||||
Investment advisory fee waiver | (691 | ) | — | ||||||||
Reimbursement of other operating expenses | — | (6 | ) | ||||||||
Shareholder services waiver | (15 | ) | — | ||||||||
Net expenses | 2,874 | 1 | |||||||||
Net investment income (loss) | (986 | ) | — | ||||||||
Net realized gain from securities sold | 43,625 | — | |||||||||
Net change in unrealized appreciation (depreciation) on investments | 23,107 | 39 | |||||||||
Net realized and unrealized gain from investments | 66,732 | 39 | |||||||||
Net increase in net assets resulting from operations | $ | 65,746 | $ | 39 | |||||||
(1) Commencement of operations.
(2) Attributable to Investor Class Shares only.
(3) Attributable to Retirement 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.
TURNER FUNDS 2013 ANNUAL REPORT 53
FINANCIAL STATEMENTS
Statements of changes in net assets (000)
| Turner Market Neutral Fund | Turner Medical Sciences Long/Short Fund | ||||||||||||||||||
| year ended 9/30/13 | year ended 9/30/12 | year ended 9/30/13 | year ended 9/30/12 | ||||||||||||||||
Investment activities: | |||||||||||||||||||
Net investment loss | $ | (203 | ) | $ | (417 | ) | $ | (393 | ) | $ | (1,097 | ) | |||||||
Net realized gain (loss) from securities sold and securities sold short | (1,862 | ) | (599 | ) | 3,301 | (1,302 | ) | ||||||||||||
Net realized gain on written options contracts | — | — | — | — | |||||||||||||||
Net realized loss on foreign currency transactions | (14 | ) | (1 | ) | (6 | ) | (4 | ) | |||||||||||
Net change in unrealized appreciation (depreciation) on investments and securities sold short | 137 | (200 | ) | (397 | ) | 1,043 | |||||||||||||
Net change in unrealized appreciation (depreciation) on written options contracts | — | — | — | — | |||||||||||||||
| Net change in unrealized appreciation (depreciation) on foreign currencies and translation of other assets and liabilities denominated in foreign currencies | — | — | 2 | 2 | |||||||||||||||
Net increase (decrease) in net assets resulting from operations | (1,942 | ) | (1,217 | ) | 2,507 | (1,358 | ) | ||||||||||||
Dividends and distributions to shareholders: | |||||||||||||||||||
Realized capital gains: | |||||||||||||||||||
Institutional Class Shares | — | (394 | ) | — | — | ||||||||||||||
Investor Class Shares | — | (67 | ) | — | — | ||||||||||||||
Class C Shares | — | — | — | — | |||||||||||||||
Total dividends and distributions | — | (461 | ) | — | — | ||||||||||||||
Capital share transactions: | |||||||||||||||||||
Institutional Class Shares | |||||||||||||||||||
Proceeds from shares issued | 781 | 49,135 | 2,380 | 51,896 | |||||||||||||||
Proceeds from shares issued in lieu of cash distributions | — | 385 | — | — | |||||||||||||||
Cost of shares redeemed | (43,717 | ) | (8,748 | ) | (24,867 | ) | (59,013 | ) | |||||||||||
Net increase (decrease) in net assets from Institutional Class Shares transactions | (42,936 | ) | 40,772 | (22,487 | ) | (7,117 | ) | ||||||||||||
Investor Class Shares | |||||||||||||||||||
Proceeds from shares issued | 122 | 7,056 | 548 | 18,248 | |||||||||||||||
Proceeds from shares issued in lieu of cash distributions | — | 67 | — | — | |||||||||||||||
Cost of shares redeemed | (5,087 | ) | (4,394 | ) | (7,356 | ) | (21,057 | ) | |||||||||||
Net increase (decrease) in net assets from Investor Class Shares transactions | (4,965 | ) | 2,729 | (6,808 | ) | (2,809 | ) | ||||||||||||
Class C Shares | |||||||||||||||||||
Proceeds from shares issued | — | 137 | 361 | 2,329 | |||||||||||||||
Proceeds from shares issued in lieu of cash distributions | — | — | — | — | |||||||||||||||
Cost of shares redeemed | (16 | ) | (49 | ) | (2,007 | ) | (1,522 | ) | |||||||||||
Net increase (decrease) in net assets from Class C Shares transactions | (16 | ) | 88 | (1,646 | ) | 807 | |||||||||||||
Net increase (decrease) in net assets from capital share transactions | (47,917 | ) | 43,589 | (30,941 | ) | (9,119 | ) | ||||||||||||
Total increase (decrease) in net assets | (49,859 | ) | 41,911 | (28,434 | ) | (10,477 | ) | ||||||||||||
Net assets: | |||||||||||||||||||
Beginning of year | 53,824 | 11,913 | 49,612 | 60,089 | |||||||||||||||
End of year | $ | 3,965 | $ | 53,824 | $ | 21,178 | $ | 49,612 | |||||||||||
Accumulated net investment income | $ | (157 | ) | $ | (339 | ) | $ | (153 | ) | $ | (773 | ) | |||||||
Share issued and redeemed: | |||||||||||||||||||
Institutional Class Shares | |||||||||||||||||||
Issued | 78 | 4,704 | 228 | 5,070 | |||||||||||||||
Issued in lieu of cash distributions | — | 38 | — | — | |||||||||||||||
Redeemed | (4,476 | ) | (845 | ) | (2,419 | ) | (5,790 | ) | |||||||||||
Net increase (decrease) in Institutional Class Shares | (4,398 | ) | 3,897 | (2,191 | ) | (720 | ) | ||||||||||||
Investor Class Shares | |||||||||||||||||||
Issued | 12 | 674 | 53 | 1,778 | |||||||||||||||
Issued in lieu of cash distributions | — | 7 | — | — | |||||||||||||||
Redeemed | (514 | ) | (427 | ) | (732 | ) | (2,068 | ) | |||||||||||
Net increase (decrease) in Investor Class Shares | (502 | ) | 254 | (679 | ) | (290 | ) | ||||||||||||
Class C Shares | |||||||||||||||||||
Issued | — | 14 | 35 | 230 | |||||||||||||||
Issued in lieu of cash distributions | — | — | — | — | |||||||||||||||
Redeemed | (2 | ) | (5 | ) | (201 | ) | (152 | ) | |||||||||||
Net increase (decrease) in Class C Shares | (2 | ) | 9 | (166 | ) | 78 | |||||||||||||
Net increase (decrease) in share transactions | (4,902 | ) | 4,160 | (3,036 | ) | (932 | ) | ||||||||||||
54 TURNER FUNDS 2013 ANNUAL REPORT
| Turner Spectrum Fund | Turner Titan Fund | ||||||||||||||||||
| year ended 9/30/13 | year ended 9/30/12 | year ended 9/30/13 | year ended 9/30/12 | ||||||||||||||||
Investment activities: | |||||||||||||||||||
Net investment loss | $ | (5,419 | ) | $ | (10,711 | ) | $ | (329 | ) | $ | (246 | ) | |||||||
Net realized gain (loss) from securities sold and securities sold short | 22,449 | (26,926 | ) | 242 | 298 | ||||||||||||||
Net realized gain on written options contracts | 65 | 865 | — | — | |||||||||||||||
Net realized loss on foreign currency transactions | (284 | ) | (223 | ) | (6 | ) | (1 | ) | |||||||||||
Net change in unrealized appreciation (depreciation) on investments and securities sold short | 16,276 | 25,373 | 814 | 863 | |||||||||||||||
Net change in unrealized appreciation (depreciation) on written options contracts | 31 | — | — | — | |||||||||||||||
| Net change in unrealized appreciation (depreciation) on foreign currencies and translation of other assets and liabilities denominated in foreign currencies | (2 | ) | 7 | — | — | ||||||||||||||
Net increase (decrease) in net assets resulting from operations | 33,116 | (11,615 | ) | 721 | 914 | ||||||||||||||
Dividends and distributions to shareholders: | |||||||||||||||||||
Realized capital gains: | |||||||||||||||||||
Institutional Class Shares | — | (22,293 | ) | (341 | ) | (110 | ) | ||||||||||||
Investor Class Shares | — | (7,313 | ) | (20 | ) | (40 | ) | ||||||||||||
Class C Shares | — | (553 | ) | (6 | ) | (1 | ) | ||||||||||||
Total dividends and distributions | — | (30,159 | ) | (367 | ) | (151 | ) | ||||||||||||
Capital share transactions: | |||||||||||||||||||
Institutional Class Shares | |||||||||||||||||||
Proceeds from shares issued | 295,417 | 786,546 | 48,123 | 18,412 | |||||||||||||||
Proceeds from shares issued in lieu of cash distributions | — | 19,084 | 334 | 110 | |||||||||||||||
Cost of shares redeemed | (676,075 | ) | (388,983 | ) | (53,640 | ) | (4,663 | ) | |||||||||||
Net increase (decrease) in net assets from Institutional Class Shares transactions | (380,658 | ) | 416,647 | (5,183 | ) | 13,859 | |||||||||||||
Investor Class Shares | |||||||||||||||||||
Proceeds from shares issued | 23,320 | 74,782 | 202 | 5,783 | |||||||||||||||
Proceeds from shares issued in lieu of cash distributions | — | 7,037 | 20 | 40 | |||||||||||||||
Cost of shares redeemed | (108,927 | ) | (108,037 | ) | (4,711 | ) | (3,684 | ) | |||||||||||
Net increase (decrease) in net assets from Investor Class Shares transactions | (85,607 | ) | (26,218 | ) | (4,489 | ) | 2,139 | ||||||||||||
Class C Shares | |||||||||||||||||||
Proceeds from shares issued | 351 | 3,376 | 286 | 503 | |||||||||||||||
Proceeds from shares issued in lieu of cash distributions | — | 493 | 6 | 1 | |||||||||||||||
Cost of shares redeemed | (5,427 | ) | (5,176 | ) | (775 | ) | — | ||||||||||||
Net increase (decrease) in net assets from Class C Shares transactions | (5,076 | ) | (1,307 | ) | (483 | ) | 504 | ||||||||||||
Net increase (decrease) in net assets from capital share transactions | (471,341 | ) | 389,122 | (10,155 | ) | 16,502 | |||||||||||||
Total increase (decrease) in net assets | (438,225 | ) | 347,348 | (9,801 | ) | 17,265 | |||||||||||||
Net assets: | |||||||||||||||||||
Beginning of year | 969,781 | 622,433 | 31,380 | 14,115 | |||||||||||||||
End of year | $ | 531,556 | $ | 969,781 | $ | 21,579 | $ | 31,380 | |||||||||||
Accumulated net investment income | $ | (5,895 | ) | $ | (8,238 | ) | $ | (260 | ) | $ | — | ||||||||
Share issued and redeemed: | |||||||||||||||||||
Institutional Class Shares | |||||||||||||||||||
Issued | 26,718 | 70,716 | 4,796 | 1,802 | |||||||||||||||
Issued in lieu of cash distributions | — | 1,757 | 34 | 11 | |||||||||||||||
Redeemed | (61,031 | ) | (35,203 | ) | (5,338 | ) | (455 | ) | |||||||||||
Net increase (decrease) in Institutional Class Shares | (34,313 | ) | 37,270 | (508 | ) | 1,358 | |||||||||||||
Investor Class Shares | |||||||||||||||||||
Issued | 2,130 | 6,709 | 20 | 579 | |||||||||||||||
Issued in lieu of cash distributions | — | 653 | 2 | 4 | |||||||||||||||
Redeemed | (9,945 | ) | (9,829 | ) | (479 | ) | (367 | ) | |||||||||||
Net increase (decrease) in Investor Class Shares | (7,815 | ) | (2,467 | ) | (457 | ) | 216 | ||||||||||||
Class C Shares | |||||||||||||||||||
Issued | 33 | 307 | 29 | 50 | |||||||||||||||
Issued in lieu of cash distributions | — | 46 | 1 | — | |||||||||||||||
Redeemed | (509 | ) | (481 | ) | (80 | ) | — | ||||||||||||
Net increase (decrease) in Class C Shares | (476 | ) | (128 | ) | (50 | ) | 50 | ||||||||||||
Net increase (decrease) in share transactions | (42,604 | ) | 34,675 | (1,015 | ) | 1,624 | |||||||||||||
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 2013 ANNUAL REPORT 55
FINANCIAL STATEMENTS
Statements of changes in net assets (000)
| Turner All Cap Growth Fund | Turner Emerging Growth Fund | ||||||||||||||||||
| year ended 9/30/13 | year ended 9/30/12 | year ended 9/30/13 | year ended 9/30/12 | ||||||||||||||||
Investment activities: | |||||||||||||||||||
Net investment income (loss) | $ | (25 | ) | $ | (75 | ) | $ | (894 | ) | $ | (1,966 | ) | |||||||
Net realized gain from securities sold and securities sold short | 2,004 | 1,232 | 36,788 | 42,086 | |||||||||||||||
Net realized loss on foreign currency transactions | — | — | — | — | |||||||||||||||
Net change in unrealized appreciation (depreciation) on investments and securities sold short | 61 | 3,417 | 29,719 | 15,892 | |||||||||||||||
Net increase in net assets resulting from operations | 2,040 | 4,574 | 65,613 | 56,012 | |||||||||||||||
Dividends and distributions to shareholders: | |||||||||||||||||||
Net investment income: | |||||||||||||||||||
Institutional Class Shares | — | — | — | — | |||||||||||||||
Investor Class Shares | — | — | — | — | |||||||||||||||
Realized capital gains: | |||||||||||||||||||
Institutional Class Shares | — | — | (8,753 | ) | — | ||||||||||||||
Investor Class Shares | — | — | (24,111 | ) | — | ||||||||||||||
Return of capital: | |||||||||||||||||||
Investor Class Shares | (73 | ) | — | — | — | ||||||||||||||
Total dividends and distributions | (73 | ) | — | (32,864 | ) | — | |||||||||||||
Capital share transactions: | |||||||||||||||||||
