SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES EXCHANGE ACT OF 1934
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TURNER FUNDS
TURNER CORE HIGH QUALITY FIXED INCOME FUND
Dear Shareholder,
A Special Meeting of Shareholders of the Turner Core High Quality Fixed Income
Fund (the "Fund"), a series of Turner Funds (the "Trust"), has been scheduled
for July 31, 2002. If you are a shareholder of record as of the close of
business on June 7, 2002, you are entitled to vote at the meeting and any
adjournment of the meeting.
While you are, of course, welcome to join us at the meeting, most shareholders
cast their votes by filling out and signing the enclosed proxy card, voting over
the internet or by phone. Whether or not you plan to attend the meeting, we need
your vote. Please mark, sign, and date the enclosed proxy card and return it
promptly in the enclosed postage-paid envelope so that the maximum number of
shares may be voted. You may vote over the internet or by telephone by following
the enclosed instructions to utilize those methods of voting.
The attached proxy statement is designed to give you information relating to the
proposals on which you are asked to vote. The proposals described in the proxy
statement relate to changing the Fund's name to the "Turner Total Return Fixed
Income Fund," changing the Fund's principal investment strategy, and amending or
eliminating certain of the Fund's "non-fundamental" investment policies. The
Board of Trustees (the "Board") of the Fund recommends that you vote to approve
each proposal, and we encourage you to support the Board's recommendation.
Your vote is important to us. Please do not hesitate to call 1-800-224-6312 if
you have any questions about the proposals under consideration. Thank you for
taking the time to consider these important proposals and for your investment in
the Fund.
Sincerely,
Stephen J. Kneeley
President
Turner Funds
2
IMPORTANT NOTICE
We recommend that you read the entire proxy statement. For your convenience, we
have provided a brief overview of the proposals to be voted on at the Special
Meeting.
QUESTIONS AND ANSWERS ABOUT THE SPECIAL MEETING AND
THE PROXY STATEMENT
The Board is proposing a number of changes in order to provide additional
investment opportunities for the Fund, and in an effort to achieve the Fund's
investment goal of total return through current income and capital appreciation.
A detailed discussion of each proposal is included in the body of the proxy
statement.
Q. WHAT ARE THE PROPOSED CHANGES, AND WHY IS THE BOARD PROPOSING THESE CHANGES?
A. The Board is asking shareholders of the Fund to vote on several proposals.
First, the Board is asking shareholders to consider a change to the name of the
Fund to the "Turner Total Return Fixed Income Fund." The Board believes that the
proposed name represents more accurately the Fund's investment goal of achieving
total return through current income and capital appreciation, while not
requiring the Fund to invest a fixed minimum percentage of its assets in any
specific type of fixed income security. Second, the Board is asking shareholders
to consider changes to the Fund's principal investment strategy to employ a
"core" approach that will permit the Fund to invest in a wide variety of fixed
income securities, including fixed income securities rated below investment
grade (often referred to as "high yield securities" or "junk bonds") and fixed
income securities issued by non-U.S. issuers. Finally, the Board is requesting
shareholders to consider proposals to amend the Fund's non-fundamental
investment policies with respect to the average weighted maturity of Fund
investments and the percentage amount that the Fund may invest in high yield
securities. The Board believes that by implementing these changes, the Fund will
have greater flexibility in selecting investments in order to achieve its
investment objective.
Q. WHY AM I BEING ASKED TO VOTE ON THESE CHANGES?
A. Although the proposed changes do not require shareholder approval, we believe
that these changes are significant enough to warrant your consideration and
approval.
Q. HOW WOULD THESE CHANGES AFFECT MY ACCOUNT?
A. If these changes are approved, the Fund's investment adviser will have
greater flexibility to invest the Fund's assets in securities of varying credit
quality and maturities. The Board believes that these changes will benefit the
Fund and its shareholders because the Fund's assets may be allocated across more
sub-classes of fixed income securities, and the Fund may be able to take
advantage of potential fluctuations in foreign currency valuations. Of course,
there can be no assurance that the Fund will meet its investment goal or that
losses will not occur.
3
Q. HOW DOES THE BOARD SUGGEST THAT I VOTE?
After careful consideration, the Board, including all of the independent
Trustees of the Board, unanimously recommends that you vote "FOR" each proposal.
Q. AM I REQUIRED TO APPROVE OR REJECT ALL OF THE PROPOSALS AS A GROUP, OR CAN I
VOTE "YES" FOR SOME PROPOSALS AND "NO" FOR OTHERS?
A. Each of the Proposals discussed in this proxy statement is subject to a
separate vote, and you should accept or reject each Proposal on its own merits.
Please note, however, that the decisions made on each of the Proposals are
ultimately related. For example, unless the Fund's name is changed so as to no
longer suggest that the Fund has an investment emphasis in investment-grade
securities, the Fund will not be permitted to implement the investment strategy
changes discussed in Proposal 2. In addition, even if Proposals 1 and 2 are
approved, the Fund will not be permitted to invest more than 20% of its assets
in high yield securities unless Proposal 4 is approved.
