SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN A PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[X] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Under Rule 14a-12
Turner Funds
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
1) Title of each class of securities to which transaction
applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (set forth the
amount on which the filing fee is calculated and state how it
was determined):
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting
fee was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
<page>
TURNER FUNDS
Dear Shareholder:
A Special Meeting (the "Meeting") of the Turner Financial Services Fund, Turner
Healthcare & Biotechnology Fund, Turner Tax Managed U.S. Equity Fund, Turner
Small Cap Value Opportunities Fund, Turner Strategic Value and High Income Fund,
Turner Large Cap Value Fund, Turner Core Value Fund, Turner Small Cap Value
Fund, Turner Core Fixed Income Fund, Turner Ultra Short Duration Fixed Income
Fund, Turner Short Duration Fixed Income Fund, and Turner High Yield Fund (each
a "Turner Fund" and collectively the "Funds" or the "Turner Funds") of Turner
Funds (the "Turner Trust") will be held at the offices of Turner Investments
Partners, Inc. ("Turner") at 1205 Westlakes Drive, Suite 100, Berwyn,
Pennsylvania 19312 on [DATE], 2004, at [TIME] Eastern Time.
At the Meeting, you will be asked to approve the reorganization of the Funds
with and into virtually identical series (each a "Constellation Fund" and
collectively the "Constellation Funds") of Constellation Funds (the
"Constellation Trust"). Assuming approval by shareholders of the Turner Funds,
you will receive a number of shares of a Constellation Fund equal in dollar
value and in the number of shares of each Turner Fund that you own at the time
of the reorganization. As further explained in the accompanying proxy statement,
the Board of Trustees of the Turner Trust has recommended that shareholders
approve the reorganization. We encourage you to support the Trustees'
recommendation.
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.
Shareholders of record at the close of business on [RECORD DATE], 2004 are
entitled to notice of and to vote at the Meeting or any adjournments of the
Meeting.
By Order of the Board of Trustees
[SIGNATURE]
Thomas R. Trala
President
Turner Funds
February __, 2004
2
<page>
PROXY INFORMATION
THE TURNER FUNDS WILL HOLD A SPECIAL MEETING OF SHAREHOLDERS ON [DATE],
2004, AT THE OFFICES OF TURNER INVESTMENT PARTNERS, INC. ("TURNER" OR "TIP"),
CURRENT INVESTMENT ADVISER TO THE FUNDS, 1205 WESTLAKES DRIVE, SUITE 100,
BERWYN, PENNSYLVANIA 19312. THE PURPOSE OF THIS MEETING IS TO VOTE ON A PROPOSAL
TO REORGANIZE THE TURNER FUNDS INTO SUBSTANTIALLY SIMILAR CONSTELLATION FUNDS,
WHICH ARE MUTUAL FUNDS THAT ARE BEING CREATED BY THE CONSTELLATION TRUST.
THE FIRST TWO PAGES OF THIS BOOKLET HIGHLIGHT KEY POINTS ABOUT THE
PROPOSED REORGANIZATION AND EXPLAIN THE PROXY PROCESS - INCLUDING HOW TO CAST
YOUR VOTES. BEFORE YOU VOTE, PLEASE READ THE FULL TEXT OF THE PROXY STATEMENT
FOR A COMPLETE UNDERSTANDING OF THE PROPOSAL.
KEY POINTS ABOUT THE PROPOSED REORGANIZATION
Under the proposed reorganization, each Turner Fund's assets and
liabilities would be transferred to a new Constellation Fund that is being
created just for this purpose. Constellation Investment Management Company, LP
("CIMCO") would serve as each new fund's investment adviser, subject to the
direction of the Constellation Trust's Board of Trustees. CIMCO, in turn, would
hire Turner, Clover Capital Management, Inc. ("Clover") and Chartwell Investment
Partners ("Chartwell") as sub-advisers to manage the newly organized
Constellation Funds on a day-to-day basis, as described in more detail below.
UNDER THE PROPOSED ARRANGEMENT, THE INDIVIDUALS THAT CURRENTLY PERFORM
DAY-TO-DAY PORTFOLIO MANAGEMENT SERVICES FOR EACH TURNER FUND WILL NOT CHANGE.
o TURNER SUB-ADVISED FUNDS: Turner currently serves as the investment
adviser to the Turner Financial Services Fund, Turner Healthcare &
Biotechnology Fund, Turner Tax Managed U.S. Equity Fund, and Turner
Strategic Value and High Income Fund. Turner Investment Management, LLC
("TIM"), a majority-owned subsidiary of Turner, currently serves as the
investment adviser to the Turner Small Cap Value Opportunities Fund. As
proposed, Turner will serve as the sub-adviser to the newly-formed
Constellation TIP Financial Services Fund, Constellation TIP Healthcare
& Biotechnology Fund, Constellation TIP Tax Managed Fund, and
Constellation TIP Small Cap Value Opportunities Fund.
o CLOVER SUB-ADVISED FUNDS: Clover currently serves as the investment
sub-adviser to the Turner Large Cap Value Fund, Turner Core Value Fund,
Turner Small Cap Value Fund, and Turner Core Fixed Income Fund. As
proposed, Clover will continue to serve as the sub-adviser to the
newly-formed Constellation Clover Large Cap Value Fund, Constellation
Clover Core Value Fund, Constellation Clover Small Cap Value Fund, and
Constellation Clover Core Fixed Income Fund.
o CHARTWELL SUB-ADVISED FUNDS: Turner currently serves as the investment
adviser to the Turner Ultra Short Duration Fixed Income Fund, Turner
Short Duration Fixed Income Fund, and Turner High Yield Fund. Mr. Roger
Early and Mr. Paul Matlack form the team that manages the Turner Ultra
Short Duration Fund and the Turner Short Duration Fund, while Mr.
Early, Mr. Matlack and Mr. John McCarthy form the committee that
manages the Turner Total Return Fixed Income Fund and the Turner High
Yield Fund. Messrs. Early, Matlack and McCarthy recently became
employees of Chartwell, while remaining "dual" employees of Turner for
the sole purpose of providing day-to-day management services to the
above-referenced Funds. Under the proposed arrangement, Messrs. Early,
Matlack and McCarthy would terminate their respective employment with
Turner, and Chartwell will serve as the sub-adviser to the newly-formed
Constellation Chartwell Ultra Short Duration Fixed Income Fund,
Constellation Chartwell Short Duration Fixed Income Fund, and
Constellation Chartwell High Yield Fund.
3
<page>
IMPLEMENTATION OF PERFORMANCE FEE ADJUSTMENTS. One of the hallmarks of
the Constellation Funds will be the universal employment of "performance fees"
for CIMCO AND each sub-adviser. Performance fees are fees that start at a base
or "fulcrum" point, and adjust upward or downward proportionately depending on
the fund's performance in relation to a specified index of securities. The
Turner Financial Services Fund currently has such fees (as do other series of
the Turner Trust that are not a part of the proposed reorganization), and CIMCO
believes that such fees are an important means of aligning its interests and the
interests of each sub-adviser with those of shareholders. Importantly, the base
fee component of each Constellation Fund's advisory fee is being proposed at the
same level as the current investment advisory fee for its corresponding Turner
Fund. In addition, with the exception of the Constellation TIP Financial
Services Fund, which currently pays a performance fee as a series of the Turner
Trust and would continue to do so upon reorganization into the Constellation
Trust, no Constellation Fund's advisory (or sub-advisory) fee will reflect a
performance adjustment for at least one year from the date the reorganization is
effective.
SAME OR SIMILAR FUND OPERATING EXPENSES. Each Constellation Fund is
expected to have the same or similar fund operating expenses, for at least the
initial two years following the reorganization, as its corresponding Turner
Fund. All of the Turner Funds that are proposed to become Constellation Funds
presently have some form of expense limitation or cap, with many of these
limitations or caps scheduled to terminate on January 31, 2005. CIMCO will
implement similar expense limitations or caps that will remain in place through
January 31, 2006, and may be extended or modified beyond that date.
SAME SHAREHOLDER SERVICES. As a shareholder of the Constellation Funds,
you will have the same access to a wide range of shareholder services, including
exchange privileges (by mail or phone), telephone redemption services, automatic
investment programs, systematic withdrawal programs, tax qualified retirement
plans and toll-free shareholder service support as you had as a shareholder of
the Turner Funds.
TAX-FREE NATURE OF THE REORGANIZATION. The reorganization is
anticipated to be accomplished on a tax-free basis, meaning that you should not
realize any capital gains when your Turner Fund shares are exchanged for shares
of the corresponding Constellation Fund.
HOW THE REORGANIZATION WILL AFFECT YOUR ACCOUNT
If shareholders approve the reorganization, your existing Turner Fund
shares will be exchanged, on a tax-free basis, for an equivalent dollar amount
of the corresponding Constellation Fund's shares. Your account registration and
account options will remain the same unless you change them. In addition, your
aggregate cost basis in each Constellation Fund will remain the same as it was
in the corresponding Turner Fund.
4
<page>
QUESTIONS & ANSWERS
Q. WHY IS TURNER PROPOSING TO REORGANIZE THE TURNER FUNDS INTO THE CONSTELLATION
FUNDS?
A. Turner recently made a strategic investment decision to focus its investment
advisory and administrative services on a core group of "growth" mutual funds.
Turner is proposing that, subject to the approval of the shareholders of the
Turner Funds, the assets and liabilities of the Turner Funds be transferred with
and into new Constellation Funds that will be created just for this purpose.
Turner believes that the proposed reorganization is an efficient process whereby
fixed income, value and certain "non-core" U.S. growth funds are split off from
the Turner Trust and brought into a new trust for their ongoing operation,
management and sales. As proposed, CIMCO would serve as each new Constellation
Fund's investment adviser, subject to the direction of the Constellation Trust's
Trustees. CIMCO, in turn, would hire Turner, Clover and Chartwell as
sub-advisers to manage the newly organized Constellation Funds on a day-to-day
basis. UNDER THE PROPOSED ARRANGEMENT, THE INDIVIDUALS THAT CURRENTLY PERFORM
DAY-TO-DAY PORTFOLIO MANAGEMENT SERVICES FOR EACH TURNER FUND WILL CONTINUE TO
PERFORM DAY-TO-DAY PORTFOLIO MANAGEMENT SERVICES FOR EACH CONSTELLATION FUND.
Q. WILL MY VOTE MAKE A DIFFERENCE?
A. Yes. Your vote is needed to ensure that the proposal can be acted upon. We
encourage all shareholders to participate in the governance of their Fund.
Additionally, your immediate response on the enclosed proxy card will help save
the costs of any further solicitations.
Q. HOW DO THE TRUSTEES SUGGEST THAT I VOTE?
A. After careful consideration, the Trustees of your Turner Fund, including the
"Independent Trustees" who comprise a majority of the Turner Trust's Board of
Trustees, unanimously recommend that you vote "FOR" the proposal.
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 utilize these methods of voting.
5
<page>
TURNER FUNDS
TURNER FINANCIAL SERVICES FUND
TURNER HEALTHCARE & BIOTECHNOLOGY FUND
TURNER TAX MANAGED U.S. EQUITY FUND
TURNER SMALL CAP VALUE OPPORTUNITIES FUND
TURNER LARGE CAP VALUE FUND
TURNER CORE VALUE FUND
TURNER SMALL CAP VALUE FUND
TURNER CORE FIXED INCOME FUND
TURNER ULTRA SHORT DURATION FIXED INCOME FUND
TURNER SHORT DURATION FIXED INCOME FUND
TURNER HIGH YIELD FUND
TURNER STRATEGIC VALUE AND HIGH INCOME FUND
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
[DATE OF MEETING]
Notice is hereby given that a Special Meeting of Shareholders (the
"Meeting") of the Turner Financial Services Fund, Turner Healthcare &
Biotechnology Fund, Turner Tax Managed U.S. Equity Fund, Turner Small Cap Value
Opportunities Fund, Turner Large Cap Value Fund, Turner Core Value Fund, Turner
Small Cap Value Fund, Turner Core Fixed Income Fund, Turner Ultra Short Duration
Fixed Income Fund, Turner Short Duration Fixed Income Fund, Turner High Yield
Fund, and Turner Strategic Value and High Income Fund (each a "Turner Fund" and
collectively the "Turner Funds") of Turner Funds (the "Turner Trust") will be
held at the offices of Turner Investments Partners, Inc. ("Turner" or "TIP") at
1205 Westlakes Drive, Suite 100, Berwyn, Pennsylvania 19312 on [DATE], at [TIME]
Eastern Time.
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.
Shareholders of record at the close of business on [RECORD DATE], 2004 are
entitled to notice of and to vote at the Meeting or any adjournments of the
Meeting.
By Order of the Board of Trustees
[SIGNATURE]
Thomas R. Trala
President
Turner Funds
February __, 2004
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 (THE "BOARD") OF TURNER FUNDS (THE "TURNER
TRUST") FOR USE AT THE SPECIAL MEETING OF SHAREHOLDERS TO BE HELD [DATE], 2004
AT [TIME] EASTERN TIME AT THE OFFICES OF TURNER INVESTMENTS PARTNERS, INC.
("TURNER" OR "TIP"), 1205 WESTLAKES DRIVE, SUITE 100, BERWYN, PENNSYLVANIA
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 Financial Services Fund, Turner Healthcare &
Biotechnology Fund, Turner Tax Managed U.S. Equity Fund, Turner Small Cap Value
Opportunities Fund, Turner Large Cap Value Fund, Turner Core Value Fund, Turner
Small Cap Value Fund, Turner Core Fixed Income Fund, Turner Ultra Short Duration
Fixed Income Fund, Turner Short Duration Fixed Income Fund, Turner High Yield
Fund, and Turner Strategic Value and High Income Fund (each a "Turner Fund" and
collectively the "Turner Funds") of record at the close of business on [DATE]
("Shareholders") are entitled to vote at the Meeting.
The Meeting is being called in order to permit the Shareholders to
consider and vote on the following proposals.
1. To approve the reorganization of the Turner Funds with and
into corresponding series (each a "Constellation Fund" and
collectively the "Constellation Funds") of the Constellation
Funds (the "Constellation Trust").
2. To act on any other business properly brought before the
meeting
THE TRUSTEES UNANIMOUSLY RECOMMEND
THAT SHAREHOLDERS VOTE "FOR" THE REORGANIZATION.
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 [RECORD DATE], 2004, and each fractional share is
entitled to a proportionate fractional vote. As of [DATE], 2004, the Turner
Funds had the following units of beneficial interest ("shares") issued and
outstanding:
Turner Financial Services Fund [ ]
Turner Healthcare & Biotechnology Fund [ ]
Turner Tax Managed U.S. Equity Fund [ ]
Turner Small Cap Value Opportunities Fund [ ]
Turner Large Cap Value Fund [ ]
Turner Core Value Fund [ ]
Turner Small Cap Value Fund [ ]
Turner Core Fixed Income Fund [ ]
Turner Ultra Short Duration Fixed Income Fund [ ]
Turner Short Duration Fixed Income Fund [ ]
Turner High Yield Fund [ ]
Turner Strategic Value and High Income Fund [ ]
In addition to the solicitation of proxies by mail, Trustees and
officers of the Turner Trust and officers and employees of Turner may solicit
proxies in person or by telephone. Persons holding shares as nominees will, upon
7
request, be reimbursed for their reasonable expenses incurred in sending
soliciting materials to their principals. Turner and CIMCO will bear the cost of
the Meeting and proxy materials. The proxy card and this proxy statement are
being mailed to Shareholders on or about [DATE], 2004.
PROPOSAL 1: APPROVAL OF THE REORGANIZATION OF THE TURNER FUNDS
WITH AND INTO CORRESPONDING SERIES OF THE CONSTELLATION FUNDS.
VOTE APPLICABLE TO SHAREHOLDERS OF: ALL TURNER FUNDS
The Turner Trust's Board has approved a plan to reorganize each Turner
Fund into a new, corresponding Constellation Fund that is being created by the
Constellation Trust specifically for the proposed reorganization. Each
Constellation Fund will have the same investment objectives, and substantially
the same risks, policies, restrictions and limitations, as an existing Turner
Fund. (A form of the agreement and plan of reorganization (the "Agreement") is
attached as Exhibit A to this proxy statement.) To proceed with the
reorganization, each Turner Fund needs Shareholder approval. The next few pages
of this proxy statement discuss important details of the reorganization.
AGREEMENT AND PLAN OF REORGANIZATION. This agreement spells out the
terms and conditions that will apply to each Turner Fund's reorganization into
the corresponding Constellation Fund (assuming that Shareholders approve the
reorganization). The reorganization is subject to a number of conditions set
forth in the reorganization agreement. Certain of these conditions may be waived
by the Board. The significant conditions which may not be waived include: (a)
the receipt by the Turner Trust and the Constellation Trust of an opinion of
counsel to the Constellation Trust, as to certain federal income tax aspects of
the reorganization; and (b) the approval of the reorganization agreement by the
Shareholders of each of the Turner Funds. The Board can terminate the
reorganization agreement and abandon the reorganization at any time, (whether
before or after Shareholders of the Funds approve it) before the closing date.
In addition, the Board may amend the reorganization agreement. For a complete
description of these terms and conditions, please see the form of the Agreement
in Exhibit A to this proxy statement. The description of the reorganization and
the reorganization agreement in this proxy statement is qualified in its
entirety by reference to the form of the Agreement in Exhibit A.
STEPS TO REORGANIZE. The reorganization would be accomplished in a
three-step process. First, your Turner Fund would transfer all of its assets to
a corresponding Constellation Fund, and the Constellation Fund would assume your
Turner Fund's liabilities. Second, and simultaneously with step one, the new
Constellation Fund would open an account for you, crediting it with
corresponding shares of the new Constellation Fund that are equivalent in value
to your investment in shares of your Turner Fund at the time of the
reorganization. Every Shareholder will receive the same number of shares of a
Constellation Fund as the number of Turner Fund shares held by the Shareholder
immediately before the reorganization. Third, the existing Turner Funds would be
terminated. If approved by Shareholders, the reorganization is expected to take
place on or about [REORGANIZATION DATE], 2004.
THE REORGANIZATION IS EXPECTED TO BE TAX-FREE AT THE FEDERAL LEVEL. The
reorganization is expected to have no federal income tax consequences for you or
your Turner Fund. Following the reorganization, from a tax standpoint, the
adjusted basis of your Turner Fund shares should be the same. Shareholders are
not expected to incur any personal state or local taxes as a result of the
reorganization, but you should consult your own tax adviser to be sure. There is
more information about the tax consequences of the reorganization in the
agreement and plan of reorganization.
8
THE CONSTELLATION FUNDS
YOUR FUND'S INVESTMENT OBJECTIVES AND POLICIES WILL STAY THE SAME. As
reorganized, your Turner Fund - which will become a new Constellation Fund -
will continue to seek the same investment objectives that it currently seeks and
will follow the same investment policies that it currently follows.
COMPARING INVESTMENT ADVISORY FEES. One of the hallmarks of the
Constellation Funds will be the universal employment of "performance fees" for
the adviser AND each sub-adviser. Performance fees are fees that start at a base
or "fulcrum" point, and adjust upward or downward on the fund's performance in
relation to a specified index of securities. The amount of each Constellation
Fund's performance adjustment, either upwards or downwards, will be capped at a
maximum (for outperformance) and minimum (for underperformance) level. The
Turner Financial Services Fund currently has such fees, and CIMCO believes that
such fees are an important means of aligning the interests of the adviser and
each sub-adviser with those of shareholders.
As proposed, the base fee component of each Constellation Fund's
advisory fee is being proposed at the same level as the current investment
advisory fee for the corresponding Turner Fund. In addition, with the exception
of the Constellation TIP Financial Services Fund (as described below), which now
pays a performance fee and will continue that arrangement from the outset as a
series of the Constellation Trust, no Constellation Fund's advisory (or
sub-advisory) fee will reflect a performance adjustment for at least one year
from the date the reorganization into the Constellation Trust is complete. A
detailed discussion of each Constellation Fund's proposed performance fee
structure is discussed below, under the heading "Overview of Each Constellation
Fund."
COMPARING FUND EXPENSES. All of the Turner Funds that are proposed to
become Constellation Funds presently have some form of expense limitation or
cap. CIMCO is committed to ensuring that shareholders of the Turner Funds not be
subjected to additional fund operating expenses as a result of the
reorganization, and accordingly has agreed to extend all existing expense
limitations or caps through January 31, 2006. This means that your Turner Fund
is expected to have approximately the same estimated fund operating expenses for
the first two full years after the reorganization occurs.
Some of the current Turner Fund expense limitations are tied to the
"Net Total Fund Operating Expenses" of the relevant Fund (e.g., the Turner Large
Cap Value, Turner Core Value and Turner Small Cap Value Funds), while others
limit just "Other Expenses" (e.g., the Turner Financial Services and Turner Tax
Managed U.S. Equity Funds). Because the proposed Advisory Fees for the
Constellation Funds are all variable beginning 12 months after the
reorganization, it is necessary to cap each Constellation Fund's "Other
Expenses," rather its "Net Total Fund Operating Expenses." Other Expenses
include administrative, custody, transfer agency, legal, accounting/auditing and
other operating expenses, but exclude investment advisory and rule 12b-1 fees.