Institutional Class Shares | |||||||||||||||||||
Proceeds from shares issued | — | — | 9,023 | 12,775 | |||||||||||||||
Proceeds from shares issued in lieu of cash distributions | — | — | 8,473 | — | |||||||||||||||
Cost of shares redeemed | — | — | (23,483 | ) | (27,694 | ) | |||||||||||||
Net decrease in net assets from Institutional Class Shares transactions | — | — | (5,987 | ) | (14,919 | ) | |||||||||||||
Investor Class Shares | |||||||||||||||||||
Proceeds from shares issued | 1,709 | 7,196 | 24,834 | 27,454 | |||||||||||||||
Proceeds from Fund acquisition (Note 10) | — | — | — | — | |||||||||||||||
Proceeds from shares issued in lieu of cash distributions | 56 | — | 21,988 | — | |||||||||||||||
Cost of shares redeemed | (11,597 | ) | (18,983 | ) | (59,232 | ) | (56,328 | ) | |||||||||||
Net decrease in net assets from Investor Class Shares transactions | (9,832 | ) | (11,787 | ) | (12,410 | ) | (28,874 | ) | |||||||||||
Net decrease in net assets from capital share transactions | (9,832 | ) | (11,787 | ) | (18,397 | ) | (43,793 | ) | |||||||||||
Total increase (decrease) in net assets | (7,865 | ) | (7,213 | ) | 14,352 | 12,219 | |||||||||||||
Net assets: | |||||||||||||||||||
Beginning of year | 25,840 | 33,053 | 238,381 | 226,162 | |||||||||||||||
End of year | $ | 17,975 | $ | 25,840 | $ | 252,733 | $ | 238,381 | |||||||||||
Undistributed net investment income (accumulated net investment income) | $ | (25 | ) | $ | (1 | ) | $ | (1,286 | ) | $ | (1,536 | ) | |||||||
Share issued and redeemed: | |||||||||||||||||||
Institutional Class Shares | |||||||||||||||||||
Issued | — | — | 166 | 235 | |||||||||||||||
Issued in lieu of cash distributions | — | — | 177 | — | |||||||||||||||
Redeemed | — | — | (436 | ) | (495 | ) | |||||||||||||
Net decrease in Institutional Class Shares | — | — | (93 | ) | (260 | ) | |||||||||||||
Investor Class Shares | |||||||||||||||||||
Issued | 195 | 815 | 451 | 521 | |||||||||||||||
Shares from Fund acquisition (Note 10) | — | — | — | — | |||||||||||||||
Issued in lieu of cash distributions | 7 | — | 464 | — | |||||||||||||||
Redeemed | (1,328 | ) | (2,255 | ) | (1,072 | ) | (1,060 | ) | |||||||||||
Net decrease in Investor Class Shares | (1,126 | ) | (1,440 | ) | (157 | ) | (539 | ) | |||||||||||
Net decrease in share transactions | (1,126 | ) | (1,440 | ) | (250 | ) | (799 | ) | |||||||||||
56 TURNER FUNDS 2013 ANNUAL REPORT
| Turner Large Growth Fund | |||||||||||
| year ended 9/30/13 | year ended 9/30/12 | ||||||||||
Investment activities: | |||||||||||
Net investment income (loss) | $ | 740 | $ | 435 | |||||||
Net realized gain from securities sold and securities sold short | 33,884 | 82,216 | |||||||||
Net realized loss on foreign currency transactions | — | (1 | ) | ||||||||
Net change in unrealized appreciation (depreciation) on investments and securities sold short | (19,979 | ) | 4,462 | ||||||||
Net increase in net assets resulting from operations | 14,645 | 87,112 | |||||||||
Dividends and distributions to shareholders: | |||||||||||
Net investment income: | |||||||||||
Institutional Class Shares | (1,087 | ) | — | ||||||||
Investor Class Shares | (92 | ) | — | ||||||||
Realized capital gains: | |||||||||||
Institutional Class Shares | — | — | |||||||||
Investor Class Shares | — | — | |||||||||
Return of capital: | |||||||||||
Investor Class Shares | — | — | |||||||||
Total dividends and distributions | (1,179 | ) | — | ||||||||
Capital share transactions: | |||||||||||
Institutional Class Shares | |||||||||||
Proceeds from shares issued | 14,890 | 45,450 | |||||||||
Proceeds from shares issued in lieu of cash distributions | 1,034 | — | |||||||||
Cost of shares redeemed | (172,365 | ) | (301,740 | ) | |||||||
Net decrease in net assets from Institutional Class Shares transactions | (156,441 | ) | (256,290 | ) | |||||||
Investor Class Shares | |||||||||||
Proceeds from shares issued | 7,080 | 8,694 | |||||||||
Proceeds from Fund acquisition (Note 10) | 15,614 | — | |||||||||
Proceeds from shares issued in lieu of cash distributions | 91 | — | |||||||||
Cost of shares redeemed | (44,134 | ) | (29,601 | ) | |||||||
Net decrease in net assets from Investor Class Shares transactions | (21,349 | ) | (20,907 | ) | |||||||
Net decrease in net assets from capital share transactions | (177,790 | ) | (277,197 | ) | |||||||
Total increase (decrease) in net assets | (164,324 | ) | (190,085 | ) | |||||||
Net assets: | |||||||||||
Beginning of year | 248,912 | 438,997 | |||||||||
End of year | $ | 84,588 | $ | 248,912 | |||||||
Undistributed net investment income (accumulated net investment income) | $ | 10 | $ | 449 | |||||||
Share issued and redeemed: | |||||||||||
Institutional Class Shares | |||||||||||
Issued | 1,153 | 3,803 | |||||||||
Issued in lieu of cash distributions | 83 | — | |||||||||
Redeemed | (13,194 | ) | (24,590 | ) | |||||||
Net decrease in Institutional Class Shares | (11,958 | ) | (20,787 | ) | |||||||
Investor Class Shares | |||||||||||
Issued | 546 | 716 | |||||||||
Shares from Fund acquisition (Note 10) | 1,216 | — | |||||||||
Issued in lieu of cash distributions | 7 | — | |||||||||
Redeemed | (3,423 | ) | (2,394 | ) | |||||||
Net decrease in Investor Class Shares | (1,654 | ) | (1,678 | ) | |||||||
Net decrease in share transactions | (13,612 | ) | (22,465 | ) | |||||||
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 2013 ANNUAL REPORT 57
FINANCIAL STATEMENTS
Statements of changes in net assets (000)
| Turner Midcap Growth Fund | |||||||||||
| year ended 9/30/13 | year ended 9/30/12 | ||||||||||
Investment activities: | |||||||||||
Net investment loss | $ | (1,982 | ) | $ | (2,188 | ) | |||||
Net realized gain from securities sold | 82,710 | 93,758 | |||||||||
Net change in unrealized appreciation (depreciation) on investment transactions | 19,404 | 19,856 | |||||||||
Net increase in net assets resulting from operations | 100,132 | 111,426 | |||||||||
Dividends and distributions to shareholders: | |||||||||||
Realized capital gains: | |||||||||||
Institutional Class Shares | (2,966 | ) | — | ||||||||
Investor Class Shares | (5,108 | ) | — | ||||||||
Retirement Class Shares | (72 | ) | — | ||||||||
Total dividends and distributions | (8,146 | ) | — | ||||||||
Capital share transactions: | |||||||||||
Institutional Class Shares | |||||||||||
Proceeds from shares issued | 59,903 | 54,971 | |||||||||
Proceeds from shares issued in lieu of cash distributions | 2,364 | — | |||||||||
Cost of shares redeemed | (131,596 | ) | (103,598 | ) | |||||||
Net increase (decrease) in net assets from Institutional Class Shares transactions | (69,329 | ) | (48,627 | ) | |||||||
Investor Class Shares | |||||||||||
Proceeds from shares issued | 40,974 | 76,266 | |||||||||
Proceeds from shares issued in lieu of cash distributions | 4,946 | — | |||||||||
Cost of shares redeemed | (245,432 | ) | (214,569 | ) | |||||||
Net increase (decrease) in net assets from Investor Class Shares transactions | (199,512 | ) | (138,303 | ) | |||||||
Retirement Class Shares | |||||||||||
Proceeds from shares issued | 576 | 822 | |||||||||
Proceeds from shares issued in lieu of cash distributions | 72 | — | |||||||||
Cost of shares redeemed | (2,024 | ) | (671 | ) | |||||||
Net increase (decrease) in net assets from Retirement Class Shares transactions | (1,376 | ) | 151 | ||||||||
Net increase (decrease) in net assets from capital share transactions | (270,217 | ) | (186,779 | ) | |||||||
Total increase (decrease) in net assets | (178,231 | ) | (75,353 | ) | |||||||
Net assets: | |||||||||||
Beginning of period | 645,385 | 720,738 | |||||||||
End of period | $ | 467,154 | $ | 645,385 | |||||||
Accumulated net investment income | $ | 1 | $ | (2,022 | ) | ||||||
Share issued and redeemed: | |||||||||||
Institutional Class Shares | |||||||||||
Issued | 1,600 | 1,598 | |||||||||
Issued in lieu of cash distributions | 69 | — | |||||||||
Redeemed | (3,604 | ) | (2,998 | ) | |||||||
Net increase (decrease) in Institutional Class Shares | (1,935 | ) | (1,400 | ) | |||||||
Investor Class Shares | |||||||||||
Issued | 1,098 | 2,238 | |||||||||
Issued in lieu of cash distributions | 147 | — | |||||||||
Redeemed | (6,793 | ) | (6,311 | ) | |||||||
Net increase (decrease) in Investor Class Shares | (5,548 | ) | (4,073 | ) | |||||||
Retirement Class Shares | |||||||||||
Issued | 17 | 26 | |||||||||
Issued in lieu of cash distributions | 2 | — | |||||||||
Redeemed | (59 | ) | (20 | ) | |||||||
Net increase (decrease) in Retirement Class Shares | (40 | ) | 6 | ||||||||
Net increase (decrease) in share transactions | (7,523 | ) | (5,467 | ) | |||||||
58 TURNER FUNDS 2013 ANNUAL REPORT
| Turner Small Cap Growth Fund | Turner Emerging Markets Fund | ||||||||||||||
| year ended 9/30/13 | year ended 9/30/12 | 8/28/13(1) thru 9/30/13 | |||||||||||||
Investment activities: | |||||||||||||||
Net investment loss | $ | (986 | ) | $ | (1,768 | ) | $ | — | |||||||
Net realized gain from securities sold | 43,625 | 19,111 | — | ||||||||||||
Net change in unrealized appreciation (depreciation) on investment transactions | 23,107 | 47,225 | 39 | ||||||||||||
Net increase in net assets resulting from operations | 65,746 | 64,568 | 39 | ||||||||||||
Dividends and distributions to shareholders: | |||||||||||||||
Realized capital gains: | |||||||||||||||
Institutional Class Shares | — | — | — | ||||||||||||
Investor Class Shares | (15,983 | ) | — | — | |||||||||||
Retirement Class Shares | — | — | — | ||||||||||||
Total dividends and distributions | (15,983 | ) | — | — | |||||||||||
Capital share transactions: | |||||||||||||||
Institutional Class Shares | |||||||||||||||
Proceeds from shares issued | — | — | 475 | ||||||||||||
Proceeds from shares issued in lieu of cash distributions | — | — | — | ||||||||||||
Cost of shares redeemed | — | — | — | ||||||||||||
Net increase (decrease) in net assets from Institutional Class Shares transactions | — | — | 475 | ||||||||||||
Investor Class Shares | |||||||||||||||
Proceeds from shares issued | 20,912 | 31,902 | 35 | ||||||||||||
Proceeds from shares issued in lieu of cash distributions | 15,896 | — | — | ||||||||||||
Cost of shares redeemed | (103,631 | ) | (76,290 | ) | — | ||||||||||
Net increase (decrease) in net assets from Investor Class Shares transactions | (66,823 | ) | (44,388 | ) | 35 | ||||||||||
Retirement Class Shares | |||||||||||||||
Proceeds from shares issued | — | — | — | ||||||||||||
Proceeds from shares issued in lieu of cash distributions | — | — | — | ||||||||||||
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 | (66,823 | ) | (44,388 | ) | 510 | ||||||||||
Total increase (decrease) in net assets | (17,060 | ) | 20,180 | 549 | |||||||||||
Net assets: | |||||||||||||||
Beginning of period | 250,099 | 229,919 | — | ||||||||||||
End of period | $ | 233,039 | $ | 250,099 | $ | 549 | |||||||||
Accumulated net investment income | $ | — | $ | (1,229 | ) | $ | (1 | ) | |||||||
Share issued and redeemed: | |||||||||||||||
Institutional Class Shares | |||||||||||||||
Issued | — | — | 48 | ||||||||||||
Issued in lieu of cash distributions | — | — | — | ||||||||||||
Redeemed | — | — | — | ||||||||||||
Net increase (decrease) in Institutional Class Shares | — | — | 48 | ||||||||||||
Investor Class Shares | |||||||||||||||
Issued | 558 | 950 | 3 | ||||||||||||
Issued in lieu of cash distributions | 473 | — | — | ||||||||||||
Redeemed | (2,781 | ) | (2,255 | ) | — | ||||||||||
Net increase (decrease) in Investor Class Shares | (1,750 | ) | (1,305 | ) | 3 | ||||||||||
Retirement Class Shares | |||||||||||||||
Issued | — | — | — | ||||||||||||
Issued in lieu of cash distributions | — | — | — | ||||||||||||
Redeemed | — | — | — | ||||||||||||
Net increase (decrease) in Retirement Class Shares | — | — | — | ||||||||||||
