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 |
|
Turner Funds |
(Exact name of registrant as specified in charter) |
|
1000 Chesterbrook Boulevard, 1st Floor Berwyn, PA | | 19312 |
(Address of principal executive offices) | | (Zip code) |
|
James C. Munsell Sidley Austin LLP 787 Seventh Avenue New York, NY 10019 |
(Name and address of agent for service) |
|
Registrant’s telephone number, including area code: | 1-800-224-6312 | |
|
Date of fiscal year end: | September 30 | |
|
Date of reporting period: | September 30, 2016 | |
| | | | | | | | |
Item 1. Reports to Stockholders.
Long/short equity funds
Turner Medical Sciences Long/Short Fund
Turner Titan Long/Short Fund
U.S. growth equity funds
Turner SMID Cap Growth Opportunities Fund
Turner Midcap Growth Fund
Turner Small Cap Growth Fund
Contents
| | 2 | | | Letter to shareholders | |
| | 4 | | | Investment review: | |
| | Turner Medical Sciences Long/Short Fund | |
| 5
| | | Investment review:
Turner Titan Long/Short Fund | |
| 6
| | | Investment review:
Turner SMID Cap Growth Opportunities Fund | |
| 7
| | | Investment review:
Turner Midcap Growth Fund | |
| 8
| | | Investment review:
Turner Small Cap Growth Fund | |
| | 9 | | | Schedules of investments | |
| | 22 | | | Financial statements | |
| | 34 | | | Notes to financial statements | |
| 42
| | | Report of independent registered public
accounting firm | |
| | 43 | | | Notice to shareholders | |
| | 44 | | | Disclosure of fund expenses | |
| | 45 | | | Trustees and officers of the Trust | |
Turner Funds
As of September 30, 2016, the Turner Funds offered a series of five 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 Medical Sciences Long/Short Fund and the Turner Titan Long/Short 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 LLC, based in Berwyn, Pennsylvania, serves as the investment adviser for the Turner Funds. Turner Investments LLC, founded in 1990, manages more than $325 million in equity investments as of September 30, 2016.
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 2016 ANNUAL REPORT 1
LETTER TO SHAREHOLDERS (Unaudited)
To our shareholders
The past year has been especially difficult and disappointing for active investment managers on two fronts and we will discuss the changes we are making later in this letter. First, the quantitative easing and negative to zero interest rates implemented by the Federal Reserve, European Central Bank (ECB) and Bank of Japan (BOJ) have accomplished the intended consequence of pushing investors out on the risk and valuation spectrum. With each institution spending $80 Billion per month to purchase government bonds, corporate bonds and in some cases equities, most asset classes have appreciated in price with disregard to valuation and quality. Second, the backdrop of excess liquidity to combat aging demographics and slowing economies has triggered the largest migration of assets from traditional active managers to passive mutual funds and exchange traded funds.
We fully anticipate market volatility and swings in sentiment and expectations to continue to create opportunities for disciplined investors. The 35 year decline in long term interest rates, from 15% in 1981 to 1.36% early in the third quarter is likely nearing its end. Since 2009, the coordinated efforts of central banks have supported global equity and fixed income markets and led to an extended period of low volatility. Investors weighed slowing earnings growth, increasing budget deficits and future interest rate hikes throughout 2015.
The multi-year bull market was greeted in early 2016 with renewed fears about China's economy and uncertainty about global growth and geopolitics. As a result, the price of a barrel of oil dropped under $30 for the first time since 2003, Puerto Rico's economy teetered on the verge of collapse and the Japanese 10 year bond traded with a negative interest rate for the first time ever. As fear grew, the Federal Reserve reevaluated its intentions to raise short-term interest rates multiple times in 2016 and the Bank of Japan lowered its interest rates in response to slowing growth expectations.
Fears of a global recession drove the Russell 2000 Index of small company stocks down 25.7% from its June 2015 high, the worst move since 2011.
Equities steadily recovered during the second quarter driven by a stabilization in the expectations of economic growth and corporate earnings. In late June, the U.K.'s historic vote to leave the European Union surprised the
markets and brought a rapid and painful response from worldwide bourses. Post Brexit, the markets readjusted expectations to factor in slower growth and a Central Bank "lower for longer" mantra. The German 10 year Bund dropped below 0.0% for the first time ever and total government security debt with a negative yield surpassed $10 trillion worldwide. The Fed Funds Futures started to price in a 23% chance of a rate CUT by September, and the United States 10 year dropped to its lowest yield since 1953.
Within two weeks of the Brexit vote, the U.S. dollar rallied, European markets arrested their decline and all three major US stock market averages closed at record highs for the first time since 1999. Expectations completely shifted from deflation avoidance to inflation stoking putting into question the credibility and long-term consequences of the negative interest rate experiment.
Turner Investments is committed to active management and is proactively enhancing our investment processes, portfolio construction and risk management controls through additional investment professionals and technology. We made several recent announcements regarding the merger with Veracen LP, which enhances our technology and investment management teams and announcement of Dr. Stefania Perrucci, PhD, to manage our global credit strategies. Recently, we filed a proxy, adding a new slate of independent trustees for the Turner Funds and appreciate the valued service of our former trustees. In addition, we announced a reduction in our fee schedules which should take effect the end of the year and plan the introduction of many new global credit and equity products.
Our continued focus will be on a disciplined investment process with an emphasis on momentum, value, quality, profitability, sentiment, and management with the goal of creating more predictable outcomes and attractive risk-adjusted returns for client investors. Risk management will be thoughtfully applied to protect portfolios and generate returns. With our enhanced investment process and technology, we plan on taking a leading role in redefining active management and offering clients the types of products they need to achieve their investment goals in an ever-changing world.
2 TURNER FUNDS 2016 ANNUAL REPORT
We sincerely appreciate your support and look forward to sharing with you our developments over the coming months and years.
Sincerely,
Bob Turner
Chairman, Chief Investment Officer and Chief Executive Officer
Turner Investments
President and Trustee
Turner Funds
Past performance is no guarantee of future results. The views expressed are those of Turner Investments as of September 30, 2016, and are not intended as a forecast or investment recommendations. The indexes mentioned are not available for investment.
TURNER FUNDS 2016 ANNUAL REPORT 3
INVESTMENT REVIEW (Unaudited)
Turner Medical Sciences Long/Short Fund
Fund profile
September 30, 2016
n Ticker symbol TMSFX
Investor Class Shares
n CUSIP #900297557
Investor Class Shares
n Top five holdings1
(1) GlaxoSmithKline ADR
(2) Merck
(3) Pfizer
(4) Aratana Therapeutics
(5) Abbott Laboratories
n % in five largest holdings 22.9%1,2
n Number of holdings 771
n Net assets $27.15 million, Investor Class Shares
Growth of a $10,000 investment in the
Investor Class Shares:
February 7, 2011-September 30, 20163,4
| Average annual total returns (Periods ended September 30, 2016)3 | | One
year | | Three
years | | Five
years | | Since
inception4 | |
Institutional Class Shares5 | | | -8.19 | % | | | 7.17 | % | | | 6.54 | % | | | 6.41 | % | |
Investor Class Shares5 | | | -8.43 | % | | | 6.91 | % | | | 6.29 | % | | | 6.18 | % | |
Class C Shares5 | | | -9.13 | % | | | 6.09 | % | | | 5.47 | % | | | 5.38 | % | |
S&P 500 Health Care Index6 | | | 10.71 | % | | | 14.36 | % | | | 20.02 | % | | | 17.54 | % | |
Bloomberg Barclays U.S. Aggregate Bond Index7 | | | 5.19 | % | | | 4.03 | % | | | 3.08 | % | | | 4.62 | % | |
Lipper Long/Short Equity Funds Average8 | | | 2.60 | % | | | 2.54 | % | | | 6.00 | % | | | 3.67 | % | |
Expense Ratio† | | Gross expense ratio | | Net expense ratio†† | |
Institutional Class Shares | | | 3.40 | % | | | 3.21 | % | |
Investor Class Shares | | | 3.65 | % | | | 3.46 | % | |
Class C Shares | | | 4.40 | % | | | 4.21 | % | |
Sector weightings2:
For the 12-month period ended September 30, 2016, the Turner Medical Sciences Long/Short Fund generated a negative return. During the reporting period, the Fund underperformed the S&P 500 Health Care Index, Bloomberg Barclays U.S. Aggregate Bond Index and the Lipper Long/Short Equity Funds Average. The Fund focuses on investment opportunities within the health care sector using a long/short growth strategy to capture alpha, reduce volatility, and preserve capital in declining markets.
Over this reporting period, top contributors to the Fund were long and short positions within the specialty Pharma and Biotechnology industries. Over the same period, detractors to performance were long and short positions that also came from the specialty pharma and biotechnology industry groups.
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 Bloomberg Barclays 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.
† 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, 2017.
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. The 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.
4 TURNER FUNDS 2016 ANNUAL REPORT
INVESTMENT REVIEW (Unaudited)
Turner Titan Long/Short Fund
Fund profile
September 30, 2016
n Ticker symbol TSPEX
Institutional Class Shares
n CUSIP #900297664
Institutional Class Shares
n Top five holdings1
(1) Kinross Gold
(2) AngloGold Ashanti ADR
(3) Summit Materials, Cl A
(4) Antero Resources
(5) Achillion Pharmaceuticals
n % in five largest holdings 23.1%1,2
n Number of holdings 761
n Net assets $21.20 million, Institutional Class Shares
Growth of a $100,000 investment in the
Institutional Class Shares:
May 7, 2009-September 30, 20163,4
| Average annual total returns (Periods ended September 30, 2016)3 | | One
year | | Three
years | | Five
years | | Since
inception | |
Institutional Class Shares5 | | | -1.58 | % | | | 1.67 | % | | | 1.82 | % | | | 3.19 | %4 | |
Investor Class Shares5 | | | -1.84 | % | | | 1.39 | % | | | 1.55 | % | | | 2.92 | %4 | |
Class C Shares5 | | | -2.55 | % | | | 0.66 | % | | | 0.82 | % | | | 2.32 | %6 | |
S&P 500 Index7 | | | 15.43 | % | | | 11.16 | % | | | 16.37 | % | | | 14.91 | %4 | |
Bloomberg Barclays U.S. Aggregate Bond Index8 | | | 5.19 | % | | | 4.03 | % | | | 3.08 | % | | | 4.57 | %4 | |
Lipper Long/Short Equity Funds Average9 | | | 2.60 | % | | | 2.54 | % | | | 6.00 | % | | | 6.24 | %4 | |
Expense Ratio† | | Gross expense ratio | | Net expense ratio†† | |
Institutional Class Shares | | | 3.39 | % | | | 3.07 | % | |
Investor Class Shares | | | 3.64 | % | | | 3.32 | % | |
Class C Shares | | | 4.39 | % | | | 4.07 | % | |
Sector weightings2:
For the 12-month period ended September 30, 2016, the Turner Titan Long/Short Fund generated a negative absolute return. The Fund trailed the S&P 500 Index as well as the Lipper Long/Short Equity Fund Average and Bloomberg Barclays U.S. Aggregate Bond Index. The Turner Titan Long/Short 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, most sectors contributed to performance. The top contributors to performance were Consumer discretionary, Energy, Consumer staples and Materials. Producer durables was a detractor, but the primary negative attribution was attributable to broad based market shorts for the 12-month period ended September 30, 2016.
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 Long/Short 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 Titan Long/Short 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 Bloomberg Barclays 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.
† 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, 2017.
The Turner Titan Long/Short 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 fund is also subject to taxable income and realized capital gains. Shareholder redemptions may force the fund to sell securities at an inappropriate time, also resulting in realized gains.
TURNER FUNDS 2016 ANNUAL REPORT 5
INVESTMENT REVIEW (Unaudited)
Turner SMID Cap Growth Opportunities Fund
Fund profile
September 30, 2016
n Ticker symbol TMCGX
Investor Class Shares
n CUSIP #872524301
Investor Class Shares
n Top five holdings1
(1) Hill-Rom Holdings
(2) PRA Health Sciences
(3) Ellie Mae
(4) Coherent, Inc.
(5) NuVasive
n % in five largest holdings 15.9%1,2
n Number of holdings 441
n Net assets $41.00 million, Investor Class Shares
Growth of a $10,000 investment in the
Investor Class Shares:
September 30, 2006-September 30, 20163,4
| Average annual total returns (Periods ended September 30, 2016)3 | | One
year | | Three
years | | Five
years | | Ten
years | | Since
inception6 | |
Institutional Class Shares5 | | | -4.63 | % | | | 0.51 | % | | | 11.19 | % | | | — | | | | 14.04 | %6 | |
Investor Class Shares5 | | | -4.86 | % | | | 0.26 | % | | | 10.92 | % | | | 6.03 | % | | | 15.60 | %4 | |
Russell 2000® Growth Index7 | | | 12.12 | % | | | 6.58 | % | | | 16.15 | % | | | 8.29 | % | | | 5.50 | %4 | |
Expense Ratio† | | Gross expense ratio | | Net expense ratio†† | |
Institutional Class Shares | | | 1.59 | % | | | 1.15 | % | |
Investor Class Shares | | | 1.84 | % | | | 1.40 | % | |
Sector weightings2:
For the 12-month period ended September 30, 2016, the Turner SMID Cap Opportunities Fund underperformed its benchmark, the Russell 2000® Growth Index.
The strongest returning sectors were Health care and Energy with those sectors outperforming their corresponding index sectors. The Consumer discretionary and Materials sectors were drags on the portfolio on relative and absolute 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. Performance of the Institutional and Investor Class Shares will differ due to differences in fees.
4 The inception date of the Turner SMID Cap Growth Opportunistic 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 SMID Cap Growth Opportunistic 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.
† 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, 2017.
Amounts designated as "—" are not applicable.
The Turner SMID Cap Growth Opportunistic 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. The fund is subject to risks due to its foreign investments. The 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.
6 TURNER FUNDS 2016 ANNUAL REPORT
INVESTMENT REVIEW (Unaudited)
Turner Midcap Growth Fund
Fund profile
September 30, 2016
n Ticker symbol TMGFX
Investor Class Shares
n CUSIP #900297409
Investor Class Shares
n Top five holdings1
(1) Cavium
(2) NXP Semiconductors
(3) CBS, Cl B
(4) Lam Research
(5) Monolithic Power Systems
n % in five largest holdings 15.8%1,2
n Number of holdings 401
n Net assets $96.13 million, Investor Class Shares
Growth of a $10,000 investment in the
Investor Class Shares:
September 30, 2006-September 30, 20163,4
| Average annual total returns (Periods ended September 30, 2016)3 | | One
year | | Three
years | | Five
years | | Ten
years | | Since
inception | |
Institutional Class Shares5 | | | 0.22 | % | | | 2.37 | % | | | 9.25 | % | | | — | | | | 3.83 | %6 | |
Investor Class Shares5 | | | -0.04 | % | | | 2.11 | % | | | 8.98 | % | | | 5.31 | % | | | 9.17 | %4 | |
Retirement Class Shares5 | | | -0.35 | % | | | 1.85 | % | | | 8.72 | % | | | 5.05 | % | | | 6.43 | %7 | |
Russell Midcap® Growth Index8 | | | 11.24 | % | | | 8.90 | % | | | 15.85 | % | | | 8.51 | % | | | 8.38 | %4 | |
Expense Ratio† | | Gross expense ratio | | Net expense ratio†† | |
Institutional Class Shares | | | 1.33 | % | | | 0.93 | % | |
Investor Class Shares | | | 1.58 | % | | | 1.18 | % | |
Retirement Class Shares | | | 1.83 | % | | | 1.43 | % | |
Sector weightings2:
For the 12-month period ended September 30, 2016, the Turner Midcap Growth Fund trailed the return of its benchmark, the Russell Midcap® Growth Index. The Consumer discretionary and Financial services sectors provided the greatest contribution to the fund's performance. In Consumer discretionary, solid stock performance in social media/advertising as well as select retail oriented names led to outperformance relative to the benchmark. Interest sensitive names such as banks and data processing companies performed well in the Financial services sector as Brexit fears weighed heavily on banks and money centers outside of the US.
The main detractors from performance were in the Health care and Technology sectors. Within these sectors, specialty Pharmaceuticals and Biotechnology had the greatest negative impact to returns as concerns around higher drug pricing came into focus during the political campaign season and weighed heavily on these industries. In Technology, results in the software as a service and telecom industries were the worst performers.
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.
† 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, 2017.
Amounts designated as "—" are not applicable.
The Turner Midcap Growth Fund may buy and sell securities frequently as part of its investment strategy. The medium capitalization companies in which the fund invests may be more vulnerable to adverse business or economic events than larger, more established companies. The fund is subject to risks due to its foreign investments. The fund is also subject to taxable income and realized capital gains. Shareholder redemptions may force the fund to sell securities at an inappropriate time, also resulting in realized gains.
TURNER FUNDS 2016 ANNUAL REPORT 7
INVESTMENT REVIEW (Unaudited)
Turner Small Cap Growth Fund
Fund profile
September 30, 2016
n Ticker symbol TSCEX
n CUSIP #900297300
Investor Class Shares
n Top five holdings1
(1) Digimarc
(2) Remark Media, Inc.
(3) Senomyx
(4) Coherent, Inc.
(5) Electronics for Imaging
n % in five largest holdings 17.8%1,2
n Number of holdings 461
n Net assets $36.33 million
Growth of a $10,000 investment in the
Investor Class Shares:
September 30, 2006-September 30, 20163
| Average annual total returns (Periods ended September 30, 2016)3 | | One
year | | Three
years | | Five
years | | Ten
years | | Since
inception3 | |
Investor Class Shares4 | | | 6.47 | % | | | 4.64 | % | | | 14.65 | % | | | 7.73 | % | | | 10.92 | % | |
Russell 2000® Growth Index5 | | | 12.12 | % | | | 6.58 | % | | | 16.15 | % | | | 8.29 | % | | | 7.02 | % | |
Expense Ratio† | | Gross expense ratio | | Net expense ratio†† | |
Investor Class Shares | | | 1.83 | % | | | 1.25 | % | |
Sector weightings2:
For the 12-month period ended September 30, 2016, the Turner Small Cap Growth Fund underperformed its benchmark, the Russell 2000® Growth Index.