By limiting Other Expenses in this manner, advisory fee increases and/or
reductions (if any) resulting from performance adjustments will be passed along
to shareholders while ensuring that the other expenses that affect their returns
are appropriately limited.
OVERVIEW OF EACH CONSTELLATION FUND. A detailed description of each
Constellation Fund's principal investment strategy, fees and expenses, and
proposed performance fee structure is included on the following pages.
9
1. CONSTELLATION TIP FINANCIAL SERVICES FUND (currently the Turner Financial
Services Fund)
Turner, the Turner Financial Service Fund's current investment adviser, will
continue to provide daily investment management services to the Constellation
Financial Services Fund in its capacity as the new Fund's sub-adviser.
The Constellation TIP Financial Services Fund will continue to invest primarily
(at least 80% of its net assets) in common stocks and other equity securities of
U.S. financial services companies, including banks, brokerage houses, insurance
companies and investment advisory companies, that its sub-adviser, Turner,
believes have above average growth potential. This is a non-fundamental
investment policy that can be changed by the Fund upon 60 days' prior notice to
shareholders. These securities may be traded over the counter or listed on an
exchange. Turner also will invest in financial services companies that it
believes to be potential merger or acquisition targets. It is not expected that
the Fund will own a substantial amount of securities that pay dividends.
Turner will continue to pursue a bottom-up strategy that blends quantitative and
qualitative analysis to find growth companies with superior earnings prospects,
reasonable valuations, and favorable trading-volume and price patterns. A will
become a sell candidate if Turner detects deterioration in the company's
earnings growth potential. Turner may also trim positions to adhere to
capitalization or capacity constraints.
ANNUAL FUND OPERATING EXPENSES (DEDUCTED FROM FUND ASSETS)
TURNER FINANCIAL SERVICES CONSTELLATION TIP FINANCIAL
FUND - SERVICES FUND -
CLASS I SHARES CLASS I SHARES
------------------------- ---------------------------
Redemption Fee (as a percentage of amount
redeemed, if applicable) ............................. 2.00% 1 2.00% 1
Investment Advisory Fees .................................. 1.10% 2 1.10% 2
Distribution (12b-1) Fees ................................. None None
Other Expenses ............................................ 0.72% 0.72 3
----- ----
TOTAL ANNUAL FUND OPERATING EXPENSES ...................... 1.82% 4 1.82% 4
<FN>
- -----------------------------------
1 Applies to redemptions within 90 days of purchase. At this time, purchases of Class I Shares of the Fund
will not be subject to the redemption fee described above. The Fund will notify all existing
shareholders if and when it decides to implement the fee.
2 The advisory fee is currently subject to a performance adjustment based on the Fund's performance relative
to the performance of the S&P 500 Financials Index, and may range from 0.75% to 1.25%, depending upon the
Fund's performance. The reorganized Fund's advisory fee will be subject to the same performance adjustment.
3 For the purposes of this comparison, Other Expenses are assumed to stay the same. Actual expenses of the
reorganized Fund may vary.
4 Turner has voluntarily committed to waive fees and reimburse expenses to keep the Turner Financial
Services Fund's "Other Expenses" from exceeding 0.40%. Turner may discontinue this arrangement at any time
but has no present intent to do so. CIMCO will continue this voluntary waiver for through at least
January 31, 2006.
</FN>
10
EXAMPLE
This example is intended to help you compare the cost of investing in
the Turner Financial Services Fund with the cost of investing in the
Constellation TIP Financial Services Fund. The Example assumes that you invest
$10,000 in the Fund for the time periods indicated and that you sell your shares
at the end of each period. The Example also assumes that each year your
investment has a 5% return and Fund expenses remain the same. Although your
actual costs and returns might be different, based on these assumptions, your
costs would be:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
Turner Financial Services Fund - Class I Shares............ $185 $573 $985 $2,137
Constellation TIP Financial Services Fund - Class I Shares.... $185 $573 $985 $2,137
PERFORMANCE FEE ADJUSTMENT. The Turner Financial Services Fund's advisory fee is
currently subject to a performance adjustment based on the Fund's performance
relative to the performance of the S&P 500 Financials Index. Currently, the
Turner Financial Services Fund's advisory fee can range from 0.75% to 1.25%,
depending upon the Fund's performance relative to the S&P 500 Financials Index.
The Constellation TIP Financial Services Fund will use the same performance fee
structure.
THE BASE FEE THE BASE FEE
IF THE FUND: INCREASES BY: IF THE FUND: DECREASES BY:
- ------------ ------------- ------------ -------------
Outperforms the Index by 3.01% or more + 0.25% Underperforms the Index by 3.01% or more - 0.25%
Outperforms the Index by 3.00% or less 0.00% Underperforms the Index by 3.00% or less 0.00%
11
2. CONSTELLATION TIP HEALTHCARE & BIOTECHNOLOGY FUND (currently the Turner
Healthcare & Biotechnology Fund)
Turner, the Turner Healthcare & Biotechnology Fund's current investment adviser,
will continue to provide daily investment management services to the
Constellation TIP Healthcare & Biotechnology Fund in its capacity as the new
Fund's sub-adviser.
The Constellation TIP Healthcare & Biotechnology Fund will continue to invest
primarily (at least 80% of its net assets) in equity securities of healthcare
and biotechnology companies that are traded in the U.S. This is a
non-fundamental investment policy that can be changed by the Fund upon 60 days'
prior notice to shareholders. These securities may be traded over the counter or
listed on an exchange.
Healthcare companies include pharmaceutical companies, companies involved in
research and development of pharmaceutical products and services, companies
involved in the operation of health care facilities, and other companies
involved in the design, manufacture, or sale of health care-related products or
services. Biotechnology companies are those that engage in the research,
development, and manufacture of various biotechnological products, services, and
processes; manufacture and/or distribute biotechnological and biomedical
products, including devices and instruments; provide or benefit significantly
from scientific and technological advances in biotechnology; or provide
processes or services instead of, or in addition to, products. It is not
expected that the Fund will own a substantial amount of securities that pay
dividends.
While the Fund typically invests in the common stocks of medium to large
capitalization companies, it may invest in companies of any size or any industry
in order to achieve its goal. The Fund may also engage in futures and options
transactions, purchase ADRs and U.S. government securities, and enter into
repurchase agreements.
Turner will continue to pursue a bottom-up strategy that blends quantitative and
qualitative analysis to find growth companies with superior earnings prospects,
reasonable valuations, and favorable trading-volume and price patterns. A stock
will become a sell candidate if Turner detects deterioration in the company's
earnings growth potential. Turner may also trim positions to adhere to
capitalization or capacity constraints, to maintain sector neutrality or to
adjust stock position size relative to the S&P 500 Healthcare Index.
ANNUAL FUND OPERATING EXPENSES (DEDUCTED FROM FUND ASSETS)
TURNER HEALTHCARE & CONSTELLATION TIP HEALTHCARE
BIOTECHNOLOGY FUND - & BIOTECHNOLOGY FUND -
CLASS II SHARES CLASS II SHARES
-------------------- ----------------------------
Redemption Fee (as a percentage of amount
redeemed, if applicable) ............................ 2.00% 1 2.00% 1
Investment Advisory Fees ................................. 0.91% 2 0.91% 2
Distribution (12b-1) Fees ................................ None None
Other Expenses ........................................... 0.72% 0.72% 3
----- -----
Shareholder Servicing Fee ........................... 0.25% 4 0.25% 4
TOTAL ANNUAL FUND OPERATING EXPENSES ..................... 1.63% 5 1.63% 5
<FN>
- -----------------------------------
1 Applies to redemptions within 90 days of purchase. At this time, purchases of Class I
Shares of the Fund will not be subject to the redemption fee described above.
The Fund will notify all existing shareholders if and when it decides to implement the fee.
2 The advisory fee is currently subject to a performance adjustment based on the Fund's
performance relative to the performance of the S&P 500 Healthcare Index, and may range from
0.75% to 1.25%, depending upon the Fund's performance. The reorganized Fund's advisory
fee will be subject to the same performance adjustment.
3 For the purposes of this comparison, Other Expenses are assumed to stay the same. Actual
expenses of the reorganized Fund may vary.
4 The Shareholder Servicing Fee is included as part of the Fund's "Total Other Expenses" and
is presented here for information purposes only.
5 Turner has voluntarily committed to waive fees and reimburse expenses to keep the
Turner Healthcare & Biotechnology Fund's "Total Other Expenses" from exceeding 0.75%.
Turner may discontinue this arrangement at any time but has no present intent to do so.
CIMCO will continue this voluntary waiver for through at least January 31, 2006.
</FN>
12
EXAMPLE
This example is intended to help you compare the cost of investing in
the Turner Healthcare & Biotechnology Fund with the cost of investing in the
Constellation TIP Healthcare & Biotechnology Fund. The Example assumes that you
invest $10,000 in the Fund for the time periods indicated and that you sell your
shares at the end of each period. The Example also assumes that each year your
investment has a 5% return and Fund expenses remain the same. Although your
actual costs and returns might be different, based on these assumptions, your
costs would be:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
Turner Healthcare & Biotechnology Fund - Class II Shares ...... $166 $514 $887 $1,933
Constellation TIP Healthcare & Biotechnology Fund - Class II
Shares ........................................................ $166 $514 $887 $1,933
PERFORMANCE FEE ADJUSTMENT. The Turner Healthcare & Biotechnology Fund's
advisory fee is currently subject to a performance adjustment based on the
Fund's performance relative to the performance of the S&P 500 Healthcare Index.
Currently, the Turner Healthcare & Biotechnology Fund's advisory fee can range
from 0.75% to 1.25%, depending upon the Fund's performance relative to the S&P
500 Healthcare Index. The Constellation TIP Healthcare & Biotechnology Fund will
use the same performance fee structure.
THE BASE FEE THE BASE FEE
IF THE FUND: INCREASES BY: IF THE FUND: DECREASES BY:
- ------------ ------------- ------------ -------------
Outperforms the Index by 3.01% or more + 0.25% Underperforms the Index by 3.01% or more - 0.25%
Outperforms the Index by 3.00% or less 0.00% Underperforms the Index by 3.00% or less 0.00%
13
3. CONSTELLATION TIP TAX MANAGED U.S. EQUITY FUND (currently the Turner Tax
Managed U.S. Equity Fund)
Turner, the Turner Tax Managed U.S. Equity Fund's current investment adviser,
will continue to provide daily investment management services to the
Constellation TIP Tax Managed U.S. Equity Fund in its capacity as the new Fund's
sub-adviser.
The Constellation TIP Tax Managed U.S. Equity Fund will continue to invest
primarily (at least 80% of its net assets) in common stocks of U.S. companies
that its sub-adviser, Turner, considers to have strong growth potential. This is
a non-fundamental investment policy that can be changed by the Fund upon 60
days' prior notice to shareholders. Turner will seek stocks that are favorably
priced in relation to their fundamental value and will likely grow over time.
These securities may be traded over the counter or listed on an exchange. While
the Fund will typically invest in the common stocks of large to medium sized
companies, it may invest in companies of any size or any industry in order to
achieve its goal.
Turner will continue to manage the Fund using an investment strategy that is
sensitive to the potential impact of personal income tax on shareholders'
investment returns. The Fund's tax-sensitive investment strategy is intended to
lead to lower distributions of income and realized capital gains than funds
managed without regard to federal income tax consequences. Turner expects to
employ a number of strategies to minimize taxable distributions to shareholders.
In selecting companies, Turner typically will invest for the long term and
choose securities that it believes offer strong opportunities for long-term
growth of capital. When deciding to sell a security, Turner will consider the
negative tax impact of realized capital gains and, if applicable, the positive
tax impact of realized capital losses. However, Turner may sell a security at a
realized gain if it determines that the potential tax cost is outweighed by the
risk of owning the security, or if more attractive investment opportunities are
available.
ANNUAL FUND OPERATING EXPENSES (DEDUCTED FROM FUND ASSETS)
TURNER TAX MANAGED U.S. EQUITY CONSTELLATION TIP TAX MANAGED
FUND - U.S. EQUITY FUND -
CLASS II SHARES CLASS II SHARES
------------------------------ -----------------------------
Redemption Fee (as a percentage of amount
redeemed, if applicable) ............................ 2.00% 1 2.00% 1
Investment Advisory Fees ................................. 0.75% 0.75% 2
Distribution (12b-1) Fees ................................ None None
Total Other Expenses ..................................... 1.39% 1.39% 3
---- ----
Shareholder Servicing Fee ........................... 0.25% 4 0.25% 4
TOTAL ANNUAL FUND OPERATING EXPENSES ..................... 2.14% 5 2.14% 5
<FN>
- -----------------------------------
1 Applies to redemptions within 90 days of purchase. At this time, purchases of Class II Shares
of the Fund will not be subject to the redemption fee described above. The Fund will notify all
existing shareholders if and when it decides to implement the fee.
2 The reorganized Fund's advisory fee will be subject to a performance adjustment based on the
Fund's performance relative to the performance of the S&P 500 Index, and may range from 0.60%
to 0.90% depending on the Fund's performance.
3 For the purposes of this comparison, Other Expenses are assumed to stay the same. Actual
expenses of the reorganized Fund may vary.
4 The Shareholder Servicing Fee is included as part of the Fund's "Total Other Expenses"
and is presented here for information purposes only.
5 Turner has voluntarily committed to waive fees and reimburse expenses to keep the Turner Tax
Managed U.S. Equity Fund's "Other Expenses" from exceeding 0.50%. Turner may discontinue
this arrangement at any time but has no present intent to do so. CIMCO will contractually agree
to waive fees and reimburse expenses to keep the Constellation TIP Tax Managed U.S. Equity Fund's
"Other Expenses" from exceeding 0.50% through at least January 31, 2006.
</FN>
14
EXAMPLE
This example is intended to help you compare the cost of investing in
the Turner Tax Managed U.S. Equity Fund with the cost of investing in the
Constellation TIP Tax Managed U.S. Equity Fund. The Example assumes that you
invest $10,000 in the Fund for the time periods indicated and that you sell your
shares at the end of each period. The Example also assumes that each year your
investment has a 5% return and Fund expenses remain the same. Although your
actual costs and returns might be different, based on these assumptions, your
costs would be:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
Turner Tax Managed U.S. Equity Fund - Class II Shares ........ $217 $670 $1,149 $2,472
Constellation TIP Tax Managed U.S. Equity Fund -- Class II
Shares ....................................................... $217 $670 $1,149 $2,472
PERFORMANCE FEE ADJUSTMENT. The Constellation TIP Tax Managed U.S. Equity Fund's
base advisory fee is 0.75%, and this fee subject to a performance adjustment
based on the Fund's performance relative to the performance of the S&P 500
Index. The advisory fee may range from 0.60% to 0.90%, depending on the Fund's
performance over a rolling 12-month period beginning in the twelfth month
following the effective date of the reorganization. The table below describes
the advisory fee, with the applicable performance adjustment that CIMCO would
receive based on the Fund's performance as compared to its benchmark index over
a given performance period:
THE BASE FEE THE BASE FEE
IF THE FUND: INCREASES BY: IF THE FUND: DECREASES BY:
- ------------ ------------- ------------ -------------
Outperforms the Index by 3.01% or more + 0.15% Underperforms the Index by 3.01% or more - 0.15%
Outperforms the Index by 3.00% or less 0.00% Underperforms the Index by 3.00% or less 0.00%
15
4. CONSTELLATION TIP SMALL CAP VALUE OPPORTUNITIES FUND (currently the Turner
Small Cap Value Opportunities Fund)
Turner Investment Management, LLC ("TIM"), an affiliate of Turner, currently
serves as the investment adviser to the Turner Small Cap Value Opportunities
Fund. As proposed, Turner would serve as the sub-adviser to the Constellation
TIP Small Cap Value Opportunities Fund. The individuals who currently provide
the daily investment management services to the Turner Fund (Messrs. Thomas
DiBella and Kenneth Gainey) are dual employees of TIM and Turner, and these
individuals will continue to provide daily investment management services to the
Constellation Fund.
The Constellation TIP Small Cap Value Opportunities Fund will continue to invest
primarily (at least 80% of its net assets) in equity securities of small
capitalization companies that its sub-adviser, Turner, believes have the
potential for growth and that appear to be trading below their perceived value.
This is a non-fundamental investment policy that can be changed by the Fund upon
60 days' prior notice to shareholders. Most of these companies are based in the
U.S., but some may be headquartered in or doing a substantial portion of their
business overseas. In pursuing its objective, the Fund may invest in securities
convertible into small cap equity securities and securities issued by non-U.S.
small cap companies. A small capitalization company is one that has a market
capitalization at the time of purchase that is within the range of market
capitalizations represented in the Russell 2000 Value Index.
The Fund will continue to invest in securities of companies operating in a broad
range of industries based primarily on a fundamental analysis of each company
and due consideration of such characteristics as price-cash flow, price-earnings
and price-book value ratios. Turner will continue to look for companies with
quality management teams that can take advantage of unique product
opportunities, with an emphasis on companies that Turner believes are
undervalued by the market. Turner will employ a quantitative approach to
determine whether a company's share price reflects its perceived value.
ANNUAL FUND OPERATING EXPENSES (DEDUCTED FROM FUND ASSETS)
TURNER SMALL CAP VALUE CONSTELLATION TIP SMALL CAP
OPPORTUNITIES FUND - VALUE OPPORTUNITIES FUND -
CLASS II SHARES CLASS II SHARES
---------------------- ---------------------------
Redemption Fee (as a percentage of amount
redeemed, if applicable) ................................. 2.00% 1 2.00% 1
Investment Advisory Fees ...................................... 0.95% 0.95% 2
Distribution (12b-1) Fees ..................................... 0.25% 0.25%
Other Expenses ................................................ 2.44% 2.44% 3
----- -----
TOTAL ANNUAL FUND OPERATING EXPENSES .......................... 3.64% 3.64%
Fee Waivers and Expense Reimbursements ........................ (2.19)% 4 (2.19)% 4
------- -------
NET TOTAL OPERATING EXPENSES ................................. 1.45% 1.45%
<FN>
- -----------------------------------
1 Applies to redemptions within 90 days of purchase. At this time, purchases of Class II Shares of the
Fund will not be subject to the redemption fee described above. The Fund will notify all existing
shareholders if and when it decides to implement the fee.
2 The reorganized Fund's advisory fee will be subject to a performance adjustment based on the Fund's
performance relative to the performance of the Russell 2000 Value Index, and may range from 0.80%
to 1.10% depending on the Fund's performance.
3 For the purposes of this comparison, Other Expenses are assumed to stay the same. Actual expenses
of the reorganized Fund may vary.
4 TIM has contractually agreed to waive fees and reimburse expenses in order to keep the Turner Small
Cap Value Opportunities Fund's "Other Expenses" from exceeding 0.25% through January 31, 2005.
CIMCO will contractually agree to waive fees and reimburse expenses in order to keep the
Constellation TIP Small Cap Value Opportunities Fund's "Other Expenses" from exceeding 0.25%
through January 31, 2006.
</FN>
16
EXAMPLE. This example is intended to help you compare the cost of investing in
the Turner Small Cap Value Opportunities Fund with the cost of investing in the
Constellation TIP Small Cap Value Opportunities Fund. The Example assumes that
you invest $10,000 in the Fund for the time periods indicated and that you sell
your shares at the end of each period. The Example also assumes that each year
your investment has a 5% return and Fund expenses remain the same. One year
figures are based on Net Total Operating Expenses from above. Although your
actual costs and returns might be different, based on these assumptions, your
costs would be:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
Turner Small Cap Value Opportunities Fund - Class II Shares ..... $148 $912 $1,697 $3,755
Constellation TIP Small Cap Value Opportunities Fund - Class
II Shares ....................................................... $148 $912 $1,697 $3,755
PERFORMANCE FEE ADJUSTMENT. The Constellation TIP Small Cap Value Opportunities
Fund's base advisory fee is 0.95%, and this fee subject to a performance
adjustment based on the Fund's performance relative to the performance of the
Russell 2000 Value Index. The advisory fee may range from 0.80% to 1.10%,
depending on the Fund's performance over a rolling 12-month period beginning in
the twelfth month following the effective date of the reorganization. The table
below describes the advisory fee, with the applicable performance adjustment
that CIMCO would receive based on the Fund's performance as compared to its
benchmark index over a given performance period:
THE BASE FEE THE BASE FEE
IF THE FUND: INCREASES BY: IF THE FUND: DECREASES BY:
- ------------ ------------- ------------ -------------
Outperforms the Index by 3.01% or more + 0.15% Underperforms the Index by 3.01% or more - 0.15%
Outperforms the Index by 3.00% or less 0.00% Underperforms the Index by 3.00% or less 0.00%
17
5. CONSTELLATION CLOVER LARGE CAP VALUE FUND (currently the Turner Large Cap
Value Fund)
Clover, the Turner Large Cap Value Fund's current investment sub-adviser, will
continue to provide daily investment management services to the Constellation
Clover Large Cap Value Fund in its capacity as the new Fund's sub-adviser.