Net increase (decrease) in share transactions | (1,750 | ) | (1,305 | ) | 51 | ||||||||||
(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 2013 ANNUAL REPORT 59
FINANCIAL STATEMENTS
Financial highlights
For a share outstanding throughout each period
| Net asset value, beginning of period | Net investment income (loss)(1) | Realized and unrealized gains (losses) on investments | Total from investment operations | Dividends from net investment income | Distributions from capital gains | Total dividends and distributions | |||||||||||||||||||||||||
Turner Market Neutral Fund — Institutional Class Shares | |||||||||||||||||||||||||||||||
2013 | $ | 10.18 | (0.09 | ) | 0.12 | 0.03 | — | — | — | ||||||||||||||||||||||
2012 | $ | 10.53 | (0.11 | ) | (0.02 | ) | (0.13 | ) | — | (0.22 | ) | (0.22 | ) | ||||||||||||||||||
| 2011 (4) | $ | 10.00 | (0.09 | ) | 0.62 | 0.53 | — | — | — | ||||||||||||||||||||||
Turner Market Neutral Fund — Investor Class Shares | |||||||||||||||||||||||||||||||
2013 | $ | 10.13 | (0.10 | ) | 0.11 | 0.01 | — | — | — | ||||||||||||||||||||||
2012 | $ | 10.52 | (0.14 | ) | (0.03 | ) | (0.17 | ) | — | (0.22 | ) | (0.22 | ) | ||||||||||||||||||
| 2011 (4) | $ | 10.00 | (0.10 | ) | 0.62 | 0.52 | — | — | — | ||||||||||||||||||||||
Turner Market Neutral Fund — Class C Shares | |||||||||||||||||||||||||||||||
2013 | $ | 10.01 | (0.19 | ) | 0.13 | (0.06 | ) | — | — | — | |||||||||||||||||||||
2012 | $ | 10.46 | (0.20 | ) | (0.03 | ) | (0.23 | ) | — | (0.22 | ) | (0.22 | ) | ||||||||||||||||||
| 2011 (4) | $ | 10.00 | (0.15 | ) | 0.61 | 0.46 | — | — | — | ||||||||||||||||||||||
Turner Medical Sciences Long/Short Fund — Institutional Class Shares | |||||||||||||||||||||||||||||||
2013 | $ | 10.19 | (0.13 | ) | 1.48 | 1.35 | — | — | — | ||||||||||||||||||||||
2012 | $ | 10.35 | (0.15 | ) | (0.01 | ) | (0.16 | ) | — | — | — | ||||||||||||||||||||
| 2011 (4) | $ | 10.00 | (0.12 | ) | 0.47 | 0.35 | — | — | — | ||||||||||||||||||||||
Turner Medical Sciences Long/Short Fund — Investor Class Shares | |||||||||||||||||||||||||||||||
2013 | $ | 10.16 | (0.16 | ) | 1.48 | 1.32 | — | — | — | ||||||||||||||||||||||
2012 | $ | 10.34 | (0.18 | ) | — | (0.18 | ) | — | — | — | |||||||||||||||||||||
| 2011 (4) | $ | 10.00 | (0.13 | ) | 0.47 | 0.34 | — | — | — | ||||||||||||||||||||||
Turner Medical Sciences Long/Short Fund — Class C Shares | |||||||||||||||||||||||||||||||
2013 | $ | 10.04 | (0.23 | ) | 1.45 | 1.22 | — | — | — | ||||||||||||||||||||||
2012 | $ | 10.30 | (0.25 | ) | (0.01 | ) | (0.26 | ) | — | — | — | ||||||||||||||||||||
| 2011 (4) | $ | 10.00 | (0.18 | ) | 0.48 | 0.30 | — | — | — | ||||||||||||||||||||||
60 TURNER FUNDS 2013 ANNUAL REPORT
| Net asset value, end of period | Total return | Net assets end of period (000) | 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 | |||||||||||||||||||||||||||||||
2013 | $ | 10.21 | 0.29 | % | $ | 3,296 | 1.95 | %† (2) | 2.98 | %† | (0.87 | )%† | 973 | % | |||||||||||||||||
2012 | $ | 10.18 | (1.23 | )% | $ | 48,054 | 1.94 | %† (3) | 2.57 | %† | (1.00 | )%† | 1,520 | % | |||||||||||||||||
| 2011 (4) | $ | 10.53 | 5.30 | %†† | $ | 8,679 | 1.95 | % (5) | 3.92 | % | (1.27 | )% | 1,184 | % | |||||||||||||||||
Turner Market Neutral Fund — Investor Class Shares | |||||||||||||||||||||||||||||||
2013 | $ | 10.14 | 0.10 | % | $ | 601 | 2.20 | %† (2) | 3.23 | %† | (1.12 | )%† | 973 | % | |||||||||||||||||
2012 | $ | 10.13 | (1.62 | )% | $ | 5,685 | 2.19 | %† (3) | 2.82 | %† | (1.25 | )%† | 1,520 | % | |||||||||||||||||
| 2011 (4) | $ | 10.52 | 5.20 | %†† | $ | 3,233 | 2.20 | % (5) | 4.18 | % | (1.54 | )% | 1,184 | % | |||||||||||||||||
Turner Market Neutral Fund — Class C Shares | |||||||||||||||||||||||||||||||
2013 | $ | 9.95 | (0.60 | )% | $ | 68 | 2.94 | %† (2) | 3.98 | %† | (1.87 | )%† | 973 | % | |||||||||||||||||
2012 | $ | 10.01 | (2.21 | )% | $ | 85 | 2.94 | %† (3) | 3.57 | %† | (2.00 | )%† | 1,520 | % | |||||||||||||||||
| 2011 (4) | $ | 10.46 | 4.60 | %†† | $ | — | 2.95 | % (5) | 4.77 | % | (2.26 | )% | 1,184 | % | |||||||||||||||||
Turner Medical Sciences Long/Short Fund — Institutional Class Shares | |||||||||||||||||||||||||||||||
2013 | $ | 11.54 | 13.25 | % | $ | 16,742 | 1.98 | %† (6) | 2.99 | %† | (1.26 | )%† | 492 | % | |||||||||||||||||
2012 | $ | 10.19 | (1.55 | )% | $ | 37,117 | 1.87 | %† (7) | 2.09 | %† | (1.45 | )%† | 900 | % | |||||||||||||||||
| 2011 (4) | $ | 10.35 | 3.50 | %†† | $ | 45,147 | 1.93 | % (8) | 2.74 | % | (1.74 | )% | 608 | % | |||||||||||||||||
Turner Medical Sciences Long/Short Fund — Investor Class Shares | |||||||||||||||||||||||||||||||
2013 | $ | 11.48 | 12.99 | % | $ | 3,062 | 2.23 | %† (6) | 3.24 | %† | (1.51 | )%† | 492 | % | |||||||||||||||||
2012 | $ | 10.16 | (1.74 | )% | $ | 9,606 | 2.12 | %† (7) | 2.34 | %† | (1.70 | )%† | 900 | % | |||||||||||||||||
| 2011 (4) | $ | 10.34 | 3.40 | %†† | $ | 12,777 | 2.14 | % (8) | 2.89 | % | (1.93 | )% | 608 | % | |||||||||||||||||
Turner Medical Sciences Long/Short Fund — Class C Shares | |||||||||||||||||||||||||||||||
2013 | $ | 11.26 | 12.15 | % | $ | 1,374 | 2.98 | %† (6) | 3.99 | %† | (2.26 | )%† | 492 | % | |||||||||||||||||
2012 | $ | 10.04 | (2.52 | )% | $ | 2,889 | 2.87 | %† (7) | 3.09 | %† | (2.45 | )%† | 900 | % | |||||||||||||||||
| 2011 (4) | $ | 10.30 | 3.00 | %†† | $ | 2,165 | 2.93 | % (8) | 3.63 | % | (2.71 | )% | 608 | % | |||||||||||||||||
* 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.
† Does not include acquired fund fees or expenses.
†† Total return is for the period indicated and has not been annualized.
(1) Based on average shares outstanding.
(2) Dividend expense totaled 0.43% of average net assets for the year ended September 30, 2013, 0.43% of which was waived. Broker fees and charges on short sales totaled 0.38% of average net assets for the year ended September 30, 2013, 0.38% 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 2.74%, 2.99% and 3.73% for the Institutional, Investor and Class C Shares, respectively.
(3) Dividend expense totaled 0.37% of average net assets for the year ended September 30, 2012, 0.37% of which was waived. Broker fees and charges on short sales totaled 0.22% of average net assets for the year ended September 30, 2012, 0.22% 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 2.53%, 2.78% and 3.53% for the Institutional, Investor and Class C Shares, respectively.
(4) Commenced operations on February 7, 2011. All ratios for the period have been annualized.
(5) Dividend expense totaled 0.44% of average net assets for the year 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 year 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.
(6) Dividend expense totaled 0.45% of average net assets for the year ended September 30, 2013, 0.45% of which was waived. Broker fees and charges on short sales totaled 0.41% of average net assets for the year ended September 30, 2013, 0.41% 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 2.79%, 3.04% and 3.79% for the Institutional, Investor and Class C Shares, respectively.
(7) Dividend expense totaled 0.04% of average net assets for the year ended September 30, 2012, 0.04% of which was waived. Broker fees and charges on short sales totaled 0.15% of average net assets for the year ended September 30, 2012, 0.15% 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 2.06%, 2.31% and 3.06% for the Institutional, Investor and Class C Shares, respectively.
(8) Dividend expense totaled 0.15% of average net assets for the year 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 year 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.
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 2013 ANNUAL REPORT 61
FINANCIAL STATEMENTS
Financial highlights
For a share outstanding throughout each period
| Net asset value, beginning of period | Net investment income (loss)(1) | Realized and unrealized gains (losses) on investments | Total from investment operations | Dividends from net investment income | Distributions from capital gains | Total dividends and distributions | |||||||||||||||||||||||||
Turner Spectrum Fund — Institutional Class Shares | |||||||||||||||||||||||||||||||
2013 | $ | 10.89 | (0.07 | ) | 0.61 | 0.54 | — | — | — | ||||||||||||||||||||||
2012 | $ | 11.45 | (0.13 | ) | 0.04 | (3) | (0.09 | ) | — | (0.47 | ) | (0.47 | ) | ||||||||||||||||||
2011 | $ | 10.82 | (0.16 | ) | 0.79 | 0.63 | — | — | — | ||||||||||||||||||||||
2010 | $ | 10.81 | (0.13 | ) | 0.21 | 0.08 | — | (0.07 | ) | (0.07 | ) | ||||||||||||||||||||
| 2009 (7) | $ | 10.00 | (0.07 | ) | 0.88 | 0.81 | — | — | — | ||||||||||||||||||||||
Turner Spectrum Fund — Investor Class Shares | |||||||||||||||||||||||||||||||
2013 | $ | 10.80 | (0.09 | ) | 0.59 | 0.50 | — | — | — | ||||||||||||||||||||||
2012 | $ | 11.38 | (0.16 | ) | 0.05 | (3) | (0.11 | ) | — | (0.47 | ) | (0.47 | ) | ||||||||||||||||||
2011 | $ | 10.78 | (0.19 | ) | 0.79 | 0.60 | — | — | — | ||||||||||||||||||||||
2010 | $ | 10.80 | (0.16 | ) | 0.21 | 0.05 | — | (0.07 | ) | (0.07 | ) | ||||||||||||||||||||
| 2009 (7) | $ | 10.00 | (0.09 | ) | 0.89 | 0.80 | — | — | — | ||||||||||||||||||||||
Turner Spectrum Fund — Class C Shares | |||||||||||||||||||||||||||||||
2013 | $ | 10.57 | (0.17 | ) | 0.58 | 0.41 | — | — | — | ||||||||||||||||||||||
2012 | $ | 11.23 | (0.24 | ) | 0.05 | (3) | (0.19 | ) | — | (0.47 | ) | (0.47 | ) | ||||||||||||||||||
2011 | $ | 10.72 | (0.27 | ) | 0.78 | 0.51 | — | — | — | ||||||||||||||||||||||
2010 | $ | 10.80 | (0.24 | ) | 0.23 | (0.01 | ) | — | (0.07 | ) | (0.07 | ) | |||||||||||||||||||
| 2009 (9) | $ | 9.98 | (0.07 | ) | 0.89 | 0.82 | — | — | — | ||||||||||||||||||||||
Turner Titan Fund — Institutional Class Shares | |||||||||||||||||||||||||||||||
2013 | $ | 10.24 | (0.08 | ) | 0.43 | 0.35 | — | (0.08 | ) | (0.08 | ) | ||||||||||||||||||||
2012 | $ | 9.77 | (0.11 | ) | 0.67 | 0.56 | — | (0.09 | ) | (0.09 | ) | ||||||||||||||||||||
| 2011 (12) | $ | 10.00 | (0.10 | ) | (0.13 | ) | (0.23 | ) | — | — | — | ||||||||||||||||||||
Turner Titan Fund — Investor Class Shares | |||||||||||||||||||||||||||||||
2013 | $ | 10.20 | (0.10 | ) | 0.42 | 0.32 | — | (0.08 | ) | (0.08 | ) | ||||||||||||||||||||
2012 | $ | 9.76 | (0.13 | ) | 0.66 | 0.53 | — | (0.09 | ) | (0.09 | ) | ||||||||||||||||||||
| 2011 (12) | $ | 10.00 | (0.11 | ) | (0.13 | ) | (0.24 | ) | — | — | — | ||||||||||||||||||||
Turner Titan Fund — Class C Shares | |||||||||||||||||||||||||||||||
2013 | $ | 10.07 | (0.16 | ) | 0.39 | 0.23 | — | (0.08 | ) | (0.08 | ) | ||||||||||||||||||||
2012 | $ | 9.72 | (0.21 | ) | 0.65 | 0.44 | — | (0.09 | ) | (0.09 | ) | ||||||||||||||||||||
| 2011 (12) | $ | 10.00 | (0.16 | ) | (0.12 | ) | (0.28 | ) | — | — | — | ||||||||||||||||||||
62 TURNER FUNDS 2013 ANNUAL REPORT
| Net asset value, end of period | Total return | Net assets end of period (000) | 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 Spectrum Fund — Institutional Class Shares | |||||||||||||||||||||||||||||||
2013 | $ | 11.43 | 4.96 | % | $ | 481,845 | 1.93 | %† (2) | 2.75 | %† | (0.64 | )%† | 580 | % | |||||||||||||||||
2012 | $ | 10.89 | (0.77 | )% | $ | 832,857 | 1.89 | %† (4) | 2.34 | %† | (1.15 | )%† | 996 | % | |||||||||||||||||
2011 | $ | 11.45 | 5.82 | % | $ | 448,554 | 1.93 | % (5) | 2.48 | % | (1.34 | )% | 1,153 | % | |||||||||||||||||
2010 | $ | 10.82 | 0.77 | % | $ | 179,526 | 1.91 | % (6) | 2.85 | % | (1.23 | )% | 1,808 | % | |||||||||||||||||
| 2009 (7) | $ | 10.81 | 8.10 | %†† | $ | 8,681 | 2.44 | % (8) | 5.63 | % | (1.78 | )% | 663 | % | |||||||||||||||||
Turner Spectrum Fund — Investor Class Shares | |||||||||||||||||||||||||||||||
2013 | $ | 11.30 | 4.63 | % | $ | 44,139 | 2.18 | %† (2) | 3.00 | %† | (0.89 | )%† | 580 | % | |||||||||||||||||
2012 | $ | 10.80 | (0.95 | )% | $ | 126,533 | 2.14 | %† (4) | 2.59 | %† | (1.40 | )%† | 996 | % | |||||||||||||||||