Q. WHAT WILL THE BOARD DO IF ONE OR MORE, BUT NOT ALL, OF THE PROPOSALS ARE
APPROVED?
A. If one or more, but not all, of the Proposals are approved, the Board will
evaluate the appropriate action that the Fund should take. Because each of the
changes discussed in this proxy statement could be made without shareholder
approval, the Board will have considerable flexibility in choosing an
appropriate course of action. For example, if shareholders approve Proposals 1,
2 and 4 but reject Proposal 3, the Board could determine that in order to fully
implement the approved Proposals, it is in the best interest of the Fund and its
shareholders to amend the Fund's policy on average weighted maturity of fund
investments notwithstanding the outcome of the shareholder vote.
Q. WILL MY VOTE MAKE A DIFFERENCE?
A. Yes. Your vote is needed to ensure that each separate proposal can be acted
upon. We encourage all shareholders to participate in the governance of the
Fund. Additionally, your immediate response on the enclosed proxy card will help
save the costs of any further solicitations.
Q. WHOM DO I CALL IF I HAVE QUESTIONS?
A. We will be happy to answer your questions about this proxy solicitation.
Please call us at 1-800-224-6312 between 8:30 a.m. and 8:00 p.m., Eastern Time,
Monday through Friday.
Q. HOW DO I VOTE?
A. You may use the enclosed postage-paid envelope to mail your proxy card. You
may also vote over the internet or by telephone. Please follow the instructions
on the enclosed proxy card to use these methods of voting.
4
TURNER CORE HIGH QUALITY FIXED INCOME FUND
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
July 31, 2002
Notice is hereby given that a Special Meeting of Shareholders (the
"Meeting") of the Turner Core High Quality Fixed Income Fund (the "Fund"), a
series of Turner Funds (the "Trust"), will be held at the offices of Turner
Investment Partners, Inc. ("Turner"), 1235 Westlakes Drive, Suite 350, Berwyn,
PA 19312, on Wednesday, July 31, 2002, at 3:00 p.m. Eastern Time.
At the Meeting, shareholders will be asked to consider and act on the
following:
1. To approve or disapprove a proposal to change the Fund's name to the
"Turner Total Return Fixed Income Fund."
2. To approve or disapprove a proposal to change the principal
investment strategy employed by the Fund.
3. To approve or disapprove a proposal to eliminate the Fund's
non-fundamental investment policy on the average weighted maturity
of Fund investments.
4. To approve or disapprove a proposal to amend the Fund's
non-fundamental investment policy on investments in below investment
grade securities.
5. To vote upon any other business properly brought before the Meeting.
All shareholders are cordially invited to attend the Meeting. However, if
you are unable to attend the Meeting, please mark, sign and date the enclosed
Proxy Card and return it promptly in the enclosed, postage-paid envelope so that
the Meeting may be held and a maximum number of shares may be voted. You may
also vote over the internet or by phone by following the directions on the
enclosed proxy card.
Shareholders of record at the close of business on June 7, 2002 are
entitled to notice of and to vote at the Meeting or any adjournments of the
Meeting.
By Order of the Board of Trustees
John H. Grady, Jr.
Secretary
June 14, 2002
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PROMPT EXECUTION AND RETURN OF THE ENCLOSED PROXY CARD IS REQUESTED. A
SELF-ADDRESSED, POSTAGE-PAID ENVELOPE IS ENCLOSED FOR YOUR CONVENIENCE ALONG
WITH INSTRUCTIONS ON HOW TO VOTE OVER THE INTERNET OR BY TELEPHONE SHOULD YOU
PREFER TO VOTE BY ONE OF THOSE METHODS.
6
PROXY STATEMENT
THIS PROXY STATEMENT IS FURNISHED IN CONNECTION WITH THE SOLICITATION OF
PROXIES BY THE BOARD OF TRUSTEES OF TURNER FUNDS (THE "TRUST") FOR USE AT THE
SPECIAL MEETING OF SHAREHOLDERS TO BE HELD WEDNESDAY, JULY 31, 2002 AT 3:00 P.M.
EASTERN TIME AT THE OFFICES OF TURNER INVESTMENT PARTNERS, INC. ("TURNER"), 1235
WESTLAKES DRIVE, SUITE 350, BERWYN, PA 19312, AND AT ANY ADJOURNED SESSION
THEREOF (THE SPECIAL MEETING AND ANY ADJOURNMENTS OF THE SPECIAL MEETING ARE
REFERRED TO IN THIS PROXY STATEMENT AS THE "MEETING"). Shareholders of the
Turner Core High Quality Fixed Income Fund (the "Fund") of record at the close
of business on June 7, 2002 ("Shareholders") are entitled to vote at the
Meeting. As of June 7, 2002, the Fund had [_______] units of beneficial interest
("shares") issued and outstanding.