The Constellation Clover Large Cap Value Fund will continue to invest primarily
(at least 80% of its net assets) in common stocks and other equity securities of
U.S. companies with large market capitalizations that its sub-adviser, Clover,
believes have low valuations and attractive dividend yields relative to the
market or to their own trading history. This is a non-fundamental investment
policy that can be changed by the Fund upon 60 days' prior notice to
shareholders. Large cap companies are defined for this purpose as companies with
market capitalizations at the time of purchase in the range of those market
capitalizations of companies included in the S&P 500 Index.
The Fund will continue to invest in securities of companies operating in a broad
range of industries based primarily on characteristics such as price-cash flow,
dividend yield, price-earnings and price-book value ratios. Clover will
typically screen the stocks of the 500 largest U.S. companies (based on market
capitalization) for those with the highest dividend yields. In selecting
specific securities for the Fund, Clover will seek to identify companies whose
stock is out-of-favor with investors.
ANNUAL FUND OPERATING EXPENSES (DEDUCTED FROM FUND ASSETS)
TURNER LARGE CAP VALUE CONSTELLATION CLOVER LARGE
FUND - CLASS I SHARES CAP VALUE FUND - CLASS I SHARES
---------------------- -------------------------------
Investment Advisory Fees ............................... 0.74% 0.74% 1
Distribution (12b-1) Fees .............................. None None
Other Expenses ......................................... 0.96% 0.96% 2
----- -----
TOTAL ANNUAL FUND OPERATING EXPENSES ................... 1.70% 1.70%
Fee Waivers and Expense Reimbursements ................. (0.45)% (0.45)%
NET TOTAL OPERATING EXPENSES .......................... 1.25% 3 1.25% 3
<FN>
- -----------------------------------
1 The reorganized Fund's advisory fee will be subject to a performance adjustment based on the
Fund's performance relative to the performance of the Russell 1000 Value Index, and may range
from 0.64% to 0.84%, depending upon the Fund's performance.
2 For the purposes of this comparison, Other Expenses are assumed to stay the same. Actual
expenses of the reorganized Fund may vary.
3 Turner has contractually agreed to waive fees and reimburse expenses in order to keep the Turner
Large Cap Value Fund's "Net Total Operating Expenses" of the Class I Shares from exceeding
1.25% through January 31, 2005. CIMCO has voluntarily agreed to waive fees and reimburse
expenses in order to keep the Constellation Clover Large Cap Value Fund's "Other Expenses" of
the Class I Shares from exceeding 0.51% through at least January 31, 2006.
</FN>
EXAMPLE
This example is intended to help you compare the cost of investing in
the Turner Large Cap Value Fund with the cost of investing in the Constellation
Clover Large Cap Value Fund. The Example assumes that you invest $10,000 in the
Fund for the time periods indicated and that you sell your shares at the end of
each period. The Example also assumes that each year your investment has a 5%
18
return and Fund expenses remain the same. One year figures are based on Net
Total Operating Expenses from above. Although your actual costs and returns
might be different, based on these assumptions, your costs would be:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
Turner Large Cap Value Fund - Class I Shares $127 $492 $881 $1,971
Constellation Clover Large Cap Value Fund - Class I Shares $127 $492 $881 $1,971
PERFORMANCE FEE ADJUSTMENT. The Constellation Clover Large Cap Value Fund's base
advisory fee is 0.74%, and this fee subject to a performance adjustment based on
the Fund's performance relative to the performance of the Russell 1000 Value
Index. The advisory fee may range from 0.64% to 0.84%, depending on the Fund's
performance over a rolling 12-month period beginning in the twelfth month
following the effective date of the reorganization. The table below describes
the advisory fee, with the applicable performance adjustment that CIMCO would
receive based on the Fund's performance as compared to its benchmark index over
a given performance period:
THE BASE FEE THE BASE FEE
IF THE FUND: INCREASES BY: IF THE FUND: DECREASES BY:
- ------------ ------------- ------------ -------------
Outperforms the Index by 5.01% or more + 0.10% Underperforms the Index by 5.01% or more - 0.10%
Outperforms the Index by 4.01% to 5.00% + 0.075% Underperforms the Index by 4.01% to 5.00% - 0.075%
Outperforms the Index by 3.01% to 4.00% + 0.050% Underperforms the Index by 3.01% to 4.00% - 0.050%
Outperforms the Index by 2.01% to 3.00% + 0.025% Underperforms the Index by 2.01% to 3.00% - 0.025%
Outperforms the Index by 2.00% or less 0.00% Underperforms the Index by 2.00% or less 0.00%
For example, if the Constellation Clover Large Cap Value Fund outperforms the
Russell 1000 Value Index over the relevant performance period by 3.25%, CIMCO's
advisory fees would increase from 0.74% to 0.79%. If, however, the Fund
underperforms the Index by 3.25%, CIMCO's advisory fees would decrease to 0.69%.
19
6. CONSTELLATION CLOVER CORE VALUE FUND (currently the Turner Core Value Fund)
Clover, the Turner Core Value Fund's current investment sub-adviser, will
continue to provide daily investment management services to the Constellation
Clover Core Value Fund in its capacity as the new Fund's sub-adviser.
The Constellation Clover Core Value Fund will continue to invest substantially
in common stocks and other equity securities of U.S. companies with medium
market capitalizations that its sub-adviser, Clover, believes are undervalued
relative to the market or their historic valuation. Mid cap companies are
defined for this purpose as companies with market capitalizations at the time of
purchase in the range of those market capitalizations of companies included in
the Russell 3000 Value Index.
The Fund will continue to invest in securities of companies operating in a broad
range of industries based primarily on value characteristics such as price-cash
flow, price-earnings and price-book value ratios. In selecting specific
securities for the Fund, Clover will seek to identify companies whose stock is
out-of-favor with investors. The Fund may also invest in small and large
capitalization securities of U.S. companies believed to be undervalued.
ANNUAL FUND OPERATING EXPENSES (DEDUCTED FROM FUND ASSETS)
TURNER CORE VALUE CONSTELLATION CLOVER CORE
FUND - CLASS I SHARES VALUE FUND - CLASS I SHARES
--------------------- ---------------------------
Investment Advisory Fees ...................................... 0.74% 0.74% 1
Distribution (12b-1) Fees ..................................... None None
Other Expenses ................................................ 0.39% 0.39% 2
----- -----
TOTAL ANNUAL FUND OPERATING EXPENSES .......................... 1.13% 3 1.13% 3
<FN>
- -----------------------------------
1 The reorganized Fund's advisory fee will be subject to a performance adjustment based on the Fund's
performance relative to the performance of the Russell 3000 Value Index, and may range from 0.615%
to 0.865%, depending upon the Fund's performance.
2 For the purposes of this comparison, Other Expenses are assumed to stay the same. Actual expenses
of the reorganized Fund may vary.
3 Turner has contractually agreed to waive fees and reimburse expenses in order to keep the Turner
Core Value Fund's "Net Total Operating Expenses" of the Class I Shares from exceeding 1.25%
through January 31, 2005. CIMCO has voluntarily agreed to waive fees and reimburse expenses in
order to keep the Constellation Clover Core Value Fund's "Other Expenses" of the Class I Shares
from exceeding 0.51% through at least January 31, 2006.
</FN>
20
EXAMPLE
This example is intended to help you compare the cost of investing in
the Turner Core Value Fund with the cost of investing in the Constellation
Clover Core Value Fund. The Example assumes that you invest $10,000 in the Fund
for the time periods indicated and that you sell your shares at the end of each
period. The Example also assumes that each year your investment has a 5% return
and Fund expenses remain the same. One year figures are based on Net Total
Operating Expenses from above. Although your actual costs and returns might be
different, based on these assumptions, your costs would be:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
Turner Core Value Fund - Class I Shares ..................... $115 $359 $622 $1,375
Constellation Clover Core Value Fund - Class I Shares ....... $115 $359 $622 $1,375
PERFORMANCE FEE ADJUSTMENT. The Constellation Clover Core Value Fund's base
advisory fee is 0.74%, and this fee subject to a performance adjustment based on
the Fund's performance relative to the performance of the Russell 3000 Value
Index. The advisory fee may range from 0.625% to 0.865%, depending on the Fund's
performance over a rolling 12-month period beginning in the twelfth month
following the effective date of the reorganization. The table below describes
the advisory fee, with the applicable performance adjustment that CIMCO would
receive based on the Fund's performance as compared to its benchmark index over
a given performance period:
THE BASE FEE THE BASE FEE
IF THE FUND: INCREASES BY: IF THE FUND: DECREASES BY:
- ------------ ------------- ------------ -------------
Outperforms the Index by 5.01% or more + 0.125% Underperforms the Index by 5.01% or more - 0.125%
Outperforms the Index by 4.01% to 5.00% + 0.09375% Underperforms the Index by 4.01% to 5.00% - 0.09375%
Outperforms the Index by 3.01% to 4.00% + 0.0625% Underperforms the Index by 3.01% to 4.00% - 0.0625%
Outperforms the Index by 2.01% to 3.00% + 0.03125% Underperforms the Index by 2.01% to 3.00% - 0.03125%
Outperforms the Index by 2.00% or less 0.00% Underperforms the Index by 2.00% or less 0.00%
For example, if the Constellation Clover Core Value Fund outperforms the Russell
3000 Value Index over the relevant performance period by 3.25%, CIMCO's advisory
fees would increase from 0.74% to 0.8025%. If, however, the Fund underperforms
the Index by 3.25%, CIMCO's advisory fees would decrease to 0.675%.
21
7. CONSTELLATION CLOVER SMALL CAP VALUE FUND (currently the Turner Small Cap
Value Fund)
Clover, the Turner Small Cap Value Fund's current investment sub-adviser, will
continue to provide daily investment management services to the Constellation
Small Cap Value Fund in its capacity as the new Fund's sub-adviser.
The Constellation Clover Small Cap Value Fund will continue to invest primarily
(at least 80% of its net assets) in common stocks and other equity securities of
U.S. companies with small market capitalizations that its sub-adviser, Clover,
believes are undervalued relative to the market or to their historical
valuation. This is a non-fundamental investment policy that can be changed by
the Fund upon 60 days' prior notice to shareholders. Small cap companies are
defined for this purpose as companies with market capitalizations at the time of
purchase in the range of those market capitalizations of companies included in
the Russell 2000 Value Index.
The Fund will continue to invest in securities of companies operating in a broad
range of industries based primarily on value characteristics such as price-cash
flow, price-earnings and price-book value ratios. In selecting specific
securities for the Fund, Clover seeks to identify companies whose stock is
out-of-favor with investors.
ANNUAL FUND OPERATING EXPENSES (DEDUCTED FROM FUND ASSETS)
TURNER SMALL CAP VALUE CONSTELLATION CLOVER SMALL
FUND - CLASS I SHARES CAP VALUE FUND - CLASS I SHARES
---------------------- -------------------------------
Investment Advisory Fees ............................ 0.85% 0.85% 1
Distribution (12b-1) Fees............................ None None
Total Other Expenses................................. 0.42% 0.42% 2
----- -----
TOTAL ANNUAL FUND OPERATING EXPENSES ................ 1.27% 3 1.27% 3
<FN>
- -----------------------------------
1 The reorganized Fund's advisory fee will be subject to a performance adjustment based on
the Fund's performance relative to the performance of the Russell 2000 Value Index, and
may range from 0.70% to 1.00%, depending upon the Fund's performance.
2 For the purposes of this comparison, Other Expenses are assumed to stay the same.
Actual expenses of the reorganized Fund may vary.
3 Turner has contractually agreed to waive fees and to reimburse expenses in order to keep
"Net Total Operating Expenses" of the Class I Shares from exceeding 1.40% through January
31, 2005. CIMCO has voluntarily agreed to waive fees and reimburse expenses in order to
keep the Constellation Small Cap Value Fund's "Other Expenses" of the Class I Shares
from exceeding 0.50% through at least January 31, 2006.
</FN>
EXAMPLE
This example is intended to help you compare the cost of investing in
the Turner Small Cap Value Fund with the cost of investing in the Constellation
Clover Small Cap Value. The Example assumes that you invest $10,000 in the Fund
for the time periods indicated and that you sell your shares at the end of each
period. The Example also assumes that each year your investment has a 5% return
and Fund expenses remain the same. Although your actual costs and returns might
be different, based on these assumptions, your costs would be:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
Turner Small Cap Value Fund - Class II Shares .................. $129 $403 $697 $1,534
Constellation Clover Small Cap Value Fund -- Class II Shares ... $129 $403 $697 $1,534
PERFORMANCE FEE ADJUSTMENT. The Constellation Clover Small Cap Value Fund's base
advisory fee is 0.85%, and this fee subject to a performance adjustment based on
the Fund's performance relative to the performance of the Russell 2000 Value
Index. The advisory fee may range from 0.70% to 1.00%, depending on the Fund's
performance over a rolling 12-month period beginning in the twelfth month
following the effective date of the reorganization. The table below describes
the advisory fee, with the applicable performance adjustment that CIMCO would
receive based on the Fund's performance as compared to its benchmark index over
a given performance period:
THE BASE FEE THE BASE FEE
IF THE FUND: INCREASES BY: IF THE FUND: DECREASES BY:
- ------------ ------------- ------------ -------------
Outperforms the Index by 5.01% or more + 0.15% Underperforms the Index by 5.01% or more - 0.15%
Outperforms the Index by 4.01% to 5.00% + 0.1125% Underperforms the Index by 4.01% to 5.00% - 0.1125%
Outperforms the Index by 3.01% to 4.00% + 0.075% Underperforms the Index by 3.01% to 4.00% - 0.075%
Outperforms the Index by 2.01% to 3.00% + 0.0375% Underperforms the Index by 2.01% to 3.00% - 0.0375%
Outperforms the Index by 2.00% or less 0.00% Underperforms the Index by 2.00% or less 0.00%
For example, if the Constellation Clover Small Cap Value Fund outperforms the
Russell 2000 Value Index over the relevant performance period by 3.25%, CIMCO's
advisory fees would increase from 0.85% to 0.925%. If, however, the Fund
underperforms the Index by 3.25%, CIMCO's advisory fees would decrease to
0.775%.
23
8. CONSTELLATION CLOVER CORE FIXED INCOME FUND (currently the Turner Core Fixed
Income Fund)
Clover, the Turner Core Fixed Income Fund's current investment sub-adviser, will
continue to provide daily investment management services to the Constellation
Clover Core Fixed Income Fund in its capacity as the new Fund's sub-adviser.
The Constellation Clover Core Fixed Income Fund will continue to invest
primarily (at least 80% of its net assets) in U.S. government obligations and
other investment grade fixed income securities, including corporate debt
obligations and mortgage- and asset-backed securities. This is a non-fundamental
investment policy that can be changed by the Fund upon 60 days' prior notice to
shareholders.
In selecting investments for the Fund, the sub-adviser, Clover, will continue to
choose fixed income securities of issuers that it believes will offer attractive
income potential with an acceptable level of risk. Clover will invest in fixed
income obligations of different types and maturities depending on its current
assessment of the relative market values of the sectors in which the Fund
invests. Clover does not attempt to forecast interest rate changes. The Fund's
average duration will typically be between four and six years.
ANNUAL FUND OPERATING EXPENSES (DEDUCTED FROM FUND ASSETS)
CONSTELLATION CLOVER
TURNER CORE FIXED INCOME CORE FIXED INCOME FUND
FUND - CLASS I SHARES - CLASS I SHARES
------------------------ ----------------------
Investment Advisory Fees ............................... 0.45% 0.45% 1
Distribution (12b-1) Fees .............................. None None
Other Expenses ......................................... 0.42% 0.42% 2
----- -----
TOTAL ANNUAL FUND OPERATING EXPENSES ................... 0.87% 0.87%
Fee Waivers and Expense Reimbursements ................. (0.07)% (0.07)%
------- -------
NET TOTAL OPERATING EXPENSES .......................... 0.80% 3 0.80% 3
<FN>
- -----------------------------------
1 The reorganized Fund's advisory fee will be subject to a performance adjustment based
on the Fund's performance relative to the performance of the Lehman Brothers
Aggregate Bond Index, and may range from 0.37% to 0.53%, depending upon the Fund's
performance.
2 For the purposes of this comparison, Other Expenses are assumed to stay the same.
Actual expenses of the reorganized Fund may vary.
3 Turner has contractually agreed to waive fees and reimburse expenses in order to keep
the Turner Core Fixed Income Fund's "Net Total Operating Expenses" of the Class I Shares
from exceeding 0.80% through January 31, 2005. CIMCO has voluntarily agreed to waive
fees and reimburse expenses in order to keep the Constellation Clover Core Fixed Income
Fund's "Other Expenses" of the Class I Shares from exceeding 0.35% through at least
January 31, 2006.
</FN>
EXAMPLE
This example is intended to help you compare the cost of investing in
the Turner Core Fixed Income Fund with the cost of investing in the
Constellation Clover Core Fixed Income Fund. The Example assumes that you invest
$10,000 in the Fund for the time periods indicated and that you sell your shares
at the end of each period. The Example also assumes that each year your
investment has a 5% return and Fund expenses remain the same. One year figures
are based on Net Total Operating Expenses from above. Although your actual costs
and returns might be different, based on these assumptions, your costs would be:
24
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
Turner Core Fixed Income Fund - Class I Shares .................... $82 $271 $475 $1,066
Constellation Clover Core Fixed Income Fund - Class I Shares ...... $82 $271 $475 $1,066
PERFORMANCE FEE ADJUSTMENT. The Constellation Clover Core Fixed Income Fund's
base advisory fee is 0.45%, and this fee subject to a performance adjustment
based on the Fund's performance relative to the performance of the Lehman
Brothers Aggregate Bond Index. The advisory fee may range from 0.37% to 0.53%,
depending on the Fund's performance over a rolling 12-month period beginning in
the twelfth month following the effective date of the reorganization. The table
below describes the advisory fee, with the applicable performance adjustment
that CIMCO would receive based on the Fund's performance as compared to its
benchmark index over a given performance period:
THE BASE FEE THE BASE FEE
IF THE FUND: INCREASES BY: IF THE FUND: DECREASES BY:
- ------------ ------------- ------------ -------------
Outperforms the Index by 5.01% or more + 0.08% Underperforms the Index by 5.01% or more - 0.08%
Outperforms the Index by 4.01% to 5.00% + 0.06% Underperforms the Index by 4.01% to 5.00% - 0.06%
Outperforms the Index by 3.01% to 4.00% + 0.04% Underperforms the Index by 3.01% to 4.00% - 0.04%
Outperforms the Index by 2.01% to 3.00% + 0.02% Underperforms the Index by 2.01% to 3.00% - 0.02%
Outperforms the Index by 2.00% or less 0.00% Underperforms the Index by 2.00% or less 0.00%
For example, if the Constellation Clover Fixed Income Fund outperforms the
Lehman Brothers Aggregate Bond Index over the relevant performance period by
3.25%, CIMCO's advisory fees would increase from 0.45% to 0.49%. If, however,
the Fund underperforms the Index by 3.25%, CIMCO's advisory fees would decrease
to 0.41%.
25
9. CONSTELLATION CHARTWELL ULTRA SHORT DURATION FIXED INCOME FUND
(currently the Turner Ultra Short Duration Fixed Income Fund)
Mr. Roger Early and Mr. Paul Matlack form the team that manages the Turner Ultra
Short Duration Fund. Messrs. Early and Matlack recently became employees of
Chartwell, while remaining "dual" employees of Turner for the sole purpose of
providing day-to-day management services to certain Turner Funds, including the
Turner Ultra Short Duration Fixed Income Fund. Messrs. Early and Matlack will
continue to provide daily investment management services to the Constellation
Chartwell Ultra Short Duration Fixed Income Fund through Chartwell's capacity as
the new Fund's sub-adviser.
The Constellation Chartwell Ultra Short Duration Fixed Income Fund will invest
primarily (at least 80% of its net assets) in debt securities issued or
guaranteed by the U.S. government, its agencies or instrumentalities, including
mortgage-backed securities issued by agencies such as the Federal National
Mortgage Association or the Government National Mortgage Association. This is a
non-fundamental investment policy that can be changed by the Fund upon 60 days'
prior notice to shareholders.
In selecting investments for the Fund, the Fund's sub-adviser, Chartwell, will
continue to choose U.S. government obligations that are attractively priced
relative to the market or to similar instruments. In addition, Chartwell will
consider the "effective duration" of the Fund's entire portfolio when selecting
securities. Effective duration is a measure of a security's price volatility or
the risk associated with changes in interest rates. Although Chartwell will
manage interest rate risk by maintaining an effective duration that is
comparable to or less than that of one-year U.S. Treasury bills, the Fund may
invest in securities with any maturity or duration. In any event, the Fund is
expected to maintain an average duration of one year or less, and a
dollar-weighted average portfolio maturity of no more than three years.
