UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM N-CSR
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CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT
INVESTMENT COMPANIES
Investment Company Act file number 811-7527
Turner Funds
(Exact name of registrant as specified in charter)
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1205 Westlakes Drive Suite 100
Berwyn, PA 19312
(Address of principal executive offices) (Zip code)
Turner Funds
P.O. Box 219805
Kansas City, MO 64121-9805
(Name and address of agent for service)
Registrant's telephone number, including area code: 1-800-224-6312
Date of fiscal year end: September 30, 2004
Date of reporting period: September 30, 2004
Item 1. Reports to Stockholders.
TURNER FUNDS
ANNUAL REPORT
SEPTEMBER 30, 2004
GROWTH FUNDS
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Turner Disciplined Large Cap Growth Fund
Turner Large Cap Growth Opportunities Fund
Turner Midcap Growth Fund
Turner Small Cap Growth Fund
Turner Micro Cap Growth Fund
CORE FUNDS
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Turner Small Cap Equity Fund
SECTOR/SPECIALTY FUNDS
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Turner Technology Fund
Turner Concentrated Growth Fund
Turner New Enterprise Fund
[BLANK PAGE]
CONTENTS
2 Letter to Shareholders
6 Total returns of Turner Funds
8 Investment review:
Turner Disciplined Large Cap
Growth Fund
9 Investment review:
Turner Large Cap Growth
Opportunities Fund
10 Investment review:
Turner Midcap Growth Fund
11 Investment review:
Turner Small Cap Growth Fund
12 Investment review:
Turner Micro Cap Growth Fund
13 Investment review:
Turner Small Cap Equity Fund
14 Investment review:
Turner Technology Fund
15 Investment review:
Turner Concentrated Growth Fund
16 Investment review:
Turner New Enterprise Fund
17 Financial Statements
60 Notes to Financial Statements
66 Report of Independent Registered Public Accounting Firm
67 Notice to Shareholders
68 Trustees and Officers of the Trust
70 Disclosure of Fund Expenses
TURNER FUNDS
As of September 30, 2004 the Turner Funds offered a series of nine no-load
mutual funds to individual and institutional investors. The minimum initial
investment in a Turner Fund for regular accounts is $2,500 and $2,000 for
individual retirement accounts.
Turner Investment Management, LLC, an affiliate of Turner Investment Partners,
Inc., serves as the investment adviser for the Small Cap Equity Fund. Turner
Investment Partners, Inc., based in Berwyn, Pennsylvania, serves as the
investment adviser for the remaining Funds. Turner Investment Partners, Inc.,
founded in 1990, invests more than $14 billion in equity and balanced portfolios
on behalf of individuals and institutions.
SHAREHOLDER SERVICES
Turner Funds shareholders receive annual and semiannual reports, quarterly
account statements and a quarterly newsletter. Shareholders who have questions
about their accounts may call a toll-free telephone number, 1-800-224-6312,
visit our website, www.turnerinvestments.com. Or they may write to Turner Funds,
P.O. Box 219805, Kansas City, Missouri 64121-9805.
TURNER FUNDS 2004 ANNUAL REPORT 1
LETTER TO SHAREHOLDERS
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TO OUR SHAREHOLDERS
More often than not the stock market is no respecter of calendars. The market
frequently refuses to behave with an orderly consistency over any standard short
period of time -- such as the 12-month period ended September 30, 2004, that's
the subject of this letter. The S&P 500 Index gained 13.87% during that period,
but it was hardly a smooth, steady climb. Rather, the return was the product of
a significant initial ascent and a subsequent prolonged modest decline: the S&P
500 Index rose a robust 17.02% in the first 134 days of the period, then fell
2.23% in the remaining 231 days.
The split personality of the market during the past 12 months reflected a
distinct change in investor sentiment that had an impact on the performance of
most of our stock funds. Early on, optimism about stocks' return potential
prevailed, based on a strengthening economy and strengthening corporate earnings
that exceeded the expectations of Wall Street analysts. But then that sentiment
soured, as investors questioned whether changing top-down and bottom-up
conditions were threatening the sustainability of the bull market that began in
October 2002.
They found no lack of reasons to justify their doubts. The bull market was in
danger of faltering, they said, because of a slowing economy, a peak in earnings
growth, the Federal Reserve's interest-rate hikes, oil prices rising to a
21-year high, the Iraq quagmire, the specter of new terrorist attacks,
uncertainty about the outcome of the Bush-Kerry presidential race, and an
increased incidence of disappointing earnings forecasts.
OUR FUNDS DID WELL IN THE UP PHASE
Our own nine stock funds -- especially our growth and sector/specialty funds --
generally flourished when the market was rising and tailed off when the market
was falling during the period. As sentiment curdled, the market became
increasingly oblivious to earnings and other fundamentals, which worked to the
disadvantage of our growth and sector/specialty funds. Those funds emphasize
stocks of companies with above-average earnings prospects, and those type of
stocks were largely out of favor, all of a sudden. Valuations -- not
fundamentals -- became all-important; value stocks, which are perceived to be
relatively safe, markedly outperformed growth stocks, which are perceived to be
relatively volatile. For instance, from January to September, the Russell 1000
Value Index gained 5.54%, beating its growth counterpart by 8.17 percentage
points.
Meanwhile, the fundamentals of the companies owned by our growth and
sector/specialty funds were remarkably strong. Across the board, our holdings
were expected by a consensus of Wall Street analysts to increase their earnings
per share by more than 20% over the next 12 months, versus growth rates in the
mid- to high-teens for most companies in our funds' target indexes. But for some
of our funds, the strong prospective earnings power of our holdings failed to
translate into favorable results during the market's down phase. That has
generally been the case for our growth and sector/specialty funds: the funds
tend to underperform in falling markets and tend to do best in flat and rising
markets.
One other point bears mentioning: our growth and sector/specialty funds produced
strong returns early in the period in no small part because we stuck with our
growth-investing process after having endured a brutal bear market from 2000 to
2002. Because we knew that bear markets don't last forever and because we stayed
true to our process, our growth and sector/specialty funds were positioned to
capitalize fully on the advance of the market that finally occurred. In
contrast, some growth managers turned cautious at almost exactly the wrong time,
lightening their holdings in technology and other growth sectors during the bear
market and thus failing to deliver the kind of strong returns expected of them
in the subsequent rally.
FOUR FUNDS OUTPERFORM
On balance, four of our nine funds -- the Turner Micro Cap Growth Fund, the
Turner Small Cap Growth Fund, the Turner Technology Fund, and the Turner Small
Cap Equity Fund -- outperformed their indices.
The market's bias toward value stocks proved particularly advantageous to our
core fund, Small Cap Equity, which invests in both value and growth stocks and
which generated the highest total return of any of our funds during the period.
Also enhancing Small Cap Equity's results were good stock selection and the
relative strength of smaller stocks versus their larger brethren.
2 TURNER FUNDS 2004 ANNUAL REPORT
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September 2004
Here are the specific returns for each of our funds and their indices in the
past 12 months.
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TOTAL RETURNS
12-month period ended September 30, 2004
GROWTH FUNDS:
TURNER DISCIPLINED LARGE CAP GROWTH FUND 4.64%
Russell Top 200 Growth Index 5.93
TURNER LARGE CAP GROWTH
OPPORTUNITIES FUND 5.67
Russell Top 200 Growth Index 5.93
TURNER MICRO CAP GROWTH FUND 23.54
Russell 2000 Growth Index 11.92
TURNER MIDCAP GROWTH FUND,
CLASS I SHARES 7.42
Russell Midcap Growth Index 13.68
TURNER SMALL CAP GROWTH FUND 12.98
Russell 2000 Growth Index 11.92
SECTOR/SPECIALTY FUNDS:
TURNER CONCENTRATED GROWTH FUND (3.80)
S&P 500 Index 13.87
TURNER NEW ENTERPRISE FUND 4.15
NASDAQ Composite Index 6.70
TURNER TECHNOLOGY FUND 4.52
Goldman Sachs Technology Composite Index 1.87
CORE FUND:
TURNER SMALL CAP EQUITY FUND 24.75
Russell 2000 Index 18.77
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See Total returns of Turner Funds, page 6.
For an analysis of the performance of all nine of our funds, see the Investment
Review beginning on page 8.
Needless to say, we will continue to stick to our investment disciplines,
despite the mixed results of our growth and sector/specialty funds over the past
12 months. There is a rhythm to investing, and it flows and ebbs. When it flows
again, for instance, we think our growth-investment process can reap the kind of
market-beating results that growth stocks are justly known for. If the history
of the stock market has proven nothing else, it's that changes in earnings do
bring about changes in stock prices sooner or later. When that happens, earnings
expectations inevitably rise and deliver an upswing in share prices of the
companies that meet or exceed those expectations. By sticking to the same
investment processes for our growth, sector/specialty, and core funds that we
have in the past, we think those funds will be primed to fully exploit the
upswing when it does materialize.
WHEN WILL THE BULL MARKET RESUME?
Since the stock market is no respecter of calendars, we don't know exactly when
fundamentals will matter again and when bullishness will prevail again. But we
think the bull market is by no means over just yet; we anticipate the market
could snap out of its lackluster performance for the year-to-date and rally
sooner rather than later -- possibly as soon as the fourth quarter and early
2005.
We regard 2004 as something of a cooling-off period for the stock market after
it set such a torrid pace in 2003. In our judgment, now that the market has
caught its breath, it may be ready to resume going up. We think better times are
ahead soon for stocks because the economic recovery is likely to continue and
corporate profits, despite what will undoubtedly be some prominent anomalies,
may be stronger than expected. For their part, Wall Street analysts expect the
S&P 500 companies to report increases in earnings per share of 14.3% over the
next 12 months.
We think stocks that offer especially good return potential now include those of
staffing-services firms; security-software providers; makers of biotechnology
products and broadband-communications systems; health-maintenance organizations;
and firms in cyclical industries such as metals and industrial products that
tend to perform well when the economic cycle is maturing.
WE PLEDGE TO YOU OUR BEST EFFORTS
In closing, we pledge to continue doing our best for you no matter whether the
market goes up, down, or sideways. (The market is likely to do all three, given
enough time.) We thank you for staying invested with us, so that we can have the
privilege of doing our best for you. It's one thing in the abstract to endorse
"staying the course" when one of our funds has produced a subpar return, as any
fund inevitably will. It's another thing entirely to actually do it. And by and
large, our fund shareholders have stayed the course with us, for which we are
deeply grateful. We think it's the ultimate testimonial to your faith in us
that,
TURNER FUNDS 2004 ANNUAL REPORT 3
LETTER TO SHAREHOLDERS (continued)
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in a year that thus far has produced uninspiring equity returns, you entrusted
us with additional assets to manage -- a net inflow of $33 million in the
year-to-date through September 30.
We think our role as an employee-owned firm that's focused on just one business
- -- investment management -- in fact helps us to concentrate on doing our best
for you. Because we are employee owned, our loyalties aren't divided by any
obligations to a corporate parent or an outside owner. Throughout our history we
have above all tried to practice the Golden Rule: we have sought to provide you
with a level of investment performance that we ourselves would expect if we were
in your shoes. (And in a very real sense, we are in your shoes: the money of our
investing teams, as well as your money, is in our funds.)
I look forward to reporting to you in future letters how well both you and we
are faring in a stock market that may behave erratically in the short term
(witness the ups and downs of the past 12 months) but that has acted more
reliably over time (it has delivered gains in any period six years or longer
since 1950).
/S/BOB TURNER
Bob Turner
CHAIRMAN AND CHIEF INVESTMENT OFFICER
TURNER INVESTMENT PARTNERS, ADVISER TO THE TURNER FUNDS
[PHOTO OMITTED]
Bob Turner
4 TURNER FUNDS 2004 ANNUAL REPORT
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September 2004
LIPPER INC. PERFORMANCE RANKINGS OF MUTUAL FUNDS WITH AT LEAST THREE YEARS OF HISTORY
Periods ending September 30, 2004
ONE TWO THREE FOUR FIVE SEVEN 10
YEAR YEARS YEARS YEARS YEARS YEARS YEARS
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MULTI CAP GROWTH FUNDS
TURNER CONCENTRATED
GROWTH FUND
Ranking versus competitors 416/429 146/403 288/349 267/284 180/207 -- --
Percentile ranking 97 36 83 94 87 -- --
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LARGE CAP GROWTH FUNDS
TURNER DISCIPLINED LARGE CAP GROWTH
Ranking versus competitors 499/631 71/585 197/513 371/462 -- -- --
Percentile ranking 79 12 38 80 -- -- --
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TURNER LARGE CAP GROWTH OPPORTUNITIES
Ranking versus competitors 425/631 17/585 95/513 359/462 205/371 46/233 --
Percentile ranking 67 3 19 78 55 20 --
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MID-CAP GROWTH FUNDS
TURNER MIDCAP
GROWTH FUND
Ranking versus competitors 379/505 57/453 137/408 262/330 146/255 9/183 --
Percentile ranking 75 13 34 79 57 5 --
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SCIENCE AND TECHNOLOGY FUNDS
TURNER TECHNOLOGY FUND
Ranking versus competitors 87/311 45/300 81/277 198/233 60/114 -- --
Percentile ranking 28 15 29 85 53 -- --
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TURNER NEW ENTERPRISE FUND
Ranking versus competitors 96/311 17/300 14/277 101/233 -- --
Percentile ranking 31 6 5 43 -- -- --
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SMALL-CAP GROWTH FUNDS
TURNER MICRO CAP GROWTH FUND
Ranking versus competitors 12/518 88/474 25/420 20/354 4/280 -- --
Percentile ranking 2 19 6 6 1 -- --
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TURNER SMALL CAP GROWTH FUND
Ranking versus competitors 151/518 36/474 83/420 217/354 156/280 55/196 6/80
Percentile ranking 29 8 20 61 56 28 8
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Source: Lipper Inc.
Total return is ranking criteria. Past performance is no guarantee of future
results.
TURNER FUNDS 2004 ANNUAL REPORT 5
PERFORMANCE
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TOTAL RETURNS OF TURNER FUNDS
Through September 30, 2004
Current performance may be lower or higher than the performance data quoted.
Please call (800) 224-6312 or visit our website at www.turnerinvestments.com
for most recent month-end performance information.
Year (Annualized) Total
Six to One Three Five Ten Since Net Assets
Fund Name/Index Months Date Year Years Years Years inception ($mil)
GROWTH
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TURNER DISCIPLINED LARGE CAP
GROWTH FUND (5.66) (3.98) 4.64 0.95 N/A N/A (15.57) $67.99
Russell Top 200 Growth Index (3.42) (3.67) 5.93 (0.29) n/a n/a (13.84)
S&P 500 Index (0.18) 1.51 13.87 4.05 n/a n/a (4.79)
INCEPTION DATE: 6/14/00
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TURNER LARGE CAP GROWTH
OPPORTUNITIES FUND (7.58) (3.70) 5.67 3.12 (5.63) N/A 5.80 $4.43
Russell Top 200 Growth Index (3.42) (3.67) 5.93 (0.29) (8.38) n/a 2.71
S&P 500 Index (0.18) 1.51 13.87 4.05 (1.31) n/a 6.25
INCEPTION DATE: 1/31/97
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TURNER MIDCAP GROWTH FUND --
CLASS I SHARES(1) (7.57) (4.59) 7.42 6.45 (0.48) N/A 12.77 $857.90
Russell Midcap Growth Index (3.32) 1.35 13.68 10.09 0.63 n/a 6.63
INCEPTION DATE: 10/1/96
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TURNER SMALL CAP GROWTH FUND(1) (3.70) (0.42) 12.98 10.87 1.32 14.44 14.04 $237.21
Russell 2000 Growth Index (5.92) (0.67) 11.92 9.09 (0.68) 5.54 4.98
INCEPTION DATE: 2/7/94
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TURNER MICRO CAP GROWTH FUND(1) 0.99 7.13 23.54 16.80 23.83 N/A 31.72 $366.69
Russell 2000 Growth Index (5.92) (0.67) 11.92 9.09 (0.68) n/a (0.35)
INCEPTION DATE: 2/27/98
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CORE FUNDS
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TURNER SMALL CAP EQUITY FUND(1) (0.36) 5.14 24.75 N/A N/A N/A 18.03 $29.17
Russell 2000 Index (2.40) 3.71 18.77 n/a n/a n/a 7.79
INCEPTION DATE: 3/4/02
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6 TURNER FUNDS 2004 ANNUAL REPORT
Year (Annualized) Total
Six to One Three Five Ten Since Net Assets
Fund Name/Index Months Date Year Years Years Years inception ($mil)
SPECIALTY
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TURNER TECHNOLOGY FUND(1)(2) (11.62) (9.17) 4.52 4.38 (11.74) N/A (5.26) $16.03
Goldman Sachs Technology
Composite Index (9.36) (10.33) 1.87 3.29 (12.23) n/a (10.81)
Pacific Stock Exchange
Technology 100 Index (4.59) (2.19) 10.72 9.90 1.87 n/a 2.67
INCEPTION DATE: 6/30/99
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TURNER CONCENTRATED
GROWTH FUND (14.66) (11.82) (3.80) 0.35 (9.89) N/A (3.46) $39.11
S&P 500 Index (0.18) 1.51 13.87 4.05 (1.31) n/a (2.45)
NASDAQ 100 Index (1.65) (3.59) 8.66 6.72 (10.01) n/a (8.72)
INCEPTION DATE: 6/30/99
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TURNER NEW ENTERPRISE FUND (13.74) (9.78) 4.15 11.17 N/A N/A (17.04) $10.81
NASDAQ Composite Index (4.64) (4.98) 6.70 8.64 n/a n/a (15.59)
INCEPTION DATE: 6/30/00
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Returns less than one year are cumulative.