Each share is entitled to one vote and each fractional share is entitled
to a proportionate fractional vote on each matter as to which such shares are to
be voted at the Meeting. Approval of the Proposal requires the affirmative vote
of a majority of the outstanding securities of the Fund entitled to vote as that
term is defined in the Investment Company Act of 1940, as amended (the "1940
Act").
In addition to the solicitation of proxies by mail, the Board of Trustees
(the "Board") and officers of the Trust and officers and employees of Turner may
solicit proxies in person or by telephone. Persons holding shares as nominees
will, upon request, be reimbursed for their reasonable expenses incurred in
sending soliciting materials to their principals. The Fund will bear the cost of
the Shareholders' Meeting and proxy materials. The proxy card and this Proxy
Statement are being mailed to Shareholders on or about June 14, 2002.
Shares represented by duly executed proxies will be voted in accordance
with the instructions given. Proxies may be revoked at any time before they are
exercised by a written revocation received by the President of the Trust at 1235
Westlakes Drive, Suite 350, Berwyn, Pennsylvania 19312, by properly executing a
later-dated proxy, or by attending the Meeting and voting in person.
7
INTRODUCTION
The Trust is organized as a Massachusetts business trust and is not
required to hold annual meetings of Shareholders. The Meeting is being called in
order to permit the Shareholders of the Fund to consider and vote the proposals
set forth in this proxy statement. Specifically, Shareholders are being asked to
approve changing the name of the Fund to the "Turner Total Return Fixed Income
Fund," amending the Fund's principal investment strategy, and amending or
eliminating certain of the Fund's "non-fundamental" investment policies. The
1940 Act, which regulates investment companies such as the Fund, does NOT
require shareholder approval in order to change a fund's name, principal
investment strategy, or related non-fundamental investment policies. However, we
believe that these changes are significant enough to warrant your consideration
and approval. If shareholders vote to approve any or all of the proposals, they
will remain non-fundamental policies of the Fund that the Board may change at
any time.
PROPOSAL 1
TO CHANGE THE FUND'S NAME
The Fund's investment goal is to achieve total return through current
income and capital appreciation. Recently, the U.S. Securities and Exchange
Commission (the "SEC") adopted Rule 35d-1 (the "Names Rule") under the 1940 Act.
The Names Rule is designed to prevent investment companies from using names that
may mislead investors about a fund's investments and risks. Among other things,
the Names Rule requires that a fund with a name suggesting an investment
emphasis in a particular type of security must, under normal market conditions,
invest at least 80% of its assets in the type of investment suggested by its
name. The Names Rule replaces a previous requirement under which a fund with a
name suggesting a specific investment emphasis was required to invest at least
65% of its assets in such investment type. Because the Fund's current name
suggests an investment emphasis on investment-grade (or "high quality") fixed
income securities, the Fund must currently invest at least 80% of its assets in
these securities.
While under normal market conditions the Fund may choose to pursue its
investment goal by investing 80% or more of its assets in investment-grade
securities, under other conditions the Fund may wish to invest less than 80% of
its assets in these securities. So long as the Fund retains the name Turner Core
High Quality Fixed Income Fund, however, the Names Rule will REQUIRE the Fund to
invest at least 80% of its assets in investment-grade securities under normal
market conditions. Accordingly, the Board proposes to change the name of the
Fund so that it no longer suggests that the Fund will invest 80% or more of its
assets in investment-grade securities. The Board believes that the proposed
name, the "Turner Total Return Fixed Income Fund," accurately represents the
Fund's investment goal while not requiring the Fund to invest a fixed minimum
percentage of its assets in any specific type of fixed income securities.
Investment-grade securities or obligations are generally considered to be
those securities rated within the four highest rating categories by a nationally
recognized statistical rating organization ("NRSRO") such as Standard & Poor's
Incorporated ("S&P") or Moody's Investor
8
Services, Inc. ("Moody's"), or securities the Fund's investment adviser, Turner
Investment Partners, Inc. ("Turner"), determines to be of comparable quality.
Securities rated below investment grade (often referred to as "high yield
securities" or "junk bonds") tend to offer higher interest rates than
investment-grade securities, but they are generally more sensitive to adverse
economic changes and developments relating to the issuer's credit quality. This
may affect the issuer's ability to make principal and interest payments on the
debt obligations. There may also be greater risk of price declines due to
changes in the issuer's creditworthiness. Because the market for lower-rated
securities may be less active than for higher-rated securities, it may be
difficult for the Fund to sell these securities. In addition, because there is
often less objective information available about high yield securities than
investment-grade securities, it may be difficult for Turner to value high yield
securities.
The Board believes that having maximum flexibility to invest in securities
of varying credit quality will benefit the Fund and its shareholders because the
Fund's investment adviser will be able to allocate its assets across more
sub-classes of fixed income securities, and to possibly take advantage of
fluctuations in foreign currency valuations. Moreover, through portfolio
diversification and credit analysis, investment risk can be reduced. Of course,
there can be no assurance that the Fund will meet its investment goal or that
losses will not occur.