The strongest returning sectors were Health care, Financials, and Energy with those sectors outperforming their corresponding index sectors. The Producer durables and Materials sectors were drags on the portfolio on relative and absolute 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 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.
† 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, 2017.
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. The fund is subject to risks due to its foreign investments. The 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.
8 TURNER FUNDS 2016 ANNUAL REPORT
Turner Medical Sciences Long/Short Fund
September 30, 2016
| | | Shares | | Value
(000) | |
Common stock—98.8% | |
Biotechnology—40.9% | |
Achillion Pharmaceuticals*^ | | | 171,540 | | | $ | 1,389 | | |
Alexion Pharmaceuticals*^ | | | 7,700 | | | | 944 | | |
Alnylam Pharmaceuticals*^ | | | 6,760 | | | | 458 | | |
BioMarin Pharmaceuticals*^ | | | 6,270 | | | | 580 | | |
Cidara Therapeutics*^ | | | 27,451 | | | | 314 | | |
Coherus Biosciences*^ | | | 48,310 | | | | 1,294 | | |
Exact Sciences*^ | | | 58,890 | | | | 1,094 | | |
Heron Therapeutics*^ | | | 45,390 | | | | 782 | | |
Ionis Pharmaceuticals*^ | | | 41,140 | | | | 1,507 | | |
Juno Therapeutics*^ | | | 26,670 | | | | 800 | | |
Kite Pharma*^ | | | 13,730 | | | | 767 | | |
Momenta Pharmaceuticals*^ | | | 77,287 | | | | 903 | | |
Myriad Genetics*^ | | | 24,040 | | | | 495 | | |
Oncomed Pharmaceuticals*^ | | | 52,160 | | | | 596 | | |
Progenics Pharmaceuticals*^ | | | 177,206 | | | | 1,122 | | |
Prothena*^ | | | 17,370 | | | | 1,042 | | |
Raptor Pharmaceuticals*^ | | | 54,040 | | | | 485 | | |
Retrophin*^ | | | 50,984 | | | | 1,141 | | |
Tesaro*^ | | | 10,080 | | | | 1,010 | | |
Trevena*^ | | | 136,300 | | | | 920 | | |
Vascular Biogenics* | | | 202,690 | | | | 1,058 | | |
Total Biotechnology | | | | | 18,701 | | |
Health care equipment & supplies—18.6% | |
Abbott Laboratories^ | | | 40,840 | | | | 1,727 | | |
Boston Scientific*^ | | | 50,960 | | | | 1,213 | | |
Cerus* | | | 38,530 | | | | 239 | | |
ConMed^ | | | 16,428 | | | | 658 | | |
Edwards Lifesciences*^ | | | 12,630 | | | | 1,523 | | |
Intuitive Surgical*^ | | | 2,290 | | | | 1,660 | | |
Invivo Therapeutics Holdings*^ | | | 100,000 | | | | 680 | | |
St. Jude Medical^ | | | 10,370 | | | | 827 | | |
Total Health care equipment & supplies | | | | | 8,527 | | |
Health care providers & services—2.7% | |
BioTelemetry* | | | 33,708 | | | | 626 | | |
Community Health Systems* | | | 52,420 | | | | 605 | | |
Total Health care providers & services | | | | | 1,231 | | |
Life sciences tools & services—1.8% | |
Waters*^ | | | 5,190 | | | | 823 | | |
Total Life sciences tools & services | | | | | 823 | | |
| | | Shares | | Value
(000) | |
Pharmaceuticals—34.8% | |
Aratana Therapeutics*^ | | | 204,160 | | | $ | 1,911 | | |
Bristol-Myers Squibb^ | | | 8,760 | | | | 472 | | |
Cardiome Pharma*^ | | | 150,000 | | | | 471 | | |
Flamel Technologies ADR*^ | | | 68,058 | | | | 844 | | |
GlaxoSmithKline ADR^ | | | 53,740 | | | | 2,317 | | |
Horizon Pharma*^ | | | 19,340 | | | | 351 | | |
Mallinckrodt*^ | | | 16,550 | | | | 1,155 | | |
Merck^ | | | 36,830 | | | | 2,299 | | |
Ocera Therapeutics*^ | | | 134,419 | | | | 356 | | |
Paratek Pharmaceuticals*^ | | | 74,760 | | | | 973 | | |
Pfizer^ | | | 66,600 | | | | 2,256 | | |
SteadyMed (a)*^ | | | 242,500 | | | | 868 | | |
Teligent*^ | | | 132,116 | | | | 1,004 | | |
Teva Pharmaceutical Industries ADR | | | 14,800 | | | | 681 | | |
Total Pharmaceuticals | | | | | 15,958 | | |
Total Common stock
(Cost $38,512)** | | | | | 45,240 | | |
Warrant—0.0% | |
Biotechnology—0.0% | |
NephroGenex (a) | | | 65,000 | | | | — | | |
Total Biotechnology | | | | | — | | |
Total Warrant
(Cost $—) | | | | | — | | |
Cash equivalent—1.4% | |
BlackRock Liquidity Funds
TempCash Portfolio,
Dollar Shares, 0.302%‡ | | | 624,702 | | | | 625 | | |
Total Cash equivalent
(Cost $625)** | | | | | 625 | | |
Total Investments—100.2%
(Cost $39,137)** | | | | | 45,865 | | |
Segregated cash with brokers—79.6% | | | | | 36,481 | | |
Securities sold short—(77.6)%
(Proceeds $(37,370))** | | | | | (35,560 | ) | |
Net Other assets (liabilities)—(2.2)% | | | | | (980 | ) | |
Net Assets—100.0% | | | | $ | 45,806 | | |
TURNER FUNDS 2016 ANNUAL REPORT 9
Schedule of investments
Turner Medical Sciences Long/Short Fund
Amounts designated as "—" have been rounded to $0.
(a) These securities have been deemed illiquid by the Adviser and represent 1.89% of Net Assets.
* 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, 2016.
ADR — American Depositary Receipt
The accompanying notes are an integral part of the financial statements.
10 TURNER FUNDS 2016 ANNUAL REPORT
Schedule of securities sold short
Turner Medical Sciences Long/Short Fund
September 30, 2016
| | | Shares | | Value
(000) | |
Common stock—32.7% | |
Biotechnology—5.1% | |
AbbVie | | | 13,350 | | | $ | 841 | | |
Intrexon | | | 18,250 | | | | 511 | | |
Regeneron Pharmaceuticals | | | 1,280 | | | | 515 | | |
United Therapeutics | | | 4,010 | | | | 474 | | |
Total Biotechnology | | | | | 2,341 | | |
Food & staples retailing—1.6% | |
CVS Health | | | 8,060 | | | | 717 | | |
Total Food & staples retailing | | | | | 717 | | |
Health care equipment & supplies—4.5% | |
Align Technology | | | 4,060 | | | | 381 | | |
Hologic | | | 13,300 | | | | 516 | | |
Stryker | | | 6,560 | | | | 763 | | |
Zimmer Biomet Holdings | | | 2,950 | | | | 384 | | |
Total Health care equipment & supplies | | | | | 2,044 | | |
Health care providers & services—10.4% | |
Aetna | | | 2,140 | | | | 247 | | |
Anthem | | | 2,910 | | | | 365 | | |
Cardinal Health | | | 11,410 | | | | 887 | | |
HCA Holdings | | | 11,020 | | | | 833 | | |
Laboratory Corp. of America
Holdings | | | 8,280 | | | | 1,139 | | |
LifePoint Health | | | 9,620 | | | | 570 | | |
Universal Health Services, Cl B | | | 6,150 | | | | 758 | | |
Total Health care providers & services | | | | | 4,799 | | |
Health care technology—4.4% | |
athenahealth | | | 4,110 | | | | 518 | | |
Cerner | | | 13,530 | | | | 836 | | |
Medidata Solutions | | | 11,710 | | | | 653 | | |
Total Health care technology | | | | | 2,007 | | |
| | | Shares | | Value
(000) | |
Life sciences tools & services—5.1% | |
BIO-Rad Laboratories, Cl A | | | 2,320 | | | $ | 380 | | |
ICON | | | 5,110 | | | | 395 | | |
Illumina | | | 2,000 | | | | 363 | | |
Mettler-Toledo International | | | 1,260 | | | | 529 | | |
PerkinElmer | | | 11,580 | | | | 650 | | |
Total Life sciences tools & services | | | | | 2,317 | | |
Pharmaceuticals—1.6% | |
Dr. Reddy's Laboratories ADR | | | 15,930 | | | | 739 | | |
Total Pharmaceuticals | | | | | 739 | | |
Total Common stock
(Proceeds $15,130)* | | | | | 14,964 | | |
Exchange traded funds—44.9% | |
Health Care Select Sector
SPDR Fund | | | 82,860 | | | | 5,975 | | |
iShares NASDAQ
Biotechnology ETF | | | 19,530 | | | | 5,653 | | |
iShares Russell 2000 Growth ETF | | | 31,520 | | | | 3,915 | | |
SPDR S&P Biotech ETF | | | 76,220 | | | | 5,053 | | |
Total Exchange traded funds
(Proceeds $22,240)* | | | | | 20,596 | | |
Total Securities sold short—77.6%
(Proceeds $37,370)* | | | | $ | 35,560 | | |
Percentages disclosed are based on total net assets of the Fund as of September 30, 2016.
* 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.
TURNER FUNDS 2016 ANNUAL REPORT 11
Turner Titan Long/Short Fund
September 30, 2016
| | | Shares | | Value
(000) | |
Common stock—89.8%† | |
Consumer discretionary—4.8% | |
Amazon.com*^ | | | 940 | | | $ | 787 | | |
CBS, Cl B^ | | | 11,100 | | | | 608 | | |
Total Consumer discretionary | | | | | 1,395 | | |
Consumer staples—0.9% | |
Monster Beverage* | | | 1,810 | | | | 266 | | |
Total Consumer staples | | | | | 266 | | |
Energy—20.7% | |
Antero Resources*^ | | | 44,770 | | | | 1,207 | | |
Cimarex Energy | | | 2,320 | | | | 312 | | |
Continental Resources* | | | 17,210 | | | | 894 | | |
Devon Energy | | | 3,360 | | | | 148 | | |
Marathon Oil | | | 72,070 | | | | 1,139 | | |
Newfield Exploration* | | | 26,030 | | | | 1,131 | | |
Whiting Petroleum* | | | 133,260 | | | | 1,165 | | |
Total Energy | | | | | 5,996 | | |
Financials—1.1% | |
Bank of the Ozarks^ | | | 8,260 | | | | 317 | | |
Total Financials | | | | | 317 | | |
Health care—14.8% | |
Abbott Laboratories^ | | | 5,100 | | | | 216 | | |
Achillion Pharmaceuticals*^ | | | 145,730 | | | | 1,181 | | |
Alexion Pharmaceuticals*^ | | | 1,700 | | | | 208 | | |
Boston Scientific*^ | | | 12,340 | | | | 294 | | |
Celgene*^ | | | 5,610 | | | | 586 | | |
Merck^ | | | 5,830 | | | | 364 | | |
Oncomed Pharmaceuticals*^ | | | 42,333 | | | | 484 | | |
Prothena*^ | | | 6,140 | | | | 368 | | |
Vascular Biogenics*^ | | | 109,819 | | | | 573 | | |
Total Health care | | | | | 4,274 | | |
Industrials—3.3% | |
Southwest Airlines^ | | | 24,790 | | | | 964 | | |
Total Industrials | | | | | 964 | | |
Information technology—13.6% | |
| 2U*^ | | | 10,660 | | | | 408 | | |
Alphabet, Cl A*^ | | | 370 | | | | 298 | | |
Broadcom^ | | | 1,780 | | | | 307 | | |
Electronic Arts*^ | | | 7,810 | | | | 667 | | |
| | | Shares | | Value
(000) | |
F5 Networks*^ | | | 2,400 | | | $ | 299 | | |
Monolithic Power Systems^ | | | 3,880 | | | | 312 | | |
NXP Semiconductors*^ | | | 3,350 | | | | 342 | | |
Salesforce.com*^ | | | 4,860 | | | | 347 | | |
ServiceNow*^ | | | 3,930 | | | | 311 | | |
Shopify, Cl A*^ | | | 7,360 | | | | 316 | | |
Vantiv, Cl A*^ | | | 5,570 | | | | 313 | | |
Total Information technology | | | | | 3,920 | | |
Materials—29.4% | |
Albemarle^ | | | 3,340 | | | | 286 | | |
AngloGold Ashanti ADR*^ | | | 86,100 | | | | 1,371 | | |
Barrick Gold ADR^ | | | 63,600 | | | | 1,127 | | |
Kinross Gold*^ | | | 335,740 | | | | 1,413 | | |
Martin Marietta Materials | | | 2,400 | | | | 430 | | |
Newmont Mining^ | | | 21,590 | | | | 848 | | |
Senomyx* | | | 145,141 | | | | 618 | | |
Summit Materials, Cl A*^ | | | 72,850 | | | | 1,351 | | |
Trinseo SA^ | | | 5,150 | | | | 291 | | |
Vulcan Materials | | | 3,560 | | | | 405 | | |
Yamana Gold | | | 82,550 | | | | 356 | | |
Total Materials | | | | | 8,496 | | |
Real estate—1.2% | |
QTS Realty Trust, Cl A^ | | | 6,740 | | | | 356 | | |
Total Real estate | | | | | 356 | | |
Total Common stock
(Cost $24,151)** | | | | | 25,984 | | |
Exchange traded funds—5.9% | |
SPDR S&P Oil & Gas Exploration &
Production ETF | | | 15,510 | | | | 597 | | |
VanEck Vectors Gold ETF—‡^ | | | 41,110 | | | | 1,087 | | |
Total Exchange traded funds
(Cost $1,697)** | | | | | 1,684 | | |
12 TURNER FUNDS 2016 ANNUAL REPORT
Schedule of investments
Turner Titan Long/Short Fund
| | | Shares | | Value
(000) | |
Warrant—0.0% | |
Financials—0.0% | |
Atlas Mara (a) | | | 472,160 | | | $ | 7 | | |
Total Financials | | | | | 7 | | |
Total Warrant
(Cost $92)** | | | | | 7 | | |
Cash equivalent—1.9% | |
BlackRock Liquidity Funds
TempCash Portfolio, Dollar
Shares, 0.302%‡ | | | 557,982 | | | | 558 | | |
Total Cash equivalent
(Cost $558)** | | | | | 558 | | |
Total Investments—97.6%
(Cost $26,498)** | | | | | 28,233 | | |
Segregated cash with brokers—59.3% | | | | | 17,172 | | |
Securities sold short—(59.2)%
(Proceeds $(16,871))** | | | | | (17,116 | ) | |
Net Other assets (liabilities)—2.3% | | | | | 639 | | |
Net Assets—100.0% | | | | $ | 28,928 | | |
(a) These securities have been deemed illiquid by the Adviser and represent 0.02% of Net Assets.
* 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.
† 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, 2016.
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.
TURNER FUNDS 2016 ANNUAL REPORT 13
Schedule of securities sold short
Turner Titan Long/Short Fund
September 30, 2016
| | | Shares | | Value
(000) | |
Common stock—49.9% | |
Consumer discretionary—11.1% | |
CarMax | | | 13,230 | | | $ | 706 | | |
Carnival, Cl A | | | 8,230 | | | | 402 | | |
O'Reilly Automotive | | | 1,290 | | | | 361 | | |
Priceline Group | | | 440 | | | | 647 | | |
Tesla Motors | | | 2,200 | | | | 449 | | |
Tiffany | | | 8,700 | | | | 632 | | |
Total Consumer discretionary | | | | | 3,197 | | |
Energy—1.1% | |
Frank's International | | | 23,606 | | | | 307 | | |
Total Energy | | | | | 307 | | |
Financials—5.4% | |
American Express | | | 5,590 | | | | 358 | | |
Bank of America | | | 27,320 | | | | 428 | | |
State Street | | | 11,330 | | | | 788 | | |
Total Financials | | | | | 1,574 | | |
Health care—1.3% | |
Express Scripts Holdings | | | 5,210 | | | | 367 | | |
Total Health care | | | | | 367 | | |
Industrials—19.4% | |
AGCO | | | 11,500 | | | | 567 | | |
Applied Industrial Technologies | | | 24,780 | | | | 1,158 | | |
Deere | | | 5,510 | | | | 470 | | |
Heartland Express | | | 34,720 | | | | 656 | | |
J.B. Hunt Transport Services | | | 5,330 | | | | 432 | | |
MSC Industrial Direct, Cl A | | | 6,919 | | | | 508 | | |
PACCAR | | | 10,080 | | | | 593 | | |
Swift Transportation | | | 56,640 | | | | 1,217 | | |
Total Industrials | | | | | 5,601 | | |
Information technology—9.3% | |
Cognizant Technology
Solutions, Cl A | | | 4,000 | | | | 191 | | |
Intel | | | 14,050 | | | | 530 | | |
Oracle | | | 15,750 | | | | 619 | | |
Trimble Navigation | | | 47,750 | | | | 1,364 | | |
Total Information technology | | | | | 2,704 | | |
| | | Shares | | Value
(000) | |
Materials—2.3% | |
Compass Minerals International | | | 9,080 | | | $ | 669 | | |
Total Materials | | | | | 669 | | |
Total Common stock
(Proceeds $14,176)* | | | | | 14,419 | | |
Exchange traded funds—9.3% | |
iShares Russell 1000 Growth ETF | | | 4,150 | | | | 432 | | |
iShares U.S. Technology ETF | | | 4,440 | | | | 528 | | |
SPDR S&P 500 ETF Trust | | | 2,010 | | | | 435 | | |
SPDR S&P Bank ETF | | | 38,990 | | | | 1,302 | | |
Total Exchange traded funds
(Proceeds $2,695)* | | | | | 2,697 | | |
Total Securities sold short—59.2%
(Proceeds $16,871)* | | | | $ | 17,116 | | |
Percentages disclosed are based on total net assets of the Fund as of September 30, 2016.