ANNUAL FUND OPERATING EXPENSES (DEDUCTED FROM FUND ASSETS)
CONSTELLATION
TURNER ULTRA CHARTWELL ULTRA
SHORT DURATION SHORT DURATION
FIXED INCOME FIXED INCOME
FUND - CLASS I FUND - CLASS I
SHARES CLASS II SHARES SHARES Class II Shares
------------- --------------- --------------- ----------------
Investment Advisory Fees ....................... 0.25% 0.25% 0.25% 1 0.25% 1
Distribution (12b-1) Fees ...................... None None None None
Other Expenses ................................. 0.37% 0.62% 0.37% 2 0.62% 2
----- ----- ----- -----
Shareholder Servicing Fee ................. None 0.25% 3 None 0.25% 3
TOTAL ANNUAL FUND OPERATING EXPENSES ........... 0.62% 0.87% 0.62% 0.87%
Fee Waivers and Expense Reimbursements ......... (0.13)% (0.13)% (0.13)% (0.13)%
------- ------- ------- -------
NET TOTAL OPERATING EXPENSES .................. 0.49% 4 0.74% 4 0.49% 4 0.74% 4
<FN>
- -----------------------------------
1 The reorganized Fund's advisory fee will be subject to a performance adjustment based on the Fund's
performance relative to the performance of the Merrill Lynch Three Month U.S. Treasury Bill Index, and may
range from 0.19% to 0.31%, depending upon the Fund's performance.
2 For the purposes of this comparison, Other Expenses are assumed to stay the same. Actual expenses of the
reorganized Fund may vary.
3 The Shareholder Service Fee is included as part of the Fund's "Total Other Expenses" and is presented
here for information purposes only.
4 Turner has contractually agreed to waive fees and reimburse expenses in order to keep the Turner Ultra
Short Duration Fixed Income Fund's "Net Total Operating Expenses" of the Class I and Class II Shares
from exceeding 0.49% and 0.74%, respectively, through January 31, 2005. CIMCO will contractually agree
to waive fees and reimburse expenses in order to keep the Constellation Chartwell Ultra Short
Duration Fixed Income Fund's "Other Expenses" of the Class I and Class II Shares from exceeding 0.24%
and 0.49%, respectively, through at least January 31, 2006.
</FN>
26
EXAMPLE
This example is intended to help you compare the cost of investing in
the Turner Ultra Short Duration Fixed Income Fund with the cost of investing in
the Constellation Chartwell Ultra Short Duration Fixed Income Fund. The Example
assumes that you invest $10,000 in the Fund for the time periods indicated and
that you sell your shares at the end of each period. The Example also assumes
that each year your investment has a 5% return and Fund expenses remain the
same. One year figures are based on Net Total Operating Expenses from above.
Although your actual costs and returns might be different, based on these
assumptions, your costs would be:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
Turner Ultra Short Duration Fixed Income Fund - Class I Shares ............ $50 $185 $333 $762
Turner Ultra Short Duration Fixed Income Fund - Class II Shares ........... $76 $265 $469 $1,061
Constellation Chartwell Ultra Short Duration Fixed Income Fund - Class I
Shares .................................................................... $50 $185 $333 $762
Constellation Chartwell Ultra Short Duration Fixed Income Fund - Class II
Shares .................................................................... $76 $265 $469 $1,061
PERFORMANCE FEE ADJUSTMENT. The Constellation Chartwell Ultra Short Duration
Fixed Income Fund's base advisory fee is 0.25%, and this fee subject to a
performance adjustment based on the Fund's performance relative to the
performance of the Merrill Lynch Three Month U.S. Treasury Bill Index. The
advisory fee may range from 0.19% to 0.31%, depending on the Fund's performance
over a rolling 12-month period beginning in the twelfth month following the
effective date of the reorganization. The table below describes the advisory
fee, with the applicable performance adjustment that CIMCO would receive based
on the Fund's performance as compared to its benchmark index over a given
performance period:
THE BASE FEE THE BASE FEE
IF THE FUND: INCREASES BY: IF THE FUND: DECREASES BY:
- ------------ ------------- ------------ -------------
Outperforms the Index by 0.76% or more + 0.06% Underperforms the Index by 0.76% or more - 0.06%
Outperforms the Index by 0.75% or less 0.00% Underperforms the Index by 0.75% or less 0.00%
27
10. CONSTELLATION CHARTWELL SHORT DURATION FIXED INCOME FUND (currently the
Turner Short Duration Fixed Income Fund)
Mr. Roger Early and Mr. Paul Matlack form the team that manages the Turner Short
Duration Fund. Messrs. Early and Matlack recently became employees of Chartwell,
while remaining "dual" employees of Turner for the sole purpose of providing
day-to-day management services to certain Turner Funds, including the Turner
Short Duration Fixed Income Fund. Messrs. Early and Matlack will continue to
provide daily investment management services to the Constellation Chartwell
Short Duration Fixed Income Fund through Chartwell's capacity as the new Fund's
sub-adviser.
The Constellation Chartwell Short Duration Fixed Income Fund will continue to
invest primarily (at least 80% of its net assets) in debt securities issued or
guaranteed by the U.S. government, its agencies or instrumentalities, including
mortgage-backed securities issued by agencies such as the Federal National
Mortgage Association or the Government National Mortgage Association. This is a
non-fundamental investment policy that can be changed by the Fund upon 60 days'
prior notice to shareholders.
In selecting investments for the Fund, the Fund's sub-adviser, Chartwell, will
continue to choose U.S. government obligations that are attractively priced
relative to the market or to similar instruments. Chartwell will consider the
"effective duration" of the Fund's entire portfolio when selecting securities.
Effective duration is a measure of a security's price volatility or the risk
associated with changes in interest rates. The Fund seeks to maintain an
effective duration that is comparable to or less than that of three-year U.S.
Treasury notes. The Fund may invest in securities with any maturity.
ANNUAL FUND OPERATING EXPENSES (DEDUCTED FROM FUND ASSETS)
CONSTELLATION
TURNER SHORT CHARTWELL SHORT
DURATION FIXED DURATION FIXED
INCOME FUND - INCOME FUND -
CLASS I SHARES CLASS II SHARES CLASS I SHARES Class II Shares
--------------- ---------------- --------------- ----------------
Investment Advisory Fees ...................... 0.25% 0.25% 0.25% 1 0.25% 1
Distribution (12b-1) Fees ..................... None None None None
Other Expenses ................................ 0.37% 0.62% 0.37% 2 0.62% 2
----- ----- ----- -----
Shareholder Servicing Fee ................ None 0.25% 3 None 0.25% 3
TOTAL ANNUAL FUND OPERATING EXPENSES .......... 0.60% 0.85% 0.60% 0.85%
Fee Waivers and Expense Reimbursements ........ (0.13)% (0.13)% (0.13)% (0.13)%
------- ------- ------- -------
NET TOTAL OPERATING EXPENSES ................. 0.49% 4 0.74% 4 0.49% 4 0.74% 4
<FN>
- -----------------------------------
1 The reorganized Fund's advisory fee will be subject to a performance adjustment based on the Fund's
performance relative to the performance of the Lehman Brothers 1 - 3 Year U.S. Government Bond Index,
and may range from 0.19% to 0.31%, depending upon the Fund's performance.
2 For the purposes of this comparison, Other Expenses are assumed to stay the same. Actual expenses
of the reorganized Fund may vary.
3 The Shareholder Service Fee is included as part of the Fund's "Total Other Expenses" and is
presented here for information purposes only.
4 Turner has contractually agreed to waive fees and reimburse expenses in order to keep the Turner
Short Duration Fixed Income Fund's "Net Total Operating Expenses" of the Class I and Class II Shares
from exceeding 0.49% and 0.74%, respectively, through January 31, 2005. CIMCO will contractually
agree to waive fees and reimburse expenses in order to keep the Constellation Chartwell Short
Duration Fixed Income Fund's "Other Expenses" of the Class I and Class II Shares from exceeding
0.24% and 0.49%, respectively, through at least January 31, 2006.
</FN>
28
EXAMPLE
This example is intended to help you compare the cost of investing in
the Turner Short Duration Fixed Income Fund with the cost of investing in the
Constellation Short Duration Fixed Income Fund. The Example assumes that you
invest $10,000 in the Fund for the time periods indicated and that you sell your
shares at the end of each period. The Example also assumes that each year your
investment has a 5% return and Fund expenses remain the same. One year figures
are based on Net Total Operating Expenses from above. Although your actual costs
and returns might be different, based on these assumptions, your costs would be:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
Turner Short Duration Fixed Income Fund - Class I Shares $50 $185 $333 $762
Turner Short Duration Fixed Income Fund - Class II Shares $76 $265 $469 $1,061
Constellation Chartwell Short Duration Fixed Income Fund - Class $50 $185 $333 $762
I Shares
Constellation Chartwell Short Duration Fixed Income Fund - Class $76 $265 $469 $1,061
II Shares
PERFORMANCE FEE ADJUSTMENT. The Constellation Chartwell Short Duration Fixed
Income Fund's base advisory fee is 0.25%, and this fee subject to a performance
adjustment based on the Fund's performance relative to the performance of the
Lehman Brothers 1 - 3 Year U.S. Government Bond Index. The advisory fee may
range from 0.19% to 0.31%, depending on the Fund's performance over a rolling
12-month period beginning in the twelfth month following the effective date of
the reorganization. The table below describes the advisory fee, with the
applicable performance adjustment that CIMCO would receive based on the Fund's
performance as compared to its benchmark index over a given performance period:
THE BASE FEE THE BASE FEE
IF THE FUND: INCREASES BY: IF THE FUND: DECREASES BY:
- ------------ ------------- ------------ -------------
Outperforms the Index by 1.51% or more + 0.06% Underperforms the Index by 1.51% or more - 0.06%
Outperforms the Index by 1.50% or less 0.00% Underperforms the Index by 1.50% or less 0.00%
29
11. CONSTELLATION CHARTWELL HIGH YIELD FUND (currently the Turner High Yield
Fund)
Mr. Roger Early, Mr. Paul Matlack and Mr. John McCarthy form the team that
manages the Turner High Yield Fund. Messrs. Early, Matlack and McCarthy recently
became employees of Chartwell, while remaining "dual" employees of Turner for
the sole purpose of providing day-to-day management services to certain Turner
Funds, including the Turner High Yield Fund. Messrs. Early, Matlack and McCarthy
will continue to provide daily investment management services to the
Constellation Chartwell High Yield Fund through Chartwell's capacity as the new
Fund's sub-adviser.
The Constellation Chartwell High Yield Fund will continue to invest primarily
(at least 80% of its net assets) in fixed income securities rated below
investment grade ("high yield" securities, often referred to as "junk bonds").
This is a non-fundamental investment policy that can be changed by the Fund upon
60 days' prior notice to shareholders. In selecting investments for the Fund,
the Fund's sub-adviser, Chartwell, will choose fixed income securities that
offer high current yields as well as capital appreciation potential, including
preferred stocks, convertible securities, zero coupon obligations,
payment-in-kind bonds, and variable rate securities. The Fund's average weighted
maturity may vary, and will generally be ten years or less. The Fund will
typically invest in securities rated B or BB by S&P or Ba or B by Moody's.
Chartwell does not intend to invest more than 20% of the Fund's assets in bonds
that are unrated, rated CCC or lower, or in default. This strategy may cause the
Fund to earn less income, but should result in the Fund owning fewer bonds in
default (i.e., paying no income).
Chartwell intends to invest no more than 5% of the Fund's assets in any single
issuer. The Fund will limit its investment in any one industry to the lesser of
10% of the Fund's assets or two times that industry's weighting in the Merrill
Lynch High Yield Index. Chartwell will continuously review the credit quality of
the bonds in the Fund's portfolio, and will sell a bond when the issuer is
downgraded, the industry sector in which the bond belongs is downgraded as a
whole, or when the bond's price declines more than 15% as compared to its
industry sector.
ANNUAL FUND OPERATING EXPENSES (DEDUCTED FROM FUND ASSETS)
TURNER HIGH YIELD FUND - CLASS CONSTELLATION CHARTWELL HIGH
I SHARES YIELD FUND - CLASS I SHARES
------------------------------ ----------------------------
Redemption Fee (as a percentage of amount
redeemed, if applicable) ..................... 2.00% 1 2.00% 1
Investment Advisory Fees ........................... 0.55% 0.55% 2
Distribution (12b-1) Fees .......................... None None
Other Expenses ..................................... 0.61% 0.61% 3
----- -----
TOTAL ANNUAL FUND OPERATING EXPENSES ............... 1.16% 1.16%
Fee Waivers and Expense Reimbursements ............. (0.26)% 4 (0.26% 4
-------- -------
NET TOTAL OPERATING EXPENSES ...................... 0.90% 0.90%
<FN>
- -----------------------------------
1 Applies to redemptions within 90 days of purchase. At this time, purchases of Class I Shares
of the Fund will not be subject to the redemption fee described above. The Fund will notify
all existing shareholders if and when it decides to implement the fee.
2 The reorganized Fund's advisory fee will be subject to a performance adjustment based on
the Fund's performance relative to the performance of the Merrill Lynch High Yield, Cash Pay
Index, and may range from 0.45% to 0.65%, depending upon the Fund's performance.
3 For the purposes of this comparison, Other Expenses are assumed to stay the same. Actual
expenses of the reorganized Fund may vary.
4 Turner has contractually agreed to waive fees and reimburse expenses in order to keep the
Turner High Yield Fund's "Total Annual Fund Expenses" from exceeding 0.90% through January 31,
2005. CIMCO has voluntarily agreed to waive fees and reimburse expenses in order to keep the
Constellation Chartwell High Yield Fund's "Other Expenses" from exceeding 0.35% through at
least January 31, 2006.
</FN>
30
EXAMPLE
This example is intended to help you compare the cost of investing in
the Turner High Yield Fund with the cost of investing in the Constellation
Chartwell High Yield Fund. The Example assumes that you invest $10,000 in the
Fund for the time periods indicated and that you sell your shares at the end of
each period. The Example also assumes that each year your investment has a 5%
return and Fund expenses remain the same. One year figures are based on Net
Total Operating Expenses from above. Although your actual costs and returns
might be different, based on these assumptions, your costs would be:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
Turner High Yield Fund - Class I Shares ................... $92 $343 $613 $1,386
Constellation Chartwell High Yield Fund - Class I
Shares .................................................... $92 $343 $613 $1,386
PERFORMANCE FEE ADJUSTMENT. The Constellation Chartwell High Yield Fund's base
advisory fee is 0.55%, and this fee subject to a performance adjustment based on
the Fund's performance relative to the performance of the Merrill Lynch High
Yield, Cash Pay Index. The advisory fee may range from 0.45% to 0.65%, depending
on the Fund's performance over a rolling 12-month period beginning in the
twelfth month following the effective date of the reorganization. The table
below describes the advisory fee, with the applicable performance adjustment
that CIMCO would receive based on the Fund's performance as compared to its
benchmark index over a given performance period:
THE BASE FEE THE BASE FEE
IF THE FUND: INCREASES BY: IF THE FUND: DECREASES BY:
- ------------ ------------- ------------ -------------
Outperforms the Index by 3.01% or more + 0.10% Underperforms the Index by 3.01% or more - 0.10%
Outperforms the Index by 3.00% or less 0.00% Underperforms the Index by 3.00% or less 0.00%
31
12. CONSTELLATION STRATEGIC VALUE AND HIGH INCOME FUND (currently the Turner
Strategic Value and High Income Fund")
The Constellation Strategic Value and High Income Fund will be considered a
"fund of funds," which means that it will invest substantially all of its assets
in shares of other mutual funds (referred to as the "underlying funds"), rather
than in individual securities. As a fund of funds, the Fund will pursue its goal
by investing substantially all of its assets in shares of other Constellation
Funds - the Constellation TIP Small Cap Value Opportunities Fund (the "Small Cap
Value Opportunities Fund") and the Constellation Chartwell High Yield Fund (the
"High Yield Fund"). The Turner Strategic Value and High Income Fund may
currently invest a portion of its assets in the Turner Ultra Short Duration
Fixed Income Fund. In addition to being able to invest a portion of its assets
in the Constellation Chartwell Ultra Short Duration Fixed Income Fund (the
"Ultra Short Duration Fund"), the Fund may also invest a portion of its assets
in the Constellation Clover Core Value Fund (the "Core Value Fund") and/or the
Constellation HLAM Large Cap Value Fund (the "Large Cap Value Fund"). As a
result, the investment performance of the Fund is directly related to the
performance of the underlying funds.
The Small Cap Value Opportunities Fund focuses on equity securities of small
capitalization companies that are believed to have the potential for growth and
that appear to be trading below their perceived value. The High Yield Fund
primarily holds fixed income securities rated below investment grade ("high
yield, high risk" securities, often referred to as "junk bonds"). The Fund may
also invest a portion of its assets in the Ultra Short Duration Fund which
invests in high quality, short duration fixed income securities. Furthermore,
the Fund may in the future invest in other underlying funds sponsored and
offered by the Constellation Funds family.
Generally, the Fund will invest at least 40% of its assets, and may invest up to
60% of its assets, in the Small Cap Value Opportunities Fund, on the one hand,
and in the High Yield Fund, on the other. The Fund will periodically adjust its
asset allocation among these funds in response to changing economic and market
conditions, the performance of the underlying funds, or for other reasons. For
example, when the high yield market generally is outperforming the small
capitalization equity market, the Fund generally will invest more of its assets
in the High Yield Fund. The Fund will allocate more of its assets to the Small
Cap Value Opportunities Fund when equity market's return potential appears to
outweigh that of the high yield market.
The Fund may invest some or all of the assets otherwise allocated to the Small
Cap Value Opportunities Fund in shares of the Core Value Fund and/or the Large
Cap Value Fund if CIMCO believes that the small capitalization segment of the
equity markets appears to be overvalued, or if it otherwise wishes to limit the
Fund's exposure to small cap issuers. CIMCO also may allocate assets to the
Ultra Short Duration Fund in order to reduce the Fund's exposure to the high
yield sector of the fixed income markets. For temporary defensive purposes, or
in response to adverse market conditions, the Fund may invest all or a
substantial portion of its total assets in the Ultra Short Duration Fund. The
Fund will normally sell a proportionate amount of the shares it owns in each
underlying fund to meet redemption requests.
32
ANNUAL FUND OPERATING EXPENSES (DEDUCTED FROM FUND ASSETS)
TURNER CONSTELLATION
STRATEGIC VALUE STRATEGIC VALUE
AND HIGH INCOME AND HIGH INCOME
FUND - CLASS I FUND - CLASS I
SHARES CLASS II SHARES SHARES CLASS II SHARES
--------------- --------------- --------------- ----------------
Redemption Fee (as a percentage of
amount redeemed, if applicable) ........ 2.00% 1 2.00% 1 2.00% 1 2.00% 1
Investment Advisory Fees .................... 0.10% 0.10% 0.10% 2 0.10% 2
Distribution (12b-1) Fees ................... None None None None
Total Other Expenses ........................ 21.83% 3 22.08% 3 21.83% 3 22.08% 3
. ------ ------ ------ ------
Shareholder Servicing Fee .............. None 0.25% 4 None 0.25% 4
TOTAL ANNUAL FUND OPERATING EXPENSES ........ 21.93% 5 22.18% 5 21.93% 5 22.18% 5
Underlying Fund Expenses .................... 1.08% 6 1.08% 6 1.08% 6 1.08% 6
------ ------ ------ ------
TOTAL ANNUAL FUND OPERATING AND ............. 23.01% 23.26% 23.01% 23.26%
INDIRECT EXPENSES
Fee Waivers and Expense Reimbursements ...... (22.76%) (22.76%) (22.76%) (22.76%)
NET TOTAL OPERATING EXPENSES ............... 0.25% 0.50% 0.25% 0.50%
<FN>
- -----------------------------------
1 Applies to redemptions within 90 days of purchase. At this time, purchases of Class I Shares and
Class II Shares of the Fund will not be subject to the redemption fee described above. The Fund will
notify all existing shareholders if and when it decides to implement the fee.
2 The reorganized Fund's advisory fee will be subject to a performance adjustment based on the Fund's
performance relative to the performance of a 50%/50% blend of the Russell 2000 Value Index and the
Merrill Lynch High Yield, Cash Pay Index, and may range from 0.05% to 0.15%, depending upon the Fund's
performance.
3 For the purposes of this comparison, Other Expenses for the Constellation Strategic Value and High
Income Fund are estimated at the same amount. Actual expenses of the reorganized Fund may vary.
4 The Shareholder Service Fee is included as part of the Fund's "Total Other Expenses" and is
presented here for information purposes only.
5 Turner has contractually agreed to waive fees and reimburse expenses in order to keep the Turner
Strategic Value and High Income Fund's "Total Annual Fund Operating and Indirect Expenses" of the
Class I and Class II Shares from exceeding 0.25% and 0.50%, respectively, through January 31, 2005.