THE TURNER FUNDS ARE DISTRIBUTED BY CONSTELLATION INVESTMENT DISTRIBUTION
COMPANY, INC., BERWYN, PA 19312. THE INVESTOR SHOULD CONSIDER THE INVESTMENT
OBJECTIVES, RISKS, CHARGES AND EXPENSES CAREFULLY BEFORE INVESTING. THIS AND
OTHER INFORMATION CAN BE FOUND IN THE PROSPECTUS. A FREE PROSPECTUS, WHICH
CONTAINS DETAILED INFORMATION, INCLUDING FEES AND EXPENSES, AND THE RISKS
ASSOCIATED WITH INVESTING IN THESE FUNDS, CAN BE OBTAINED BY CALLING (800)
224-6312. READ THE PROSPECTUS CAREFULLY BEFORE INVESTING. THE PERFORMANCE DATA
QUOTED REPRESENTS PAST PERFORMANCE AND THE PRINCIPAL VALUE AND INVESTMENT RETURN
WILL FLUCTUATE SO THAT AN INVESTOR'S SHARES, WHEN REDEEMED, MAY BE WORTH MORE OR
LESS THAN THEIR ORIGINAL COST. PAST PERFORMANCE IS NO GUARANTEE OF FUTURE
RESULTS. RETURNS SHOWN, UNLESS OTHERWISE INDICATED, ARE TOTAL RETURNS, WITH
DIVIDENDS AND INCOME REINVESTED. RETURNS SPANNING MORE THAN ONE YEAR ARE
ANNUALIZED. FEE WAIVERS ARE IN EFFECT; IF THEY HAD NOT BEEN IN EFFECT,
PERFORMANCE WOULD HAVE BEEN LOWER. THE INDICES MENTIONED ARE UNMANAGED
STATISTICAL COMPOSITES OF STOCK MARKET PERFORMANCE. INVESTING IN AN INDEX IS NOT
POSSIBLE. THE HOLDINGS AND SECTOR WEIGHTINGS OF THE FUNDS ARE SUBJECT TO CHANGE.
FORWARD EARNINGS PROJECTIONS ARE NOT PREDICATORS OF STOCK PRICE OR INVESTMENT
PERFORMANCE, AND DO NOT REPRESENT PAST PERFORMANCE. THERE IS NO GUARANTEE THAT
THE FORWARD EARNINGS PROJECTIONS WILL ACCURATELY PREDICT THE ACTUAL EARNINGS
EXPERIENCE OF ANY OF THE COMPANIES INVOLVED, AND NO GUARANTEE TAHT THE OWNING
SECURITIES OF COMPANIES RELATIVELY HIGH PRICE-TO-EARNINGS RATIOS WILL CAUSE THE
PORTFOLIO TO OUT PERFORM ITS BENCHMARK OR INDEX.
(1) INVESTING IN TECHNOLOGY AND SCIENCE COMPANIES AND SMALL AND MID
CAPITALIZATION COMPANIES MAY SUBJECT THE FUNDS TO SPECIFIC INHERENT RISKS,
INCLUDING ABOVE-AVERAGE PRICE FLUCTUATIONS.
(2) FUNDS THAT TAKE A FOCUS OR SECTOR SPECIFIC APPROACH ARE SUBJECT TO GREATER
RISK FROM DOWNTURNS AFFECTING A SPECIFIC ISSUER OR INDUSTRY.
TURNER FUNDS 2004 ANNUAL REPORT 7
INVESTMENT REVIEW
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TURNER DISCIPLINED LARGE CAP GROWTH FUND
FUND PROFILE
SEPTEMBER 30, 2004
o Ticker symbol TSGEX
o CUSIP #87252R839
o Top 5 holdings
(1) Cisco Systems
(2) Dell
(3) Procter & Gamble
(4) PepsiCo
(5) American Express
o % in 5 largest holdings 17.3%
o Number of holdings 59
o Price/earnings ratio 21.3
o Weighted average market capitalization $58.17 billion
o % of holdings with positive earnings surprises 77.4%
o % of holdings with negative earnings surprises 18.30%
o Net assets $68 million
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VALUE GROWTH
INVESTMENT STYLE
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GROWTH OF A $10,000 INVESTMENT IN THE
TURNER DISCIPLINED LARGE CAP GROWTH FUND:
JUNE 14, 2000-SEPTEMBER 30, 2004*
[LINE CHART OMITTED, PLOT POINTS AS FOLLOWS:]
TURNER DISCIPLINED RUSSELL TOP 200 RUSSELL 1000
LARGE CAP GROWTH FUND GROWTH INDEX GROWTH INDEX
6/14/00 10000 10000 10000
SEP 00 9810 9546 9691
SEP 01 4700 5318 5268
SEP 02 3500 4053 4082
SEP 03 4620 4978 5140
SEP 04 4835 5273 5526
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AVERAGE ANNUAL TOTAL RETURNS (PERIODS ENDING SEPTEMBER 30, 2004)
PAST ONE YEAR PAST THREE YEARS SINCE INCEPTION
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Turner Disciplined Large Cap Growth Fund 4.64% 0.95% (15.57)%
Russell Top 200 Growth Index 5.93% (0.29)% (13.84)%
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[BAR CHART OMITTED, PLOT POINTS FOLLOWS]
28.1% INFORMATION TECHNOLOGY
24.1% HEALTHCARE
10.5% CONSUMER STAPLES
10.5% CONSUMER DISCRETIONARY
8.2% CASH EQUIVALENTS
8.2% FINANCIALS
6.9% INDUSTRIALS
2.0% TELECOMMUNICATION SERVICES
0.8% ENERGY
0.7% MATERIALS
MANAGERS DISCUSSION AND ANALYSIS
Losses in producer-durables and financial-services stocks impaired the
performance of the Turner Disciplined Large Cap Growth Fund in the 12-month
period ended September 30. As a result the Fund gained 4.64%, underperforming
the Russell Top 200 Growth Index's 5.93% rise by 1.29 percentage points.
Semiconductor-capital-equipment, financial-transaction-processing, and brokerage
stocks in particular hurt the Fund's producer-durables and financial-services
positions, which accounted for 14% of the portfolio and underperformed their
corresponding index sectors markedly. Four of the Fund's 10 sector positions
beat their index sectors. Consumer-discretionary/services stocks, a 24%
weighting, added the most value to results; winners here included retail,
consumer-electronics, staffing-services, publishing, restaurant, and Internet
stocks.
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* These figures represent past performance, which is no guarantee of future
results. The investment return and principal value of an investment will
fluctuate, so an investor's shares, when redeemed, may be worth more or less
than its original cost. The performance in the above graph and table do not
reflect the deduction of taxes the shareholder will pay on fund distributions
or the redemptions of fund shares. The inception date of the Turner
Disciplined Large Cap Growth Fund is June 14, 2000.
8 TURNER FUNDS 2004 ANNUAL REPORT
INVESTMENT REVIEW
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TURNER LARGE CAP GROWTH OPPORTUNITIES FUND
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FUND PROFILE
SEPTEMBER 30, 2004
o Ticker symbol TLCGX
o CUSIP #900297870
o Top 5 holdings
(1) Sun Microsystems
(2) Dell
(3) Cisco Systems
(4) Anthem
(5) EMC
o % in 5 largest holdings 12.7%
o Number of holdings 69
o Price/earnings ratio 31.8
o Weighted average market capitalization $29.42 billion
o % of holdings with positive earnings surprises 73.6%
o % of holdings with negative earnings surprises 24.5%
o Net assets $4 million
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VALUE GROWTH
INVESTMENT STYLE
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GROWTH OF A $10,000 INVESTMENT IN THE
TURNER LARGE CAP GROWTH OPPORTUNITIES FUND:
JANUARY 31, 1997-SEPTEMBER 30, 2004*
[LINE CHART OMITTED, PLOT POINTS AS FOLLOWS:]
TURNER LARGE CAP GROWTH RUSSELL TOP 200 S&P 500
OPPORTUNITIES FUND GROWTH INDEX INDEX
1/31/97 10000 10000 10000
SEP 97 12280 12013 12202
SEP 98 14399 14166 13307
SEP 99 20587 19019 17006
SEP 00 30363 22233 19264
SEP 01 14055 12386 14136
SEP 02 10280 9439 11240
SEP 03 14585 11593 13981
MAR 04 15412 12281 15920
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AVERAGE ANNUAL TOTAL RETURNS (1) (PERIODS ENDING SEPTEMBER 30, 2004)
PAST ONE YEAR PAST THREE YEARS PAST FIVE YEARS SINCE INCEPTION
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Turner Large Cap Growth Opportunities Fund 5.67% 3.12% (5.63)% 5.80%
Russell Top 200 Growth Index 5.93% (0.29)% (8.38)% 2.71%
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SECTOR WEIGHTINGS
[BAR CHART OMITTED, PLOT POINTS AS FOLLOWS:]
40.4% INFORMATION TECHNOLOGY
20.6% HEALTHCARE
15.0% CONSUMER DISCRETIONARY
7.5% FINANCIALS
4.7% INDUSTRIALS
2.9% CONSUMER STAPLES
2.6% TELECOMMUNICATION SERVICES
2.4% ENERGY
2.3% CASH EQUIVALENTS
1.6% MATERIALS
MANAGERS DISCUSSION AND ANALYSIS
A robust gain of more than 20% in consumer-discretionary/ services stocks helped
the Turner Large Cap Growth Opportunities Fund to deliver a 5.67% return in the
12-month period ended September 30. The Fund nearly matched the performance of
its index, the Russell Top 200 Growth Index, underperforming by just 0.26
percentage points.
Three of the Fund's 10 sector investments returned more than their index sectors
did. Besides the consumer- discretionary/ services sector, the Fund held
investments in the technology and utilities/communication sectors that added
extra return; they constituted 53% of holdings. Conversely, the Fund's
producer-durables and financial-services holdings, a 12% weighting, recorded
losses. Semiconductor-capital-equipment, financial-transaction-processing, and
brokerage stocks detracted the most.
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* These figures represent past performance, which is no guarantee of future
results. The investment return and principal value of an investment will
fluctuate, so an investor's shares, when redeemed, may be worth more or less
than its original cost. The performance in the above graph and table do not
reflect the deduction of taxes the shareholder will pay on fund
distributions or the redemptions of fund shares. The inception date of the
Turner Large Cap Growth Opportunities Fund is January 31, 1997.
(1) Returns prior to August 17, 2002, represent performance of the Mercury
Select Growth Fund, Class I.
TURNER FUNDS 2004 ANNUAL REPORT 9
INVESTMENT REVIEW
- --------------------------------------------------------------------------------
TURNER MIDCAP GROWTH FUND
- --------------------------------------------------------------------------------
FUND PROFILE
SEPTEMBER 30, 2004
o Ticker symbol TMGFX,
Class I Shares
o CUSIP #900297409,
Class I Shares
o Top 5 holdings
(1) Juniper Networks
(2) C.R. Bard
(3) Marriott International, Cl A
(4) VeriSign
(5) Anthem
o % in 5 largest holdings 8.0%
o Number of holdings 123
o Price/earnings ratio 18.6
o Weighted average market capitalization $5.3
o % of holdings with positive earnings surprises 81.1%
o % of holdings with negative earnings surprises 17.8%
o Net assets $858 million, Class I Shares
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- --------------------------------------------------------------------------------
GROWTH OF A $10,000 INVESTMENT IN THE TURNER MIDCAP GROWTH FUND, CLASS I SHARES:
OCTOBER 1, 1996-SEPTEMBER 30, 2004*
[LINE CHART OMITTED, PLOT POINTS AS FOLLOWS:]
TURNER MIDCAP GROWTH FUND, CLASS I SHARES RUSSELL MIDCAP GROWTH INDEX
10/1/96 10000 10000
SEP 97 14377 13029
SEP 98 14555 11808
SEP 99 26792 16200
SEP 00 52874 25979
SEP 01 21678 12530
SEP 02 17169 10588
SEP 03 24346 14705
SEP 04 26152 16717
- ---------------------------------------------------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS (PERIODS ENDING SEPTEMBER 30, 2004
PAST ONE YEAR PAST THREE YEARS PAST FIVE YEARS SINCE INCEPTION
- ---------------------------------------------------------------------------------------------------------------------------
Turner Midcap Growth Fund, Class I Shares 7.42% 6.45% (0.48)% 12.77%
Turner Midcap Growth Fund, Class II Shares 6.87% 5.92% (0.46)%** 12.58%**
Russell Midcap Growth Index 13.68% 10.09% 0.63% 6.63%
- ---------------------------------------------------------------------------------------------------------------------------
[BAR CHART OMITTED, PLOT POINTS AS FOLLOWS:]
28.9% INFORMATION TECHNOLOGY
18.2% HEALTHCARE
17.3% CONSUMER DISCRETIONARY
8.9% INDUSTRIALS
8.1% FINANCIALS
5.2% CASH EQUIVALENTS
4.8% ENERGY
3.4% CONSUMER STAPLES
3.2% MATERIALS
1.7% TELECOMMUNICATION SERVICES
0.3% UTILITIES
MANAGERS DISCUSSION AND ANALYSIS
The Turner Midcap Growth Fund benefited from the strong performance of mid-cap
growth stocks in the 12-month period ended September 30. The Russell Midcap
Growth Index advanced 13.68%, a return superior to that of large-cap growth and
small-cap growth indexes. But the Fund failed to keep pace, gaining 7.42%.
Performance was hurt by subpar returns in three major sectors, financial
services, consumer discretionary/services, and health care, with a combined
weighting of 58%. Retail, medical-services, pharmaceutical, biotechnology,
media, and financial-transaction-processing stocks detracted from results. Good
relative returns in the technology sector, which amounted to 19% of the
portfolio, contributed the most to results. Altogether, three of 10 sector
positions outperformed their corresponding index sectors. Energy stocks were the
Fund's biggest gainer, up more than 50%.
- --------------------------------------------------------------------------------
* These figures represent past performance, which is no guarantee of future
results. The investment return and principal value of an investment will
fluctuate, so an investor's shares, when redeemed, may be worth more or less
than its original cost. The performance in the above graph and table do not
reflect the deduction of taxes the shareholder will pay on fund
distributions or the redemptions of fund shares. The inception date of the
Turner Midcap Growth Fund (Class I Shares) is October 1, 1996.