* 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.
14 TURNER FUNDS 2016 ANNUAL REPORT
Turner SMID Cap Growth Opportunities Fund
September 30, 2016
| | | Shares | | Value
(000) | |
Common stock—96.8%† | |
Consumer discretionary—11.8% | |
Burlington Stores* | | | 17,000 | | | $ | 1,377 | | |
Dunkin' Brands Group | | | 18,000 | | | | 937 | | |
Jack In The Box | | | 12,000 | | | | 1,151 | | |
LKQ* | | | 45,000 | | | | 1,597 | | |
Thor Industries | | | 12,000 | | | | 1,016 | | |
Total Consumer discretionary | | | | | 6,078 | | |
Consumer staples—2.1% | |
Blue Buffalo Pet Products* | | | 45,000 | | | | 1,069 | | |
Total Consumer staples | | | | | 1,069 | | |
Energy—2.3% | |
Callon Petroleum* | | | 75,000 | | | | 1,178 | | |
Total Energy | | | | | 1,178 | | |
Financials—2.3% | |
MSCI, Cl A | | | 14,000 | | | | 1,175 | | |
Total Financials | | | | | 1,175 | | |
Health care—23.5% | |
ABIOMED* | | | 10,000 | | | | 1,286 | | |
Achillion Pharmaceuticals* | | | 85,000 | | | | 689 | | |
Bio-Techne | | | 9,000 | | | | 986 | | |
Dexcom* | | | 12,000 | | | | 1,052 | | |
Hill-Rom Holdings | | | 32,000 | | | | 1,982 | | |
Inogen* | | | 22,000 | | | | 1,318 | | |
NuVasive* | | | 24,000 | | | | 1,600 | | |
PRA Health Sciences* | | | 30,000 | | | | 1,695 | | |
WellCare Health Plans* | | | 12,500 | | | | 1,464 | | |
Total Health care | | | | | 12,072 | | |
Industrials—1.6% | |
Nordson | | | 8,000 | | | | 797 | | |
Total Industrials | | | | | 797 | | |
Information technology—45.5% | |
Arista Networks* | | | 14,000 | | | | 1,191 | | |
Broadridge Financial Solutions | | | 17,000 | | | | 1,152 | | |
Coherent, Inc.* | | | 15,000 | | | | 1,658 | | |
Digimarc*^ | | | 30,000 | | | | 1,151 | | |
Electronics for Imaging* | | | 32,000 | | | | 1,565 | | |
Ellie Mae* | | | 16,000 | | | | 1,684 | | |
Gigamon* | | | 20,000 | | | | 1,096 | | |
| | | Shares | | Value
(000) | |
Grubhub* | | | 22,000 | | | $ | 946 | | |
Inphi* | | | 25,000 | | | | 1,088 | | |
Lam Research | | | 10,000 | | | | 947 | | |
Lumentum Holdings* | | | 27,000 | | | | 1,128 | | |
Match Group* | | | 70,000 | | | | 1,245 | | |
Microchip Technology^ | | | 12,000 | | | | 746 | | |
Monolithic Power Systems | | | 16,000 | | | | 1,288 | | |
Qualys* | �� | | 25,000 | | | | 955 | | |
RealPage* | | | 38,000 | | | | 977 | | |
Shopify, Cl A* | | | 24,000 | | | | 1,030 | | |
Splunk* | | | 14,000 | | | | 822 | | |
Take-Two Interactive Software* | | | 18,000 | | | | 811 | | |
Ubiquiti Networks* | | | 22,000 | | | | 1,177 | | |
Ultratech* | | | 32,000 | | | | 739 | | |
Total Information technology | | | | | 23,396 | | |
Materials—3.6% | |
Ball | | | 10,720 | | | | 879 | | |
Senomyx*^ | | | 225,000 | | | | 958 | | |
Total Materials | | | | | 1,837 | | |
Real estate—1.5% | |
Physicians Realty Trust | | | 35,000 | | | | 754 | | |
Total Real estate | | | | | 754 | | |
Telecommunication services—2.6% | |
Zayo Group Holdings* | | | 45,000 | | | | 1,336 | | |
Total Telecommunication services | | | | | 1,336 | | |
Total Common stock
(Cost $45,625)** | | | | | 49,692 | | |
Cash equivalent—9.0% | |
BlackRock Liquidity Funds
TempCash Portfolio,
Dollar Shares, 0.302%‡ (1) | | | 4,623,443 | | | | 4,623 | | |
Total Cash equivalent
(Cost $4,623)** | | | | | 4,623 | | |
Total Investments—105.8%
(Cost $50,248)** | | | | | 54,315 | | |
Net Other assets (liabilities)—(5.8)% | | | | | (2,962 | ) | |
Net Assets—100.0% | | | | $ | 51,353 | | |
TURNER FUNDS 2016 ANNUAL REPORT 15
Schedule of investments
Turner SMID Cap Growth Opportunities Fund
* 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, 2016 was $2,119**.
^ Security fully or partially on loan at September 30, 2016. The total value of securities on loan at September 30, 2016 was $2,116**. Certain of these securities may have been sold prior to period end.
† 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, 2016.
Cl — Class
The accompanying notes are an integral part of the financial statements.
16 TURNER FUNDS 2016 ANNUAL REPORT
Turner Midcap Growth Fund
September 30, 2016
| | | Shares | | Value
(000) | |
Common stock—97.4%† | |
Consumer discretionary—21.6% | |
Aramark | | | 92,360 | | | $ | 3,512 | | |
AutoZone* | | | 3,380 | | | | 2,597 | | |
CBS, Cl B | | | 72,330 | | | | 3,960 | | |
lululemon athletica* | | | 25,260 | | | | 1,540 | | |
Mohawk Industries* | | | 11,490 | | | | 2,302 | | |
Newell Rubbermaid | | | 55,650 | | | | 2,931 | | |
Ross Stores | | | 48,110 | | | | 3,093 | | |
Ulta Salon, Cosmetics &
Fragrance* | | | 7,980 | | | | 1,899 | | |
Wynn Resorts^ | | | 26,240 | | | | 2,556 | | |
Total Consumer discretionary | | | | | 24,390 | | |
Consumer staples—7.4% | |
Casey's General Stores | | | 13,000 | | | | 1,562 | | |
Constellation Brands, Cl A | | | 19,100 | | | | 3,180 | | |
Monster Beverage* | | | 24,410 | | | | 3,584 | | |
Total Consumer staples | | | | | 8,326 | | |
Energy—2.1% | |
Pioneer Natural Resources | | | 12,560 | | | | 2,332 | | |
Total Energy | | | | | 2,332 | | |
Financials—3.1% | |
Intercontinental Exchange Group | | | 12,990 | | | | 3,499 | | |
Total Financials | | | | | 3,499 | | |
Health care—17.8% | |
Achillion Pharmaceuticals*^ | | | 381,930 | | | | 3,094 | | |
Alexion Pharmaceuticals* | | | 18,180 | | | | 2,228 | | |
Boston Scientific* | | | 134,500 | | | | 3,200 | | |
Edwards Lifesciences* | | | 26,400 | | | | 3,183 | | |
Intuitive Surgical* | | | 3,500 | | | | 2,537 | | |
Ligand Pharmaceuticals, Cl B*^ | | | 11,060 | | | | 1,129 | | |
Neurocrine Biosciences* | | | 38,800 | | | | 1,965 | | |
Prothena*^ | | | 46,220 | | | | 2,772 | | |
Total Health care | | | | | 20,108 | | |
Industrials—5.1% | |
Acuity Brands | | | 10,920 | | | | 2,889 | | |
Fortune Brands Home & Security | | | 49,120 | | | | 2,854 | | |
Total Industrials | | | | | 5,743 | | |
| | | Shares | | Value
(000) | |
Information technology—35.2% | |
Broadcom | | | 20,570 | | | $ | 3,549 | | |
Cavium*^ | | | 78,544 | | | | 4,570 | | |
Electronic Arts* | | | 42,700 | | | | 3,647 | | |
Facebook, Cl A* | | | 17,500 | | | | 2,245 | | |
Fiserv* | | | 22,360 | | | | 2,224 | | |
Lam Research | | | 39,350 | | | | 3,727 | | |
Maxim Integrated Products | | | 48,730 | | | | 1,946 | | |
Monolithic Power Systems | | | 45,310 | | | | 3,647 | | |
NXP Semiconductors* | | | 41,770 | | | | 4,261 | | |
Proofpoint*^ | | | 32,540 | | | | 2,436 | | |
Salesforce.com* | | | 32,000 | | | | 2,283 | | |
Shopify, Cl A*^ | | | 78,880 | | | | 3,386 | | |
Vantiv, Cl A* | | | 31,230 | | | | 1,757 | | |
Total Information technology | | | | | 39,678 | | |
Materials—2.2% | |
PPG Industries | | | 24,160 | | | | 2,497 | | |
Total Materials | | | | | 2,497 | | |
Telecommunication services—2.9% | |
Zayo Group Holdings* | | | 109,400 | | | | 3,250 | | |
Total Telecommunication services | | | | | 3,250 | | |
Total Common stock
(Cost $89,853)** | | | | | 109,823 | | |
Cash equivalent—16.1% | |
BlackRock Liquidity Funds
TempCash Portfolio,
Dollar Shares, 0.302%‡ (1) | | | 18,174,470 | | | | 18,174 | | |
Total Cash equivalent
(Cost $18,174)** | | | | | 18,174 | | |
Total Investments—113.5%
(Cost $108,027)** | | | | | 127,997 | | |
Net Other assets (liabilities)—(13.5)% | | | | | (15,267 | ) | |
Net Assets—100.0% | | | | $ | 112,730 | | |
* 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, 2016 was $15,068**.
TURNER FUNDS 2016 ANNUAL REPORT 17
Schedule of investments
Turner Midcap Growth Fund
^ Security fully or partially on loan at September 30, 2016. The total value of securities on loan at September 30, 2016 was $14,921**. Certain of these securities may have been sold prior to period end.
† 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, 2016.
Cl — Class
The accompanying notes are an integral part of the financial statements.
18 TURNER FUNDS 2016 ANNUAL REPORT
Turner Small Cap Growth Fund
September 30, 2016
| | | Shares | | Value
(000) | |
Common stock—98.0%† | |
Consumer discretionary—8.4% | |
Duluth Holdings, Cl B*^ | | | 19,000 | | | $ | 504 | | |
Jack In The Box | | | 6,000 | | | | 576 | | |
Oxford Industries | | | 6,000 | | | | 406 | | |
Planet Fitness* | | | 22,000 | | | | 442 | | |
Restoration Hardware Holdings* | | | 15,000 | | | | 519 | | |
Thor Industries | | | 7,000 | | | | 592 | | |
Total Consumer discretionary | | | | | 3,039 | | |
Energy—4.6% | |
Callon Petroleum* | | | 55,000 | | | | 863 | | |
US Silica Holdings | | | 17,000 | | | | 792 | | |
Total Energy | | | | | 1,655 | | |
Financials—5.1% | |
BofI Holdings* | | | 40,000 | | | | 896 | | |
Legacytexas Financial Group | | | 30,000 | | | | 949 | | |
Total Financials | | | | | 1,845 | | |
Health care—27.4% | |
ABIOMED* | | | 5,000 | | | | 643 | | |
Achillion Pharmaceuticals*^ | | | 80,000 | | | | 648 | | |
Bio-Techne | | | 7,000 | | | | 767 | | |
Cerus*^ | | | 65,000 | | | | 404 | | |
Genmark Diagnostics* | | | 65,000 | | | | 767 | | |
HealthEquity*^ | | | 23,000 | | | | 871 | | |
Inogen* | | | 11,000 | | | | 659 | | |
Masimo* | | | 14,000 | | | | 833 | | |
Mazor Robotics ADR* | | | 35,000 | | | | 904 | | |
NuVasive* | | | 12,500 | | | | 833 | | |
Omnicell* | | | 16,000 | | | | 613 | | |
PRA Health Sciences* | | | 14,000 | | | | 791 | | |
Prothena* | | | 9,000 | | | | 540 | | |
Supernus Pharmaceuticals* | | | 28,000 | | | | 692 | | |
Total Health care | | | | | 9,965 | | |
Industrials—2.2% | |
Mueller Water Products, Cl A | | | 65,000 | | | | 816 | | |
Total Industrials | | | | | 816 | | |
Information technology—46.0% | |
Cavium*^ | | | 18,000 | | | | 1,048 | | |
CEVA* | | | 25,000 | | | | 877 | | |
Coherent, Inc.* | | | 11,000 | | | | 1,216 | | |
| | | Shares | | Value
(000) | |
CUI Global, Inc. (a)*^ | | | 153,956 | | | $ | 898 | | |
Digimarc*^ | | | 57,000 | | | | 2,185 | | |
Electronics for Imaging* | | | 24,000 | | | | 1,174 | | |
Ellie Mae* | | | 10,000 | | | | 1,053 | | |
Five9* | | | 25,000 | | | | 392 | | |
Gigamon* | | | 14,000 | | | | 767 | | |
Grubhub* | | | 10,000 | | | | 430 | | |
HubSpot* | | | 12,000 | | | | 691 | | |
Inphi* | | | 14,000 | | | | 609 | | |
Lumentum Holdings* | | | 18,000 | | | | 752 | | |
MA-Com Technology Solutions
Holdings* | | | 16,000 | | | | 677 | | |
Qualys* | | | 19,000 | | | | 726 | | |
Remark Media, Inc. (a)* | | | 386,000 | | | | 1,752 | | |
Shopify, Cl A* | | | 15,000 | | | | 644 | | |
Take-Two Interactive Software* | | | 10,000 | | | | 451 | | |
Ultratech* | | | 17,000 | | | | 392 | | |
Total Information technology | | | | | 16,734 | | |
Materials—4.3% | |
Senomyx*^ | | | 370,000 | | | | 1,576 | | |
Total Materials | | | | | 1,576 | | |
Total Common stock
(Cost $30,173)** | | | | | 35,630 | | |
Cash equivalent—24.3% | |
BlackRock Liquidity Funds
TempCash Portfolio,
Dollar Shares, 0.302%‡ (1) | | | 8,819,603 | | | | 8,820 | | |
Total Cash equivalent
(Cost $8,820)** | | | | | 8,820 | | |
Total Investments—122.3%
(Cost $38,993)** | | | | | 44,450 | | |
Net Other assets (liabilities)—(22.3)% | | | | | (8,119 | ) | |
Net Assets—100.0% | | | | $ | 36,331 | | |
(a) These securities have been deemed illiquid by the Adviser and represent 7.29% of Net Assets.
* 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, 2016 was $8,017**.
TURNER FUNDS 2016 ANNUAL REPORT 19
Schedule of investments
Turner Small Cap Growth Fund
^ Security fully or partially on loan at September 30, 2016. The total value of securities on loan at September 30, 2016 was $8,044**. Certain of these securities may have been sold prior to period end.
† 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, 2016.
ADR — American Depositary Receipt
Cl — Class
The accompanying notes are an integral part of the financial statements.
