[TURNER LOGO OMITTED] Annual Report September 30, 1999 - -------------------------------------------------------------------------------- Turner Large Cap Growth Equity Fund - -------------------------------------------------------------------------------- Turner Growth Equity Fund - -------------------------------------------------------------------------------- Turner Midcap Growth Fund - -------------------------------------------------------------------------------- Turner Small Cap Growth Fund - -------------------------------------------------------------------------------- Turner Micro Cap Growth Fund - -------------------------------------------------------------------------------- Turner Top 20 Fund - -------------------------------------------------------------------------------- Turner Technology Fund - -------------------------------------------------------------------------------- Turner Short Duration Government Funds - Three Year Portfolio - -------------------------------------------------------------------------------- Turner Short Duration Government Funds - One Year Portfolio - -------------------------------------------------------------------------------- Turner Core High Quality Fixed Income Fund - -------------------------------------------------------------------------------- Portfolios of The TIP Funds [LOGO OMITTED] Contents 1 Letter to shareholders 3 Total returns of Turner Funds 5 Investment review: Turner Large Cap Growth Equity Fund 7 Investment review: Turner Growth Equity Fund 9 Investment review: Turner Midcap Growth Fund 11 Investment review: Turner Small Cap Growth Fund 13 Investment review: Turner Micro Cap Growth Fund 15 Investment review: Turner Top 20 Fund 17 Investment review: Turner Technology Fund 19 Investment review: Turner Short Duration Government Funds-Three Year Portfolio 21 Investment review: Turner Short Duration Government Funds-One Year Portfolio 23 Investment review: Turner Core High Quality Fixed Income Fund 25 Financial statements 64 Report of Independent Auditors Turner Funds The Turner Funds, Portfolios of the TIP Funds, offer a series of ten no-load mutual funds to individual and institutional investors. The minimum initial investment in a Turner Fund for regular accounts is $2,500 and $2,000 for individual retirement accounts. The minimum amount for subsequent investments is $50. Turner Investment Partners, Inc., based in Berwyn, Pennsylvania, serves as the investment adviser to the Turner Funds. The firm, founded in 1990, invests more than $3 billion in equity, fixed-income, and balanced portfolios on behalf of individuals and institutions. Shareholder services Turner Funds shareholders receive annual and semiannual reports and monthly account statements. Shareholders who have questions about their accounts may call a toll-free telephone number, 1-800-224-6312. Or they may write to Turner Funds, Box 419805, Kansas City, Missouri 64141. Letter to shareholders - -------------------------------------------------------------------------------- To our shareholders What a difference a year makes. At this time last year, we were assuring investors that despite all signs to the contrary, the global financial markets were not headed toward a catastrophic meltdown. This year, we are happy to report that our confidence was well founded, and that the world's financial picture is in fact brighter than ever. And, we are pleased to inform our investors of truly outstanding results across our entire family of equity and fixed income funds. For the year ended September 30, 1999, the Turner funds delivered performance that stood out even in the crowded environment of today's mutual fund industry. This included a breathtaking 113.46% total return for our Micro Cap Growth Fund. Our other funds performed as follows: [BULLET] Turner Large Cap Growth Equity Fund: 42.97% [BULLET] Turner Growth Equity Fund: 38.16% [BULLET] Turner Midcap Growth Fund: 84.07% [BULLET] Turner Small Cap Growth Fund: 59.14% [BULLET] Turner Top 20 Fund: 39.90%* [BULLET] Turner Technology Fund: 40.60%* [BULLET] Turner Short Duration - Three Year Fund (Institutional Class): 2.89% [BULLET] Turner Short Duration - One Year Fun (Institutional Class): 5.34% [BULLET] Turner Core High Quality Fixed Income Fund: 0.48%* *Inception Date: 7/1/99 These results took place against a backdrop of strong overall market performance. After a rocky start, the domestic equity markets rallied strongly, eventually leading the S&P 500 Index to a total return of 27.80% for the fiscal year. This is an exceptional result by any historical standard. And it makes it all the more remarkable that all of our equity funds significantly outperformed their indices. Affirmation of our investment approach. Performance like this was bound to attract the attention of the financial media. And in 1999, the Turner Funds and their portfolio managers became favorite subjects of major newspaper, magazine, and broadcast reports. These included prominent appearances in Fortune, Forbes, Barron's, Investment News, and Mutual Funds magazine. In addition, several of our individual funds received high ratings from Morningstar, Inc. And while this increased level of attention is of course gratifying, we are more pleased that 1999 continued to affirm the value of the Turner Funds investment approach. This approach is based on the philosophy that earnings expectations drive stock prices. Our investment philosophy and process lead us to create portfolios that are fully invested at all times and maintain sector weightings that are neutral or well diversified relative to their benchmark indices. This helps us avoid risks associated with sector rotation and market timing, and allows us to focus our efforts exclusively on stock selection. Investing lessons of the past decade. During our first ten years as an independent investment firm, we have learned a great deal about what it takes to achieve above-average results in the challenging world of investing. And we recently condensed this knowledge into six fundamental lessons that we believe can benefit any investor. They are: 1. Understand fully and completely what makes stocks go up and down. Earnings growth is the essence of stock investing: Stocks of companies with good earnings ultimately go up, and the stocks of companies with poor earnings ultimately go down. That's why we above all seek to invest in companies with earnings that are growing at a rate meeting or exceeding Wall Street's expectations. 2. Don't take on risks you can't control. Our stock funds are fully invested and sector neutral because the entire history of the market tells us that market timing and sector rotation present a risk of selling at the bottom and buying at the top. The best way to avoid that risk and consistently outperform a benchmark is to look like that benchmark. 3. Be the best stock pickers possible. A multifaceted investment process is vital in selecting good stocks because many factors contribute to stocks' performance. Our own process involves a combination of many quantitative, fundamental, and technical analyses. LETTER TO SHAREHOLDERS - -------------------------------------------------------------------------------- 4. Don't get too big. Generating superior investment performance becomes increasingly difficult once a portfolio's assets grow beyond a certain point. To maximize our own returns, we have established asset limits for our institutional stock portfolios and mutual funds. 5. Align the firm's goals with the client's. Investment managers have a pronounced tendency to equate success with gaining assets rather than with putting the client first. Instead, we focus on how to do one's best for the client. For instance, we compensate the members of our investment team based on how they perform. If they don't provide our clients with above-average returns, they don't receive above-average bonuses. 6. Be willing to adjust to changes in the market. For example, the quantitative modeling process that I developed back in 1985 worked very well, by all accounts. Through back-testing, however, we found it was working better in growth sectors such as technology, than in value sectors such as energy. So we adjusted the model's value factors to give greater weight in the value sectors. The result: improved returns in the value sectors. The investment environment is continually changing, and you must adapt. Study the market, and alter your activities to reflect what you've learned. An age of infinite opportunities. As we enter the new millennium, we look back with pride over what we have accomplished thus far. And we are looking forward with excitement over the nearly infinite opportunities that are available to investors during this golden age of capitalism. While our task as money managers is more complex than ever, it is also more rewarding because of the potential gains that global economic growth and productivity-enhancing technology have put within our reach. We therefore feel privileged to serve as your eyes and ears on the market, and thank you for entrusting us to identify the very best of what the markets have to offer - now and in the future. /s/ signature omitted - --------------------- Robert E. Turner Chairman and Chief Investment Officer Turner Investment Partners, Inc. [PHOTO OMITTED] Bob Turner 2 | TURNER FUNDS 1999 ANNUAL REPORT Performance - ------------------------------------------------------------------------------- Total returns of Turner Funds* Through September 30, 1999 Since Three Year One Three Five inception Months To Date Year Year Year (annualized) (annualized) (annualized)+ Equity ======================================================================================================================= Turner Large Cap Growth Equity Fund (1.77)% 10.20% 42.97% n/a n/a 31.15% Lipper Large-Cap Growth Funds Average 3.64 8.75 37.86 n/a n/a 23.71 Russell Top 200 Growth Index (3.40) 5.89 34.26 n/a n/a 27.29 S&P 500 Index (6.24) 5.36 27.80 n/a n/a 22.06 - ----------------------------------------------------------------------------------------------------------------------- Turner Growth Equity Fund (1.00) 9.97 38.16 26.58% 24.63% 19.17 Lipper Large-Cap Growth Funds Average 3.64 8.75 37.86 25.04 24.02 17.93 Russell 1000 Growth Index (3.66) 6.40 34.85 26.87 26.79 19.30 S&P 500 Index (6.24) 5.36 27.80 25.09 25.03 19.05 - ----------------------------------------------------------------------------------------------------------------------- Turner Midcap Growth Fund 3.95 45.80 84.07 n/a n/a 38.93 Lipper Mid-Cap Growth Funds Average 0.53 17.83 50.88 n/a n/a 13.41 Russell Midcap Growth Index (5.01) 8.47 37.19 n/a n/a 17.25 - ----------------------------------------------------------------------------------------------------------------------- Turner Small Cap Growth Fund 3.42 27.99 59.14 15.54 29.26 26.63 Lipper Small-Cap Growth Funds Average 0.85 13.57 43.76 9.58 15.03 12.68 Russell 2000 Growth Index (4.92) 7.27 32.63 7.14 12.16 9.85 - ----------------------------------------------------------------------------------------------------------------------- Turner Micro Cap Growth Fund 20.17 51.95 113.46 n/a n/a 59.94 Lipper Small-Cap Core Funds Average (3.77) 4.66 24.96 n/a n/a (4.46) Russell 2000 Growth Index (4.92) 7.27 32.63 n/a n/a 0.71 - ----------------------------------------------------------------------------------------------------------------------- Turner Top 20 Fund 39.90 n/a n/a n/a n/a 39.90** Lipper Multi-Cap Core Funds Average (6.34) n/a n/a n/a n/a (6.34) S&P 500 Index (6.24) n/a n/a n/a n/a (6.24) - ----------------------------------------------------------------------------------------------------------------------- Turner Technology Fund 40.60 n/a n/a n/a n/a 40.60** Lipper Science & Technology Funds Average 7.02 n/a n/a n/a n/a 7.02 Pacific Exchange Technology 100 Index 4.62 n/a n/a n/a n/a 4.62 - ----------------------------------------------------------------------------------------------------------------------- Fixed income ======================================================================================================================= Turner Short Duration Government Funds- Three Year Portfolio (Institutional Class) 1.10% 2.19% 2.89% 6.00% 6.56% 6.02% Lipper Short-Intermediate U.S. Government Funds Average 0.81 0.41 0.69 5.3 5.94 5.05 Lehman Brothers 1-3 Year U.S. Government Bond Index 1.24 2.41 3.18 5.98 6.36 5.76 - ----------------------------------------------------------------------------------------------------------------------- Turner Short Duration Government Funds- One Year Portfolio (Institutional Class) 1.40 4.10 5.34 5.92 6.33 6.08 Lipper Ultra-Short Obligation Funds Average 1.14 3.28 4.28 5.35 5.57 5.31 Merrill Lynch Three-Month U.S. Treasury Bill Index 1.27 3.54 4.70 5.15 5.36 5.23 - ----------------------------------------------------------------------------------------------------------------------- Turner Core High Quality Fixed Income Fund 0.48 n/a n/a n/a n/a 0.48** Lipper General Bond Funds Average (0.22) n/a n/a n/a n/a (0.22) Lehman Brothers Aggregate Bond Index 0.68 n/a n/a n/a n/a 0.68 - ----------------------------------------------------------------------------------------------------------------------- * Past performance is no guarantee of future results. ** Returns are cumulative. Source: Lipper Analytical Services. + The inception dates for each Turner Fund are as follows: Turner Large Cap Growth Equity Fund, February 1, 1997; Turner Growth Equity Fund, March 11, 1992; Turner Midcap Growth Fund, October 1, 1996; Turner Small Cap Growth Fund, February 7, 1994; Turner Micro Cap Growth Fund, March 1, 1998; Turner Top 20 Fund, July 1, 1999; Turner Technology Fund, July 1, 1999; Turner Short Duration Government Funds-Three Year Portfolio (Institutional Class Shares), March 1, 1994; Turner Short Duration Government Funds-One Year Portfolio (Institutional Class Shares), March 1, 1994; and Turner Core High Quality Fixed Income Fund, July 1, 1999. SEI Investments Distribution Co., Oaks, PA acts as distributor of the Turner Funds. The performance data quoted represents past performance and the principal value and investment return will fluctuate so that an investor's shares, when redeemed, may be worth more or less than their original cost. This information must be preceded or accompanied by a prospectus for the Turner Funds. Investors should read the prospectus carefully before investing. TURNER FUNDS 1999 ANNUAL REPORT | 3 Performance - -------------------------------------------------------------------------------- Lipper Inc. performance rankings of mutual funds Periods ending September 30, 1999 One Two Five Seven year years years years - ----------------------------------------------------------------------------------------------------------------- Large-Cap Growth Funds Turner Large Cap Growth Equity Fund Ranking vs. competitors 72/331 26/257 -- -- Percentile ranking 21 10 -- -- - ----------------------------------------------------------------------------------------------------------------- Large-Cap Growth Funds Turner Growth Equity Fund Ranking vs. competitors 118/331 70/257 44/130 30/70 Percentile ranking 35 27 33 42 - ----------------------------------------------------------------------------------------------------------------- Mid-Cap Growth Funds Turner Midcap Growth Fund Ranking vs. competitors 26/228 7/197 -- -- Percentile ranking 11 3 - ----------------------------------------------------------------------------------------------------------------- Small-Cap Growth Funds Turner Small Cap Growth Fund Ranking vs. competitors 52/247 32/201 2/82 -- Percentile ranking 21 16 2 -- - ----------------------------------------------------------------------------------------------------------------- Small-Cap Core Funds Turner Micro Cap Growth Fund Ranking vs. competitors 6/175 -- -- -- Percentile ranking 3 - ----------------------------------------------------------------------------------------------------------------- Short-Intermediate U.S. Government Funds Turner Short Duration Government Funds - Three Year Portfolio (Institutional Class) Ranking vs. competitors 8/91 2/86 9/58 -- Percentile ranking 9 2 15 -- - ----------------------------------------------------------------------------------------------------------------- Ultra-Short Obligation Funds Turner Short Duration Government Funds - One Year Portfolio (Institutional Class) Ranking vs. competitors 1/29 2/27 2/18 -- Percentile ranking 1 7 11 -- - ----------------------------------------------------------------------------------------------------------------- Source: Lipper Inc. 4 | TURNER FUNDS 1999 ANNUAL REPORT Investment review - -------------------------------------------------------------------------------- Turner Large Cap Growth Equity Fund - -------------------------------------------------------------------------------- Total return Year ending September 30, 1999 - -------------------------------------------------------------------------------- Turner Large Cap Growth Equity Fund 42.97% Lipper Large-Cap Growth Funds Average 37.86 S&P 500 Index 27.80 Russell Top 200 Growth Index 34.26 ================================================================================ The Turner Large Cap Growth Equity Fund continued to outperform its benchmarks by a substantial margin during the 12-month period ended September 30, 1999. The fund achieved a total return of 42.97%, compared with 34.26% for the Russell Top 200 Growth Index and 27.80% for the S&P 500 Index. This superior performance was attributable to strong stock selection and decisive timing within key portfolio sectors. And it was accomplished while remaining sector-diversified relative to the Russell Top 200 Growth Index The year was marked by a return to favor of mid-cap and small-cap issues, which had long been overshadowed by their larger counterparts. This trend continued through the end of the fiscal year, but was not enough to dampen the performance of high-quality, large-cap growth issues. The portfolio's strongest performers for the year included perennial growth leader Microsoft, which continued to advance despite antitrust concerns and fundamental changes in its business model. Cisco Systems also continued to perform strongly thanks to its unique position as the predominant mover of Internet traffic. And even staid old IBM produced fireworks as a result of its success in embracing Internet commerce. In the healthcare sector, Johnson & Johnson and Bristol-Myers Squibb benefited from robust earnings growth and promising product pipelines. Looking ahead, we are optimistic that large cap stocks will remain market leaders. Companies in this sector have the strong cash flows needed to fund aggressive research and development programs. In addition, recent efforts to streamline operations and decision-making have given large companies the agility to adapt quickly to the rapid changes brought on by the e-commerce revolution. As always, however, we will look beyond the obvious to locate those stocks that appear to offer the strongest potential for above-average growth. Growth of a $10,000 Investment in the Turner Large Cap Growth Fund: February 1, 1997-September 30, 1999 * Annualized total returns Periods ending September 30, 1999 - -------------------------------------------------------------------------------- Past one year Since inception 42.97% 31.15% In the printed version of the document, a line graph appears which depicts the following plot points: Turner Russell S&P Large Cap Top 200 500 --------- ------- ------ 1/31/97 10,000 10,000 10,000 Sep. 97 12,279 12,013 12,199 Sep. 98 14,399 14,165 13,304 Sep. 99 20,586 19,018 17,003 * These figures represent past performance, which is no guarantee of future results. The investment return and principal value of an investment will fluctuate, so an investor's shares, when redeemed, may be worth more or less than their original cost. The inception date of the Turner Large Cap Growth Equity Fund is February 1, 1997. TURNER FUNDS 1999 ANNUAL REPORT | 5 Investment review - -------------------------------------------------------------------------------- Turner Large Cap Growth Equity Fund - -------------------------------------------------------------------------------- Fund objective The Turner Large Cap Growth Equity Fund seeks capital appreciation. It invests primarily in a diversified portfolio of common stocks with market capitalizations exceeding $10 billion at the time of purchase that Turner believes offer strong earnings growth potential. The fund's economic-sector weightings approximate the sector weightings of the Russell Top 200 Growth Index. - -------------------------------------------------------------------------------- Fund profile September 30, 1999 o CUSIP #900297508 o Top 10 holdings (1) Microsoft, (2) Cisco Systems, (3) Johnson & Johnson, (4) Intel, (5) Bristol-Myers Squibb, (6) Lucent Technologies, (7) America Online, (8) Procter & Gamble, (9) Wal-Mart Stores, (10) IBM o % in 10 largest holdings 43.8% o Number of holdings 44 o Price/earnings ratio 42.2 o Weighted average market capitalization $124.7 billion o % of holdings with positive earnings surprises 68.0% o % of holdings with negative earnings surprises 12.3% o Net assets $8.5 million [FUND PROFILE GRAPH OMITTED] - -------------------------------------------------------------------------------- Sector weightings: neutral to Russell Top 200 Growth Index [BAR GRAPH OMITTED] 44.3% Technology 19.3% Health care 15.9% Consumer discretionary/services 10.7% Consumer staples 4.2% Financial services 2.6% Producer durables 2.6 Utilities/communication 1.0% Materials/processing Portfolio managers [PHOTO OMITTED] John F. Hammerschmidt has served as the lead product manager of the Large Cap Growth Equity Fund since its inception in 1997. John joined Turner in 1992. Previously he was vice president of government securities trading with S. G. Warburg. He holds a bachelor's degree from Lehigh University and an MBA degree from Duke University. [PHOTO OMITTED] Robert E. Turner, founder, chairman, and chief investment officer of Turner Investment Partners, serves as a comanager of the Large Cap Growth Equity Fund. A Chartered Financial Analyst, Bob previously was senior investment manager with Meridian Investment Company. He earned bachelor's and MBA degrees at Bradley University. [PHOTO OMITTED] Mark D. Turner, president of Turner Investment Partners, serves as a comanager of the Large Cap Growth Equity Fund. Mark joined Turner when it was founded in 1990. He previously served as vice president and senior portfolio manager with First Maryland Asset Management. He earned a bachelor's degree from Bradley University and an MBA degree from the University of Illinois. 6 | TURNER FUNDS 1999 ANNUAL REPORT Turner Growth Equity Fund Total return Year ending September 30, 1999 - -------------------------------------------------------------------------------- Turner Growth Equity Fund 38.16% Lipper Large-Cap Growth Funds Average 37.86 S&P 500 Index 27.80 Russell 1000 Growth Index 34.85 - -------------------------------------------------------------------------------- In a year marked by exceptional market volatility, the Turner Growth Equity Fund handily outperformed its benchmarks, delivering a total return of 38.16%. By comparison, the Russell 1000 Growth Index returned 34.85%, while the S&P 500 Index yielded 27.80%. The fund's outperformance is attributable to careful stock selection which focused on companies with outstanding management, world-class products and services, and long-term records of superior performance. The top ten holdings of the fund at year-end were without exception household names, including Microsoft, Cisco Systems, Intel, Johnson & Johnson, Bristol-Myers Squibb, Lucent Technologies, Procter & Gamble, Wal-Mart Stores, Home Depot, and Schering Plough. Among their many other attributes, all ten are ranked among "America's Most Admired Companies" in their respective categories by Fortune magazine. Looking ahead, we believe that the growth sector will continue to dominate the markets well into the future. In fact, we are convinced that a sea-change in the markets has placed growth stocks in a position of uncontested dominance over their value-oriented counterparts. Of course, this does not mean that this sector is forever immune to volatility. But through our identification of best-of-class companies, we anticipate that the Growth Equity Fund will continue to live up to its name. Growth of a $10,000 Investment in the Turner Growth Equity Fund: March 31, 1992-September, 30, 1999 * In the printed version of the document, a line graph appears which depicts the following plot points: Turner Growth S&P 500 Russell 1000 Equity Fund Composite Index Growth Index ------------- --------------- ------------ 3/31/92 10,000 10,000 10,000 Sep. 92 10,055 10,511 10,326 Sep. 93 12,734 11,871 10,942 Sep. 94 12,352 12,309 11,583 Sep. 95 14,900 15,965 15,311 Sep. 96 18,314 19,209 18,588 Sep. 97 24,286 26,976 25,335 Sep. 98 26,887 29,420 28,147 Sep. 99 37,147 37,598 37,957 Annualized total returns Periods ending September 30, 1999 - -------------------------------------------------------------------------------- Past one Past three Past five Since year years years inception 38.16% 26.58% 24.63% 19.17% * These figures represent past performance, which is no guarantee of future results. The investment return and principal value of an investment will fluctuate, so an investor's shares, when redeemed, may be worth more or less than their original cost. The inception date of the Turner Growth Equity Fund is March 11, 1992. Returns are calculated from the first full month following the fund's inception date. TURNER FUNDS 1999 ANNUAL REPORT | 7 INVESTMENT REVIEW - -------------------------------------------------------------------------------- Turner Growth Equity Fund - -------------------------------------------------------------------------------- Fund objective The Turner Growth Equity Fund seeks capital appreciation. It invests primarily in a diversified portfolio of common stocks that, in Turner's opinion, have strong earnings growth potential. The fund's economic-sector weightings approximate the sector weightings of the Russell 1000 Growth Index. - -------------------------------------------------------------------------------- Fund profile September 30, 1999 o Ticker symbol TRGEX o CUSIP #900297102 o Top 10 holdings (1) Microsoft, (2) Cisco Systems, (3) Intel, (4) Johnson & Johnson, (5) Bristol-Myers Squibb, (6) Lucent Technologies, (7) Procter & Gamble, (8) Wal-Mart Stores, (9) Home Depot, (10) Schering-Plough o % in 10 largest holdings 36.9% o Number of holdings 97 o Price/earnings ratio 39.9 o Weighted average market capitalization $105.6 billion o % of holdings with positive earnings surprises 73.6% o % of holdings with negative earnings surprises 9.7% o Net assets $142.8 million [GROWTH EQUITY GRAPH OMITTED] - -------------------------------------------------------------------------------- Sector weightings: neutral to Russell 1000 Growth Index 36.3% Technology 16.7% Health care 15.3% Consumer discretionary/services 9.0% Consumer staples 5.1% Financial services 4.5% Utilities/communication 3.5% Producer durables 1.2% Materials/processing 0.9% Energy 0.4% Autos/transportation [BAR GRAPH OMITTED] Portfolio managers [PHOTO OMITTED] Robert E. Turner, founder, chairman, and chief investment officer of Turner Investment Partners, has served as the lead product manager of the Growth Equity Fund since its inception in 1992. A Chartered Financial Analyst, Bob previously was senior investment manager with Meridian Investment Company. He earned bachelor's and MBA degrees at Bradley University. [PHOTO OMITTED] John F. Hammerschmidt serves as a comanager of the Growth Equity Fund. John joined Turner in 1992. Previously he was vice president of government securities trading with S. G. Warburg. He holds a bachelor's degree from Lehigh University and an MBA degree from Duke University. [PHOTO OMITTED] Mark D. Turner, president of Turner Investment Partners, serves as a comanager of the Growth Equity Fund. Mark joined Turner when it was founded in 1990. He previously served as vice president and senior portfolio manager with First Maryland Asset Management. He earned a bachelor's degree from Bradley University and an MBA degree from the University of Illinois. 