** Class II Shares were offered beginning on September 24, 2001. Class II
Shares' performance for the periods prior to September 24, 2001 reflects the
performance of the Fund's Class I Shares. The performance of the Class II
Shares has been adjusted for the differences in fees between the classes.
10 TURNER FUNDS 2004 ANNUAL REPORT
INVESTMENT REVIEW
- --------------------------------------------------------------------------------
TURNER SMALL CAP GROWTH FUND
- --------------------------------------------------------------------------------
FUND PROFILE
SEPTEMBER 30, 2004
o Ticker symbol TSCEX
o CUSIP #900297300
o Top 5 holdings
(1) Immucor
(2) Sierra Health Services
(3) Trimble Navigation
(4) MGI Pharma
(5) Advanced Medical Optics
o % in 5 largest holdings 6.0%
o Number of holdings 132
o Price/earnings ratio 18.0
o Weighted average market capitalization $1.11 billion
o % of holdings with positive earnings surprises 80.7%
o % of holdings with negative earnings surprises 17.0%
o Net assets $237 million
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- --------------------------------------------------------------------------------
GROWTH OF A $10,000 INVESTMENT IN THE TURNER SMALL CAP GROWTH FUND:
SEPTEMBER 30, 1994-SEPTEMBER 30, 2004*
[LINE CHART OMITTED, PLOT POINTS AS FOLLOWS:]
TURNER SMALL CAP GROWTH FUND RUSSELL 2000 GROWTH INDEX
9/30/94 10000 10000
SEP 95 15347 12818
SEP 96 23393 14434
SEP 97 27286 17805
SEP 98 22675 13384
SEP 99 36085 17751
SEP 00 56317 23016
SEP 01 28266 13213
SEP 02 22793 10814
SEP 03 34099 15325
SEP 04 38525 17152
- ---------------------------------------------------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS (PERIODS ENDING SEPTEMBER 30, 2004)
PAST PAST PAST PAST SINCE
ONE YEAR THREE YEARS FIVE YEARS TEN YEARS INCEPTION
- ---------------------------------------------------------------------------------------------------------------------------
Turner Small Cap Growth Fund 12.98% 10.87% 1.32% 14.44% 14.04%
Russell 2000 Growth Index 11.92% 9.09% (0.68)% 5.54% 4.98%
- ---------------------------------------------------------------------------------------------------------------------------
SECTOR WEIGHTINGS:
[BAR CHART OMITTED, PLOT POINTS AS FOLLOWS:]
25.4% Information technology
15.9% Cash equivalents
14.9% Healthcare
12.0% Consumer discretionary
10.8% Industrials
8.6% Financials
4.8% Materials
4.2% Energy
1.8% Telecommunication services
1.6% Consumer staples
MANAGERS DISCUSSION AND ANALYSIS
Although the Turner Small Cap Growth Fund was helped by strength in small-cap
stocks generally in the 12-month period ended September 30, it also helped
itself with admirable stock selection: six of the Fund's 10 sector positions
beat their index-sector counterparts. As a result the fund gained 12.98%,
outdistancing the Russell 2000 Growth Index's 11.92% rise by 1.06 percentage
points.
The fund's health-care and autos/transportation stocks, a 25% weighting,
performed best in relative terms, recording double-digit gains that represented
substantial margins of outperformance over their index counterparts. Winners
included biotechnology, medical-device, specialty-pharmaceutical,
discount-airline, and motor-home stocks. An 8% position in producer-durables
stocks, mainly semiconductor-capital-equipment shares, were a drag on
performance.
- --------------------------------------------------------------------------------
* These figures represent past performance, which is no guarantee of future
results. The investment return and principal value of an investment will
fluctuate, so an investor's shares, when redeemed, may be worth more or less
than its original cost. The performance in the above graph and table do not
reflect the deduction of taxes the shareholder will pay on fund
distributions or the redemptions of fund shares. The inception date of the
Turner Small Cap Growth Fund is February 7, 1994.
TURNER FUNDS 2004 ANNUAL REPORT 11
INVESTMENT REVIEW
- --------------------------------------------------------------------------------
TURNER MICRO CAP GROWTH FUND
- --------------------------------------------------------------------------------
FUND PROFILE
SEPTEMBER 30, 2004
o Ticker symbol TMCGX
o CUSIP #872524301
o Top 5 holdings
(1) Petroleum Development
(2) Oxford Industries
(3) ESCO Technologies
(4) Cleveland-Cliffs
(5) Comstock Resources
o % in 5 largest holdings 7.0%
o Number of holdings 118
o Price/earnings ratio 16.2
o Weighted average market capitalization $0.61 billion
o % of holdings with positive earnings surprises 70.6%
o % of holdings with negative earnings surprises 25.3%
o Net assets $367 million
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- --------------------------------------------------------------------------------
GROWTH OF A $10,000 INVESTMENT IN THE TURNER MICRO CAP GROWTH FUND:
FEBRUARY 28, 1998-SEPTEMBER 30, 2004*
[LINE CHART OMITTED, PLOT POINTS AS FOLLOWS:]
TURNER MICRO CAP GROWTH FUND RUSSELL 2000 GROWTH INDEX
2/28/98 10000 10000
SEP 98 9882 7625
SEP 99 21093 10113
SEP 00 48308 13113
SEP 01 38535 7528
SEP 02 38489 6161
SEP 03 49709 8731
MAR 04 61410 9772
- ---------------------------------------------------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS (PERIODS ENDING SEPTEMBER 30, 2004)
PAST ONE YEAR PAST THREE YEARS PAST FIVE YEARS SINCE INCEPTION
- ---------------------------------------------------------------------------------------------------------------------------
Turner Micro Cap Growth Fund 23.54% 16.80% 23.83% 31.72%
Russell 2000 Growth Index 11.92% 9.09% (0.68)% (0.35)%
- ---------------------------------------------------------------------------------------------------------------------------
SECTOR WEIGHTINGS:
[BAR CHART OMITTED, PLOT POINTS AS FOLLOWS:]
35.3% CASH EQUIVALENTS
12.9% INDUSTRIALS
11.0% HEALTHCARE
9.7% FINANCIALS
9.7% CONSUMER DISCRETIONARY
7.1% ENERGY
7.0% INFORMATION TECHNOLOGY
4.6% MATERIALS
1.7% TELECOMMUNICATION SERVICES
0.8% CONSUMER STAPLES
0.2% UTILITIES
MANAGERS DISCUSSION AND ANALYSIS
The 12 months ended September 30 were a good period of performance for small-cap
stocks. The Turner Micro Cap Growth Fund did even better, producing a 23.54%
gain that far outdistanced its benchmark, the Russell 2000 Growth Index. The
Fund's performance premium over the index's 11.92% return was 11.62 percentage
points.
The Fund's stock selection was good, with nine of 10 sector positions
outperforming their corresponding index sectors. Health-care,
financial-services, and energy holdings, a 38% weighting in aggregate,
contributed the most to performance, each rising more than 30%.
Specialty-pharmaceutical, managed-care, medical-equipment, banking, and
energy-production stocks were especially strong. The sole detractor from
performance were the fund's consumer-staples stocks, which lost money, compared
with a gain for the index sector.
- --------------------------------------------------------------------------------
* These figures represent past performance, which is no guarantee of future
results. The investment return and principal value of an investment will
fluctuate, so an investor's shares, when redeemed, may be worth more or less
than its original cost. The performance in the above graph and table do not
reflect the deduction of taxes the shareholder will pay on fund
distributions or the redemptions of fund shares. The inception date of the
Turner Micro Cap Growth Fund is February 27, 1998.
12 TURNER FUNDS 2004 ANNUAL REPORT
INVESTMENT REVIEW
- --------------------------------------------------------------------------------
TURNER SMALL CAP EQUITY FUND
- --------------------------------------------------------------------------------
FUND PROFILE
SEPTEMBER 30, 2004
o Ticker symbol TSEIX
o CUSIP #87252R714
o Top 5 holdings
(1) NAM TAI Electronics
(2) Intergraph
(3) People's Bank
(4) OMI
(5) Alamosa Holdings
o % in 5 largest holdings 8.1%
o Number of holdings 101
o Price/earnings ratio 16.4
o Weighted average market capitalization $1.46 billion
o Net assets $29 million
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INVESTMENT STYLE
- --------------------------------------------------------------------------------
GROWTH OF A $10,000 INVESTMENT IN THE TURNER SMALL CAP EQUITY FUND:
MARCH 4, 2002-SEPTEMBER 30, 2004*
[LINE CHART OMITTED, PLOT POINTS AS FOLLOWS:]
TURNER SMALL CAP EQUITY FUND RUSSELL 2000 INDEX
3/4/02 10000 10000
SEP 02 9299 7485
SEP 03 12278 10217
SEP 04 15317 12134
- ---------------------------------------------------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS (PERIODS ENDING SEPTEMBER 30, 2004)
PAST ONE YEAR SINCE INCEPTION
- ---------------------------------------------------------------------------------------------------------------------------
Turner Small Cap Equity Fund 24.75% 18.03%
Russell 2000 Index 18.77% 7.79%
- ---------------------------------------------------------------------------------------------------------------------------
SECTOR WEIGHTINGS:
[BAR CHART OMITTED, PLOT POINTS AS FOLLOWS:]
17.7% FINANCIALS
15.7% INDUSTRIALS
13.5% CASH EQUIVALENTS
11.2% MATERIALS
10.1% CONSUMER DISCRETIONARY
9.8% INFORMATION TECHNOLOGY
7.6% HEALTHCARE
4.4% ENERGY
3.9% TELECOMMUNICATION SERVICES
3.3% CONSUMER STAPLES
2.8% UTILITIES
MANAGERS DISCUSSION AND ANALYSIS
With outperforming investments in six of 10 market sectors, the Turner Small Cap
Equity Fund gained 24.75% in the 12-month period ended September 30. That return
beat the Russell 2000 Index's 18.77% advance by 5.98 percentage points.
The Fund is invested in both growth and value stocks, and its value holdings
generally produced the highest returns. The greatest degree of outperformance
was supplied by autos/transportation, utilities/communication, and
materials/processing stocks, which represented 21% of the portfolio. All three
of those positions were overweighted versus the index sectors. Energy and
utility stocks produced the highest absolute returns, more than 80%. An
underweighted 18% position in financial-services stocks hurt results the most;
those stocks gained about two percentage points less than the index sector did.
- --------------------------------------------------------------------------------
* These figures represent past performance, which is no guarantee of future
results. The investment return and principal value of an investment will
fluctuate, so an investor's shares, when redeemed, may be worth more or less
than its original cost. The performance in the above graph and table do not
reflect the deduction of taxes the shareholder will pay on fund
distributions or the redemptions of fund shares. The inception date of the
Turner Small Cap Equity Fund is March 4, 2002.
TURNER FUNDS 2004 ANNUAL REPORT 13
INVESTMENT REVIEW
- --------------------------------------------------------------------------------
TURNER TECHNOLOGY FUND
- --------------------------------------------------------------------------------
FUND PROFILE
SEPTEMBER 30, 2004
o Ticker symbol TTECX
o CUSIP #87252R870
o Top 5 holdings
(1) Cisco Systems
(2) Sun Microsystems
(3) Juniper Networks
(4) SAP ADR
(5) Gen-Probe
o % in 5 largest holdings 20.2%
o Number of holdings 41
o Price/earnings ratio 26.4
o Weighted average market capitalization $19.76 billion
o % of holdings with positive earnings surprises 79.7%
o % of holdings with negative earnings surprises 18.3%
o Net assets $16 million
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INVESTMENT STYLE
- --------------------------------------------------------------------------------
GROWTH OF A $10,000 INVESTMENT IN THE TURNER TECHNOLOGY FUND:
JUNE 30, 1999-SEPTEMBER 30, 2004*
[LINE CHART OMITTED, PLOT POINTS AS FOLLOWS:]
TURNER TECHNOLOGY PACIFIC STOCK EXCHANGE GOLDMAN SACHS
FUND TECHNOLOGY 100 INDEX TECHNOLOGY COMPOSITE INDEX
6/30/99 10000 10000 10000
SEP 99 14060 10467 10523
SEP 00 35059 17345 14251
SEP 01 6619 8652 4972
SEP 02 4110 6470 3240
SEP 03 7202 10372 5378
SEP 04 7528 11484 5479
- ---------------------------------------------------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS (PERIODS ENDING SEPTEMBER 30, 2004)
PAST PAST PAST SINCE
ONE YEAR THREE YEARS FIVE YEARS INCEPTION
- ---------------------------------------------------------------------------------------------------------------------------
Turner Technology Fund 4.52% 4.38% (11.74)% (5.26)%
Goldman Sachs Technology Composite Index 1.87% 3.29% (12.23)% (10.81)%
- ---------------------------------------------------------------------------------------------------------------------------
SECTOR WEIGHTINGS:
[BAR CHART OMITTED, PLOT POINTS AS FOLLOWS:]
76.6% INFORMATION TECHNOLOGY
17.5% HEALTHCARE
4.9% CASH EQUIVALENTS
1.0% TELECOMMUNICATION SERVICES
MANAGERS DISCUSSION AND ANALYSIS
In the 12-month period ended September 30, the Turner Technology Fund gained
4.52%, outperforming the Goldman Sachs Technology Composite Index's 1.87% return
by 2.65 percentage points.
Technology stocks soared in the first four months of the period, then declined
sharply in the remaining five months. We took profits in some big winners early
in the period, then sought to minimize the damage as tech shares almost
uniformly fell 10% or more subsequently. Investors increasingly fretted that a
slowing economy and muted capital spending would limit demand for tech products
and services. Medical-technology, biotechnology, software,
broadband-communications, and data-networking stocks did well.
Financial-transaction-processing and semiconductor-capital-equipment shares
lagged.
- --------------------------------------------------------------------------------
* These figures represent past performance, which is no guarantee of future
results. The investment return and principal value of an investment will
fluctuate, so an investor's shares, when redeemed, may be worth more or less
than its original cost. The performance in the above graph and table do not
reflect the deduction of taxes the shareholder will pay on fund
distributions or the redemptions of fund shares. The inception date of the
Turner Technology Fund is June 30, 1999.
14 TURNER FUNDS 2004 ANNUAL REPORT
INVESTMENT REVIEW
- --------------------------------------------------------------------------------
TURNER CONCENTRATED GROWTH FUND
- --------------------------------------------------------------------------------
FUND PROFILE
SEPTEMBER 30, 2004
o Ticker symbol TTOPX
o CUSIP #87252R862
o Top 5 holdings
(1) Genentech
(2) Sun Microsystems
(3) Cisco Systems
(4) Ericsson Telephone ADR
(5) Juniper Networks
o % in 5 largest holdings 25.0%
o Number of holdings 29
o Price/earnings ratio 25.7
o Weighted average market capitalization $28.92 billion
o % of holdings with positive earnings surprises 74.4%
o % of holdings with negative earnings surprises 25.6%
o Net assets $39 million
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INVESTMENT STYLE
- --------------------------------------------------------------------------------
GROWTH OF A $10,000 INVESTMENT IN THE TURNER CONCENTRATED GROWTH FUND:
JUNE 30, 1999-SEPTEMBER 30, 2004*
[LINE CHART OMITTED, PLOT POINTS AS FOLLOWS:]
TURNER CONCENTRATED GROWTH FUND S&P 500 INDEX NASDAQ 100 INDEX
6/30/99 10000 10000 10000
SEP 99 13990 9376 10485
SEP 00 27782 10622 15553
SEP 01 8223 7794 5092
SEP 02 5754 6197 3631
SEP 03 8638 7709 5696
SEP 04 8310 8778 6190
- ---------------------------------------------------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS (PERIODS ENDING SEPTEMBER 30, 2004)
PAST ONE YEAR PAST THREE YEARS PAST FIVE YEARS SINCE INCEPTION
- ---------------------------------------------------------------------------------------------------------------------------
Turner Concentrated Growth Fund (3.80)% 0.35% (9.89)% (3.46)%
S&P 500 Index 13.87% 4.05% (1.31)% (2.45)%
- ---------------------------------------------------------------------------------------------------------------------------
SECTOR WEIGHTINGS:
[BAR CHART OMITTED, PLOT POINTS AS FOLLOWS:]
58.6% INFORMATION TECHNOLOGY
15.8% HEALTHCARE
6.0% CASH EQUIVALENTS
5.6% INDUSTRIALS
4.8% TELECOMMUNICATION SERVICES
4.4% FINANCIALS
2.6% MATERIALS
2.2% CONSUMER DISCRETIONARY
MANAGERS DISCUSSION AND ANALYSIS
The Turner Concentrated Growth Fund generally contains a select few stocks --
15-29 -- that Turner thinks have the most return potential. The Fund's holdings
emphasize companies with the strongest growth prospects and above-average
valuations, which were out of favor for much of the 12-month period ended
September 30. Because of that emphasis, the Fund lost 3.80%, underperforming the
S&P 500 Index's 13.87% gain by 17.67 percentage points.