20 TURNER FUNDS 2016 ANNUAL REPORT
THIS PAGE WAS INTENTIONALLY LEFT BLANK
TURNER FUNDS 2016 ANNUAL REPORT 21
Statements of assets and liabilities (000)
September 30, 2016
| | | Turner
Medical Sciences
Long/Short
Fund | | Turner
Titan
Long/Short
Fund | | Turner
SMID Cap
Growth
Opportunities
Fund | |
Assets: | |
Investment securities, at cost | | $ | 39,137 | | | $ | 26,498 | | | $ | 50,248 | | |
Investment securities, at value | | $ | 45,865 | | | $ | 28,233 | | | $ | 54,315 | | |
Deposits with brokers for securities sold short | | | 36,481 | | | | 17,172 | | | | — | | |
Foreign currency, at value | | | — | | | | 3 | | | | — | | |
Receivable for investment securities sold | | | 4,827 | | | | 1,883 | | | | 3,113 | | |
Receivable for capital shares sold | | | 123 | | | | — | | | | 1 | | |
Prepaid expenses | | | 5 | | | | 12 | | | | 7 | | |
Receivable for dividend income | | | 50 | | | | 15 | | | | 6 | | |
Receivable from investment adviser | | | — | | | | — | | | | — | | |
Total assets | | | 87,351 | | | | 47,318 | | | | 57,442 | | |
Liabilities: | |
Securities sold short, at proceeds | | | 37,370 | | | | 16,871 | | | | — | | |
Securities sold short, at value | | | 35,560 | | | | 17,116 | | | | — | | |
Foreign currency overdraft, at value | | | 1 | | | | — | | | | — | | |
Payable for investment securities purchased | | | 5,749 | | | | 961 | | | | 3,330 | | |
Obligation to return securities lending collateral | | | — | | | | — | | | | 2,119 | | |
Payable for capital shares redeemed | | | 82 | | | | 194 | | | | 551 | | |
Dividends payable on securities sold short (Note 2) | | | 9 | | | | 32 | | | | — | | |
Payable due to investment adviser | | | 71 | | | | 40 | | | | 10 | | |
Payable due to administrator | | | 7 | | | | 5 | | | | 7 | | |
Payable due to shareholder servicing | | | 14 | | | | 3 | | | | 18 | | |
Payable due to distributor | | | 2 | | | | 1 | | | | — | | |
Payable due to transfer agent | | | 9 | | | | 8 | | | | 11 | | |
Payable due to custodian | | | 6 | | | | 6 | | | | 5 | | |
Payable due to compliance services | | | 2 | | | | 2 | | | | 3 | | |
Other accrued expenses | | | 33 | | | | 22 | | | | 35 | | |
Total liabilities | | | 41,545 | | | | 18,390 | | | | 6,089 | | |
Net assets | | $ | 45,806 | | | $ | 28,928 | | | $ | 51,353 | | |
| | *Includes market value of securities on loan | | | $ | — | | | $ | — | | | $ | 2,116 | | |
Net assets: | |
Portfolio capital | | $ | 59,603 | | | $ | 29,762 | | | $ | 58,164 | | |
Accumulated net investment loss | | | (1,574 | ) | | | (628 | ) | | | (431 | ) | |
Accumulated net realized loss from investments, securities sold short and foreign
currency transactions | | | (20,761 | ) | | | (1,696 | ) | | | (10,447 | ) | |
Net unrealized appreciation on investments, securities sold short, foreign currencies and
translation of other assets and liabilities denominated in foreign currencies | | | 8,538 | | | | 1,490 | | | | 4,067 | | |
Net assets | | $ | 45,806 | | | $ | 28,928 | | | $ | 51,353 | | |
Outstanding shares of beneficial interest — Institutional Class Shares (1) | | | 1,203 | | | | 2,438 | | | | 615 | | |
Outstanding shares of beneficial interest — Investor Class Shares (1) | | | 2,178 | | | | 769 | | | | 2,617 | | |
Outstanding shares of beneficial interest — Class C Shares (1) | | | 289 | | | | 153 | | | | — | | |
Outstanding shares of beneficial interest — Retirement Class Shares (1) | | | — | | | | — | | | | — | | |
Net assets — Institutional Class Shares | | $ | 15,212 | | | $ | 21,204 | | | $ | 10,345 | | |
Net assets — Investor Class Shares | | $ | 27,151 | | | $ | 6,511 | | | $ | 41,008 | | |
Net assets — Class C Shares | | $ | 3,443 | | | $ | 1,213 | | | $ | — | | |
Net assets — Retirement Class Shares | | $ | — | | | $ | — | | | $ | — | | |
Net asset value, offering and redemption price per share — Institutional Class Shares | | $ | 12.64 | † | | $ | 8.69 | † | | $ | 16.82 | | |
Net asset value, offering and redemption price per share — Investor Class Shares | | $ | 12.47 | | | $ | 8.47 | | | $ | 15.67 | | |
Net asset value, offering and redemption price per share — Class C Shares | | $ | 11.91 | | | $ | 7.93 | | | $ | — | | |
Net asset value, offering and redemption price per share — Retirement Class Shares | | $ | — | | | $ | — | | | $ | — | | |
22 TURNER FUNDS 2016 ANNUAL REPORT
| | | Turner
Midcap
Growth Fund | | Turner
Small Cap
Growth Fund | |
Assets: | |
Investment securities, at cost | | $ | 108,027 | | | $ | 38,993 | | |
Investment securities, at value | | $ | 127,997 | | | $ | 44,450 | | |
Deposits with brokers for securities sold short | | | — | | | | — | | |
Foreign currency, at value | | | — | | | | — | | |
Receivable for investment securities sold | | | — | | | | 3,881 | | |
Receivable for capital shares sold | | | 2 | | | | 9 | | |
Prepaid expenses | | | 11 | | | | 6 | | |
Receivable for dividend income | | | 48 | | | | 28 | | |
Receivable from investment adviser | | | 29 | | | | 2 | | |
Total assets | | | 128,087 | | | | 48,376 | | |
Liabilities: | |
Securities sold short, at proceeds | | | — | | | | — | | |
Securities sold short, at value | | | — | | | | — | | |
Foreign currency overdraft, at value | | | — | | | | — | | |
Payable for investment securities purchased | | | — | | | | 2,005 | | |
Obligation to return securities lending collateral | | | 15,068 | | | | 8,017 | | |
Payable for capital shares redeemed | | | 95 | | | | 1,966 | | |
Dividends payable on securities sold short (Note 2) | | | — | | | | — | | |
Payable due to investment adviser | | | — | | | | — | | |
Payable due to administrator | | | 28 | | | | 5 | | |
Payable due to shareholder servicing | | | 42 | | | | 16 | | |
Payable due to distributor | | | — | | | | — | | |
Payable due to transfer agent | | | 28 | | | | 6 | | |
Payable due to custodian | | | 4 | | | | 4 | | |
Payable due to compliance services | | | 7 | | | | 2 | | |
Other accrued expenses | | | 85 | | | | 24 | | |
Total liabilities | | | 15,357 | | | | 12,045 | | |
Net assets | | $ | 112,730 | | | $ | 36,331 | | |
| | *Includes market value of securities on loan | | | $ | 14,921 | | | $ | 8,044 | | |
Net assets: | |
Portfolio capital | | $ | 104,374 | | | $ | 31,795 | | |
Accumulated net investment loss | | | (384 | ) | | | (74 | ) | |
Accumulated net realized loss from investments, securities sold short and foreign
currency transactions | | | (11,230 | ) | | | (847 | ) | |
Net unrealized appreciation on investments, securities sold short, foreign currencies and
translation of other assets and liabilities denominated in foreign currencies | | | 19,970 | | | | 5,457 | | |
Net assets | | $ | 112,730 | | | $ | 36,331 | | |
Outstanding shares of beneficial interest — Institutional Class Shares (1) | | | 871 | | | | — | | |
Outstanding shares of beneficial interest — Investor Class Shares (1) | | | 5,408 | | | | 2,685 | | |
Outstanding shares of beneficial interest — Class C Shares (1) | | | — | | | | — | | |
Outstanding shares of beneficial interest — Retirement Class Shares (1) | | | 25 | | | | — | | |
Net assets — Institutional Class Shares | | $ | 16,205 | | | $ | — | | |
Net assets — Investor Class Shares | | $ | 96,130 | | | $ | 36,331 | | |
Net assets — Class C Shares | | $ | — | | | $ | — | | |
Net assets — Retirement Class Shares | | $ | 395 | | | $ | — | | |
Net asset value, offering and redemption price per share — Institutional Class Shares | | $ | 18.61 | | | $ | — | | |
Net asset value, offering and redemption price per share — Investor Class Shares | | $ | 17.78 | | | $ | 13.53 | | |
Net asset value, offering and redemption price per share — Class C Shares | | $ | — | | | $ | — | | |
Net asset value, offering and redemption price per share — Retirement Class Shares | | $ | 15.71 | † | | $ | — | | |
(1) Unlimited authorization — par value $0.00001.
† Differences in net asset value recalculation and net asset value stated are caused by rounding.
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 2016 ANNUAL REPORT 23
Statements of operations (000)
| | | Turner
Medical Sciences
Long/Short
Fund | | Turner
Titan
Long/Short
Fund | | Turner
SMID Cap
Growth
Opportunities
Fund | |
| | | year ended
9/30/16 | | year ended
9/30/16 | | year ended
9/30/16 | |
Investment income: | |
Dividend | | $ | 709 | | | $ | 508 | | | $ | 262 | | |
Securities lending | | | — | | | | — | | | | 238 | | |
Foreign taxes withheld | | | — | | | | (1 | ) | | | — | | |
Total investment income | | | 709 | | | | 507 | | | | 500 | | |
Expenses: | |
Investment advisory fees | | | 1,383 | | | | 658 | | | | 675 | | |
Administration fees | | | 138 | | | | 66 | | | | 101 | | |
Shareholder service fees (1) | | | 147 | | | | 36 | | | | 137 | | |
Shareholder service fees (2) | | | 12 | | | | 3 | | | | — | | |
Shareholder service fees (3) | | | — | | | | — | | | | — | | |
Distribution fees (2) | | | 36 | | | | 10 | | | | — | | |
Distribution fees (3) | | | — | | | | — | | | | — | | |
Accounting agent fees | | | 2 | | | | 2 | | | | 1 | | |
Dividend expense | | | 405 | | | | 285 | | | | — | | |
Broker fees and charges on short sales | | | 753 | | | | 116 | | | | — | | |
Custodian fees | | | 33 | | | | 29 | | | | 24 | | |
Transfer agent fees | | | 131 | | | | 85 | | | | 100 | | |
Registration fees | | | 68 | | | | 61 | | | | 37 | | |
Professional fees | | | 86 | | | | 42 | | | | 66 | | |
Trustees' fees | | | 100 | | | | 48 | | | | 76 | | |
Compliance service fees | | | 54 | | | | 25 | | | | 40 | | |
Insurance and other fees | | | 90 | | | | 47 | | | | 68 | | |
Total expenses | | | 3,438 | | | | 1,513 | | | | 1,325 | | |
Less: | |
Investment advisory fee waiver | | | (350 | ) | | | (231 | ) | | | (414 | ) | |
Net expenses | | | 3,088 | | | | 1,282 | | | | 911 | | |
Net investment loss | | | (2,379 | ) | | | (775 | ) | | | (411 | ) | |
Net realized gain (loss) from securities sold | | | (23,032 | ) | | | (256 | ) | | | (6,283 | ) | |
Net realized gain from securities sold short | | | 7,237 | | | | 63 | | | | — | | |
Net change in unrealized appreciation on investments | | | 16,217 | | | | 1,935 | | | | 2,420 | | |
Net change in unrealized (depreciation) on securities sold short | | | (12,162 | ) | | | (2,140 | ) | | | — | | |
Net realized and unrealized gain (loss) from investments, options and foreign currencies | | | (11,740 | ) | | | (398 | ) | | | (3,863 | ) | |
Net increase (decrease) in net assets resulting from operations | | $ | (14,119 | ) | | $ | (1,173 | ) | | $ | (4,274 | ) | |
24 TURNER FUNDS 2016 ANNUAL REPORT
| | | Turner
Midcap
Growth Fund | | Turner
Small Cap
Growth Fund | |
| | | year ended
9/30/16 | | year ended
9/30/16 | |
Investment income: | |
Dividend | | $ | 662 | | | $ | 84 | | |
Securities lending | | | 237 | | | | 312 | | |
Foreign taxes withheld | | | — | | | | — | | |
Total investment income | | | 899 | | | | 396 | | |
Expenses: | |
Investment advisory fees | | | 1,013 | | | | 443 | | |
Administration fees | | | 203 | | | | 66 | | |
Shareholder service fees (1) | | | 277 | | | | 111 | | |
Shareholder service fees (2) | | | — | | | | — | | |
Shareholder service fees (3) | | | 6 | | | | — | | |
Distribution fees (2) | | | — | | | | — | | |
Distribution fees (3) | | | 6 | | | | — | | |
Accounting agent fees | | | 1 | | | | 1 | | |
Dividend expense | | | — | | | | — | | |
Broker fees and charges on short sales | | | — | | | | — | | |
Custodian fees | | | 23 | | | | 23 | | |
Transfer agent fees | | | 216 | | | | 65 | | |
Registration fees | | | 61 | | | | 24 | | |
Professional fees | | | 138 | | | | 46 | | |
Trustees' fees | | | 152 | | | | 50 | | |
Compliance service fees | | | 78 | | | | 26 | | |
Insurance and other fees | | | 135 | | | | 47 | | |
Total expenses | | | 2,309 | | | | 902 | | |
Less: | |
Investment advisory fee waiver | | | (767 | ) | | | (350 | ) | |
Net expenses | | | 1,542 | | | | 552 | | |
Net investment loss | | | (643 | ) | | | (156 | ) | |
Net realized gain (loss) from securities sold | | | (6,069 | ) | | | 1,087 | | |
Net realized gain from securities sold short | | | — | | | | — | | |
Net change in unrealized appreciation on investments | | | 5,384 | | | | 696 | | |
Net change in unrealized (depreciation) on securities sold short | | | — | | | | — | | |
Net realized and unrealized gain (loss) from investments, options and foreign currencies | | | (685 | ) | | | 1,783 | | |
Net increase (decrease) in net assets resulting from operations | | $ | (1,328 | ) | | $ | 1,627 | | |
(1) Attributable to Investor Class Shares only.
(2) Attributable to Class C Shares only.
(3) Attributable to Retirement Class 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 2016 ANNUAL REPORT 25
Statements of changes in net assets (000)
| | | Turner
Medical Sciences
Long/Short
Fund | | Turner
Titan Long/
Short Fund | |
| | | year ended
9/30/16 | | year ended
9/30/15 | | year ended
9/30/16 | | year ended
9/30/15 | |
Investment activities: | |
Net investment loss | | $ | (2,379 | ) | | $ | (1,904 | ) | | $ | (775 | ) | | $ | (1,227 | ) | |
Net realized gain (loss) from securities sold and securities sold short | | | (15,795 | ) | | | (221 | ) | | | (193 | ) | | | 7,630 | | |
Net realized gain on foreign currency transactions | | | — | | | | — | | | | — | | | | 2 | | |
Net change in unrealized appreciation (depreciation) on investments and securities sold short | | | 4,055 | | | | 1,534 | | | | (205 | ) | | | (9,128 | ) | |
Net increase (decrease) in net assets resulting from operations | | | (14,119 | ) | | | (591 | ) | | | (1,173 | ) | | | (2,723 | ) | |
Dividends and distributions to shareholders: | |
Realized capital gains: | |
Institutional Class Shares | | | (745 | ) | | | (1,619 | ) | | | (1,929 | ) | | | (20,550 | ) | |
Investor Class Shares | | | (1,619 | ) | | | (454 | ) | | | (1,621 | ) | | | (2,460 | ) | |
Class C Shares | | | (104 | ) | | | (176 | ) | | | (92 | ) | | | (595 | ) | |
Total dividends and distributions | | | (2,468 | ) | | | (2,249 | ) | | | (3,642 | ) | | | (23,605 | ) | |
Capital share transactions: | |
Institutional Class Shares | |
Proceeds from shares issued | | | 12,071 | | | | 30,321 | | | | 9,532 | | | | 11,521 | | |
Proceeds from shares issued in lieu of cash distributions | | | 570 | | | | 1,163 | | | | 1,502 | | | | 14,739 | | |
Cost of shares redeemed | | | (32,961 | ) | | | (18,381 | ) | | | (21,651 | ) | | | (89,272 | ) | |
Net increase (decrease) in net assets from Institutional Class Shares transactions | | | (20,320 | ) | | | 13,103 | | | | (10,617 | ) | | | (63,012 | ) | |
Investor Class Shares | |
Proceeds from shares issued | | | 27,763 | | | | 118,863 | | | | 8,469 | | | | 20,650 | | |
Proceeds from shares issued in lieu of cash distributions | | | 1,605 | | | | 400 | | | | 1,595 | | | | 2,346 | | |
Cost of shares redeemed | | | (82,307 | ) | | | (31,830 | ) | | | (26,876 | ) | | | (10,096 | ) | |
Net increase (decrease) in net assets from Investor Class Shares transactions | | | (52,939 | ) | | | 87,433 | | | | (16,812 | ) | | | 12,900 | | |
Class C Shares | |
Proceeds from shares issued | | | 1,390 | | | | 3,409 | | | | 71 | | | | 38 | | |