CIMCO will contractually agree to waive fees and reimburse expenses in order to keep the Constellation
Strategic Value and High Income Fund's combined "Total Other Expenses" and "Underlying Fund
Expenses" of the Class I and Class II Shares from exceeding 0.15% and 0.40%, respectively, through at
least January 31, 2006.
6 Because the Fund invests in other mutual funds, your investment in the Fund is also indirectly subject
to the operating expenses of the underlying funds. Underlying Fund Expenses will vary with changes in
the expenses of the underlying funds (which may include changes in their fee waiver arrangements,
if any) as well as allocation of the Fund's assets, and may be higher or lower than those shown above.
</FN>
33
EXAMPLE
This example is intended to help you compare the cost of investing in
the Turner Strategic Value and High Income Fund with the cost of investing in
the Constellation Strategic Value and High Income Fund. The Example assumes that
you invest $10,000 in the Fund for the time periods indicated and that you sell
your shares at the end of each period. The Example also assumes that each year
your investment has a 5% return and Fund expenses remain the same. One year
figures are based on Total Annual Fund Operating Expenses from above. Although
your actual costs and returns might be different, based on these assumptions,
your costs would be:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
Turner Strategic Value and High Income Fund - Class I Shares $26 $4,017 $6,700 $10,165
Turner Strategic Value and High Income Fund - Class II Shares $51 $4,065 $6,747 $10,177
Constellation Strategic Value and High Income Fund - Class I $26 $4,017 $6,700 $10,165
Shares
Constellation Strategic Value and High Income Fund - Class II $51 $4,065 $6,747 $10,177
Shares
PERFORMANCE FEE ADJUSTMENT. The Constellation Strategic Value and High Income
Fund's base advisory fee is 0.15%, and this fee subject to a performance
adjustment based on the Fund's performance relative to the performance of a
50%/50% blend of the Russell 2000 Value Index and the Merrill Lynch High Yield,
Cash Pay Index. The advisory fee may range from 0.05% to 0.15%, depending on the
Fund's performance over a rolling 12-month period beginning in the twelfth month
following the effective date of the reorganization. The table below describes
the advisory fee, with the applicable performance adjustment that CIMCO would
receive based on the Fund's performance as compared to its benchmark index over
a given performance period:
THE BASE FEE THE BASE FEE
IF THE FUND: INCREASES BY: IF THE FUND: DECREASES BY:
- ------------ ------------- ------------ -------------
Outperforms the Index by 3.01% or more + 0.15% Underperforms the Index by 3.01% or more - 0.15%
Outperforms the Index by 3.00% or less 0.00% Underperforms the Index by 3.00% or less 0.00%
34
MANAGER OF MANAGERS INVESTMENT APPROACH. The Constellation Trust, each
Constellation Fund, and CIMCO have received an order from the Securities and
Exchange Commission permitting the Constellation Funds to operate as "manager of
managers" funds. Subject to the authority of the Constellation Trust's Board of
Trustees, including a majority of Trustees who are not "interested persons" of
the Funds as defined in Section 2(a)(19) of the Investment Company Act of 1940,
as amended (the "1940 Act," with such Trustees referred to as "Independent
Trustees"), CIMCO in its capacity as investment adviser to the Constellation
Funds will oversees various sub-advisers ("Managers") and will be responsible
for recommending their hiring, termination and replacement.
Under its Advisory Agreement with the Constellation Trust, CIMCO is
authorized to provide Manager selection, monitoring and asset allocation
services to the Constellation Funds. The Advisory Agreement with the
Constellation Trust also provides that CIMCO may enter into agreements with one
or more Managers to exercise day-to-day investment discretion over all or a
portion of the assets of each Constellation Fund (each a "Sub-Advisory
Agreement"). Each Manager will be registered as an investment adviser under the
Advisers Act. CIMCO is required to perform due diligence on prospective
Managers; communicate performance targets and evaluations to Managers; supervise
compliance with the Constellation Funds' investment objectives and policies;
continuously monitor and evaluate Managers; and recommend to the Board whether
Sub-Advisory Agreements with the various Managers should be renewed, modified or
terminated. CIMCO also is required to recommend to the Board the addition of new
Managers as CIMCO deems appropriate. These new Managers could be in lieu of or
in addition to existing Managers. The Managers, in turn, are responsible for
continuously reviewing, supervising and administering the Constellation Funds'
investment programs regarding the portion of the assets assigned to them.
By approving the proposed reorganization, shareholders, in effect, will
hire CIMCO to manage each Constellation Fund's assets directly and/or to hire
Managers from time to time to manage some or all of the Constellation Fund's
assets. Shareholders will not be able to vote on the approval of any Manager
CIMCO hires or a material change to an existing Sub-Advisory Agreement. CIMCO
will, however, provide shareholders with all the information that would be in a
proxy statement within 90 days of the hiring of a new Manager. Further, CIMCO
will not enter into a Sub-Advisory Agreement with any Manager that is affiliated
with CIMCO unless the shareholders of the relevant Constellation Fund approve
the agreement, including the compensation to be paid thereunder.
CIMCO will have general oversight responsibility for the advisory
services provided to the Constellation Funds. As part of this oversight
responsibility, CIMCO will recommend, if appropriate, to the Board that a change
in a Manager is necessary in the best interests of a Constellation Fund and its
shareholders. CIMCO will evaluate a Manager based on, among other things,
performance of the Constellation Fund on a medium-to-long term basis in
comparison to appropriate peer groups and/or benchmarks; the amount of risk
taken as compared to investment returns; adherence to a given investment
strategy; the resources, qualifications and expertise of the personnel of a
Manager; quality of the services a Manager provides; and the rate of
compensation given the services provided in comparison to similar investment
firms.
The "manager of managers" investment approach provides three principal
benefits to shareholders. First, it will reduce fund expenses to the extent that
each Constellation Fund will not have to prepare and solicit proxies each and
every time a Sub-Advisory Agreement is entered into or modified. Second, it will
enable each Constellation Fund to operate more efficiently. In particular, it
will permit each Constellation Fund to hire, terminate and replace Managers more
efficiently according to the judgment of its Board, Independent Trustees, and
CIMCO. Third, and most important, this investment approach relieves shareholders
35
of the very responsibility that they are paying CIMCO to assume, that is, the
selection, termination and replacement of Managers.
While CIMCO does not currently intend to recommend that the Board
terminate any of the sub-advisers to the Constellation Funds, shareholders
should be aware that this is a possibility in the future under the "manager of
managers" investment approach.
YOUR FUND WILL KEEP THE SAME FISCAL YEAR END AND INCOME DISTRIBUTION
SCHEDULE. Your Constellation Fund will keep its September 30th fiscal year end.
As reorganized, the Constellation TIP Small Cap Value Opportunities,
Constellation TIP Financial Services, Constellation TIP Healthcare &
Biotechnology, and Constellation TIP Tax Managed U.S. Equity Funds will continue
to distribute their income annually as a dividend to shareholders. The
Constellation Clover Large Cap Value, Constellation Clover Core Value,
Constellation Clover Small Cap Value, and Constellation Strategic Value and High
Income Funds will distribute their income, if any, quarterly as a dividend to
shareholders. The Constellation Clover Core Fixed Income, Constellation
Chartwell Ultra Short Duration Fixed Income, Constellation Chartwell Short
Duration Fixed Income, and Constellation Chartwell High Income Funds will
continue to declare their investment income daily and distribute it monthly as a
dividend to shareholders.
THE REORGANIZATION WILL HAVE NO IMPACT ON YOUR FUND'S SHARE PRICE
(NAV). On the day of the reorganization, the corresponding Constellation Fund's
share price will be the same as that of each respective Turner Fund. As
indicated below, the reorganization will not cause your Turner Fund's share
price to go up or down, and you will own the same number of shares. Any declared
but undistributed dividends or capital gains will carry over in the
reorganization.
YOUR FUND'S CURRENT TRUSTEES WILL BE REPLACED BY THE CONSTELLATION
FUNDS' TRUSTEES. The individuals listed below are expected to serve as trustees
of the Constellation Funds. (As previously mentioned, your Turner Fund will
become a series of the Constellation Funds, if Shareholders approve the
reorganization). The chart below also includes the Constellation Funds' proposed
officers.
- -------------------------- ---------------- ----------------- ----------------------------- -------------------------
TERM OF OFFICE OTHER DIRECTORSHIPS/
POSITION(S) AND LENGTH OF PRINCIPAL OCCUPATION(S) TRUSTEESHIPS HELD BY
NAME AND AGE HELD WITH TRUST TIME SERVED DURING PAST 5 YEARS TRUSTEE
- -------------------------- ---------------- ----------------- ----------------------------- -------------------------
* John H. Grady, 42 Trustee; N/A; Less than President and Chief N/A; currently
President 1 year Executive Officer of nominated to serve as
Constellation Investment Trustee of Westlakes
Management Company, LP (an Institutional
investment adviser); Portfolios, Berwyn, PA
General Counsel, Chief
Operating Officer and Chief
Legal Officer, Turner
Investment Partners, Inc.
(an investment adviser);
President, Chief Operating
Officer, Turner Investment
Distributors, Inc. (a
broker-dealer); previously,
Partner, Morgan, Lewis &
Bockius LLP (a law firm).
- -------------------------- ---------------- ----------------- ----------------------------- -------------------------
36
- -------------------------- ---------------- ----------------- ----------------------------- -------------------------
TERM OF OFFICE OTHER DIRECTORSHIPS/
POSITION(S) AND LENGTH OF PRINCIPAL OCCUPATION(S) TRUSTEESHIPS HELD BY
NAME AND AGE HELD WITH TRUST TIME SERVED DURING PAST 5 YEARS TRUSTEE
- -------------------------- ---------------- ----------------- ----------------------------- -------------------------
Alfred C. Salvato, 45 Trustee N/A; Since Treasurer, Thomas Jefferson Turner Funds, Berwyn,
Trust's University Health Care PA; Westlakes
inception Pension Fund (a hospital Institutional
pension fund). Portfolios, Berwyn, PA
- -------------------------- ---------------- ----------------- ----------------------------- -------------------------
Ronald W. Filante, 57 Trustee N/A; Since Associate Professor of N/A; currently
Trust's Finance, Pace University. nominated to serve as
inception Trustee of Westlakes
Institutional
Portfolios, Berwyn, PA
- -------------------------- ---------------- ----------------- ----------------------------- -------------------------
Janet F. Sansonse Proposed New N/A; N/A Self-employed consultant Turner Funds, Berwyn,
57 Trustee** since 1999; previously PA; Westlakes
Senior Vice President of Institutional
Human Resources of Frontier Portfolios, Berwyn, PA
Corporation
- -------------------------- ---------------- ----------------- ----------------------------- -------------------------
John Canning, 33 Vice President N/A; Less than Vice President Director of N/A
and Assistant 1 year Mutual Fund Administration
Secretary of Constellation Investment
Management Company, LP;
Sub-Advisory Institutional
Service Product Manager,
Turner Investment Partners,
Inc.; previously, Transfer
Agent Manager, Pilgrim
Baxter and Associates (an
investment adviser);
Portfolio Implementation
Analyst, SEI Investments.
- -------------------------- ---------------- ----------------- ----------------------------- -------------------------
Antoinette C. Robbins, 40 Vice President N/A; Less than Vice President and Director N/A
1 year of Compliance of
Constellation
Investment
Management
Company, LP;
Director of
Compliance, Turner
Investment
Partners, Inc.;
previously, Senior
Gift Planning
Officer, American
Civil Liberties
Union, 2001-2002;
Assistant Vice
President and
Counsel, Equitable
Life Assurance
Society of the
United States.
- -------------------------- ---------------- ----------------- ----------------------------- -------------------------
37
- -------------------------- ---------------- ----------------- ----------------------------- -------------------------
TERM OF OFFICE OTHER DIRECTORSHIPS/
POSITION(S) AND LENGTH OF PRINCIPAL OCCUPATION(S) TRUSTEESHIPS HELD BY
NAME AND AGE HELD WITH TRUST TIME SERVED DURING PAST 5 YEARS TRUSTEE
- -------------------------- ---------------- ----------------- ----------------------------- -------------------------
Saeed Franklin, 28 Vice President N/A; Less than Vice President of N/A
1 year Constellation Investment
Management Company, LP;
previously, Performance
Analyst, Turner Investment
Partners, Inc.; Performance
Analyst, ING Variable
Annuities (an insurance
company); Senior Fund
Accountant, Bank of New
York (an investment bank);
Fund Accountant, PFPC Inc.
(an investment management
company)
- -------------------------- ---------------- ----------------- ----------------------------- -------------------------
Rami Livelsberger, 29 Vice President N/A; Less than Vice President of N/A
and Assistant 1 year Constellation Investment
Secretary Management Company, LP;
previously, Compliance
Officer, Legal Assistant,
Turner Investment Partners,
Inc., Legal Assistant,
Morgan, Lewis & Bockius,
LLP.
- -------------------------- ---------------- ----------------- ----------------------------- -------------------------
Peter Golden, 38 Controller and N/A; 2 years Director of Funds N/A
Chief Accounting of SEI
Financial Investments; previously,
Officer Vice President of Fund
Administration, J.P. Morgan
Chase & Co. (an investment
bank); Vice President, Fund
and Pension Accounting,
Brown Brothers Harriman (an
investment bank).
- -------------------------- ---------------- ----------------- ----------------------------- -------------------------
Lydia A. Gavalis, 38 Vice President N/A; 4 years Vice President and N/A
and Assistant Assistant Secretary of SEI
Secretary Investments.
- -------------------------- ---------------- ----------------- ----------------------------- -------------------------
38
- -------------------------- ---------------- ----------------- ----------------------------- -------------------------
TERM OF OFFICE OTHER DIRECTORSHIPS/
POSITION(S) AND LENGTH OF PRINCIPAL OCCUPATION(S) TRUSTEESHIPS HELD BY
NAME AND AGE HELD WITH TRUST TIME SERVED DURING PAST 5 YEARS TRUSTEE
- -------------------------- ---------------- ----------------- ----------------------------- -------------------------
William E. Zitelli, Jr., Vice President N/A; 3 years Vice President and N/A
35 and Assistant Assistant Secretary of SEI
Secretary Investments; Vice
President, Merrill Lynch &
Co. Asset Management Group
(an investment bank).
- -------------------------- ---------------- ----------------- ----------------------------- -------------------------
Timothy D. Barto, 35 Vice President N/A; 3 years Vice President and N/A
and Assistant Assistant Secretary of SEI
Secretary Investments; previously
Associate, Dechert Price &
Rhoads (a law firm).
- -------------------------- ---------------- ----------------- ----------------------------- -------------------------
Christine M. McCullough, Vice President N/A; 3 years Vice President and N/A
42 and Assistant Assistant Secretary of SEI
Secretary Investments;
previously,
Associate, White
and Williams LLP
(a law firm).
- -------------------------- ---------------- ----------------- ----------------------------- -------------------------
<FN>
* MR. GRADY IS AN "INTERESTED PERSON" (AS THAT TERM IS DEFINED IN THE 1940 ACT") OF THE CONSTELLATION TRUST DUE
TO HIS ASSOCIATION WITH CIMCO.
** MS. SANSONE IS AN INDEPENDENT TRUSTEE OF THE TURNER TRUST. ON JANUARY 29, 2004, THE INDEPENDENT TRUSTEES OF
THE CONSTELLATION TRUST NOMINATED MS. SANSONE TO SERVE AS INDEPENDENT TRUSTEE OF THE CONSTELLATION TRUST.
HER APPOINTMENT IS SUBJECT TO THE APPROVAL OF THE CONSTELLATION TRUST'S EXISTING SHAREHOLDERS.
</FN>
BOARD COMMITTEES. The Board of the Turner Funds has established an
audit committee, which is comprised entirely of Independent Trustees, and a fair
value pricing committee, which includes one Independent Trustee. The Board of
the Constellation Funds has also established an audit committee, which is
comprised entirely of Independent Trustees, and a fair value pricing committee,
which includes one Independent Trustee. The Constellation Funds may establish a
nominating committee in the future comprised entirely of Independent Trustees.
COMPENSATING "INDEPENDENT" TRUSTEES. Each Independent Trustee of the
Turner Funds receives an annual retainer of $5,400 payable quarterly. In
addition, Independent Trustees receive $675 for each regular or special in
person board meeting and $350 for any special board meeting held by telephone.
Trustees of the Turner Funds are reimbursed for travel and other out-of-pocket
expenses in connection with the attendance of Board meetings. The Turner Funds
does not offer any retirement benefits for its Independent Trustees.
Each Independent Trustee of the Constellation Trust receives an annual
retainer of $5,400 payable quarterly. In addition, Independent Trustees receive
$675 for each regular or special in person board meeting and $350 for any
special board meeting held by telephone. The Constellation Trustees will
consider increasing these fees as assets in the Constellation Funds increase.
Trustees of the Constellation Trust are reimbursed for travel and other
out-of-pocket expenses in connection with the attendance of Board meetings. The
Constellation Trust does not offer any retirement benefits for its Independent
Trustees.
39
COMPENSATING "INTERESTED" TRUSTEES. The Turner Funds does not
compensate its Trustees who are officers or employees of Turner (I.E.,
"interested" Trustees). However, Turner compensates these Trustees in their
capacity as officers or employees of Turner. Similarly, the Constellation
Trust's interested trustees will receive no compensation from the Constellation
Trust for their service in that capacity. However, these trustees will be paid
in their roles as officers or directors of CIMCO.
PURCHASES, REDEMPTIONS, AND EXCHANGES. The following chart highlights
redemption and exchange features of your Fund compared to those of the newly
formed Constellation Funds.
PURCHASE, REDEMPTION
AND EXCHANGE FEATURES TURNER FUNDS CONSTELLATION FUNDS
--------------------- ------------ -------------------
Purchases................................. By telephone, internet, mail, wire By telephone, internet, maiL, wire
or systematic investments or systematic investments
Redemptions.............................. By telephone, internet, mail, wire By telephone, interneT, mail, Wire
or systematic withdrawals or systematic withdrawals
Exchanges................................. With other Turner Funds - by mail With other constellation funds -
or telephone by mail or telephone
OTHER FUND SERVICE PROVIDERS. The primary service providers of the
Turner Funds and the Constellation Funds are set forth below:
- ---------------------------------------- -------------------------------------- --------------------------------------
TURNER FUNDS CONSTELLATION FUNDS
INVESTMENT ADVISER Turner1, TIM2 CIMCO
- ---------------------------------------- -------------------------------------- --------------------------------------
SUB-ADVISER Clover 3 Turner 4
- ---------------------------------------- -------------------------------------- --------------------------------------
Clover 5
- ---------------------------------------- -------------------------------------- --------------------------------------
Chartwell 6
- ---------------------------------------- -------------------------------------- --------------------------------------
ADMINISTRATOR Turner CIMCO
- ---------------------------------------- -------------------------------------- --------------------------------------
SUB ADMINISTRATOR SEI SEI
- ---------------------------------------- -------------------------------------- --------------------------------------
DISTRIBUTOR Turner Investment Distributors, Inc. Constellation Investment
Distribution Company, Inc.
- ---------------------------------------- -------------------------------------- --------------------------------------
CUSTODIAN First Union National Bank First Union National Bank
- ---------------------------------------- -------------------------------------- --------------------------------------
TRANSFER AGENT DST Systems, Inc. DST Systems, Inc.
- ---------------------------------------- -------------------------------------- --------------------------------------
INDEPENDENT AUDITOR Ernst & Young LLP Ernst & Young LLP
- ---------------------------------------- -------------------------------------- --------------------------------------
<FN>
1 With respect to all Turner Funds other than the Turner Small Cap Value Opportunities Fund.
2 With respect to the Turner Small Cap Value Opportunities Fund.
3 With respect to the Turner Large Cap Value, Turner Core Value, Turner Small Cap Value, and Turner
Core Fixed Income Funds.
4 With respect to the Constellation TIP Financial Services, Constellation TIP Healthcare & Biotechnology,
Constellation TIP Tax Managed U.S. Equity, and Constellation TIP Small Cap Value Opportunities Funds.
5 With respect to the Constellation Clover Large Cap Value, Constellation Clover Core Value, Constellation
Clover Small Cap Value, and Constellation Clover Core Fixed Income Funds.
6 With respect to the Constellation Chartwell Ultra Short Duration Fixed Income, Constellation Chartwell
Short Duration Fixed Income, and Constellation Chartwell High Yield Funds.
</FN>
40
CALCULATING NAV. Each Turner Fund calculates its net asset value per
share ("NAV") once each business day at the regularly-scheduled close of normal
trading on the New York Stock Exchange (normally, 4:00 p.m. Eastern Time). The
Constellation Funds will calculate their NAV at the same time.