2011 | $ | 11.38 | 5.57 | % | $ | 161,401 | 2.18 | % (5) | 2.70 | % | (1.61 | )% | 1,153 | % | |||||||||||||||||
2010 | $ | 10.78 | 0.49 | % | $ | 52,361 | 2.17 | % (6) | 3.12 | % | (1.52 | )% | 1,808 | % | |||||||||||||||||
| 2009 (7) | $ | 10.80 | 8.00 | %†† | $ | 4,567 | 2.71 | % (8) | 5.84 | % | (2.09 | )% | 663 | % | |||||||||||||||||
Turner Spectrum Fund — Class C Shares | |||||||||||||||||||||||||||||||
2013 | $ | 10.98 | 3.88 | % | $ | 5,572 | 2.93 | %† (2) | 3.75 | %† | (1.64 | )%† | 580 | % | |||||||||||||||||
2012 | $ | 10.57 | (1.71 | )% | $ | 10,391 | 2.89 | %† (4) | 3.34 | %† | (2.15 | )%† | 996 | % | |||||||||||||||||
2011 | $ | 11.23 | 4.76 | % | $ | 12,478 | 2.93 | % (5) | 3.39 | % | (2.33 | )% | 1,153 | % | |||||||||||||||||
2010 | $ | 10.72 | (0.07 | )% | $ | 7,169 | 2.92 | % (6) | 3.82 | % | (2.19 | )% | 1,808 | % | |||||||||||||||||
| 2009 (9) | $ | 10.80 | 8.22 | %†† | $ | — | 2.35 | % (8) | 5.28 | % | (3.12 | )% | 663 | % | |||||||||||||||||
Turner Titan Fund — Institutional Class Shares | |||||||||||||||||||||||||||||||
2013 | $ | 10.51 | 3.43 | % | $ | 21,166 | 1.94 | %† (10) | 2.42 | %† | (0.76 | )%† | 788 | % | |||||||||||||||||
2012 | $ | 10.24 | 5.75 | % | $ | 25,811 | 1.92 | %† (11) | 2.41 | %† | (1.03 | )%† | 834 | % | |||||||||||||||||
| 2011 (12) | $ | 9.77 | (2.30 | )%†† | $ | 11,374 | 1.92 | % (13) | 3.54 | % | (1.47 | )% | 647 | % | |||||||||||||||||
Turner Titan Fund — Investor Class Shares | |||||||||||||||||||||||||||||||
2013 | $ | 10.44 | 3.14 | % | $ | 387 | 2.19 | %† (10) | 2.67 | %† | (1.01 | )%† | 788 | % | |||||||||||||||||
2012 | $ | 10.20 | 5.44 | % | $ | 5,038 | 2.17 | %† (11) | 2.66 | %† | (1.28 | )%† | 834 | % | |||||||||||||||||
| 2011 (12) | $ | 9.76 | (2.40 | )%†† | $ | 2,711 | 2.16 | % (13) | 4.66 | % | (1.65 | )% | 647 | % | |||||||||||||||||
Turner Titan Fund — Class C Shares | |||||||||||||||||||||||||||||||
2013 | $ | 10.22 | 2.28 | % | $ | 26 | 2.94 | %† (10) | 3.42 | %† | (1.76 | )%† | 788 | % | |||||||||||||||||
2012 | $ | 10.07 | 4.53 | % | $ | 531 | 2.92 | %† (11) | 3.41 | %† | (2.03 | )%† | 834 | % | |||||||||||||||||
| 2011 (12) | $ | 9.72 | (2.80 | )%†† | $ | 29 | 2.92 | % (13) | 2.31 | % | (2.44 | )% | 647 | % | |||||||||||||||||
* 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.
† Does not include acquired fund fees or expenses.
†† Total return is for the period indicated and has not been annualized.
(1) Based on average shares outstanding.
(2) Dividend expense totaled 0.45% of average net assets for the year ended September 30, 2013, 0.45% of which was waived. Broker fees and charges on short sales totaled 0.45% of average net assets for the year ended September 30, 2013, 0.45% 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 2.83%, 3.08% and 3.83% for the Institutional, Investor and Class C Shares, respectively.
(3) The amount shown for a share outstanding throughout the period and the aggregate net losses on investments for the fund are not in accord, because of the sales and purchases of fund shares in relation to fluctuating market value of the investments of the Fund.
(4) Dividend expense totaled 0.20% of average net assets for the year ended September 30, 2012, 0.20% of which was waived. Broker fees and charges on short sales totaled 0.33% of average net assets for the year ended September 30, 2012, 0.33% 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 2.42%, 2.67% and 3.42% for the Institutional, Investor and Class C Shares, respectively.
(5) 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.
(6) 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.
(7) Commenced operations on May 7, 2009. All ratios for the period have been annualized.
(8) 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.
(9) Commenced operations on July 14, 2009. All ratios for the period have been annualized.
(10) Dividend expense totaled 0.14% of average net assets for the year ended September 30, 2013, 0.14% of which was waived. Broker fees and charges on short sales totaled 0.27% of average net assets for the year ended September 30, 2013, 0.27% 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 2.35%, 2.60% and 3.35% for the Institutional, Investor and Class C Shares, respectively.
(11) Dividend expense totaled 0.08% of average net assets for the year ended September 30, 2012, 0.08% of which was waived. Broker fees and charges on short sales totaled 0.23% of average net assets for the year ended September 30, 2012, 0.23% 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 2.23%, 2.48% and 3.23% for the Institutional, Investor and Class C Shares, respectively.
(12) Commenced operations on February 7, 2011. All ratios for the period have been annualized.
(13) 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 not applicable, $0 or have been rounded to $0.
The accompanying notes are an integral part of the financial statements.
TURNER FUNDS 2013 ANNUAL REPORT 63
FINANCIAL STATEMENTS
Financial highlights
For a share outstanding throughout each period
| Net asset value, beginning of period | Net investment income (loss)(1) | Realized and unrealized gains (losses) on investments | Total from investment operations | Dividends from net investment income | Distributions from capital gains | Distributions from return of capital | Total dividends and distributions | ||||||||||||||||||||||||||||
Turner All Cap Growth Fund — Investor Class Shares | |||||||||||||||||||||||||||||||||||
2013 | $ | 9.01 | (0.01 | ) | 1.35 | 1.34 | — | — | (0.03 | ) | (0.03 | ) | |||||||||||||||||||||||
2012 | $ | 7.67 | (0.02 | ) | 1.36 | 1.34 | — | — | — | — | |||||||||||||||||||||||||
2011 | $ | 7.03 | (0.11 | ) | 0.75 | 0.64 | — | — | — | — | |||||||||||||||||||||||||
2010 | $ | 5.95 | (0.09 | ) | 1.18 | 1.09 | (0.01 | ) | — | — | (0.01 | ) | |||||||||||||||||||||||
2009 | $ | 5.60 | — | 0.35 | 0.35 | — | — | — | — | ||||||||||||||||||||||||||
Turner Emerging Growth Fund — Institutional Class Shares | |||||||||||||||||||||||||||||||||||
2013 | $ | 57.68 | (0.12 | ) | 16.10 | 15.98 | — | (8.41 | ) | — | (8.41 | ) | |||||||||||||||||||||||
2012 | $ | 45.83 | (0.34 | ) | 12.19 | 11.85 | — | — | — | — | |||||||||||||||||||||||||
2011 | $ | 42.51 | (0.40 | ) | 3.72 | 3.32 | — | — | — | — | |||||||||||||||||||||||||
2010 | $ | 37.78 | (0.31 | ) | 5.04 | 4.73 | — | — | — | — | |||||||||||||||||||||||||
| 2009 (3) | $ | 28.45 | (0.12 | ) | 9.45 | 9.33 | — | — | — | — | |||||||||||||||||||||||||
Turner Emerging Growth Fund — Investor Class Shares | |||||||||||||||||||||||||||||||||||
2013 | $ | 57.16 | (0.25 | ) | 15.88 | 15.63 | — | (8.41 | ) | — | (8.41 | ) | |||||||||||||||||||||||
2012 | $ | 45.52 | (0.47 | ) | 12.11 | 11.64 | — | — | — | — | |||||||||||||||||||||||||
2011 | $ | 42.32 | (0.52 | ) | 3.72 | 3.20 | — | — | — | — | |||||||||||||||||||||||||
2010 | $ | 37.71 | (0.41 | ) | 5.02 | 4.61 | — | — | — | — | |||||||||||||||||||||||||
2009 | $ | 46.42 | (0.22 | ) | (7.31 | ) | (7.53 | ) | — | (1.18 | ) | — | (1.18 | ) | |||||||||||||||||||||
Turner Large Growth Fund — Institutional Class Shares | |||||||||||||||||||||||||||||||||||
2013 | $ | 12.86 | 0.07 | 1.83 | 1.90 | (0.08 | ) | — | — | (0.08 | ) | ||||||||||||||||||||||||
2012 | $ | 10.50 | 0.02 | 2.34 | 2.36 | — | — | — | — | ||||||||||||||||||||||||||
2011 | $ | 10.56 | — | (0.04 | ) | (0.04 | ) | (0.02 | ) | — | — | (0.02 | ) | ||||||||||||||||||||||
2010 | $ | 9.93 | 0.02 | 0.65 | 0.67 | (0.04 | ) | — | — | (0.04 | ) | ||||||||||||||||||||||||
2009 | $ | 10.41 | 0.05 | (0.48 | ) | (0.43 | ) | (0.05 | ) | — | — | (0.05 | ) | ||||||||||||||||||||||
Turner Large Growth Fund — Investor Class Shares | |||||||||||||||||||||||||||||||||||
2013 | $ | 12.74 | 0.02 | 1.82 | 1.84 | (0.03 | ) | — | — | (0.03 | ) | ||||||||||||||||||||||||
2012 | $ | 10.42 | (0.01 | ) | 2.33 | 2.32 | — | — | — | — | |||||||||||||||||||||||||
2011 | $ | 10.49 | (0.03 | ) | (0.04 | ) | (0.07 | ) | — | — | — | — | |||||||||||||||||||||||
2010 | $ | 9.87 | — | 0.64 | 0.64 | (0.02 | ) | — | — | (0.02 | ) | ||||||||||||||||||||||||
2009 | $ | 10.34 | 0.03 | (0.47 | ) | (0.44 | ) | (0.03 | ) | — | — | (0.03 | ) | ||||||||||||||||||||||
64 TURNER FUNDS 2013 ANNUAL REPORT
| Net asset value, end of period | Total return | Net assets end of period (000) | Ratio of net expenses to average net assets* | Ratio of net Ratio of total expenses to average net assets | investment income (loss) to average net assets* | Portfolio turnover rate** | |||||||||||||||||||||||||
Turner All Cap Growth Fund — Investor Class Shares | |||||||||||||||||||||||||||||||
2013 | $ | 10.32 | 14.93 | % | $ | 17,975 | 0.85 | % | 1.43 | % | (0.13 | )% | 105 | % | |||||||||||||||||
2012 | $ | 9.01 | 17.47 | % | $ | 25,840 | 0.86 | % | 1.34 | % | (0.25 | )% | 182 | % | |||||||||||||||||
2011 | $ | 7.67 | 9.10 | % | $ | 33,053 | 1.73 | % | 2.12 | % | (1.29 | )% | 205 | % | |||||||||||||||||
2010 | $ | 7.03 | 18.25 | % | $ | 23,227 | 1.64 | % | 2.15 | % | (1.38 | )% | 115 | % | |||||||||||||||||
2009 | $ | 5.95 | 6.25 | % | $ | 26,324 | 0.62 | % (2) | 1.23 | % | 0.09 | % | 220 | % | |||||||||||||||||
Turner Emerging Growth Fund — Institutional Class Shares | |||||||||||||||||||||||||||||||
2013 | $ | 65.25 | 32.98 | % | $ | 72,442 | 1.15 | % | 1.31 | % | (0.21 | )% | 62 | % | |||||||||||||||||
2012 | $ | 57.68 | 25.86 | % | $ | 69,391 | 1.15 | % | 1.30 | % | (0.62 | )% | 75 | % | |||||||||||||||||
2011 | $ | 45.83 | 7.81 | % | $ | 67,035 | 1.15 | % | 1.27 | % | (0.77 | )% | 74 | % | |||||||||||||||||
2010 | $ | 42.51 | 12.52 | % | $ | 276,445 | 1.15 | % | 1.28 | % | (0.77 | )% | 96 | % | |||||||||||||||||
| 2009 (3) | $ | 37.78 | 32.79 | %† | $ | 243,790 | 1.15 | % | 1.33 | % | (0.54 | )% | 78 | % | |||||||||||||||||
Turner Emerging Growth Fund — Investor Class Shares | |||||||||||||||||||||||||||||||
2013 | $ | 64.38 | 32.63 | % | $ | 180,291 | 1.40 | % | 1.56 | % | (0.46 | )% | 62 | % | |||||||||||||||||
2012 | $ | 57.16 | 25.57 | % | $ | 168,990 | 1.40 | % | 1.55 | % | (0.87 | )% | 75 | % | |||||||||||||||||
2011 | $ | 45.52 | 7.56 | % | $ | 159,127 | 1.40 | % | 1.55 | % | (1.01 | )% | 74 | % | |||||||||||||||||
2010 | $ | 42.32 | 12.22 | % | $ | 176,823 | 1.40 | % | 1.53 | % | (1.02 | )% | 96 | % | |||||||||||||||||
2009 | $ | 37.71 | (15.58 | )% | $ | 188,812 | 1.40 | % | 1.56 | % | (0.71 | )% | 78 | % | |||||||||||||||||
Turner Large Growth Fund — Institutional Class Shares | |||||||||||||||||||||||||||||||
2013 | $ | 14.68 | 14.87 | % | $ | 53,965 | 0.69 | % | 0.96 | % | 0.52 | % | 71 | % (4) | |||||||||||||||||
2012 | $ | 12.86 | 22.48 | % | $ | 201,051 | 0.69 | % | 0.91 | % | 0.15 | % | 105 | % | |||||||||||||||||
2011 | $ | 10.50 | (0.39 | )% | $ | 382,336 | 0.69 | % | 0.89 | % | (0.03 | )% | 182 | % | |||||||||||||||||
2010 | $ | 10.56 | 6.76 | % | $ | 377,650 | 0.69 | % | 0.87 | % | 0.20 | % | 178 | % | |||||||||||||||||
2009 | $ | 9.93 | (3.97 | )% | $ | 381,277 | 0.69 | % | 0.92 | % | 0.65 | % | 126 | % | |||||||||||||||||
Turner Large Growth Fund — Investor Class Shares | |||||||||||||||||||||||||||||||
2013 | $ | 14.55 | 14.50 | % | $ | 30,623 | 0.94 | % | 1.21 | % | 0.27 | % | 71 | % (4) | |||||||||||||||||
2012 | $ | 12.74 | 22.26 | % | $ | 47,861 | 0.94 | % | 1.16 | % | (0.10 | )% | 105 | % | |||||||||||||||||
2011 | $ | 10.42 | (0.67 | )% | $ | 56,661 | 0.94 | % | 1.13 | % | (0.28 | )% | 182 | % | |||||||||||||||||
2010 | $ | 10.49 | 6.51 | % | $ | 163,750 | 0.94 | % | 1.12 | % | (0.05 | )% | 178 | % | |||||||||||||||||
2009 | $ | 9.87 | (4.21 | )% | $ | 252,916 | 0.94 | % | 1.17 | % | 0.41 | % | 126 | % | |||||||||||||||||
* 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) Excluding fees paid indirectly, the ratio of net expenses to average net assets would have been 0.63%.