Proceeds from shares issued in lieu of cash distributions | | | 89 | | | | 142 | | | | 89 | | | | 565 | | |
Cost of shares redeemed | | | (2,837 | ) | | | (1,020 | ) | | | (372 | ) | | | (1,357 | ) | |
Net increase (decrease) in net assets from Class C Shares transactions | | | (1,358 | ) | | | 2,531 | | | | (212 | ) | | | (754 | ) | |
Net increase (decrease) in net assets from capital share transactions | | | (74,617 | ) | | | 103,067 | | | | (27,641 | ) | | | (50,866 | ) | |
Total increase (decrease) in net assets | | | (91,204 | ) | | | 100,227 | | | | (32,456 | ) | | | (77,194 | ) | |
Net assets: | |
Beginning of year | | | 137,010 | | | | 36,783 | | | | 61,384 | | | | 138,578 | | |
End of year | | $ | 45,806 | | | $ | 137,010 | | | $ | 28,928 | | | $ | 61,384 | | |
Undistributed net investment income (accumulated net investment loss) | | $ | (1,574 | ) | | $ | (1,688 | ) | | $ | (628 | ) | | $ | (825 | ) | |
Shares issued and redeemed: | |
Institutional Class Shares | |
Issued | | | 906 | | | | 2,117 | | | | 1,074 | | | | 1,216 | | |
Issued in lieu of cash distributions | | | 43 | | | | 103 | | | | 169 | | | | 1,694 | | |
Redeemed | | | (2,639 | ) | | | (1,418 | ) | | | (2,451 | ) | | | (9,308 | ) | |
Net increase (decrease) in Institutional Class Shares | | | (1,690 | ) | | | 802 | | | | (1,208 | ) | | | (6,398 | ) | |
Investor Class Shares | |
Issued | | | 2,083 | | | | 8,356 | | | | 961 | | | | 2,209 | | |
Issued in lieu of cash distributions | | | 122 | | | | 36 | | | | 183 | | | | 275 | | |
Redeemed | | | (6,587 | ) | | | (2,284 | ) | | | (3,172 | ) | | | (1,014 | ) | |
Net increase (decrease) in Investor Class Shares | | | (4,382 | ) | | | 6,108 | | | | (2,028 | ) | | | 1,470 | | |
Class C Shares | |
Issued | | | 110 | | | | 245 | | | | 8 | | | | 4 | | |
Issued in lieu of cash distributions | | | 7 | | | | 13 | | | | 11 | | | | 70 | | |
Redeemed | | | (237 | ) | | | (76 | ) | | | (45 | ) | | | (152 | ) | |
Net increase (decrease) in Class C Shares | | | (120 | ) | | | 182 | | | | (26 | ) | | | (78 | ) | |
Net increase (decrease) in share transactions | | | (6,192 | ) | | | 7,092 | | | | (3,262 | ) | | | (5,006 | ) | |
26 TURNER FUNDS 2016 ANNUAL REPORT
| | | Turner
SMID Cap
Growth Opportunities | |
| | | year ended
9/30/16 | | year ended
9/30/15 | |
Investment activities: | |
Net investment loss | | $ | (411 | ) | | $ | (585 | ) | |
Net realized gain (loss) from securities sold and securities sold short | | | (6,283 | ) | | | 33,794 | | |
Net realized gain on foreign currency transactions | | | — | | | | — | | |
Net change in unrealized appreciation (depreciation) on investments and securities sold short | | | 2,420 | | | | (24,302 | ) | |
Net increase (decrease) in net assets resulting from operations | | | (4,274 | ) | | | 8,907 | | |
Dividends and distributions to shareholders: | |
Realized capital gains: | |
Institutional Class Shares | | | (6,644 | ) | | | (8,970 | ) | |
Investor Class Shares | | | (29,725 | ) | | | (49,724 | ) | |
Class C Shares | | | — | | | | — | | |
Total dividends and distributions | | | (36,369 | ) | | | (58,694 | ) | |
Capital share transactions: | |
Institutional Class Shares | |
Proceeds from shares issued | | | 1,171 | | | | 1,684 | | |
Proceeds from shares issued in lieu of cash distributions | | | 6,630 | | | | 8,776 | | |
Cost of shares redeemed | | | (5,871 | ) | | | (13,071 | ) | |
Net increase (decrease) in net assets from Institutional Class Shares transactions | | | 1,930 | | | | (2,611 | ) | |
Investor Class Shares | |
Proceeds from shares issued | | | 4,564 | | | | 15,293 | | |
Proceeds from shares issued in lieu of cash distributions | | | 27,432 | | | | 46,308 | | |
Cost of shares redeemed | | | (29,432 | ) | | | (64,473 | ) | |
Net increase (decrease) in net assets from Investor Class Shares transactions | | | 2,564 | | | | (2,872 | ) | |
Class C 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 Class C Shares transactions | | | — | | | | — | | |
Net increase (decrease) in net assets from capital share transactions | | | 4,494 | | | | (5,483 | ) | |
Total increase (decrease) in net assets | | | (36,149 | ) | | | (55,270 | ) | |
Net assets: | |
Beginning of year | | | 87,502 | | | | 142,772 | | |
End of year | | $ | 51,353 | | | $ | 87,502 | | |
Undistributed net investment income (accumulated net investment loss) | | $ | (431 | ) | | $ | (577 | ) | |
Shares issued and redeemed: | |
Institutional Class Shares | |
Issued | | | 58 | | | | 48 | | |
Issued in lieu of cash distributions | | | 377 | | | | 295 | | |
Redeemed | | | (326 | ) | | | (310 | ) | |
Net increase (decrease) in Institutional Class Shares | | | 109 | | | | 33 | | |
Investor Class Shares | |
Issued | | | 279 | | | | 474 | | |
Issued in lieu of cash distributions | | | 1,670 | | | | 1,615 | | |
Redeemed | | | (1,713 | ) | | | (1,882 | ) | |
Net increase (decrease) in Investor Class Shares | | | 236 | | | | 207 | | |
Class C Shares | |
Issued | | | — | | | | — | | |
Issued in lieu of cash distributions | | | — | | | | — | | |
Redeemed | | | — | | | | — | | |
Net increase (decrease) in Class C Shares | | | — | | | | — | | |
Net increase (decrease) in share transactions | | | 345 | | | | 240 | | |
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 2016 ANNUAL REPORT 27
Statements of changes in net assets (000)
| | | Turner
Midcap Growth
Fund | |
| | | year ended
9/30/16 | | year ended
9/30/15 | |
Investment activities: | |
Net investment loss | | $ | (643 | ) | | $ | (1,307 | ) | |
Net realized gain (loss) from securities sold | | | (6,069 | ) | | | 31,791 | | |
Net change in unrealized appreciation (depreciation) on investment transactions | | | 5,384 | | | | (36,114 | ) | |
Net increase (decrease) in net assets resulting from operations | | | (1,328 | ) | | | (5,630 | ) | |
Dividends and distributions to shareholders: | |
Realized capital gains: | |
Institutional Class Shares | | | (4,537 | ) | | | (15,809 | ) | |
Investor Class Shares | | | (18,204 | ) | | | (76,404 | ) | |
Retirement Class Shares | | | (424 | ) | | | (2,077 | ) | |
Total dividends and distributions | | | (23,165 | ) | | | (94,290 | ) | |
Capital share transactions: | |
Institutional Class Shares | |
Proceeds from shares issued | | | 760 | | | | 9,565 | | |
Proceeds from Fund acquisition (Note 10) | | | — | | | | 14,971 | | |
Proceeds from shares issued in lieu of cash distributions | | | 4,273 | | | | 13,702 | | |
Cost of shares redeemed | | | (19,487 | ) | | | (31,244 | ) | |
Net increase (decrease) in net assets from Institutional Class Shares transactions | | | (14,454 | ) | | | 6,994 | | |
Investor Class Shares | |
Proceeds from shares issued | | | 4,704 | | | | 15,410 | | |
Proceeds from Fund acquisition (Note 10) | | | — | | | | 14,263 | | |
Proceeds from shares issued in lieu of cash distributions | | | 17,080 | | | | 72,044 | | |
Cost of shares redeemed | | | (40,199 | ) | | | (75,850 | ) | |
Net increase (decrease) in net assets from Investor Class Shares transactions | | | (18,415 | ) | | | 25,867 | | |
Retirement Class Shares | |
Proceeds from shares issued | | | 186 | | | | 545 | | |
Proceeds from shares issued in lieu of cash distributions | | | 424 | | | | 2,077 | | |
Cost of shares redeemed | | | (2,505 | ) | | | (2,477 | ) | |
Net increase (decrease) in net assets from Retirement Class Shares transactions | | | (1,895 | ) | | | 145 | | |
Net increase (decrease) in net assets from capital share transactions | | | (34,764 | ) | | | 33,006 | | |
Total increase (decrease) in net assets | | | (59,257 | ) | | | (66,914 | ) | |
Net assets: | |
Beginning of year | | | 171,987 | | | | 238,901 | | |
End of year | | $ | 112,730 | | | $ | 171,987 | | |
Accumulated net investment income (loss) | | $ | (384 | ) | | $ | (1,010 | ) | |
Shares issued and redeemed: | |
Institutional Class Shares | |
Issued | | | 42 | | | | 361 | | |
Shares from Fund acquisition (Note 10) | | | — | | | | 646 | | |
Issued in lieu of cash distributions | | | 227 | | | | 603 | | |
Redeemed | | | (1,059 | ) | | | (1,148 | ) | |
Net increase (decrease) in Institutional Class Shares | | | (790 | ) | | | 462 | | |
Investor Class Shares | |
Issued | | | 268 | | | | 627 | | |
Shares from Fund acquisition (Note 10) | | | — | | | | 638 | | |
Issued in lieu of cash distributions | | | 948 | | | | 3,286 | | |
Redeemed | | | (2,256 | ) | | | (3,077 | ) | |
Net increase (decrease) in Investor Class Shares | | | (1,040 | ) | | | 1,474 | | |
Retirement Class Shares | |
Issued | | | 12 | | | | 22 | | |
Issued in lieu of cash distributions | | | 26 | | | | 104 | | |
Redeemed | | | (160 | ) | | | (110 | ) | |
Net increase (decrease) in Retirement Class Shares | | | (122 | ) | | | 16 | | |
Net increase (decrease) in share transactions | | | (1,952 | ) | | | 1,952 | | |
28 TURNER FUNDS 2016 ANNUAL REPORT
| | | Turner
Small Cap Growth
Fund | |
| | | year ended
9/30/16 | | year ended
9/30/15 | |
Investment activities: | |
Net investment loss | | $ | (156 | ) | | $ | (593 | ) | |
Net realized gain (loss) from securities sold | | | 1,087 | | | | 18,782 | | |
Net change in unrealized appreciation (depreciation) on investment transactions | | | 696 | | | | (15,758 | ) | |
Net increase (decrease) in net assets resulting from operations | | | 1,627 | | | | 2,431 | | |
Dividends and distributions to shareholders: | |
Realized capital gains: | |
Institutional Class Shares | | | — | | | | — | | |
Investor Class Shares | | | (14,893 | ) | | | (46,207 | ) | |
Retirement Class Shares | | | — | | | | — | | |
Total dividends and distributions | | | (14,893 | ) | | | (46,207 | ) | |
Capital share transactions: | |
Institutional Class Shares | |
Proceeds from shares issued | | | — | | | | — | | |
Proceeds from Fund acquisition (Note 10) | | | — | | | | — | | |
Proceeds from shares issued in lieu of cash distributions | | | — | | | | — | | |
Cost of shares redeemed | | | — | | | | — | | |
Net increase (decrease) in net assets from Institutional Class Shares transactions | | | — | | | | — | | |
Investor Class Shares | |
Proceeds from shares issued | | | 5,054 | | | | 41,326 | | |
Proceeds from Fund acquisition (Note 10) | | | — | | | | — | | |
Proceeds from shares issued in lieu of cash distributions | | | 14,328 | | | | 45,588 | | |
Cost of shares redeemed | | | (40,627 | ) | | | (102,381 | ) | |
Net increase (decrease) in net assets from Investor Class Shares transactions | | | (21,245 | ) | | | (15,467 | ) | |
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 | | | (21,245 | ) | | | (15,467 | ) | |
Total increase (decrease) in net assets | | | (34,511 | ) | | | (59,243 | ) | |
Net assets: | |
Beginning of year | | | 70,842 | | | | 130,085 | | |
End of year | | $ | 36,331 | | | $ | 70,842 | | |
Accumulated net investment income (loss) | | $ | (74 | ) | | $ | (323 | ) | |
Shares issued and redeemed: | |
Institutional Class Shares | |
Issued | | | — | | | | — | | |
Shares from Fund acquisition (Note 10) | | | — | | | | — | | |
Issued in lieu of cash distributions | | | — | | | | — | | |
Redeemed | | | — | | | | — | | |
Net increase (decrease) in Institutional Class Shares | | | — | | | | — | | |
Investor Class Shares | |
Issued | | | 373 | | | | 1,956 | | |
Shares from Fund acquisition (Note 10) | | | — | | | | — | | |
Issued in lieu of cash distributions | | | 1,155 | | | | 2,694 | | |
Redeemed | | | (2,765 | ) | | | (4,222 | ) | |
Net increase (decrease) in Investor Class Shares | | | (1,237 | ) | | | 428 | | |
Retirement Class Shares | |
Issued | | | — | | | | — | | |
Issued in lieu of cash distributions | | | — | | | | — | | |
Redeemed | | | — | | | | — | | |
Net increase (decrease) in Retirement Class Shares | | | — | | | | — | | |
Net increase (decrease) in share transactions | | | (1,237 | ) | | | 428 | | |
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 2016 ANNUAL REPORT 29
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 Medical Sciences Long/Short Fund — Institutional Class Shares | | | |
| | 2016 | | | $ | 14.02 | | | | (0.31 | ) | | | (0.83 | ) | | | (1.14 | ) | | | — | | | | (0.24 | ) | | | (0.24 | ) | |
| | 2015 | | | $ | 13.33 | | | | (0.35 | ) | | | 1.83 | | | | 1.48 | | | | — | | | | (0.79 | ) | | | (0.79 | ) | |
| | 2014 | | | $ | 11.54 | | | | (0.18 | ) | | | 2.33 | | | | 2.15 | | | | — | | | | (0.36 | ) | | | (0.36 | ) | |
| | 2013 | | | $ | 10.19 | | | | (0.13 | ) | | | 1.48 | | | | 1.35 | | | | — | | | | — | | | | — | | |
| | 2012 | | | $ | 10.35 | | | | (0.15 | ) | | | (0.01 | ) | | | (0.16 | ) | | | — | | | | — | | | | — | | |
Turner Medical Sciences Long/Short Fund — Investor Class Shares | | | |
| | 2016 | | | $ | 13.87 | | | | (0.34 | ) | | | (0.82 | ) | | | (1.16 | ) | | | — | | | | (0.24 | ) | | | (0.24 | ) | |
| | 2015 | | | $ | 13.23 | | | | (0.39 | ) | | | 1.82 | | | | 1.43 | | | | — | | | | (0.79 | ) | | | (0.79 | ) | |
| | 2014 | | | $ | 11.48 | | | | (0.21 | ) | | | 2.32 | | | | 2.11 | | | | — | | | | (0.36 | ) | | | (0.36 | ) | |
| | 2013 | | | $ | 10.16 | | | | (0.16 | ) | | | 1.48 | | | | 1.32 | | | | — | | | | — | | | | — | | |
| | 2012 | | | $ | 10.34 | | | | (0.18 | ) | | | — | | | | (0.18 | ) | | | — | | | | — | | | | — | | |
Turner Medical Sciences Long/Short Fund — Class C Shares | | | |
| | 2016 | | | $ | 13.36 | | | | (0.41 | ) | | | (0.80 | ) | | | (1.21 | ) | | | — | | | | (0.24 | ) | | | (0.24 | ) | |
| | 2015 | | | $ | 12.87 | | | | (0.47 | ) | | | 1.75 | | | | 1.28 | | | | — | | | | (0.79 | ) | | | (0.79 | ) | |
| | 2014 | | | $ | 11.26 | | | | (0.29 | ) | | | 2.26 | | | | 1.97 | | | | — | | | | (0.36 | ) | | | (0.36 | ) | |
| | 2013 | | | $ | 10.04 | | | | (0.23 | ) | | | 1.45 | | | | 1.22 | | | | — | | | | — | | | | — | | |
| | 2012 | | | $ | 10.30 | | | | (0.25 | ) | | | (0.01 | ) | | | (0.26 | ) | | | — | | | | — | | | | — | | |
Turner Titan Long/Short Fund — Institutional Class Shares | | | |
| | 2016 | | | $ | 9.37 | | | | (0.15 | ) | | | 0.02 | (6) | | | (0.13 | ) | | | — | | | | (0.55 | ) | | | (0.55 | ) | |
| | 2015 | | | $ | 11.95 | | | | (0.18 | ) | | | 0.23 | (6) | | | 0.05 | | | | — | | | | (2.63 | ) | | | (2.63 | ) | |
| | 2014 | | | $ | 11.43 | | | | (0.14 | ) | | | 0.66 | | | | 0.52 | | | | — | | | | — | | | | — | | |
| | 2013 | | | $ | 10.89 | | | | (0.07 | ) | | | 0.61 | | | | 0.54 | | | | — | | | | — | | | | — | | |
| | 2012 | | | $ | 11.45 | | | | (0.13 | ) | | | 0.04 | | | | (0.09 | ) | | | — | | | | (0.47 | ) | | | (0.47 | ) | |
Turner Titan Long/Short Fund — Investor Class Shares | | | |
| | 2016 | | | $ | 9.17 | | | | (0.17 | ) | | | 0.02 | (6) | | | (0.15 | ) | | | — | | | | (0.55 | ) | | | (0.55 | ) | |
| | 2015 | | | $ | 11.78 | | | | (0.20 | ) | | | 0.22 | (6) | | | 0.02 | | | | — | | | | (2.63 | ) | | | (2.63 | ) | |
| | 2014 | | | $ | 11.30 | | | | (0.17 | ) | | | 0.65 | | | | 0.48 | | | | — | | | | — | | | | — | | |
| | 2013 | | | $ | 10.80 | | | | (0.09 | ) | | | 0.59 | | | | 0.50 | | | | — | | | | — | | | | — | | |
| | 2012 | | | $ | 11.38 | | | | (0.16 | ) | | | 0.05 | | | | (0.11 | ) | | | — | | | | (0.47 | ) | | | (0.47 | ) | |