Most of the Fund's holdings were concentrated in the
consumer-discretionary/services, health-care, and technology sectors. The
technology holdings in particular didn't pan out; they were largely responsible
for the Fund's performance shortfall, with computer-networking, semiconductor,
and broadband-communications stocks faring worst. A 19%
consumer-discretionary/services position, led by Internet, retailing, and
staff-services stocks, contributed the most to results.
- --------------------------------------------------------------------------------
* These figures represent past performance, which is no guarantee of future
results. The investment return and principal value of an investment will
fluctuate, so an investor's shares, when redeemed, may be worth more or less
than its original cost. The performance in the above graph and table do not
reflect the deduction of taxes the shareholder will pay on fund
distributions or the redemptions of fund shares. The inception date of the
Turner Concentrated Growth Fund is June 30, 1999.
TURNER FUNDS 2004 ANNUAL REPORT 15
- --------------------------------------------------------------------------------
INVESTMENT REVIEW
TURNER NEW ENTERPRISE FUND
- --------------------------------------------------------------------------------
FUND PROFILE
SEPTEMBER 30, 2004
o Ticker symbol TBTBX
o CUSIP #87252R797
o Top 5 holdings
(1) Cisco Systems
(2) F5 Networks
(3) Juniper Networks
(4) Apple Computer
(5) Monster Worldwide
o % in 5 largest holdings 16.9%
o Number of holdings 42
o Price/earnings ratio 28.4
o Weighted average market capitalization $13.34 billion
o % of holdings with positive earnings surprises 80.3%
o % of holdings with negative earnings surprises 16.2%
o Net assets $11 million
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GROWTH OF A $10,000 INVESTMENT IN THE TURNER NEW ENTERPRISE FUND:
JUNE 30, 2000-SEPTEMBER 30, 2004*
[LINE CHART OMITTED, PLOT POINTS AS FOLLOWS:]
TURNER NEW ENTERPRISE FUND NASDAQ COMPOSITE INDEX
6/30/00 10000 10000
SEP 00 12520 9264
SEP 01 3290 3792
SEP 02 2270 2976
SEP 03 4340 4556
SEP 04 4521 4862
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS (PERIODS ENDING SEPTEMBER 30, 2004)
PAST ONE YEAR PAST THREE YEARS SINCE INCEPTION
- ---------------------------------------------------------------------------------------------------------------------------
Turner New Enterprise Fund 4.15% 11.17% (17.04)%
NASDAQ Composite Index 6.70% 8.64% (15.59)%
- ---------------------------------------------------------------------------------------------------------------------------
SECTOR WEIGHTINGS:
[BAR CHART OMITTED, PLOT POINTS FOLLOWS]
50.5% INFORMATION TECHNOLOGY
14.5% HEALTHCARE
12.9% CASH EQUIVALENTS
8.1% CONSUMER DISCRETIONARY
6.2% TELECOMMUNICATION SERVICES
6.1% INDUSTRIALS
1.7% CONSUMER STAPLES
MANAGERS DISCUSSION AND ANALYSIS
Big gains in autos/transportation and energy stocks were unable to overcome
subpar results in two major sectors -- technology and consumer
discretionary/services -- for the Turner New Enterprise Fund in the 12 months
ended September 30. The Fund returned 4.15%, lagging the Nasdaq Composite
Index's 6.70% result by 2.55 percentage points.
The technology and consumer-discretionary/services positions accounted for 68%
of the Fund's holdings and significantly underperformed the index sectors; the
technology holdings lost 3% (versus a 6% gain for the index sector) and the
consumer holdings rose 4% (versus a 20% gain for the index sector). Adding to
performance were trucking, courier-service, energy-production, and oil-services
stocks, which in aggregate generated returns of more than 90%. Unfortunately,
their 2% combined weighting wasn't enough to positively affect performance much.
- --------------------------------------------------------------------------------
* These figures represent past performance, which is no guarantee of future
results. The investment return and principal value of an investment will
fluctuate, so an investor's shares, when redeemed, may be worth more or less
than its original cost. The performance in the above graph and table do not
reflect the deduction of taxes the shareholder will pay on fund
distributions or the redemptions of fund shares. The inception date of the
Turner New Enterprise Fund is June 30, 2000.
16 TURNER FUNDS 2004 ANNUAL REPORT
- --------------------------------------------------------------------------------
FINANCIAL STATEMENTS
STATEMENT OF NET ASSETS
TURNER DISCIPLINED LARGE CAP GROWTH FUND
September 30, 2004
Value
Shares (000)
- --------------------------------------------------------------------------------
COMMON STOCK--96.9%
- --------------------------------------------------------------------------------
ACCOUNTING/TAX PREPARATION/BOOKKEEPING/
PAYROLL SERVICES--0.8%
- --------------------------------------------------------------------------------
Paychex 19,310 $ 582
---------
Total Accounting/tax preparation/
bookkeeping/payroll services 582
---------
- --------------------------------------------------------------------------------
ADVERTISING & RELATED SERVICES--1.8%
- --------------------------------------------------------------------------------
Time Warner* 75,680 1,221
---------
Total Advertising & related services 1,221
---------
- --------------------------------------------------------------------------------
AGRICULTURE, CONSTRUCTION & MINING
MACHINERY MANUFACTURING--1.8%
- --------------------------------------------------------------------------------
Caterpillar 15,150 1,219
---------
Total Agriculture, construction &
mining machinery manufacturing 1,219
---------
- --------------------------------------------------------------------------------
ALUMINA & ALUMINUM PRODUCTION &
PROCESSING--0.7%
- --------------------------------------------------------------------------------
Alcoa 15,050 506
---------
Total Alumina & aluminum
production & processing 506
---------
- --------------------------------------------------------------------------------
BEVERAGE MANUFACTURING--3.3%
- --------------------------------------------------------------------------------
PepsiCo 46,560 2,265
---------
Total Beverage manufacturing 2,265
---------
- --------------------------------------------------------------------------------
COMMUNICATIONS EQUIPMENT
MANUFACTURING--6.3%
- --------------------------------------------------------------------------------
Cisco Systems* 168,070 3,042
Ericsson Telephone ADR* 21,280 665
Research In Motion* 7,940 606
---------
Total Communications
equipment manufacturing 4,313
---------
- --------------------------------------------------------------------------------
COMPUTER & PERIPHERAL EQUIPMENT
MANUFACTURING--6.5%
- --------------------------------------------------------------------------------
Apple Computer* 23,130 896
Dell* 71,240 2,536
EMC* 83,790 967
---------
Total Computer & peripheral
equipment manufacturing 4,399
---------
Value
Shares (000)
- --------------------------------------------------------------------------------
COMPUTER SYSTEMS DESIGN &
RELATED SERVICES--1.5%
- --------------------------------------------------------------------------------
Sun Microsystems* 250,920 $ 1,014
---------
Total Computer systems design &
related services 1,014
---------
- --------------------------------------------------------------------------------
COURIERS--1.0%
- --------------------------------------------------------------------------------
United Parcel Service, Cl B 9,160 695
---------
Total Couriers 695
---------
- --------------------------------------------------------------------------------
DATA PROCESSING SERVICES--1.7%
- --------------------------------------------------------------------------------
First Data 27,050 1,177
---------
Total Data processing services 1,177
---------
- --------------------------------------------------------------------------------
DEPARTMENT STORES--1.0%
- --------------------------------------------------------------------------------
Kohl's* 13,580 654
---------
Total Department stores 654
---------
- --------------------------------------------------------------------------------
ELECTRICAL EQUIPMENT MANUFACTURING--2.2%
- --------------------------------------------------------------------------------
General Electric 44,480 1,494
---------
Total Electrical equipment
manufacturing 1,494
---------
- --------------------------------------------------------------------------------
ELECTRONIC SHOPPING &
MAIL-ORDER HOUSES--1.6%
- --------------------------------------------------------------------------------
eBay* 11,630 1,069
---------
Total Electronic shopping &
mail-order houses 1,069
---------
- --------------------------------------------------------------------------------
ELECTRONICS & APPLIANCE STORES--1.6%
- --------------------------------------------------------------------------------
Best Buy 19,900 1,079
---------
Total Electronics & appliance stores 1,079
---------
- --------------------------------------------------------------------------------
GRAIN & OILSEED MILLING--1.6%
- --------------------------------------------------------------------------------
Archer-Daniels-Midland 63,250 1,074
---------
Total Grain & oilseed milling 1,074
---------
- --------------------------------------------------------------------------------
HEALTH & PERSONAL CARE STORES--1.6%
- --------------------------------------------------------------------------------
Walgreen 30,530 1,094
---------
Total Health & personal care stores 1,094
---------
TURNER FUNDS 2004 ANNUAL REPORT 17
FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
STATEMENT OF NET ASSETS
TURNER DISCIPLINED LARGE CAP GROWTH FUND
Value
Shares (000)
- --------------------------------------------------------------------------------
INFORMATION SERVICES--4.0%
- --------------------------------------------------------------------------------
Google, Cl A*# 4,600 $ 596
Juniper Networks* 33,770 797
Yahoo!* 38,740 1,314
---------
Total Information services 2,707
---------
- --------------------------------------------------------------------------------
INSURANCE CARRIERS--7.1%
- --------------------------------------------------------------------------------
American International Group 25,810 1,755
Anthem* 19,620 1,712
UnitedHealth Group 18,800 1,386
---------
Total Insurance carriers 4,853
---------
- --------------------------------------------------------------------------------
LIMITED-SERVICE EATING PLACES--1.0%
- --------------------------------------------------------------------------------
Starbucks* 14,780 672
---------
Total Limited-service eating places 672
---------
- --------------------------------------------------------------------------------
MEDICAL EQUIPMENT & SUPPLIES
MANUFACTURING--5.5%
- --------------------------------------------------------------------------------
Boston Scientific* 34,880 1,386
St. Jude Medical* 18,440 1,388
Zimmer Holdings* 12,700 1,004
---------
Total Medical equipment &
supplies manufacturing 3,778
---------
- --------------------------------------------------------------------------------
NAVIGATIONAL/MEASURING/MEDICAL/
CONTROL INSTRUMENTS MANUFACTURING--2.0%
- --------------------------------------------------------------------------------
Medtronic 26,240 1,362
---------
Total Navigational/measuring/
medical/control instruments
manufacturing 1,362
---------
- --------------------------------------------------------------------------------
NEWSPAPER/PERIODICAL/BOOK/
DATABASE PUBLISHERS--1.6%
- --------------------------------------------------------------------------------
News ADR* 32,550 1,070
---------
Total Newspaper/periodical/book/
database publishers 1,070
---------
- --------------------------------------------------------------------------------
NONDEPOSITORY CREDIT INTERMEDIATION--3.0%
- --------------------------------------------------------------------------------
American Express 39,910 2,054
---------
Total Nondepository credit
intermediation 2,054
---------
Value
Shares (000)
- --------------------------------------------------------------------------------
OFFICES OF PHYSICIANS--2.0%
- --------------------------------------------------------------------------------
Caremark Rx* 42,830 $ 1,374
---------
Total Offices of physicians 1,374
---------
- --------------------------------------------------------------------------------
OIL & GAS EXTRACTION--0.8%
- --------------------------------------------------------------------------------
Apache 10,960 549
---------
Total Oil & gas extraction 549
---------
- --------------------------------------------------------------------------------
OTHER MISCELLANEOUS MANUFACTURING--0.9%
- --------------------------------------------------------------------------------
International Game Technology 17,000 611
---------
Total Other miscellaneous
manufacturing 611
---------
- --------------------------------------------------------------------------------
PHARMACEUTICAL & MEDICINE
MANUFACTURING--7.3%
- --------------------------------------------------------------------------------
Amgen* 34,340 1,946
Forest Laboratories* 22,450 1,010
Gilead Sciences* 30,080 1,124
Sanofi-Aventis ADR 23,420 858
---------
Total Pharmaceutical &
medicine manufacturing 4,938
---------
- --------------------------------------------------------------------------------
SCHEDULED AIR TRANSPORTATION--0.8%
- --------------------------------------------------------------------------------
Southwest Airlines 41,470 565
---------
Total Scheduled air transportation 565
---------
- --------------------------------------------------------------------------------
SCIENTIFIC R&D SERVICES--4.0%
- --------------------------------------------------------------------------------
Biogen Idec* 21,720 1,328
Genentech* 26,950 1,413
---------
Total Scientific r&d services 2,741
---------
- --------------------------------------------------------------------------------
SECURITY & COMMODITY CONTRACTS
INTERMEDIATION & BROKERAGE--3.1%
- --------------------------------------------------------------------------------
Charles Schwab 74,510 685
Goldman Sachs Group 14,990 1,397
---------
Total Security & commodity contracts
intermediation & brokerage 2,082
---------
18 TURNER FUNDS 2004 ANNUAL REPORT
- --------------------------------------------------------------------------------
STATEMENT OF NET ASSETS
TURNER DISCIPLINED LARGE CAP GROWTH FUND
Value
Shares (000)
- --------------------------------------------------------------------------------
SEMICONDUCTOR & OTHER ELECTRONIC
COMPONENT MANUFACTURING--6.4%
- --------------------------------------------------------------------------------
Applied Materials* 86,000 $ 1,418
Maxim Integrated Products 22,850 967
Texas Instruments 45,070 959
Tyco International 32,070 983
---------
Total Semiconductor & other electronic
component manufacturing 4,327
---------
- --------------------------------------------------------------------------------
SOAP, CLEANERS & TOILET PREPARATION
MANUFACTURING--4.6%
- --------------------------------------------------------------------------------
Avon Products 13,700 598
Procter & Gamble 46,690 2,527
---------
Total Soap, cleaners & toilet
preparation manufacturing 3,125
---------
- --------------------------------------------------------------------------------
SOFTWARE PUBLISHERS--4.9%
- --------------------------------------------------------------------------------
Electronic Arts* 14,080 648
Microsoft 14,500 401
SAP ADR* 35,890 1,398
Symantec* 16,060 881
---------
Total Software publishers 3,328
---------
- --------------------------------------------------------------------------------
TELECOMMUNICATIONS--1.2%
- --------------------------------------------------------------------------------
America Movil, Ser L ADR* 20,490 800
---------
Total Telecommunications 800
---------
- --------------------------------------------------------------------------------
TRAVELER ACCOMMODATION--1.7%
- --------------------------------------------------------------------------------
Marriott International, Cl A 21,730 1,128
---------
Total Traveler accommodation 1,128
---------
- --------------------------------------------------------------------------------
TOTAL COMMON STOCK
(COST $58,108) 65,919
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
CASH EQUIVALENTS--7.6%
- --------------------------------------------------------------------------------
Blackrock TempCash Fund,
Institutional Shares 3,625,153 3,625
Blackrock Temp Fund,
Institutional Shares 1,553,356 1,554
- --------------------------------------------------------------------------------
TOTAL CASH EQUIVALENTS
(COST $5,179) 5,179
- --------------------------------------------------------------------------------
Value
Shares (000)
- --------------------------------------------------------------------------------
SHORT-TERM INVESTMENT HELD AS COLLATERAL
FOR LOANED SECURITIES--1.1%
- --------------------------------------------------------------------------------
Boston Global Investment Trust--
Quality Portfolio (1) 723,600 $ 724
- --------------------------------------------------------------------------------
TOTAL SHORT-TERM INVESTMENT HELD
AS COLLATERAL FOR LOANED SECURITIES
(COST $724) 724
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
TOTAL INVESTMENTS--105.6%
(COST $64,011) 71,822
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
OTHER ASSETS AND LIABILITIES-- (5.6)%
- --------------------------------------------------------------------------------
Payable for investment securities purchased (4,377)
Obligation to return securities
lending collateral (724)
Payable due to investment adviser (20)
Payable due to administrator (12)
Other assets and liabilities, net 1,302
- --------------------------------------------------------------------------------
TOTAL OTHER ASSETS AND LIABILITIES (3,831)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
NET ASSETS-- 100.0% $67,991
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
NET ASSETS CONSIST OF:
- --------------------------------------------------------------------------------
Portfolio capital of Class I Shares
(unlimited authorization -- no par value)
based on 14,068,386 outstanding shares
of beneficial interest $ 91,103
Undistributed net investment income 42
Accumulated net realized loss
on investments (30,965)
Net unrealized appreciation
on investments 7,811
- --------------------------------------------------------------------------------
NET ASSETS $ 67,991
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
NET ASSET VALUE, OFFERING AND REDEMPTION
PRICE PER SHARE--CLASS I SHARES $4.83
- --------------------------------------------------------------------------------
* Non-income producing security
# Security fully or partially on loan at September 30, 2004 (see Note 9 in
Notes to Financial Statements). The total value of securities on loan at
September 30, 2004, was $699,840.