THE BOARD UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS APPROVE PROPOSAL 1.
PROPOSAL 2
TO CHANGE THE FUND'S PRINCIPAL INVESTMENT STRATEGY
In an effort to meet its investment goal, the Fund currently invests
primarily in investment-grade fixed income securities, including U.S. government
securities, corporate debt securities, mortgage-backed securities, asset-backed
securities, and short-term obligations. To comply with the Names Rule, at least
at least 80% of Fund assets are invested in investment-grade fixed income
securities. The Board believes, however, that the Fund should have maximum
flexibility to invest in fixed income securities in order to achieve its
investment goal. The Board further believes that the requirement to invest at
least 80% of the Fund's assets in investment-grade fixed income securities, as
disclosed in the prospectus and as currently required because of the Fund's
name, may unduly restrict the Fund's ability to meet its stated goal. The Board
believes that it would be beneficial for the Fund and its shareholders to give
the Fund greater flexibility with respect to its permitted investments;
specifically, to permit the Fund to invest substantial portions of its assets in
high yield securities and securities issued by non-U.S. issuers.
The Board proposes to revise the Fund's principal investment strategy to
employ a "core" approach that will permit the Fund to invest in a wide variety
of fixed income securities. Under the proposed approach, the Fund would continue
to invest primarily in U.S. government and investment-grade corporate debt
securities. Under normal market conditions, the Fund would also invest a portion
of its assets in high yield securities and foreign securities. The Board
believes that employing this "core" investment strategy will benefit the Fund
and its shareholders
9
because the Fund's investment adviser will have more types of fixed income
securities from which to select.
While the Fund is currently permitted to invest in both foreign and high yield
securities, investments in these securities have been limited in the past. For
example, as of May 31, 2002, the Fund invested approximately 94% of its assets
in investment-grade securities and 6% in high yield and foreign securities. If
this proposal is approved, the Board expects that investments in high yield and
foreign securities will increase.
PROPOSED APPROACH
PRINCIPAL STRATEGY
U.S. INVESTMENT GRADE SECTOR: The Fund will invest, under normal market
conditions, approximately 50% to 90% of its assets in securities issued or
guaranteed by the U.S. government and its agencies and instrumentalities, as
well as corporate bonds, notes, debentures and commercial paper. When investing
in this sector, the Fund may acquire mortgage-backed securities issued or
guaranteed by the U.S. Government and its agencies and instrumentalities, by
certain government sponsored corporations, and by private non-governmental
entities, as well as securities backed by receivables such as credit card loans,
automobile loans, home equity loans and leases. All of these securities will be
rated in one of the four highest ratings categories as published by S&P, Moody's
or another NRSRO, or, if unrated, will be determined by Turner to be of
comparable quality.
U.S. HIGH YIELD SECTOR: The Fund will invest, under normal market conditions,
approximately 5% to 30% of its assets in high yield securities (often referred
to as "junk bonds") issued by U.S. corporations, including bonds, notes (both
convertible and non-convertible), units consisting of bonds with warrants or
stock attached, and debentures (including convertible debentures), as well as
zero coupon bonds and "pay in kind" securities. The Fund will focus on issues
that have a liberal and consistent yield and/or that tend to have reduced risk
of market fluctuations. Securities purchased in this sector will generally be
rated BB or lower by S&P or Ba or lower by Moody's (or similarly rated by other
NRSROs).
NON-U.S. SECTOR: The Fund will invest, under normal market conditions,
approximately 5% to 20% of its assets in debt securities of issuers organized,
having the majority of their assets, or deriving a majority of their operating
income, in foreign countries, including obligations of foreign governments,
foreign companies and supranational entities. Eligible securities may be from
issuers located in developed or developing nations, and include American
Depositary Receipts ("ADRs"), Brady Bonds, as well as European and Global
Depositary receipts. International securities will generally be limited to those
determined to be investment grade by one or more NRSROs, or if unrated deemed by
Turner to be of comparable quality. The Fund may hold foreign currencies, and
may purchase or sell foreign currencies and/or engage in forward currency
transactions to facilitate settlement or minimize foreign currency value
fluctuations.
10
PRINCIPAL RISKS
IN GENERAL. The prices of the Fund's fixed income securities respond to economic
developments, particularly interest rate changes, as well as to perceptions
about the creditworthiness of individual issuers, including governments.
Generally, the Fund's fixed income securities will decrease in value if interest
rates rise and vice versa, and the volatility of lower-rated securities is even
greater than that of higher-rated securities. In addition, the Fund is subject
to the risk that, due to Turner's security selection and/or sector allocation,
the Fund's fixed income securities may underperform other segments of the fixed
income markets as a whole.