8 | TURNER FUNDS 1999 ANNUAL REPORT Turner Midcap Growth Fund Total return Year ending September 30, 1999 - -------------------------------------------------------------------------------- Turner Midcap Growth Fund 84.07% Lipper Mid-Cap Growth Funds Average 50.88 Russell Midcap Growth Index 37.19 - -------------------------------------------------------------------------------- During the 12 months ended September 30, 1999, the Turner Midcap Growth Fund added to its outstanding record by soaring 84.07%. In doing so, the fund more than doubled the performance of the Russell Midcap Growth Index, which returned 37.19%. Among the strongest performing sectors of the portfolio were technology, healthcare and producer durables. Broadcasting/media, specialty retailing, biotechnology, semiconductor and networking stocks were especially profitable. Only our consumer-stables positions lagged. What is particularly notable about the fund's superior performance is that it was achieved while maintaining an average price earnings ratio (P/E Ratio) just over 33 relative to the Russell Midcap P/E Ratio of 34. In light of the favorable earnings prospects of our holdings, we think Midcap Growth can perform relatively well in favorable or unfavorable economic conditions. The companies in the Midcap Growth Fund are well-known, well-capitalized organizations with dominant market positions and reputations for innovation. They include "dot-com" address provider Network Solutions; electronics retailers Best Buy and Circuit City; payroll processing leader Paychex; Internet advertising giant DoubleClick; advertising conglomerate Interpublic Group; adhesive products maker Avery Denison; printer manufacturer Lexmark International; food distributor Sysco, and fiber optics leader JDS Uniphase. Looking ahead, we believe that the Midcap Growth Fund has strong prospects for the future, thanks to its continued emphasis on finding leaders in a dynamic market place. And while it is unrealistic to expect consecutive years of performance of this caliber, we believe the fund is well positioned for a wide range of market environments. Growth of a $10,000 Investment in the Turner Midcap Growth Fund: October 31, 1996-September 30, 1999* In the printed version of the document, a line graph appears which depicts the following plot points: Turner Midcap Growth Russell Midcap Growth Index -------------------- --------------------------- 10/31/96 10,000 10,000 Sep. 97 14,248 13,117 Sep. 98 14,425 11,887 Sep. 99 26,552 16,309 Annualized total returns Periods ending September 30, 1999 - -------------------------------------------------------------------------------- Past one year Since inception 84.07% 38.93% * These figures represent past performance, which is no guarantee of future results. The investment return and principal value of an investment will fluctuate, so an investor's shares, when redeemed, may be worth more or less than their original cost. The inception date of the Turner Midcap Growth Fund is October 1, 1996. TURNER FUNDS 1999 ANNUAL REPORT | 9 Investment review - -------------------------------------------------------------------------------- Turner Midcap Growth Fund - -------------------------------------------------------------------------------- Fund objective The Turner Midcap Growth Fund seeks capital appreciation. It invests primarily in a diversified portfolio of common stocks with market capitalizations between $1 billion and $8 billion at the time of purchase that Turner believes offer strong earnings growth potential. The fund's economic-sector weightings approximate the sector weightings of the Russell Midcap Growth Index. - -------------------------------------------------------------------------------- Fund profile September 30, 1999 o Ticker symbol TMGFX o CUSIP #900297409 o Top 10 holdings (1) Network Solutions, (2) Best Buy, (3) Paychex, (4) DoubleClick, (5) Interpublic Group, (6) Bausch & Lomb, (7) Circuit City, (8) Lexmark International, (9) SPX, (10) JDS Uniphase o % in 10 largest holdings 13.9% o Number of holdings 113 o Price/earnings ratio 33.8 o Weighted average market capitalization $5.2 billion o % of holdings with positive earnings surprises 71.1% o % of holdings with negative earnings surprises 5.9% o Net assets $148.8 million [MIDCAP FUND GRAPH OMITTED] - -------------------------------------------------------------------------------- Sector weightings: neutral to Russell Midcap Growth Index [BAR GRAPH OMITTED] 27.4% Technology 24.4% Consumer discretionary/services 11.1% Health care 9.1% Financial services 6.5% Producer durables 5.4% Utilities/communication 3.4% Materials/processing 3.0% Consumer staples 2.6% Energy 1.9% Autos/transportation Portfolio managers [PHOTO OMITTED] Christopher K. McHugh has served as the lead product manager of the Midcap Growth Fund since its inception in 1996. Chris joined Turner when it was founded in 1990 and previously held a position as performance specialist at Provident Capital Management. He earned a bachelor's degree at the Philadelphia College of Textiles and Science and an MBA degree at St. Joseph's University. [PHOTO OMITTED] William C. McVail serves as a comanager of the Midcap Growth Fund. Before joining Turner in 1998, Bill was a portfolio manager at PNC Equity Advisors. A Chartered Financial Analyst, Bill received a bachelor's degree from Vassar College. [PHOTO OMITTED] Robert E. Turner, founder, chairman, and chief investment officer of Turner Investment Partners, serves as a comanager of the Midcap Growth Fund. A Chartered Financial Analyst, Bob previously was senior investment manager with Meridian Investment Company. He earned bachelor's and MBA degrees at Bradley University. 10 | TURNER FUNDS 1999 ANNUAL REPORT Turner Small Cap Growth Fund Total return Year ending September 30, 1999 - -------------------------------------------------------------------------------- Turner Small Cap Growth Fund 59.14% Lipper Small-Cap Growth Funds Average 43.76 Russell 2000 Growth Index 32.63 - -------------------------------------------------------------------------------- Small-cap growth stocks performed extremely well during the year ended September 30, 1999. But the Turner Small Cap Growth Fund performed even better. For the period, the fund returned a whopping 59.14% -- nearly doubling the performance of the Russell 2000 Growth Index, which returned 32.63%. This performance is even more notable in light of the fact that some key sectors, including financial services and producer durables, spent a good portion of the year out of the market's favor. However, any underperformance was more than made up by the fund's outstanding holdings in such areas as consumer discretionary/ services and technology. Top performers in the portfolio included cable equipment maker ANTEC; specialty software creator Mercury Interactive; investment banker Hambrecht & Quist; videoconferencing leader Polycom; pharmaceutical innovator Jones Pharma; security software producer Symantec; French software developer Business Objects; communications equipment maker Powerwave Technologies; help desk software developer Peregrine Systems; and home products retailer Linens 'N Things. Overall, more than 63% of the portfolio's holdings reported positive earnings surprises, while just over five percent reported negative earnings surprises. Looking ahead, we continue to favor selected consumer, telecommunications, and bandwidth-technology stocks that have contributed so much to our recent results. And we continue to find outstanding values in the small-cap sector, which is so rich with innovative, energetic young companies. Growth of a $10,000 Investment in the Turner Small Cap Growth Fund: February 28, 1994-September 30, 1999* In the printed version of the document, a line graph appears which depicts the following plot points: Turner Small Frank Russell Cap Growth 2000 Growth Index ------------ ----------------- 2/28/94 10,000 10,000 Sep. 94 10,303 9,618 Sep. 95 15,812 12,328 Sep. 96 24,103 13,881 Sep. 97 28,114 17,123 Sep. 98 23,362 12,872 Sep. 99 37,179 17,072 Annualized total returns Periods ending September 30, 1999 - -------------------------------------------------------------------------------- Past one Past three Past five Since year years years inception 59.14% 15.54% 29.26% 26.63% * These figures represent past performance, which is no guarantee of future results. The investment return and principal value of an investment will fluctuate, so an investor's shares, when redeemed, may be worth more or less than their original cost. The inception date of the Turner Small Cap Growth Fund is February 7, 1994. Returns are calculated from the first full month following the fund's inception date. TURNER FUNDS 1999 ANNUAL REPORT | 11 Investment review - -------------------------------------------------------------------------------- Turner Small Cap Growth Fund - -------------------------------------------------------------------------------- Fund objective The Turner Small Cap Growth Fund seeks capital appreciation. It invests primarily in a diversified portfolio of common stocks with market capitalizations at the time of purchase not exceeding $2 billion that Turner believes offer strong earnings growth potential. The fund's economic-sector weightings approximate the sector weightings of the Russell 2000 Growth Index. - -------------------------------------------------------------------------------- Fund profile September 30, 1999 [SMALL CAP GRAPH OMITTED] o Ticker symbol TSCEX o CUSIP #900297300 o Top 10 holdings ((1) ANTEC, (2) Mercury Interactive, (3) Hambrecht & Quist, (4) Polycom, (5) Jones Pharma, (6) Symantec, (7) Business Objects, (8) Powerwave Technologies, (9) Peregrine Systems, (10) Linens 'N Things o % in 10 largest holdings 12.9% o Number of holdings 146 o Price/earnings ratio 28.1 o Weighted average market capitalization $1.3 billion o % of holdings with positive earnings surprises 73.6% o % of holdings with negative earnings surprises 3.5% o Net assets $254.1 million - -------------------------------------------------------------------------------- Sector weightings: neutral to Russell 2000 Growth Index 23.9% Consumer discretionary/services 22.8% Technology 13.3% Health care 10.9% Financial services 10.0% Producer durables 6.2% Materials/processing 5.6% Utilities/communication 1.7% Energy 1.6% Autos/transportation 1.3% Consumer staples [BAR GRAPH OMITTED] - -------------------------------------------------------------------------------- Portfolio managers [PHOTO OMITTED] William C. McVail serves as the lead product manager of the Small Cap Growth Fund. Before joining Turner in 1998, Bill was a portfolio manager at PNC Equity Advisors. A Chartered Financial Analyst, Bill received a bachelor's degree from Vassar College. [PHOTO OMITTED] Frank L. Sustersic serves as a comanager of the Small Cap Growth Fund. A Chartered Financial Analyst, Frank joined Turner in 1994. Previously he was an investment officer and fund manager with First Fidelity Bank Corporation. He holds a bachelor's degree from the University of Pennsylvania. [PHOTO OMITTED] Christopher K. McHugh serves as a comanager of the Small Cap Growth Fund. Chris joined Turner when it was founded in 1990 and previously held a position as performance specialist at Provident Capital Management. He earned a bachelor's degree at the Philadelphia College of Textiles and Science and an MBA degree at St. Joseph's University. 12 | TURNER FUNDS 1999 ANNUAL REPORT Turner Micro Cap Growth Fund Total return Year ending September 30, 1999 - -------------------------------------------------------------------------------- Turner Micro Cap Growth Fund 113.46% Lipper Small-Cap Core Funds Average 24.96 Russell 2000 Growth Index 32.63 - -------------------------------------------------------------------------------- Those who believe that triple-digit annual returns are the sole province of certain Internet stocks are likely to think that the performance figures of the Turner Micro Cap Growth Fund are a misprint. But they are not. For the 12 months ended September 30, 1999, the fund delivered an astonishing return of 113.46%. In doing so, the fund more than tripled the performance of its key benchmark, the Russell 2000 Growth Index, which recorded an annual return of 32.63%. We are pleased to report that this performance has not come at the expense of diversification. Throughout the year, the fund was represented in all ten market sectors -- unlike other micro-cap funds which invest primarily in technology stocks while maintaining only token weightings in other sectors. The fund was aided by a general strength in growth stocks; particularly those in the technology sector. However, the real story was stock selection. Our fundamental analysis and proprietary quantitative model led us to companies that were clearly poised for above-average growth. And over the course of the year, more than 46% of our holdings came through with positive earnings surprises, while only three percent delivered negative surprises. Our top ten holdings were among the best-performing stocks in the portfolio. Our largest holding, CD-ROM producer Zomax, rose more than 1,000% during the year. Other superior performers included cell phone manufacturer Audiovox; electronics retailer Rex Stores; video game creator THQ, Inc.; specialty circuits manufacturer Zoran; cardiac products leader Zoll Medical; broadcast equipment maker California Amplifier; and remote control producer Universal Electronics. Looking ahead, one cannot expect performance of this level to repeat itself -- especially as the fund grows in size. However, we believe that micro-cap stocks remain a fertile area for exceptional rates of growth. And we believe that our strategy of seeking the most promising stocks in each industry sector will continue to provide an effective method for outperforming the overall market. Growth of a $10,000 Investment in the Turner Micro Cap Growth Fund: March 1, 1998-September 30, 1999* In the printed version of the document, a line graph appears which depicts the following plot points: Turner Micro Cap Russell 2000 Growth Fund Growth Index ---------------- ------------ 2/98 10,000 10,000 9/98 9,882 7,625 9/99 21,093 10,113 Annualized total returns Periods ending September 30, 1999 - -------------------------------------------------------------------------------- Past one year Since inception 113.46% 59.94% * These figures represent past performance, which is no guarantee of future results. The investment return and principal value of an investment will fluctuate, so an investor's shares, when redeemed, may be worth more or less than their original cost. The inception date of the Turner Micro Cap Growth Fund is March 1, 1998. TURNER FUNDS 1999 ANNUAL REPORT | 13 INVESTMENT REVIEW - -------------------------------------------------------------------------------- Turner Micro Cap Growth Fund - -------------------------------------------------------------------------------- Fund objective The Turner Micro Cap Growth Fund seeks capital appreciation. It invests primarily in a diversified portfolio of common stocks that, in Turner's opinion, have strong earnings growth potential and market capitalizations not exceeding $500 million at the time of purchase. The fund's economic-sector weightings stay within a range that's not more than 50% above or below the sector weightings of the Russell 2000 Growth Index. The Fund participates in the Initial Public Offering ("IPO") market, and a significant portion of the fund's returns are attributable to its investment in IPOs, which have a magnified impact due to the fund's relatively small asset base. There is no guarantee that as the fund's assets grow, it will continue to experience substantially similar performance by investing in IPOs. - -------------------------------------------------------------------------------- Fund profile September 30, 1999 [MICRO CAP GRAPH OMITTED] o Ticker symbol TMCGX o CUSIP #872524301 o Top 10 holdings (1) Zomax, (2) Audiovox, (3) Rex Stores, (4) THQ, (5) Zoran, (6) Eclipse Surgical Technologies, (7) Zoll Medical, (8) California Amplifier, (9) Homeseekers.com, (10) Universal Electronics o % in 10 largest holdings 16.1% o Number of holdings 126 o Price/earnings ratio 34.4 o Weighted average market capitalization $300 million o % of holdings with positive earnings surprises 56.9% o % of holdings with negative earnings surprises 3.4% o Net assets $13.0 million - -------------------------------------------------------------------------------- Sector weightings: resemble Russell 2000 Growth Index 31.1% Technology 27.4% Consumer discretionary/services 12.2% Health care 5.2% Financial services 5.0% Materials/processing 4.1% Energy 3.9% Producer durables 3.5% Utilities/communication 2.6% Autos/transportation 0.9% Consumer staples [BAR GRAPH OMITTED] Portfolio managers [PHOTO OMITTED] Frank L. Sustersic has served as the lead product manager of the Micro Cap Growth Fund since its inception in 1998. A Chartered Financial Analyst, Frank joined Turner in 1994. Previously he was an investment officer and fund manager with First Fidelity Bank Corporation. He holds a bachelor's degree from the University of Pennsylvania. [PHOTO OMITTED] William C. McVail serves as the comanager of the Micro Cap Growth Fund. Before joining Turner in 1998, Bill was a portfolio manager at PNC Equity Advisors. A Chartered Financial Analyst, Bill received a bachelor's degree from Vassar College. [PHOTO OMITTED] Christopher J. Perry serves as the comanager of the Micro Cap Growth Fund. Chris joined Turner in 1998 after serving as a research analyst at the Pennsylvania Merchant Group. A Chartered Financial Analyst, he earned a bachelor's degree at Villanova University and an MBA degree at Drexel University. 14 | TURNER FUNDS 1999 ANNUAL REPORT Turner Top 20 Fund Total return Period ending September 30, 1999 - -------------------------------------------------------------------------------- Turner Top 20 Fund 39.90% Lipper Multi-Cap Core Funds Average 24.96 S&P 500 Index (6.24) - -------------------------------------------------------------------------------- The Turner Top 20 Fund, which invests in the 15-25 stocks on which we are the most bullish, recorded a bullish initial performance in the third quarter. Top 20 climbed 39.90% to beat the S&P 500 Index's 6.24% loss by 46.14 percentage. Our holdings were culled from the approximately 250 stocks in all capitalization ranges that we own in our other stock funds -- the stocks that we think are the best of the best. In essence, we regard the fund as a distillation of our ability to pick good stocks. As the market fluctuated in the quarter, we moved in and out of our holdings adroitly. For instance, we reaped gains in technology stocks, then sold a portion of them to buy health-care stocks and benefit from their subsequent rally. Our holdings remain broadly diversified by sector and security, with investments in seven sectors and typical weightings in individual stocks of about 5%; we think such an approach should produce smoother returns over time. Growth of a $10,000 Investment in the Turner Top 20 Fund: July 1, 1999-September 30, 1999* In the printed version of the document, a line graph appears which depicts the following plot points: Turner S&P ------ ----- 6/98 10,000 10,000 9/99 13,990 9,375 Cumulative total returns Period ending September 30, 1999 - -------------------------------------------------------------------------------- Since inception 39.90% * These figures represent past performance, which is no guarantee of future results. The investment return and principal value of an investment will fluctuate, so an investor's shares, when redeemed, may be worth more or less than their original cost. The inception date of the Turner Top 20 Fund is July 1, 1999. TURNER FUNDS 1999 ANNUAL REPORT | 15 INVESTMENT REVIEW - -------------------------------------------------------------------------------- Turner Top 20 Fund - -------------------------------------------------------------------------------- Fund objective The Turner Top 20 Fund seeks capital appreciation. It invests in common stock and other equity securities of companies, regardless of their market capitalization, that Turner believes have strong earnings potential. The portfolio will contain a total of 15-25 stocks representing Turner's favorite investment ideas. - -------------------------------------------------------------------------------- Fund profile September 30, 1999 [TOP 20 GRAPH OMITTED] o Ticker symbol TTOPX o CUSIP #87252R862 o Top 10 holdings (1) NetZero, (2) Yahoo!, (3) America Online, (4) JDS Uniphase, (5) InterNAP Network Services, (6) Scientific-Atlanta, (7) Johnson & Johnson, (8) Micron Technology, (9) Abercrombie & Fitch, (10) Bausch & Lomb o % in 10 largest holdings 53.8% o Number of holdings 21 o Price/earnings ratio 39.8 o Weighted average market capitalization $57.3 billion o % of holdings with positive earnings surprises 68.8% o % of holdings with negative earnings surprises 19.1% o Net assets $16.1 million - -------------------------------------------------------------------------------- Sector weightings: resemble Russell 2000 Growth Index 35.9% Technology 28.1% Consumer discretionary/services 9.9% Health care 9.8% Producer durables 8.5% Energy 4.6% Financial services 4.3% Consumer staples [BAR GRAPH OMITTED] Portfolio managers [PHOTO OMITTED] Robert E. Turner, founder, chairman, and chief investment officer of Turner Investment Partners, serves as a comanager of the Midcap Growth Fund. A Chartered Financial Analyst, Bob previously was senior investment manager with Meridian Investment Company. He earned bachelor's and MBA degrees at Bradley University. [PHOTO OMITTED] Christopher K. McHugh has served as the lead product manager of the Midcap Growth Fund since its inception in 1996. Chris joined Turner when it was founded in 1990 and previously held a position as performance specialist at Provident Capital Management. He earned a bachelor's degree at the Philadelphia College of Textiles and Science and an MBA degree at St. Joseph's University. [PHOTO OMITTED] William C. McVail serves as a comanager of the Midcap Growth Fund. Before joining Turner in 1998, Bill was a portfolio manager at PNC Equity Advisors. A Chartered Financial Analyst, Bill received a bachelor's degree from Vassar College. 16 | TURNER FUNDS 1999 ANNUAL REPORT Turner Technology Fund Total return Period ending September 30, 1999 - -------------------------------------------------------------------------------- Turner Technology Fund 40.60% Lipper Science & Technology Funds Average 24.96 Pacific Exchange Technology 100 Index 4.62 - -------------------------------------------------------------------------------- Performance was generally bleak for the 10 sectors of the stock market in the third quarter, but the technology sector was a notable exception. The Pacific Exchange Technology 100 Index, for one, advanced 4.62%. The Turner Technology Fund began operation in the quarter and made the most of this favorable environment: it soared 40.60% to outdistance the PSE Tech Index by 35.98 percentage points. During the summer, technology stocks bottomed after a tough second quarter and came roaring back. Seeing an enormous buying opportunity, we scooped up selected Internet, software, and semiconductor shares, then rode their ascent. For instance, software stocks were so beaten down that they were selling at price/earnings multiples below their growth rates, which is highly unusual. Going forward, we especially like the fundamentals of enterprise-resource- planning software firms, which should benefit from future capital spending on technology. Growth of a $10,000 Investment in the Turner Technology Fund: July 1, 1999-September 30, 1999* In the printed version of the document, a line graph appears which depicts the following plot points: Turner Pacific ------ ------- 6/99 10,000 10,000 9/99 14,060 10,467 Cumulative total returns Period ending September 30, 1999 - -------------------------------------------------------------------------------- Since inception 40.60% * These figures represent past performance, which is no guarantee of future results. The investment return and principal value of an investment will fluctuate, so an investor's shares, when redeemed, may be worth more or less than their original cost. The inception date of the Turner Technology Fund is July 1, 1999. TURNER FUNDS 1999 ANNUAL REPORT | 17 Investment Review - -------------------------------------------------------------------------------- Turner Technology Fund - -------------------------------------------------------------------------------- Fund objective The Turner Technology Fund seeks capital appreciation. It invests in common stock of companies that develop new technologies and that may experience exceptional growth in sales and earnings driven technology related products and services. Stock selection will not be based on company size, but rather on an assessment of a company's fundamental prospects. The Fund participates in the Initial Public Offering ("IPO") market, and a significant portion of the fund's returns are attributable to its investment in IPOs, which have a magnified impact due to the fund's relatively small asset base. There is no guarantee that as the fund's assets grow, it will continue to experience substantially similar performance by investing in IPOs. - -------------------------------------------------------------------------------- Fund profile September 30, 1999 [TECH GRAPH OMITTED] o Ticker symbol TTECX o CUSIP #87252R870 o Top 10 holdings (1) InterNAP Network Services, (2) Amazon.com, (3) NetZero, (4) Microsoft, (5) Priceline.com, (6) Network Solutions, (7) Ciena, (8) Intuit, (9) America Online, (10) JDS Uniphase o % in 10 largest holdings 39.9% o Number of holdings 39 o Price/earnings ratio 42.9 o Weighted average market capitalization $45.1 billion o % of holdings with positive earnings surprises 68.5% o % of holdings with negative earnings surprises 15.3% o Net assets $8.3 million - -------------------------------------------------------------------------------- Sector weightings: resemble Russell 2000 Growth Index 56.9% Technology 24.4% Consumer discretionary/services 8.7% Producer durables 2.9% Utilities/communication 2.6% Health care [BAR GRAPH OMITTED] Portfolio managers [PHOTO OMITTED] Robert E. Turner, founder, chairman, and chief investment officer of Turner Investment Partners, serves as a comanager of the Midcap Growth Fund. A Chartered Financial Analyst, Bob previously was senior investment manager with Meridian Investment Company. He earned bachelor's and MBA degrees at Bradley University. [PHOTO OMITTED] Christopher K. McHugh has served as the lead product manager of the Midcap Growth Fund since its inception in 1996. Chris joined Turner when it was founded in 1990 and previously held a position as performance specialist at Provident Capital Management. He earned a bachelor's degree at the Philadelphia College of Textiles and Science and an MBA degree at St. Joseph's University. 