(1) A private placement security. Units are non-transferable but may be redeemed
at the NAV.
ADR - American depositary receipt
Cl - Class
Ser - Series
The accompanying notes are an integral part of the financial statements.
TURNER FUNDS 2004 ANNUAL REPORT 19
FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
STATEMENT OF NET ASSETS
TURNER LARGE CAP GROWTH OPPORTUNITIES FUND
September 30, 2004
Value
Shares (000)
- --------------------------------------------------------------------------------
COMMON STOCK--99.7%
- --------------------------------------------------------------------------------
ADVERTISING & RELATED SERVICES--1.5%
- --------------------------------------------------------------------------------
Time Warner* 4,070 $ 66
---------
Total Advertising & related services 66
---------
- --------------------------------------------------------------------------------
AGRICULTURE, CONSTRUCTION & MINING
MACHINERY MANUFACTURING--1.9%
- --------------------------------------------------------------------------------
Caterpillar 1,040 84
---------
Total Agriculture, construction &
mining machinery manufacturing 84
---------
- --------------------------------------------------------------------------------
CLOTHING STORES--1.2%
- --------------------------------------------------------------------------------
Chico's FAS* 1,500 51
---------
Total Clothing stores 51
---------
- --------------------------------------------------------------------------------
COMMUNICATIONS EQUIPMENT
MANUFACTURING--5.7%
- --------------------------------------------------------------------------------
Cisco Systems* 7,000 127
Ericsson Telephone ADR* 1,940 60
Research In Motion* 850 65
---------
Total Communications
equipment manufacturing 252
---------
- --------------------------------------------------------------------------------
COMPUTER & PERIPHERAL EQUIPMENT
MANUFACTURING--8.8%
- --------------------------------------------------------------------------------
Apple Computer* 1,770 68
Dell* 3,810 136
EMC* 7,550 87
Network Appliance* 1,730 40
Zebra Technologies, Cl A* 930 57
---------
Total Computer & peripheral
equipment manufacturing 388
---------
- --------------------------------------------------------------------------------
COMPUTER SYSTEMS DESIGN &
RELATED SERVICES--3.1%
- --------------------------------------------------------------------------------
Sun Microsystems* 33,820 137
---------
Total Computer systems design &
related services 137
---------
- --------------------------------------------------------------------------------
DATA PROCESSING SERVICES--4.3%
- --------------------------------------------------------------------------------
Alliance Data Systems* 1,510 61
First Data 1,610 70
Fiserv* 1,700 59
---------
Total Data processing services 190
---------
Value
Shares (000)
- --------------------------------------------------------------------------------
ELECTRONIC SHOPPING &
MAIL-ORDER HOUSES--1.7%
- --------------------------------------------------------------------------------
eBay* 820 $ 75
---------
Total Electronic shopping &
mail-order houses 75
---------
- --------------------------------------------------------------------------------
ELECTRONICS & APPLIANCE STORES--3.0%
- --------------------------------------------------------------------------------
Best Buy 1,250 68
CDW 1,160 67
---------
Total Electronics & appliance stores 135
---------
- --------------------------------------------------------------------------------
GRAIN & OILSEED MILLING--1.6%
- --------------------------------------------------------------------------------
Archer-Daniels-Midland 4,240 72
---------
Total Grain & oilseed milling 72
---------
- --------------------------------------------------------------------------------
HOME FURNISHINGS STORES--1.2%
- --------------------------------------------------------------------------------
Williams-Sonoma* 1,450 54
---------
Total Home furnishings stores 54
---------
- --------------------------------------------------------------------------------
INFORMATION SERVICES--3.8%
- --------------------------------------------------------------------------------
Google, Cl A*# 300 39
Juniper Networks* 3,030 72
Yahoo!* 1,690 57
---------
Total Information services 168
---------
- --------------------------------------------------------------------------------
INSURANCE CARRIERS--3.3%
- --------------------------------------------------------------------------------
American International Group 820 56
Anthem* 1,020 89
---------
Total Insurance carriers 145
---------
- --------------------------------------------------------------------------------
LIMITED-SERVICE EATING PLACES--2.0%
- --------------------------------------------------------------------------------
Starbucks* 790 36
Yum! Brands 1,320 53
---------
Total Limited-service eating places 89
---------
- --------------------------------------------------------------------------------
MEDICAL EQUIPMENT & SUPPLIES
MANUFACTURING--5.5%
- --------------------------------------------------------------------------------
Boston Scientific* 1,490 59
C.R. Bard 680 38
St. Jude Medical* 1,110 84
Zimmer Holdings* 770 61
---------
Total Medical equipment &
supplies manufacturing 242
---------
20 TURNER FUNDS 2004 ANNUAL REPORT
STATEMENT OF NET ASSETS
TURNER LARGE CAP GROWTH OPPORTUNITIES FUND
Value
Shares (000)
- --------------------------------------------------------------------------------
NAVIGATIONAL/MEASURING/MEDICAL/
CONTROL INSTRUMENTS MANUFACTURING--3.7%
- --------------------------------------------------------------------------------
Danaher 1,220 $ 62
Fisher Scientific International* 940 55
Waters* 1,040 46
---------
Total Navigational/measuring/medical/
control instruments manufacturing 163
---------
- --------------------------------------------------------------------------------
NEWSPAPER/PERIODICAL/BOOK/
DATABASE PUBLISHERS--1.4%
- --------------------------------------------------------------------------------
News ADR* 1,890 62
---------
Total Newspaper/periodical/book/
database publishers 62
---------
- --------------------------------------------------------------------------------
NONDEPOSITORY CREDIT INTERMEDIATION--1.7%
- --------------------------------------------------------------------------------
American Express 1,470 76
---------
Total Nondepository credit
intermediation 76
---------
- --------------------------------------------------------------------------------
OFFICES OF PHYSICIANS--1.9%
- --------------------------------------------------------------------------------
Caremark Rx* 2,640 85
---------
Total Offices of physicians 85
---------
- --------------------------------------------------------------------------------
OIL & GAS EXTRACTION--2.4%
- --------------------------------------------------------------------------------
Apache 1,180 59
XTO Energy 1,470 48
---------
Total Oil & gas extraction 107
---------
- --------------------------------------------------------------------------------
OTHER FINANCIAL INVESTMENT ACTIVITIES--1.4%
- --------------------------------------------------------------------------------
T. Rowe Price Group 1,200 61
---------
Total Other financial
investment activities 61
---------
- --------------------------------------------------------------------------------
OTHER LEATHER & ALLIED PRODUCT
MANUFACTURING--1.4%
- --------------------------------------------------------------------------------
Coach* 1,510 64
---------
Total Other leather & allied
product manufacturing 64
---------
- --------------------------------------------------------------------------------
OTHER MISCELLANEOUS MANUFACTURING--1.0%
- --------------------------------------------------------------------------------
International Game Technology 1,250 45
---------
Total Other miscellaneous
manufacturing 45
---------
Value
Shares (000)
- --------------------------------------------------------------------------------
PHARMACEUTICAL & MEDICINE
MANUFACTURING--6.1%
- --------------------------------------------------------------------------------
Amgen* 1,390 $ 79
Forest Laboratories* 1,400 63
Gilead Sciences* 2,080 78
Sanofi-Aventis ADR 1,450 53
---------
Total Pharmaceutical & medicine
manufacturing 273
---------
- --------------------------------------------------------------------------------
SCIENTIFIC R&D SERVICES--4.8%
- --------------------------------------------------------------------------------
Biogen Idec* 1,110 68
Genentech* 1,410 74
Monsanto 1,960 71
---------
Total Scientific r&d services 213
---------
- --------------------------------------------------------------------------------
SECURITY & COMMODITY CONTRACTS
INTERMEDIATION & BROKERAGE--3.3%
- --------------------------------------------------------------------------------
Charles Schwab 7,400 68
Goldman Sachs Group 840 78
---------
Total Security & commodity contracts
intermediation & brokerage 146
---------
- --------------------------------------------------------------------------------
SEMICONDUCTOR & OTHER ELECTRONIC
COMPONENT MANUFACTURING--11.9%
- --------------------------------------------------------------------------------
Applied Materials* 4,030 66
ASML Holding* 5,000 64
Flextronics International* 3,910 52
JDS Uniphase* 15,470 52
Marvell Technology Group* 1,790 47
Maxim Integrated Products 1,250 53
Texas Instruments 3,900 83
Tyco International 2,090 64
Xilinx 1,690 46
---------
Total Semiconductor & other electronic
component manufacturing 527
---------
- --------------------------------------------------------------------------------
SOAP, CLEANERS & TOILET PREPARATION
MANUFACTURING--1.4%
- --------------------------------------------------------------------------------
Avon Products 1,390 61
---------
Total Soap, cleaners & toilet
preparation manufacturing 61
---------
TURNER FUNDS 2004 ANNUAL REPORT 21
FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
STATEMENT OF NET ASSETS
TURNER LARGE CAP GROWTH OPPORTUNITIES FUND
Value
Shares (000)
- --------------------------------------------------------------------------------
SOFTWARE PUBLISHERS--5.0%
- --------------------------------------------------------------------------------
Electronic Arts* 940 $ 43
SAP ADR* 1,590 62
Symantec* 1,240 68
VeriSign* 2,460 49
---------
Total Software publishers 222
---------
- --------------------------------------------------------------------------------
TELECOMMUNICATIONS--1.3%
- --------------------------------------------------------------------------------
America Movil, Ser L ADR* 1,490 58
---------
Total Telecommunications 58
---------
- --------------------------------------------------------------------------------
TRAVELER ACCOMMODATION--2.4%
- --------------------------------------------------------------------------------
Marriott International, Cl A 1,250 65
MGM Mirage* 800 40
---------
Total Traveler accommodation 105
---------
- --------------------------------------------------------------------------------
TOTAL COMMON STOCK
(COST $4,052) 4,416
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SHORT-TERM INVESTMENT HELD AS COLLATERAL
FOR LOANED SECURITIES--1.2%
- --------------------------------------------------------------------------------
Boston Global Investment Trust--
Quality Portfolio (1) 53,600 54
- --------------------------------------------------------------------------------
TOTAL SHORT-TERM INVESTMENT HELD AS
COLLATERAL FOR LOANED SECURITIES
(COST $54) 54
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
CASH EQUIVALENT--1.2%
- --------------------------------------------------------------------------------
Blackrock TempCash Fund,
Institutional Shares 51,737 52
- --------------------------------------------------------------------------------
TOTAL CASH EQUIVALENT
(COST $52) 52
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
TOTAL INVESTMENTS--102.1%
(COST $4,158) 4,522
- --------------------------------------------------------------------------------
Value
(000)
- --------------------------------------------------------------------------------
OTHER ASSETS AND LIABILITIES--(2.1)%
- --------------------------------------------------------------------------------
Obligation to return securities
lending collateral $ (54)
Payable due to administrator (1)
Other assets and liabilities, net (37)
- --------------------------------------------------------------------------------
TOTAL OTHER ASSETS AND LIABILITIES (92)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
NET ASSETS-- 100.0% $ 4,430
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
NET ASSETS CONSIST OF:
- --------------------------------------------------------------------------------
Portfolio capital of Class I Shares
(unlimited authorization -- no par value)
based on 448,484 outstanding shares
of beneficial interest $ 17,470
Accumulated net realized loss
on investments (13,404)
Net unrealized appreciation
on investments 364
- --------------------------------------------------------------------------------
NET ASSETS $ 4,430
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
NET ASSET VALUE, OFFERING AND REDEMPTION
PRICE PER SHARE--CLASS I SHARES $9.88
- --------------------------------------------------------------------------------
* Non-income producing security
# Security fully or partially on loan at September 30, 2004 (see Note 9 in
Notes to Financial Statements). The total value of securities on loan at
September 30, 2004, was $51,840.
(1) A private placement security. Units are non-transferable but may be redeemed
at the NAV.
ADR - American depositary receipt
Cl - Class
Ser - Series
The accompanying notes are an integral part of the financial statements.