(3) Commenced operations on February 1, 2009. All ratios for the period have been annualized.
(4) If purchases of portfolio securities in connection with the reorganization of the Turner Concentrated Growth Fund into the Turner Large Growth Fund had been included, the portfolio turnover rate would have been 81%.
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 2013 ANNUAL REPORT 65
FINANCIAL STATEMENTS
Financial highlights
For a share outstanding throughout each period
| Net asset value, beginning of period | Net investment income (loss)(1) | Realized and unrealized gains (losses) on investments | Total from investment operations | Dividends from net investment income | Distributions from capital gains | Total dividends and distributions | |||||||||||||||||||||||||
Turner Midcap Growth Fund — Institutional Class Shares | |||||||||||||||||||||||||||||||
2013 | $ | 35.39 | (0.09 | ) | 8.68 | 8.59 | — | (0.55 | ) | (0.55 | ) | ||||||||||||||||||||
2012 | $ | 30.42 | (0.05 | ) | 5.02 | 4.97 | — | — | — | ||||||||||||||||||||||
2011 | $ | 29.90 | (0.06 | ) | 0.58 | 0.52 | — | — | — | ||||||||||||||||||||||
2010 | $ | 26.12 | (0.08 | ) | 3.86 | 3.78 | — | — | — | ||||||||||||||||||||||
2009 | $ | 26.20 | (0.01 | ) | (0.07 | ) | (0.08 | ) | — | — | — | ||||||||||||||||||||
Turner Midcap Growth Fund — Investor Class Shares | |||||||||||||||||||||||||||||||
2013 | $ | 35.03 | (0.18 | ) | 8.55 | 8.37 | — | (0.55 | ) | (0.55 | ) | ||||||||||||||||||||
2012 | $ | 30.16 | (0.13 | ) | 5.00 | 4.87 | — | — | — | ||||||||||||||||||||||
2011 | $ | 29.73 | (0.13 | ) | 0.56 | 0.43 | — | — | — | ||||||||||||||||||||||
2010 | $ | 26.03 | (0.15 | ) | 3.85 | 3.70 | — | — | — | ||||||||||||||||||||||
2009 | $ | 26.18 | (0.06 | ) | (0.09 | ) | (0.15 | ) | — | — | — | ||||||||||||||||||||
Turner Midcap Growth Fund — Retirement Class Shares | |||||||||||||||||||||||||||||||
2013 | $ | 33.65 | (0.25 | ) | 8.22 | 7.97 | — | (0.55 | ) | (0.55 | ) | ||||||||||||||||||||
2012 | $ | 29.05 | (0.20 | ) | 4.80 | 4.60 | — | — | — | ||||||||||||||||||||||
2011 | $ | 28.71 | (0.22 | ) | 0.56 | 0.34 | — | — | — | ||||||||||||||||||||||
2010 | $ | 25.20 | (0.21 | ) | 3.72 | 3.51 | — | — | — | ||||||||||||||||||||||
2009 | $ | 25.40 | (0.11 | ) | (0.09 | ) | (0.20 | ) | — | — | — | ||||||||||||||||||||
Turner Small Cap Growth Fund — Investor Class Shares | |||||||||||||||||||||||||||||||
2013 | $ | 35.96 | (0.16 | ) | 11.47 | 11.31 | — | (2.51 | ) | (2.51 | ) | ||||||||||||||||||||
2012 | $ | 27.83 | (0.23 | ) | 8.36 | 8.13 | — | — | — | ||||||||||||||||||||||
2011 | $ | 28.97 | (0.26 | ) | (0.88 | ) | (1.14 | ) | — | — | — | ||||||||||||||||||||
2010 | $ | 25.17 | (0.20 | ) | 4.00 | 3.80 | — | — | — | ||||||||||||||||||||||
2009 | $ | 26.45 | (0.07 | ) | (1.21 | ) | (1.28 | ) | — | — | — | ||||||||||||||||||||
Turner Emerging Markets Fund — Institutional Class Shares | |||||||||||||||||||||||||||||||
| 2013 (2) | $ | 10.00 | — | 0.78 | 0.78 | — | — | — | |||||||||||||||||||||||
Turner Emerging Markets Fund — Investor Class Shares | |||||||||||||||||||||||||||||||
| 2013 (2) | $ | 10.00 | — | 0.78 | 0.78 | — | — | — | |||||||||||||||||||||||
66 TURNER FUNDS 2013 ANNUAL REPORT
| Net asset value, end of period | Total return | Net assets end of period (000) | 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 — Institutional Class Shares | |||||||||||||||||||||||||||||||
2013 | $ | 43.43 | 24.69 | % | $ | 205,679 | 0.93 | % | 1.08 | % | (0.24 | )% | 84 | % | |||||||||||||||||
2012 | $ | 35.39 | 16.34 | % | $ | 236,147 | 0.93 | % | 1.04 | % | (0.14 | )% | 121 | % | |||||||||||||||||
2011 | $ | 30.42 | 1.74 | % | $ | 245,480 | 0.93 | % | 1.05 | % | (0.18 | )% | 104 | % | |||||||||||||||||
2010 | $ | 29.90 | 14.47 | % | $ | 164,993 | 0.93 | % | 1.03 | % | (0.29 | )% | 90 | % | |||||||||||||||||
2009 | $ | 26.12 | (0.31 | )% | $ | 136,069 | 0.93 | % | 1.08 | % | (0.05 | )% | 120 | % | |||||||||||||||||
Turner Midcap Growth Fund — Investor Class Shares | |||||||||||||||||||||||||||||||
2013 | $ | 42.85 | 24.31 | % | $ | 257,240 | 1.18 | % | 1.33 | % | (0.49 | )% | 84 | % | |||||||||||||||||
2012 | $ | 35.03 | 16.15 | % | $ | 404,427 | 1.18 | % | 1.29 | % | (0.39 | )% | 121 | % | |||||||||||||||||
2011 | $ | 30.16 | 1.45 | % | $ | 471,286 | 1.18 | % | 1.28 | % | (0.38 | )% | 104 | % | |||||||||||||||||
2010 | $ | 29.73 | 14.21 | % | $ | 751,124 | 1.18 | % | 1.28 | % | (0.54 | )% | 90 | % | |||||||||||||||||
2009 | $ | 26.03 | (0.57 | )% | $ | 859,640 | 1.18 | % | 1.33 | % | (0.29 | )% | 120 | % | |||||||||||||||||
Turner Midcap Growth Fund — Retirement Class Shares | |||||||||||||||||||||||||||||||
2013 | $ | 41.07 | 24.11 | % | $ | 4,235 | 1.43 | % | 1.58 | % | (0.74 | )% | 84 | % | |||||||||||||||||
2012 | $ | 33.65 | 15.83 | % | $ | 4,811 | 1.43 | % | 1.54 | % | (0.64 | )% | 121 | % | |||||||||||||||||
2011 | $ | 29.05 | 1.18 | % | $ | 3,972 | 1.43 | % | 1.54 | % | (0.63 | )% | 104 | % | |||||||||||||||||
2010 | $ | 28.71 | 13.93 | % | $ | 4,578 | 1.43 | % | 1.53 | % | (0.79 | )% | 90 | % | |||||||||||||||||
2009 | $ | 25.20 | (0.79 | )% | $ | 3,892 | 1.43 | % | 1.58 | % | (0.55 | )% | 120 | % | |||||||||||||||||
Turner Small Cap Growth Fund — Investor Class Shares | |||||||||||||||||||||||||||||||
2013 | $ | 44.76 | 33.79 | % | $ | 233,039 | 1.25 | % | 1.56 | % | (0.43 | )% | 82 | % | |||||||||||||||||
2012 | $ | 35.96 | 29.21 | % | $ | 250,099 | 1.25 | % | 1.53 | % | (0.68 | )% | 100 | % | |||||||||||||||||
2011 | $ | 27.83 | (3.94 | )% | $ | 229,919 | 1.25 | % | 1.53 | % | (0.76 | )% | 119 | % | |||||||||||||||||
2010 | $ | 28.97 | 15.10 | % | $ | 274,925 | 1.25 | % | 1.52 | % | (0.74 | )% | 89 | % | |||||||||||||||||
2009 | $ | 25.17 | (4.84 | )% | $ | 250,860 | 1.25 | % | 1.58 | % | (0.36 | )% | 113 | % | |||||||||||||||||
Turner Emerging Markets Fund — Institutional Class Shares | |||||||||||||||||||||||||||||||
| 2013 (2) | $ | 10.78 | 7.80 | %† | $ | 512 | 1.05 | % | 13.81 | % | 0.87 | % | 1 | % | |||||||||||||||||
Turner Emerging Markets Fund — Investor Class Shares | |||||||||||||||||||||||||||||||
| 2013 (2) | $ | 10.78 | 7.80 | %† | $ | 37 | 1.30 | % | 15.39 | % | 0.62 | % | 1 | % | |||||||||||||||||
* 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 August 28, 2013. All ratios for the period have been annualized.
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 2013 ANNUAL REPORT 67
NOTES TO FINANCIAL STATEMENTS
Notes to financial statements
September 30, 2013
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. The funds included herein are the Turner Market Neutral Fund ("Market Neutral Fund"), Turner Medical Sciences Long/Short Fund ("Medical Sciences Long/Short Fund"), Turner Spectrum Fund ("Spectrum Fund"), Turner Titan Fund ("Titan Fund"), Turner All Cap Growth Fund ("All Cap Growth Fund"), Turner Emerging Growth Fund ("Emerging Growth Fund"), Turner Large Growth Fund ("Large Growth Fund"), Turner Midcap Growth Fund ("Midcap Growth Fund"), Turner Small Cap Growth Fund ("Small Cap Growth Fund"), and Turner Emerging Markets Fund ("Emerging Markets Fund"), each a "Fund" and collectively the "Funds."
Each Fund is registered as a diversified portfolio of the Trust.
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.
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—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 an orderly 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)
Securities listed on a securities exchange, market or automated quotation system for which quotations are readily available (except for securities traded on NASDAQ), including American Depositary Receipts ("ADRs"), 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 is 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. To the extent these securities are valued at the last sales price or NASDAQ Official Closing Price, they are categorized as Level 1 in the fair value hierarchy.
Investments in other open-end investment companies are valued at net asset value. These valuations are typically categorized as Level 1 in the fair value hierarchy.
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. In this situation, valuations are typically categorized as Level 2 in the fair value hierarchy.
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
68 TURNER FUNDS 2013 ANNUAL REPORT
available to the Committee. Depending on the source or relative significance of the valuation inputs, these securities may be categorized as Level 2 or Level 3 in the fair value hierarchy.
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 a 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 a Fund calculates net asset value. A Significant Event may relate to a single issuer or to an entire market sector. In addition, the Funds' 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 a Fund calculates its net asset value. If price movements in a monitored index or security exceed levels recommended by the Committee for approval by the Board ("trigger points"), the Sub-administrator will notify the Adviser, as defined in Note 3, that such limits have been exceeded. If such trigger points are exceeded, then the close prices for certain foreign markets are systematically adjusted by fair value factors calculated by an independent pricing service. The circumstances described above use significant observable inputs and therefore these valuations are considered as Level 2 in the fair value hierarchy.
In the event that the Adviser believes that the fair values provided by a third party fair valuation vendor are not reliable, or believes that a foreign security held by a Fund should be fair valued for any other reason, the Adviser shall contact the Sub-administrator and request that a meeting of the Committee be held. Depending on the source or relative significance of the valuation inputs, these securities may be categorized as Level 2 or Level 3 in the fair value hierarchy.
For the year ended September 30, 2013, there were no Level 3 investments for which significant unobservable inputs were used to determine fair value.
The following table is a summary of inputs used to value the Funds' investments as of September 30, 2013 (000). The breakdown, by sub-category, of the "common stock" category is disclosed on the Schedule of investments and Schedule of securities sold short for each Fund, as applicable.