18 | TURNER FUNDS 1999 ANNUAL REPORT Turner Short Duration Government Funds- Three Year Portfolio Total return Year ending September 30, 1999 - -------------------------------------------------------------------------------- Turner Short Duration Government Funds- Three Year Portfolio (Institutional Class) 2.89% Lipper Short/Intermediate U.S. Government Funds Average 0.69 Lehman Brothers 1-3 Year U.S. Government Bond Index 3.18 - -------------------------------------------------------------------------------- In a challenging year for all fixed income investors, the Turner Short Duration - -- Three Year Fund Institutional Class delivered strong results, with a total return of 2.89%. By comparison, the Lehman Brothers 1-3 Year U.S. Government Bond Index returned only a slightly higher 3.18%. During the fiscal year, fixed income securities were hit by two rate hikes by the Federal Reserve Board, each pushing short rates up by 0.25%. The Fed's goal in each case was to tap the brakes on the economy and preempt inflation. Throughout the period, we held the fund's average weighted maturity to a relatively conservative 2.2 years. This positioned us to take advantage of higher yields as they became available. We also maintained our level of quality, focusing primarily on U.S. Treasury notes and government agency securities. The new year offers considerable challenge as the economy continues to grow at a healthy pace and inflation fears rise. In the face of this the Turner Short Duration Government Fund-Three Year Portfolio will continue to invest in high quality instruments and to manage interest rate risk carefully. We will seek to benefit from an eventual fall in rates, which we expect, without exposing our investors to undue risk. Growth of a $10,000 Investment in the Turner Short Duration Government Funds- Three Year Portfolio, Institutional Class: March 31, 1994-September 30, 1999 * In the printed version of the document, a line graph appears which depicts the following plot points: Turner Short Duration Lehman 1-3 yr --------------------- ------------- 1/31/94 10,000 10,000 Sep 94 10,089 10,049 Sep 95 10,976 10,871 Sep 96 11,637 11,488 Sep 97 12,463 12,279 Sep 98 13,469 13,253 Sep 99 13,858 13,676 Annualized total returns Periods ending September 30, 1999 Past one Past three Past five Since year years years inception Institutional Class Shares 2.89% 6.00% 6.56% 6.02% Advisor Class Shares -- -- -- 5.64% * These figures represent past performance, which is no guarantee of future results. The investment return and principal value of an investment will fluctuate, so an investor's shares, when redeemed, may be worth more or less than their original cost. The inception date of the Turner Short Duration Government Funds-Three Year Portfolio (Institutional Class) is March 1, 1994. TURNER FUNDS 1999 ANNUAL REPORT | 19 Investment Review - -------------------------------------------------------------------------------- Turner Short Duration Government Funds- Three Year Portfolio - -------------------------------------------------------------------------------- Fund objective The Turner Short Duration Government Funds-Three Year Portfolio seeks to produce maximum total return consistent with preservation of capital and investment prudence. It invests primarily in high-grade securities issued or guaranteed by the U.S. government or its agencies. The fund seeks to limit fluctuations in principal and reduce interest-rate risk by maintaining an average effective duration no greater than that of a three-year Treasury bill. - -------------------------------------------------------------------------------- Fund profile September 30, 1999 [THREE YEAR GRAPH] o Ticker symbol TSDGX, Institutional Class Shares o CUSIP #872524202, Institutional Class Shares o Top 10 holdings (1) U.S. Treasury Notes, 5.75%, 10/31/00, (2) U.S. Treasury Notes, 5.00%, 02/28/01, (3) U.S. Treasury Notes, 7.00%, 07/15/06, (4) Federal Home Loan Mortgage Corporation, 9.50%, 06/15/06, (5) Spiegel Credit Card, 7.50%, 1995-A, (6) Federal Home Loan Mortgage Corporation Gold, 7.50%, 10/14/29, (7) U.S. Treasury Notes, 6.375%, 08/15/02, (8) Structured Assets SEC Corporation Variable %, 10/30/07, (9) Fleet Credit Card, 1998-A, (10) Ford Motor Credit, 5.75%, 02/23/04 o % in 10 largest holdings 57.4% o Number of holdings 44 o Average effective duration 1.7 years o Average maturity 2.3 years o Average yield to maturity 6.13% o Average credit quality Agency o Convexity (0.21) o Net assets $38.8 million - -------------------------------------------------------------------------------- Sector weightings: 47.6% Mortgage-backed securities 30.1% Treasury securities 11.6% Asset-backed securities 7.4% Corporates 3.3% Other [BAR GRAPH OMITTED] - -------------------------------------------------------------------------------- Portfolio managers [PHOTO OMITTED] James I. Midanek, fixed-income chief investment officer, has served as manager of the Short Duration Funds-One Year Portfolio since inception. Jim joined Turner in 1998, upon our acquisition of Solon Asset Management, which he cofounded. Previously he was chief investment officer, fixed income with Montgomery Asset Management. He holds a bachelor's degree from Queens College. [PHOTO OMITTED] Kathy Dull, senior portfolio manager/security analyst, joined the firm in 1997. She earned a bachelor's degree at Miami University, Oxford, Ohio. Previously Kathy was an assistant to the fixed-income portfolio manager at Montgomery Asset Management. [PHOTO OMITTED] Robb J. Parlanti, senior portfolio manager/security analyst, joined Turner in 1993. A Chartered Financial Analyst, he received a bachelor's degree at Wake Forest University. Robb formerly was an assistant vice president/portfolio manager at PNC Bank. 20 | TURNER FUNDS 1999 ANNUAL REPORT Turner Short Duration Government Funds- One Year Portfolio Total return Year ending September 30, 1999 - -------------------------------------------------------------------------------- Turner Short Duration Government Funds- One Year Portfolio (Institutional Class) 5.34% Lipper Ultra-Short Obligation Funds Average 4.28 Merrill Lynch 3 Month U.S. Treasury Bill Index 4.70 - -------------------------------------------------------------------------------- For the 12 months ended September 30, 1999, the Turner Short Duration - One Year Fund Institutional Class delivered a strong total return of 5.34%. By contrast, the Merrill Lynch 3 Month U.S. Treasury Bill Index reported a total return of 4.70%. The fund benefited from the Federal Reserve Board's two rate hikes late in the fiscal year, each of which boosted short-term yields by 0.25%. Because of these actions, short-term instruments actually outperformed intermediate-term securities for the year. The fund also took advantage of the incremental yield opportunities available at the longer end of its maturity spectrum. And, it boosted returns still further by holding a sizeable proportion of government-backed collateralized mortgage obligation (CMO) securities, which offer higher income levels than Treasury issues of comparable maturities. Looking ahead, we believe the potential for additional rate increases remains fairly strong for the early part of calendar year 2000. Once the Federal Reserve Board is satisfied that any Y2K-related concerns have been put to rest, the strength of the economy and tightness in the labor markets could make a compelling case for additional action. Whether or not this occurs, we believe the fund is well positioned to continue delivering yields well in excess of the rate of inflation. Growth of a $10,000 Investment in the Turner Short Duration Government Funds- One Year Portfolio, Institutional Class March 1, 1998-September 30, 1999* In the printed version of the document, a line graph appears which depicts the following plot points: Turner Short Duration Merrill Lynch 3-month --------------------- --------------------- 3/3/94 10,000 10,000 Sep.94 10,231 10,235 Sep 95 10,935 10,837 Sep 96 11,704 11,431 Sep 97 12,428 12,047 Sep 98 13,201 12,693 Sep 99 13,906 13,289 Annualized total returns Periods ending September 30, 1999 Past one Past three Past five Since year years years inception Institutional Class Shares 5.34% 5.92% 6.33% 6.08% Advisor Class Shares 5.00% -- -- 5.22% * These figures represent past performance, which is no guarantee of future results. The investment return and principal value of an investment will fluctuate, so an investor's shares, when redeemed, may be worth more or less than their original cost. The inception date of the Turner Short Duration Government Funds-One Year Portfolio (Institutional Class) is March 1, 1994. TURNER FUNDS 1999 ANNUAL REPORT | 21 INVESTMENT REVIEW - -------------------------------------------------------------------------------- Turner Short Duration Government Funds- One Year Portfolio - -------------------------------------------------------------------------------- Fund objective The Turner Short Duration Government Funds-One Year Portfolio seeks to produce maximum total return consistent with the preservation of capital and investment prudence. It invests primarily in high-grade securities issued or guaranteed by the U.S. government or its agencies. The fund seeks to limit fluctuations in principal and reduce interest-rate risk by maintaining an average effective duration no greater than that of a one-year Treasury note. - -------------------------------------------------------------------------------- Fund profile September 30, 1999 [ONE YEAR GRAPH OMITTED] o CUSIP #872524103, Institutional Class Shares o Top 10 holdings (1) Federal National Mortgage Association, 5.84375%, 06/25/00, (2) Federal Home Loan Mortgage Corporation, 5.85%, 11/15/05, (3) U.S. Treasury Notes, 5.75%, 10/31/00, (4) Federal Home Loan Mortgage Corporation, 6.50%, 09/15/06, (5) Morgan Stanley, 6.85%, 02/15/20, (6) Federal National Mortgage Association, 5.84375%, 06/25/08, (7) Government National Mortgage Association, 6.375%, (8) Federal Home Loan Mortgage Corporation, 6.00%, 11/15/05, (9) Federal Home Loan Mortgage Corporation, 5.70%, 07/15/05, (10) Federal Home Loan Mortgage Corporation, 7.00%, 10/15/18 o % in 10 largest holdings 69.6% o Number of holdings 33 o Average effective duration 0.4 years o Average maturity 0.5 years o Average yield to maturity 5.73% o Average credit quality Agency o Convexity (0.18) o Net assets $6.4 million - -------------------------------------------------------------------------------- Sector weightings: 47.6% Mortgage-backed securities 30.1% Treasury securities 11.6% Asset-backed securities 7.4% Corporates 3.3% Other [BAR GRAPH OMITTED] - -------------------------------------------------------------------------------- Portfolio managers [PHOTO OMITTED] James I. Midanek, fixed-income chief investment officer, has served as manager of the Short Duration Funds-Three Year Portfolio since inception. Jim joined Turner in 1998, upon our acquisition of Solon Asset Management, which he cofounded. Previously he was chief investment officer, fixed income with Montgomery Asset Management. He holds a bachelor's degree from Queens College. [PHOTO OMITTED] Kathy Dull, senior portfolio manager/security analyst, joined the firm in 1997. She earned a bachelor's degree at Miami University, Oxford, Ohio. Previously Kathy was an assistant to the fixed-income portfolio manager at Montgomery Asset Management. [PHOTO OMITTED] Robb J. Parlanti, senior portfolio manager/security analyst, joined Turner in 1993. A Chartered Financial Analyst, he received a bachelor's degree at Wake Forest University. Robb formerly was an assistant vice president/portfolio manager at PNC Bank. 22 | TURNER FUNDS 1999 ANNUAL REPORT Turner Core High Quality Fixed Income Fund Total return Period ending September 30, 1999* - -------------------------------------------------------------------------------- Turner Core High Quality Fixed Income Fund 0.48% Lipper General Bond Funds Average 4.28 Lehman Brothers Aggregate Bond Index 0.68 - -------------------------------------------------------------------------------- Interest rates rose at most maturities in the third quarter, but not enough to prevent the Turner Core High Quality Fixed Income Fund from recording a positive return, 0.48%. That return was below the 0.68% performance of the bond market, as represented by the Lehman Brothers Aggregate Bond Index. Our results were enhanced by the portfolio's high average credit quality (better-quality securities outperformed), significant positions in Treasury, mortgage-backed, and asset-backed securities (those three sectors outperformed), and a conservative average duration (longer durations underperformed). Conversely, our results would have been better if we had owned more bonds with above-average yields, especially more mortgage pass-throughs, which have done well lately. We are keeping our average duration in neutral territory to capture more yield than we would with a more conservative positioning. Growth of a $10,000 Investment in the Turner Core High Quality Fixed Income Fund: July 1, 1999-September 30, 1999* In the printed version of the document, a line graph appears which depicts the following plot points: Turner Lehman ------ ------ 6/98 10,000 10,000 9/99 10,047 10,068 Cumulative total returns Period ending September 30, 1999 - -------------------------------------------------------------------------------- Since inception 0.48% * These figures represent past performance, which is no guarantee of future results. The investment return and principal value of an investment will fluctuate, so an investor's shares, when redeemed, may be worth more or less than their original cost. The inception date of the Turner Core High Quality Fixed Income Fund is July 1, 1999. TURNER FUNDS 1999 ANNUAL REPORT | 23 INVESTMENT REVIEW - -------------------------------------------------------------------------------- Turner Core High Quality Fixed Income Fund - -------------------------------------------------------------------------------- Fund objective The Turner Core High Quality Fixed Income Fund seeks current income and capital appreciation, an objective that emphasizes total return rather than just yield alone. It invests in investment-grade fixed-income securities, including U.S. government, corporate, mortgaged-backed and asset-backed securities. - -------------------------------------------------------------------------------- Fund profile September 30, 1999 [CORE HIGH GRAPH OMITTED] o Ticker symbol THQFX o CUSIP #87252R847 o Top 10 holdings (1) U.S. Treasury Notes, 7.00%, 07/15/06, (2) U.S. Treasury Notes, 8.125%, 05/15/21, (3) Spiegel Credit Card, 7.50%, 1995-A, (4) FNCI, 6.00%, 02/01/13, (5) Federal National Mortgage Association, 6.00%, 12/25/22, (6) Federal Home Loan Mortgage Corporation, 6.00%, 6/01/29, (7) Federal Home Loan Mortgage Corporation Gold Pool, 7.50%, 10/01/28, (8) FNCL, 6.00%, 04/01/28, (9) Federal Home Loan Mortgage Corporation, 9.50%, 06/15/06, (10) Olympic Auto, 6.15%, 1995-D o % in 10 largest holdings 85.8% o Number of holdings 26 o Average effective duration 5.0 years o Average maturity 8.5 years o Average yield to maturity 6.49% o Average credit quality Agency o Convexity 0.09 o Net assets $10.0 million - -------------------------------------------------------------------------------- Sector weightings: resemble Russell 2000 Growth Index 44.1% Mortgage-backed securities 38.1% Treasury securities 13.7% Corporates 2.2% Asset-backed securities 1.9% Other [BAR GRAPH OMITTED] Portfolio managers [PHOTO OMITTED] James I. Midanek, fixed-income chief investment officer, has served as manager of the Short Duration Funds-Three Year Portfolio since inception. Jim joined Turner in 1998, upon our acquisition of Solon Asset Management, which he cofounded. Previously he was chief investment officer, fixed income with Montgomery Asset Management. He holds a bachelor's degree from Queens College. [PHOTO OMITTED] Kathy Dull, senior portfolio manager/security analyst, joined the firm in 1997. She earned a bachelor's degree at Miami University, Oxford, Ohio. Previously Kathy was an assistant to the fixed-income portfolio manager at Montgomery Asset Management. [PHOTO OMITTED] Robb J. Parlanti, senior portfolio manager/security analyst, joined Turner in 1993. A Chartered Financial Analyst, he received a bachelor's degree at Wake Forest University. Robb formerly was an assistant vice president/portfolio manager at PNC Bank. 24 | TURNER FUNDS 1999 ANNUAL REPORT FINANCIAL STATEMENTS - -------------------------------------------------------------------------------- Statement of net assets Turner Large Cap Growth Equity Fund September 30, 1999 Value Shares (000) - ---------------------------------------------------------- Common stocks--100.3% - ---------------------------------------------------------- Beauty products--4.7% - ---------------------------------------------------------- Colgate-Palmolive 2,530 $ 116 Procter & Gamble 3,015 283 ----- Total Beauty products 399 ----- - ---------------------------------------------------------- Broadcasting, newspapers & advertising--2.8% - ---------------------------------------------------------- AT&T Corp-Liberty Media, Cl A* 3,740 139 Clear Channel Communications* 1,220 97 ----- Total Broadcasting, newspapers & advertising 236 ----- - ---------------------------------------------------------- Communications equipment--7.7% - ---------------------------------------------------------- Juniper Networks* 910 166 Lucent Technologies 5,490 356 Nokia 1,460 131 ----- Total Communications equipment 653 ----- - ---------------------------------------------------------- Computers & services--12.7% - ---------------------------------------------------------- Cisco Systems* 7,094 486 EMC* 2,380 170 IBM 2,170 263 Sun Microsystems* 1,660 154 ----- Total Computers & services 1,073 ----- - ---------------------------------------------------------- Drugs--11.4% - ---------------------------------------------------------- American Home Products 3,990 166 Bristol-Myers Squibb 5,500 371 Genentech* 1,405 206 Schering Plough 5,030 219 ----- Total Drugs 962 ----- - ---------------------------------------------------------- Electronics--3.4% - ---------------------------------------------------------- Micron Technology 1,610 107 Solectron* 2,500 180 ----- Total Electronics 287 ----- Value Shares (000) - ---------------------------------------------------------- Financial services--2.1% - ---------------------------------------------------------- American Express 610 $ 82 Automatic Data Processing 2,080 93 ----- Total Financial services 175 ----- - ---------------------------------------------------------- Food, beverage & tobacco--2.5% - ---------------------------------------------------------- Anheuser Busch 1,120 78 Seagram 2,880 131 ----- Total Food, beverage & tobacco 209 ----- - ---------------------------------------------------------- Insurance--2.1% - ---------------------------------------------------------- American International Group 2,097 182 ----- Total Insurance 182 ----- - ---------------------------------------------------------- Internet services--6.4% - ---------------------------------------------------------- Amazon.com* 1,310 105 America Online* 2,885 300 Yahoo* 790 142 ----- Total Internet services 547 ----- - ---------------------------------------------------------- Medical products & services--7.9% - ---------------------------------------------------------- Amgen* 2,190 178 Johnson & Johnson 4,375 402 Medtronic 2,400 85 ----- Total Medical products & services 665 ----- - ---------------------------------------------------------- Miscellaneous manufacturing--1.0% - ---------------------------------------------------------- Tyco International 810 84 ----- Total Miscellaneous manufacturing 84 ----- - ---------------------------------------------------------- Multimedia--0.9% - ---------------------------------------------------------- CBS 1,705 79 ----- Total Multimedia 79 ----- TURNER FUNDS 1999 ANNUAL REPORT | 25 FINANCIAL STATEMENTS - -------------------------------------------------------------------------------- Statement of net assets Turner Large Cap Growth Equity Fund Value Shares (000) - ---------------------------------------------------------- Retail--9.1% - ---------------------------------------------------------- CVS 3,430 $ 140 Home Depot 3,043 209 Kroger* 2,950 65 Safeway* 2,300 88 Wal-Mart Stores 5,635 268 ----- Total Retail 770 ----- - ---------------------------------------------------------- Semiconductors/instruments--9.9% - ---------------------------------------------------------- Intel 5,010 372 Jds Uniphase* 1,920 219 Texas Instruments 2,970 244 ----- Total Semiconductors/instruments 835 ----- - ---------------------------------------------------------- Software & programming--13.1% - ---------------------------------------------------------- BMC Software* 2,490 178 Computer Associates 2,220 136 Microsoft* 6,800 616 Oracle* 3,890 177 ----- Total Software & programming 1,107 ----- - ---------------------------------------------------------- Telephones & telecommunications--2.6% - ---------------------------------------------------------- Qwest Communications International* 4,530 134 Sprint (PCS Group)* 1,150 86 ----- Total Telephones & telecommunications 220 ----- - ---------------------------------------------------------- Total common stocks (Cost $7,993) 8,483 ========================================================== Face amount Value (000) (000) - ---------------------------------------------------------- Repurchase agreement--0.9% - ---------------------------------------------------------- Morgan Stanley, 5.00%, dated 09/30/99, matures 10/01/99, repurchase price $76,151 (collateralized by U.S. Treasury Note, par value $73,410, 7.25%, 08/15/04: market value $77,918) $76 $ 76 - ---------------------------------------------------------- Total repurchase agreement (Cost $76) 76 ========================================================== Total investments--101.2% (Cost $8,069) 8,559 ========================================================== - ---------------------------------------------------------- Other assets and liabilities, net--(1.2%) (100) ========================================================== - ---------------------------------------------------------- Net assets: - ---------------------------------------------------------- Portfolio Shares (unlimited authorization -- no par value) based on 447,615 outstanding shares of beneficial interest 6,352 Accumulated net realized gain on investments 1,617 Net unrealized appreciation on investments 490 - ---------------------------------------------------------- Total net assets--100.0% $8,459 ========================================================== Net asset value, offering and redemption price per share $18.90 ========================================================== *Non-income producing security. Cl - Class The accompanying notes are an integral part of the financial statements. 26 | TURNER FUNDS 1999 ANNUAL REPORT - -------------------------------------------------------------------------------- Schedule of investments Turner Growth Equity Fund September 30, 1999 Value Shares (000) - ---------------------------------------------------------- Common stocks--98.8% - ---------------------------------------------------------- Aircraft--0.5% - ---------------------------------------------------------- Allied Signal 12,440 $ 746 ------- Total Aircraft 746 ------- - ---------------------------------------------------------- Beauty products--4.5% - ---------------------------------------------------------- Colgate-Palmolive 36,650 1,677 Procter & Gamble 50,900 4,772 ------- Total Beauty products 6,449 ------- - ---------------------------------------------------------- Broadcasting, newspapers & advertising--2.4% - ---------------------------------------------------------- AT&T Corp-- Liberty Media, Cl A* 30,785 1,143 Clear Channel Communications* 13,695 1,094 Omnicom Group 14,245 1,128 ------- Total Broadcasting, newspapers & advertising 3,365 ------- - ---------------------------------------------------------- Communications--0.8% - ---------------------------------------------------------- Vodafone Airtouch PLC, ADR 4,950 1,177 ------- Total Communications 1,177 ------- - ---------------------------------------------------------- Communications equipment--7.0% - ---------------------------------------------------------- Ciena* 38,880 1,419 Comcast, Special, Cl A 29,970 1,195 Juniper Networks* 3,650 665 Lucent Technologies 76,360 4,954 Nokia 11,970 1,075 Scientific-Atlanta 14,480 718 ------- Total Communications equipment 10,026 ------- - ---------------------------------------------------------- Computers & services--10.8% - ---------------------------------------------------------- Brocade Communications Systems* 3,050 641 Cisco Systems* 92,895 6,369 EMC* 25,155 1,797 Foundry Networks* 4,530 571 IBM 23,265 2,824 Lexmark International Group, Cl A* 8,620 694 Network Appliance* 10,110 724 Sun Microsystems* 19,340 1,799 ------- Total Computers & services 15,419 ------- Value Shares (000) - ---------------------------------------------------------- Drugs--8.0% - ---------------------------------------------------------- American Home Products 25,240 $ 1,047 Biogen* 13,150 1,036 Bristol-Myers Squibb 79,335 5,355 Genentech* 7,190 1,052 Schering Plough 67,890 2,962 ------- Total Drugs 11,452 ------- - ---------------------------------------------------------- Electronics--3.8% - ---------------------------------------------------------- Atmel* 19,550 661 LSI Logic* 12,955 667 Maxim Integrated Products* 10,430 658 Microchip Technology* 13,700 704 Micron Technology 14,100 939 Motorola 8,105 713 Solectron* 15,390 1,105 ------- Total Electronics 5,447 ------- - ---------------------------------------------------------- Entertainment--1.0% - ---------------------------------------------------------- Time Warner 23,735 1,442 ------- Total Entertainment 1,442 ------- - ---------------------------------------------------------- Financial services--3.4% - ---------------------------------------------------------- American Express 10,525 1,417 Citigroup 24,892 1,095 Concord EFS* 30,405 627 Goldman Sachs Group 11,540 704 Paychex 30,650 1,046 ------- Total Financial services 4,889 ------- - ---------------------------------------------------------- Food, beverage & tobacco--2.9% - ---------------------------------------------------------- Anheuser Busch 20,060 1,405 Pepsi Bottling Group 26,870 458 Sara Lee 32,120 753 Seagram 32,480 1,478 ------- Total Food, beverage & tobacco 4,094 ------- - ---------------------------------------------------------- Gas/natural gas--0.5% - ---------------------------------------------------------- Enron 17,200 710 ------- Total Gas/natural gas 710 ------- TURNER FUNDS 1999 ANNUAL REPORT | 27 FINANCIAL STATEMENTS - -------------------------------------------------------------------------------- Schedule of Investments Turner Growth Equity Fund Value Shares (000) - ---------------------------------------------------------- Glass products--0.5% - ---------------------------------------------------------- Corning 11,010 $ 755 ------- Total Glass products 