U.S. GOVERNMENT SECURITIES. Although investments in U.S. government securities
are considered to be among the safest investments, they are not guaranteed
against price movements due to changing interest rates. Securities issued by
some U.S. government agencies are backed by the U.S. Treasury, while others are
backed solely by the ability of the agency to borrow from the U.S. Treasury or
by the agency's own resources.
MORTGAGE-BACKED SECURITIES. Mortgage-backed securities are fixed income
securities representing an interest in a pool of underlying mortgage loans.
Mortgage-backed securities are sensitive to changes in interest rates, but may
respond to these changes differently from other fixed income securities due to
the possibility of prepayment of the underlying mortgage loans. Prepayment risks
may make it difficult to calculate the average maturity of the Fund's
mortgage-backed securities, and therefore, to assess the volatility risk of the
Fund.
HIGH YIELD SECURITIES. High yield securities are speculative, may be in default
and are more likely to react to developments affecting issues than are more
highly rated securities. Adverse economic developments can disrupt the market
for such securities and severely affect the ability of issuers to service their
debt obligations or repay their obligations upon maturity.
FOREIGN SECURITIES. Investing in issuers in foreign countries poses additional
risks because political and economic events unique to a country or region will
affect those markets and their issuers. These events will not necessarily affect
the U.S. economy or similar issuers located in the U.S. In addition, investments
in foreign countries are generally denominated in a foreign currency. As a
result, changes in the value of those currencies compared to the U.S. dollar may
affect (either positively or negatively) the value of the Fund's investments.
These currency movements may happen separately from and in response to events
that do not otherwise affect the value of the security in the issuer's home
country. While ADRs are denominated in U.S. dollars, they are subject to
currency risk to the extent the underlying stocks are denominated in foreign
currencies.
THE BOARD UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS APPROVE PROPOSAL 2.
11
PROPOSAL 3
TO ELIMINATE THE FUND'S NON-FUNDAMENTAL INVESTMENT POLICY ON
THE AVERAGE WEIGHTED MATURITY OF FUND INVESTMENTS
The Fund may currently invest in fixed income securities of varying levels
of maturity, including securities with long-term, short-term and
intermediate-term maturities. The Fund's non-fundamental investment policy,
however, is to maintain an average weighted maturity of its entire portfolio of
between three and six years. This investment policy, which was originally
implemented in an attempt to approximate the average duration range of the
Fund's benchmark index (the Lehman Brothers Aggregate Bond Index), is neither
required by the 1940 Act nor standard within the industry.
Duration is a measure of the price sensitivity of fixed-income securities
for a given change in interest rates. Duration is the change in the value of a
fixed income security that will result from a 1% change in interest rates.
Duration is stated in years. For example, a 5 year duration means the bond will
decrease in value by 5% if interest rates rise 1%, and increase in value by 5%
if interest rates fall 1%. Maturity, on the other hand, is the date on which a
fixed-income security becomes due for payment of principal.
The Board believes that the current limitation on the Fund's average
weighted maturity of fixed income investments may unduly restrict the Fund's
efforts to meet its stated investment goal of total return through current
income and capital appreciation. While the Fund will continue to seek to produce
a return to shareholders in excess of that of the Lehman Brothers Aggregate Bond
Index, if this proposal is approved the Fund will not be required to track the
average maturity of the securities contained in this index, nor will it be
required to maintain an average duration similar to the index.
THE BOARD UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS APPROVE PROPOSAL 3.
PROPOSAL 4
TO AMEND THE FUND'S NON-FUNDAMENTAL INVESTMENT POLICY ON
INVESTMENTS IN BELOW INVESTMENT GRADE SECURITIES
The Fund's current non-fundamental investment policy permits no more than
20% of Fund assets to be invested in high yield securities. The Board believes,
however, that the Fund should have maximum flexibility in order to meet its
stated investment goal of total return through current income and capital
appreciation. In this regard, the Board believes that there may be market
conditions under which it would be beneficial to the Fund and its shareholders
to maintain up to 30% of assets in high yield securities.
Below investment-grade debt securities tend to be more sensitive to
adverse economic changes and developments relating to the issuer's credit
quality than investment-grade debt. This may affect the issuer's ability to make
principal and interest payments on the debt obligation. There is also a greater
risk of price declines due to changes in the issuer's
12
creditworthiness. Because the market for lower-rated securities may be less
active than for higher-rated securities, it may be difficult for the Fund to
sell the securities. In addition, because there is less objective information
available about high yield securities, it may be difficult for Turner to value
the securities.
The Board believes, however, that having maximum flexibility to invest in
securities of varying credit quality will benefit the Fund and its shareholders
because the Fund's investment adviser will have more types of fixed income
securities from which to select. This policy will permit Turner to take
advantage of investment opportunities, including investments in unrated
obligations, and will allow it to respond more quickly to market changes.
Moreover, through portfolio diversification and credit analysis, investment risk
can be reduced, although there can be no assurance that losses will not occur.
THE BOARD UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS APPROVE PROPOSAL 4.