Level 1 | Level 2 | Total | |||||||||||||
Market Neutral Fund | |||||||||||||||
Investments in securities | |||||||||||||||
Common stock | $ | 2,997 | $ | — | $ | 2,997 | |||||||||
Cash equivalent | 220 | — | 220 | ||||||||||||
Total Investments in securities | $ | 3,217 | $ | — | $ | 3,217 | |||||||||
Securities sold short | |||||||||||||||
Common stock | $ | 2,925 | $ | — | $ | 2,925 | |||||||||
Total Securities sold short | $ | 2,925 | $ | — | $ | 2,925 | |||||||||
Medical Sciences Long/Short Fund | |||||||||||||||
Investments in securities | |||||||||||||||
Common stock | $ | 13,685 | $ | — | $ | 13,685 | |||||||||
Call option contracts | 12 | — | 12 | ||||||||||||
Put option contracts | 1 | — | 1 | ||||||||||||
Cash equivalent | 2,669 | — | 2,669 | ||||||||||||
Total Investments in securities | $ | 16,367 | $ | — | $ | 16,367 | |||||||||
Securities sold short | |||||||||||||||
Common stock | $ | 4,353 | $ | — | $ | 4,353 | |||||||||
Exchange traded funds | 3,871 | — | 3,871 | ||||||||||||
Total Securities sold short | $ | 8,224 | $ | — | $ | 8,224 | |||||||||
Spectrum Fund | |||||||||||||||
Investments in securities | |||||||||||||||
Common stock | $ | 520,905 | $ | — | $ | 520,905 | |||||||||
Call option contracts | 379 | — | 379 | ||||||||||||
Put option contracts | 6 | — | 6 | ||||||||||||
Cash equivalent | 24,213 | — | 24,213 | ||||||||||||
Total Investments in securities | $ | 545,503 | $ | — | $ | 545,503 | |||||||||
Securities sold short | |||||||||||||||
Common stock | $ | 259,263 | $ | — | $ | 259,263 | |||||||||
Exchange traded funds | 97,664 | — | 97,664 | ||||||||||||
Total Securities sold short | $ | 356,927 | $ | — | $ | 356,927 | |||||||||
Other financial instruments(a) | |||||||||||||||
Written call option contracts | $ | 58 | $ | — | $ | 58 | |||||||||
Total Other financial instruments | $ | 58 | $ | — | $ | 58 | |||||||||
Titan Fund | |||||||||||||||
Investments in securities | |||||||||||||||
Common stock | $ | 18,706 | $ | — | $ | 18,706 | |||||||||
Cash equivalent | 1,921 | — | 1,921 | ||||||||||||
Total Investments in securities | $ | 20,627 | $ | — | $ | 20,627 | |||||||||
Securities sold short | |||||||||||||||
Common stock | $ | 9,508 | $ | — | $ | 9,508 | |||||||||
Exchange traded funds | 2,085 | — | 2,085 | ||||||||||||
Total Securities sold short | $ | 11,593 | $ | — | $ | 11,593 | |||||||||
All Cap Growth Fund | |||||||||||||||
Investments in securities | |||||||||||||||
Common stock | $ | 17,836 | $ | — | $ | 17,836 | |||||||||
Cash equivalent | 1,584 | — | 1,584 | ||||||||||||
Total Investments in securities | $ | 19,420 | $ | — | $ | 19,420 | |||||||||
TURNER FUNDS 2013 ANNUAL REPORT 69
NOTES TO FINANCIAL STATEMENTS
Level 1 | Level 2 | Total | |||||||||||||
Emerging Growth Fund | |||||||||||||||
Investments in securities | |||||||||||||||
Common stock | $ | 251,911 | $ | — | $ | 251,911 | |||||||||
Cash equivalent | 28,400 | — | 28,400 | ||||||||||||
Total Investments in securities | $ | 280,311 | $ | — | $ | 280,311 | |||||||||
Large Growth Fund | |||||||||||||||
Investments in securities | |||||||||||||||
Common stock | $ | 84,545 | $ | — | $ | 84,545 | |||||||||
Cash equivalent | 2,962 | — | 2,962 | ||||||||||||
Total Investments in securities | $ | 87,507 | $ | — | $ | 87,507 | |||||||||
Midcap Growth Fund | |||||||||||||||
Investments in securities | |||||||||||||||
Common stock | $ | 446,753 | $ | — | $ | 446,753 | |||||||||
Cash equivalent | 25,719 | — | 25,719 | ||||||||||||
Total Investments in securities | $ | 472,472 | $ | — | $ | 472,472 | |||||||||
Small Cap Growth Fund | |||||||||||||||
Investments in securities | |||||||||||||||
Common stock | $ | 230,998 | $ | — | $ | 230,998 | |||||||||
Cash equivalent | 19,050 | — | 19,050 | ||||||||||||
Total Investments in securities | $ | 250,048 | $ | — | $ | 250,048 | |||||||||
Emerging Markets Fund | |||||||||||||||
Investments in securities | |||||||||||||||
Common stock | |||||||||||||||
Consumer staples | $ | — | $ | 6 | $ | 6 | |||||||||
Financials | — | 2 | 2 | ||||||||||||
Health care | — | 6 | 6 | ||||||||||||
Industrials | — | 3 | 3 | ||||||||||||
Information technology | — | 7 | 7 | ||||||||||||
Other common stock | 512 | — | 512 | ||||||||||||
Cash equivalent | 12 | — | 12 | ||||||||||||
Total Investments in securities | $ | 524 | $ | 24 | $ | 548 | |||||||||
(a) Other financial instruments are derivative instruments and are reflected in the Schedule of open written option contracts.
For the year ended September 30, 2013, there were no significant changes to the Funds' fair valuation methodologies. 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 transfers between Levels as of September 30, 2013 based on the input Levels assigned at September 30, 2012.
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 declared on open short positions are recorded on ex-date and 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, 2013.
Participation Notes—The Emerging Markets Fund may invest in participation notes. Some countries, especially emerging markets countries, do not permit foreign entities to participate directly in their securities markets or otherwise have regulations that present difficulties for efficient foreign investment. The Emerging Markets Fund may use participation notes to establish a position in such markets as a substitute for direct investment. Participation notes are issued by banks or broker-dealers and are designed to track the return of a particular underlying equity security or debt security, currency or market. When the participation note matures, the issuer of the participation note will pay to, or receive from, the Emerging Markets Fund the difference between the nominal value of the underlying instrument at the time of purchase and that instrument's value at maturity. Investments in participation notes involve the same risks as are associated with a direct investment in the underlying security, currency or market that they seek to replicate. In addition, participation notes are generally traded over-the-counter and are subject to counterparty risk. Counterparty risk is the risk that the broker-dealer or
70 TURNER FUNDS 2013 ANNUAL REPORT
bank that issues the participation note will not fulfill its contractual obligation to complete the transaction with the Emerging Markets Fund. Participation notes constitute general unsecured contractual obligations of the banks or broker-dealers that issue them, and the Emerging Markets Fund will rely on the creditworthiness of such banks or broker-dealers and will have no rights under a participation note against the issuer of the underlying assets when it invests in participation notes. In addition, participation notes may trade at a discount to the value of the underlying securities or markets that they seek to replicate.
Option transactions—Consistent with each Fund's investment objectives, the Funds may write covered call options and sell put 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 portfolios 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). The primary risk exposure from written and purchased options contracts is equity exposure.
Purchased options held by the Funds are included in "Investment securities, at value" on the Statements of assets and liabilities. As of September 30, 2013, these amounts were $13 (000) for the Medical Sciences Long/Short Fund and $385 (000) for the Spectrum Fund. Written option contracts are shown on the Statements of assets and liabilities under "Written options, at value" and were $58 (000) for the Spectrum Fund.
Any realized and unrealized gains and losses on purchase option contracts are included in "Net realized gain from securities sold" and "Net change in unrealized appreciation (depreciation) on investments," respectively, on the Statements of operations. Realized and unrealized gains and (losses) on purchased options for the Medical Sciences Long/Short Fund for the year ended September 30, 2013 were $(58) and $(5), respectively (000). Realized and unrealized gains and (losses) on purchased options for the Spectrum Fund for the year ended September 30, 2013 were $(3,927) and $(94), respectively (000). Any realized and unrealized gains and losses on written option contracts are shown on the Statements of operations under "Net realized gain on written options contracts" and "Net change in unrealized appreciation (depreciation) on written option contracts," respectively. Realized and unrealized gains and (losses) on written options for the Spectrum Fund for the year ended September 30, 2013 were $65 and $31, respectively (000). The Medical Sciences Long/Short Fund and Spectrum Fund engaged in limited purchased and written option activity during the year ended September 30, 2013, representing less than 1% of each Fund's average monthly fair value amounts of purchased and written options as compared to net assets.
A summary of option contracts written during the year ended September 30, 2013 for the Spectrum Fund is as follows:
| Option contracts | Option premiums (000) | ||||||||||
| Options outstanding at beginning of year | — | $ | — | ||||||||
Options written | 10,161 | 775 | |||||||||
| Options cancelled in a closing purchase transaction | (7,888 | ) | (646 | ) | |||||||
Options exercised | — | — | |||||||||
Options expired | (825 | ) | (40 | ) | |||||||
Options outstanding at end of year | 1,448 | $ | 89 | ||||||||
TURNER FUNDS 2013 ANNUAL REPORT 71
NOTES TO FINANCIAL STATEMENTS
Foreign currency translation—The books and records of the Funds 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 Funds 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 Funds' books and the U.S. dollar equivalent amounts actually received or paid.
Illiquid Securities—Illiquid securities are securities that cannot be disposed of within seven business days at approximately the price at which they are being carried on a Fund's books. Illiquid securities include demand instruments with demand notice periods exceeding seven days, securities for which there is no active secondary market, and repurchase agreements with maturities of over seven days in length. The Funds may invest in securities that are neither listed on a stock exchange nor traded over the counter, including privately placed securities. Investing in such unlisted emerging country equity securities, including investments in new and early stage companies, may involve a high degree of business and financial risk that can result in substantial losses. As a result of the absence of a public trading market for these securities, they may be less liquid than publicly traded securities. Although these securities may be resold in privately negotiated transactions, the prices realized from these sales could be less than those originally paid by the Fund, or less than what may be considered the fair value of such securities. Further, companies whose securities are not publicly traded may not be subject to the disclosure and other investor protection requirements which might be applicable if their securities were publicly traded. If such securities are required to be registered under the securities laws of one or more jurisdictions before being resold, a Fund may be required to bear the expenses of registration.
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.
New Accounting Pronouncement—In January 2013, the Financial Accounting Standards Board issued Accounting Standards Update ("ASU") No. 2013-01 "Clarifying the Scope of Disclosures about Offsetting Assets and Liabilities ("ASU 2013-01") which amended Accounting Standards Codification Subtopic 210-20, "Balance Sheet Offsetting." ASU 2013-01 clarified the scope of ASU No. 2011-11 "Disclosures about Offsetting Assets and Liabilities" ("ASU 2011-11"). ASU 2011-11 requires an entity to disclose information about offsetting and related arrangements to enable users of that entity's financial statements to understand the effect of those arrangements on its financial position. ASU 2013-01 clarifies the scope of ASU 2011-11 as it applies to derivatives accounted for in accordance with Topic 815, "Derivatives and Hedging," including bifurcated embedded derivatives, repurchase agreements and reverse repurchase agreements, and securities borrowing and securities lending transactions that are offset either in accordance with other requirements of GAAP or subject to an enforceable master netting arrangement or similar agreement. The guidance in ASU 2013-01 and ASU 2011-11 is effective for interim and annual periods beginning on or after January 1, 2013. Management is currently evaluating any impact ASU 2013-01 and ASU 2011-11 may have on the Trust's financial statements.
3. Administration, shareholder servicing, distribution and transfer agent agreements:
Turner Investments, L.P. ("Turner," the "Adviser," or the "Administrator") 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 Fund Services Ohio, Inc. ("Citi" or the "Sub-administrator"), Citi provides sub-administrative services, including certain fund accounting services, to the Trust. For the year ended September 30, 2013, Citi was paid $764 (000) by Turner.
72 TURNER FUNDS 2013 ANNUAL REPORT
Foreside Fund Services, LLC (the "Distributor") provides distribution services to the Funds under a Distribution Services Agreement.
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 to exceed 0.75% of each 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 to exceed 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.
Certain officers and trustees of the Trust are also officers or employees of Turner or Citi. 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.
4. Investment advisory agreement:
The Trust and Turner are parties to an Investment Advisory Agreement dated April 28, 1996 under which Turner 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 the 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 expense 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 expense 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, 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 | % | January 31, 2014 | ||||||||||
Investor Class | 1.50 | % | 2.20 | % | January 31, 2014 | ||||||||||
Class C | 1.50 | % | 2.95 | % | January 31, 2014 | ||||||||||
| Medical Sciences Long/Short Fund | |||||||||||||||
Institutional Class | 1.50 | % | 1.95 | % | January 31, 2014 | ||||||||||
Investor Class | 1.50 | % | 2.20 | % | January 31, 2014 | ||||||||||
Class C | 1.50 | % | 2.95 | % | January 31, 2014 | ||||||||||
Spectrum Fund | |||||||||||||||
Institutional Class | 1.50 | % | 1.95 | % | January 31, 2014 | ||||||||||
Investor Class | 1.50 | % | 2.20 | % | January 31, 2014 | ||||||||||
Class C | 1.50 | % | 2.95 | % | January 31, 2014 | ||||||||||
Titan Fund | |||||||||||||||
Institutional Class | 1.50 | % | 1.95 | % | January 31, 2014 | ||||||||||
Investor Class | 1.50 | % | 2.20 | % | January 31, 2014 | ||||||||||
Class C | 1.50 | % | 2.95 | % | January 31, 2014 | ||||||||||
Emerging Growth Fund | |||||||||||||||
Institutional Class | 1.00 | % | 1.15 | % | January 31, 2014 | ||||||||||
Investor Class | 1.00 | % | 1.40 | % | January 31, 2014 | ||||||||||
Large Growth Fund | |||||||||||||||
Institutional Class | 0.60 | % | 0.69 | % | January 31, 2014 | ||||||||||
Investor Class | 0.60 | % | 0.94 | % | January 31, 2014 | ||||||||||
Midcap Growth Fund | |||||||||||||||
Institutional Class | 0.75 | % | 0.93 | % | January 31, 2014 | ||||||||||
Investor Class | 0.75 | % | 1.18 | % | January 31, 2014 | ||||||||||
Retirement Class | 0.75 | % | 1.43 | % | January 31, 2014 | ||||||||||
Small Cap Growth Fund | |||||||||||||||
Investor Class | 1.00 | % | 1.25 | % | January 31, 2014 | ||||||||||
Emerging Markets Fund | |||||||||||||||
Institutional Class | 0.70 | % | 1.05 | % | January 31, 2015 | ||||||||||
Investor Class | 0.70 | % | 1.30 | % | January 31, 2015 | ||||||||||
For the All Cap 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%) 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 the 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).