755 ------- - ---------------------------------------------------------- Healthcare--0.8% - ---------------------------------------------------------- PE Biosystems 15,730 1,136 ------- Total Healthcare 1,136 ------- - ---------------------------------------------------------- Insurance--1.2% - ---------------------------------------------------------- Aflac 16,890 707 American International Group 12,081 1,050 ------- Total Insurance 1,757 ------- - ---------------------------------------------------------- Internet services--5.5% - ---------------------------------------------------------- Amazon.com* 10,740 859 America Online* 22,885 2,380 Internet Capital Group* 6,810 598 Netzero* 40,690 1,058 Priceline.com* 11,680 753 RealNetworks* 7,070 739 Yahoo* 7,750 1,391 ------- Total Internet services 7,778 ------- - ---------------------------------------------------------- Machinery--1.2% - ---------------------------------------------------------- Applied Materials* 13,375 1,039 Eaton 7,310 631 ------- Total Machinery 1,670 ------- - ---------------------------------------------------------- Medical products & services--8.9% - ---------------------------------------------------------- Amgen* 25,780 2,101 Bausch & Lomb 23,140 1,526 Columbia/HCA Healthcare 50,290 1,066 Johnson & Johnson 62,810 5,771 Medimmune* 7,470 744 Medtronic 42,320 1,502 ------- Total Medical products & services 12,710 ------- - ---------------------------------------------------------- Miscellaneous business services--0.7% - ---------------------------------------------------------- Automatic Data Processing 23,360 1,042 ------- Total Miscellaneous business services 1,042 ------- - ---------------------------------------------------------- Miscellaneous manufacturing--0.8% - ---------------------------------------------------------- Tyco International 11,010 1,137 ------- Total Miscellaneous manufacturing 1,137 ------- Value Shares (000) - ---------------------------------------------------------- Multimedia--1.0% - ---------------------------------------------------------- CBS 30,490 $ 1,410 ------- Total Multimedia 1,410 ------- - ---------------------------------------------------------- Petroleum & fuel products--0.4% - ---------------------------------------------------------- Burlington Resources 16,860 620 ------- Total Petroleum & fuel products 620 ------- - ---------------------------------------------------------- Printing & publishing--1.1% - ---------------------------------------------------------- Tribune 30,080 1,496 ------- Total Printing & publishing 1,496 ------- - ---------------------------------------------------------- Restaurants--0.8% - ---------------------------------------------------------- McDonald's 25,020 1,076 ------- Total Restaurants 1,076 ------- - ---------------------------------------------------------- Retail--6.8% - ---------------------------------------------------------- Abercrombie & Fitch, Cl A* 18,230 621 CVS 18,260 745 Home Depot 43,430 2,980 Kroger* 44,985 992 Safeway* 16,250 619 Wal-Mart Stores 79,290 3,771 ------- Total Retail 9,728 ------- - ---------------------------------------------------------- Semiconductors/instruments--7.6% - ---------------------------------------------------------- Intel 85,540 6,357 Jds Uniphase* 12,310 1,401 KLA-Tencor* 10,280 668 Lam Research* 11,790 719 Texas Instruments 20,160 1,658 ------- Total Semiconductors/instruments 10,803 ------- - ---------------------------------------------------------- Software & programming--11.7% - ---------------------------------------------------------- BMC Software* 15,650 1,120 Checkpoint Software* 8,110 685 Computer Associates 19,020 1,165 Electronic Arts* 9,580 693 Inktomi* 5,720 687 Intuit* 11,510 1,009 Microsoft* 97,450 8,825 Oracle* 25,100 1,142 Siebel Systems* 10,670 711 Veritas Software* 8,920 677 ------- Total Software & programming 16,714 ------- 28 | TURNER FUNDS 1999 ANNUAL REPORT Schedule of Investments Turner Growth Equity Fund Value Shares (000) - ---------------------------------------------------------- Steel & steel works--0.5% - ---------------------------------------------------------- Alcoa 12,050 $ 748 ------- Total Steel & steel works 748 ------- - ---------------------------------------------------------- Telephones & telecommunications--3.2% - ---------------------------------------------------------- McLeodusa, Cl A* 18,190 774 Nextel Communications, Cl A* 16,630 1,128 Nextlink Communications* 15,190 788 Qwest Communications International* 24,700 730 Sprint (PCS Group)* 14,740 1,099 ------- Total Telephones & telecommunications 4,519 ------- - ---------------------------------------------------------- Wholesale--0.5% - ---------------------------------------------------------- Sysco 20,880 732 ------- Total Wholesale 732 ------- - ---------------------------------------------------------- Total common stocks (Cost $128,224) 141,047 ========================================================== Face Amount Value (000) (000) - ---------------------------------------------------------- Repurchase agreement--1.9% - ---------------------------------------------------------- Morgan Stanley, 5.35%, dated 09/30/99, matures 10/01/99, repurchase price $2,713,821 (collateralized by GNMA, par value $3,784,310, 7.50%, matures 10/15/28: market value $2,768,098) $2,714 $ 2,714 - ---------------------------------------------------------- Total repurchase agreement (Cost $2,714) 2,714 ========================================================== - ---------------------------------------------------------- Total investments--100.7% (Cost $130,938) 143,761 ========================================================== - ---------------------------------------------------------- Other assets and liabilities, net--(0.7%) (937) ========================================================== - ---------------------------------------------------------- Total net assets--100.0% $142,824 ========================================================== * Non-income producing security. ADR - American Depository Receipts Cl - Class The accompanying notes are an integral part of the financial statements. TURNER FUNDS 1999 ANNUAL REPORT | 29 FINANCIAL STATEMENTS - -------------------------------------------------------------------------------- Schedule of investments Turner Midcap Growth Fund September 30, 1999 Value Shares (000) - ---------------------------------------------------------- Common stocks--96.9% - ---------------------------------------------------------- Automotive--0.6% - ---------------------------------------------------------- Lear* 25,070 $ 882 ------- Total Automotive 882 ------- - ---------------------------------------------------------- Banks--2.1% - ---------------------------------------------------------- National Commerce Bancorporation 54,790 1,204 Northern Trust 14,000 1,169 TCF Financial 24,480 699 ------- Total Banks 3,072 ------- - ---------------------------------------------------------- Broadcasting, newspapers & advertising--5.5% - ---------------------------------------------------------- Hispanic Broadcasting* 9,020 687 Interpublic Group 48,700 2,003 Outdoor Systems* 53,931 1,928 TMP Worldwide* 27,530 1,676 Young & Rubicam* 41,480 1,825 ------- Total Broadcasting, newspapers & advertising 8,119 ------- - ---------------------------------------------------------- Chemicals--1.7% - ---------------------------------------------------------- Avery Dennison 28,340 1,495 W.R. Grace* 60,980 979 ------- Total Chemicals 2,474 ------- - ---------------------------------------------------------- Communications equipment--3.2% - ---------------------------------------------------------- Antec* 14,880 790 Ciena* 44,810 1,636 Juniper Networks* 6,190 1,127 Scientific-Atlanta 24,810 1,230 ------- Total Communications equipment 4,783 ------- - ---------------------------------------------------------- Computers & services--7.3% - ---------------------------------------------------------- Affiliated Computer Services, Cl A* 28,580 1,161 Brocade Communications Systems* 5,590 1,174 Comverse Technology* 12,890 1,216 Fiserv* 45,915 1,492 Foundry Networks* 9,280 1,169 Lexmark International Group, Cl A* 24,250 1,952 Network Appliance* 17,060 1,222 Safeguard Scientifics* 21,030 1,430 ------- Total Computers & services 10,816 ------- Value Shares (000) - ---------------------------------------------------------- Drugs--1.9% - ---------------------------------------------------------- Biogen* 20,630 $ 1,626 Forest Laboratories* 27,630 1,164 ------- Total Drugs 2,790 ------- - ---------------------------------------------------------- Consumer staples--0.7% - ---------------------------------------------------------- Dial 42,740 1,090 ------- Total Consumer staples 1,090 ------- - ---------------------------------------------------------- Electrical services--0.7% - ---------------------------------------------------------- Calpine* 12,390 1,054 ------- Total Electrical services 1,054 ------- - ---------------------------------------------------------- Electronics--5.1% - ---------------------------------------------------------- Atmel* 27,130 917 Gemstar International* 23,350 1,824 LSI Logic* 19,980 1,029 Maxim Integrated Products* 20,490 1,293 Micron Technology 20,500 1,365 Sawtek* 33,440 1,170 ------- Total Electronics 7,598 ------- - ---------------------------------------------------------- Financial services--3.4% - ---------------------------------------------------------- Capital One Financial 18,360 716 Concord EFS* 65,820 1,358 Lehman Brothers Holdings 25,880 1,509 SLM Holding 33,990 1,462 ------- Total Financial services 5,045 ------- - ---------------------------------------------------------- Food, beverage & tobacco--3.1% - ---------------------------------------------------------- Dean Foods 28,040 1,221 Paychex 59,640 2,035 Pepsi Bottling Group 81,030 1,383 ------- Total Food, beverage & tobacco 4,639 ------- - ---------------------------------------------------------- Household furniture & fixtures--0.8% - ---------------------------------------------------------- Ethan Allen Interiors 40,095 1,276 ------- Total Household furniture & fixtures 1,276 ------- - ---------------------------------------------------------- Internet services--12.8% - ---------------------------------------------------------- Ariba * 6,250 903 CMGI* 13,100 1,343 30 | TURNER FUNDS 1999 ANNUAL REPORT Schedule of investments Turner Midcap Growth Fund Value Shares (000) - ---------------------------------------------------------- C-Net* 18,270 $ 1,023 Doubleclick* 17,080 2,035 Exodus Communications* 15,140 1,091 Infospace.com* 30,450 1,252 Internap Network Services* 28,110 1,255 Internet Capital Group* 16,330 1,435 Looksmart* 25,980 619 Network Solutions, Cl A* 23,340 2,144 Netzero* 40,080 1,042 Phone.com* 5,560 842 Priceline.com* 21,350 1,377 RealNetworks* 10,240 1,071 Ticketmaster Online-CitySearch* 64,740 1,566 ------- Total Internet services 18,998 ------- - ---------------------------------------------------------- Machinery--2.0% - ---------------------------------------------------------- Lennox International* 70,590 1,094 SPX 21,420 1,944 ------- Total Machinery 3,038 ------- - ---------------------------------------------------------- Medical products & services--8.7% - ---------------------------------------------------------- Allergan 13,340 1,467 Bausch & Lomb 29,940 1,974 C.R. Bard 28,060 1,321 Express Scripts, Cl A* 13,770 1,078 Medimmune* 17,810 1,775 MiniMed* 13,440 1,320 St. Jude Medical 23,380 736 Stryker 27,140 1,388 Visx* 23,950 1,894 ------- Total Medical products & services 12,953 ------- - ---------------------------------------------------------- Paper & paper products--1.0% - ---------------------------------------------------------- Smurfit-Stone Container* 71,470 1,546 ------- Total Paper & paper products 1,546 ------- - ---------------------------------------------------------- Petroleum services--1.9% - ---------------------------------------------------------- Cooper Cameron* 29,530 1,115 Devon Energy 19,060 790 Eog Resources 43,760 930 ------- Total Petroleum services 2,835 ------- Value Shares (000) - ---------------------------------------------------------- Retail--10.8% - ---------------------------------------------------------- Abercrombie & Fitch, Cl A* 52,280 $ 1,781 American Eagle Outfitters* 28,140 1,363 AnnTaylor Stores* 25,630 1,048 Bed Bath & Beyond* 38,990 1,362 Best Buy* 33,320 2,068 Brinker International* 58,820 1,595 Circuit City Stores 46,290 1,953 Drugstore.com* 22,660 821 Linens N Things* 20,090 678 Outback Steakhouse* 26,655 679 Tiffany & Company 26,850 1,609 TJX 39,500 1,108 ------- Total Retail 16,065 ------- - ---------------------------------------------------------- Semiconductors/instruments--9.1% - ---------------------------------------------------------- Applied Micro Circuits* 12,660 722 Broadcom, Cl A* 9,980 1,088 E-Tek Dynamics* 23,750 1,288 GlobeSpan* 10,840 684 Jds Uniphase* 17,070 1,943 KLA-Tencor* 21,460 1,395 Lam Research* 18,980 1,158 Lattice Semiconductor* 24,720 734 PE Biosystems 16,400 1,185 QLogic* 12,700 887 RF Micro Devices* 29,620 1,355 SDL* 13,870 1,058 ------- Total Semiconductors/instruments 13,497 ------- - ---------------------------------------------------------- Software & programming--7.8% - ---------------------------------------------------------- Electronic Arts* 16,460 1,191 Electronics for Imaging* 18,120 931 Inktomi* 11,160 1,340 Intuit* 12,220 1,071 J.D. Edwards & Company* 51,370 1,064 Mercury Interactive* 21,330 1,377 Portal Software* 31,850 1,234 Siebel Systems* 17,740 1,182 Verisign* 10,740 1,144 Veritas Software* 14,650 1,112 ------- Total Software & programming 11,646 ------- TURNER FUNDS 1999 ANNUAL REPORT | 31 FINANCIAL STATEMENTS - -------------------------------------------------------------------------------- Schedule of investments Turner Midcap Growth Fund Value Shares (000) - ---------------------------------------------------------- Technology--0.4% - ---------------------------------------------------------- Redback Networks* 6,360 $ 687 ------- Total Technology 687 ------- - ---------------------------------------------------------- Telephones & telecommunications--6.3% - ---------------------------------------------------------- Allegiance Telecommunications* 28,480 1,499 McLeodusa, Cl A* 39,140 1,666 Nextel Communications, Cl A* 17,610 1,194 Nextlink Communications* 25,300 1,312 NTL* 11,690 1,123 Pinnacle Holdings* 41,540 1,085 RNC* 35,590 1,459 ------- Total Telephones & telecommunications 9,338 ------- - ---------------------------------------------------------- Total common stocks (Cost $132,982) 144,241 ========================================================== - ---------------------------------------------------------- Rights--0.0% - ---------------------------------------------------------- Internet Capital Group Rights 1,032 -- US Interactive Rights 516 -- - ---------------------------------------------------------- Total rights (Cost $0) -- ========================================================== Face amount Value (000) (000) - ---------------------------------------------------------- Repurchase agreement--3.0% - ---------------------------------------------------------- Morgan Stanley, 5.35%, dated 09/30/99, matures 10/01/99, repurchase price $4,451,363 (collateralized by GNMA, par value $6,207,240, 7.50%, 10/15/28: market value $4,640,391) $4,451 $ 4,451 - ---------------------------------------------------------- Total repurchase agreement (Cost $4,451) 4,451 ========================================================== - ---------------------------------------------------------- Total investments--99.9% (Cost $137,433) 148,692 ========================================================== - ---------------------------------------------------------- Other assets and liabilities, net--0.1% 138 ========================================================== - ---------------------------------------------------------- Total net assets--100.0% $148,830 ========================================================== * Non-income producing security. Cl - Class The accompanying notes are an integral part of the financial statements. 32 | TURNER FUNDS 1999 ANNUAL REPORT Statement of net assets Turner Small Cap Growth Fund September 30, 1999 Value Shares (000) - ---------------------------------------------------------- Common stocks--97.2% - ---------------------------------------------------------- Air Transportation--0.8% - ---------------------------------------------------------- Atlas Air* 48,860 $ 1,069 SkyWest 46,870 1,028 -------- Total Air transportation 2,097 -------- - ---------------------------------------------------------- Automotive--0.9% - ---------------------------------------------------------- Avis Rent A Car* 61,430 1,282 Tower Automotive* 46,000 911 -------- Total Automotive 2,193 -------- - ---------------------------------------------------------- Banks--1.9% - ---------------------------------------------------------- Community First Bankshares 80,170 1,353 Silicon Valley Bancshares* 46,970 1,133 Webster Financial 53,500 1,364 Westamerica Bancorporation 35,510 1,074 -------- Total Banks 4,924 -------- - ---------------------------------------------------------- Broadcasting, newspapers & advertising--7.1% - ---------------------------------------------------------- Acme Communications* 29,260 907 Entercom Communications* 32,590 1,173 Flycast Communications* 50,780 2,311 Insight Communications* 40,610 1,162 Lamar Advertising* 43,840 2,170 Modem Media Poppe Tyson* 46,290 1,713 Radio One* 27,960 1,160 Salem Communications, Cl A* 46,480 1,185 TMP Worldwide* 44,370 2,701 True North Communications 55,790 2,029 Wink Communications* 36,920 1,613 -------- Total Broadcasting, newspapers & advertising 18,124 -------- - ---------------------------------------------------------- Chemicals--1.6% - ---------------------------------------------------------- OM Group 48,210 1,850 W.R. Grace* 134,080 2,154 -------- Total Chemicals 4,004 -------- Value Shares (000) - ---------------------------------------------------------- Commericial services--2.5% - ---------------------------------------------------------- Abacus Direct* 11,090 $ 1,352 ACNielsen* 50,340 1,142 Profit Recovery Group International* 43,290 1,932 Quanta Services* 65,930 1,933 -------- Total Commericial services 6,359 -------- - ---------------------------------------------------------- Communications equipment--4.0% - ---------------------------------------------------------- Antec* 79,230 4,209 Polycom* 66,180 3,154 Powerwave Technologies* 59,730 2,880 -------- Total Communications equipment 10,243 -------- - ---------------------------------------------------------- Computers & services--1.6% - ---------------------------------------------------------- Digex* 48,440 1,147 Digital Insight* 18,610 279 Jack Henry & Associates 40,490 1,496 Packeteer* 31,380 1,069 -------- Total Computers & services 3,991 -------- - ---------------------------------------------------------- Containers & packaging--0.9% - ---------------------------------------------------------- Ball 26,420 1,164 Gaylord Container* 156,830 1,117 -------- Total Containers & packaging 2,281 -------- - ---------------------------------------------------------- Drugs--5.7% - ---------------------------------------------------------- Alkermes* 31,000 893 Alpharma, Cl A 72,530 2,561 Biovail International* 32,780 1,664 Gilead Sciences* 15,770 1,012 IDEC Pharmaceuticals* 19,040 1,790 Jones Pharmaceuticals 94,155 3,104 King Pharmaceuticals* 50,840 1,779 QLT PhotoTherapeutics* 21,440 1,639 -------- Total Drugs 14,442 -------- - ---------------------------------------------------------- Electrical services--0.7% - ---------------------------------------------------------- Calpine* 21,210 1,804 -------- Total Electrical services 1,804 -------- TURNER FUNDS 1999 ANNUAL REPORT | 33 Statement of net assets Turner Small Cap Growth Fund Value Shares (000) - ---------------------------------------------------------- Electronics--3.4% - ---------------------------------------------------------- DII Group* 70,040 $ 2,465 DSP Group* 53,190 2,121 Optical Coating Laboratories 21,890 2,015 Sawtek* 57,000 1,995 -------- Total Electronics 8,596 -------- - ---------------------------------------------------------- Entertainment--0.3% - ---------------------------------------------------------- Argosy Gaming* 56,300 746 -------- Total Entertainment 746 -------- - ---------------------------------------------------------- Financial services--3.8% - ---------------------------------------------------------- Hambrecht & Quist* 65,810 3,221 Legg Mason 32,970 1,263 Metris 60,780 1,789 NCO Group* 44,220 2,078 Private Business* 74,040 352 Raymond James Financial 51,510 1,027 -------- Total Financial services 9,730 -------- - ---------------------------------------------------------- Food, beverage & tobacco--1.3% - ---------------------------------------------------------- Aurora Foods * 63,980 1,024 Beringer Wine Estates Holdings* 29,320 1,204 Smithfield Foods* 36,550 978 -------- Total Food, beverage & tobacco 3,206 -------- - ---------------------------------------------------------- Healthcare--0.7% - ---------------------------------------------------------- Chemdex* 61,510 1,895 -------- Total Healthcare 1,895 -------- - ---------------------------------------------------------- Household furniture & fixtures--0.5% - ---------------------------------------------------------- Ethan Allen Interiors 42,790 1,361 -------- Total Household furniture & fixtures 1,361 -------- - ---------------------------------------------------------- Insurance--2.1% - ---------------------------------------------------------- Annuity & Life Re Holdings 40,200 1,000 E.W. Blanch Holdings 15,000 977 Financial Security Assurance Holdings 29,640 1,532 Radian Group 42,310 1,817 -------- Total Insurance 5,326 -------- Value Shares (000) - ---------------------------------------------------------- Internet services--3.7% - ---------------------------------------------------------- Go2Net* 19,360 $ 1,254 ITXC* 40,390 1,285 Keynote Systems* 17,070 427 Looksmart* 46,270 1,102 Multex.com* 62,140 792 Network Solutions, Cl A* 20,930 1,923 Phone.com* 9,170 1,389 VerticalNet* 33,300 1,232 -------- Total Internet services 9,404 -------- - ---------------------------------------------------------- Machinery--3.3% - ---------------------------------------------------------- Advanced Energy Industries* 65,740 2,030 Asyst Technologies* 60,150 1,985 Brooks Automation* 23,420 411 Lennox International* 65,260 1,012 PRI Automation* 47,740 1,725 SPX 12,560 1,140 -------- Total Machinery 8,303 -------- - ---------------------------------------------------------- Measuring devices--1.0% - ---------------------------------------------------------- Mettler-Toledo International* 84,800 2,512 -------- Total Measuring devices 2,512 -------- - ---------------------------------------------------------- Medical products & services--7.4% - ---------------------------------------------------------- Advanced Paradigm* 31,230 1,710 Conmed* 59,840 1,466 Dendrite International* 48,930 2,312 Eclipse Surgical Technologies* 94,200 1,554 Express Scripts, Cl A* 26,930 2,107 Hooper Holmes 90,090 2,309 MiniMed* 19,690 1,935 Patterson Dental* 53,900 2,671 Summit Technology* 72,320 1,324 Techne* 44,530 1,397 -------- Total Medical products & services 18,785 -------- - ---------------------------------------------------------- Miscellaneous manufacturing--1.5% - ---------------------------------------------------------- Dexter 47,400 1,769 Kemet* 64,340 2,057 -------- Total Miscellaneous manufacturing 3,826 -------- 34 | TURNER FUNDS 1999 ANNUAL REPORT - -------------------------------------------------------------------------------- Statement of net assets Turner Small Cap Growth Fund Value Shares (000) - ---------------------------------------------------------- Petroleum & fuel products--1.0% - ---------------------------------------------------------- Global Industries* 99,890 $ 812 Ocean Energy* 174,752 1,780 -------- Total Petroleum & fuel products 2,592 -------- - ---------------------------------------------------------- Retail--13.0% - ---------------------------------------------------------- American Eagle Outfitters* 54,100 2,620 AnnTaylor Stores* 63,130 2,580 Buca* 68,360 889 Children's Place* 87,520 2,330 Cost Plus* 31,900 1,547 Drugstore.com* 26,820 972 Foodmaker* 78,620 1,961 Insight Enterprises* 50,100 1,628 Linens N Things* 83,360 2,813 Pacific Sunwear of California* 78,210 2,192 Papa John's International* 49,180 2,029 Rex Stores* 43,820 1,358 Stamps.com* 30,980 1,077 Sunglass Hut International* 141,870 1,499 Tuesday Morning* 96,380 2,434 United Rentals* 74,180 1,613 Yankee Candle* 55,230 1,067 Zale* 64,290 2,463 -------- Total Retail 33,072 -------- - ---------------------------------------------------------- Semiconductors/instruments--8.9% - ---------------------------------------------------------- Alpha Industries* 35,420 1,998 Applied Micro Circuits* 31,590 1,801 Cymer* 56,960 1,976 GlobeSpan* 19,320 1,220 Harmonic* 14,200 1,858 Lam Research* 37,300 2,275 Lattice Semiconductor* 76,400 2,268 MIPS Technologies* 67,060 2,133 SDL* 36,370 2,776 TranSwitch* 33,380 1,903 Varian Semiconductor Equipment Associates* 64,480 1,358 Zoran* 43,740 1,186 -------- Total Semiconductors/instruments 22,752 -------- Value Shares (000) - ---------------------------------------------------------- Software & programming--10.4% - ---------------------------------------------------------- Agile Software* 28,320 $ 1,812 Business Objects ADR* 49,520 2,922 Clarify* 29,000 1,459 E.piphany* 27,500 1,341 Kana Communications* 34,430 1,717 Mercury Interactive* 55,980 3,614 MicroStrategy* 33,390 1,872 Peregrine Systems* 69,110 2,816 Quest Software* 29,180 1,357 Symantec* 84,600 3,043 Verity* 35,920 2,472 Vignette* 21,540 1,949 -------- Total Software & programming 26,374 -------- - ---------------------------------------------------------- Specialty construction--0.5% - ---------------------------------------------------------- U.S. Aggregates* 82,920 1,156 -------- Total Specialty construction 1,156 -------- - ---------------------------------------------------------- Telephones & telecommunications--5.8% - ---------------------------------------------------------- AirGate PCS* 49,020 1,219 Caprock Communications* 15,290 356 CommScope * 52,630 1,710 Dycom Industries* 47,180 1,990 Focal Communications* 68,360 1,752 Intermedia Communications* 59,080 1,285 ITC Deltacom* 76,660 2,108 Pinnacle Holdings* 99,200 2,592 Price Communications* 64,627 1,620 -------- Total Telephones & telecommunications 14,632 -------- - ---------------------------------------------------------- Wholesale--0.9% - ---------------------------------------------------------- Amerisource Health, Cl A* 37,300 884 WESCO International* 95,940 1,355 -------- Total Wholesale 2,239 -------- - ---------------------------------------------------------- Total common stocks (Cost $211,888) 246,969 - ---------------------------------------------------------- TURNER FUNDS 1999 ANNUAL REPORT | 35 Statement of net assets Turner Small Cap Growth Fund Face amount Value (000) (000) - ---------------------------------------------------------- Repurchase agreement--5.0% - ---------------------------------------------------------- JP Morgan 5.35%, dated 09/30/99, matures 10/01/99, repurchase price $12,767,114 (collateralized by GNMA, par value $17,803,206, 7.50%, matures 10/15/28: market value $13,022,457) $12,767 $ 12,767 - ---------------------------------------------------------- Total repurchase agreement (Cost $12,767) 12,767 - ---------------------------------------------------------- - ---------------------------------------------------------- Total investments--102.2% (Cost $224,655) 259,736 - ---------------------------------------------------------- Other assets and liabilities, net--(2.2%) (5,659) - ---------------------------------------------------------- Value (000) - ---------------------------------------------------------- Net assets: - ---------------------------------------------------------- Portfolio Shares (unlimited authorization-- no par value) based on 7,429,338 outstanding shares of beneficial interest $167,680 Accumulated net realized gain on investments 51,316 Net unrealized appreciation on investments 35,081 - ---------------------------------------------------------- Total net assets--100.0% $254,077 - ---------------------------------------------------------- - ---------------------------------------------------------- Net asset value, offering and redemption price per share $34.20 - ---------------------------------------------------------- *Non-income producing security. ADR - American Depository Receipt Cl - Class The accompanying notes are an integral part of the financial statements. 