NOTIFICATION OF CHANGES TO CERTAIN OF THE FUND'S NON-
FUNDAMENTAL INVESTMENT POLICIES
As discussed in this proxy statement, the Board is seeking shareholder
approval to eliminate the Fund's non-fundamental investment policy on the
average weighted maturity of Fund investments (Proposal 3) and to amend the
Fund's non-fundamental investment policy on investments in below investment
grade securities (Proposal 4). The 1940 Act, which regulates investment
companies such as the Fund, does NOT require shareholder approval in order to
change a fund's non-fundamental investment policies. However, the Board believes
that these changes are significant enough to warrant your consideration and
approval.
In addition to these two specific proposals, the Board has determined to
eliminate or amend certain of the Fund's other non-fundamental investment
policies. While these additional changes are not anticipated to substantially
affect the way the Fund is currently managed, the Board believes that the
changes will benefit the Fund and its shareholders because the Fund's investment
adviser will have more types of investments to choose from in pursuing the
Fund's investment goal. The Board has approved each of the following changes,
and you are not being asked to approve these changes. These changes will be
effective August 5, 2002. Additional information about each of the following
practices is available in the Fund's Statement of Additional Information, which
is on file with the SEC.
o AMERICAN DEPOSITARY RECEIPTS ("ADRS")
The Board has eliminated the Fund's non-fundamental investment policy that
prohibited investments in ADRs. ADRs are securities, typically issued by a U.S.
financial institution (a "depositary"), that evidence ownership interests in a
security or a pool of securities issued by a foreign issuer and deposited with
the depositary.
13
o CONVERTIBLE SECURITIES
The Board has eliminated the Fund's non-fundamental investment policy that
prohibited investments in convertible securities. Convertible securities
typically have characteristics of both fixed income and equity securities.
Because of the conversion feature, the market value of a convertible security
tends to move with the market value of the underlying stock.
o FORWARD FOREIGN CURRENCY CONTRACTS
The Board has eliminated the Fund's non-fundamental investment policy that
prohibited the Fund from entering into forward foreign currency contracts. The
Fund may now enter into forward foreign currency contracts to manage foreign
currency exposure and as a hedge against possible variations in foreign exchange
rates. In addition, the Fund may enter into forward foreign currency contracts
to hedge a specific security transaction or to hedge a portfolio position.
o FUTURES CONTRACTS AND OPTIONS ON FUTURES CONTRACTS
The Board has eliminated the Fund's non-fundamental investment policy that
prohibited the Fund from entering into futures contracts and options on futures
contracts. Futures contracts provide for the future sale by one party and
purchase by another party of a specified amount of a specific security at a
specified future time and at a specified price. An option on a futures contract
gives the purchaser the right, in exchange for a premium, to assume a position
in a futures contract at a specified exercise price during the term of the
option. The Fund may use futures contracts and related options for BONA FIDE
hedging purposes, to offset changes in the value of securities held or expected
to be acquired or be disposed of, to minimize fluctuations in foreign
currencies, or to gain exposure to a particular market or instrument.
o INVESTMENT COMPANY SHARES
The Board has eliminated the Fund's non-fundamental investment policy
prohibiting the purchase of investment company shares. The Fund may now invest
in shares of other investment companies, to the extent permitted by applicable
law and subject to certain restrictions. These investment companies typically
incur fees that are separate from those fees the Fund incurs directly, and
shareholders would indirectly bear a proportionate share of the operating
expenses of these investment companies in addition to paying Fund expenses.
o RECEIPTS
The Board has eliminated the Fund's non-fundamental investment policy
prohibiting investments in receipts. Receipts are sold as zero coupon
securities, which means that they are sold at a substantial discount and
redeemed at face value at their maturity date without interim cash payments of
interest or principal.
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o REITS
The Board has eliminated the Fund's non-fundamental investment policy
prohibiting investments in real estate investment trusts ("REITs"). A REIT pools
investors' money for investment in income producing commercial real estate or
real estate related loans or interests.
o TELECOMMUNICATIONS SECURITIES
The Board has eliminated the Fund's non-fundamental investment policy
prohibiting investments in telecommunications securities.
GENERAL INFORMATION ABOUT THE TRUST AND OTHER MATTERS
VOTING DETAILS. The 1940 Act, which regulates investment companies such as
the Fund, does NOT require shareholder approval in order to change a fund's
name, principal investment strategy, or related non-fundamental investment
policies. However, we believe that these changes are significant enough to
warrant your consideration and approval. Each whole share held entitles the
shareholder to one vote for each dollar (carried forward to two decimal places)
of net asset value of such share as of the close of business on June 7, 2002,
and each fractional share is entitled to a proportionate fractional vote. A
majority in interest of the Fund's shares entitled to vote on the proposal
constitutes a quorum. Any shareholder who submits a proxy may revoke it at any
time before it is exercised by submitting to the Trust a specific written notice
of revocation. Abstentions and "broker non-votes" will not be counted for or
against the proposals, but will be counted for purposes of determining whether a
quorum is present. Abstentions will be counted as votes present for purposes of
determining a "majority of the outstanding voting securities" present at the
Meeting and will therefore have the effect of counting against the proposals.