Turner Titan Long/Short Fund — Class C Shares | | | |
| | 2016 | | | $ | 8.68 | | | | (0.22 | ) | | | 0.02 | (6) | | | (0.20 | ) | | | — | | | | (0.55 | ) | | | (0.55 | ) | |
| | 2015 | | | $ | 11.36 | | | | (0.26 | ) | | | 0.21 | (6) | | | (0.05 | ) | | | — | | | | (2.63 | ) | | | (2.63 | ) | |
| | 2014 | | | $ | 10.98 | | | | (0.25 | ) | | | 0.63 | | | | 0.38 | | | | — | | | | — | | | | — | | |
| | 2013 | | | $ | 10.57 | | | | (0.17 | ) | | | 0.58 | | | | 0.41 | | | | — | | | | — | | | | — | | |
| | 2012 | | | $ | 11.23 | | | | (0.24 | ) | | | 0.05 | | | | (0.19 | ) | | | — | | | | (0.47 | ) | | | (0.47 | ) | |
30 TURNER FUNDS 2016 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 Medical Sciences Long/Short Fund — Institutional Class Shares | |
| | 2016 | | | $ | 12.64 | | | | (8.19 | )% | | $ | 15,212 | | | | 3.15 | % | | | 3.53 | % | | | (2.38 | )% | | | 210 | % | |
| | 2015 | | | $ | 14.02 | | | | 12.60 | % | | $ | 40,568 | | | | 2.90 | % (2) | | | 3.39 | % | | | (2.50 | )% | | | 206 | % | |
| | 2014 | | | $ | 13.33 | | | | 19.08 | % | | $ | 27,884 | | | | 1.93 | % (3) | | | 3.52 | % | | | (1.44 | )% | | | 409 | % | |
| | 2013 | | | $ | 11.54 | | | | 13.25 | % | | $ | 16,742 | | | | 1.98 | % (4) | | | 2.99 | % | | | (1.26 | )% | | | 492 | % | |
| | 2012 | | | $ | 10.19 | | | | (1.55 | )% | | $ | 37,117 | | | | 1.87 | % (5) | | | 2.09 | % | | | (1.45 | )% | | | 900 | % | |
Turner Medical Sciences Long/Short Fund — Investor Class Shares | |
| | 2016 | | | $ | 12.47 | | | | (8.43 | )% | | $ | 27,151 | | | | 3.40 | % | | | 3.78 | % | | | (2.63 | )% | | | 210 | % | |
| | 2015 | | | $ | 13.87 | | | | 12.30 | % | | $ | 90,976 | | | | 3.15 | % (2) | | | 3.64 | % | | | (2.75 | )% | | | 206 | % | |
| | 2014 | | | $ | 13.23 | | | | 18.83 | % | | $ | 5,974 | | | | 2.18 | % (3) | | | 3.77 | % | | | (1.69 | )% | | | 409 | % | |
| | 2013 | | | $ | 11.48 | | | | 12.99 | % | | $ | 3,062 | | | | 2.23 | % (4) | | | 3.24 | % | | | (1.51 | )% | | | 492 | % | |
| | 2012 | | | $ | 10.16 | | | | (1.74 | )% | | $ | 9,606 | | | | 2.12 | % (5) | | | 2.34 | % | | | (1.70 | )% | | | 900 | % | |
Turner Medical Sciences Long/Short Fund — Class C Shares | |
| | 2016 | | | $ | 11.91 | | | | (9.13 | )% | | $ | 3,443 | | | | 4.15 | % | | | 4.53 | % | | | (3.38 | )% | | | 210 | % | |
| | 2015 | | | $ | 13.36 | | | | 11.43 | % | | $ | 5,466 | | | | 3.90 | % (2) | | | 4.39 | % | | | (3.50 | )% | | | 206 | % | |
| | 2014 | | | $ | 12.87 | | | | 17.93 | % | | $ | 2,925 | | | | 2.93 | % (3) | | | 4.52 | % | | | (2.44 | )% | | | 409 | % | |
| | 2013 | | | $ | 11.26 | | | | 12.15 | % | | $ | 1,374 | | | | 2.98 | % (4) | | | 3.99 | % | | | (2.26 | )% | | | 492 | % | |
| | 2012 | | | $ | 10.04 | | | | (2.52 | )% | | $ | 2,889 | | | | 2.87 | % (5) | | | 3.09 | % | | | (2.45 | )% | | | 900 | % | |
Turner Titan Long/Short Fund — Institutional Class Shares | |
| | 2016 | | | $ | 8.69 | | | | (1.58 | )% | | $ | 21,204 | | | | 2.82 | % | | | 3.35 | % | | | (1.66 | )% | | | 572 | % | |
| | 2015 | | | $ | 9.37 | | | | 2.13 | % | | $ | 34,179 | | | | 2.56 | % (7) | | | 3.37 | % | | | (1.83 | )% | | | 510 | % | |
| | 2014 | | | $ | 11.95 | | | | 4.55 | % | | $ | 120,032 | | | | 1.93 | % (8) | | | 2.82 | % | | | (1.18 | )% | | | 443 | % | |
| | 2013 | | | $ | 11.43 | | | | 4.96 | % | | $ | 481,845 | | | | 1.93 | % (9) | | | 2.75 | % | | | (0.64 | )% | | | 580 | % | |
| | 2012 | | | $ | 10.89 | | | | (0.77 | )% | | $ | 832,857 | | | | 1.89 | % (10) | | | 2.34 | % | | | (1.15 | )% | | | 996 | % | |
Turner Titan Long/Short Fund — Investor Class Shares | |
| | 2016 | | | $ | 8.47 | | | | (1.84 | )% | | $ | 6,511 | | | | 3.07 | % | | | 3.60 | % | | | (1.91 | )% | | | 572 | % | |
| | 2015 | | | $ | 9.17 | | | | 1.86 | % | | $ | 25,651 | | | | 2.81 | % (7) | | | 3.62 | % | | | (2.08 | )% | | | 510 | % | |
| | 2014 | | | $ | 11.78 | | | | 4.25 | % | | $ | 15,630 | | | | 2.18 | % (8) | | | 3.07 | % | | | (1.42 | )% | | | 443 | % | |
| | 2013 | | | $ | 11.30 | | | | 4.63 | % | | $ | 44,139 | | | | 2.18 | % (9) | | | 3.00 | % | | | (0.89 | )% | | | 580 | % | |
| | 2012 | | | $ | 10.80 | | | | (0.95 | )% | | $ | 126,533 | | | | 2.14 | % (10) | | | 2.59 | % | | | (1.40 | )% | | | 996 | % | |
Turner Titan Long/Short Fund — Class C Shares | |
| | 2016 | | | $ | 7.93 | | | | (2.55 | )% | | $ | 1,213 | | | | 3.82 | % | | | 4.35 | % | | | (2.66 | )% | | | 572 | % | |
| | 2015 | | | $ | 8.68 | | | | 1.17 | % | | $ | 1,554 | | | | 3.56 | % (7) | | | 4.37 | % | | | (2.83 | )% | | | 510 | % | |
| | 2014 | | | $ | 11.36 | | | | 3.46 | % | | $ | 2,916 | | | | 2.93 | % (8) | | | 3.82 | % | | | (2.18 | )% | | | 443 | % | |
| | 2013 | | | $ | 10.98 | | | | 3.88 | % | | $ | 5,572 | | | | 2.93 | % (9) | | | 3.75 | % | | | (1.64 | )% | | | 580 | % | |
| | 2012 | | | $ | 10.57 | | | | (1.71 | )% | | $ | 10,391 | | | | 2.89 | % (10) | | | 3.34 | % | | | (2.15 | )% | | | 996 | % | |
* 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.
(1) Based on average shares outstanding.
(2) Dividend expense totaled 0.44% of average net assets for the year ended September 30, 2015, 0.02% of which was waived. Broker fees and charges on short sales totaled 0.86% of average net assets for the year ended September 30, 2015, 0.28% 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 3.20%, 3.45% and 4.20% for the Institutional, Investor and Class C Shares, respectively.
(3) Dividend expense totaled 0.16% of average net assets for the year ended September 30, 2014, 0.16% of which was waived. Broker fees and charges on short sales totaled 1.27% of average net assets for the year ended September 30, 2014, 1.27% 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 3.36%, 3.61% and 4.36% for the Institutional, Investor and Class C Shares, respectively.
(4) 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.
(5) 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.
(6) The amount shown for a share outstanding throughout the period does not accord with the change in aggregate gains and losses in the portfolio of securities during the period because of the timing of the sales and purchases of fund shares in relation to fluctuating market values during the period.
(7) Dividend expense totaled 0.46% of average net assets for the year ended September 30, 2015, 0.14% of which was waived. Broker fees and charges on short sales totaled 0.68% of average net assets for the year ended September 30, 2015, 0.35% 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 3.05%, 3.30% and 4.05% for the Institutional, Investor and Class C Shares, respectively.
(8) Dividend expense totaled 0.40% of average net assets for the year ended September 30, 2014, 0.40% of which was waived. Broker fees and charges on short sales totaled 0.44% of average net assets for the year ended September 30, 2014, 0.44% 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 2.77%, 3.01% and 3.77% for the Institutional, Investor and Class C Shares, respectively.
(9) 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.
(10) 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.
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 2016 ANNUAL REPORT 31
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 SMID Cap Growth Opportunities Fund — Institutional Class Shares | | | |
| | 2016 | | | $ | 31.27 | | | | (0.07 | ) | | | (0.77 | ) | | | (0.84 | ) | | | — | | | | (13.61 | ) | | | (13.61 | ) | |
| | 2015 | | | $ | 54.75 | | | | (0.12 | ) | | | 2.75 | | | | 2.63 | | | | — | | | | (26.11 | ) | | | (26.11 | ) | |
| | 2014 | | | $ | 65.25 | | | | (0.46 | ) | | | 0.32 | | | | (0.14 | ) | | | — | | | | (10.36 | ) | | | (10.36 | ) | |
| | 2013 | | | $ | 57.68 | | | | (0.12 | ) | | | 16.10 | | | | 15.98 | | | | — | | | | (8.41 | ) | | | (8.41 | ) | |
| | 2012 | | | $ | 45.83 | | | | (0.34 | ) | | | 12.19 | | | | 11.85 | | | | — | | | | — | | | | — | | |
Turner SMID Cap Growth Opportunities Fund — Investor Class Shares | | | |
| | 2016 | | | $ | 30.11 | | | | (0.11 | ) | | | (0.72 | ) | | | (0.83 | ) | | | — | | | | (13.61 | ) | | | (13.61 | ) | |
| | 2015 | | | $ | 53.75 | | | | (0.21 | ) | | | 2.68 | | | | 2.47 | | | | — | | | | (26.11 | ) | | | (26.11 | ) | |
| | 2014 | | | $ | 64.38 | | | | (0.59 | ) | | | 0.32 | | | | (0.27 | ) | | | — | | | | (10.36 | ) | | | (10.36 | ) | |
| | 2013 | | | $ | 57.16 | | | | (0.25 | ) | | | 15.88 | | | | 15.63 | | | | — | | | | (8.41 | ) | | | (8.41 | ) | |
| | 2012 | | | $ | 45.52 | | | | (0.47 | ) | | | 12.11 | | | | 11.64 | | | | — | | | | — | | | | — | | |
Turner Midcap Growth Fund — Institutional Class Shares | | | |
| | 2016 | | | $ | 21.49 | | | | (0.05 | ) | | | 0.13 | (2) | | | 0.08 | | | | — | | | | (2.96 | ) | | | (2.96 | ) | |
| | 2015 | | | $ | 38.57 | | | | (0.10 | ) | | | (0.82 | ) | | | (0.92 | ) | | | — | | | | (16.16 | ) | | | (16.16 | ) | |
| | 2014 | | | $ | 43.43 | | | | (0.08 | ) | | | 4.58 | | | | 4.50 | | | | — | | | | (9.36 | ) | | | (9.36 | ) | |
| | 2013 | | | $ | 35.39 | | | | (0.09 | ) | | | 8.68 | | | | 8.59 | | | | — | | | | (0.55 | ) | | | (0.55 | ) | |
| | 2012 | | | $ | 30.42 | | | | (0.05 | ) | | | 5.02 | | | | 4.97 | | | | — | | | | — | | | | — | | |
Turner Midcap Growth Fund — Investor Class Shares | | | |
| | 2016 | | | $ | 20.71 | | | | (0.09 | ) | | | 0.12 | (2) | | | 0.03 | | | | — | | | | (2.96 | ) | | | (2.96 | ) | |
| | 2015 | | | $ | 37.79 | | | | (0.16 | ) | | | (0.76 | ) | | | (0.92 | ) | | | — | | | | (16.16 | ) | | | (16.16 | ) | |
| | 2014 | | | $ | 42.85 | | | | (0.17 | ) | | | 4.47 | | | | 4.30 | | | | — | | | | (9.36 | ) | | | (9.36 | ) | |
| | 2013 | | | $ | 35.03 | | | | (0.18 | ) | | | 8.55 | | | | 8.37 | | | | — | | | | (0.55 | ) | | | (0.55 | ) | |
| | 2012 | | | $ | 30.16 | | | | (0.13 | ) | | | 5.00 | | | | 4.87 | | | | — | | | | — | | | | — | | |
Turner Midcap Growth Fund — Retirement Class Shares | | | |
| | 2016 | | | $ | 18.69 | | | | (0.12 | ) | | | 0.10 | (2) | | | (0.02 | ) | | | — | | | | (2.96 | ) | | | (2.96 | ) | |
| | 2015 | | | $ | 35.75 | | | | (0.21 | ) | | | (0.69 | ) | | | (0.90 | ) | | | — | | | | (16.16 | ) | | | (16.16 | ) | |
| | 2014 | | | $ | 41.07 | | | | (0.25 | ) | | | 4.29 | | | | 4.04 | | | | — | | | | (9.36 | ) | | | (9.36 | ) | |
| | 2013 | | | $ | 33.65 | | | | (0.25 | ) | | | 8.22 | | | | 7.97 | | | | — | | | | (0.55 | ) | | | (0.55 | ) | |
| | 2012 | | | $ | 29.05 | | | | (0.20 | ) | | | 4.80 | | | | 4.60 | | | | — | | | | — | | | | — | | |
Turner Small Cap Growth Fund — Investor Class Shares | | | |
| | 2016 | | | $ | 18.06 | | | | (0.05 | ) | | | 0.74 | | | | 0.69 | | | | — | | | | (5.22 | ) | | | (5.22 | ) | |
| | 2015 | | | $ | 37.23 | | | | (0.17 | ) | | | 1.25 | | | | 1.08 | | | | — | | | | (20.25 | ) | | | (20.25 | ) | |
| | 2014 | | | $ | 44.76 | | | | (0.33 | ) | | | 0.76 | | | | 0.43 | | | | — | | | | (7.96 | ) | | | (7.96 | ) | |
| | 2013 | | | $ | 35.96 | | | | (0.16 | ) | | | 11.47 | | | | 11.31 | | | | — | | | | (2.51 | ) | | | (2.51 | ) | |
| | 2012 | | | $ | 27.83 | | | | (0.23 | ) | | | 8.36 | | | | 8.13 | | | | — | | | | — | | | | — | | |
32 TURNER FUNDS 2016 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 SMID Cap Growth Opportunities Fund — Institutional Class Shares | |
| | 2016 | | | $ | 16.82 | | | | (4.63 | )% | | $ | 10,345 | | | | 1.15 | % | | | 1.76 | % | | | (0.40 | )% | | | 525 | % | |
| | 2015 | | | $ | 31.27 | | | | 7.28 | % | | $ | 15,808 | | | | 1.15 | % | | | 1.58 | % | | | (0.33 | )% | | | 227 | % | |
| | 2014 | | | $ | 54.75 | | | | (0.76 | )% | | $ | 25,912 | | | | 1.15 | % | | | 1.42 | % | | | (0.76 | )% | | | 78 | % | |
| | 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 | % | |
Turner SMID Cap Growth Opportunities Fund — Investor Class Shares | |
| | 2016 | | | $ | 15.67 | | | | (4.86 | )% | | $ | 41,008 | | | | 1.40 | % | | | 2.01 | % | | | (0.65 | )% | | | 525 | % | |
| | 2015 | | | $ | 30.11 | | | | 7.01 | % | | $ | 71,694 | | | | 1.40 | % | | | 1.83 | % | | | (0.59 | )% | | | 227 | % | |
| | 2014 | | | $ | 53.75 | | | | (1.00 | )% | | $ | 116,860 | | | | 1.40 | % | | | 1.67 | % | | | (1.01 | )% | | | 78 | % | |
| | 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 | % | |
Turner Midcap Growth Fund — Institutional Class Shares | |
| | 2016 | | | $ | 18.61 | | | | 0.22 | % | | $ | 16,205 | | | | 0.93 | % | | | 1.50 | % | | | (0.26 | )% | | | 165 | % | |
| | 2015 | | | $ | 21.49 | | | | (4.63 | )% | | $ | 35,704 | | | | 0.93 | % | | | 1.33 | % | | | (0.39 | )% | | | 119 | % (3) | |
| | 2014 | | | $ | 38.57 | | | | 12.25 | % | | $ | 46,253 | | | | 0.93 | % | | | 1.17 | % | | | (0.21 | )% | | | 89 | % (4) | |
| | 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 | % | |
Turner Midcap Growth Fund — Investor Class Shares | |
| | 2016 | | | $ | 17.78 | | | | (0.04 | )% | | $ | 96,130 | | | | 1.18 | % | | | 1.75 | % | | | (0.51 | )% | | | 165 | % | |
| | 2015 | | | $ | 20.71 | | | | (4.81 | )% | | $ | 133,541 | | | | 1.18 | % | | | 1.58 | % | | | (0.64 | )% | | | 119 | % (3) | |
| | 2014 | | | $ | 37.79 | | | | 11.88 | % | | $ | 187,974 | | | | 1.18 | % | | | 1.42 | % | | | (0.44 | )% | | | 89 | % (4) | |
| | 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 | % | |
Turner Midcap Growth Fund — Retirement Class Shares | |
| | 2016 | | | $ | 15.71 | | | | (0.35 | )% | | $ | 395 | | | | 1.43 | % | | | 2.00 | % | | | (0.76 | )% | | | 165 | % | |
| | 2015 | | | $ | 18.69 | | | | (5.11 | )% | | $ | 2,742 | | | | 1.43 | % | | | 1.83 | % | | | (0.89 | )% | | | 119 | % (3) | |
| | 2014 | | | $ | 35.75 | | | | 11.74 | % | | $ | 4,674 | | | | 1.43 | % | | | 1.67 | % | | | (0.68 | )% | | | 89 | % (4) | |
| | 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 | % | |
Turner Small Cap Growth Fund — Investor Class Shares | |
| | 2016 | | | $ | 13.53 | | | | 6.47 | % | | $ | 36,331 | | | | 1.25 | % | | | 2.04 | % | | | (0.35 | )% | | | 372 | % | |
| | 2015 | | | $ | 18.06 | | | | 6.55 | % | | $ | 70,842 | | | | 1.25 | % | | | 1.83 | % | | | (0.77 | )% | | | 280 | % | |
| | 2014 | | | $ | 37.23 | | | | 0.99 | % | | $ | 130,085 | | | | 1.25 | % | | | 1.66 | % | | | (0.83 | )% | | | 127 | % | |
| | 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 | % | |
* 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.
(1) Based on average shares outstanding.
(2) The amount shown for a share outstanding throughout the period does not accord with the change in aggregate gains and losses in the portfolio of securities during the period because of the timing of the sales and purchases of fund shares in relation to fluctuating market values during the period.
(3) If purchases of portfolio securities in connection with the reorganization of the Turner Large Growth Fund into the Turner Midcap Growth Fund had been included, the portfolio turnover rate would have been 133%.
(4) If purchases of portfolio securities in connection with the reorganization of the Turner All Cap Growth Fund into the Turner Midcap Growth Fund had been included, the portfolio turnover rate would have been 93%.