TURNER FUNDS 2013 ANNUAL REPORT 73
NOTES TO FINANCIAL STATEMENTS
The resulting amount is then added to (in the case of overperformance) or subtracted from (in the case of underperformance) the 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 | % | |||||||||||||
(1) See the Fund's Prospectus and Statement of Additional Information for more information regarding the Fund's performance benchmark.
During the year ended September 30, 2013, the All Cap Growth Fund's advisory fees, before waivers, were adjusted in accordance with the policy described above (000):
| Base advisory fee | Performance adjustment | Net advisory fee before waivers | |||||||||||||
All Cap Growth Fund | $ | 212 | $ | (97 | ) | $ | 115 | ||||||||
5. Contingent deferred sales charges (Class C Shares):
A 1.00% contingent deferred sales charge ("CDSC") will be deducted with respect to Class C Shares of the Market Neutral Fund, Medical Sciences Long/Short Fund, Spectrum Fund and Titan Fund 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 Class C Shares statutory prospectus for the Market Neutral Fund, Medical Sciences Long/Short Fund, Spectrum Fund and Titan Fund.
6. Investment transactions:
The cost of security purchases and the proceeds from security sales, other than short-term investments and option contracts written, for the year ended September 30, 2013 were as follows (000):
Purchases | Sales | ||||||||||
Market Neutral Fund | $ | 160,632 | $ | 197,130 | |||||||
Medical Sciences Long/Short Fund | 85,705 | 105,044 | |||||||||
Spectrum Fund | 3,915,115 | 4,286,521 | |||||||||
Titan Fund | 288,455 | 302,920 | |||||||||
All Cap Growth Fund | 20,298 | 29,960 | |||||||||
Purchases | Sales | ||||||||||
Emerging Growth Fund | $ | 139,273 | $ | 186,391 | |||||||
Large Growth Fund* | 114,357 | 307,441 | |||||||||
Midcap Growth Fund | 417,723 | 709,746 | |||||||||
Small Cap Growth Fund | 186,835 | 268,313 | |||||||||
Emerging Markets Fund | 370 | 4 | |||||||||
* Costs of purchases and proceeds from sales of portfolio securities incurred to realign the Fund's portfolio after the reorganization of the Turner Concentrated Growth Fund into the Large Growth Fund are excluded from these amounts. The cost of purchases excluded were $15,344(000).
7. 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, foreign currency transactions, net operating losses, return of capital distributions, equalization 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. 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 part of the dividends paid deduction for income tax purposes.
Withholding taxes on dividends and net realized capital gains as a result of certain investments in ADRs by the Funds have been provided for in accordance with each investment's applicable country's tax rules and rates.
Accordingly, the following permanent differences have been reclassified to/from the following accounts during the fiscal year ended September 30, 2013 (000):
| Fund | Undistributed net investment income | Accumulated net realized gain (loss) | Portfolio Capital | ||||||||||||
Market Neutral Fund | $ | 385 | $ | 8 | $ | (393 | ) | ||||||||
| Medical Sciences Long/Short Fund | 1,013 | (968 | ) | (45 | ) | ||||||||||
74 TURNER FUNDS 2013 ANNUAL REPORT
| Fund | Undistributed net investment income | Accumulated net realized gain (loss) | Portfolio Capital | ||||||||||||
Spectrum Fund | $ | 7,762 | $ | 44 | $ | (7,806 | ) | ||||||||
Titan Fund | 69 | (5 | ) | (64 | ) | ||||||||||
All Cap Growth Fund | 1 | — | (1 | ) | |||||||||||
Emerging Growth Fund | 1,144 | (103 | ) | (1,041 | ) | ||||||||||
Large Growth Fund | — | 18,670 | (18,670 | ) | |||||||||||
Midcap Growth Fund | 4,005 | (4,005 | ) | — | |||||||||||
Small Cap Growth Fund | 2,215 | (2,215 | ) | — | |||||||||||
Emerging Markets Fund | (1 | ) | 1 | — | |||||||||||
The tax character of dividends and distributions declared during the years ended September 30, 2013 and September 30, 2012 were as follows (000):
| Ordinary income | Long-term capital gain | Return of capital | Total | ||||||||||||||||
Market Neutral Fund | |||||||||||||||||||
2012 | $ | 457 | $ | 4 | $ | — | $ | 461 | |||||||||||
| Ordinary income | Long-term capital gain | Return of capital | Total | ||||||||||||||||
Spectrum Fund | |||||||||||||||||||
2012 | $ | 30,159 | $ | — | $ | — | $ | 30,159 | |||||||||||
Titan Fund | |||||||||||||||||||
2013 | $ | 367 | $ | — | $ | — | $ | 367 | |||||||||||
2012 | 151 | — | — | 151 | |||||||||||||||
All Cap Growth Fund | |||||||||||||||||||
2013 | $ | — | $ | — | $ | 73 | $ | 73 | |||||||||||
Emerging Growth Fund | |||||||||||||||||||
2013 | $ | — | $ | 32,864 | $ | — | $ | 32,864 | |||||||||||
Large Growth Fund | |||||||||||||||||||
2013 | $ | 1,179 | $ | — | $ | — | $ | 1,179 | |||||||||||
Midcap Growth Fund | |||||||||||||||||||
2013 | $ | 739 | $ | 7,407 | $ | — | $ | 8,146 | |||||||||||
Small Cap Growth Fund | |||||||||||||||||||
2013 | $ | — | $ | 15,983 | $ | — | $ | 15,983 | |||||||||||
As of September 30, 2013, 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 (depreciation) | Total distributable earnings (accumulated losses) | |||||||||||||||||||||||||
Market Neutral Fund | $ | — | $ | — | $ | (730 | ) | $ | (2,251 | ) | $ | (125 | ) | $ | 44 | $ | (3,062 | ) | |||||||||||||
Medical Sciences Long/Short Fund | — | 293 | — | — | (146 | ) | 909 | 1,056 | |||||||||||||||||||||||
Spectrum Fund | — | — | (13,925 | ) | (2,807 | ) | (5,219 | ) | 26,666 | 4,715 | |||||||||||||||||||||
Titan Fund | — | — | — | (246 | ) | (260 | ) | 1,155 | 649 | ||||||||||||||||||||||
All Cap Growth Fund | — | — | (10,311 | ) | — | (25 | ) | 3,575 | (6,761 | ) | |||||||||||||||||||||
Emerging Growth Fund | — | 35,414 | — | — | (1,035 | ) | 96,242 | 130,621 | |||||||||||||||||||||||
Large Growth Fund | 11 | — | (66,259 | ) | — | — | 11,837 | (54,411 | ) | ||||||||||||||||||||||
Midcap Growth Fund | 12,240 | 58,930 | — | — | — | 105,462 | 176,632 | ||||||||||||||||||||||||
Small Cap Growth Fund | 3,054 | 32,518 | — | — | — | 63,817 | 99,389 | ||||||||||||||||||||||||
Emerging Markets Fund | 1 | — | — | — | — | 38 | 39 | ||||||||||||||||||||||||
Under current tax law, capital losses and specified ordinary losses realized after October 31 and non-specified ordinary losses incurred after December 31 (ordinary losses collectively known as "late year ordinary loss") may be deferred and treated as having arisen in the following fiscal year.
As of the end of their latest tax year end of September 30, 2013, the Funds in the following tables had capital loss carryforwards ("CLCFs"). CLCFs not subject to expiration must be used prior to using any CLCFs that are subject to expiration. A summary of these CLCFs is detailed in the tables below.
CLCFs not subject to expiration (000):
Short Term | Long Term | ||||||||||
Market Neutral Fund | $ | 730 | $ | — | |||||||
Spectrum Fund | 13,925 | — | |||||||||
All Cap Growth Fund | 446 | — | |||||||||
CLCFs subject to expiration (000):
Expiring September 30, | |||||||||||||||
2017 | 2018 | Total | |||||||||||||
All Cap Growth Fund | $ | 7,475 | $ | 2,390 | $ | 9,865 | |||||||||
Large Growth Fund | 1,774 | 64,485 | 66,259 | ||||||||||||
As of January 18, 2013, the Large Growth Fund credited accumulated net realized loss $20,921 (000) and charged paid-in-capital $35,249 (000) and unrealized appreciation $1,373 (000) due to the Turner Concentrated Growth Fund merger with Large Growth Fund. 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's merger with the Large Growth Fund. Internal Revenue Code Section 382 limits the amount of annual CLCFs available for use.
TURNER FUNDS 2013 ANNUAL REPORT 75
NOTES TO FINANCIAL STATEMENTS
During the year ended September 30, 2013, Medical Sciences Long/Short Fund and Large Growth Fund utilized $165 and $33,222, respectively (000), of CLCFs.
At September 30, 2013, the total cost of securities for Federal income tax purposes and the aggregate gross unrealized appreciation and depreciation for the investments held by each 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 | $ | 3,059 | $ | 214 | $ | (56 | ) | $ | 158 | ||||||||||
Medical Sciences Long/Short Fund | 14,454 | 2,022 | (109 | ) | 1,913 | ||||||||||||||
Spectrum Fund | 492,832 | 65,122 | (12,451 | ) | 52,671 | ||||||||||||||
Titan Fund | 19,034 | 1,656 | (63 | ) | 1,593 | ||||||||||||||
All Cap Growth Fund | 15,846 | 3,966 | (392 | ) | 3,574 | ||||||||||||||
Emerging Growth Fund | 184,069 | 98,099 | (1,857 | ) | 96,242 | ||||||||||||||
Large Growth Fund | 75,672 | 12,962 | (1,127 | ) | 11,835 | ||||||||||||||
Midcap Growth Fund | 367,012 | 107,983 | (2,523 | ) | 105,460 | ||||||||||||||
Small Cap Growth Fund | 186,231 | 66,933 | (3,116 | ) | 63,817 | ||||||||||||||
Emerging Markets Fund | 510 | 42 | (4 | ) | 38 | ||||||||||||||
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, 2013, 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.
8. Loans of portfolio securities:
The Funds may lend securities in their portfolios 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 based on the previous day's market value of the securities loaned, marked-to-market daily. Any collateral shortfalls are adjusted the next business day. Cash collateral received is invested in the Dollar Shares of the BlackRock Liquidity Funds TempCash, 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 the projected lending activity.
In the event of bankruptcy of the borrower, realization/retention of the collateral may be subject to legal proceedings.
The following Funds had securities on loan and had invested cash collateral with the following values as of September 30, 2013 (000):
Fund | Value of Securities on Loan | Value of Collateral | |||||||||
All Cap Growth Fund | $ | 1,434 | $ | 1,470 | |||||||
Emerging Growth Fund | 21,994 | 22,358 | |||||||||
Large Growth Fund | 2,707 | 2,763 | |||||||||
Midcap Growth Fund | 18,860 | 19,306 | |||||||||
Small Cap Growth Fund | 14,643 | 14,943 | |||||||||
9. Concentration/risks:
Certain Funds invest a high percentage of their assets in specific market sectors in order to achieve a potentially greater investment return. As a result, these Funds may be more susceptible to positive or negative economic, political, and regulatory developments in a particular market sector of the market and may experience the effect of this increased volatility on the Fund's net asset value and a magnified effect on the Fund's total return.
Governments of some developing countries exercise substantial influence over many aspects of the private sector. In some countries, the government owns or controls many companies, including the largest companies in the country. As such, government actions in the future could have a significant effect on the economic conditions in developing countries in these regions, which could affect private sector companies, the Fund and the value of its securities. Furthermore, certain developing countries are among the largest debtors to commercial banks and foreign governments. Trading in debt obligations issued or guaranteed by such governments or their agencies and instrumentalities involves a high degree of risk.
76 TURNER FUNDS 2013 ANNUAL REPORT
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.
10. Fund Merger:
On January 18, 2013, the Large Growth Fund acquired all of the net assets of the Turner Concentrated Growth Fund ("Concentrated Growth Fund"), an open-end investment company, pursuant to a Plan of Reorganization approved by the Concentrated Growth Fund shareholders on January 9, 2013. 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 1,216,063 Investor Class shares of the Large Growth Fund, valued at $15,614 (000), for the 2,025,116 Investor Class shares of the Concentrated Growth Fund outstanding on January 18, 2013. The exchange ratio (Large Growth Fund shares issued/Concentrated Growth Fund shares outstanding) was 0.60:1 for the Investor Class.
The investment portfolio of the Concentrated Growth Fund, with a fair value of $16,717 (000) and identified cost of $15,344 (000) at January 18, 2013, 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 Concentrated 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 January 18, 2013, the net assets of the Concentrated Growth Fund, which included portfolio capital of $35,249 (000), accumulated net investment loss of $87 (000), accumulated realized losses of $20,921 (000) and unrealized gains of $1,373 (000), combined with the Large Growth Fund were $225,958 (000). The undistributed net investment income and unrealized gains of the Concentrated Growth Fund may be distributed by the Large Growth Fund in future periods. Immediately prior to the merger, the net assets of the Concentrated Growth Fund and the Large Growth Fund were $15,614 (000) and $210,344 (000), respectively. All fees and expenses incurred by the Concentrated 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, 2012, 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, 2013, are as follows (000):
Net investment income/(loss): | $ | 1,012 | |||||
Net realized/unrealized gains/(losses): | 14,238 | ||||||
Change in net assets resulting from operations: | $ | 15,250 | |||||
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 Concentrated Growth Fund that have been included in the Large Growth Fund's Statement of operations since January 18, 2013.
11. Subsequent Events:
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, no additional disclosures and/or adjustments were required to the financial statements as of September 30, 2013.