36 | TURNER FUNDS 1999 ANNUAL REPORT Schedule of investments Turner Micro Cap Growth Fund September 30, 1999 Value Shares (000) - ---------------------------------------------------------- Common stocks--96.0% - ---------------------------------------------------------- Agricultural biotechnology--1.3% - ---------------------------------------------------------- Strategic Diagnostics* 18,500 $ 168 -------- Total Agricultural biotechnology 168 -------- - ---------------------------------------------------------- Athletic footwear--1.2% - ---------------------------------------------------------- Saucony Inc* 9,900 156 -------- Total Athletic footwear 156 -------- - ---------------------------------------------------------- Automotive--1.2% - ---------------------------------------------------------- Monaco Coach* 3,165 77 Oshkosh Truck 2,775 74 -------- Total Automotive 151 -------- - ---------------------------------------------------------- Banks--1.0% - ---------------------------------------------------------- PFF Bancorp* 4,700 97 Trico Bancshares 2,000 37 -------- Total Banks 134 -------- - ---------------------------------------------------------- Building & construction supplies--1.8% - ---------------------------------------------------------- Dayton Superior* 2,000 34 Mobile Mini* 6,600 144 NVR* 980 49 -------- Total Building & construction supplies 227 -------- - ---------------------------------------------------------- Communications equipment--1.9% - ---------------------------------------------------------- California Amplifier* 12,500 181 Catapult Communications* 4,100 64 -------- Total Communications equipment 245 -------- - ---------------------------------------------------------- Computers & services--8.5% - ---------------------------------------------------------- Cybex Computer Products* 1,350 45 Digital Insight* 1,400 21 Homeseekers.com* 14,000 175 In Focus Systems* 7,200 121 Mercury Computer Systems* 3,000 102 Mti Technology* 6,000 138 Netscout Systems* 2,200 47 Radisys* 1,700 67 Rare Medium Group* 15,000 158 Zomax* 9,000 233 -------- Total Computers & services 1,107 -------- Value Shares (000) - ---------------------------------------------------------- Consumer products--0.7% - ---------------------------------------------------------- Steven Madden* 7,400 $ 96 -------- Total Consumer products 96 -------- - ---------------------------------------------------------- Containers & packaging--0.7% - ---------------------------------------------------------- Gaylord Container* 12,000 85 -------- Total Containers & packaging 85 -------- - ---------------------------------------------------------- Electronics--1.9% - ---------------------------------------------------------- Anaren Microwave* 2,450 69 Universal Electronics* 7,500 173 -------- Total Electronics 242 -------- - ---------------------------------------------------------- Entertainment--5.9% - ---------------------------------------------------------- Alliance Gaming* 9,600 76 Argosy Gaming* 10,000 132 Boyd Gaming* 20,700 124 Isle of Capris Casinos* 9,500 95 THQ* 5,000 216 WMS Industries* 10,700 124 --------- Total Entertainment 767 --------- - ---------------------------------------------------------- Environmental services--0.9% - ---------------------------------------------------------- Stericycle* 7,600 112 -------- Total Environmental services 112 -------- - ---------------------------------------------------------- Financial services--2.8% - ---------------------------------------------------------- Ace Cash Express* 4,000 58 Creditrust* 5,150 116 Financial Federal* 3,900 74 Onyx Acceptance* 9,500 72 Rock Financial 2,700 49 -------- Total Financial services 369 -------- - ---------------------------------------------------------- Food, beverage & tobacco--0.4% - ---------------------------------------------------------- Agribrands International* 1,100 55 -------- Total Food, beverage & tobacco 55 -------- - ---------------------------------------------------------- Gas/natural gas--0.6% - ---------------------------------------------------------- Cascade Natural Gas 2,100 38 RGC Resources 1,700 34 -------- Total Gas/natural gas 72 -------- TURNER FUNDS 1999 ANNUAL REPORT | 37 Schedule of investments Turner Micro Cap Growth Fund Value Shares (000) - ---------------------------------------------------------- Household furniture & fixtures--0.3% - ---------------------------------------------------------- Stanley Furniture* 2,060 $ 44 -------- Total Household furniture & fixtures 44 -------- - ---------------------------------------------------------- Household products--1.2% - ---------------------------------------------------------- Salton* 5,300 160 -------- Total Household products 160 -------- - ---------------------------------------------------------- Insurance--1.3% - ---------------------------------------------------------- Farm Family Holdings* 970 38 Guarantee Life 3,200 98 Penn Treaty American* 1,450 30 -------- Total Insurance 166 -------- - ---------------------------------------------------------- Leasing & renting--0.7% - ---------------------------------------------------------- Dollar Thrifty Automotive* 4,700 97 -------- Total Leasing & renting 97 -------- - ---------------------------------------------------------- Machinery--1.8% - ---------------------------------------------------------- Moog, Cl A* 2,100 61 Photon Dynamics* 8,000 168 -------- Total Machinery 229 -------- - ---------------------------------------------------------- Medical products & services--8.9% - ---------------------------------------------------------- Advanced Paradigm* 1,700 93 Collagenex Pharmaceuticals* 4,200 74 Eclipse Surgical Technologies* 12,000 198 Endocare* 7,300 46 Exactech* 6,600 89 Hooper Holmes 2,000 51 Molecular Devices* 2,850 78 PolyMedica* 7,000 163 Staar Surgical* 8,000 95 Syncor International* 2,200 83 Zoll Medical* 6,000 182 -------- Total Medical products & services 1,152 -------- - ---------------------------------------------------------- Metal--0.8% - ---------------------------------------------------------- Century Aluminum 9,100 98 -------- Total Metal 98 -------- - ---------------------------------------------------------- Miscellaneous business services--1.0% - ---------------------------------------------------------- Peapod* 13,000 131 -------- Total Miscellaneous business services 131 -------- Value Shares (000) - ---------------------------------------------------------- Miscellaneous manufacturing--2.9% - ---------------------------------------------------------- Aeroflex* 5,650 $ 69 Jakks Pacific* 3,050 114 LSI Industries 2,400 55 Shuffle Master* 7,200 59 Uniroyal Technology* 7,500 73 -------- Total Miscellaneous manufacturing 370 -------- - ---------------------------------------------------------- Petroleum & fuel products--4.1% - ---------------------------------------------------------- Basin Exploration* 3,400 82 Comstock Resources* 14,100 58 Edge Petroleum* 16,000 102 Frontier Oil* 9,500 65 HS Resources* 7,000 115 Key Energy Group* 23,000 114 -------- Total Petroleum & fuel products 536 -------- - ---------------------------------------------------------- Pharmaceutical--1.8% - ---------------------------------------------------------- Corixa* 6,500 87 United Therapeutics* 5,000 144 -------- Total Pharmaceutical 231 -------- - ---------------------------------------------------------- Photography--0.6% - ---------------------------------------------------------- Pinnacle Systems* 1,800 76 -------- Total Photography 76 -------- - ---------------------------------------------------------- Professional services--0.5% - ---------------------------------------------------------- ICT Group* 9,000 65 -------- Total Professional services 65 -------- - ---------------------------------------------------------- Retail--11.6% - ---------------------------------------------------------- Chico's Fas* 5,000 136 Factory 2u Stores* 4,200 125 Garden Fresh Restaurant* 4,050 62 Genesco* 8,000 100 Hot Topic* 4,500 123 Intertan* 7,000 137 Rare Hospitality International* 3,500 76 Rex Stores* 7,050 219 Seaway Food Town 2,400 67 Shop At Home* 12,000 108 Taco Cabana, Cl A* 5,500 53 Ugly Duckling* 10,000 71 Ultimate Electronics* 8,400 131 Wilsons Leather Experts* 6,300 101 -------- Total Retail 1,509 -------- 38 | TURNER FUNDS 1999 ANNUAL REPORT Schedule of investments Turner Micro Cap Growth Fund Value Shares (000) - ---------------------------------------------------------- Semiconductors/instruments--10.8% - ---------------------------------------------------------- Advanced Digital Information* 5,000 $ 139 Cohu 5,400 114 Elantec Semiconductor* 5,500 97 ESS Technology* 5,300 70 Ibis Technology* 2,800 97 Keithley Instruments 6,300 89 Measurement Specialties* 4,400 81 Parlex* 6,400 98 Pericom Semiconductor* 6,500 97 Silicon Storage Technology* 7,600 107 Three-Five Systems* 3,600 80 Triquint Semiconductor* 2,250 129 Zoran* 7,300 198 -------- Total Semiconductors/instruments 1,396 -------- - ---------------------------------------------------------- Software & programming--6.5% - ---------------------------------------------------------- Ardent Software* 2,100 57 Avt* 2,230 68 Bluestone Software* 6,000 139 Broadbase Software * 5,000 80 JDA Software Group* 5,500 64 Mission Critical Software* 2,000 89 Pervasive Software* 2,900 100 Sapiens International* 6,100 68 Unify* 4,100 92 Verity* 1,300 89 -------- Total Software & programming 846 -------- - ---------------------------------------------------------- Steel & steel works--1.5% - ---------------------------------------------------------- Maverick Tube* 5,700 95 NS Group* 9,000 97 -------- Total Steel & steel works 192 -------- - ---------------------------------------------------------- Telephones & telecommunications--5.2% - ---------------------------------------------------------- Audiovox, Cl A* 13,000 228 Lightbridge* 6,100 120 Metro One Telecommunications* 6,700 129 Orckit Communications* 2,400 85 Periophonics* 3,700 116 -------- Total Telephones & telecommunications 678 -------- Shares/face Value amount (000) (000) - ---------------------------------------------------------- Transportation services--1.4% - ---------------------------------------------------------- Arkansas Best* 7,300 $ 90 Forward Air* 4,000 95 -------- Total Transportation services 185 -------- - ---------------------------------------------------------- Water utilities--1.1% - ---------------------------------------------------------- Artesian Resources, Cl A 2,800 70 E'town 1,350 67 -------- Total Water utilities 137 -------- - ---------------------------------------------------------- Wholesale--1.2% - ---------------------------------------------------------- Advanced Marketing Systems 3,755 74 D&K Healthcare Resources* 3,700 86 -------- Total Wholesale 160 -------- - ---------------------------------------------------------- Total common stocks (Cost $9,849) 12,444 - ---------------------------------------------------------- - ---------------------------------------------------------- Repurchase agreement--3.2% - ---------------------------------------------------------- Morgan Stanley, 5.00%, dated 09/30/99, matures 10/01/99, repurchase price $413,708, (collateralized by U.S. Treasury Notes, par value $398,882, 7.25%, matures 08/15/04: market value $423,306) $414 414 - ---------------------------------------------------------- Total repurchase agreement (Cost $414) 414 - ---------------------------------------------------------- - ---------------------------------------------------------- Total investments--99.2% (Cost $10,263) 12,858 - ---------------------------------------------------------- - ---------------------------------------------------------- Other assets and liabilities, net--0.8% 105 - ---------------------------------------------------------- - ---------------------------------------------------------- Total net assets--100.0% $12,963 - ---------------------------------------------------------- *Non-income producing security. Cl - Class The accompanying notes are an integral part of the financial statements. TURNER FUNDS 1999 ANNUAL REPORT | 39 Schedule of investments Turner Top 20 Fund September 30, 1999 Value Shares (000) - ---------------------------------------------------------- Common stocks--97.5% - ---------------------------------------------------------- Communications equipment--12.8% - ---------------------------------------------------------- Ciena* 16,000 $ 584 Nokia 7,400 665 Scientific-Atlanta 16,320 809 -------- Total Communications equipment 2,058 -------- - ---------------------------------------------------------- Computers & services--4.0% - ---------------------------------------------------------- Cisco Systems* 9,500 651 -------- Total Computers & services 651 -------- - ---------------------------------------------------------- Electronics--8.2% - ---------------------------------------------------------- Atmel* 16,000 541 Micron Technology 11,800 785 -------- Total Electronics 1,326 -------- - ---------------------------------------------------------- Financial services--4.4% - ---------------------------------------------------------- Automatic Data Processing 16,000 714 -------- Total Financial services 714 -------- - ---------------------------------------------------------- Food, beverage & tobacco--4.1% - ---------------------------------------------------------- Anheuser Busch 9,500 666 -------- Total Food, beverage & tobacco 666 -------- - ---------------------------------------------------------- Gas/natural gas--4.1% - ---------------------------------------------------------- Enron 16,000 660 -------- Total Gas/natural gas 660 -------- - ---------------------------------------------------------- Internet services--27.4% - ---------------------------------------------------------- America Online* 8,200 853 Internap Network services* 18,630 831 Netzero* 41,000 1,066 Priceline.com* 11,000 709 Yahoo* 5,280 948 -------- Total Internet services 4,407 -------- - ---------------------------------------------------------- Medical products & services--9.6% - ---------------------------------------------------------- Bausch & Lomb 11,200 738 Johnson & Johnson 8,725 802 -------- Total Medical products & services 1,540 -------- Shares/face Value amount (000) (000) - ---------------------------------------------------------- Oil field services--4.1% - ---------------------------------------------------------- Baker Hughes 23,000 $ 667 -------- Total Oil field services 667 -------- - ---------------------------------------------------------- Retail--4.9% - ---------------------------------------------------------- Abercrombie & Fitch, Cl A* 23,000 783 -------- Total Retail 783 -------- - ---------------------------------------------------------- Semiconductors/instruments--9.5% - ---------------------------------------------------------- Jds Uniphase* 7,350 837 Lam Research* 11,275 688 -------- Total Semiconductors/instruments 1,525 -------- - ---------------------------------------------------------- Software & programming--4.4% - ---------------------------------------------------------- Microsoft* 7,830 709 -------- Total Software & programming 709 -------- - ---------------------------------------------------------- Total common stock (Cost $14,900) 15,706 - ---------------------------------------------------------- - ---------------------------------------------------------- Repurchase agreement--1.0% - ---------------------------------------------------------- Morgan Stanley, 5.00%, dated 09/30/99, matures 10/01/99, repurchase price $164,964 (collateralized by U.S. Treasury Notes, par value $159,027, 7.25%, matures 08/15/04: market value $168,791) $165 165 - ---------------------------------------------------------- - ---------------------------------------------------------- Total repurchase agreement (Cost $165) 165 - ---------------------------------------------------------- - ---------------------------------------------------------- Total investments--98.5% (Cost $15,065) 15,871 - ---------------------------------------------------------- - ---------------------------------------------------------- Other assets and liabilities, net--1.5% 241 - ---------------------------------------------------------- - ---------------------------------------------------------- Total net assets--100.0% $16,112 - ---------------------------------------------------------- * Non-income producing security. Cl - Class The accompanying notes are an integral part of the financial statements. 40 | TURNER FUNDS 1999 ANNUAL REPORT Schedule of investments Turner Technology Fund September 30, 1999 Value Shares (000) - ---------------------------------------------------------- Common stocks--89.8% - ---------------------------------------------------------- Communications equipment--8.5% - ---------------------------------------------------------- Ciena* 6,760 $ 247 Juniper Networks* 1,000 182 Lucent Technologies 1,920 125 Scientific-Atlanta 3,100 154 -------- Total Communications equipment 708 -------- - ---------------------------------------------------------- Computers & services--4.8% - ---------------------------------------------------------- Cisco Systems* 2,860 196 EMC* 2,850 204 -------- Total Computers & services 400 -------- - ---------------------------------------------------------- Drugs--1.2% - ---------------------------------------------------------- Biogen* 1,300 102 -------- Total Drugs 102 -------- - ---------------------------------------------------------- Electronics--10.9% - ---------------------------------------------------------- Atmel* 5,325 180 Gemstar International* 2,860 223 LSI Logic* 2,500 129 Micron Technology 3,350 223 Sawtek* 4,170 146 -------- Total Electronics 901 -------- - ---------------------------------------------------------- Internet services--32.7% - ---------------------------------------------------------- Amazon.com* 4,790 383 America Online* 2,245 233 CMGI* 1,500 154 Infospace.com* 3,800 156 Internap Network services* 9,410 420 Network Solutions, Cl A* 3,070 282 Netzero* 12,630 328 Priceline.com* 4,670 301 RealNetworks* 1,070 112 Ticketmaster Online-CitySearch* 5,805 140 Yahoo* 1,140 205 -------- Total Internet services 2,714 -------- - ---------------------------------------------------------- Machinery--1.9% - ---------------------------------------------------------- Applied Materials* 2,040 158 -------- Total Machinery 158 -------- Value Shares (000) - ---------------------------------------------------------- Medical products & services--1.3% - ---------------------------------------------------------- Amgen* 1,265 $ 103 -------- Total Medical products & services 103 -------- - ---------------------------------------------------------- Semiconductors/instruments--12.5% - ---------------------------------------------------------- Broadcom, Cl A* 1,650 180 GlobeSpan* 3,560 225 Jds Uniphase* 2,000 228 KLA-Tencor* 2,280 148 RF Micro Devices* 3,080 141 Texas Instruments 1,400 115 -------- Total Semiconductors/instruments 1,037 -------- - ---------------------------------------------------------- Software & programming--13.3% - ---------------------------------------------------------- Computer Associates 2,230 137 Electronics for Imaging* 2,230 115 Intuit* 2,670 234 Microsoft* 3,465 314 Oracle* 3,000 136 Verisign* 1,550 165 -------- Total Software & programming 1,101 -------- - ---------------------------------------------------------- Telephones & telecommunications--2.7% - ---------------------------------------------------------- McLeodusa, Cl A* 2,970 126 Nextel Communications, Cl A* 1,470 100 -------- Total Telephones & telecommunications 226 -------- - ---------------------------------------------------------- Total common stocks (Cost $7,138) 7,450 - ---------------------------------------------------------- - ---------------------------------------------------------- Total investments--89.8% (Cost $7,138) 7,450 - ---------------------------------------------------------- - ---------------------------------------------------------- Other assets and liabilities, net--10.2% 846 - ---------------------------------------------------------- - ---------------------------------------------------------- Total net assets--100.0% $8,296 - ---------------------------------------------------------- * Non-income producing producing security. Cl - Class The accompanying notes are an integral part of the financial statements. TURNER FUNDS 1999 ANNUAL REPORT | 41 Schedule of investments Turner Short Duration Government Funds- Three Year Portfolio September 30, 1999 Face amount Value (000) (000) - ---------------------------------------------------------- Asset-backed securities--11.5% - ---------------------------------------------------------- Fleet Credit Card Master Trust, Ser 1998-A, Cl A (A) 5.630%, 07/15/2003 $1,400 $1,398 Hyundai Auto Receivables Trust, Ser 1998-A, Cl A2 6.050%, 07/15/2004 890 889 Olympic Automobile Receivables Trust, Ser 1996-A, Cl A5 6.000%, 02/15/2002 250 250 Spiegel Master Trust, Ser 1995-A, Cl A 7.500%, 09/15/2004 1,900 1,915 - ---------------------------------------------------------- Total asset-backed securities (Cost $4,455) 4,452 - ---------------------------------------------------------- - ---------------------------------------------------------- Collateralized mortgage obligations--9.0% - ---------------------------------------------------------- Citicorp Mortgage Securities, Ser 1994-10, Cl A4 6.250%, 06/25/2024 15 15 Countrywide Home Loans, Ser 1997-2, Cl A11 7.500%, 04/25/2027 2 2 Goldman Sachs Mortgage Securities, Ser 1998-C1, Cl A1 6.060%, 10/18/2030 979 946 Residential Funding Mortgage Securization, Ser 1993-S23, Cl A7 6.500%, 06/25/2008 310 309 Securitized Asset Sales, Ser 1993-7, Cl TA2 6.250%, 12/25/2023 650 648 Structured Asset Securities, Ser 1997-2, Cl 1A (A) 7.124%, 10/30/2007 1,559 1,566 - ---------------------------------------------------------- Total collateralized mortgage obligations (Cost $3,487) 3,486 - ---------------------------------------------------------- - ---------------------------------------------------------- Corporate obligations--4.9% - ---------------------------------------------------------- Ford Motor Credit 5.750%, 02/23/2004 1,450 1,391 Phillips Petroleum 9.000%, 06/01/2001 500 519 - ---------------------------------------------------------- Face amount Value (000) (000) - ---------------------------------------------------------- Total corporate obligations (Cost $1,906) $1,910 - ---------------------------------------------------------- - ---------------------------------------------------------- U.S. government agency obligations--0.9% - ---------------------------------------------------------- FNMA MTN 6.710%, 03/13/2002 $360 361 - ---------------------------------------------------------- Total U.S. government agency obligations (Cost $362) 361 - ---------------------------------------------------------- - ---------------------------------------------------------- U.S. government mortgage- backed bonds--39.7% - ---------------------------------------------------------- FHLMC CMO/REMIC, Ser 1093, Cl F 7.500%, 06/15/2006 408 414 FHLMC CMO/REMIC, Ser 1361, Cl D 6.000%, 11/15/2005 285 285 FHLMC CMO/REMIC, Ser 1411, Cl G 6.500%, 07/15/2018 330 331 FHLMC CMO/REMIC, Ser 1430, Cl G 7.000%, 10/15/2018 491 491 FHLMC CMO/REMIC, Ser 1457, Cl PH 7.000%, 06/15/2006 834 839 FHLMC CMO/REMIC, Ser 1465, Cl E 6.500%, 09/15/2006 546 547 FHLMC CMO/REMIC, Ser 1497, Cl D 6.400%, 02/15/2019 330 330 FHLMC CMO/REMIC, Ser 1501, Cl F 6.100%, 11/15/2016 275 274 FHLMC CMO/REMIC, Ser 161, Cl F 9.500%, 06/15/2006 2,041 2,114 FHLMC CMO/REMIC, Ser 1862, Cl FD (A) 6.188%, 12/15/2022 388 389 FHLMC CMO/REMIC, Ser 1900, Cl FA (A) 5.988%, 03/15/2009 634 636 42 | TURNER FUNDS 1999 ANNUAL REPORT Schedule of investments Turner Short Duration Government Funds- Three Year Portfolio Face amount Value (000) (000) - ---------------------------------------------------------- FHLMC CMO/REMIC, Ser 2043, Cl CD 6.000%, 09/15/2016 $ 570 $ 565 FHLMC TBA (B) 7.500%, 11/01/2029 1,815 1,823 FHLMC, Pool #G10288 6.000%, 09/01/2009 398 390 FHLMC, Pool #G10446 6.500%, 02/01/2011 824 816 FNMA CMO/REMIC, Ser 1993-88, Cl F (A) 5.906%, 06/25/2000 850 852 FNMA, Pool #252209 6.000%, 01/01/2019 1,236 1,171 FNMA, Pool #6222 9.000%, 04/01/2016 286 301 FNMA, Pool #8245 8.000%, 12/01/2008 582 596 GNMA ARM (A), Pool #8108 6.375%, 03/20/2016 891 904 GNMA ARM (A), Pool #8254 6.625%, 08/20/2017 85 86 GNMA ARM (A), Pool #8266 6.625%, 09/20/2017 206 210 GNMA ARM (A), Pool #8426 6.125%, 11/20/2018 192 195 GNMA, Pool #351122 6.500%, 07/15/2008 596 592 GNMA, Pool #357343 6.500%, 10/15/2008 245 244 - ---------------------------------------------------------- Total U.S. government mortgage-backed bonds (Cost $15,407) 15,395 - ---------------------------------------------------------- - ---------------------------------------------------------- U.S. Treasury obligations--29.9% - ---------------------------------------------------------- U.S. Treasury Notes 5.750%, 10/31/2000 4,495 4,506 5.000%, 02/28/2001 2,642 2,621 8.000%, 05/15/2001 300 311 6.375%, 08/15/2002 1,600 1,626 7.000%, 07/15/2006 2,309 2,424 6.000%, 08/15/2004 94 95 - ---------------------------------------------------------- Total U.S. Treasury obligations (Cost $11,598) 11,583 - ---------------------------------------------------------- Face amount Value (000) (000) - ---------------------------------------------------------- Repurchase agreement--7.1% - ---------------------------------------------------------- J.P. Morgan, 5.00%, dated 09/30/99, matures 10/01/99, repurchase price $2,758,665 (collateralized by GNMA, par value $3,846,642, 7.50%, matures 10/15/28: market value $2,813,838) $2,759 $ 2,759 - ---------------------------------------------------------- Total repurchase agreement (Cost $2,759) 2,759 - ---------------------------------------------------------- - ---------------------------------------------------------- Total investments--103.0% (Cost $39,974) 39,946 - ---------------------------------------------------------- - ---------------------------------------------------------- Other assets