STATE OF ORGANIZATION. The Constellation Trust is organized as a
business trust under Delaware law. The Turner Trust is organized as a business
trust under Massachusetts law. The following is a summary of certain differences
between and among the Declaration of Trust and By-laws of the Constellation
Trust and the Declaration of Trust and By-laws of the Turner Trust. It is not a
complete list of the differences.
Delaware law contains favorable limitations on shareholder and trustee
liability for obligations of the trust, and provides for indemnification out of
trust property for any shareholder or trustee that may be held personally liable
for the obligations of the trust. Further, under the By-laws of the
Constellation Trust, such indemnification extends to any person who is or was a
trustee, officer, employee or other agent of the Constellation Trust or is or
was serving at the request of the Constellation Trust as a trustee, director,
officer, employee or agent of another foreign or domestic corporation,
partnership, joint venture, trust or other enterprise or was a trustee,
director, officer or an employee or agent of a foreign or domestic corporation
that was a predecessor of another enterprise at the request of such enterprise.
Massachusetts law does not include provisions relating to the
limitation of liability of the shareholders and trustees for a business trust.
Therefore, the shareholders and trustees of a Massachusetts business trust could
potentially be liable for obligations of the trust. The Turner Trust's
Declaration of Trust, however, contains express provisions stating that the
shareholders and trustees are not personally liable in connection with Trust
property or the acts, obligations or affairs of the Trust. The Turner Trust's
Declaration of Trust also contains an express provision limiting the liability
of the Trustees and provides for indemnification of the shareholders and
trustees under certain circumstances.
REMOVING TRUSTEES. Under the Constellation Trust's Declaration
of Trust, shareholders may remove a trustee by a vote of two-thirds of the
Trust's outstanding shares. Under the Turner Trust's Declaration of Trust,
shareholders holding a majority of the shares entitled to vote may remove a
trustee.
SHAREHOLDER MEETINGS. The Constellation Trust's Declaration of
Trust and By-Laws do NOT specifically authorize shareholders to call a special
shareholder's meeting. Under the Turner Trust's Declaration of Trust and
By-Laws, shareholders owning at least 10% of the outstanding shares of any
Turner Fund may call a special shareholder's meeting for any purpose.
QUORUM. At any meeting of shareholders, under the
Constellation Trust's Declaration of Trust, 40% of the shares entitled to vote
constitutes a quorum at a shareholder's meeting, except when a larger quorum is
required by applicable law. Under the Turner Trust's Declaration of Trust and
By-Laws, a majority in interest of the shares entitled to vote constitutes a
quorum at a shareholder's meeting.
DERIVATIVE AND CLASS ACTIONS. Under the Turner Trust's
Declaration of Trust, shareholders have the power to vote to the same extent as
the shareholders of a Massachusetts business corporation as to whether or not a
court action, proceeding or claim should be brought or maintained derivatively
or as a class action on behalf of the Turner Trust or its shareholders. The
Constellation Trust's Declaration of Trust does not provide shareholders a
similar right. Delaware law, however, affords shareholders of a business trust
the right to bring derivative actions.
41
REORGANIZING/MERGING A FUND. Under the Constellation Trust's
Declaration of Trust, the trustees can merge, reorganize or sell all or
substantially all of the assets of a fund created on or after August 14, 1998
WITHOUT shareholder approval. Under the Turner Trust's Declaration of Trust, the
trustees can merge, reorganize or sell all or substantially all of the assets of
a fund created on or after August 17, 2001 WITHOUT shareholder approval.
AMENDING THE DECLARATION OF TRUST. Under the Constellation
Trust's Declaration of Trust, the trustees may amend the declaration of trust
without shareholder approval. Under the Turner Trust's Declaration of Trust, the
trustees may amend the declaration of trust without shareholder approval, except
for amendments that affect certain shareholder rights.
THE INVESTMENT ADVISER AND THE INVESTMENT ADVISORY AGREEMENT
INVESTMENT ADVISORY ARRANGEMENTS WITH CIMCO. CIMCO will serve as each
Constellation Fund's investment adviser under an investment advisory agreement
with the Constellation Trust. Under the agreement, CIMCO will have general
responsibility for the management of each Constellation Fund. As the
Constellation Funds' investment adviser, CIMCO will oversee each sub-adviser's
sub-advisory activities with respect to each Constellation Fund and will monitor
each sub-adviser's compliance with the respective Constellation Fund's
investment policies, guidelines and restrictions.
ABOUT CIMCO. CIMCO (formerly, Concentrated Capital Management, LP) is a
limited partnership organized under the laws of the State of Pennsylvania and is
registered as an investment adviser with the SEC. CIMCO is located at 1205
Westlakes Drive, Suite 100, Berwyn, PA 19312. As of January 31, 2004, CIMCO had
discretionary management authority over less than $1 million of assets.
Listed below are the names and principal occupations of each of the
directors and the principal executive officers of CIMCO. The principal business
address of each director and the principal executive officer, as it relates to
their duties at CIMCO, is 1205 Westlakes Drive, Suite 100, Berwyn, Pennsylvania
19312.
NAME POSITION WITH CIMCO
---- -------------------
John H. Grady President and Chief Executive Officer
Francis McAleer [Senior Vice President]
John J. Canning Vice President and Director of Mutual Fund Accounting
Antoinette C. Robbins Vice President and Director of Accounting
Saeed Franklin [Vice President]
Rami Livelsberger [Vice President]
ABOUT THE INVESTMENT ADVISORY AGREEMENT. The investment advisory
agreement between CIMCO and the Constellation Trust is similar to the current
investment advisory agreement between Turner and the Turner Trust. Under the
investment advisory agreement and subject to the direction of the Constellation
Trust's Board of Trustees, CIMCO will have general responsibility for the
management of the Constellation Funds. As the Constellation Funds' investment
adviser, CIMCO will oversee each sub-adviser's sub-advisory activities with
respect to each Constellation Fund and will monitor each sub-adviser's
compliance with the respective Constellation Fund's investment policies,
guidelines and restrictions. As discussed above, CIMCO will receive base
investment advisory fees equal to the fees currently charged by Turner under its
investment advisory agreement with the Turner Trust plus, beginning one year
after the date of the Reorganization, performance fees. CIMCO will, in turn, pay
sub-advisory fees to Turner, TIM, Clover and Chartwell, respectively, from its
advisory fee.
42
The advisory agreement will become effective as of the date of its
execution and will continue in effect for a period of up to two years from the
date of execution. Thereafter, the agreement would continue automatically for
successive annual periods, provided such continuance is specifically approved at
least annually by (i) the Constellation Trust's Trustees or (ii) a vote of a
"majority of the outstanding voting securities" (as defined in the 1940 Act) of
the Constellation Trust, provided that in either event the continuance also is
approved by a majority of the Constellation Trust's trustees who are not
"interested persons" (as defined in the 1940 Act) of the Trust or of any party
to the agreement, by vote cast in person at a meeting called for the purpose of
voting on such approval. The agreement is terminable with respect to each
Constellation Fund, without penalty, on 60 days' written notice by CIMCO, by the
Constellation Fund's Trustees, or by vote of holders of a majority of the
Constellation Fund's shares. CIMCO may terminate the agreement, without penalty,
on 60 days' written notice. The agreement also would terminate automatically in
the event of its assignment (as defined in the 1940 Act).
Under the investment advisory agreement, neither CIMCO nor its
officers, directors, employees or agents or controlling persons would be liable
for any error of judgment or mistake of law, or for any loss suffered by the
Constellation Trust and/or a Constellation Fund in connection with or arising
out of the matters to which the advisory agreement relates, except a loss
resulting from willful misfeasance, bad faith or gross negligence on the part of
CIMCO in the performance of its duties or from reckless disregard by it of its
obligations and duties under the advisory agreement.
Each Turner Fund's current investment advisory agreement with Turner
has a similar standard of care. Under that agreement, Turner is not liable for
any error of judgment or mistake of law or for any loss arising out of any
investment or for any act or omission in carrying out its duties thereunder,
except a loss resulting from willful misfeasance, bad faith or gross negligence
in the performance of its duties, or by reason of reckless disregard of its
obligations and duties under the agreement, except as may otherwise be provided
under provisions of applicable state law or federal securities law that cannot
be waived or modified.
THE SUB-ADVISERS AND THE SUB-ADVISORY AGREEMENTS
1. ABOUT TURNER
DESCRIPTION OF TURNER. Turner, 1205 Westlakes Drive, Suite 100, Berwyn,
Pennsylvania 19312, is a professional investment management firm founded in
March, 1990, and is registered with the SEC as an investment adviser. Robert E.
Turner is the Chairman and controlling shareholder of Turner. As of December 31,
2003, Turner had discretionary management authority with respect to
approximately $12 billion of assets. Turner has provided investment advisory
services to investment companies since 1992.
Listed below are the names and principal occupations of each of the
directors and the principal executive officers of Turner. The principal business
address of each director and the principal executive officer, as it relates to
their duties at Turner, is 1235 Westlakes Drive, Suite 350, Berwyn, Pennsylvania
19312.
NAME POSITION WITH TURNER
Robert E. Turner* Chairman and Chief Investment Officer - Growth Equities
Mark D. Turner Vice Chairman and Senior Portfolio Manager
Stephen J. Kneeley President and Co-Chief Executive Officer
Christopher McHugh Board Member, Vice President and Secretary
Brian F. McNally Assistant Secretary and Corporate Counsel
Thomas R. Trala Board Member, Chief Operating Officer, Chief Financial Officer and
Treasurer
* THIS PERSON IS ALSO A TRUSTEE OR TRUST OFFICER OF THE TURNER TRUST.
43
ABOUT THE TURNER SUB-ADVISORY AGREEMENT. Turner, or its affiliate, TIM,
currently serves as the investment adviser to all of the Turner Funds. Under the
sub-advisory agreement between CIMCO and Turner, Turner will continue to provide
day-to-day investment management services to the newly formed Constellation TIP
Financial Services, Constellation TIP Healthcare & Biotechnology, Constellation
TIP Tax Managed U.S. Equity, and Constellation TIP Small Cap Value Opportunities
Funds.
The sub-advisory agreement between CIMCO and Turner is similar to the
investment advisory agreement between Turner and the Turner Financial Services,
Turner Healthcare & Biotechnology and Turner Tax Managed U.S. Equity Funds, and
is also similar to the investment advisory agreement between TIM and the Turner
Small Cap Value Opportunities Fund. The principal difference between these
agreements is the compensation structure. In the advisory agreement with the
referenced Turner Funds, Turner and TIM receive a fee directly from a Turner
Fund. In the sub-advisory agreement relating to the Constellation TIP Financial
Services, Constellation TIP Healthcare & Biotechnology, Constellation TIP Tax
Managed U.S. Equity, and Constellation TIP Small Cap Value Opportunities Funds,
Turner would receive a fee from CIMCO, subject to a performance fee adjustment
for each sub-advised Fund. Turner will receive a lower fee under the
sub-advisory agreement because under the agreement Turner will not be
responsible for providing certain services to the new Constellation Funds that
it or its affiliate is currently required to provide to the Turner Funds. CIMCO
will be responsible for providing these services under its investment advisory
agreement with the Constellation Trust, on behalf of each Constellation Fund.
The Turner sub-advisory agreement will become effective as of the date
of its execution and will continue in effect for a period of up to two years
from the date of execution. Thereafter, the sub-advisory agreement would
continue automatically with respect to each of the above-referenced
Constellation Funds for successive annual periods, provided such continuance is
specifically approved at least annually by: (i) the Board of Trustees of the
Constellation Trust or (ii) a vote of a "majority" of the outstanding voting
securities (as defined in the 1940 Act) of a Constellation Fund for which Turner
serves as sub-adviser, provided that in either event the continuance also is
approved by a majority of the Constellation Fund's trustees who are not
"interested persons" (as defined in the 1940 Act) of the Constellation Fund or
of any party to the sub-advisory agreement, by vote cast in person at a meeting
called for the purpose of voting on such approval. The sub-advisory agreement is
terminable, without penalty, on 60 days' written notice by CIMCO, by the Board
of Trustees of the Constellation Trust, or by vote of holders of a majority of a
Constellation Fund's shares for which Turner serves as sub-adviser. Turner may
terminate the agreement, without penalty, on 60 days' written notice. The
sub-advisory agreement will terminate automatically five business days after
Turner receives written notice of termination of the advisory agreement between
the Constellation Trust and CIMCO. The sub-advisory agreement also will
terminate automatically in the event of its assignment (as defined in the 1940
Act).
The sub-advisory agreement requires Turner to exercise its best
judgment in rendering the services provided by it under the sub-advisory
agreement. Under the agreement, Turner would not be liable for any error of
judgment or mistake of law or for any loss suffered by the Constellation Funds
or the holders of the Constellation Funds' shares or by CIMCO in connection with
the matters to which the sub-advisory agreement relates, provided that nothing
in the sub-advisory agreement will be deemed to protect or purport to protect
Turner against liability to the Constellation Funds or to holders of the
Constellation Funds' shares or to CIMCO to which Turner would otherwise be
subject by reason of willful misfeasance, bad faith or gross negligence on its
part in the performance of its duties or by reason of Turner's reckless
disregard of its obligations and duties under the sub-advisory agreement. Your
44
Turner Fund's current investment advisory agreement with Turner has a similar
standard of care.
2. ABOUT CLOVER
DESCRIPTION OF CLOVER. Clover, 110 Office Park Way, Pittsford, New York
14534, is a professional investment management firm founded in 1984 by Michael
Edward Jones, CFA, and Geoffrey Harold Rosenberger, CFA, who are Managing
Directors of Clover Capital and who control all of Clover Capital's outstanding
voting stock. Clover is registered with the SEC as an investment adviser. As of
December 31, 2003, Clover had discretionary management authority with respect to
approximately $2 billion of assets. In addition to providing sub-advisory
services to the Turner Funds mentioned above, Clover provides advisory services
to pension plans, religious and educational endowments, corporations, 401(k)
plans, profit sharing plans, individual investors and trusts and estates.
Listed below are the names and principal occupations of each of the
directors and the principal executive officers of Clover. The principal business
address of each director and the principal executive officer, as it relates to
their duties at Clover, is 11 Tobey Village Office Park, Pittsford, New York
14534.
NAME POSITION WITH CLOVER
---- --------------------
Michael E. Jones Board Member and President
Geoffrey H. Rosenberger Board Member, Executive Vice President, Secretary and Treasurer
Stephen J. Carl Chief Operating Officer
James G. Gould Board Member
ABOUT THE CLOVER SUB-ADVISORY AGREEMENT. Clover currently serves as the
investment sub-adviser to the Turner Large Cap Value, Turner Core Value, Turner
Small Cap Value, and Turner Core Fixed Income Funds. Clover began serving as
sub-adviser to these Turner Funds on May 1, 2001, and before that served as
these Funds' investment adviser. Under the sub-advisory agreement between CIMCO
and Clover, Clover will continue to provide day-to-day investment management
services to the newly formed Constellation Clover Large Cap Value, Constellation
Clover Core Value, Constellation Clover Small Cap Value, and Constellation
Clover Core Fixed Income Funds.
The sub-advisory agreement between CIMCO and Clover is virtually
identical to the investment sub-advisory agreement between Turner and Clover
with respect to the Turner Large Cap Value, Turner Core Value, Turner Small Cap
Value, and Turner Core Fixed Income Funds. The principal difference between the
two agreements is the compensation structure. In the sub-advisory agreement
between Turner and Clover, Clover receives a fee from Turner. In the
sub-advisory agreement between CIMCO and Clover relating to the Constellation
Clover Large Cap Value, Constellation Clover Core Value, Constellation Clover
Small Cap Value, and Constellation Clover Core Fixed Income Funds, Clover would
receive a fee from CIMCO.
The Clover sub-advisory agreement will become effective as of the date
of its execution and will continue in effect for a period of up to two years
from the date of execution. Thereafter, the sub-advisory agreement would
continue automatically with respect to each of the above-referenced
Constellation Funds for successive annual periods, provided such continuance is
specifically approved at least annually by: (i) the Board of Trustees of the
Constellation Trust or (ii) a vote of a "majority" of the outstanding voting
securities (as defined in the 1940 Act) of a Constellation Fund for which Clover
serves as sub-adviser, provided that in either event the continuance also is
45
approved by a majority of the Constellation Fund's trustees who are not
"interested persons" (as defined in the 1940 Act) of the Constellation Fund or
of any party to the sub-advisory agreement, by vote cast in person at a meeting
called for the purpose of voting on such approval. The sub-advisory agreement is
terminable, without penalty, on 60 days' written notice by CIMCO, by the Board
of Trustees of the Constellation Trust, or by vote of holders of a majority of a
Constellation Fund's shares for which Clover serves as sub-adviser. Clover may
terminate the agreement, without penalty, on 60 days' written notice. The
sub-advisory agreement will terminate automatically five business days after
Clover receives written notice of termination of the advisory agreement between
the Constellation Trust and CIMCO. The sub-advisory agreement also will
terminate automatically in the event of its assignment (as defined in the 1940
Act).
The sub-advisory agreement requires Clover to exercise its best
judgment in rendering the services provided by it under the sub-advisory
agreement. Under the agreement, Clover would not be liable for any error of
judgment or mistake of law or for any loss suffered by the Constellation Funds
or the holders of the Constellation Funds' shares or by CIMCO in connection with
the matters to which the sub-advisory agreement relates, provided that nothing
in the sub-advisory agreement will be deemed to protect or purport to protect
Clover against liability to the Constellation Funds or to holders of the
Constellation Funds' shares or to CIMCO to which Clover would otherwise be
subject by reason of willful misfeasance, bad faith or gross negligence on its
part in the performance of its duties or by reason of Clover's reckless
disregard of its obligations and duties under the sub-advisory agreement. Your
Turner Fund's current investment sub-advisory agreement with Clover has a
similar standard of care.
3. ABOUT CHARTWELL
DESCRIPTION OF CHARTWELL. Chartwell, 1235 Westlakes Drive, Suite 400,
Berwyn, PA 19312, is a professional investment management firm, and is
registered with the SEC as an investment adviser. As of December 31, 2003,
Chartwell had discretionary management authority with respect to approximately
$6.8 billion of assets. In addition to providing the sub-advisory services to
the Constellation Funds referenced above, Chartwell provides advisory services
to pension plans, religious and educational endowments, corporations, 401(k)
plans, profit sharing plans and individual investors..
Listed below are the names and principal occupations of each of the
directors and the principal executive officers of Chartwell. The principal
business address of each director and the principal executive officer, as it
relates to their duties at Chartwell, is 1235 Westlakes Drive, Suite 400,
Berwyn, PA 19312.
NAME POSITION WITH CHARTWELL
---- -----------------------
Timothy J. Riddle, CFA Managing Partner, Chief Executive Officer
Winthrop S. Jessup Managing Partner, Chairman of the Management Committee
G. Gregory Haggar, CPA Partner, Chief Financial Officer
Michael J. McCloskey Managing Partner, President
ABOUT THE CHARTWELL SUB-ADVISORY AGREEMENT. Currently, Turner manages
the Turner Ultra Short Duration Fixed Income, Turner Short Duration Fixed
Income, and Turner High Yield pursuant to the terms of an Investment Advisory
Agreement between Turner and the Turner Trust. Mr. Roger Early and Mr. Paul
Matlack form the team that manages the Turner Ultra Short Duration Fund and the
Turner Short Duration Funds, while Mr. Early, Mr. Matlack and Mr. John McCarthy
form the committee that manages the Turner High Yield Fund.
Effective September 2, 2003, Turner made a strategic business decision
to outsource its fixed income investment management responsibilities with
respect to the above-referenced Turner Funds to Chartwell. As part of this
arrangement, all four members of Turner's fixed income investments team
46
(including Messrs. Early, Matlack and McCarthy) became employees of Chartwell,
while remaining "dual" employees of Turner for the sole purpose of providing
day-to-day management services to the above-referenced Turner Funds. Effective
upon completion of the proposed reorganization, each member of Turner's fixed
income investment team intends to terminate his employment relationship with
Turner and to become a full-time, exclusive employee of Chartwell.
Under the sub-advisory agreement between CIMCO and Chartwell, Messrs.
Early, Matlack and McCarthy will continue to provide day-to-day investment
management services to the newly formed Constellation Chartwell Ultra Short
Duration Fixed Income, Constellation Chartwell Short Duration Fixed Income, and
Constellation Chartwell High Yield Funds.
The sub-advisory agreement between CIMCO and Chartwell is similar to
the investment advisory agreement between Turner and the Turner Ultra Short
Duration Fixed Income, Turner Short Duration Fixed Income, and Turner High Yield
Funds. The principal difference between the two agreements is the compensation
structure. In Turner's advisory agreement with the referenced Turner Funds,
Turner receives a fee directly from these Turner Funds. In the sub-advisory
agreement relating to the Constellation Chartwell Ultra Short Duration Fixed
Income, Constellation Chartwell Short Duration Fixed Income, and Constellation
Chartwell High Yield Funds, Chartwell (rather than Turner) would receive a fee
from CIMCO, not the Funds. Chartwell will receive a lower fee under the
sub-advisory agreement than Turner received under the investment advisory
agreement because under the sub-advisory agreement Chartwell will not be
responsible for providing certain services to the new Constellation Funds that
Turner is currently required to provide to the Turner Funds. CIMCO will be
responsible for providing these services under its investment advisory agreement
with the Constellation Trust, on behalf of each Constellation Fund.