TURNER FUNDS 2013 ANNUAL REPORT 77
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 Funds, comprising the Turner Market Neutral Fund, Turner Medical Sciences Long/Short Fund, Turner Spectrum Fund, Turner Titan Fund, Turner All Cap Growth Fund, Turner Emerging Growth Fund, Turner Large Growth Fund, Turner Midcap Growth Fund, Turner Small Cap Growth Fund, and Turner Emerging Markets Fund (collectively, the Funds), as of September 30, 2013, 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 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, 2013, by correspondence with the custodian and brokers or 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 comprising the Turner Funds referred to above as of September 30, 2013, the results of their operations for the year or period then ended, the changes in their net assets for each of the years or periods in the two-year period then ended, and the financial highlights for each of the years or periods in the five-year period then ended, in conformity with U.S. generally accepted accounting principles.
Philadelphia, Pennsylvania
November 22, 2013
78 TURNER FUNDS 2013 ANNUAL REPORT
NOTICE TO SHAREHOLDERS (Unaudited)
For shareholders that do not have a September 30, 2013 tax year end, this notice is for informational purposes only. For shareholders with a September 30, 2013 year end, please consult your tax advisor as to the pertinence of this notice. For the fiscal period ended September 30, 2013, each portfolio is designating the following items with regard to distributions paid during the year.
| Dividends qualifying for corporate dividends receivable deduction(1) | Qualifying dividend income(2) | Short-term capital gain(3) | Long-term capital gain(4) | ||||||||||||||||
Titan Fund | 33.12 | % | 23.69 | % | $ | 367 | $ | — | |||||||||||
Emerging Growth Fund | 0.00 | % | 0.00 | % | — | 32,864 | |||||||||||||
Large Growth Fund | 100.00 | % | 100.00 | % | — | — | |||||||||||||
Midcap Growth Fund | 22.45 | % | 23.99 | % | 739 | 7,407 | |||||||||||||
Small Cap Growth Fund | 0.00 | % | 0.00 | % | — | 15,983 | |||||||||||||
(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" and is reflected as a percentage of "Ordinary Income Distributions" which may be subject to a maximum tax rate of 23.8% (includes 3.8% Medicare tax) for individual taxpayers.
(3) The amount in this column (000) represents the amount of "Short-Term Capital Gain" as designated in accordance with Section 871(k)(2) and 881(e) of the Internal Revenue Code. This designation is not applicable to U.S. citizens or U.S. resident shareholders.
(4) The amount in this column (000) represents the amount of Long-Term Capital Gain" as designated by each applicable fund.
The information reported herein may differ from the information and distributions taxable to the Shareholders for the calendar year ending December 31, 2013. Complete information will be computed and reported in conjunction with your 2013 Form 1099-DIV.
TURNER FUNDS 2013 ANNUAL REPORT 79
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 4/1/13 | Ending Account Value 9/30/13 | Annualized Expense Ratios | Expenses Paid During Period* | ||||||||||||||||
Turner Market Neutral Fund — Institutional Class Shares | |||||||||||||||||||
Actual Fund Return | $ | 1,000.00 | $ | 1,081.60 | 1.96 | % | $ | 10.23 | |||||||||||
| Hypothetical 5% Return | 1,000.00 | 1,015.24 | 1.96 | 9.90 | |||||||||||||||
Turner Market Neutral Fund — Investor Class Shares | |||||||||||||||||||
Actual Fund Return | 1,000.00 | 1,079.90 | 2.21 | 11.52 | |||||||||||||||
| Hypothetical 5% Return | 1,000.00 | 1,013.99 | 2.21 | 11.16 | |||||||||||||||
Turner Market Neutral Fund — Class C Shares | |||||||||||||||||||
Actual Fund Return | 1,000.00 | 1,076.80 | 2.95 | 15.36 | |||||||||||||||
| Hypothetical 5% Return | 1,000.00 | 1,010.28 | 2.95 | 14.87 | |||||||||||||||
| Turner Medical Sciences Long/Short Fund — Institutional Class Shares | |||||||||||||||||||
Actual Fund Return | 1,000.00 | 1,107.50 | 2.02 | 10.67 | |||||||||||||||
| Hypothetical 5% Return | 1,000.00 | 1,014.94 | 2.02 | 10.20 | |||||||||||||||
Turner Medical Sciences Long/Short Fund — Investor Class Shares | |||||||||||||||||||
Actual Fund Return | 1,000.00 | 1,106.00 | 2.29 | 12.09 | |||||||||||||||
| Hypothetical 5% Return | 1,000.00 | 1,013.59 | 2.29 | 11.56 | |||||||||||||||
| Beginning Account Value 4/1/13 | Ending Account Value 9/30/13 | Annualized Expense Ratios | Expenses Paid During Period* | ||||||||||||||||
Turner Medical Sciences Long/Short Fund — Class C Shares | |||||||||||||||||||
Actual Fund Return | $ | 1,000.00 | $ | 1,101.80 | 3.02 | % | $ | 15.91 | |||||||||||
| Hypothetical 5% Return | 1,000.00 | 1,009.93 | 3.02 | 15.22 | |||||||||||||||
Turner Spectrum Fund — Institutional Class Shares | |||||||||||||||||||
Actual Fund Return | 1,000.00 | 1,027.00 | 1.98 | 10.06 | |||||||||||||||
| Hypothetical 5% Return | 1,000.00 | 1,015.14 | 1.98 | 10.00 | |||||||||||||||
Turner Spectrum Fund — Investor Class Shares | |||||||||||||||||||
Actual Fund Return | 1,000.00 | 1,025.40 | 2.25 | 11.42 | |||||||||||||||
| Hypothetical 5% Return | 1,000.00 | 1,013.79 | 2.25 | 11.36 | |||||||||||||||
Turner Spectrum Fund — Class C Shares | |||||||||||||||||||
Actual Fund Return | 1,000.00 | 1,021.40 | 2.98 | 15.10 | |||||||||||||||
| Hypothetical 5% Return | 1,000.00 | 1,010.13 | 2.98 | 15.02 | |||||||||||||||
Turner Titan Fund — Institutional Class Shares | |||||||||||||||||||
Actual Fund Return | 1,000.00 | 1,050.00 | 1.97 | 10.12 | |||||||||||||||
| Hypothetical 5% Return | 1,000.00 | 1,015.19 | 1.97 | 9.95 | |||||||||||||||
80 TURNER FUNDS 2013 ANNUAL REPORT
(Unaudited)
| Beginning Account Value 4/1/13 | Ending Account Value 9/30/13 | Annualized Expense Ratios | Expenses Paid During Period* | ||||||||||||||||
Turner Titan Fund — Investor Class Shares | |||||||||||||||||||
Actual Fund Return | $ | 1,000.00 | $ | 1,048.20 | 2.31 | % | $ | 11.86 | |||||||||||
| Hypothetical 5% Return | 1,000.00 | 1,013.49 | 2.31 | 11.66 | |||||||||||||||
Turner Titan Fund — Class C Shares | |||||||||||||||||||
Actual Fund Return | 1,000.00 | 1,041.80 | 3.05 | 15.61 | |||||||||||||||
| Hypothetical 5% Return | 1,000.00 | 1,009.78 | 3.05 | 15.37 | |||||||||||||||
Turner All Cap Growth Fund — Investor Class Shares | |||||||||||||||||||
Actual Fund Return | 1,000.00 | 1,157.00 | 0.84 | 4.54 | |||||||||||||||
| Hypothetical 5% Return | 1,000.00 | 1,020.86 | 0.84 | 4.26 | |||||||||||||||
Turner Emerging Growth Fund — Institutional Class Shares | |||||||||||||||||||
Actual Fund Return | 1,000.00 | 1,219.60 | 1.15 | 6.40 | |||||||||||||||
| 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 | 1,218.20 | 1.40 | 7.78 | |||||||||||||||
| 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 | 1,118.10 | 0.69 | 3.66 | |||||||||||||||
| 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 | 1,115.80 | 0.94 | 4.99 | |||||||||||||||
| Hypothetical 5% Return | 1,000.00 | 1,020.36 | 0.94 | 4.76 | |||||||||||||||
| Beginning Account Value 4/1/13 | Ending Account Value 9/30/13 | Annualized Expense Ratios | Expenses Paid During Period* | ||||||||||||||||
Turner Midcap Growth Fund — Institutional Class Shares | |||||||||||||||||||
Actual Fund Return | $ | 1,000.00 | $ | 1,150.50 | 0.93 | % | $ | 5.01 | |||||||||||
| 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 | 1,148.80 | 1.18 | 6.36 | |||||||||||||||
| 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 | 1,147.20 | 1.43 | 7.70 | |||||||||||||||
| 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 | 1,186.00 | 1.25 | 6.85 | |||||||||||||||
| Hypothetical 5% Return | 1,000.00 | 1,018.80 | 1.25 | 6.33 | |||||||||||||||
Turner Emerging Markets Fund — Institutional Class Shares | |||||||||||||||||||
Actual Fund Return** | 1,000.00 | 1,078.00 | 1.02 | 1.05 | |||||||||||||||
| Hypothetical 5% Return | 1,000.00 | 1,019.80 | 5.32 | 1.05 | |||||||||||||||
Turner Emerging Markets Fund — Investor Class Shares | |||||||||||||||||||
Actual Fund Return** | 1,000.00 | 1,078.00 | 1.26 | 1.30 | |||||||||||||||
| Hypothetical 5% Return | 1,000.00 | 1,018.55 | 6.58 | 1.30 | |||||||||||||||
* 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 4/1/13 — 9/30/13).
** Expenses are equal to the Fund's annualized expense ratio multiplied by the average account value over the period, multiplied by 34/365 (to reflect the period from inception to date, 8/28/13 — 9/30/13).
TURNER FUNDS 2013 ANNUAL REPORT 81
TRUSTEES AND OFFICERS OF THE TRUST
Name, address and age(1) | Position held with | Principal occupation(s) | Number of | Other | |||||||||||||||
Interested Trustee* | |||||||||||||||||||
Thomas R. Trala, Jr. | Trustee (since 2010); President (since 2004) | Executive Managing Director (since 2010) and Chief Operating Officer (since 2004), Turner. | 10 | None | |||||||||||||||
* Mr. Trala is deemed to be an "Interested Trustee" by virtue of his relationship with Turner. | |||||||||||||||||||
Non-Interested Trustees | |||||||||||||||||||
Alfred C. Salvato | Chairman of the Board (since 2004); Trustee (since 1996) | Chief Investment Officer (since 2003) and Treasurer (since 1995), Thomas Jefferson University. | 10 | None | |||||||||||||||
Janet F. Sansone | Trustee (since 1996) | Chief Management Officer, United States Government Printing Office (2008-2010); Self-employed Consultant (since 1999). | 10 | None | |||||||||||||||
John T. Wholihan | Trustee (since 1996) | Dean Emeritus (since 2007), Professor (since 1984) and Dean (1984-2007), College of Business Administration, Loyola Marymount University. | 10 | None | |||||||||||||||
Executive Officers | |||||||||||||||||||
Ty S. Edwards | 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 | 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 | Turner Funds plc (since 2008). | |||||||||||||||
Jennifer L. Page | Vice-President and Assistant Secretary (since 2011) | Director – Fund Administration and Compliance (since 2011), Director – Fund Administration – Offshore & Alternatives (2011), Turner; Senior Project Manager, AC Lordi Consulting (2010-2011); Senior Manager – Internal Audit (2006-2010), Senior Compliance Manager (2004-2006), Senior Risk Manager (2001-2006), Senior Fund Accounting Manager (1996-2001), Vanguard. | 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.
Trustee and Officer information is as of September 30, 2013.
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.
82 TURNER FUNDS 2013 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.
Chief Operating & Financial Officer
Executive Managing Director
Turner Investments, L.P.
Dr. John T. Wholihan
Professor (Retired), Dean Emeritus, College of Business
Loyola Marymount University
Investment adviser
Turner Investments, L.P.
Berwyn, Pennsylvania
Distributor
Foreside Fund Services, LLC
Portland, Maine
Administrator
Turner Investments, L.P.
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 Web site 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 Investments, L.P. Turner Investments, L.P. 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' Web site, www.turnerinvestments.com; (ii) on the Commission's Web site at http://www.sec.gov; and (iii) without charge by calling 1.800.224.6312.
TURNER FUNDS 2013 ANNUAL REPORT 83
THIS PAGE WAS INTENTIONALLY LEFT BLANK
84 TURNER FUNDS 2013 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-002-0310
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:
|
| 2013 |
| 2012 |
| ||||||||||
|
| All fees and |
| All fees and |
| All other fees |
| All fees and |
| All fees and |
| All other fees |
| ||
(a) Audit Fees (1) |
| $ | 240,000 |
| N/A |
| N/A |
| $ | 255,000 |
| N/A |
| N/A |
|
(b) Audit-Related Fees (2) |
| $ | 12,500 |
| N/A |
| N/A |
| $ | 20,550 |
| N/A |
| N/A |
|
(c) Tax Fees (3) |
| $ | 113,704 |
| N/A |
| N/A |
| $ | 120,328 |
| N/A |
| N/A |
|
(d) All Other Fees |
| 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) | Audit-Related Fees relate to consents issued in connection with review of registration statements. |
(3) | 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 |
(e)(1) The Audit Committee has delegated pre-approval of non-audit services to the Chairman of the Audit Committee, subject to ratification by the Audit Committee.
(e)(2) Percentage of fees billed applicable to non-audit services pursuant to waiver of pre-approval requirement were as follows:
|
| 2013 |
| 2012 |
|
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 $113,704 and $120,328 for 2013 and 2012, 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) Registrant’s Code of Ethics for Principal Executive and Senior Financial Officers is incorporated herein by reference to Exhibit 12(a)(1) of the registrant’s Form N-CSR filed on December 7, 2012, which is the most current document.
(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 (Principal Executive Officer) |
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Date | January 9, 2014 |
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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.
By (Signature and Title) | /s/ Thomas R. Trala, Jr. |
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| Thomas R. Trala, Jr., President (Principal Executive Officer) |
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Date | January 9, 2014 |
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By (Signature and Title) | /s/ Ty Edwards |
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| Ty Edwards, Controller and Chief Financial Officer (Principal Financial Officer) |
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Date | January 9, 2014 |
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