and liabilities, net--(3.0%) (1,172) - ---------------------------------------------------------- - ---------------------------------------------------------- Total net assets--100.0% $38,774 - ---------------------------------------------------------- - ---------------------------------------------------------- Net asset value, offering and redemption price per share- institutional class shares $9.84 - ---------------------------------------------------------- - ---------------------------------------------------------- Net asset value, offering and redemption price per share-adviser class shares $9.80 - ---------------------------------------------------------- - ---------------------------------------------------------- (A) Floating rate security. The rate reflected on the Statement of Net Assets is the rate in effect on September 30, 1999. (B) When issued security ARM - Adjustable Rate Mortgage Cl - Class CMO - Collateralized Mortgage Obligation FHLMC - Federal Home Loan Mortgage Obligation FNMA - Federal National Mortgage Association GNMA - Government National Mortgage Association MTN - Medium Term Notes REMIC - Real Estate Mortgage Investment Conduit Ser - Series TBA - To be announced The accompanying notes are an integral part of the financial statements. TURNER FUNDS 1999 ANNUAL REPORT | 43 Statement of net assets Turner Short Duration Government Funds- One Year Portfolio September 30, 1999 Face amount Value (000) (000) - ---------------------------------------------------------- Asset-backed securities--1.9% - ---------------------------------------------------------- Fleet Credit Card Master Trust, Ser 1998-A, Cl A (A) 5.630%, 07/15/2003 $ 40 $ 40 Hyundai Auto Receivables Trust, Ser 1998-A, Cl A2 6.050%, 07/15/2004 50 50 Spiegel Master Trust, Ser 1995-A, Cl A 7.500%, 09/15/2004 30 30 - ---------------------------------------------------------- Total asset-backed securities (Cost $120) 120 - ---------------------------------------------------------- - ---------------------------------------------------------- Collateralized mortgage obligations--5.1% - ---------------------------------------------------------- Morgan Stanley Capital I, Ser 1997-C1, Cl A1A 6.850%, 02/15/2020 322 323 - ---------------------------------------------------------- Total collateralized mortgage obligations (Cost $322) 323 - ---------------------------------------------------------- - ---------------------------------------------------------- U.S. government agency obligations--20.4% - ---------------------------------------------------------- FHLMC Discount Note 5.330%, 10/13/1999 800 798 FNMA Discount Note 5.293%, 10/06/1999 500 500 - ---------------------------------------------------------- Total U.S. government agency obligations (Cost $1,299) 1,298 - ---------------------------------------------------------- - ---------------------------------------------------------- U.S. government mortgage-backed bonds--63.5% - ---------------------------------------------------------- FHLMC CMO/REMIC, Ser 1301, Cl E 7.000%, 03/15/2005 64 64 FHLMC CMO/REMIC, Ser 1361, Cl D 6.000%, 11/15/2005 219 218 FHLMC CMO/REMIC, Ser 1430, Cl G 7.000%, 10/15/2018 186 186 FHLMC CMO/REMIC, Ser 1457, Cl PH 7.000%, 06/15/2006 133 134 Face amount Value (000) (000) - ---------------------------------------------------------- FHLMC CMO/REMIC, Ser 1465, Cl E 6.500%, 09/15/2006 $ 442 $ 443 FHLMC CMO/REMIC, Ser 1501, Cl F 6.100%, 11/15/2016 9 9 FHLMC CMO/REMIC, Ser 1506, Cl EA 5.700%, 07/15/2005 200 199 FHLMC CMO/REMIC, Ser 1549, Cl D 5.850%, 11/15/2005 603 602 FHLMC CMO/REMIC, Ser 161, Cl F 9.500%, 06/15/2006 90 93 FHLMC CMO/REMIC, Ser 1862, Cl FD (A) 6.188%, 12/15/2022 71 71 FHLMC CMO/REMIC, Ser 1900, Cl FA (A) 5.988%, 03/15/2009 70 70 FNMA CMO/REMIC, Ser 1992-70, Cl H 7.000%, 04/25/2006 95 95 FNMA CMO/REMIC, Ser 1993-76, Cl F (A) 5.906%, 06/25/2008 280 281 FNMA CMO/REMIC, Ser 1993-88, Cl F (A) 5.906%, 06/25/2000 607 608 FNMA CMO/REMIC, Ser 1996-35, Cl C 7.000%, 05/25/2020 95 95 GNMA ARM (A), Pool #8108 6.375%, 03/20/2016 217 221 GNMA ARM (A), Pool #8111 6.375%, 03/20/2016 47 48 GNMA ARM (A), Pool #8287 6.125%, 11/20/2017 158 158 GNMA ARM (A), Pool #8297 6.125%, 12/20/2017 67 68 GNMA ARM (A), Pool #8333 6.375%, 03/20/2018 101 102 44 | TURNER FUNDS 1999 ANNUAL REPORT Statement of investments Turner Short Duration Government Funds- One Year Portfolio Face amount Value (000) (000) - ---------------------------------------------------------- GNMA ARM (A), Pool #8392 6.625%,08/20/2018 $ 96 $ 98 GNMA ARM (A), Pool #8405 6.625%, 09/20/2018 77 78 GNMA ARM (A), Pool #8462 6.375%, 02/20/2019 37 38 GNMA ARM (A), Pool #8489 6.375%, 04/20/2019 62 62 - ---------------------------------------------------------- Total U.S. government mortgage-backed bonds (Cost $4,042) 4,041 - ---------------------------------------------------------- - ---------------------------------------------------------- U.S. Treasury obligations--12.7% - ---------------------------------------------------------- U.S. Treasury Notes 5.625%, 11/30/1999 180 180 5.750%, 10/31/2000 600 602 5.000%, 02/28/2001 26 26 - ---------------------------------------------------------- - ---------------------------------------------------------- Total U.S. Treasury obligations (Cost $806) 808 - ---------------------------------------------------------- - ---------------------------------------------------------- Total investments--103.6% (Cost $6,589) 6,590 - ---------------------------------------------------------- - ---------------------------------------------------------- Other assets and liabilities, net--(3.6%) (228) - ---------------------------------------------------------- Value (000) - ---------------------------------------------------------- Net assets: - ---------------------------------------------------------- Portfolio shares of institutional class shares (unlimited authorization-- no par value) based on 319,084 outstanding shares of beneficial interest $3,202 Portfolio shares of adviser class shares (unlimited authorization--no par value) based on 312,453 outstanding shares of beneficial interest 3,156 Accumulated net realized gain on investments 3 Net unrealized appreciation on investments 1 - ---------------------------------------------------------- Total net assets--100.0% $6,362 - ---------------------------------------------------------- - ---------------------------------------------------------- Net asset value, offering and redemption price per share- institutional class shares $10.05 - ---------------------------------------------------------- - ---------------------------------------------------------- Net asset value, offering and redemption price per share-adviser class shares $10.10 - ---------------------------------------------------------- (A) Floating rate security. The rate reflected on the Statement of Net Assets is the rate in effect on September 30, 1999. ARM - Adjustable Rate Mortgage Cl - Class CMO - Collateralized Mortgage Obligation FHLMC - Federal Home Loan Mortgage Obligation FNMA - Federal National Mortgage Association GNMA - Government National Mortgage Association REMIC - Real Estate Mortgage Investment Conduit Ser - Series The accompanying notes are an integral part of the financial statements. TURNER FUNDS 1999 ANNUAL REPORT | 45 Statement of net assets Turner Core High Quality Fixed Income Fund September 30, 1999 Face amount Value (000) (000) - ---------------------------------------------------------- Asset-backed securities--13.6% - ---------------------------------------------------------- Olympic Automobile Receivables Trust, Ser 1995-D, Cl A5 6.150%, 07/15/2001 $ 349 $ 349 Spiegel Master Trust, Ser 1995-A, Cl A 7.500%, 09/15/2004 1,000 1,008 - ---------------------------------------------------------- Total Asset-backed securities (Cost $1,357) 1,357 - ---------------------------------------------------------- - ---------------------------------------------------------- Collateralized mortgage obligations--0.7% - ---------------------------------------------------------- Drexel Burnham Lambert CMO/REMIC Trust, Ser S, Cl 2 9.000%, 08/01/2018 25 25 Goldman Sachs Mortgage Securities II, Ser 1998-C1, Cl A1 6.060%, 10/18/2030 42 41 - ---------------------------------------------------------- Total Collateralized mortgage obligations (Cost $67) 66 - ---------------------------------------------------------- - ---------------------------------------------------------- Corporate obligations--1.7% - ---------------------------------------------------------- Ford Motor Credit 5.750%, 02/23/2004 60 58 Heinz H.J. 6.750%, 10/15/1999 100 100 Phillips Petroleum 9.000%, 06/01/2001 15 16 - ---------------------------------------------------------- Total Corporate obligations (Cost $173) 174 - ---------------------------------------------------------- - ---------------------------------------------------------- U.S. government mortgage-backed bonds--43.3% - ---------------------------------------------------------- FHLMC CMO/REMIC, Ser 1538, Cl J 6.500%, 06/15/2008 160 157 FHLMC CMO/REMIC, Ser 161, Cl F 9.500%, 06/15/2006 380 393 FHLMC, Pool #C16814 7.500%, 10/01/2028 466 469 FHLMC, Pool #C27092 6.000%, 06/01/2029 600 561 FNMA, Pool #251617 6.000%, 03/01/2013 830 801 Face amount Value (000) (000) - ---------------------------------------------------------- FNMA, Pool #398280 6.000%, 03/01/2013 $ 114 $ 109 FNMA, Pool #416657 6.000%, 04/01/2028 472 440 FNMA, Pool #421677 6.000%, 03/01/2028 93 86 FNMA, Pool #481600 6.000%, 02/01/2029 35 33 FNMA, Ser 1993-198, Cl K 6.000%, 12/25/2022 834 784 FNMA, Ser 1998-63, Cl PG 6.000%, 03/25/2027 100 92 GNMA ARM (A), Pool #8103 6.375%, 02/20/2016 57 57 GNMA TBA (B) 7.500%, 10/01/2029 50 50 GNMA, Pool #484384 7.500%, 09/15/2028 113 113 GNMA, Pool #491479 6.500%, 06/15/2029 199 191 - ---------------------------------------------------------- Total U.S. government mortgage- backed bonds (Cost $4,437) 4,336 - ---------------------------------------------------------- - ---------------------------------------------------------- U.S. Treasury obligations--37.7% - ---------------------------------------------------------- U.S. Treasury Bonds 7.875%, 02/15/2021 200 233 8.125%, 05/15/2021 1,070 1,277 7.000%, 07/15/2006 2,143 2,250 6.000%, 08/15/2004 17 17 - ---------------------------------------------------------- Total U.S. Treasury obligations (Cost $3,918) 3,777 - ---------------------------------------------------------- - ---------------------------------------------------------- Repurchase agreement--1.3% - ---------------------------------------------------------- Morgan Stanley, 5.00%, dated 09/30/99, matures 10/01/99, repurchase price $125,797, (collateralized by U.S. Treasury Notes, par value $121,269, 7.250%, matures 08/15/04: market value $128,715) 126 126 - ---------------------------------------------------------- Total repurchase agreement (Cost $126) 126 - ---------------------------------------------------------- 46 | TURNER FUNDS 1999 ANNUAL REPORT Statement of Net Assets Turner Core High Quality Fixed Income Fund Value (000) - ---------------------------------------------------------- Total investments--98.3% (Cost $10,078) $ 9,836 - ---------------------------------------------------------- - ---------------------------------------------------------- Other assets and liabilities, net--1.7% 173 - ---------------------------------------------------------- - ----------------------------------------------------------- Net assets: - ----------------------------------------------------------- Portfolio Shares (unlimited authorization-- no par value) based on 1,009,986 outstanding shares of beneficial interest 10,357 Accumulated net realized loss on investments (106) Net unrealized depreciation on investments (242) - ---------------------------------------------------------- Total net assets--100.0% $10,009 - ---------------------------------------------------------- - ---------------------------------------------------------- Net asset value, offering and redemption price per share $9.91 - ---------------------------------------------------------- - ---------------------------------------------------------- (A) Floating rate security. The rate reflected on the Statement of Net Assets is the rate in effect on September 30, 1999. (B) When issued security ARM - Adjustable Rate Mortgage Cl - Class CMO - Collateralized Mortgage Obligation FHLMC - Federal Home Loan Mortgage Obligation FNMA - Federal National Mortgage Association GNMA - Government National Mortgage Association REMIC - Real Estate Mortgage Investment Conduit Ser - Series TBA - To be announced The accompanying notes are an integral part of the financial statements. TURNER FUNDS 1999 ANNUAL REPORT | 47 Statement of assets and liabilities (000) Turner Growth Turner Midcap Equity Fund Growth Fund - ---------------------------------------------------------------------------------------------------- 9/30/99 9/30/99 - ---------------------------------------------------------------------------------------------------- Assets: - ---------------------------------------------------------------------------------------------------- Investment securities at cost $ 130,938 $ 137,433 - ---------------------------------------------------------------------------------------------------- Investment securities at value 143,761 148,692 Cash 1 -- Dividend and interest receivable 46 22 Receivable for investment securities sold 9,934 8,896 Capital shares sold 161 467 Other receivable -- -- Other assets 18 19 - ---------------------------------------------------------------------------------------------------- Total assets 153,921 158,096 - ---------------------------------------------------------------------------------------------------- Liabilities: Payable for investment securities purchased 1,757 5,303 Capital shares redeemed 9,162 3,957 Accrued expenses 178 6 - ---------------------------------------------------------------------------------------------------- Total liabilities 11,097 9,266 - ---------------------------------------------------------------------------------------------------- Net assets: Portfolio capital of institutional class shares 92,958 118,551 Portfolio capital of adviser class shares -- -- Accumulated net investment loss -- (6) Accumulated net realized gain (loss) on investments 37,043 19,026 Net unrealized appreciation (depreciation) on investments 12,823 11,259 - ---------------------------------------------------------------------------------------------------- Total net assets $ 142,824 $ 148,830 - ---------------------------------------------------------------------------------------------------- Outstanding shares of beneficial interest: Institutional class shares 8,991,335 5,830,229 Adviser class shares -- -- - ---------------------------------------------------------------------------------------------------- Net asset value, offering and redemption price per share-institutional class shares $ 15.88 $ 25.53 - ---------------------------------------------------------------------------------------------------- Net asset value, offering and redemption price per share-adviser class shares $ -- $ -- - ---------------------------------------------------------------------------------------------------- 48 | TURNER FUNDS 1999 ANNUAL REPORT Turner Micro Cap Turner Growth Fund Top 20 Fund - ------------------------------------------------------------------------------------------------------- 9/30/99 9/30/99 - ------------------------------------------------------------------------------------------------------- Assets: - ------------------------------------------------------------------------------------------------------- Investment securities at cost $ 10,263 $ 15,065 - ------------------------------------------------------------------------------------------------------- Investment securities at value 12,858 15,871 Cash -- -- Dividend and interest receivable -- -- Receivable for investment securities sold 738 3,227 Capital shares sold 41 627 Other receivable -- -- Other assets 17 1 - ------------------------------------------------------------------------------------------------------- Total assets 13,654 19,726 - ------------------------------------------------------------------------------------------------------- Liabilities: Payable for investment securities purchased 641 3,580 Capital shares redeemed -- 13 Accrued expenses 50 21 - ------------------------------------------------------------------------------------------------------- Total liabilities 691 3,614 - ------------------------------------------------------------------------------------------------------- Net assets: Portfolio capital of institutional class shares 8,153 12,765 Portfolio capital of adviser class shares -- -- Accumulated net investment loss -- -- Accumulated net realized gain (loss) on investments 2,215 2,541 Net unrealized appreciation (depreciation) on investments 2,595 806 - ------------------------------------------------------------------------------------------------------- Total net assets $ 12,963 $ 16,112 - ------------------------------------------------------------------------------------------------------- Outstanding shares of beneficial interest: Institutional class shares 614,741 1,152,022 Adviser class shares -- -- - ------------------------------------------------------------------------------------------------------- Net asset value, offering and redemption price per share-institutional class shares $ 21.09 $ 13.99 - ------------------------------------------------------------------------------------------------------- Net asset value, offering and redemption price per share-adviser class shares $ -- $ -- - ------------------------------------------------------------------------------------------------------- Turner Short Duration Turner Government Funds- Technology Fund Three Year Portfolio - ----------------------------------------------------------------------------------------------------------------- 9/30/99 9/30/99 - ----------------------------------------------------------------------------------------------------------------- Assets: - ----------------------------------------------------------------------------------------------------------------- Investment securities at cost $ 7,138 $ 39,974 - ----------------------------------------------------------------------------------------------------------------- Investment securities at value 7,450 39,946 Cash 141 -- Dividend and interest receivable 1 322 Receivable for investment securities sold 1,550 1,679 Capital shares sold 516 200 Other receivable -- 66 Other assets -- 4 - ----------------------------------------------------------------------------------------------------------------- Total assets 9,658 42,217 - ----------------------------------------------------------------------------------------------------------------- Liabilities: Payable for investment securities purchased 1,338 3,176 Capital shares redeemed 14 85 Accrued expenses 10 182 - ----------------------------------------------------------------------------------------------------------------- Total liabilities 1,362 3,443 - ----------------------------------------------------------------------------------------------------------------- Net assets: Portfolio capital of institutional class shares 6,716 38,966 Portfolio capital of adviser class shares -- 87 Accumulated net investment loss -- (34) Accumulated net realized gain (loss) on investments 1,268 (217) Net unrealized appreciation (depreciation) on investments 312 (28) - ----------------------------------------------------------------------------------------------------------------- Total net assets $ 8,296 $ 38,774 - ----------------------------------------------------------------------------------------------------------------- Outstanding shares of beneficial interest: Institutional class shares 589,991 3,933,129 Adviser class shares -- 8,909 - ----------------------------------------------------------------------------------------------------------------- Net asset value, offering and redemption price per share-institutional class shares $ 14.06 $ 9.84 - ----------------------------------------------------------------------------------------------------------------- Net asset value, offering and redemption price per share-adviser class shares $ -- $ 9.80 - ----------------------------------------------------------------------------------------------------------------- Amounts designated as "--" are either $0 or have been rounded to $0 The accompanying notes are an integral part of the financial statements. TURNER FUNDS 1999 ANNUAL REPORT | 49 FINANCIAL STATEMENTS - -------------------------------------------------------------------------------- Statement of operations (000) Turner Large Cap Turner Growth Turner Midcap Turner Small Cap Growth Equity Fund Equity Fund Growth Fund Growth Fund - ----------------------------------------------------------------------------------------------------------------------- year ended year ended year ended year ended 9/30/99 9/30/99 9/30/99 9/30/99 - ----------------------------------------------------------------------------------------------------------------------- Investment income: Dividend $ 36 $ 605 $ 210 $291 Interest 4 101 137 259 - ----------------------------------------------------------------------------------------------------------------------- Total investment income 40 706 347 550 - ----------------------------------------------------------------------------------------------------------------------- Expenses: Investment advisory fees 57 987 524 2,008 Investment advisory fee waiver (57) -- (2) (67) Administrator fees 65 117 70 176 Administrator fee waiver -- -- -- -- Custodian fees 5 15 14 20 Transfer agent fees 21 96 46 271 Professional fees 15 58 40 70 Trustee fees 2 3 5 5 Registration fees 13 (10) 33 (1) Pricing fees -- 1 1 2 Printing fees 1 47 13 58 Shareholder service fees -- -- -- -- Amortization of deferred organizational costs 4 5 5 4 Insurance and other fees -- 28 2 14 - ----------------------------------------------------------------------------------------------------------------------- Total expenses 126 1,347 751 2,560 Less: Reimbursements from adviser (50) -- -- -- Directed brokerage -- (132) (28) (50) - ----------------------------------------------------------------------------------------------------------------------- Net expenses 76 1,215 723 2,510 - ----------------------------------------------------------------------------------------------------------------------- Net investment income (loss) (36) (509) (376) (1,960) - ----------------------------------------------------------------------------------------------------------------------- Net realized gain (loss) from securities sold 1,821 37,857 20,948 61,638 Net unrealized appreciation (depreciation) of investment securities 307 658 10,401 30,895 - ----------------------------------------------------------------------------------------------------------------------- Net realized and unrealized gain (loss) on investments 2,128 38,515 31,349 92,533 - ----------------------------------------------------------------------------------------------------------------------- Net increase (decrease) in net assets resultin from operations $2,092 $38,006 $30,973 $90,573 - ----------------------------------------------------------------------------------------------------------------------- 50 | TURNER FUNDS 1999 ANNUAL REPORT Turner Micro Cap Turner Turner Technology Growth Fund Top 20 Fund Fund - -------------------------------------------------------------------------------------------------- year ended 7/1/99 thru 7/1/99 thru 9/30/99 9/30/99(+) 9/30/99(+) - -------------------------------------------------------------------------------------------------- Investment income: Dividend $ 16 $ 2 $ 1 Interest 13 9 4 - -------------------------------------------------------------------------------------------------- Total investment income 29 11 5 - -------------------------------------------------------------------------------------------------- Expenses: Investment advisory fees 66 26 12 Investment advisory fee waiver (66) (19) (12) Administrator fees 68 16 16 Administrator fee waiver -- (10) (10) Custodian fees 4 2 2 Transfer agent fees 20 7 7 Professional fees 8 3 2 Trustee fees 3 -- -- Registration fees 11 6 4 Pricing fees 1 -- -- Printing fees 5 1 -- Shareholder service fees -- -- -- Amortization of deferred organizational costs 3 -- -- Insurance and other fees -- -- 1 - -------------------------------------------------------------------------------------------------- Total expenses 123 32 22 Less: Reimbursements from adviser (64) -- (7) Directed brokerage -- -- -- - -------------------------------------------------------------------------------------------------- Net expenses 59 32 15 - -------------------------------------------------------------------------------------------------- Net investment income (loss) (30) (21) (10) - -------------------------------------------------------------------------------------------------- Net realized gain (loss) from securities sold 2,292 2,562 1,278 Net unrealized appreciation (depreciation) of investment securities 2,652 806 312 - -------------------------------------------------------------------------------------------------- Net realized and unrealized gain (loss) on investments 4,944 3,368 1,590 - -------------------------------------------------------------------------------------------------- Net increase (decrease) in net assets resulting from operations $4,914 $3,347 $1,580 - -------------------------------------------------------------------------------------------------- Turner Short Duration Government Funds- ------------------------- Turner Core Three Year One Year High Quality Portfolio Portfolio Fixed Income Fund - -------------------------------------------------------------------------------------------- year ended year ended 7/1/99 thru 9/30/99 9/30/99 9/30/99(+) - -------------------------------------------------------------------------------------------- Investment income: Dividend $ -- $ -- $ -- Interest 1,304 101 151 - -------------------------------------------------------------------------------------------- Total investment income 1,304 101 151 - -------------------------------------------------------------------------------------------- Expenses: Investment advisory fees 51 5 12 Investment advisory fee waiver (51) (5) (12) Administrator fees 46 17 16 Administrator fee waiver -- -- (10) Custodian fees 6 9 2 Transfer agent fees 35 31 7 Professional fees 54 21 3 Trustee fees 2 2 -- Registration fees 38 19 7 Pricing fees 4 1 -- Printing fees 27 16 1 Shareholder service fees -- 1 -- Amortization of deferred organizational costs -- -- -- Insurance and other fees 2 -- 1 - -------------------------------------------------------------------------------------------- Total expenses 214 117 27 Less: Reimbursements from adviser (165) (116) (16) Directed brokerage -- -- -- - -------------------------------------------------------------------------------------------- Net expenses 49 1 11 - -------------------------------------------------------------------------------------------- Net investment income (loss) 1,255 100 140 - -------------------------------------------------------------------------------------------- Net realized gain (loss) from securities sold (177) -- (106) Net unrealized appreciation (depreciation) of investment securities (264) (1) 18 - -------------------------------------------------------------------------------------------- Net