The Chartwell sub-advisory agreement will become effective as of the
date of its execution and will continue in effect for a period of up to two
years from the date of execution. Thereafter, the sub-advisory agreement would
continue automatically with respect to each of the above-referenced
Constellation Funds for successive annual periods, provided such continuance is
specifically approved at least annually by: (i) the Board of Trustees of the
Constellation Trust or (ii) a vote of a "majority" of the outstanding voting
securities (as defined in the 1940 Act) of a Constellation Fund for which
Chartwell serves as sub-adviser, provided that in either event the continuance
also is approved by a majority of the Constellation Fund's trustees who are not
"interested persons" (as defined in the 1940 Act) of the Constellation Fund or
of any party to the sub-advisory agreement, by vote cast in person at a meeting
called for the purpose of voting on such approval. The sub-advisory agreement is
terminable, without penalty, on 60 days' written notice by CIMCO, by the Board
of Trustees of the Constellation Trust, or by vote of holders of a majority of a
Constellation Fund's shares for which Chartwell serves as sub-adviser. Chartwell
may terminate the agreement, without penalty, on 60 days' written notice. The
sub-advisory agreement will terminate automatically five business days after
Chartwell receives written notice of termination of the advisory agreement
between the Constellation Trust and CIMCO. The sub-advisory agreement also will
terminate automatically in the event of its assignment (as defined in the 1940
Act).
The sub-advisory agreement requires Chartwell to exercise its best
judgment in rendering the services provided by it under the sub-advisory
agreement. Under the agreement, Chartwell would not be liable for any error of
judgment or mistake of law or for any loss suffered by the Constellation Funds
or the holders of the Constellation Funds' shares or by CIMCO in connection with
the matters to which the sub-advisory agreement relates, provided that nothing
in the sub-advisory agreement will be deemed to protect or purport to protect
Chartwell against liability to the Constellation Funds or to holders of the
Constellation Funds' shares or to CIMCO to which Chartwell would otherwise be
subject by reason of willful misfeasance, bad faith or gross negligence on its
part in the performance of its duties or by reason of Chartwell's reckless
disregard of its obligations and duties under the sub-advisory agreement. Your
Turner Fund's current investment advisory agreement with Turner has a similar
standard of care.
47
CONSIDERATIONS AND RECOMMENDATIONS OF THE BOARD OF TRUSTEES
At a meeting of the Turner Trust's Board held on January 29, 2004, the
Board of Trustees, including the Independent Trustees, unanimously approved the
reorganization. The Trustees unanimously determined that the reorganization was
in the Turner Funds' best interest and that the interests of the Turner Funds'
existing shareholders will not be diluted as a result of the reorganization. The
Trustees obtained from Turner and CIMCO such information as it deemed reasonably
necessary to make these determinations. Representatives of Turner and CIMCO
provided information to the Trustees about the potential benefits and detriments
to the Turner Funds and their shareholders.
The Trustees reviewed the terms and provisions of the agreement and
plan of reorganization, the objectives, policies and restrictions of the Turner
Funds and the Constellation Funds, the expected tax consequences of the
reorganization to the Turner Funds and their shareholders, and the expense
ratios of the Turner Funds and the Constellation Funds. In evaluating CIMCO and
the reorganization, the Trustees reviewed certain materials furnished, and
considered certain representations made, by CIMCO regarding its philosophy of
management, performance expectations and methods of operation insofar as they
related to the Turner Funds, and its decision to retain Turner, Clover and
Chartwell as sub-advisers to various Constellation Funds.
The Trustees further considered the similarities and differences
between the current investment objectives and policies of the Turner Funds and
those of the Constellation Funds. The Trustees also considered the Turner Funds'
current fee and expense structure and historical expense ratio as compared to
those proposed for the Constellation Funds. The Trustees reviewed the proposed
fees as compared to those of comparable funds. In addition, the Trustees
considered that Turner and CIMCO would bear all of the Turner Funds' costs
relating to the reorganization and this solicitation.
The principal factors that the Trustees considered in approving the
reorganization were that: (i) each Constellation Fund will have similar
investment objectives, strategies, policies and limitations as those of its
corresponding Turner Fund; and (ii) the same investment advisory personnel who
currently manage each Turner Fund will continue to manage the corresponding
Constellation Fund after the reorganization. In addition, the Trustees reviewed
pro forma expense ratios for each Constellation Fund, and the nature, scope and
quality of services that CIMCO proposed to provide to the Constellation Funds.
The Trustees also considered a number of other factors, including the capacity
of CIMCO, Turner, Clover and Chartwell to perform their duties under the
investment advisory and sub-advisory agreements; CIMCO's, Turner's, Clover's and
Chartwell's investment management personnel; the financial standing of CIMCO;
and the experience and expertise of CIMCO, Turner, Clover and Chartwell as
investment advisers. The Trustees also considered other alternatives for the
Turner Funds, including termination, but determined that reorganizing the Turner
Funds into a mutual fund group that would manage the Funds in a substantially
similar manner following the reorganization was a preferable alternative to
termination, because of, among other things, adverse tax consequences to
shareholders. Based on the factors discussed above and others, the Trustees
approved the reorganization, subject to shareholder approval.
BASED ON THE ABOVE INFORMATION AND FACTORS, THE TRUSTEES UNANIMOUSLY
DETERMINED TO RECOMMEND THAT TURNER FUNDS SHAREHOLDERS APPROVE THE
REORGANIZATION.
48
GENERAL INFORMATION ABOUT THE TURNER TRUST
AND OTHER MATTERS
TRUSTEES AND OFFICERS. Information about the Turner Trust's current
Trustees and principal executive officers, including their names, positions with
the Trust, and association with the Trust is set forth below:
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
Thomas R. Trala* President and Chief Executive Officer
Peter Golden Controller and Chief Accounting Officer
<FN>
* 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. MR. TRALA IS AN "AFFILIATED PERSON" (AS THAT TERM IS
DEFINED IN THE 1940 ACT) OF THE TRUST AND TURNER.
</FN>
ADVISER. Turner, 1205 Westlakes Drive, Suite 100, Berwyn, Pennsylvania
19312, serves as the investment adviser for the Turner Financial Services,
Turner Healthcare & Biotechnology, Turner Tax Managed U.S. Equity, Turner
Strategic Value and High Income, Turner Large Cap Value, Turner Core Value,
Turner Small Cap Value, Turner Core Fixed Income, Turner Ultra Short Duration
Fixed Income, Turner Short Duration Fixed Income, and Turner High Yield Funds.
TIM, 100 Pearl Street, 12th Floor, Hartford, CT 06103, serves as the
investment adviser for the Turner Small Cap Opportunities Fund.
SUB-ADVISER. Clover, 11 Tobey Village Office Park, Pittsford, New York
14534, serves as the investment sub-adviser for the Turner Large Cap Value,
Turner Core Value, Turner Small Cap Value, and Turner Core Fixed Income Funds.
DISTRIBUTOR. Turner Investment Distributors, Inc., a registered
broker-dealer that is owned and operated by Turner, serves as the distributor of
the Turner Funds.
ADMINISTRATOR. Turner serves as the administrator of the Turner Funds.
SEI Investments Global Funds Services, a Delaware business trust that has its
principal business offices in Oaks, Pennsylvania, serves as each Turner Fund's
sub-administrator.
5% SHAREHOLDERS. As of ________ __, 2004, the following persons were
the only persons who were record owners or, to the knowledge of the Turner
Trust, were beneficial owners of 5% or more of the shares of the Turner Funds.
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.
TURNER FINANCIAL SERVICES FUND
- -------------------------------------------------- -------------------------------- ----------------------------------
NAME AND ADDRESS OF SHAREHOLDER NUMBER OF SHARES PERCENT OF FUND
- -------------------------------------------------- -------------------------------- ----------------------------------
- -------------------------------------------------- -------------------------------- ----------------------------------
- -------------------------------------------------- -------------------------------- ----------------------------------
- -------------------------------------------------- -------------------------------- ----------------------------------
- -------------------------------------------------- -------------------------------- ----------------------------------
- -------------------------------------------------- -------------------------------- ----------------------------------
- -------------------------------------------------- -------------------------------- ----------------------------------
49
TURNER HEALTHCARE & BIOTECHNOLOGY FUND
- -------------------------------------------------- -------------------------------- ----------------------------------
NAME AND ADDRESS OF SHAREHOLDER NUMBER OF SHARES PERCENT OF FUND
- -------------------------------------------------- -------------------------------- ----------------------------------
- -------------------------------------------------- -------------------------------- ----------------------------------
- -------------------------------------------------- -------------------------------- ----------------------------------
- -------------------------------------------------- -------------------------------- ----------------------------------
- -------------------------------------------------- -------------------------------- ----------------------------------
- -------------------------------------------------- -------------------------------- ----------------------------------
- -------------------------------------------------- -------------------------------- ----------------------------------
TURNER TAX MANAGED AND U.S. EQUITY FUND
- -------------------------------------------------- -------------------------------- ----------------------------------
NAME AND ADDRESS OF SHAREHOLDER NUMBER OF SHARES PERCENT OF FUND
- -------------------------------------------------- -------------------------------- ----------------------------------
- -------------------------------------------------- -------------------------------- ----------------------------------
- -------------------------------------------------- -------------------------------- ----------------------------------
- -------------------------------------------------- -------------------------------- ----------------------------------
- -------------------------------------------------- -------------------------------- ----------------------------------
- -------------------------------------------------- -------------------------------- ----------------------------------
- -------------------------------------------------- -------------------------------- ----------------------------------
TURNER SMALL CAP VALUE OPPORTUNITIES FUND
- -------------------------------------------------- -------------------------------- ----------------------------------
NAME AND ADDRESS OF SHAREHOLDER NUMBER OF SHARES PERCENT OF FUND
- -------------------------------------------------- -------------------------------- ----------------------------------
- -------------------------------------------------- -------------------------------- ----------------------------------
- -------------------------------------------------- -------------------------------- ----------------------------------
- -------------------------------------------------- -------------------------------- ----------------------------------
- -------------------------------------------------- -------------------------------- ----------------------------------
- -------------------------------------------------- -------------------------------- ----------------------------------
- -------------------------------------------------- -------------------------------- ----------------------------------
TURNER LARGE CAP VALUE FUND
- -------------------------------------------------- -------------------------------- ----------------------------------
NAME AND ADDRESS OF SHAREHOLDER NUMBER OF SHARES PERCENT OF FUND
- -------------------------------------------------- -------------------------------- ----------------------------------
- -------------------------------------------------- -------------------------------- ----------------------------------
- -------------------------------------------------- -------------------------------- ----------------------------------
- -------------------------------------------------- -------------------------------- ----------------------------------
- -------------------------------------------------- -------------------------------- ----------------------------------
- -------------------------------------------------- -------------------------------- ----------------------------------
- -------------------------------------------------- -------------------------------- ----------------------------------
TURNER CORE VALUE FUND
- -------------------------------------------------- -------------------------------- ----------------------------------
NAME AND ADDRESS OF SHAREHOLDER NUMBER OF SHARES PERCENT OF FUND
- -------------------------------------------------- -------------------------------- ----------------------------------
- -------------------------------------------------- -------------------------------- ----------------------------------
- -------------------------------------------------- -------------------------------- ----------------------------------
- -------------------------------------------------- -------------------------------- ----------------------------------
- -------------------------------------------------- -------------------------------- ----------------------------------
- -------------------------------------------------- -------------------------------- ----------------------------------
- -------------------------------------------------- -------------------------------- ----------------------------------
50
TURNER SMALL CAP VALUE FUND
- -------------------------------------------------- -------------------------------- ----------------------------------
NAME AND ADDRESS OF SHAREHOLDER NUMBER OF SHARES PERCENT OF FUND
- -------------------------------------------------- -------------------------------- ----------------------------------
- -------------------------------------------------- -------------------------------- ----------------------------------
- -------------------------------------------------- -------------------------------- ----------------------------------
- -------------------------------------------------- -------------------------------- ----------------------------------
- -------------------------------------------------- -------------------------------- ----------------------------------
- -------------------------------------------------- -------------------------------- ----------------------------------
- -------------------------------------------------- -------------------------------- ----------------------------------
TURNER CORE FIXED INCOME FUND
- -------------------------------------------------- -------------------------------- ----------------------------------
NAME AND ADDRESS OF SHAREHOLDER NUMBER OF SHARES PERCENT OF FUND
- -------------------------------------------------- -------------------------------- ----------------------------------
- -------------------------------------------------- -------------------------------- ----------------------------------
- -------------------------------------------------- -------------------------------- ----------------------------------
- -------------------------------------------------- -------------------------------- ----------------------------------
- -------------------------------------------------- -------------------------------- ----------------------------------
- -------------------------------------------------- -------------------------------- ----------------------------------
- -------------------------------------------------- -------------------------------- ----------------------------------
TURNER ULTRA SHORT DURATION FIXED INCOME FUND
- -------------------------------------------------- -------------------------------- ----------------------------------
NAME AND ADDRESS OF SHAREHOLDER NUMBER OF SHARES PERCENT OF FUND
- -------------------------------------------------- -------------------------------- ----------------------------------
- -------------------------------------------------- -------------------------------- ----------------------------------
- -------------------------------------------------- -------------------------------- ----------------------------------
- -------------------------------------------------- -------------------------------- ----------------------------------
- -------------------------------------------------- -------------------------------- ----------------------------------
- -------------------------------------------------- -------------------------------- ----------------------------------
- -------------------------------------------------- -------------------------------- ----------------------------------
TURNER SHORT DURATION FIXED INCOME FUND
- -------------------------------------------------- -------------------------------- ----------------------------------
NAME AND ADDRESS OF SHAREHOLDER NUMBER OF SHARES PERCENT OF FUND
- -------------------------------------------------- -------------------------------- ----------------------------------
- -------------------------------------------------- -------------------------------- ----------------------------------
- -------------------------------------------------- -------------------------------- ----------------------------------
- -------------------------------------------------- -------------------------------- ----------------------------------
- -------------------------------------------------- -------------------------------- ----------------------------------
- -------------------------------------------------- -------------------------------- ----------------------------------
- -------------------------------------------------- -------------------------------- ----------------------------------
TURNER HIGH YIELD FUND
- -------------------------------------------------- -------------------------------- ----------------------------------
NAME AND ADDRESS OF SHAREHOLDER NUMBER OF SHARES PERCENT OF FUND
- -------------------------------------------------- -------------------------------- ----------------------------------
- -------------------------------------------------- -------------------------------- ----------------------------------
- -------------------------------------------------- -------------------------------- ----------------------------------
- -------------------------------------------------- -------------------------------- ----------------------------------
- -------------------------------------------------- -------------------------------- ----------------------------------
- -------------------------------------------------- -------------------------------- ----------------------------------
- -------------------------------------------------- -------------------------------- ----------------------------------
51
TURNER STRATEGIC VALUE AND HIGH INCOME FUND
- -------------------------------------------------- -------------------------------- ----------------------------------
NAME AND ADDRESS OF SHAREHOLDER NUMBER OF SHARES PERCENT OF FUND
- -------------------------------------------------- -------------------------------- ----------------------------------
- -------------------------------------------------- -------------------------------- ----------------------------------
- -------------------------------------------------- -------------------------------- ----------------------------------
- -------------------------------------------------- -------------------------------- ----------------------------------
- -------------------------------------------------- -------------------------------- ----------------------------------
- -------------------------------------------------- -------------------------------- ----------------------------------
- -------------------------------------------------- -------------------------------- ----------------------------------
<FN>
* AS OF JANUARY 31, 2004, THE TURNER TRUST'S TRUSTEES AND OFFICERS OWN LESS THAN 1% OF ANY TURNER FUND'S SHARES.
</FN>
ADJOURNMENT. In the event that sufficient votes in favor of the
proposal 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. Turner and CIMCO will bear the costs of any
adjourned sessions. The persons named as proxies will vote for an adjournment of
any proxies that they are entitled to vote in favor of the proposal.
VOTING DETAILS. Each share of beneficial interest of the Turner Funds
is entitled to one vote, and a proportionate fractional vote for each fractional
share held. Any Shareholder who submits a proxy may revoke it at any time before
it is exercised by submitting to the Turner Trust a specific written notice of
revocation.
A majority in interest of each Turner Fund's shares entitled to vote on
the proposal constitutes a quorum. Abstentions and "broker non-votes" will not
be counted for or against the proposal, 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 proposal.
SHAREHOLDER PROPOSALS. The Turner 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 Turner Trust c/o Turner Investment
Partners, Inc., 1205 Westlakes Drive, Suite 100, Berwyn, Pennsylvania 19312.
OTHER MATTERS. The Trustees of the Turner Trust 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 that 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.
REPORTS TO SHAREHOLDERS. The Turner Trust will furnish, without charge,
a copy of the most recent Annual Report to Shareholders of the Trust and the
most recent Semi-Annual Report succeeding such Annual Report, if any, upon
request. Requests should be directed to the Turner Trust at 1205 Westlakes
Drive, Suite 100, Berwyn, PA 19312, or by calling 1-800-224-6312.
SHAREHOLDERS ARE URGED TO COMPLETE, SIGN AND DATE THE ENCLOSED PROXY CARD AND
RETURN IT PROMPTLY. NO POSTAGE IS REQUIRED IF MAILED IN THE UNITED STATES. YOU
MAY ALSO VOTE OVER THE INTERNET OR BY TELEPHONE. PLEASE FOLLOW THE ENCLOSED
INSTRUCTIONS TO USE THESE METHODS OF VOTING.
52
EXHIBIT A
AGREEMENT AND PLAN OF REORGANIZATION
AGREEMENT AND PLAN OF REORGANIZATION dated as of ___________, 2004 (the
"Agreement"), by and between Turner Funds, a Massachusetts business trust, on
behalf of Turner Healthcare & Biotechnology Fund, Turner Financial Services
Fund, Turner Tax Managed U.S. Equity Fund, Turner Small Cap Value Opportunities
Fund, Turner Strategic Value and High Income Fund, Turner Large Cap Value Fund,
Turner Core Value Fund, Turner Small Cap Value Fund, Turner Core Fixed Income
Fund, Turner Ultra Short Duration Fixed Income Fund, Turner Short Duration Fixed
Income Fund, and Turner High Yield Fund (collectively, the "Acquired Funds"),
and Constellation Funds, a Delaware business trust, on behalf of Constellation
TIP Large Cap Growth Opportunities Fund, Constellation TIP Financial Services
Fund, Constellation TIP Tax Managed U.S. Equity Fund, Constellation TIP Small
Cap Value Opportunities Fund, Constellation Strategic Value and High Income
Fund, Constellation Clover Large Cap Value Fund, Constellation Clover Core Value
Fund, Constellation Clover Small Cap Value Fund, Constellation Clover Core Fixed
Income Fund, Constellation CIP Ultra Short Duration Fixed Income Fund,
Constellation CIP Short Duration Fixed Income Fund, and Constellation CIP High
Yield Fund (collectively, the "Acquiring Funds").
WHEREAS, Turner Funds was organized on January 26, 1996 under
Massachusetts law as a business trust and is an open-end management investment
company registered under the Investment Company Act of 1940, as amended (the
"1940 Act"). The Trust has authorized capital consisting of an unlimited number
of units of beneficial interest without par value of separate series of Turner
Funds. The Acquired Funds are duly organized and validly existing series of
Turner Funds;
WHEREAS, Constellation Funds was organized on October 25, 1993 under
Delaware law as a business trust and is an open-end management investment
company registered under the 1940 Act. Constellation Funds has authorized
capital consisting of an unlimited number of units of beneficial interest with
no par value of separate series of Constellation Funds. The Acquiring Funds are
duly organized and validly existing series of Constellation Funds;
NOW, THEREFORE, in consideration of the mutual promises herein
contained, the parties hereto agree to effect the transfer of all of the assets
of the Acquired Funds solely in exchange for the assumption by the corresponding
Acquiring Funds of all or substantially all of the liabilities of the Acquired
Funds and units of beneficial interest of the corresponding Acquiring Funds
("Acquiring Funds Shares") followed by the distribution at the Effective Time
(as defined in Section 9 of this Agreement) of such Acquiring Funds Shares to
the holders of units of beneficial interest of the Acquired Funds ("Acquired
Funds Shares") on the terms and conditions hereinafter set forth in liquidation
of the Acquired Funds. The parties hereto covenant and agree as follows:
1. PLAN OF REORGANIZATION. At the Effective Time, the Acquired Funds will
assign, deliver, and otherwise transfer all of their assets and good and
marketable title thereto, and assign all or substantially all of the liabilities
53
as are set forth in a statement of assets and responsibilities to be prepared as
of the Effective Time (the "Statement of Assets and Liabilities"), to the
Acquiring Funds free and clear of all liens, encumbrances, and adverse claims,
except as provided in this Agreement, and the Acquiring Funds shall acquire all
such assets, and shall assume all such liabilities of the Acquired Funds, in
exchange for delivery to the Acquired Funds by the Acquiring Funds of a number
of Acquiring Funds Shares (both full and fractional) equivalent in number and
value to the Acquired Funds Shares outstanding immediately prior to the
Effective Time. The assets and stated liabilities of the Acquired Funds, as set
forth in the Statement of Assets and Liabilities, shall be exclusively assigned
to and assumed by the Acquiring Funds. All debts, liabilities, obligations, and
duties of the Acquired Funds, to the extent that they exist at or after the
Effective Time and are stated in the Statement of Assets and Liabilities, shall
after the Effective Time attach to the Acquiring Funds and may be enforced
against the Acquiring Funds to the same extent as if the same had been incurred
by the Acquiring Funds.