22 TURNER FUNDS 2004 ANNUAL REPORT
- --------------------------------------------------------------------------------
STATEMENT OF NET ASSETS
TURNER MIDCAP GROWTH FUND
September 30, 2004
Value
Shares (000)
- --------------------------------------------------------------------------------
COMMON STOCK--100.6%
- --------------------------------------------------------------------------------
AGRICULTURE, CONSTRUCTION & MINING
MACHINERY MANUFACTURING--1.7%
- --------------------------------------------------------------------------------
Baker Hughes 194,590 $ 8,508
Smith International* 105,370 6,399
---------
Total Agriculture, construction &
mining machinery manufacturing 14,907
---------
- --------------------------------------------------------------------------------
AUDIO & VIDEO EQUIPMENT
MANUFACTURING--0.8%
- --------------------------------------------------------------------------------
Harman International Industries 66,400 7,155
---------
Total Audio & video equipment
manufacturing 7,155
---------
- --------------------------------------------------------------------------------
BASIC CHEMICAL MANUFACTURING--0.8%
- --------------------------------------------------------------------------------
Ashland 123,550 6,929
---------
Total Basic chemical manufacturing 6,929
---------
- --------------------------------------------------------------------------------
BEVERAGE MANUFACTURING--0.7%
- --------------------------------------------------------------------------------
Constellation Brands, Cl A* 147,360 5,609
---------
Total Beverage manufacturing 5,609
---------
- --------------------------------------------------------------------------------
BOILER, TANK & SHIPPING CONTAINER
MANUFACTURING--0.6%
- --------------------------------------------------------------------------------
Ball 132,740 4,968
---------
Total Boiler, tank & shipping
container manufacturing 4,968
---------
- --------------------------------------------------------------------------------
BUSINESS SUPPORT SERVICES--0.6%
- --------------------------------------------------------------------------------
Iron Mountain* 141,980 4,806
---------
Total Business support services 4,806
---------
- --------------------------------------------------------------------------------
CLOTHING STORES--2.8%
- --------------------------------------------------------------------------------
Abercrombie & Fitch, Cl A 135,290 4,261
American Eagle Outfitters* 140,620 5,182
Chico's FAS* 258,340 8,835
Urban Outfitters* 162,520 5,591
---------
Total Clothing stores 23,869
---------
- --------------------------------------------------------------------------------
COAL MINING--0.7%
- --------------------------------------------------------------------------------
Peabody Energy 107,330 6,386
---------
Total Coal mining 6,386
---------
Value
Shares (000)
- --------------------------------------------------------------------------------
COMMERCIAL & SERVICE INDUSTRY
MACHINERY MANUFACTURING--0.8%
- --------------------------------------------------------------------------------
Bausch & Lomb 105,480 $ 7,009
---------
Total Commercial & service industry
machinery manufacturing 7,009
---------
- --------------------------------------------------------------------------------
COMMERCIAL/INDUSTRIAL EQUIPMENT
RENTAL & LEASING--0.9%
- --------------------------------------------------------------------------------
Comverse Technology* 431,360 8,123
---------
Total Commercial/industrial
equipment rental & leasing 8,123
---------
- --------------------------------------------------------------------------------
COMMUNICATIONS EQUIPMENT
MANUFACTURING--3.3%
- --------------------------------------------------------------------------------
Polycom* 520,130 10,309
Research In Motion* 100,920 7,704
Western Wireless, Cl A* 388,530 9,989
---------
Total Communications
equipment manufacturing 28,002
---------
- --------------------------------------------------------------------------------
COMPUTER & PERIPHERAL EQUIPMENT
MANUFACTURING--4.3%
- --------------------------------------------------------------------------------
Apple Computer* 264,580 10,253
Lexmark International, Cl A* 73,050 6,137
Network Appliance* 312,560 7,189
Sandisk* 172,330 5,018
Zebra Technologies, Cl A* 131,537 8,025
---------
Total Computer & peripheral
equipment manufacturing 36,622
---------
- --------------------------------------------------------------------------------
COMPUTER SYSTEMS DESIGN &
RELATED SERVICES--2.3%
- --------------------------------------------------------------------------------
Avid Technology* 113,270 5,309
Checkfree* 279,120 7,723
Cognizant Technology
Solutions, Cl A* 233,610 7,128
---------
Total Computer systems design &
related services 20,160
---------
- --------------------------------------------------------------------------------
CUTLERY & HANDTOOL MANUFACTURING--1.0%
- --------------------------------------------------------------------------------
Pentair 246,380 8,601
---------
Total Cutlery & handtool
manufacturing 8,601
---------
TURNER FUNDS 2004 ANNUAL REPORT 23
- --------------------------------------------------------------------------------
FINANCIAL STATEMENTS
STATEMENT OF NET ASSETS
TURNER MIDCAP GROWTH FUND
Value
Shares (000)
- --------------------------------------------------------------------------------
DATA PROCESSING SERVICES--3.8%
- --------------------------------------------------------------------------------
Alliance Data Systems* 181,500 $ 7,362
ChoicePoint* 203,850 8,694
Fiserv* 195,480 6,814
Global Payments 178,650 9,567
---------
Total Data processing services 32,437
---------
- --------------------------------------------------------------------------------
DEEP SEA, COASTAL & GREAT LAKES
WATER TRANSPORTATION--0.6%
- --------------------------------------------------------------------------------
Teekay Shipping# 117,360 5,057
---------
Total Deep sea, coastal & great lakes
water transportation 5,057
---------
- --------------------------------------------------------------------------------
DEPOSITORY CREDIT INTERMEDIATION--2.4%
- --------------------------------------------------------------------------------
City National 60,720 3,944
Silicon Valley Bancshares* 118,040 4,387
Sovereign Bancorp 274,550 5,991
UCBH Holdings 159,250 6,222
---------
Total Depository credit intermediation 20,544
---------
- --------------------------------------------------------------------------------
DRUGS & DRUGGISTS' SUNDRIES WHOLESALE--1.5%
- --------------------------------------------------------------------------------
Henry Schein*# 111,125 6,924
Nu Skin Enterprises, Cl A# 235,170 5,529
---------
Total Drugs & druggists'
sundries wholesale 12,453
---------
- --------------------------------------------------------------------------------
ELECTRIC POWER GENERATION,
TRANSMISSION & DISTRIBUTION--0.3%
- --------------------------------------------------------------------------------
Reliant Energy*# 300,870 2,807
---------
Total Electric power generation,
transmission & distribution 2,807
---------
- --------------------------------------------------------------------------------
ELECTRONICS & APPLIANCE STORES--1.0%
- --------------------------------------------------------------------------------
CDW 143,570 8,331
---------
Total Electronics & appliance stores 8,331
---------
- --------------------------------------------------------------------------------
EMPLOYMENT SERVICES--0.7%
- --------------------------------------------------------------------------------
Manpower 142,580 6,343
---------
Total Employment services 6,343
---------
Value
Shares (000)
- --------------------------------------------------------------------------------
FREIGHT TRANSPORTATION ARRANGEMENT--0.6%
- --------------------------------------------------------------------------------
Expeditors International
Washington 107,160 $ 5,540
---------
Total Freight transportation
arrangement 5,540
---------
- --------------------------------------------------------------------------------
FULL-SERVICE RESTAURANTS--1.2%
- --------------------------------------------------------------------------------
PF Chang's China Bistro*# 111,490 5,406
Ruby Tuesday 165,030 4,600
---------
Total Full-service restaurants 10,006
---------
- --------------------------------------------------------------------------------
GROCERY STORES--0.8%
- --------------------------------------------------------------------------------
Whole Foods Market# 74,770 6,415
---------
Total Grocery stores 6,415
---------
- --------------------------------------------------------------------------------
HOME FURNISHINGS STORES--2.6%
- --------------------------------------------------------------------------------
Bed Bath & Beyond* 310,070 11,507
Williams-Sonoma* 292,610 10,987
---------
Total Home furnishings stores 22,494
---------
- --------------------------------------------------------------------------------
HVAC & COMMERCIAL REFRIGERATION
EQUIPMENT MANUFACTURING--0.9%
- --------------------------------------------------------------------------------
American Standard* 205,200 7,984
---------
Total Hvac & commercial refrigeration
equipment manufacturing 7,984
---------
- --------------------------------------------------------------------------------
INDUSTRIAL MACHINERY MANUFACTURING--1.2%
- --------------------------------------------------------------------------------
Lam Research* 479,295 10,487
---------
Total Industrial machinery
manufacturing 10,487
---------
- --------------------------------------------------------------------------------
INFORMATION SERVICES--4.1%
- --------------------------------------------------------------------------------
CNET Networks* 965,820 8,837
Infospace* 97,230 4,608
Juniper Networks* 783,096 18,481
RSA Security* 176,550 3,407
---------
Total Information services 35,333
---------
24 TURNER FUNDS 2004 ANNUAL REPORT
- --------------------------------------------------------------------------------
STATEMENT OF NET ASSETS
TURNER MIDCAP GROWTH FUND
Value
Shares (000)
- --------------------------------------------------------------------------------
INSURANCE CARRIERS--2.6%
- --------------------------------------------------------------------------------
Anthem* 150,330 $ 13,116
MGIC Investment 60,290 4,013
Pacificare Health Systems* 150,030 5,506
---------
Total Insurance carriers 22,635
---------
- --------------------------------------------------------------------------------
LIMITED-SERVICE EATING PLACES--1.2%
- --------------------------------------------------------------------------------
Yum! Brands 258,610 10,515
---------
Total Limited-service eating places 10,515
---------
- --------------------------------------------------------------------------------
MANAGEMENT, SCIENTIFIC & TECHNICAL
CONSULTING SERVICES--1.5%
- --------------------------------------------------------------------------------
Monster Worldwide* 523,055 12,888
---------
Total Management, scientific &
technical consulting services 12,888
---------
- --------------------------------------------------------------------------------
MEDICAL & DIAGNOSTIC LABORATORIES--0.7%
- --------------------------------------------------------------------------------
Laboratory Corp. of
America Holdings* 143,310 6,266
---------
Total Medical & diagnostic laboratories 6,266
---------
- --------------------------------------------------------------------------------
MEDICAL EQUIPMENT & SUPPLIES
MANUFACTURING--4.2%
- --------------------------------------------------------------------------------
Biomet 166,824 7,821
C.R. Bard 246,660 13,968
Cooper 64,550 4,425
Inamed* 206,535 9,845
---------
Total Medical equipment &
supplies manufacturing 36,059
---------
- --------------------------------------------------------------------------------
METAL ORE MINING--0.9%
- --------------------------------------------------------------------------------
Phelps Dodge 83,600 7,694
---------
Total Metal ore mining 7,694
---------
- --------------------------------------------------------------------------------
MINING SUPPORT ACTIVITIES--0.5%
- --------------------------------------------------------------------------------
Transocean* 128,910 4,612
---------
Total Mining support activities 4,612
---------
- --------------------------------------------------------------------------------
MISCELLANEOUS DURABLE GOODS WHOLESALE--0.7%
- --------------------------------------------------------------------------------
Brunswick 123,730 5,662
---------
Total Miscellaneous durable
goods wholesale 5,662
---------
Value
Shares (000)
- --------------------------------------------------------------------------------
NAVIGATIONAL/MEASURING/MEDICAL/
CONTROL INSTRUMENTS MANUFACTURING--3.3%
- --------------------------------------------------------------------------------
Fisher Scientific International* 224,070 $ 13,070
Tektronix# 215,020 7,149
Waters* 190,040 8,381
---------
Total Navigational/measuring/medical/
control instruments manufacturing 28,600
---------
- --------------------------------------------------------------------------------
NONDEPOSITORY CREDIT INTERMEDIATION--0.3%
- --------------------------------------------------------------------------------
Doral Financial 70,580 2,927
---------
Total Nondepository
credit intermediation 2,927
---------
- --------------------------------------------------------------------------------
NURSING CARE FACILITIES--0.5%
- --------------------------------------------------------------------------------
Manor Care 150,920 4,522
---------
Total Nursing care facilities 4,522
---------
- --------------------------------------------------------------------------------
OIL & GAS EXTRACTION--1.7%
- --------------------------------------------------------------------------------
Range Resources 327,600 5,730
XTO Energy 260,980 8,476
---------
Total Oil & gas extraction 14,206
---------
- --------------------------------------------------------------------------------
OTHER FINANCIAL INVESTMENT ACTIVITIES--3.2%
- --------------------------------------------------------------------------------
Affiliated Managers Group*# 136,920 7,331
Investors Financial Services# 184,478 8,325
T. Rowe Price Group# 235,170 11,980
---------
Total Other financial
investment activities 27,636
---------
- --------------------------------------------------------------------------------
OTHER FOOD MANUFACTURING--0.7%
- --------------------------------------------------------------------------------
McCormick 175,870 6,039
---------
Total Other food manufacturing 6,039
---------
- --------------------------------------------------------------------------------
OTHER GENERAL PURPOSE MACHINERY
MANUFACTURING--1.6%
- --------------------------------------------------------------------------------
Eaton 112,270 7,119
Rockwell Automation 162,240 6,279
---------
Total Other general purpose
machinery manufacturing 13,398
---------
TURNER FUNDS 2004 ANNUAL REPORT 25
FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
STATEMENT OF NET ASSETS
TURNER MIDCAP GROWTH FUND
Value
Shares (000)
- --------------------------------------------------------------------------------
OTHER INVESTMENT POOLS & FUNDS--0.6%
- --------------------------------------------------------------------------------
Host Marriott* 343,460 $ 4,819
---------
Total Other investment pools & funds 4,819
---------
- --------------------------------------------------------------------------------
OTHER LEATHER & ALLIED PRODUCT
MANUFACTURING--1.3%
- --------------------------------------------------------------------------------
Coach* 271,610 11,522
---------
Total Other leather & allied
product manufacturing 11,522
---------
- --------------------------------------------------------------------------------
OTHER MISCELLANEOUS MANUFACTURING--1.1%
- --------------------------------------------------------------------------------
Scientific Games, Cl A* 188,150 3,594
WMS Industries*# 214,150 5,501
---------
Total Other miscellaneous
manufacturing 9,095
---------
- --------------------------------------------------------------------------------
PHARMACEUTICAL & MEDICINE
MANUFACTURING--4.6%
- --------------------------------------------------------------------------------
Elan ADR* 267,440 6,258
IVAX* 234,025 4,482
MGI Pharma* 215,520 5,752
Neurocrine Biosciences*# 141,537 6,675
OSI Pharmaceuticals* 147,760 9,081
Sepracor* 141,540 6,904
---------
Total Pharmaceutical &
medicine manufacturing 39,152
---------
- --------------------------------------------------------------------------------
PIPELINE TRANSPORTATION OF NATURAL GAS--0.4%
- --------------------------------------------------------------------------------
Western Gas Resources 105,450 3,015
---------
Total Pipeline transportation
of natural gas 3,015
---------
- --------------------------------------------------------------------------------
PRIMARY METAL MANUFACTURING--0.7%
- --------------------------------------------------------------------------------
Allegheny Technologies 347,240 6,337
---------
Total Primary metal manufacturing 6,337
---------
- --------------------------------------------------------------------------------
PROFESSIONAL & COMMERCIAL
EQUIPMENT & SUPPLY WHOLESALE--0.8%
- --------------------------------------------------------------------------------
Patterson* 86,200 6,599
---------
Total Professional & commercial
equipment & supply wholesale 6,599
---------
Value
Shares (000)
- --------------------------------------------------------------------------------
RESIDENTIAL BUILDING CONSTRUCTION--1.2%
- --------------------------------------------------------------------------------
DR Horton 223,060 $ 7,386
Ryland Group 32,660 3,026
---------
Total Residential building construction 10,412
---------
- --------------------------------------------------------------------------------
RESIN, SYNTHETIC RUBBER, ARTIFICIAL &
SYNTHETIC FIBERS MANUFACTURING--0.5%
- --------------------------------------------------------------------------------
Eastman Chemical 81,460 3,873
---------
Total Resin, synthetic rubber, artificial &
synthetic fibers manufacturing 3,873
---------
- --------------------------------------------------------------------------------
SCHEDULED AIR TRANSPORTATION--1.0%
- --------------------------------------------------------------------------------
Southwest Airlines 606,690 8,263
---------
Total Scheduled air transportation 8,263
---------
- --------------------------------------------------------------------------------
SCIENTIFIC R&D SERVICES--2.2%
- --------------------------------------------------------------------------------
Charles River Laboratories
International* 194,500 8,908
Gen-Probe* 251,239 10,017
---------
Total Scientific r&d services 18,925
---------
- --------------------------------------------------------------------------------
SECURITY & COMMODITY CONTRACTS
INTERMEDIATION & BROKERAGE--1.6%
- --------------------------------------------------------------------------------
Bear Stearns 59,360 5,708
E*Trade Financial* 711,890 8,130
---------
Total Security & commodity
contracts intermediation & brokerage 13,838
---------
- --------------------------------------------------------------------------------
SEMICONDUCTOR & OTHER ELECTRONIC
COMPONENT MANUFACTURING--5.1%
- --------------------------------------------------------------------------------
Benchmark Electronics* 165,040 4,918
Cymer* 148,530 4,257
JDS Uniphase* 1,561,230 5,261
Marvell Technology Group*# 343,190 8,968
National Semiconductor* 218,600 3,386
PMC-- Sierra*# 757,334 6,672
Sanmina-SCI* 609,177 4,295
Silicon Laboratories*# 192,270 6,362
---------
Total Semiconductor & other electronic
component manufacturing 44,119
---------
26 TURNER FUNDS 2004 ANNUAL REPORT
- --------------------------------------------------------------------------------
STATEMENT OF NET ASSETS
TURNER MIDCAP GROWTH FUND
Value
Shares (000)
- --------------------------------------------------------------------------------
SOAP, CLEANERS & TOILET PREPARATION
MANUFACTURING--0.9%
- --------------------------------------------------------------------------------
Clorox 142,220 $ 7,580
----------
Total Soap, cleaners & toilet
preparation manufacturing 7,580
----------
- --------------------------------------------------------------------------------
SOFTWARE PUBLISHERS--5.2%
- --------------------------------------------------------------------------------
Akamai Technologies*# 389,130 5,467
Citrix Systems* 358,040 6,273
F5 Networks* 269,820 8,219
Take-Two Interactive Software*# 160,230 5,263
TIBCO Software* 708,111 6,026
VeriSign*# 693,540 13,788
----------
Total Software publishers 45,036
----------
- --------------------------------------------------------------------------------
SPECIALIZED DESIGN SERVICES--0.7%
- --------------------------------------------------------------------------------
Avaya* 457,150 6,373
----------
Total Specialized design services 6,373
----------
- --------------------------------------------------------------------------------
TELECOMMUNICATIONS--0.7%
- --------------------------------------------------------------------------------
NII Holdings*# 139,420 5,746
----------
Total Telecommunications 5,746
----------
- --------------------------------------------------------------------------------
TRAVELER ACCOMMODATION--5.4%
- --------------------------------------------------------------------------------
Aztar* 76,900 2,038
Marriott International, Cl A 267,280 13,888
MGM Mirage* 115,990 5,759
Starwood Hotels & Resorts
Worldwide 138,490 6,428
Station Casinos 217,800 10,681
Wynn Resorts*# 149,930 7,750
----------
Total Traveler accommodation 46,544
----------
- --------------------------------------------------------------------------------
TOTAL COMMON STOCK
(COST $764,971) 864,284
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SHORT-TERM INVESTMENT HELD AS COLLATERAL
FOR LOANED SECURITIES--5.4%
- --------------------------------------------------------------------------------
Boston Global Investment Trust--
Quality Portfolio (1) 45,808,600 45,809
- --------------------------------------------------------------------------------
TOTAL SHORT-TERM INVESTMENT HELD AS
COLLATERAL FOR LOANED SECURITIES
(COST $45,809) 45,809
- --------------------------------------------------------------------------------
Value
Shares (000)
- --------------------------------------------------------------------------------
CASH EQUIVALENT--0.1%
- --------------------------------------------------------------------------------
Blackrock TempCash Fund,
Institutional Shares 1,249,467 $ 1,249
- --------------------------------------------------------------------------------
TOTAL CASH EQUIVALENT
(COST $1,249) 1,249
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
TOTAL INVESTMENTS--106.1%
(COST $812,029) 911,342
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
OTHER ASSETS AND LIABILITIES--(6.1)%
- --------------------------------------------------------------------------------
Obligation to return securities
lending collateral (45,809)
Payable due to investment adviser (523)
Payable due to administrator (105)
Other assets and liabilities, net (5,611)
- --------------------------------------------------------------------------------
TOTAL OTHER ASSETS AND LIABILITIES (52,048)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
NET ASSETS--100.0% $ 859,294
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
NET ASSETS CONSIST OF:
- --------------------------------------------------------------------------------
Portfolio capital of Class I Shares
(unlimited authorization -- no par value)
based on 40,872,272 outstanding shares
of beneficial interest $1,371,986
Portfolio capital of Class II Shares
(unlimited authorization -- no par value)
based on 67,413 outstanding shares
of beneficial interest 1,390
Accumulated net realized loss
on investments (613,395)
Net unrealized appreciation
on investments 99,313
- --------------------------------------------------------------------------------
NET ASSETS $ 859,294
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
NET ASSET VALUE, OFFERING AND REDEMPTION
PRICE PER SHARE--CLASS I SHARES $20.99
($857,899,462 / 40,872,272 SHARES)
- --------------------------------------------------------------------------------
NET ASSET VALUE, OFFERING AND REDEMPTION
PRICE PER SHARE--CLASS II SHARES $20.69
($1,394,785 / 67,413 SHARES)
- --------------------------------------------------------------------------------
* Non-income producing security
# Security fully or partially on loan at September 30, 2004 (see Note 9 in
Notes to Financial Statements). The total value of securities on loan at
September 30, 2004, was $44,342,279.