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 2016 ANNUAL REPORT 33
NOTES TO FINANCIAL STATEMENTS
Notes to financial statements
September 30, 2016
1. Organization:
Turner Funds (the "Trust"), a Massachusetts business trust, is registered under the Investment Company Act of 1940 (the "1940 Act"), as amended, as an open-end management investment company. The Trust meets the definition as an investment company and follows the accounting and reporting guidance under Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") Topic 946, "Financial Services — Investment Companies." The funds included herein are Turner Medical Sciences Long/Short Fund ("Medical Sciences Long/Short Fund"), Turner Titan Long/Short Fund ("Titan Long/Short Fund," formerly Turner Spectrum Fund and subsequently Turner Titan II Fund), Turner SMID Cap Growth Opportunities Fund ("SMID Cap Growth Opportunities Fund," formerly Turner Emerging Growth Fund), Turner Midcap Growth Fund ("Midcap Growth Fund"), and Turner Small Cap Growth Fund ("Small Cap Growth 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.
Securities 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 of the Trust (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
34 TURNER FUNDS 2016 ANNUAL REPORT
traded for an extended period of time; the security's primary pricing source is not able or willing to provide a price; or trading of the security is subject to local government-imposed restrictions. When a security is valued in accordance with the Fair Value Procedures, the Committee will determine the value after taking into consideration relevant information reasonably available to the Committee. 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 the event that Turner Investments LLC ("Turner," the "Adviser," or the "Administrator") (or its successors — see Note 4 for additional information about Turner) 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, Citi Fund Services, Ohio, Inc. ("Citi" or 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, 2016, 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, 2016. The breakdown, by sub-category, of the "common stock" category is disclosed in the Schedule of investments and Schedule of securities sold short for each Fund, as applicable.
| | | Level 1
(000) | | Level 2
(000) | | Total
(000) | |
Medical Sciences Long/Short Fund | |
Investments in Securities | |
Common stock | | $ | 45,240 | | | $ | — | | | $ | 45,240 | | |
Cash equivalent | | | 625 | | | | — | | | | 625 | | |
Warrant | | | — | | | | — | * | | | — | * | |
Total Investments in securities | | $ | 45,865 | | | $ | — | | | $ | 45,865 | | |
Securities Sold Short | |
Common stock | | $ | 14,964 | | | $ | — | | | $ | 14,964 | | |
Exchange traded funds | | | 20,596 | | | | — | | | | 20,596 | | |
Total Securities sold short | | $ | 35,560 | | | $ | — | | | $ | 35,560 | | |
Titan Long/Short Fund | |
Investments in Securities | |
Common stock | | $ | 25,984 | | | $ | — | | | $ | 25,984 | | |
Cash equivalent | | | 558 | | | | — | | | | 558 | | |
Exchange traded funds | | | 1,684 | | | | — | | | | 1,684 | | |
Warrant | | | 7 | | | | — | | | | 7 | | |
Total Investments in securities | | $ | 28,233 | | | $ | — | | | $ | 28,233 | | |
Securities Sold Short | |
Common stock | | $ | 14,419 | | | $ | — | | | $ | 14,419 | | |
Exchange traded funds | | | 2,697 | | | | — | | | | 2,697 | | |
Total Securities sold short | | $ | 17,116 | | | $ | — | | | $ | 17,116 | | |
SMID Cap Growth Opportunities Fund | |
Investments in Securities | |
Common stock | | $ | 49,692 | | | $ | — | | | $ | 49,692 | | |
Cash equivalent | | | 4,623 | | | | — | | | | 4,623 | | |
Total Investments in securities | | $ | 54,315 | | | $ | — | | | $ | 54,315 | | |
Midcap Growth Fund | |
Investments in Securities | |
Common stock | | $ | 109,823 | | | $ | — | | | $ | 109,823 | | |
Cash equivalent | | | 18,174 | | | | — | | | | 18,174 | | |
Total Investments in securities | | $ | 127,997 | | | $ | — | | | $ | 127,997 | | |
Small Cap Growth Fund | |
Investments in Securities | |
Common stock | | $ | 35,630 | | | $ | — | | | $ | 35,630 | | |
Cash equivalent | | | 8,820 | | | | — | | | | 8,820 | | |
Total Investments in securities | | $ | 44,450 | | | $ | — | | | $ | 44,450 | | |
* Represents interest in securities that were determined to have a value of zero at September 30, 2016.
For each Fund, there were no transfers between the levels as of September 30, 2016 based on the input levels assigned at September 30, 2015.
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.
TURNER FUNDS 2016 ANNUAL REPORT 35
NOTES TO FINANCIAL STATEMENTS
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. 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 Medical Sciences Long/Short Fund and Titan Long/Short Fund engaged in short sales during the year ended September 30, 2016.
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 obliga-
tions under the option contract. The initial purchase (sale) of an option contract is an "opening transaction." In order to close 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.
During the year ended September 30, 2016, the Funds held no written or purchased options.
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'
36 TURNER FUNDS 2016 ANNUAL REPORT
books and the U.S. dollar equivalent amounts actually received or paid.
Expenses—Expenses that are specifically attributed to one of the Funds are charged to that Fund. Certain other expenses of the Funds are prorated among the Funds on the basis of relative daily net assets.
Classes—Class specific expenses are borne by that class. Income, non-class specific expenses, and realized and unrealized gains and losses are allocated to the respective classes on the basis of 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.
3. Administration, shareholder servicing, distribution and transfer agent agreements:
Turner provides administrative services to the Funds under an Administration Agreement with the Trust. For its services, Turner receives an annual fee of 0.15% of the aggregate average daily net assets of the Trust up to $2 billion and 0.12% of the aggregate average daily net assets of the Trust over $2 billion. As of August 19, 2016, the services provided by Turner under the Administration Agreement were assigned to Turner Investments LLC ("New Turner"). See Note 4 below for additional information. Under a separate Sub-administration Agreement between Turner and Citi, Citi provides sub-administrative services, including certain fund accounting services, to the Trust. For the year ended September 30, 2016, Citi was paid $415 (000) by Turner.
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 1940 Act, 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 Medical Sciences Long/Short Fund and Titan Long/Short Fund pay the Distributor 0.75% in distribution fees.
The Funds have also adopted Shareholder Services Plans (the "Service Plans"). Under the Service Plans, service providers are entitled to receive aggregate fees for share-
holder 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 Medical Sciences Long/Short Fund and Titan Long/Short 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:
On August 19, 2016 (the "Closing Date"), a transaction closed in which Turner merged with Turner Investment Holdings L.P. ("TIH") and TIH agreed to acquire, directly and indirectly, all of the outstanding equity interests of Turner (the "Acquisition"). Following the Acquisition, New Turner succeeded to the investment adviser registration of Turner and succeeded Turner as the investment adviser to the Funds.
The result of the Acquisition was a change of control of Turner and the automatic termination of the previously existing advisory agreement between the Trust, on behalf of each of the Funds, and Turner, effective as of the Closing Date. To avoid disruption of the Funds' investment management program, on June 10, 2016, the Board adopted an interim advisory agreement between the Trust and Turner with respect to each Fund, effective as of the Closing Date. The interim advisory agreement was approved pursuant to Rule 15a-4 under the 1940 Act, which allows an adviser to provide investment management services pursuant to an interim advisory agreement for up to 150 days while a fund seeks shareholder approval of a new investment advisory agreement, subject to certain conditions.
During the term of the interim advisory agreement, the advisory fees earned by New Turner during the interim period will be held in an interest-bearing escrow account. Fees that are paid to the escrow account, including interest earned, will be paid to New Turner if Fund shareholders approve the new advisory agreement with respect to that Fund within 150 days of the Closing. If shareholders of a Fund do not approve the new advisory agreement within 150 days of the Closing, then New Turner will be paid the lesser of: (i) any costs incurred in performing its services under the interim advisory agreement, plus interest earned on the amount while in escrow; or (ii) the total amount in
TURNER FUNDS 2016 ANNUAL REPORT 37
NOTES TO FINANCIAL STATEMENTS
the escrow account related to its interim services, plus interest if earned.
The terms of the new advisory agreement are substantially similar to the terms of the Trust's current advisory agreement on behalf of the Funds with respect to services currently provided by Turner and services to be provided by New Turner. In addition, the advisory fees payable to New Turner by each Fund under the new advisory agreement are identical to the advisory fees payable under the previously existing advisory agreement.
A special meeting of shareholders of the Funds will be held on December 2, 2016, at which shareholders will be asked to consider and approve the new investment advisory agreement. Shareholders of record of each Fund as of the record date established for the special meeting will be entitled to and were mailed a proxy statement providing more information about the new advisory agreement on or about October 7, 2016.
The Trust and Turner were parties to an Investment Advisory Agreement dated April 28, 1996 under which Turner received a fee that was calculated daily and paid monthly, based on the average daily net assets of the Funds.
Turner contractually agreed to waive all or a portion of its fees and to reimburse expenses in order to limit total Fund operating expenses, excluding interest and borrowing cost on short and long sales and short sale dividend expenses, to a specified percentage of the average daily net assets of each Fund on an annualized basis through certain dates disclosed in the following table:
| | | Advisory
fee | | Expense
cap | | Date
(through) | |
Medical Sciences Long/Short
Fund | |
Institutional Class | | | 1.50 | % | | | 1.90 | % | | January 31, 2017 | |
Investor Class | | | 1.50 | % | | | 2.15 | % | | January 31, 2017 | |
Class C | | | 1.50 | % | | | 2.90 | % | | January 31, 2017 | |
Titan Long/Short Fund | |
Institutional Class | | | 1.50 | % | | | 1.90 | % | | January 31, 2017 | |
Investor Class | | | 1.50 | % | | | 2.15 | % | | January 31, 2017 | |
Class C | | | 1.50 | % | | | 2.90 | % | | January 31, 2017 | |
SMID Cap Growth
Opportunities Fund | |
Institutional Class | | | 1.00 | % | | | 1.15 | % | | January 31, 2017 | |
Investor Class | | | 1.00 | % | | | 1.40 | % | | January 31, 2017 | |
Midcap Growth Fund | |
Institutional Class | | | 0.75 | % | | | 0.93 | % | | January 31, 2017 | |
Investor Class | | | 0.75 | % | | | 1.18 | % | | January 31, 2017 | |
Retirement Class | | | 0.75 | % | | | 1.43 | % | | January 31, 2017 | |
Small Cap Growth Fund | |
Investor Class | | | 1.00 | % | | | 1.25 | % | | January 31, 2017 | |
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 Medical Sciences Long/Short Fund and Titan Long/Short 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 Medical Sciences Long/Short Fund and Titan Long/Short Fund.
6. Investment transactions:
The cost of security purchases and the proceeds from security sales, other than short-term investments, for the year ended September 30, 2016 were as follows:
| | | Purchases | | Sales | |
Medical Sciences Long/Short Fund | | $ | 172,853 | | | $ | 226,030 | | |
Titan Long/Short Fund | | | 230,590 | | | | 257,325 | | |
SMID Cap Growth Opportunities Fund | | | 297,563 | | | | 303,038 | | |
Midcap Growth Fund | | | 216,435 | | | | 274,346 | | |
Small Cap Growth Fund | | | 166,224 | | | | 202,429 | | |
7. Federal tax policies and information:
Each of the Funds are classified as a separate taxable entity for Federal income tax purposes. Each Fund 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. Any available tax equalization will be pro-rata to short-term capital gains and to long-term
38 TURNER FUNDS 2016 ANNUAL REPORT
capital gains, and then to net investment income, as applicable.
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, 2016:
| | Undistributed
net investment
income (loss)
(000) | | Accumulated
net realized
gain (loss)
(000) | | Portfolio
capital
(000) | |
Medical Sciences
Long/Short Fund | | $ | 2,493 | | | $ | (59 | ) | | $ | (2,434 | ) | |
Titan Long/Short Fund | | | 972 | | | | (70 | ) | | | (902 | ) | |
SMID Cap Growth
Opportunities Fund | | | 557 | | | | (10 | ) | | | (547 | ) | |
Midcap Growth Fund | | | 1,269 | | | | — | | | | (1,269 | ) | |
Small Cap Growth Fund | | | 405 | | | | — | | | | (405 | ) | |
The tax character of dividends and distributions declared during the years ended September 30, 2016 and September 30, 2015 were as follows (000):
| | Ordinary
income
(000) | | Long-term
capital gain
(000) | | Return of
capital
(000) | | Total
(000) | |
Medical Sciences Long/Short Fund | | | |
| | 2016 | | | $ | — | | | $ | 2,467 | | | $ | — | | | $ | 2,467 | | |
| | 2015 | | | | 1,500 | | | | 749 | | | | — | | | | 2,249 | | |
Titan Long/Short Fund | | | |
| | 2016 | | | $ | — | | | $ | 3,642 | | | $ | — | | | $ | 3,642 | | |
| | 2015 | | | | — | | | | 23,605 | | | | — | | | | 23,605 | | |
SMID Cap Growth Opportunities Fund | | | |
| | 2016 | | | $ | — | | | $ | 36,369 | | | $ | — | | | $ | 36,369 | | |
| | 2015 | | | | 396 | | | | 58,298 | | | | — | | | | 58,694 | | |
Midcap Growth Fund | | | |
| | 2016 | | | $ | — | | | $ | 23,165 | | | $ | — | | | $ | 23,165 | | |
| | 2015 | | | | 707 | | | | 93,583 | | | | — | | | | 94,290 | | |
Small Cap Growth Fund | | | |
| | 2016 | | | $ | — | | | $ | 14,893 | | | $ | — | | | $ | 14,893 | | |
| | 2015 | | | | — | | | | 46,207 | | | | — | | | | 46,207 | | |
As of September 30, 2016, the components of distributable earnings (accumulated losses) on a tax basis were as follows (000):
| | Undistributed
ordinary
income
(000) | | Undistributed
long-term
capital gains
(000) | | Capital
loss
carryforward
(000) | | Post-
October
losses
(000) | | Late-year
ordinary
losses
(000) | | Unrealized
appreciation
(depreciation)
(000) | | Total
distributable
earnings
(000) | |
Medical Sciences Long/Short Fund | | $ | — | | | $ | — | | | $ | (3,174 | ) | | $ | (14,717 | ) | | $ | (1,333 | ) | | $ | 5,427 | | | $ | (13,797 | ) | |
Titan Long/Short Fund | | | — | | | | — | | | | — | | | | (595 | ) | | | (506 | ) | | | 267 | | | | (834 | ) | |
SMID Cap Growth Opportunities Fund | | | — | | | | — | | | | (4,592 | ) | | | (5,612 | ) | | | (432 | ) | | | 3,825 | | | | (6,811 | ) | |
Midcap Growth Fund | | | — | | | | — | | | | (1,345 | ) | | | (8,764 | ) | | | (384 | ) | | | 18,849 | | | | 8,356 | | |
Small Cap Growth Fund | | | — | | | | 413 | | | | — | | | | — | | | | (76 | ) | | | 4,199 | | | | 4,536 | | |
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, 2016, the Fund in the following table 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 table below.
CLCFs not subject to expiration:
| | Short Term
(000) | | Long Term
(000) | |
Medical Sciences Long/Short Fund | | $ | 3,174 | | | $ | — | | |
SMID Cap Growth Opportunities Fund | | | 4,592 | | | | — | | |
CLCFs subject to expiration:
| | Expiring
September 30,
2017
(000) | |
Midcap Growth Fund* | | $ | 1,345 | | |
* CLCFs were acquired as part of the Fund merger described in Note 10. As such, the CLCF is subject to annual limitations.
TURNER FUNDS 2016 ANNUAL REPORT 39
NOTES TO FINANCIAL STATEMENTS
At September 30, 2016, 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
(000) | | Unrealized
appreciation
(000) | | Unrealized
depreciation
(000) | | Net
unrealized
appreciation
(depreciation)
(000) | |
Medical Sciences Long/Short Fund | | $ | 40,863 | | | $ | 8,719 | | | $ | (3,717 | ) | | $ | 5,002 | | |
Titan Long/Short Fund | | | 27,209 | | | | 2,167 | | | | (1,143 | ) | | | 1,024 | | |
SMID Cap Growth Opportunities Fund | | | 50,490 | | | | 4,425 | | | | (600 | ) | | | 3,825 | | |
Midcap Growth Fund | | | 109,148 | | | | 20,552 | | | | (1,703 | ) | | | 18,849 | | |
Small Cap Growth Fund | | | 40,251 | | | | 5,511 | | | | (1,312 | ) | | | 4,199 | | |
For the current open tax year and for all major jurisdictions, management has evaluated the tax positions taken or expected to be taken in the course of preparing their tax returns to determine whether the tax positions will "more-likely-than-not" be sustained by the Funds upon challenge by the applicable tax authority. Tax positions taken in previous tax years remain subject to examination by tax authorities (generally three years for federal income tax purposes). Tax positions not deemed to meet the more-likely-than-not threshold and that would result in a tax benefit or expense to the
Funds would be recorded as a tax benefit or expense in the current period. For the year ended September 30, 2016, the Funds did not recognize any amounts for unrecognized tax benefit/expense. A reconciliation of unrecognized tax benefit/expense is not provided herein, as the beginning and ending amounts of unrecognized tax benefit/expenses are zero, with no interim additions, reductions or settlements.
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.
Securities lending transactions are entered into by each Fund under a Master Securities Lending Agreement
("MSLA") which permits the Funds, under certain circumstances including an event of default (such as bankruptcy or insolvency), to offset amounts payable by the Funds to the same counterparty against amounts to be received and create one single net payment due to or from the Funds.