2. TRANSFER OF ASSETS. The assets of the Acquired Funds to be acquired by the
corresponding Acquiring Funds and allocated thereto shall include, without
limitation, all cash, cash equivalents, securities, and receivables (including
interest and dividends receivable) as set forth in the Statement of Assets and
Liabilities, as well as any claims or rights of action or rights to register
shares under applicable securities laws, any books or records of the Acquired
Funds, and other property owned by the Acquired Funds at the Effective Time.
3. LIQUIDATION OF THE ACQUIRED FUNDS. At the Effective Time, the Acquired Funds
will liquidate and the Acquiring Funds Shares (both full and fractional)
received by the Acquired Funds will be distributed to the shareholders of record
of the Acquired Funds as of the Effective Time in exchange for their respective
Acquired Funds Shares and in complete liquidation of the Acquired Funds. Each
shareholder of the Acquired Funds will receive a number of Acquiring Funds
Shares equal in number and value to the Acquired Funds Shares held by that
shareholder, and each Acquiring Funds Share and Acquired Funds Share will be of
equivalent net asset value per share. Such liquidation and distribution will be
accompanied by the establishment of an open account on the share records of the
Acquiring Funds in the name of each shareholder of the Acquired Funds that
represents the respective number of Acquiring Funds Shares due such shareholder.
As soon as practicable after the Effective Time, Turner Funds shall take any and
all steps as shall be necessary and proper to effect a complete termination of
the Acquired Funds.
4. REPRESENTATIONS AND WARRANTIES OF THE ACQUIRING FUNDS. The Acquiring Funds
represent and warrant to the Acquired Funds as follows:
(a) ORGANIZATION, EXISTENCE, ETC. Constellation Funds is a business
trust duly organized and validly existing under the laws of Delaware
and has the power to carry on its business as it is now being
conducted.
(b) REGISTRATION AS INVESTMENT COMPANY. Constellation Funds is
registered under the 1940 Act as an open-end management investment
company; such registration has not been revoked or rescinded and is in
full force and effect.
(c) SHARES TO BE ISSUED UPON REORGANIZATION. The Acquiring Funds Shares
to be issued by the Acquiring Funds in connection with the
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reorganization have been duly authorized and upon consummation of the
reorganization will be validly issued, fully paid, and nonassessable.
Prior to the Effective Time, there shall be no issued and outstanding
Acquiring Funds Shares or any other securities issued by the Acquiring
Funds.
(d) AUTHORITY RELATIVE TO THIS AGREEMENT. Constellation Funds, on
behalf of the Acquiring Funds, has the power to enter into this
Agreement and to carry out its obligations hereunder. The execution,
delivery, and performance of this Agreement, and the consummation of
the transactions contemplated hereby, have been duly authorized by the
Constellation Funds Board of Trustees, and no other proceedings by the
Acquiring Funds are necessary to authorize its officers to effectuate
this Agreement and the transactions contemplated hereby. None of the
Acquiring Funds is a party to or obligated under any charter, bylaw,
indenture, or contract provision or any other commitment or obligation,
or subject to any order or decree, that would be violated by its
executing and carrying out this Agreement.
(e) LIABILITIES. There are no liabilities of the Acquiring Funds,
whether or not determined or determinable, other than liabilities
disclosed or provided for in the Acquiring Funds Financial Statements,
if any, and liabilities incurred in the ordinary course of business
prior to the Effective Time or otherwise previously disclosed to the
Acquired Funds, none of which has been materially adverse to the
business, assets, or results of operations of the Acquiring Funds.
(f) LITIGATION. Except as previously disclosed to the Acquired Funds,
there are no claims, actions, suits, or proceedings pending or, to the
actual knowledge of the Acquiring Funds, threatened which would
materially adversely affect the Acquiring Funds or its assets or
business or which would prevent or hinder in any material respect
consummation of the transactions contemplated hereby.
(g) CONTRACTS. Except for contracts and agreements disclosed to the
Acquired Funds, under which no default exists, each of the Acquiring
Funds is not a party to or subject to any material contract, debt
instrument, plan, lease, franchise, license, or permit of any kind or
nature whatsoever with respect to the Acquiring Funds.
(h) TAXES. As of the Effective Time, all federal and other tax returns
and reports of the Acquiring Funds required by law to have been filed
shall have been filed, and all other taxes shall have been paid so far
as due, or provision shall have been made for the payment thereof, and
to the best of the Acquiring Funds' knowledge, no such return is
currently under audit and no assessment has been asserted with respect
to any of such returns.
5. REPRESENTATIONS AND WARRANTIES OF THE ACQUIRED FUNDS. The Acquired Funds
represent and warrant to the Acquiring Funds as follows:
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(a) ORGANIZATION, EXISTENCE, ETC. Turner Funds is a business trust duly
organized and validly existing under the laws of the Commonwealth of
Massachusetts and has the power to carry on its business as it is now
being conducted.
(b) REGISTRATION AS INVESTMENT COMPANY. The Trust is registered under
the 1940 Act as an open-end management investment company; such
registration has not been revoked or rescinded and is in full force and
effect.
(c) FINANCIAL STATEMENTS. The audited financial statements of Turner
Funds relating to the Acquired Funds for the fiscal year ended
September 30, 2003 (the "Acquired Funds Financial Statements"), as
delivered to the Acquiring Funds, fairly present the financial position
of the Acquired Funds as of the dates thereof, and the results of its
operations and changes in its net assets for the periods indicated.
(d) MARKETABLE TITLE TO ASSETS. Each of the Acquired Funds will have,
at the Effective Time, good and marketable title to, and full right,
power and authority to sell, assign, transfer and deliver, the assets
to be transferred to the Acquiring Funds. Upon delivery and payment for
such assets, each of the Acquiring Funds will have good and marketable
title to such assets without restriction on the transfer thereof free
and clear of all liens, encumbrances, and adverse claims.
(e) AUTHORITY RELATIVE TO THIS AGREEMENT. The Trust, on behalf of the
Acquired Funds, has the power to enter into this Agreement and to carry
out its obligations hereunder. The execution, delivery, and performance
of this Agreement, and the consummation of the transactions
contemplated hereby, have been duly authorized by Turner Funds' Board
of Trustees, and, except for approval by the shareholders of the
Acquired Funds, no other proceedings by the Acquired Funds are
necessary to authorize its officers to effectuate this Agreement and
the transactions contemplated hereby. None of the Acquired Funds is a
party to or obligated under any charter, bylaw, indenture, or contract
provision or any other commitment or obligation, or subject to any
order or decree, that would be violated by its executing and carrying
out this Agreement.
(f) LIABILITIES. There are no liabilities of the Acquired Funds,
whether or not determined or determinable, other than liabilities
disclosed or provided for in the Acquired Funds Financial Statements,
if any, and liabilities incurred in the ordinary course of business
prior to the Effective Time, or otherwise previously disclosed to the
Acquiring Funds, none of which has been materially adverse to the
business, assets, or results of operations of the Acquired Funds.
(g) LITIGATION. Except as previously disclosed to the Acquiring Funds,
there are no claims, actions, suits, or proceedings pending or, to the
knowledge of the Acquired Funds, threatened which would materially
adversely affect the Acquired Funds or its assets or business or which
would prevent or hinder in any material respect consummation of the
transactions contemplated hereby.
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(h) CONTRACTS. Except for contracts and agreements disclosed to the
Acquiring Funds, under which no default exists, each of the Acquired
Funds, at the Effective Time, is not a party to or subject to any
material contract, debt instrument, plan, lease, franchise, license, or
permit of any kind or nature whatsoever.
(i) TAXES. As of the Effective Time, all federal and other tax returns
and reports of the Acquired Funds required by law to have been filed
shall have been filed, and all other taxes shall have been paid so far
as due, or provision shall have been made for the payment thereof, and
to the best of the Acquired Funds' knowledge, no such return is
currently under audit and no assessment has been asserted with respect
to any of such returns.
6. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE ACQUIRING FUNDS.
(a) All representations and warranties of the Acquired Funds contained
in this Agreement shall be true and correct in all material respects as
of the date hereof and, except as they may be affected by the
transactions contemplated by this Agreement, as of the Effective Time,
with the same force and effect as if made on and as of the Effective
Time.
(b) The Acquired Funds shall have delivered to the Acquiring Funds at
the Effective Time the Acquired Funds' Statement of Assets and
Liabilities, prepared in accordance with generally accepted accounting
principles consistently applied, together with a certificate of the
Treasurer or Assistant Treasurer of the Acquired Funds as to the
aggregate asset value of the Acquired Funds' portfolio securities.
7. CONDITION PRECEDENT TO OBLIGATIONS OF THE ACQUIRED FUNDS. All representations
and warranties of the Acquiring Funds contained in this Agreement shall be true
and correct in all material respects as of the date hereof and, except as they
may be affected by the transactions contemplated by this Agreement, as of the
Effective Time, with the same force and effect as if made on and as of the
Effective Time.
8. FURTHER CONDITIONS PRECEDENT TO OBLIGATIONS OF THE ACQUIRED FUNDS AND THE
ACQUIRING FUNDS. The obligations of the Acquired Funds and the Acquiring Funds
to effectuate this Agreement shall be subject to the satisfaction of each of the
following conditions:
(a) Such authority from the Securities and Exchange Commission and
state securities commissions as may be necessary to permit the parties
to carry out the transactions contemplated by this Agreement shall have
been received.
(b) The Registration Statement on Form N-1A of the Acquiring Funds
shall be effective under the Securities Act of 1933 and, to the best
knowledge of the Acquiring Funds, no investigation or proceeding for
that purpose shall have been instituted or be pending, threatened or
contemplated under the Securities Act of 1933.
57
(c) The shares of the Acquiring Funds shall have been duly qualified
for offering to the public in all states of the United States, the
Commonwealth of Puerto Rico, and the District of Columbia (except where
such qualifications are not required) so as to permit the transfer
contemplated by this Agreement to be consummated.
(d) The Acquired Funds and the Acquiring Funds shall have received on
or before the Effective Time an opinion of counsel satisfactory to the
Acquired Funds and the Acquiring Funds substantially to the effect that
for federal income tax purposes:
(1) No gain or loss will be recognized to the Acquired Funds
upon the transfer of its assets in exchange solely for
Acquiring Funds Shares and the assumption by the Acquiring
Funds of the corresponding Acquired Funds' stated liabilities;
(2) No gain or loss will be recognized by the Acquiring Funds
on its receipt of the Acquired Funds' assets in exchange for
Acquiring Funds Shares and the assumption by the Acquiring
Funds of the corresponding Acquired Fund's liabilities;
(3) The basis of an Acquired Fund's assets in the
corresponding Acquiring Fund's hands will be the same as the
basis of those assets in the Acquired Fund's hands immediately
before the Effective Time;
(4) The Acquiring Funds' holding period for the assets
transferred to the Acquiring Funds by the Acquired Funds will
include the holding period of those assets in the
corresponding Acquired Fund's hands immediately before the
Effective Time;
(5) No gain or loss will be recognized by the Acquired Funds
on the distribution of Acquiring Funds Shares to the Acquired
Funds' shareholders in exchange for their Acquired Funds
Shares;
(6) No gain or loss will be recognized by the Acquired Funds'
shareholders as a result of the Acquired Funds' distribution
of Acquiring Funds Shares to the such shareholders in exchange
for such shareholders' Acquired Funds Shares;
(7) The basis of Acquiring Funds Shares received by the
Acquired Funds' shareholders will be the same as the adjusted
basis of such shareholders' Acquired Funds Shares surrendered
in exchange therefor; and
(8) The holding period of Acquiring Funds Shares received by
the Acquired Funds' shareholders will include such
shareholders' holding period for Acquired Funds Shares
surrendered in exchange therefor, provided that said Acquired
58
Funds Shares were held as capital assets as of the Effective
Time.
(f) This Agreement and the reorganization contemplated hereby shall
have been approved by at least a majority of the outstanding shares of
each of the Acquired Funds entitled to vote on the matter.
(g) The Board of Trustees of [Constellation Funds], at a meeting duly
called for such purpose, shall have approved this Agreement and
authorized the issuance by each of the Acquiring Funds of Acquiring
Funds Shares at the Effective Time in exchange for the assets of the
Acquired Funds pursuant to the terms and provisions of this Agreement.
9. EFFECTIVE TIME OF THE REORGANIZATION. The exchange of the Acquired Funds'
assets for Acquiring Funds Shares shall be effective as of close of business on
___________, 2004, or at such other time and date as fixed by the mutual consent
of the parties (the "Effective Time").
10. TERMINATION. This Agreement and the transactions contemplated hereby may be
terminated and abandoned without penalty by resolution of the Board of Trustees
of Turner Funds and/or by resolution of the Board of Trustees of [Constellation
Funds], at any time prior to the Effective Time, if circumstances should develop
that, in the opinion of either Board, make proceeding with the Agreement
inadvisable.
11. AMENDMENT. This Agreement may be amended, modified, or supplemented in such
manner as may be mutually agreed upon in writing by the parties; provided,
however, no such amendment may have the effect of changing the provisions for
determining the number or value of Acquiring Funds Shares to be paid to the
Acquired Funds' shareholders under this Agreement to the detriment of the
Acquired Funds' shareholders.
12. GOVERNING LAW. This Agreement shall be governed and construed in accordance
with the laws of Delaware.
13. NOTICES. Any notice, report, statement or demand required or permitted by
and provision of this Agreement shall be in writing and shall be given by
prepaid telegraph, telecopy, certified mail, or overnight express courier
addressed as follows:
If to the Acquiring Funds: If to the Acquired Funds:
John H. Grady Stephen J. Kneeley
7700 Martins Lane 1205 Westlakes Drive, Suite 100
Philadelphia, PA 19118 Berwyn, Pennsylvania 19312
Telephone: Telephone: 888.329.2300
Fax: Fax: 610.786.0822
With a copy to: With a copy to:
59
14. FEES AND EXPENSES.
(a) Each of the Acquiring Funds and the Acquired Funds represents and
warrants to the other that there are no brokers or finders entitled to
receive any payments in connection with the transactions provided for
herein.
(b) Except as otherwise provided for herein, all expenses of the
reorganization contemplated by this Agreement will be borne [equally]
by Turner Investment Partners, Inc., the investment adviser to the
Turner Funds, and Constellation Investment Management Company, the
investment adviser to the Constellation Funds. Such expenses include,
without limitation, (i) expenses incurred in connection with the
entering into and the carrying out of the provisions of this Agreement,
(ii) expenses associated with preparing and filing proxy materials,
(iii) solicitation costs in connection with obtaining shareholder
approval of the reorganization, (iv) registration or qualification fees
and expenses of preparing and filing such forms as are necessary under
applicable state securities laws to qualify Acquiring Funds Shares to
be issued in connection herewith in each state in which the Acquired
Funds' shareholders are resident as of the Effective Date, (v)
accounting fees, (vi) legal fees, and (vii) the Acquiring Funds'
federal and state registration fees.
15. HEADINGS, COUNTERPARTS, ASSIGNMENT.
(a) The article and section headings contained in this Agreement are
for reference purposes only and shall not affect in any way the meaning
or interpretation of this Agreement.
(b) This Agreement may be executed in any number of counterparts, each
of which shall be deemed an original.
(c) This Agreement shall be binding upon and inure to the benefit of
the parties hereto and their respective successors and assigns, but no
assignment or transfer hereof or of any rights or obligations hereunder
shall be made by any party without the written consent of the other
party. Nothing herein expressed or implied is intended or shall be
construed to confer upon or give any person, firm or corporation other
than the parties hereto and their respective successors and assigns any
rights or remedies under or by reason of this Agreement.
16. ENTIRE AGREEMENT. Each of the Acquiring Funds and the Acquired Funds agree
that neither party has made any representation, warranty, or covenant not set
forth herein and that this Agreement constitutes the entire agreement between
the parties. The representations, warranties, and covenants contained herein or
in any document delivered pursuant hereto or in connection herewith shall
survive the consummation of the transactions contemplated hereunder.
60
17. FURTHER ASSURANCES. Each of the Acquiring Funds and the Acquired Funds shall
take such further action as may be necessary or desirable and proper to
consummate the transactions contemplated hereby.
18. BINDING NATURE OF AGREEMENT. As provided in each party's bylaws, this
Agreement was executed by the undersigned officers of [Constellation Funds] and
Turner Funds, on behalf of each of the Acquiring Funds and the Acquired Funds,
respectively, as officers and not individually, and the obligations of this
Agreement are not binding upon the undersigned officers individually, but are
binding only upon the assets and property of each of [Constellation Funds] and
Turner Funds. Moreover, no series of either [Constellation Funds] or Turner
Funds shall be liable for the obligations of any other series of [Constellation
Funds] or Turner Funds.
IN WITNESS WHEREOF, each of the parties has duly caused this Agreement
to be executed as of the day and year first written above.
Attest: TURNER FUNDS
________________________ By:______________________________
Name:___________________________
Title:____________________________
Attest: CONSTELLATION FUNDS
________________________ By:______________________________
Name:___________________________
Title:____________________________
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THE TURNER FUNDS
SPECIAL MEETING OF THE SHAREHOLDERS OF THE:
TURNER FINANCIAL SERVICES FUND
TURNER HEALTHCARE & BIOTECHNOLOGY FUND
TURNER TAX MANAGED U.S. EQUITY FUND
TURNER SMALL CAP VALUE OPPORTUNITIES FUND
TURNER LARGE CAP VALUE FUND
TURNER CORE VALUE FUND
TURNER SMALL CAP VALUE FUND
TURNER CORE FIXED INCOME FUND
TURNER ULTRA SHORT DURATION FIXED INCOME FUND
TURNER SHORT DURATION FIXED INCOME FUND
TURNER HIGH YIELD FUND
TURNER STRATEGIC VALUE AND HIGH INCOME FUND
PROXY SOLICITED BY THE BOARD OF TRUSTEES FOR
THE SPECIAL MEETING OF SHAREHOLDERS,
TO BE HELD ON [DATE]
The undersigned, hereby appoints Brian F. McNally and Brian M. Ferko as proxies
and each of them, each with full power of substitution, to vote at the Special
Meeting of Shareholders of the Turner Financial Services Fund, Turner Healthcare
& Biotechnology Fund, Turner Tax Managed U.S. Equity Fund, Turner Small Cap
Value Opportunities Fund, Turner Large Cap Value Fund, Turner Core Value Fund,
Turner Small Cap Value Fund, Turner Core Fixed Income Fund, Turner Ultra Short
Duration Fixed Income Fund, Turner Short Duration Fixed Income Fund, Turner High
Yield Fund, and Turner Strategic Value and High Income Fund (each a "Turner
Fund" and collectively the "Turner Funds") of the Turner Funds (the "Turner
Trust"), to be held at the offices of Turner Investments Partners, Inc., 1205
Westlakes Drive, Suite 100, Berwyn, Pennsylvania 19312 on [DATE], 2004, at
[TIME] Eastern Time, and any adjournments or postponements of the Special
Meeting (the "Meeting") all shares of beneficial interest of the Turner Funds
that the undersigned would be entitled to vote if personally present at the
Meeting ("Shares") on the proposal set forth below, and in accordance with their
own discretion, any other matters properly brought before the Meeting.
THE BOARD OF TRUSTEES OF THE TURNER TRUST RECOMMENDS A VOTE "FOR" THE FOLLOWING
PROPOSAL:
Proposal 1. To approve the reorganization of the Turner Funds with and
into corresponding series (each a "Constellation Fund" and
collectively the "Constellation Funds" of the Constellation
Funds (the "Constellation Trust").
____FOR ____AGAINST ____ABSTAIN
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 PROPOSAL AND WILL BE VOTED
IN THE APPOINTED PROXIES' DISCRETION UPON SUCH OTHER BUSINESS AS MAY PROPERLY
COME BEFORE THE MEETING.
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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 must sign this proxy. Attorneys-in-fact, executors, administrators,
trustees or guardians must indicate the full title and capacity in which they
are signing.
Dated: , 2004
-----------------
--------------------------------
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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