(1) A private placement security. Units are non-transferable but may be redeemed
at the NAV.
ADR - American depositary receipt
Cl - Class
The accompanying notes are an integral part of the financial statements.
TURNER FUNDS 2004 ANNUAL REPORT 27
FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
STATEMENT OF NET ASSETS
TURNER SMALL CAP GROWTH FUND
September 30, 2004
- --------------------------------------------------------------------------------
COMMON STOCK--94.6%
- --------------------------------------------------------------------------------
ACCOUNTING/TAX PREPARATION/BOOKKEEPING/
PAYROLL SERVICES--0.5%
- --------------------------------------------------------------------------------
Jackson Hewitt Tax Service* 61,540 $ 1,245
---------
Total Accounting/tax preparation/
bookkeeping/payroll services 1,245
---------
- --------------------------------------------------------------------------------
ADVERTISING & RELATED SERVICES--0.7%
- --------------------------------------------------------------------------------
aQuantive* 180,930 1,746
---------
Total Advertising & related services 1,746
---------
- --------------------------------------------------------------------------------
AGENCIES & OTHER INSURANCE
RELATED ACTIVITIES--0.6%
- --------------------------------------------------------------------------------
USI Holdings* 102,740 1,402
---------
Total Agencies & other insurance
related activities 1,402
---------
- --------------------------------------------------------------------------------
ALUMINA & ALUMINUM
PRODUCTION & PROCESSING--0.8%
- --------------------------------------------------------------------------------
Century Aluminum* 70,890 1,966
---------
Total Alumina & aluminum
production & processing 1,966
---------
- --------------------------------------------------------------------------------
BASIC CHEMICAL MANUFACTURING--0.8%
- --------------------------------------------------------------------------------
Airgas 78,100 1,880
---------
Total Basic chemical manufacturing 1,880
---------
- --------------------------------------------------------------------------------
CEMENT & CONCRETE PRODUCT
MANUFACTURING--0.7%
- --------------------------------------------------------------------------------
Eagle Materials# 21,730 1,549
---------
Total Cement & concrete
product manufacturing 1,549
---------
- --------------------------------------------------------------------------------
CHEMICAL MANUFACTURING--0.5%
- --------------------------------------------------------------------------------
Georgia Gulf 25,060 1,117
---------
Total Chemical manufacturing 1,117
---------
- --------------------------------------------------------------------------------
CLOTHING STORES--1.2%
- --------------------------------------------------------------------------------
Aeropostale* 44,100 1,155
Jos. A. Bank Clothiers*# 61,231 1,695
---------
Total Clothing stores 2,850
---------
Value
Shares (000)
- --------------------------------------------------------------------------------
COMMERCIAL/INDUSTRIAL EQUIPMENT
RENTAL & LEASING--0.6%
- --------------------------------------------------------------------------------
Applied Signal Technology# 46,637 $ 1,492
---------
Total Commercial/industrial
equipment rental & leasing 1,492
---------
- --------------------------------------------------------------------------------
COMMUNICATIONS EQUIPMENT
MANUFACTURING--2.3%
- --------------------------------------------------------------------------------
Powerwave Technologies*# 364,830 2,247
Trimble Navigation* 98,780 3,122
---------
Total Communications
equipment manufacturing 5,369
---------
- --------------------------------------------------------------------------------
COMMUNITY CARE FACILITIES
FOR THE ELDERLY--0.1%
- --------------------------------------------------------------------------------
NeighborCare* 9,710 246
---------
Total Community care facilities
for the elderly 246
---------
- --------------------------------------------------------------------------------
COMPUTER SYSTEMS DESIGN &
RELATED SERVICES--4.2%
- --------------------------------------------------------------------------------
Avid Technology* 49,880 2,338
Digital River*# 77,775 2,316
Epicor Software* 136,690 1,644
Sapient* 223,050 1,702
Witness Systems* 117,240 1,884
---------
Total Computer systems design &
related services 9,884
---------
- --------------------------------------------------------------------------------
DATA PROCESSING SERVICES--1.0%
- --------------------------------------------------------------------------------
Global Payments 46,490 2,489
---------
Total Data processing services 2,489
---------
- --------------------------------------------------------------------------------
DEEP SEA, COASTAL & GREAT LAKES
WATER TRANSPORTATION--0.8%
- --------------------------------------------------------------------------------
General Maritime* 57,820 2,014
---------
Total Deep sea, coastal & great lakes
water transportation 2,014
---------
- --------------------------------------------------------------------------------
DEPARTMENT STORES--0.8%
- --------------------------------------------------------------------------------
Stein Mart* 122,970 1,872
---------
Total Department stores 1,872
---------
28 TURNER FUNDS 2004 ANNUAL REPORT
- --------------------------------------------------------------------------------
STATEMENT OF NET ASSETS
TURNER SMALL CAP GROWTH FUND
Value
Shares (000)
- --------------------------------------------------------------------------------
DEPOSITORY CREDIT INTERMEDIATION--4.5%
- --------------------------------------------------------------------------------
Bank of the Ozarks# 31,741 $ 944
Bankunited Financial, Cl A*# 65,760 1,917
Boston Private
Financial Holdings# 66,180 1,652
East-West Bancorp 89,592 3,009
Southwest Bancorp of Texas 64,130 1,292
Wintrust Financial 30,680 1,757
---------
Total Depository credit
intermediation 10,571
---------
- --------------------------------------------------------------------------------
ELECTRICAL EQUIPMENT MANUFACTURING--0.5%
- --------------------------------------------------------------------------------
Littelfuse*# 37,320 1,289
---------
Total Electrical equipment
manufacturing 1,289
---------
- --------------------------------------------------------------------------------
ELECTRONIC SHOPPING & MAIL-ORDER HOUSES--1.8%
- --------------------------------------------------------------------------------
Coldwater Creek*# 122,675 2,560
Overstock.com*# 47,140 1,732
---------
Total Electronic shopping &
mail-order houses 4,292
---------
- --------------------------------------------------------------------------------
ELECTRONICS & APPLIANCE STORES--2.0%
- --------------------------------------------------------------------------------
Hughes Supply 58,480 1,759
Insight Enterprises* 95,590 1,610
Navarre*# 97,340 1,410
---------
Total Electronics & appliance stores 4,779
---------
- --------------------------------------------------------------------------------
EMPLOYMENT SERVICES--0.7%
- --------------------------------------------------------------------------------
MPS Group* 192,210 1,616
---------
Total Employment services 1,616
---------
- --------------------------------------------------------------------------------
FULL-SERVICE RESTAURANTS--1.5%
- --------------------------------------------------------------------------------
PF Chang's China Bistro*# 48,270 2,341
Rare Hospitality International* 44,090 1,175
---------
Total Full-service restaurants 3,516
---------
- --------------------------------------------------------------------------------
GENERAL FREIGHT TRUCKING--0.4%
- --------------------------------------------------------------------------------
Landstar System* 16,560 972
---------
Total General freight trucking 972
---------
Value
Shares (000)
- --------------------------------------------------------------------------------
GENERAL MEDICAL & SURGICAL HOSPITALS--0.8%
- --------------------------------------------------------------------------------
American Healthways* 62,460 $ 1,818
---------
Total General medical &
surgical hospitals 1,818
---------
- --------------------------------------------------------------------------------
GROCERY & RELATED PRODUCT WHOLESALERS--0.3%
- --------------------------------------------------------------------------------
United Natural Foods* 30,750 818
---------
Total Grocery & related
product wholesalers 818
---------
- --------------------------------------------------------------------------------
INDUSTRIAL MACHINERY MANUFACTURING--0.4%
- --------------------------------------------------------------------------------
Varian Semiconductor
Equipment Associates*# 30,280 936
---------
Total Industrial machinery
manufacturing 936
---------
- --------------------------------------------------------------------------------
INFORMATION SERVICES--4.1%
- --------------------------------------------------------------------------------
CNET Networks* 208,950 1,912
Infospace* 32,360 1,534
iVillage* 292,524 1,755
Opsware*# 212,890 1,194
RSA Security*# 89,390 1,725
Websense* 37,740 1,573
---------
Total Information services 9,693
---------
- --------------------------------------------------------------------------------
INSURANCE CARRIERS--2.5%
- --------------------------------------------------------------------------------
Bristol West Holdings* 80,370 1,378
Direct General*# 41,670 1,205
Platinum Underwriters Holdings 47,460 1,390
Selective Insurance Group 51,840 1,928
---------
Total Insurance carriers 5,901
---------
- --------------------------------------------------------------------------------
INVESTIGATION & SECURITY SERVICES--0.9%
- --------------------------------------------------------------------------------
Cogent* 49,950 910
Identix* 185,450 1,235
---------
Total Investigation & security services 2,145
---------
- --------------------------------------------------------------------------------
LAWN & GARDEN EQUIPMENT &
SUPPLIES STORES--0.6%
- --------------------------------------------------------------------------------
Tractor Supply* 45,500 1,430
---------
Total Lawn & garden equipment &
supplies stores 1,430
---------
TURNER FUNDS 2004 ANNUAL REPORT 29
FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
STATEMENT OF NET ASSETS
TURNER SMALL CAP GROWTH FUND
Value
Shares (000)
- --------------------------------------------------------------------------------
MANAGEMENT, SCIENTIFIC & TECHNICAL
CONSULTING SERVICES--3.1%
- --------------------------------------------------------------------------------
DiamondCluster International* 174,340 $ 2,127
Korn/Ferry International* 86,320 1,573
Navigant Consulting*# 106,540 2,340
Resources Connection*# 32,960 1,245
---------
Total Management, scientific &
technical consulting services 7,285
---------
- --------------------------------------------------------------------------------
MEDICAL EQUIPMENT & SUPPLIES
MANUFACTURING--4.0%
- --------------------------------------------------------------------------------
Advanced Medical Optics*# 77,030 3,048
Align Technology* 17,565 268
Armor Holdings* 36,980 1,539
Inamed* 35,525 1,694
Resmed* 62,590 2,980
---------
Total Medical equipment &
supplies manufacturing 9,529
---------
- --------------------------------------------------------------------------------
METAL ORE MINING--0.4%
- --------------------------------------------------------------------------------
Pan American Silver Corp* 57,235 981
---------
Total Metal ore mining 981
---------
- --------------------------------------------------------------------------------
MINING SUPPORT ACTIVITIES--0.9%
- --------------------------------------------------------------------------------
Core Laboratories* 83,180 2,045
---------
Total Mining support activities 2,045
---------
- --------------------------------------------------------------------------------
MOTION PICTURE & VIDEO INDUSTRIES--1.2%
- --------------------------------------------------------------------------------
Lions Gate Entertainment* 181,270 1,577
Macrovision*# 56,640 1,364
---------
Total Motion picture & video industries 2,941
---------
- --------------------------------------------------------------------------------
MOTOR VEHICLE BODY & TRAILER
MANUFACTURING--1.1%
- --------------------------------------------------------------------------------
Wabash National*# 54,100 1,486
Winnebago Industries# 32,580 1,129
---------
Total Motor vehicle body &
trailer manufacturing 2,615
---------
- --------------------------------------------------------------------------------
NATURAL GAS DISTRIBUTION--1.0%
- --------------------------------------------------------------------------------
Quicksilver Resources*# 69,060 2,256
---------
Total Natural gas distribution 2,256
---------
Value
Shares (000)
- --------------------------------------------------------------------------------
NAVIGATIONAL/MEASURING/MEDICAL/
CONTROL INSTRUMENTS MANUFACTURING--3.8%
- --------------------------------------------------------------------------------
Cognex 54,800 $ 1,436
Given Imaging*# 38,260 1,471
Mine Safety Appliances 40,950 1,667
Roper Industries 40,220 2,311
Varian* 57,740 2,187
---------
Total Navigational/measuring/medical/
control instruments manufacturing 9,072
---------
- --------------------------------------------------------------------------------
NURSING CARE FACILITIES--1.6%
- --------------------------------------------------------------------------------
Genesis HealthCare* 73,305 2,229
Kindred Healthcare* 68,100 1,662
---------
Total Nursing care facilities 3,891
---------
- --------------------------------------------------------------------------------
OIL & GAS EXTRACTION--1.2%
- --------------------------------------------------------------------------------
KCS Energy* 120,650 1,678
Southwestern Energy*# 28,680 1,204
---------
Total Oil & gas extraction 2,882
---------
- --------------------------------------------------------------------------------
OTHER ELECTRICAL EQUIPMENT &
COMPONENT MANUFACTURING--1.6%
- --------------------------------------------------------------------------------
Artesyn Technologies* 96,590 964
FuelCell Energy*# 101,000 1,035
Rayovac* 68,260 1,799
---------
Total Other electrical equipment &
component manufacturing 3,798
---------
- --------------------------------------------------------------------------------
OTHER FINANCIAL INVESTMENT ACTIVITIES--0.8%
- --------------------------------------------------------------------------------
Affiliated Managers Group* 37,525 2,009
---------
Total Other financial
investment activities 2,009
---------
- --------------------------------------------------------------------------------
OTHER INVESTMENT POOLS & FUNDS--0.7%
- --------------------------------------------------------------------------------
Ventas 62,870 1,630
---------
Total Other investment pools & funds 1,630
---------
- --------------------------------------------------------------------------------
OTHER MISCELLANEOUS MANUFACTURING--2.7%
- --------------------------------------------------------------------------------
Multimedia Games* 88,100 1,366
Nautilus Group# 59,870 1,352
Scientific Games, Cl A* 102,870 1,965
Shuffle Master*# 43,730 1,638
---------
Total Other miscellaneous
manufacturing 6,321
---------
30 TURNER FUNDS 2004 ANNUAL REPORT
- --------------------------------------------------------------------------------
STATEMENT OF NET ASSETS
TURNER SMALL CAP GROWTH FUND
Value
Shares (000)
- --------------------------------------------------------------------------------
OTHER NONMETALLIC MINERAL PRODUCT
MANUFACTURING--0.8%
- --------------------------------------------------------------------------------
CARBO Ceramics# 25,700 $ 1,854
---------
Total Other nonmetallic mineral
product manufacturing 1,854
---------
- --------------------------------------------------------------------------------
OUTPATIENT CARE CENTERS--2.4%
- --------------------------------------------------------------------------------