The following Funds had securities on loan and had invested cash collateral, subject to offset under a MSLA, with the following values as of September 30, 2016:
Fund | | Value of
Securities
on Loan (000) | | Value of
Collateral
(000)* | | Net
Amount
(000) | |
SMID Cap Growth
Opportunities Fund | | $ | 2,116 | | | $ | 2,116 | | | | — | | |
Midcap Growth Fund | | | 14,921 | | | | 14,921 | | | | — | | |
Small Cap Growth Fund | | | 8,044 | | | | 8,017 | | | | (27 | ) | |
* The actual value of collateral received may be in excess of the amounts shown in the table. The table only reflects collateral amounts up to the amount of the value of securities on loan as disclosed in the Statements of assets and liabilities.
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 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
40 TURNER FUNDS 2016 ANNUAL REPORT
debt obligations issued or guaranteed by such governments or their agencies and instrumentalities involves a high degree of risk.
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 23, 2015, the Midcap Growth Fund acquired all of the net assets of the Turner Large Growth Fund ("Large Growth Fund"), an open-end investment company, pursuant to a Plan of Reorganization approved by the Large Growth Fund's shareholders at a meeting held on January 15, 2015. The purpose of the transaction was to combine the two Funds managed by the Adviser with similar objectives and policies. The acquisition was accomplished by a tax-free exchange of 811,506 Investor Class Shares of the Large Growth Fund, valued at $14,264 (000), for 637,903 Investor Class Shares of the Midcap Growth Fund and 843,931 Institutional Class Shares of the Large Growth Fund, valued at $14,971 (000) for 646,409 Institutional Class Shares of the Midcap Growth Fund outstanding on January 23, 2015. The exchange ratios (Midcap Growth Fund shares issued/Large Growth Fund shares outstanding) were 0.79:1 for the Investor Class and 0.77:1 for the Institutional Class.
The investment portfolio of the Large Growth Fund, with a fair value of $29,261 (000) and identified cost of $28,833 (000) at January 23, 2015, was the principal asset acquired by the Midcap Growth Fund. For financial reporting purposes, assets received and shares issued by the Midcap Growth Fund were recorded at fair value; however, the cost basis of the investments received from the Large Growth Fund was carried forward to align ongoing reporting of the Midcap 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 23, 2015, the net assets of the Large Growth Fund, which included portfolio capital of $72,623 (000), accumulated net investment income of $81 (000), accumulated realized losses of $(43,898) (000) and unrealized gains of $428 (000), combined with the Midcap Growth Fund were $225,779 (000). The undistributed net investment income and unrealized gains of the Large Growth Fund may be distributed by the Midcap Growth Fund in future periods. Immediately prior to the merger, the net assets of the Large Growth Fund and the Midcap Growth Fund were $29,234 (000) and $196,545 (000), respectively. All fees and expenses incurred by the Large Growth Fund and the Midcap Growth Fund directly in connection with the Plan of Reorganization were borne by the Advisor.
Assuming the acquisition had been completed on October 1, 2014, the beginning of the annual reporting period of the Midcap Growth Fund, the Fund's pro forma results of operations for the year ended September 30, 2015, are as follows (000):
Net investment income/(loss): | | $ | (1,321 | ) | |
Net realized/unrealized gains/(losses): | | | (3,362 | ) | |
Change in net assets resulting from operations: | | $ | (4,683 | ) | |
Because the combined investment portfolios have been managed as a single integrated portfolio since the acquisition was completed, it is not practicable to separate the amounts of revenue and earnings of the Large Growth Fund that have been included in the Midcap Growth Fund's Statement of operations since January 23, 2015.
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, 2016.
TURNER FUNDS 2016 ANNUAL REPORT 41
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Shareholders and The Board of Trustees of
Turner Funds
We have audited the accompanying statements of assets and liabilities, including the schedules of investments, of Turner Medical Sciences Long/Short Fund, Turner Titan Long/Short Fund, Turner SMID Cap Growth Fund, Turner Midcap Growth Fund and Turner Small Cap Growth Fund (the "Funds"), each a series of Turner Funds, as of September 30, 2016 and the related statements of operations for the year then ended, and the statements of changes in net assets and the financial highlights for each of the two years in the 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. The financial highlights for each of the three years in the period ended September 30, 2014 have been audited by other auditors, and in their opinion dated November 24, 2014, they expressed an unqualified opinion on such financial highlights.
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 audits to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. The Funds are not required to have, nor were we engaged to perform, an audit of their internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Funds' internal control over financial reporting. Accordingly, we express no such opinion. 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, 2016, by correspondence with the custodian and brokers or through other appropriate audit procedures where replies from brokers were unable to be obtained. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of Turner Medical Sciences Long/Short Fund, Turner Titan Long/Short Fund, Turner SMID Cap Growth Fund, Turner Midcap Growth Fund and Turner Small Cap Growth Fund, as of September 30, 2016, the results of their operations for the year the ended, and the changes in their net assets and the financial highlights for each of the two years in the period then ended, in conformity with accounting principles generally accepted in the United States of America.
TAIT, WELLER & BAKER LLP
Philadelphia, Pennsylvania
November 28, 2016
42 TURNER FUNDS 2016 ANNUAL REPORT
NOTICE TO SHAREHOLDERS (Unaudited)
For shareholders that do not have a September 30, 2016 tax year end, this notice is for informational purposes only. For shareholders with a September 30, 2016 year end, please consult your tax advisor as to the pertinence of this notice. For the fiscal period ended September 30, 2016, 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)
(000) | | Long-term
capital gain(4)
(000) | |
Medical Sciences Long/Short Fund | | | 0.00 | % | | | 0.00 | % | | $ | — | | | $ | 2,467 | | |
Titan Long/Short Fund | | | 0.00 | % | | | 0.00 | % | | | — | | | | 3,643 | | |
SMID Cap Growth Opportunities Fund | | | 0.00 | % | | | 0.00 | % | | | — | | | | 36,369 | | |
Midcap Growth Fund | | | | | 0.00 | % | | | 0.00 | % | | | 23,165 | | |
Small Cap Growth Fund | | | 0.00 | % | | | 0.00 | % | | | — | | | | 14,893 | | |
(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% for individual taxpayers.
(3) The amount in this column represents the amount of "Short-Term Capital Gain" as designated in accordance with Sections 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 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 ended December 31, 2016. Complete information will be computed and reported in conjunction with your 2016 Form 1099-DIV.
TURNER FUNDS 2016 ANNUAL REPORT 43
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
4/1/16 | | Ending
Account
Value
9/30/16 | | Annualized
Expense
Ratios | | Expenses
Paid
During
Period* | |
Medical Sciences Long/Short Fund —
Institutional Class Shares | |
Actual Fund Return | | $ | 1,000.00 | | | $ | 1,049.80 | | | | 3.30 | % | | $ | 16.91 | | |
Hypothetical
5% Return | | | 1,000.00 | | | | 1,008.50 | | | | 3.30 | | | | 16.57 | | |
Medical Sciences Long/Short Fund — Investor Class Shares | |
Actual Fund Return | | | 1,000.00 | | | | 1,048.80 | | | | 3.55 | | | | 18.18 | | |
Hypothetical
5% Return | | | 1,000.00 | | | | 1,007.25 | | | | 3.55 | | | | 17.81 | | |
Medical Sciences Long/Short Fund — Class C Shares | |
Actual Fund Return | | | 1,000.00 | | | | 1,044.70 | | | | 4.30 | | | | 22.08 | | |
Hypothetical
5% Return | | | 1,000.00 | | | | 1,003.40 | | | | 4.30 | | | | 21.64 | | |
Titan Long/Short Fund — Institutional Class Shares | |
Actual Fund Return | | | 1,000.00 | | | | 1,001.20 | | | | 3.10 | | | | 15.51 | | |
Hypothetical
5% Return | | | 1,000.00 | | | | 1,009.50 | | | | 3.10 | | | | 15.57 | | |
Titan Long/Short Fund — Investor Class Shares | |
Actual Fund Return | | | 1,000.00 | | | | 1,000.00 | | | | 3.35 | | | | 16.80 | | |
Hypothetical
5% Return | | | 1,000.00 | | | | 1,008.20 | | | | 3.35 | | | | 16.87 | | |
Titan Long/Short Fund — Class C Shares | |
Actual Fund Return | | | 1,000.00 | | | | 996.20 | | | | 4.10 | | | | 20.56 | | |
Hypothetical
5% Return | | | 1,000.00 | | | | 1,004.40 | | | | 4.10 | | | | 20.65 | | |
| | Beginning
Account
Value
4/1/16 | | Ending
Account
Value
9/30/16 | | Annualized
Expense
Ratios | | Expenses
Paid
During
Period* | |
SMID Cap Growth Opportunities Fund —
Institutional Class Shares | |
Actual Fund Return | | $ | 1,000.00 | | | $ | 1,040.80 | | | | 1.15 | % | | $ | 5.87 | | |
Hypothetical
5% Return | | | 1,000.00 | | | | 1,019.25 | | | | 1.15 | | | | 5.81 | | |
SMID Cap Growth Opportunities Fund —
Investor Class Shares | |
Actual Fund Return | | | 1,000.00 | | | | 1,039.10 | | | | 1.40 | | | | 7.14 | | |
Hypothetical
5% Return | | | 1,000.00 | | | | 1,018.00 | | | | 1.40 | | | | 7.06 | | |
Midcap Growth Fund — Institutional Class Shares | |
Actual Fund Return | | | 1,000.00 | | | | 1,081.30 | | | | 0.93 | | | | 4.84 | | |
Hypothetical
5% Return | | | 1,000.00 | | | | 1,020.35 | | | | 0.93 | | | | 4.70 | | |
Midcap Growth Fund — Investor Class Shares | |
Actual Fund Return | | | 1,000.00 | | | | 1,080.20 | | | | 1.18 | | | | 6.14 | | |
Hypothetical
5% Return | | | 1,000.00 | | | | 1,019.10 | | | | 1.18 | | | | 5.96 | | |
Midcap Growth Fund — Retirement Class Shares | |
Actual Fund Return | | | 1,000.00 | | | | 1,078.20 | | | | 1.43 | | | | 7.43 | | |
Hypothetical
5% Return | | | 1,000.00 | | | | 1,017.85 | | | | 1.43 | | | | 7.21 | | |
Small Cap Growth Fund — Investor Class Shares | |
Actual Fund Return | | | 1,000.00 | | | | 1,176.50 | | | | 1.25 | | | | 6.80 | | |
Hypothetical
5% Return | | | 1,000.00 | | | | 1,018.75 | | | | 1.25 | | | | 6.31 | | |
* Unless otherwise indicated, expenses are equal to the Fund's annualized expense ratio multiplied by the average account value over the period, multiplied by 183/366 (to reflect the one-half year period from 4/1/16 - 9/30/16).
44 TURNER FUNDS 2016 ANNUAL REPORT
TRUSTEE AND OFFICERS OF THE TRUST
| Name, address and age(1) | | Position held with
Trust and length
of service(2) | | Principal occupation(s)
during past 5 years | | Number of
portfolios in
complex
overseen
by trustee | | Other
directorships
held | |
Non-Interested Trustees | | | | | | | | | |
Alfred C. Salvato
(58) | | Chairman of the Board (since 2004); Trustee (since 1996) | | Senior Vice President of Finance and Chief Investment Officer (since 2003) and Treasurer (since 1995), Thomas Jefferson University. | | | 5 | | | | None | | |
Janet F. Sansone
(71) | | Trustee (since 1996) | | Chief Management Officer, United States Government Printing Office (2008-2010); Self-employed Consultant (since 1999). | | | 5 | | | | None | | |
John T. Wholihan
(78) | | Trustee (since 1996) | | Dean Emeritus (since 2007), Professor (since 1984) and Dean (1984-2007), College of Business Administration, Loyola Marymount University. | | | 5 | | | | None | | |
Executive Officers | | | | | | | | | |
Robert E. Turner
(58) | | President (since 2015) | | Chairman and Chief Investment Officer (since 1990); Chief Executive Officer (since 2015), Turner. | | | N/A | | | | N/A | | |
Joel B. Engle
(50) | | Controller and Chief Financial Officer (since 2015) | | Senior Vice President of Citi Fund Services Ohio, Inc. (since 2007). | | | N/A | | | | N/A | | |
Brian F. McNally
(58) | | Vice-President (since 2002), Secretary and Chief Compliance Officer (since 2004) | | General Counsel and Chief Compliance Officer (2004-2016), Deputy General Counsel (2002-2004), Turner. | | | N/A | | | | N/A | | |
Christopher Holmes
(46) | | Vice-President and Assistant Secretary (since 2015) | | Manager, Fund Administration and Compliance (since 2013), Senior Associate, Fund Administration and Compliance (2012), Associate, Fund Administration and Compliance (2005-2011), Operations Coordinator (2002-2005), Turner. | | | N/A | | | | N/A | | |
(1) Each Trustee and executive officer, unless noted otherwise, may be contacted by writing to such Trustee or Officer c/o Turner Funds, 1000 Chesterbrook Blvd, 1st Floor, 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, 2016.
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.
TURNER FUNDS 2016 ANNUAL REPORT 45
Turner Funds' trustees
Alfred C. Salvato
Chief Investment Officer & Treasurer
Thomas Jefferson University
Janet F. Sansone
Executive Director
JFS Consulting
Robert E. Turner
Chairman, Chief Investment Officer and
Chief Executive Officer
Turner Investments LLC
Dr. John T. Wholihan
Professor (Retired), Dean Emeritus, College of Business
Loyola Marymount University
Investment adviser
Turner Investments LLC
Berwyn, Pennsylvania
Distributor
Foreside Fund Services, LLC
Portland, Maine
Administrator
Turner Investments LLC
Berwyn, Pennsylvania
Independent Registered Public Accounting Firm
Tait, Weller & Baker 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 LLC. Turner Investments LLC 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.
46 TURNER FUNDS 2016 ANNUAL REPORT
THIS PAGE WAS INTENTIONALLY LEFT BLANK
TURNER FUNDS 2016 ANNUAL REPORT 47
THIS PAGE WAS INTENTIONALLY LEFT BLANK
48 TURNER FUNDS 2016 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
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 Tait, Weller & Baker, LLP (“Tait Weller”) related to the Trust
Tait Weller LLP billed aggregate fees for services rendered to the Fund for the last two fiscal years as follows:
| | 2015 | | 2016 | |
| | All fees and
services to the
Trust that were
pre-approved | | All fees and
services to
service
affiliates that
were pre-
approved | | All other fees
and services to
service
affiliates that
did not require
pre-approval | | All fees and
services to the
Trust that were
pre-approved | | All fees and
services to
service
affiliates that
were pre-
approved | | All other fees
and services to
service
affiliates that
did not require
pre-approval | |
(a) Audit Fees (1) | | $ | 85,000 | | N/A | | N/A | | $ | 85,000 | | N/A | | N/A | |
(b) Audit-Related Fees | | N/A | | N/A | | N/A | | N/A | | N/A | | N/A | |
(c) Tax Fees (3) | | 15,000 | | N/A | | N/A | | 15,000 | | 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) Tax Fees consist of tax compliance services for the Trust. These services primarily included preparation of federal and state income tax returns and federal excise tax returns, as well as review of annual excise 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:
| | 2015 | | 2016 | |
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 Tait Weller for the last two fiscal years were $15,000 and $15,000 for 2016 and 2015, respectively, as described above.
(h) The registrant’s Audit Committee has considered whether the provision of non-audit services that were rendered to the registrant’s Investment Adviser and any entity controlling, controlled by, or under common control with the Investment Adviser that provides on-going services to the registrant that were not pre-approved pursuant to paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X is compatible with maintaining the principal accountant’s independence.
Item 5. Audit Committee of Listed Registrants.
Not applicable to open-end management investment companies.
Item 6. Schedule of Investments.
Schedule of Investments is included as part of report to shareholders filed under Item 1.
Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies.
Not applicable to open-end management investment companies.
Item 8. Portfolio Managers of Closed-End Management Investment Companies.
Not applicable to open-end management investment companies.
Item 9. Purchases of Equity Securities by Closed-End Management Investment Company and Affiliated Purchasers.
Not applicable to open-end management investment companies.
Item 10. Submission of Matters to a Vote of Security Holders.
There have been no material changes to the procedures by which shareholders may recommend nominees to the registrant’s Board of Trustees since the registrant’s last proxy solicitation.
Item 11. Controls and Procedures.
(a) The registrant’s Principal Executive Officer and Principal Financial Officer concluded that the registrant’s disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940 as amended (the “Act”)) were effective as of a date within 90 days of the filing date of this report, based on their evaluation of the effectiveness of the registrant’s disclosure controls and procedures required by Rule 30a-3(b) under the Act and Rule 13a-15(b) or 15d-15(b) under the Securities and Exchange Act of 1934.
(b) There were no changes in the registrant’s internal control over financial reporting (as defined in Rule 30a-3(d) of the Act) that occurred during the registrant’s last fiscal quarter that have materially affected, or are reasonably likely to materially affect, the registrant’s internal control over financial reporting.
Item 12. Exhibits.
(a)(1) Code of Ethics is attached hereto
(a)(2) A separate certification for the Principal Executive Officer and the Principal Financial Officer of the registrant as required by Rule 30a-2(a) under the Investment Company Act of 1940, as amended (17 CFR 270.30a-2(a)), are filed herewith.
(b) Officer certifications as required by Rule 30a-2(b) under the Investment Company Act of 1940, as amended (17 CFR 270.30a-2(b)), also accompany this filing as an Exhibit.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Registrant | Turner Funds | |
| | |
By (Signature and Title) | /s/ Robert E. Turner | |
| Robert E. Turner, President (Principal Executive Officer) | |
Date | December 5, 2016 | | |
| | | | | |
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/ Robert E. Turner | |
| Robert E. Turner, President (Principal Executive Officer) | |
Date | December 5, 2016 | | |
| | |
 By (Signature and Title)
| /s/ Joel B. Engle | |
| Joel B. Engle, Controller and Chief Financial Officer (Principal Financial Officer) | |
Date | December 5, 2016 | | |
| | | | |