realized and unrealized gain (loss) on investments (441) (1) (88) - -------------------------------------------------------------------------------------------- Net increase (decrease) in net assets resulting from operations $ 814 $ 99 $ 52 - -------------------------------------------------------------------------------------------- (+) Commenced operations on July 1, 1999. Amounts designated as "--" are either $0 or have been rounded to $0 The accompanying notes are an integral part of the financial statements. TURNER FUNDS 1999 ANNUAL REPORT | 51 FINANCIAL STATEMENTS - -------------------------------------------------------------------------------- Statement of changes in net assets (000) Turner Large Cap Turner Growth Growth Equity Fund Equity Fund - ---------------------------------------------------------------------------------------------------------------------------- year year year year ended ended ended ended 9/30/99 9/30/98 9/30/99 9/30/98 - ---------------------------------------------------------------------------------------------------------------------------- Investment activities: Net investment loss $ (36) $ (2) $ (509) $ (378) Net realized gain (loss) from securities sold 1,821 (170) 37,857 17,188 Net unrealized appreciation (depreciation) of investments 307 169 658 (7,481) - ---------------------------------------------------------------------------------------------------------------------------- Net increase (decrease) in net assets resulting from operations 2,092 (3) 38,006 9,329 - ---------------------------------------------------------------------------------------------------------------------------- Distributions to shareholders: Net investment income -- (1) -- -- Realized capital gains -- (72) (12,236) (26,503) Return of capital -- -- -- -- - ---------------------------------------------------------------------------------------------------------------------------- Total distributions -- (73) (12,236) (26,503) - ---------------------------------------------------------------------------------------------------------------------------- Capital share transactions:(1) Proceeds from shares issued 4,366 3,876 34,770 22,658 Proceeds from shares issued in lieu of cash distributions -- 73 11,874 25,911 Increase from In-Kind Transfer -- -- 4,270 -- Cost of shares redeemed (2,327) (246) (31,717) (33,128) - ---------------------------------------------------------------------------------------------------------------------------- Net increase in net assets from capital share transactions 2,039 3,703 19,197 15,441 - ---------------------------------------------------------------------------------------------------------------------------- Total increase (decrease) in net assets 4,131 3,627 44,967 (1,733) - ---------------------------------------------------------------------------------------------------------------------------- Net assets: Beginning of year 4,328 701 97,857 99,590 - ---------------------------------------------------------------------------------------------------------------------------- End of year (4) $8,459 $4,328 $142,824 $97,857 - ---------------------------------------------------------------------------------------------------------------------------- (1) Shares issued and redeemed: Issued 255 282 2,274 1,638 Issued in lieu of cash distributions -- 6 890 2,320 Issued in connection with In-Kind Transfer -- -- 273 -- Redeemed (134) (18) (2,051) (2,339) - ---------------------------------------------------------------------------------------------------------------------------- Net increase in capital shares 121 270 1,386 1,619 - ---------------------------------------------------------------------------------------------------------------------------- (2) Commenced operations on March 1, 1998. (3) Commenced operations on July 1, 1999. (4) Includes undistributed net investment income (loss) and/or distributions in excess of net investment income (000) of $(6) and $(3) for the Midcap Growth Fund, and $(0) and $(1) for the Small Cap Growth Fund as of September 30, 1999, and September 30, 1998, respectively. Amounts designated as "--" are either $0 or have been rounded to $0 The accompanying notes are an integral part of the financial statements. 52 | TURNER FUNDS 1999 ANNUAL REPORT - ------------------------------------------------------------------------------------------------------------------------------- Turner Midcap Turner Small Cap Growth Fund GrowthFund - ------------------------------------------------------------------------------------------------------------------------------- year year year year ended ended ended ended 9/30/99 9/30/98 9/30/99 9/30/98 - ------------------------------------------------------------------------------------------------------------------------------- Investment activities: Net investment loss $ (376) $ (124) $(1,960) $ (1,609) Net realized gain (loss) from securities sold 20,948 (1,546) 61,638 (6,168) Net unrealized appreciation (depreciation) of investments 10,401 524 30,895 (22,875) - ------------------------------------------------------------------------------------------------------------------------------- Net increase (decrease) in net assets resulting from operations 30,973 (1,146) 90,573 (30,652) - ------------------------------------------------------------------------------------------------------------------------------- Distributions to shareholders: Net investment income -- -- -- -- Realized capital gains -- (358) -- (1,521) Return of capital -- -- -- (1,148) - ------------------------------------------------------------------------------------------------------------------------------- Total distributions -- (358) -- (2,669) Capital share transactions:(1) Proceeds from shares issued 127,616 28,977 87,818 96,936 Proceeds from shares issued in lieu of cash distributions -- 320 -- 2,289 Increase from In-Kind Transfer -- -- -- -- Cost of shares redeemed (34,341) (8,356) (71,848) (71,832) - ------------------------------------------------------------------------------------------------------------------------------- Net increase in net assets from capital share transactions 93,275 20,941 15,970 27,393 - ----------------------------------------------------------------------------------------------------------------------------- Total increase (decrease) in net assets 124,248 19,437 106,543 (5,928) Net assets: Beginning of year 24,582 5,145 147,534 153,462 - ------------------------------------------------------------------------------------------------------------------------------- End of year (4) $148,830 $24,582 $254,077 $147,534 - ------------------------------------------------------------------------------------------------------------------------------- (1) Shares issued and redeemed: Issued 5,625 1,939 3,160 3,783 Issued in lieu of cash distributions -- 24 -- 99 Issued in connection with In-Kind Transfer -- -- -- -- Redeemed (1,567) (553) (2,596) (2,840) - ------------------------------------------------------------------------------------------------------------------------------- Net increase in capital shares 4,058 1,410 564 1,042 - ------------------------------------------------------------------------------------------------------------------------------- - --------------------------------------------------------------------------------------------------------------------------------- Turner Micro Cap Turner Turner Growth Fund Top 20 Fund Technology Fund - --------------------------------------------------------------------------------------------------------------------------------- year 3/1/98 7/1/99 7/1/99 ended thru thru thru 9/30/99 9/30/98 (2) 9/30/99(3) 9/30/99 (3) - --------------------------------------------------------------------------------------------------------------------------------- Investment activities: Net investment loss $ (30) $ (11) $ (21) $ (10) Net realized gain (loss) from securities sold 2,292 (47) 2,562 1,278 Net unrealized appreciation (depreciation) of investments 2,652 (57) 806 312 - --------------------------------------------------------------------------------------------------------------------------------- Net increase (decrease) in net assets resulting from operations 4,914 (115) 3,347 1,580 - --------------------------------------------------------------------------------------------------------------------------------- Distributions to shareholders: Net investment income -- -- -- -- Realized capital gains -- -- -- -- Return of capital -- -- -- -- - --------------------------------------------------------------------------------------------------------------------------------- Total distributions -- -- -- -- Capital share transactions:(1) Proceeds from shares issued 6,101 3,087 13,557 7,914 Proceeds from shares issued in lieu of cash distributions -- -- -- -- Increase from In-Kind Transfer -- -- -- -- Cost of shares redeemed (895) (129) (792) (1,198) - --------------------------------------------------------------------------------------------------------------------------------- Net increase in net assets from capital share transactions 5,206 2,958 12,765 6,716 - --------------------------------------------------------------------------------------------------------------------------------- Total increase (decrease) in net assets 10,120 2,843 16,112 8,296 Net assets: Beginning of year 2,843 -- -- -- - --------------------------------------------------------------------------------------------------------------------------------- End of year (4) $12,963 $2,843 $16,112 $8,296 - --------------------------------------------------------------------------------------------------------------------------------- (1) Shares issued and redeemed: Issued 380 300 1,223 696 Issued in lieu of cash distributions -- -- -- -- Issued in connection with In-Kind Transfer -- -- -- -- Redeemed (53) (12) (71) (106) - --------------------------------------------------------------------------------------------------------------------------------- Net increase in capital shares 327 288 1,152 590 - --------------------------------------------------------------------------------------------------------------------------------- TURNER FUNDS 1999 ANNUAL REPORT | 53 Statement of changes in net assets (000) Turner Short Duration Government Funds- Three Year Portfolio - -------------------------------------------------------------------------------------------------------------- year ended 3/1/98 thru year ended 9/30/99 9/30/98 2/28/98 - -------------------------------------------------------------------------------------------------------------- Investment activities: Net investment income $ 1,255 $ 469 $ 967 Net realized gain (loss) from securities sold (177) 74 54 Net unrealized appreciation (depreciation) of investments (264) 119 98 - -------------------------------------------------------------------------------------------------------------- Net increase in net assets resulting from operations 814 662 1,119 - -------------------------------------------------------------------------------------------------------------- Distributions to shareholders: Net investment income Institutional class (1,258) (461) (966) Adviser class (1) -- -- Realized capital gains Institutional class (156) (10) -- Adviser class -- -- -- - -------------------------------------------------------------------------------------------------------------- Total distributions (1,415) (471) (966) - -------------------------------------------------------------------------------------------------------------- Capital share transactions: (1) Institutional class Proceeds from shares issued 10,962 666 3,854 Proceeds from shares issued in lieu of cash distributions 1,276 476 967 Increase from In-Kind transfers 18,947 -- -- Cost of shares redeemed (3,912) (4,862) (7,239) - -------------------------------------------------------------------------------------------------------------- Increase (decrease) in net assets from institutional class transactions 27,273 (3,720) (2,418) - -------------------------------------------------------------------------------------------------------------- Adviser class Proceeds from shares issued 192 -- -- Proceeds from shares issued in lieu of cash distributions 1 -- -- Cost of shares redeemed (106) -- -- - -------------------------------------------------------------------------------------------------------------- Increase in net assets from adviser class transactions 87 -- -- - -------------------------------------------------------------------------------------------------------------- Net increase (decrease) in net assets from capital share transactions 27,360 (3,720) (2,418) - -------------------------------------------------------------------------------------------------------------- Total increase (decrease) in net assets 26,759 (3,529) (2,265) - -------------------------------------------------------------------------------------------------------------- Net assets: Beginning of year 12,015 15,544 17,809 - -------------------------------------------------------------------------------------------------------------- End of year (3) $38,774 $12,015 $15,544 - -------------------------------------------------------------------------------------------------------------- (1) Shares issued and redeemed: Institutional class Issued 1,100 66 383 Issued in lieu of cash distributions 128 47 96 Issued in connection with In-Kind Transfers 1,926 -- -- Redeemed (393) (481) (722) - -------------------------------------------------------------------------------------------------------------- Increase (decrease) in net assets from institutional class transactions 2,761 (368) (243) - -------------------------------------------------------------------------------------------------------------- Adviser class Issued 20 -- -- Issued in lieu of cash distributions -- -- -- Redeemed (11) -- -- - -------------------------------------------------------------------------------------------------------------- Increase in net assets from adviser class transactions 9 -- -- - -------------------------------------------------------------------------------------------------------------- Net increase (decrease) in capital shares 2,770 (368) (243) - -------------------------------------------------------------------------------------------------------------- (2) Commenced operations on July 1, 1999. (3) Includes undistributed net investment income (000) of $(34), $10 and $2 for the Three Year Fund, $0, $2 and $0 for the One Year Fund, as of September 30, 1999, September 30, 1998 and February 28, 1998, respectively. Amounts designated as "--" are either $0 or have been rounded to $0 The accompanying notes are an integral part of the financial statements. 54 | TURNER FUNDS 1999 ANNUAL REPORT Turner Short Duration Turner Core Government Funds- High Quality One Year Portfolio Fixed Income Fund - ---------------------------------------------------------------------------------------------------------------------------------- year ended 3/1/98 thru year ended 7/1/99 thru 9/30/99 9/30/98 2/28/98 9/30/99 (2) - ---------------------------------------------------------------------------------------------------------------------------------- Investment activities: Net investment income $ 100 $ 37 $ 66 $ 140 Net realized gain (loss) from securities sold -- 1 1 (106) Net unrealized appreciation (depreciation) of investments (1) -- 1 18 - ---------------------------------------------------------------------------------------------------------------------------------- Net increase in net assets resulting from operations 99 38 68 52 - ---------------------------------------------------------------------------------------------------------------------------------- Distributions to shareholders: Net investment income Institutional class (77) (35) (66) (140) Adviser class (25) -- -- -- Realized capital gains Institutional class -- (1) -- -- Adviser class -- -- -- -- - ---------------------------------------------------------------------------------------------------------------------------------- Total distributions (102) (36) (66) (140) - ---------------------------------------------------------------------------------------------------------------------------------- Capital share transactions: (1) Institutional class Proceeds from shares issued 3,414 5 827 18 Proceeds from shares issued in lieu of cash distributions 76 36 66 139 Increase from In-Kind transfers -- -- -- 10,120 Cost of shares redeemed (1,272) (247) (564) (180) - ---------------------------------------------------------------------------------------------------------------------------------- Increase (decrease) in net assets from institutional class transactions 2,218 (206) 329 10,097 - ---------------------------------------------------------------------------------------------------------------------------------- Adviser class Proceeds from shares issued 3,642 -- -- -- Proceeds from shares issued in lieu of cash distributions 23 -- -- -- Cost of shares redeemed (509) -- -- -- - ---------------------------------------------------------------------------------------------------------------------------------- Increase in net assets from adviser class transactions 3,156 -- -- -- - ---------------------------------------------------------------------------------------------------------------------------------- Net increase (decrease) in net assets from capital share transactions 5,374 (206) 329 10,097 - ---------------------------------------------------------------------------------------------------------------------------------- Total increase (decrease) in net assets 5,371 (204) 331 10,009 - ---------------------------------------------------------------------------------------------------------------------------------- Net assets: Beginning of year 991 1,195 864 -- - ---------------------------------------------------------------------------------------------------------------------------------- End of year (3) $6,362 $ 991 $1,195 $10,009 - ---------------------------------------------------------------------------------------------------------------------------------- (1) Shares issued and redeemed: Institutional class Issued 340 -- 82 2 Issued in lieu of cash distributions 8 4 7 14 Issued in connection with In-Kind Transfers -- -- -- 1,012 Redeemed (127) (56) (18) (18) - ---------------------------------------------------------------------------------------------------------------------------------- Increase (decrease) in net assets from institutional class transactions 221 (21) 33 1,010 - ---------------------------------------------------------------------------------------------------------------------------------- Adviser class Issued 360 -- -- -- Issued in lieu of cash distributions 2 -- -- -- Redeemed 50 -- -- -- - ---------------------------------------------------------------------------------------------------------------------------------- Increase in net assets from adviser class transactions 312 -- -- -- - ---------------------------------------------------------------------------------------------------------------------------------- Net increase (decrease) in capital shares 533 (21) 33 1,010 - ---------------------------------------------------------------------------------------------------------------------------------- TURNER FUNDS 1999 ANNUAL REPORT | 55 FINANCIAL STATEMENTS - ------------------------------------------------------------------------------------------------------------------------------- Financial highlights For a share outstanding throughout each period Net Realized and asset Net unrealized Distributions Distributions value, investment gains from net from Return Net asset beginning income (losses) on investment capital OF value end of period (loss) investments income gains capital of period - ------------------------------------------------------------------------------------------------------------------------------- Turner Large Cap Growth Equity Fund (formerly Turner Ultra Large Cap Growth Fund) - --------------------------------------------------------------------------------- 1999 $13.22 (0.08) 5.76 -- -- -- $18.90 1998 $12.28 (0.01) 1.98 (0.01) (1.02) -- $13.22 1997 (1) $10.00 0.01 2.27 -- -- -- $12.28 - ------------------------- Turner Growth Equity Fund - ------------------------- 1999 $12.87 (0.05) 4.66 -- (1.60) -- $15.88 1998 $16.64 (0.05) 1.10 -- (4.82) -- $12.87 1997 $17.03 (0.03) 4.23 -- (4.59) -- $16.64 1996 (2) $14.97 0.02 2.91 (0.02) (0.85) -- $17.03 1995 $12.46 0.10 2.52 (0.11) -- -- $14.97 1994 $13.12 0.10 (0.66) (0.10) -- -- $12.46 - ------------------------- Turner Midcap Growth Fund - ------------------------- 1999 $13.87 (0.06) 11.72 -- -- -- $25.53 1998 $14.22 (0.07) 0.22 -- (0.50) -- $13.87 1997 (3) $10.00 (0.03) 4.36 -- (0.11) -- $14.22 - ---------------------------- Turner Small Cap Growth Fund - ---------------------------- 1999 $21.49 (0.26) 12.97 -- -- -- $34.20 1998 $26.35 (0.23) (4.19) -- (0.25) (0.19) $21.49 1997 $23.13 (0.07) 3.80 -- (0.51) -- $26.35 1996 (2) $16.08 (0.08) 8.17 -- (1.04) -- $23.13 1995 $10.90 (0.06) 5.24 -- -- -- $16.08 1994 (4) $10.00 (0.02) 0.92 -- -- -- $10.90 - ---------------------------- Turner Micro Cap Growth Fund - ---------------------------- 1999 (5) $ 9.88 (0.05) 11.26 -- -- -- $21.09 1998 (6) $10.00 (0.04) (0.08) -- -- -- $ 9.88 - ------------------ Turner Top 20 Fund - ------------------ 1999 (7) $10.00 (0.02) 4.01 -- -- -- $13.99 - ---------------------- Turner Technology Fund - ---------------------- 1999 (7) $10.00 (0.02) 4.08 -- -- -- $14.06 * Annualized + Returns are for the period indicated and have not been annualized. (1) Commenced operations on February 1, 1997. (2) On April 19, 1996, the Board of Trustees of the Adviser Inner Circle Funds voted to approve a tax-free reorganization of the Turner Funds. In connection with the reorganization, the Funds changed their fiscal year end from October 31 to September 30, effective September 30, 1996. (3) Commenced operations on October 1, 1996. (4) Commenced operations on February 7, 1994. 56 | TURNER FUNDS 1999 ANNUAL REPORT - ---------------------------------------------------------------------------------------------------------------------------- Ratio of Ratio of Ratio of net expenses net expenses expenses to average net to average Ratio of net to average Net assets (including net assets investment net assets assets end directed (including income (loss) (excluding Total of period brokerage waivers and to average waivers and return+ (000) arrangements) reimbursements) net assets reimbursements) - ---------------------------------------------------------------------------------------------------------------------------- Turner Large Cap Growth Equity Fund (formerly Turner Ultra Large Cap Growth Fund) - --------------------------------------------------------------------------------- 1999 42.97% $ 8,459 1.00% 1.00% (0.47)% 2.41% 1998 17.26% $ 4,328 1.00% 1.00% (0.10)% 7.70% 1997 (1) 22.80% $ 701 1.00%* 1.00%* 0.20%* 26.45%* - ------------------------- Turner Growth Equity Fund - ------------------------- 1999 38.16% $142,824 0.92% 0.96% (0.42)% 0.96% 1998 10.71% $ 97,857 1.00% 1.04% (0.42)% 1.12% 1997 32.61% $ 99,590 0.96% 1.02% (0.25)% 1.05% 1996 (2) 20.61% $ 96,164 0.94%* 1.06%* 0.03%* 1.06%* 1995 21.15% $115,819 0.94% 1.03% 0.69% 1.03% 1994 (4.28)% $112,959 0.95% 0.95% 0.86% 1.08% - ------------------------- Turner Midcap Equity Fund - ------------------------- 1999 84.07% $148,830 1.03% 1.08% (0.58)% 1.08% 1998 1.24% $ 24,582 1.23% 1.34% (0.79)% 1.73% 1997 (3) 43.77% $ 5,145 1.25%* 1.25%* (0.62)%* 7.96%* - ---------------------------- Turner Small Cap Growth Fund - ---------------------------- 1999 59.14% $254,077 1.25% 1.27% (1.00)% 1.31% 1998 (16.90)% $147,534 1.25% 1.28% (0.99)% 1.41% 1997 16.64% $153,462 1.24% 1.24% (0.84)% 1.33% 1996 (2) 52.90% $ 67,425 1.25%* 1.25%* (0.88)%* 1.54%* 1995 47.52% $ 13,072 1.25% 1.25% (0.68)% 2.39% 1994 (4) 12.35% $ 4,806 1.09%* 1.09%* (0.27)%* 4.32%* - ---------------------------- Turner Micro Cap Growth Fund - ---------------------------- 1999 (5) 113.46% $ 12,963 0.90% 0.90% (0.47)% 2.86% 1998 (6) (1.20)% $ 2,843 1.25%* 1.25%* (0.64)%* 8.18%* - ------------------ Turner Top 20 Fund - ------------------ 1999 (7) 39.90% $ 16,112 1.35%* 1.35%* (0.87)%* 2.55%* - ---------------------- Turner Technology Fund - ---------------------- 1999 (7) 40.60% $ 8,296 1.35%* 1.35%* (0.87)%* 3.89%* - --------------------------------------------------------------------------------- Ratio of net investment income (loss) to average net assets (excluding Portfolio waivers and turnover reimbursements) rate - --------------------------------------------------------------------------------- Turner Large Cap Growth Equity Fund (formerly Turner Ultra Large Cap Growth Fund) - --------------------------------------------------------------------------------- 1999 (1.88)% 370.71% 1998 (6.80)% 234.93% 1997 (1) (25.25)% 346.47% - ------------------------- Turner Growth Equity Fund - ------------------------- 1999 (0.42)% 328.26% 1998 (0.50)% 249.58% 1997 (0.28)% 178.21% 1996 (2) 0.03%* 147.79% 1995 0.69% 177.86% 1994 0.73% 164.81% - ------------------------- Turner Midcap Equity Fund - ------------------------- 1999 (0.58)% 290.79% 1998 (1.18)% 304.29% 1997 (3) (7.33)%* 348.29% - ---------------------------- Turner Small Cap Growth Fund - ---------------------------- 1999 (1.04)% 223.61% 1998 (1.12)% 167.73% 1997 (0.93)% 130.68% 1996 (2) (1.17)%* 149.00% 1995 (1.82)% 183.49% 1994 (4) (3.50)%* 173.92% - ---------------------------- Turner Micro Cap Growth Fund - ---------------------------- 1999 (5) (2.43)% 239.32% 1998 (6) (7.57)%* 128.53% - ------------------ Turner Top 20 Fund - ------------------ 1999 (7) (2.07)%* 369.11% - ---------------------- Turner Technology Fund - ---------------------- 1999 (7) (3.41)%* 317.32% (5) On January 25, 1999 shareholders of the Alpha Select Turner Micro Cap Growth Fund (the "Funds") approved a tax-free reorganization under which all assets and liabilities of the Fund were transferred to the TIP Turner Micro Cap Growth Fund. (6) Commenced operations on March 1, 1998. (7) Commenced operations on July 1, 1999. Amounts designated as "--" are either $0 or have been rounded to $0. The accompanying notes are an integral part of the financial statements. TURNER FUNDS 1999 ANNUAL REPORT | 57 FINANCIAL STATEMENTS - -------------------------------------------------------------------------------- Financial highlights For a share outstanding throughout each period Realized and Net asset unrealized Distributions Distributions value, Net gains from net from Net asset Net assets beginning investment (losses) on investment capital value end Total end of of period income investments income gains of period return+ period (000) - ------------------------------------------------------------------------------------------------------------------------------ - -------------------------------------------------------------------------- Turner Short Duration Government Funds-Three Year Portfolio--Institutional - -------------------------------------------------------------------------- 1999 (1) $10.25 0.55 (0.27) (0.55) (0.14) $ 9.84 2.89% $38,687 1998 (2) $10.10 0.35 0.15 (0.34) (0.01) $10.25 5.09% $12,015 1998 (3) $10.00 0.59 0.10 (0.59) -- $10.10 7.07% $15,544 1997 $10.04 0.58 (0.01) (0.59) (0.02) $10.00 5.45% $17,809 1996 $ 9.80 0.60 0.23 (0.59) -- $10.04 8.73% $11,027 1995 (4) $10.00 0.61 (0.22) (0.59) -- $ 9.80 4.08% $ 7,065 - -------------------------------------------------------------------- Turner Short Duration Government Funds-Three Year Portfolio--Adviser - -------------------------------------------------------------------- 1999 (5) $ 9.95 0.68 (0.13) (0.70) -- $ 9.80 5.64% $ 87 - ------------------------------------------------------------------------ Turner Short Duration Government Funds-One Year Portfolio--Institutional - ------------------------------------------------------------------------ 1999 (6) $10.09 0.54 (0.02) (0.56) -- $10.05 5.34% $ 3,207 1998 (2) $10.08 0.35 -- (0.33) (0.01) $10.09 3.50% 991 1998 (3) $10.06 0.60 0.02 (0.60) -- $10.08 6.34% 1,195 1997 $10.03 0.60 0.03 (0.60) -- $10.06 6.32% 864 1996 $ 9.99 0.64 0.05 (0.65) -- $10.03 7.09% 398 1995 (4) $10.00 0.53 (0.02) (0.52) -- $ 9.99 5.21% 145 - ------------------------------------------------------------------ Turner Short Duration Government Funds-One Year Portfolio--Adviser - ------------------------------------------------------------------ 1999 (6) $10.11 0.47 0.02 (0.50) -- $10.10 5.00% $ 3,155 1998 (7) $10.08 0.30 0.03 (0.30) -- $10.11 3.26% -- - ------------------------------------------ Turner Core High Quality Fixed Income Fund - ------------------------------------------ 1999 (8) $10.00 0.14 (0.09) (0.14) -- $ 9.91 0.48% $10,009 * Annualized + Returns are for the period indicated and have not been annualized. (1) On January 25, 1999 shareholders of the Alpha Select Turner Short Duration Government Funds-Three Year Portfolio (the "Fund") approved a tax-free reorganization under which all assets and liabilities of the Fund were transferred to the TIP Turner Short Duration Government Funds-Three Year Portfolio. (2) On November 10, 1997 the Board of Trustees of TIP Institutional Funds (formerly, The Solon Funds) approved a change in the Turner Short Duration Government Funds Three Year and One Year Portfolios' year end from February 28 to September 30, effective March 1, 1998. (3) On January 22, 1998, shareholders of both the Three Year and One Year Funds approved a change in the advisor from Solon Asset Management, L.P. to Turner Investment Partners, Inc. (4) Commenced operations on March 1, 1994. (5) Commenced operations on April 28, 1999. 