If one or more, but not all, of the Proposals are approved, the Board will
evaluate the appropriate action that the Fund should take. Because each of the
changes discussed in this proxy statement could be made without shareholder
approval, the Board will have considerable flexibility in choosing an
appropriate course of action. For example, if shareholders approve Proposals 1,
2 and 4 but reject Proposal 3, the Board could determine that, in order to fully
implement the approved Proposals, it is in the best interest of the Fund to
amend the Fund's policy on average weighted maturity of fund investments
notwithstanding the outcome of the shareholder vote.
TRUSTEES AND OFFICERS. Information about the Trust's current Trustees and
principal executive officers, including their names, positions with the Trust,
and association with the Trust is set forth below:
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NAME POSITION WITH THE TURNER TRUST
- ---- ------------------------------
Robert E. Turner* Trustee, Chairman of the Board
Janet F. Sansone Trustee, Audit Committee Member
Dr. John T. Wholihan Trustee, Audit Committee Member
Alfred C. Salvato Trustee, Audit Committee Member, Fair Value Pricing
Committee Member
Stephen J. Kneeley* President and Chief Executive Officer
Peter Golden Controller and Chief Accounting Officer
John H. Grady, Jr.* Executive Vice President and Secretary
- ----------
* MR. TURNER, IN HIS ROLE AS A TRUSTEE IS AN "INTERESTED PERSON" (AS THAT
TERM IS DEFINED IN THE 1940 ACT) OF THE TRUST DUE TO HIS ASSOCIATION WITH
TURNER. MESSRS. KNEELEY AND GRADY ARE "AFFILIATED PERSONS" (AS THAT TERM
IS DEFINED IN THE 1940 ACT) OF THE TRUST AND TURNER.
ADVISER. Turner, 1235 Westlakes Drive, Suite 350, Berwyn, Pennsylvania
19312, serves as the investment adviser for the Fund. Currently, Turner has
agreed to waive fees and reimburse expenses in order to keep total operating
expenses of the Fund from exceeding 0.45%. Effective August 5, 2002, Turner will
waive fees and reimburse expenses so that total operating expenses do not exceed
0.75% for a period of one year. Turner may determine to continue this waiver
after the initial one-year period.
ADMINISTRATOR. Turner also serves as the Fund's administrator. SEI
Investments Mutual Funds Services, One Freedom Valley Drive, Oaks, Pennsylvania
19456, serves as the Fund's sub-administrator.
DISTRIBUTOR. Turner Investment Distributors, Inc. (the "Distributor"),
1235 Westlakes Drive, Suite 350, Berwyn, Pennsylvania 19312, serves as the
distributor of the Fund's shares. The Distributor is a wholly owned subsidiary
of Turner.
5% SHAREHOLDERS. As of June 7, 2002, the following persons were the only
persons who were record owners or, to the knowledge of the Trust, were
beneficial owners of 5% or more of the shares of the Fund. The Trust believes
that most of the shares referred to below were held by the following persons in
accounts for their fiduciary, agency, or custodial customers.
- --------------------------------------------------------------------------------
NAME AND ADDRESS OF SHAREHOLDER NUMBER OF SHARES PERCENT OF FUND
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
As of June 7, 2002, the Turner Trust's Trustees and officers did not own
any Fund shares.
ADJOURNMENT. In the event that sufficient votes in favor of one or more
proposals set forth in the Notice of the Special Meeting are not received by the
time scheduled for the Meeting, the persons named as proxies may propose one or
more adjournments of the Meeting.
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Turner will bear the costs of any adjourned sessions. The persons named as
proxies will vote for an adjournment any proxies that they are entitled to vote
in favor of the proposals.
SHAREHOLDER PROPOSALS. The Trust is not required to hold annual
shareholder meetings. Shareholders wishing to submit proposals for inclusion or
presentation in a proxy statement for a subsequent meeting should send their
written proposals to the Secretary of the Trust c/o Turner Investment Partners,
Inc., 1235 Westlakes Drive, Suite 350, Berwyn, Pennsylvania 19312.
OTHER MATTERS. The Trustees know of no other business to be brought before
the Meeting. However, if any other matters properly come before the Meeting, it
is their intention that proxies which do not contain specific restrictions to
the contrary will be voted on such matters in accordance with the judgment of
the persons named in the enclosed proxy.
SHAREHOLDER REPORTS. The Fund's last audited financial statements and
annual report, for the fiscal year ended September 30, 2001, and the semi-annual
report dated March 31, 2002, are available free of charge. To obtain a copy,
please call the Fund toll free at 1-800-224-6312, or send a written request to
the Turner Core High Quality Fixed Income Fund c/o Turner Investment
Distributors, Inc., 1235 Westlakes Drive, Suite 350, Berwyn, PA 19312.