58 | TURNER FUNDS 1999 ANNUAL REPORT - ------------------------------------------------------------------------------------------------------------------------------------ Ratio of net Ratio of investment expenses income (loss) Ratio of net to average to average Average Average Ratio of investment net assets net assets debt debt net expenses income (excluding (excluding per share outstanding to average to average waivers and waivers and Interest during during net assets net assets reimbursements) reimbursements) expense the period (9) the period (9)(10) - ------------------------------------------------------------------------------------------------------------------------------------ - -------------------------------------------------------------------------- Turner Short Duration Government Funds-Three Year Portfolio--Institutional - -------------------------------------------------------------------------- 1999 (1) 0.24% 6.21% 1.31% 5.14% -- -- -- 1998 (2) 0.24%* 5.84%* 1.49%* 4.59%* -- -- -- 1998 (3) 0.24% 5.85% 1.21% 4.88% -- -- -- 1997 0.24% 5.80% 1.21% 4.83% 0.02% $0.04 $ 56,238 1996 0.24% 6.18% 1.45% 4.97% 0.12% $0.28 $256,115 1995 (4) 0.15% 6.21% 1.18% 5.18% 0.04% $0.08 $ 75,604 - -------------------------------------------------------------------- Turner Short Duration Government Funds-Three Year Portfolio--Adviser - -------------------------------------------------------------------- 1999 (5) 0.48%* 5.71%* 0.95%* 5.24%* -- -- -- - ------------------------------------------------------------------------ Turner Short Duration Government Funds-One Year Portfolio--Institutional - ------------------------------------------------------------------------ 1999 (6) 0.00% 5.50% 6.53% (1.03)% -- -- -- 1998 (2) 0.00%* 5.88%* 10.83%* (4.95)%* -- -- -- 1998 (3) 0.00% 5.97% 8.83% (2.86)% -- -- -- 1997 0.00% 5.91% 10.25% (4.34)% -- -- -- 1996 0.00% 6.46% 16.47% (10.01)% -- -- -- 1995 (4) 0.00% 5.74% 27.89% (22.15)% -- -- -- - ------------------------------------------------------------------ Turner Short Duration Government Funds-One Year Portfolio--Adviser - ------------------------------------------------------------------ 1999 (6) 0.23% 5.13% 6.76% (1.40)% -- -- 1998 (7) 0.25%* 5.63%* 11.08%* (5.20)%* -- -- -- - ------------------------------------------ Turner Core High Quality Fixed Income Fund - ------------------------------------------ 1999 (8) 0.45%* 5.67%* 1.99%* 4.13%* -- -- -- - -------------------------------------------------------------------------------- Average shares outstanding Portfolio during turnover the period rate - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------- Turner Short Duration Government Funds-Three Year Portfolio--Institutional - -------------------------------------------------------------------------- 1999 (1) -- 257.98% 1998 (2) -- 121.63% 1998 (3) -- 197.03% 1997 1,320,830 279.00% 1996 901,238 251.00% 1995 (4) 895,472 405.00% - -------------------------------------------------------------------- Turner Short Duration Government Funds-Three Year Portfolio--Adviser - -------------------------------------------------------------------- 1999 (5) -- 257.98% - ------------------------------------------------------------------------ Turner Short Duration Government Funds-One Year Portfolio--Institutional - ------------------------------------------------------------------------ 1999 (6) -- 154.33% 1998 (2) -- 96.56% 1998 (3) -- 68.80% 1997 -- 81.82% 1996 -- -- 1995 (4) -- -- - ------------------------------------------------------------------ Turner Short Duration Government Funds-One Year Portfolio--Adviser - ------------------------------------------------------------------ 1999 (6) -- 154.33% 1998 (7) -- 96.56% - ------------------------------------------ Turner Core High Quality Fixed Income Fund - ------------------------------------------ 1999 (8) -- 39.70% (6) On May 24, 1999 shareholders of the Alpha Select Turner Short Duration Government Funds-One Year Portfolio (the "Fund") approved a tax-free reorganization under which all assets and liabilities of the Fund were transferred to the TIP Turner Short Duration Government Funds-One Year Portfolio. (7) Commenced operations on February 27, 1998. (8) Commenced operations on July 1, 1999. (9) Average based upon amounts outstanding at each month end. (10) There was no debt outstanding at the end of any period presented. Amounts designated as "--" are either $0 or have been rounded to $0. The accompanying notes are an integral part of the financial statements. TURNER FUNDS 1999 ANNUAL REPORT | 59 FINANCIAL STATEMENTS - -------------------------------------------------------------------------------- Notes to financial statements September 30, 1999 1. Organization: TIP Funds (the "Trust"), a Massachusetts business trust, is registered under the Investment Company Act of 1940, as amended, as a diversified open-end management investment company with 19 portfolios. The financial statements included herein are those of the Turner Large Cap Growth Equity Fund (formerly Turner Ultra Large Cap Growth Fund) (the "Large Cap Growth Equity Fund"), the Turner Growth Equity Fund (the "Growth Equity Fund"), the Turner Midcap Growth Fund (the "Midcap Growth Fund"), the Turner Small Cap Growth Fund (the "Small Cap Growth Fund"), the Turner Micro Cap Growth Fund (the "Micro Cap Growth Fund"), the Turner Top 20 Fund (the "Top 20 Fund"), the Turner Technology Fund (the "Technology Fund"), the Turner Short Duration Government Funds-Three Year Portfolio (the "Three Year Portfolio"), the Turner Short Duration Government Funds-One Year Portfolio (the "One Year Portfolio"), and the Turner Core High Quality Fixed Income Fund (the "Core High Quality Fixed Income Fund") (each a "fund" and collectively the "Funds"). The Turner Short Duration Government Funds-Three Year and One Year Portfolios are registered to offer two classes of shares, Institutional Class Shares and Adviser Class Shares. The financial statements of the remaining portfolios are presented separately. The assets of each fund are segregated, and a shareholder's interest is limited to the fund in which shares are held. The Funds' prospectus provides a description of each fund's investment objectives, policies, and strategies. As of September 30, 1999, the Turner International Growth Fund and the Turner Focused Large Cap Equity Fund had not yet commenced operations. The Turner Small Cap Growth Fund was closed to new investors as of August 30, 1997. 2. Significant accounting policies: The following is a summary of the significant accounting policies followed by the Funds. Security valuation--Investments in equity securities which are traded on a national exchange (or reported on the NASDAQ national market system) are stated at the last quoted sales price if readily available for such equity securities on each business day; other equity securities traded in the over-the-counter market and listed equity securities for which no sale was reported on that date are stated at the last quoted bid price. Market value for debt obligations is determined on the basis of last reported sales price, or if no sales are reported, as is the case with most securities traded over the counter, the mean between representative bid and asked quotations. Short-term securities with maturities of 60 days or less may be carried at amortized cost, which approximates market value. Fixed income securities for which market quotations are not readily available may be valued, pursuant to guidelines established by the Board of Trustees, with reference to fixed income securities whose prices are more readily obtainable and whose durations are comparable to the securities being valued. Subject to the foregoing, other securities for which market quotations are not readily available are valued at fair value as determined in good faith by the Board of Trustees. Federal income taxes--It is each Fund's intention to qualify as a regulated investment company by complying with the appropriate provisions of the Internal Revenue Code of 1986, as amended. Accordingly, no provision for Federal income taxes is required. Security transactions and related income--Security transactions are accounted for on the date the security is purchased or sold (trade date). Dividend income is recognized on the ex-dividend date, and interest income is recognized on the accrual basis. Costs used in determining realized gains and losses on the sales of investment securities are those of the specific securities sold during the respective holding period. Securities purchased on a when-issued or delayed delivery basis may be settled a month or more after the trade date. Such securities are included in the portfolio and are subject to market fluctuations during this period. On the date of the commitment to purchase or sell, the Funds designate specific assets with a current value at least equal to the amount of the commitment to be used for settling the commitment. Net asset value per share--The net asset value per share of each Fund is calculated on each business day, by dividing the total value of the fund's assets, less liabilities, by the number of shares outstanding. Repurchase agreements--Securities pledged as collateral for repurchase agreements are held by the custodian bank until the respective agreements mature. Provisions of the repurchase agreements ensure that the market value of the collateral, including accrued 60 | TURNER FUNDS 1999 ANNUAL REPORT interest thereon, is sufficient in the event of default of the counterparty. If the counterparty defaults and the value of the collateral declines or if the counterparty enters an insolvency proceeding, realization of the collateral by the funds may be delayed or limited. Expenses--Expenses that are directly related to one of the funds are charged to that fund. Other operating expenses of the Trust are prorated to the Funds on the basis of relative daily net assets. Distributions to shareholders--Distributions from net investment income are declared and paid to Shareholders at least annually for the Large Cap Growth Equity Fund, the Midcap Growth Fund, the Small Cap Growth Fund, the Micro Cap Growth Fund, the Top 20 Fund, and the Technology Fund; quarterly for the Growth Equity Fund; and declared daily and paid monthly for the Three Year Portfolio, One Year Portfolio and the Core High Quality Fixed Income Fund. Any net realized capital gains on sales of securities for all Funds are distributed to Shareholders at least annually. Dividends from net investment income and distributions from net realized capital gains are determined in accordance with U.S. Federal income tax regulations. Certain book/tax differences are either temporary or permanent in nature. To the extent these differences are permanent, they are charged or credited to paid-in-capital or accumulated net realized gain, as appropriate, in the period that the differences arise. Use of estimates--The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of income and expenses during the reported period. Actual results could differ from those estimates. 3. Organization costs and transactions with affiliates: Organization costs have been capitalized by each Fund and are being amortized over a period of sixty months. In the event any of the initial shares of a Fund are redeemed by any holder thereof during the period that such Fund is amortizing its organizational costs, the redemption proceeds payable to the holder thereof by a Fund will be reduced by the unamortized organizational costs in the same ratio as the number of shares outstanding at the time of redemption. Certain officers of the Trust are also officers of SEI Investments Mutual Funds Services (the "Administrator") and/or SEI Investments Distribution Co. (the "Distributor"). Such officers are paid no fees by the Trust for serving as officers and trustees of the Trust. 4. Administration, shareholder servicing, and distribution agreements: The Trust and the Administrator are parties to an agreement under which the Administrator provides management and administrative services for an annual fee. For these administrative services, the Administrator is entitled to a fee from the Trust, which is calculated daily and paid monthly, at an annual rate of .09% of the Trust's average daily net assets up to $250 million, .07% on the next $250 million, .06% on the next $250 million, .05% on the next $1.25 billion and .04% of such assets in excess on $2 billion. Each Fund is subject to a minimum annual fee of $65,000 for the first class of shares and $15,000 for each additional class of shares, which may be reduced at the sole discretion of the Administrator. The Growth Equity Fund, the Midcap Growth Fund, and the Small Cap Growth Fund have directed certain portfolio trades to brokers who paid a portion of its expenses. For the period ended September 30, 1999, the Funds expenses were reduced by $131,755, $27,561 and $50,019 respectively, under this arrangement. DST Systems, Inc., (the "Transfer Agent"), serves as the transfer agent and dividend disbursing agent for the Funds under a transfer agency agreement with the Trust. Prior to January 1, 1998, administrative services were provided to the Three Year and One Year Funds by Solon Asset Management, L.P. for an annual fee of .07% of the average daily net assets of each Fund. The Trust and the Distributor are parties to a Distribution Agreement dated April 28, 1996. The Distributor receives no fees for its distribution services under this agreement. The Three Year and One Year Portfolios have adopted a shareholder service plan and agreement for their Adviser Class Shares. Under the shareholder service plan and agreement both funds pay the Distributor a shareholder servicing fee at an annual rate of 0.25% of the average daily net assets of the Adviser Class Shares of each fund. TURNER FUNDS 1999 ANNUAL REPORT | 61 NOTES TO FINANCIAL STATEMENTS (CONTINUED) - -------------------------------------------------------------------------------- 5. Investment advisory agreement: The Trust and Turner Investment Partners, Inc. the "Adviser" are parties to an Investment Advisory Agreement dated April 28, 1996 under which the Adviser receives an annual fee equal to .75% of the average daily net assets of the Large Cap Growth Equity, Growth Equity, and Midcap Growth Equity Funds, 1.00% of the Small Cap Growth and Micro Cap Growth Funds, 1.10 of the Top 20 and Technology Funds, .25% of the Three Year and One Year Funds and .50% of the Core High Quality Fixed Income Fund. The Adviser has voluntarily agreed to waive all or a portion of its fees and to reimburse expenses in order to limit their total operating expenses (as a percentage of daily net assets on an annualized basis) to not more than 1.00% of the Large Cap Growth Equity and Growth Equity Funds, 1.25% of the Small Cap Growth, Midcap Growth Equity and Micro Cap Growth Funds, 1.35% of the Top 20 and Technology Funds, .36% and .61% of the Three Year and One Year Funds, Institutional shares and Adviser shares, respectively, and .45% of the Core High Quality Fixed Income Fund. Fee waivers and expense reimbursements are voluntary and may be terminated at any time. On January 1, 1998, Turner Investment Partners, Inc., acquired substantially all of the assets and liabilities of Solon Asset Management, L.P. (the Three Year Portfolio and One Year Portfolio prior investment adviser). 6. Investment transactions: The cost of security purchases and the proceeds from security sales, other than short-term investments, for the period ended September 30, 1999, are as follows (000): Turner Turner Turner Turner Turner Large Cap Growth Midcap Small Cap Micro Cap Turner Growth Equity Growth Growth Growth Top 20 Equity Fund Fund Fund Fund Fund Fund - -------------------------------------------------------------------------------- Purchases Government -- -- -- -- -- -- Other 29,486 427,617 286,698 452,858 20,391 58,450 Sales Government -- -- -- -- -- -- Other 27,386 422,503 199,990 442,558 15,633 46,112 - -------------------------------------------------------------------------------- Turner Short Duration Government Funds Turner Core Turner ---------------------- High Quality Technology Three Year One Year Fixed Income Fund Portfolio Portfolio Fund - -------------------------------------------------------------------------- Purchases Government -- 56,149 1,354 5,661 Other 23,591 3,201 372 142 Sales Government -- 31,026 688 3,465 Other 17,731 6,090 191 938 - -------------------------------------------------------------------------- At September 30, 1999, the total cost of securities for Federal income tax purposes was $8,150,595 for the Large Cap Growth Equity Fund, $15,277,927 for the Top 20 Fund, and $7,237,620 for the Technology Fund. The cost of securities and net realized gains or losses on securities sold for the remaining Funds was not materially different from amounts reported for financial reporting purposes. The aggregate gross unrealized appreciation and depreciation for securities held by the Funds at September 30, 1999, are as follows (000): Turner Turner Turner Turner Turner Large Cap Growth Midcap Small Cap Micro Cap Turner Growth Equity Growth Growth Growth Top 20 Equity Fund Fund Fund Fund Fund Fund - -------------------------------------------------------------------------------- Aggregate gross unrealized appreciation 762 17,202 18,406 48,240 2,976 1,153 Aggregate gross unrealized depreciation (354) (4,379) (7,147) (13,159) (381) (560) - -------------------------------------------------------------------------------- Net unrealized appreciation (depreciation) 408 12,823 11,259 35,081 2,595 593 - -------------------------------------------------------------------------------- Turner Short Duration Government Funds Turner Core Turner ----------------------- High Quality Technology Three Year One Year Fixed Income Fund Portfolio Portfolio Fund - ---------------------------------------------------------------------------- Aggregate gross unrealized appreciation 596 91 5 8 Aggregate gross unrealized depreciation (384) (119) (4) (250) - ---------------------------------------------------------------------------- Net unrealized appreciation (depreciation) 212 (28) 1 (242) - ---------------------------------------------------------------------------- 62 | TURNER FUNDS 1999 ANNUAL REPORT 7. In Kind Transfers of Securities During the period ended September 30, 1999, the Growth Equity Fund issued 273,210 shares of beneficial interest in exchange for portfolio assets from certain accounts managed by Turner Investment Partners, Inc., at their then current value of $4,270,277. During the period ended September 30, 1999, the Three Year Portfolio issued 1,925,533 shares of beneficial interest in exchange for portfolio assets from certain accounts managed by Turner Investment Partners, Inc., at their then current value of $18,947,249. During the period ended September 30, 1999, the Core HighQuality Fixed Income Fund issued 1,012,284 shares of beneficial interest in exchange for portfolio assets from certain accounts managed by Turner Investment Partners, Inc., at their then current value of $10,120,317 which includes $260,485 of net unrealized loss. 8. Line of credit: Pursuant to a credit agreement dated May 21, 1997, First Union National Bank provides an uncommitted line of credit to the Large Cap Growth Equity Fund, the Growth Equity Fund, the Midcap Growth Fund and the Small Cap Growth Fund, Portfolios of the TIP Funds, for short-term or emergency purposes, such as funding shareholder redemptions. These loans are for the respective benefit of and repayable from the respective assets of each Fund. The aggregate principal amount of all borrowings may not exceed 10% of each Fund, net assets and the maximum principal amount that the Bank will loan is $10,000,000. Borrowings under the line of credit are charged interest based on the federal funds rate determined at the date of borrowing and are secured by investment securities of the borrowing portfolio. Each Fund is individually, and not jointly, liable for its particular advances under the line. There is no commitment fee on the unused portion of the line of credit. There were no borrowings under the line of credit during the period ended September 30, 1999. TURNER FUNDS 1999 ANNUAL REPORT | 63 REPORT OF INDEPENDENT AUDITORS - -------------------------------------------------------------------------------- To the Shareholders and Board of Trustees of the TIP Funds: We have audited the accompanying statements of net assets of the Turner Large Cap Growth Fund, the Turner Small Cap Growth Fund, the Turner Short Duration Government Funds -- One Year Portfolio, and the Turner Core High Quality Fixed Income Fund and the statement of assets and liabilities of the Turner Growth Equity Fund, the Turner Mid Cap Growth Fund, the Turner Micro Cap Growth Fund, the Turner Top 20 Fund, the Turner Technology Fund and the Turner Short Duration Government Funds -- Three Year Portfolio, including the schedules of portfolio investments, as of September 30, 1999, and the related statements of operations for the year then ended, the statements of changes in net assets for the periods presented therein and the financial highlights for the periods ended September 30, 1996 through September 30, 1999 presented therein. We have also audited the financial highlights for the periods ended February 28, 1995 and February 28, 1996 for the Turner Short Duration Government Funds -- Three Year Portfolio and the Turner Short Duration Government Funds -- One Year Portfolio. These financial statements and financial highlights are the responsibility of the Funds' management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits. The financial highlights for the periods ended October 31, 1994 and October 31, 1995 for the Turner Growth Equity Fund and the Turner Small Cap Growth Fund were audited by other auditors whose report dated December 5, 1995 expressed an unqualified opinion on those financial statements and financial highlights. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of September 30, 1999, by correspondence with the custodian and brokers. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of the TIP Funds at September 30, 1999, the results of their operations for the year then ended, the changes in their net assets for each of the periods presented therein, and financial highlights for the periods ended September 30, 1996 through September 30, 1999 presented therein, and for the periods ended February 28, 1995 and February 28, 1996 presented therein for the Turner Short Duration Government Funds -- Three Year Portfolio and the Turner Short Duration Government Funds -- One Year Portfolio in conformity with generally accepted accounting principles. /s/ Ernst & Young LLP ----------------------------------- Philadelphia, Pennsylvania November 8, 1999 64 | TURNER FUNDS 1999 ANNUAL REPORT EVENT SUBSEQUENT TO AUDITOR'S REPORT (unaudited) On February 25, 2000, the Board of Trustees of the TIP Funds approved a Plan to reorganize the Turner Growth Equity Fund into a similar fund that is being created by the Vanguard Group called the Vanguard Growth Equity Fund, subject to shareholder and regulatory approval. - -------------------------------------------------------------------------------- Notice to Shareholders of Turner Funds (Unaudited) For shareholders that do not have a September 30, 1999 tax year end, this notice is for informational purposes only. For shareholders with a September 30, 1999, please consult your tax advisor as to the pertinence of this notice. For the fiscal year ended September 30, 1999, each portfolio is designating the following items with regard to distributions paid during the year. Long Term (20% Rate) Ordinary Capital Gain Income Tax Exempt Total Qualifying Fund Distributions Distributions Interest Distributions Dividends (1) ---- ------------- ------------- ---------- ------------- ------------- Turner Large Cap Growth Equity Fund ......... 0.00% 0.00% 0.00% 0.00% 0.00% Turner Growth Equity Fund ................... 66.75% 33.25% 0.00% 100.00% 4.38% Turner Midcap Growth Fund ................... 0.00% 0.00% 0.00% 0.00% 0.00% Turner Small Cap Growth Fund ................ 0.00% 0.00% 0.00% 0.00% 0.00% Turner Micro Cap Growth Fund ................ 0.00% 0.00% 0.00% 0.00% 0.00% Turner Top 20 Fund .......................... 0.00% 0.00% 0.00% 0.00% 0.00% Turner Technology Fund ...................... 0.00% 0.00% 0.00% 0.00% 0.00% Turner Short Duration Government Funds-Three Year Portfolio ............. 3.43% 96.57% 0.00% 100.00% 0.00% Turner Short Duration Government Funds-One Year Portfolio ............... 0.00% 100.00% 0.00% 100.00% 0.00% Turner Core High Quality Fixed Income ....... 0.00% 100.00% 0.00% 100.00% 0.00% (1) Qualifying dividends represent dividends which qualify for the corporate dividends received deduction and is reflected as a percentage of "Ordinary Income Distributions". TURNER FUNDS 1999 ANNUAL REPORT | 65 - -------------------------------------------------------------------------------- NOTES - -------------------------------------------------------------------------------- NOTES [LOGO OMITTED] TURNER -------- FUNDS -------------------------------- Turner Funds 1235 Westlake Drive Berwyn, Pennsylvania 19312 Telephone: 1-800=224-6312 Email: mutualfunds@turner-invest.com Web Site: www.turner-invest.com