SHAREHOLDERS ARE URGED TO COMPLETE, SIGN AND DATE THE ENCLOSED PROXY CARD AND
RETURN IT PROMPTLY. YOU MAY ALSO VOTE OVER THE INTERNET OR BY TELEPHONE. PLEASE
FOLLOW THE ENCLOSED INSTRUCTIONS ON THE PROXY CARD TO UTILIZE THESE METHODS OF
VOTING.
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THE TURNER FUNDS
SPECIAL MEETING OF THE SHAREHOLDERS OF THE
TURNER CORE HIGH QUALITY FIXED INCOME FUND
PROXY SOLICITED BY THE BOARD OF TRUSTEES FOR
THE SPECIAL MEETING OF SHAREHOLDERS, TO BE HELD ON
JULY 31, 2002
The undersigned, hereby appoints Brian M. Ferko and John H. Grady as proxies and
each of them, each with full power of substitution, to vote at the Special
Meeting of Shareholders of the Turner Core High Quality Fixed Income Fund (the
"Fund"), a series of the Turner Funds (the "Trust"), to be held at the offices
of Turner Investment Partners, Inc., the Fund's administrator, 1235 Westlakes
Drive, Suite 350, Berwyn, PA 19312 on July 31, 2002, at 3:00 p.m. Eastern Time,
and any adjournments or postponements of the Special Meeting (the "Meeting") all
shares of beneficial interest of the Fund that the undersigned would be entitled
to vote if personally present at the Meeting ("Shares") on the proposals set
forth below, and in accordance with their own discretion, any other matters
properly brought before the Meeting.
THE BOARD OF TRUSTEES OF THE TRUST RECOMMENDS A VOTE "FOR" THE FOLLOWING
PROPOSALS:
PROPOSAL 1. APPROVAL OF CHANGING THE NAME OF THE FUND TO THE "TURNER TOTAL
RETURN FIXED INCOME FUND."
____FOR ____AGAINST ____ABSTAIN
PROPOSAL 2. APPROVAL OF AMENDING THE FUND'S PRINCIPAL INVESTMENT STRATEGY.
____FOR ____AGAINST ____ABSTAIN
PROPOSAL 3. APPROVAL OF ELIMINATING THE FUND'S NON-FUNDAMENTAL INVESTMENT
RESTRICTION ON THE AVERAGE WEIGHTED MATURITY OF FUND
INVESTMENTS.
____FOR ____AGAINST ____ABSTAIN
PROPOSAL 4. APPROVAL OF AMENDING THE FUND'S NON-FUNDAMENTAL INVESTMENT
POLICY ON INVESTMENTS IN BELOW INVESTMENT GRADE SECURITIES.
____FOR ____AGAINST ____ABSTAIN
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THIS PROXY WILL, WHEN PROPERLY EXECUTED, BE VOTED AS DIRECTED HEREIN BY THE
SIGNING SHAREHOLDER. IF NO DIRECTION IS GIVEN WHEN THE DULY EXECUTED PROXY IS
RETURNED, THIS PROXY WILL BE VOTED FOR THE FOREGOING PROPOSALS AND WILL BE VOTED
IN THE APPOINTED PROXIES' DISCRETION UPON SUCH OTHER BUSINESS AS MAY PROPERLY
COME BEFORE THE MEETING.
The undersigned acknowledges receipt with this proxy of a copy of the Notice of
Special Meeting and the proxy statement. Your signature(s) on this proxy should
be exactly as your name(s) appear on this proxy. If the shares are held jointly,
each holder should sign this proxy. Attorneys-in-fact, executors,
administrators, trustees or guardians should indicate the full title and
capacity in which they are signing.
Dated: _________, 2002
_____________________________________
Signature of Shareholder
_____________________________________
Signature (Joint owners)
PLEASE DATE, SIGN AND RETURN PROMPTLY USING THE ENCLOSED, POSTAGE-PAID ENVELOPE
WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING. YOU MAY VOTE IN PERSON IF YOU
ATTEND THE MEETING.
TELEPHONE AND INTERNET VOTING INSTRUCTIONS:
TO VOTE BY TELEPHONE:
1) READ THE PROXY STATEMENT AND HAVE THIS PROXY CARD AT HAND.
2) CALL 1-800-690-6903
3) ENTER THE 12-DIGIT CONTROL NUMBER SET FORTH BELOW AND FOLLOW THE SIMPLE
INSTRUCTIONS.
TO VOTE BY INTERNET:
1) READ THE PROXY STATEMENT AND HAVE THIS PROXY CARD AT HAND.
2) GO TO WEBSITE WWW.PROXYVOTE.COM
3) ENTER THE 12-DIGIT CONTROL NUMBER SET FORTH BELOW AND FOLLOW THE SIMPLE
INSTRUCTIONS.
CONTROL NUMBER: XXXXXXXXXXXX
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