Select Medical 179,620 2,412
Sierra Health Services*# 68,810 3,298
---------
Total Outpatient care centers 5,710
---------
- --------------------------------------------------------------------------------
PETROLEUM & COAL PRODUCTS
MANUFACTURING--1.6%
- --------------------------------------------------------------------------------
Headwaters*# 89,400 2,759
Holly 38,600 984
---------
Total Petroleum & coal
products manufacturing 3,743
---------
- --------------------------------------------------------------------------------
PHARMACEUTICAL & MEDICINE
MANUFACTURING--6.5%
- --------------------------------------------------------------------------------
Digene* 76,700 1,991
Immucor* 140,625 3,480
Impax Laboratories* 141,280 2,170
MGI Pharma* 114,840 3,065
Pharmion*# 34,850 1,802
Salix Pharmaceuticals*# 59,625 1,283
USANA Health Sciences*# 49,195 1,712
---------
Total Pharmaceutical &
medicine manufacturing 15,503
---------
- --------------------------------------------------------------------------------
PRIMARY METAL MANUFACTURING--0.8%
- --------------------------------------------------------------------------------
Allegheny Technologies 99,380 1,814
---------
Total Primary metal manufacturing 1,814
---------
- --------------------------------------------------------------------------------
PROFESSIONAL & COMMERCIAL
EQUIPMENT & SUPPLY WHOLESALE--1.2%
- --------------------------------------------------------------------------------
Stamps.com* 72,258 961
Synaptics* 97,420 1,964
---------
Total Professional & commercial
equipment & supply wholesale 2,925
---------
- --------------------------------------------------------------------------------
RESIDENTIAL BUILDING CONSTRUCTION--0.7%
- --------------------------------------------------------------------------------
Ryland Group 18,480 1,712
---------
Total Residential building construction 1,712
---------
Value
Shares (000)
- --------------------------------------------------------------------------------
SCHEDULED AIR TRANSPORTATION--1.1%
- --------------------------------------------------------------------------------
EGL*# 84,030 $ 2,543
---------
Total Scheduled air transportation 2,543
---------
- --------------------------------------------------------------------------------
SCIENTIFIC R&D SERVICES--1.1%
- --------------------------------------------------------------------------------
Martek Biosciences*# 29,580 1,439
Nektar Therapeutics* 86,620 1,254
---------
Total Scientific r&d services 2,693
---------
- --------------------------------------------------------------------------------
SECURITY & COMMODITY CONTRACTS
INTERMEDIATION & BROKERAGE--0.6%
- --------------------------------------------------------------------------------
Jefferies Group# 38,460 1,326
---------
Total Security & commodity contracts
intermediation & brokerage 1,326
---------
- --------------------------------------------------------------------------------
SEMICONDUCTOR & OTHER ELECTRONIC
COMPONENT MANUFACTURING--3.6%
- --------------------------------------------------------------------------------
Benchmark Electronics* 50,610 1,508
Cymer* 24,260 695
Microsemi* 129,910 1,832
Semtech* 91,810 1,760
Silicon Image* 128,130 1,620
Skyworks Solutions* 119,360 1,134
---------
Total Semiconductor & other electronic
component manufacturing 8,549
---------
- --------------------------------------------------------------------------------
SHOE STORES--1.0%
- --------------------------------------------------------------------------------
Genesco*# 101,000 2,378
---------
Total Shoe stores 2,378
---------
- --------------------------------------------------------------------------------
SOCIAL ASSISTANCE--1.1%
- --------------------------------------------------------------------------------
Magellan Health Services* 69,820 2,553
---------
Total Social assistance 2,553
---------
- --------------------------------------------------------------------------------
SOFTWARE PUBLISHERS--6.5%
- --------------------------------------------------------------------------------
Advent Software*# 85,580 1,440
Akamai Technologies*# 81,350 1,143
Blackboard*# 68,880 1,182
F5 Networks* 83,630 2,547
Hyperion Solutions* 47,790 1,624
SoftBrands* 3,807 4
Take-Two Interactive Software* 65,920 2,166
TIBCO Software* 313,330 2,667
Verint Systems* 69,700 2,568
---------
Total Software publishers 15,341
---------
TURNER FUNDS 2004 ANNUAL REPORT 31
FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
STATEMENT OF NET ASSETS
TURNER SMALL CAP GROWTH FUND
Value
Shares (000)
- --------------------------------------------------------------------------------
STEEL PRODUCT MANUFACTURING FROM
PURCHASED STEEL--1.0%
- --------------------------------------------------------------------------------
Steel Dynamics# 62,150 $ 2,400
---------
Total Steel product manufacturing
from purchased steel 2,400
---------
- --------------------------------------------------------------------------------
TELECOMMUNICATIONS--2.5%
- --------------------------------------------------------------------------------
Commonwealth Telephone
Enterprises* 30,470 1,327
j2 Global Communications*# 39,790 1,257
SBA Communications, Cl A* 270,510 1,894
Sonus Networks*# 270,720 1,524
---------
Total Telecommunications 6,002
---------
- --------------------------------------------------------------------------------
TRAVELER ACCOMMODATION--0.5%
- --------------------------------------------------------------------------------
Aztar* 44,570 1,181
---------
Total Traveler accommodation 1,181
---------
- --------------------------------------------------------------------------------
WASTE COLLECTION--0.9%
- --------------------------------------------------------------------------------
Waste Connections*# 64,890 2,056
---------
Total Waste collection 2,056
---------
- --------------------------------------------------------------------------------
TOTAL COMMON STOCK
(COST $194,797) 224,435
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SHORT-TERM INVESTMENT HELD AS COLLATERAL
FOR LOANED SECURITIES--15.3%
- --------------------------------------------------------------------------------
Boston Global Investment Trust--
Quality Portfolio (1) 36,246,680 36,247
- --------------------------------------------------------------------------------
TOTAL SHORT-TERM INVESTMENT HELD AS
COLLATERAL FOR LOANED SECURITIES
(COST $36,247) 36,247
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
CASH EQUIVALENT--2.7%
- --------------------------------------------------------------------------------
Blackrock TempCash Fund,
Institutional Shares 6,305,050 6,305
- --------------------------------------------------------------------------------
TOTAL CASH EQUIVALENT
(COST $6,305) 6,305
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
TOTAL INVESTMENTS--112.6%
(COST $237,349) 266,987
- --------------------------------------------------------------------------------
Value
(000)
- --------------------------------------------------------------------------------
OTHER ASSETS AND LIABILITIES--(12.6)%
- --------------------------------------------------------------------------------
Obligation to return securities
lending collateral $ (36,247)
Payable for investment securities purchased (3,564)
Payable due to investment adviser (145)
Payable due to administrator (28)
Other assets and liabilities, net 10,210
- --------------------------------------------------------------------------------
TOTAL OTHER ASSETS AND LIABILITIES (29,774)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
NET ASSETS--100.0% $ 237,213
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
NET ASSETS CONSIST OF:
- --------------------------------------------------------------------------------
Portfolio capital of Class I Shares
(unlimited authorization -- no par value)
based on 11,123,467 outstanding shares
of beneficial interest $ 361,066
Accumulated net realized loss
on investments (153,491)
Net unrealized appreciation
on investments 29,638
- --------------------------------------------------------------------------------
NET ASSETS $ 237,213
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
NET ASSET VALUE, OFFERING AND REDEMPTION
PRICE PER SHARE--CLASS I SHARES $21.33
- --------------------------------------------------------------------------------
* Non-income producing security
# Security fully or partially on loan at September 30, 2004 (see Note 9 in
Notes to Financial Statements). The total value of securities on loan at
September 30, 2004, was $34,984,578.
(1) A private placement security. Units are non-transferable but may be redeemed
at the NAV.
Cl - Class
The accompanying notes are an integral part of the financial statements.
32 TURNER FUNDS 2004 ANNUAL REPORT
- --------------------------------------------------------------------------------
STATEMENT OF NET ASSETS
TURNER MICRO CAP GROWTH FUND
September 30, 2004
Value
Shares (000)
- --------------------------------------------------------------------------------
COMMON STOCK--93.1%
- --------------------------------------------------------------------------------
ACTIVITIES RELATED TO CREDIT
INTERMEDIATION--0.8%
- --------------------------------------------------------------------------------
ACE Cash Express*# 119,130 $ 3,102
---------
Total Activities related to
credit intermediation 3,102
---------
- --------------------------------------------------------------------------------
AGENCIES & OTHER INSURANCE
RELATED ACTIVITIES--1.5%
- --------------------------------------------------------------------------------
HealthExtras*# 84,145 1,173
LabOne*# 145,280 4,247
---------
Total Agencies & other insurance
related activities 5,420
---------
- --------------------------------------------------------------------------------
ALUMINA & ALUMINUM PRODUCTION &
PROCESSING--1.0%
- --------------------------------------------------------------------------------
Century Aluminum*# 133,650 3,706
---------
Total Alumina & aluminum
production & processing 3,706
---------
- --------------------------------------------------------------------------------
ARCHITECTURAL, ENGINEERING &
RELATED SERVICES--0.9%
- --------------------------------------------------------------------------------
MTC Technologies* 115,650 3,195
---------
Total Architectural, engineering &
related services 3,195
---------
- --------------------------------------------------------------------------------
AUTOMOTIVE EQUIPMENT RENTAL & LEASING--0.9%
- --------------------------------------------------------------------------------
Dollar Thrifty Automotive
Group*# 128,570 3,128
---------
Total Automotive equipment
rental & leasing 3,128
---------
- --------------------------------------------------------------------------------
AUTOMOTIVE PARTS, ACCESSORIES &
TIRE STORES--0.9%
- --------------------------------------------------------------------------------
MarineMax* 140,230 3,158
---------
Total Automotive parts,
accessories & tire stores 3,158
---------
- --------------------------------------------------------------------------------
BASIC CHEMICAL MANUFACTURING--1.0%
- --------------------------------------------------------------------------------
Tetra Technologies*# 111,910 3,475
---------
Total Basic chemical manufacturing 3,475
---------
Value
Shares (000)
- --------------------------------------------------------------------------------
BEER/WINE/DISTILLED ALCOHOLIC
BEVERAGE WHOLESALE--0.5%
- --------------------------------------------------------------------------------
Central European Distribution*# 78,305 $ 1,749
---------
Total Beer/wine/distilled alcoholic
beverage wholesale 1,749
---------
- --------------------------------------------------------------------------------
BEVERAGE MANUFACTURING--0.4%
- --------------------------------------------------------------------------------
Hansen Natural*# 64,140 1,547
---------
Total Beverage manufacturing 1,547
---------
- --------------------------------------------------------------------------------
BUSINESS SUPPORT SERVICES--0.1%
- --------------------------------------------------------------------------------
Startek# 13,770 432
---------
Total Business support services 432
---------
- --------------------------------------------------------------------------------
CLOTHING STORES--0.4%
- --------------------------------------------------------------------------------
Casual Male Retail Group*# 288,670 1,513
---------
Total Clothing stores 1,513
---------
- --------------------------------------------------------------------------------
COAL MINING--0.7%
- --------------------------------------------------------------------------------
Penn Virginia# 60,950 2,413
---------
Total Coal mining 2,413
---------
- --------------------------------------------------------------------------------
COMMERCIAL/INDUSTRIAL EQUIPMENT
RENTAL & LEASING--1.1%
- --------------------------------------------------------------------------------
Audiocodes*# 168,060 2,116
Ditech Communications*# 80,660 1,806
---------
Total Commercial/industrial
equipment rental & leasing 3,922
---------
- --------------------------------------------------------------------------------
COMMUNICATIONS EQUIPMENT
MANUFACTURING--0.7%
- --------------------------------------------------------------------------------
Comtech Telecommunications* 90,770 2,460
---------
Total Communications
equipment manufacturing 2,460
---------
- --------------------------------------------------------------------------------
COMPUTER & PERIPHERAL EQUIPMENT
MANUFACTURING--0.9%
- --------------------------------------------------------------------------------
Metrologic Instruments*# 201,840 3,199
---------
Total Computer & peripheral
equipment manufacturing 3,199
---------
TURNER FUNDS 2004 ANNUAL REPORT 33
FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
STATEMENT OF NET ASSETS
TURNER MICRO CAP GROWTH FUND
Value
Shares (000)
- --------------------------------------------------------------------------------
COMPUTER SYSTEMS DESIGN &
RELATED SERVICES--4.6%
- --------------------------------------------------------------------------------
Covansys* 346,650 $ 4,000
Kanbay International*# 211,850 4,504
Lipman Electronic Engineering# 108,140 2,542
Quality Systems* 42,780 2,161
Sapient*# 481,100 3,671
---------
Total Computer systems design &
related services 16,878
---------
- --------------------------------------------------------------------------------
CUT & SEW APPAREL MANUFACTURING--2.2%
- --------------------------------------------------------------------------------
Oxford Industries# 214,450 7,988
---------
Total Cut & sew apparel
manufacturing 7,988
---------
- --------------------------------------------------------------------------------
DEEP SEA, COASTAL & GREAT LAKES
WATER TRANSPORTATION--1.0%
- --------------------------------------------------------------------------------
General Maritime*# 108,310 3,772
---------
Total Deep sea, coastal & great lakes
water transportation 3,772
---------
- --------------------------------------------------------------------------------
DEPOSITORY CREDIT INTERMEDIATION--6.9%
- --------------------------------------------------------------------------------
BankAtlantic Bancorp, Cl A 260,700 4,776
Bankunited Financial, Cl A*# 90,370 2,634
Boston Private Financial Holdings# 97,240 2,427
Commercial Capital Bancorp*# 129,996 2,950
FirstFed Financial*# 61,740 3,018
Hanmi Financial# 84,460 2,551
IBERIABANK# 45,250 2,612
Nara Bancorp# 91,370 1,841
PFF Bancorp# 67,368 2,578
---------
Total Depository credit
intermediation 25,387
---------
- --------------------------------------------------------------------------------
ELECTRONIC SHOPPING &
MAIL-ORDER HOUSES--0.3%
- --------------------------------------------------------------------------------
Gander Mountain*# 45,920 919
---------
Total Electronic shopping &
mail-order houses 919
---------
- --------------------------------------------------------------------------------
ELECTRONICS & APPLIANCE STORES--0.8%
- --------------------------------------------------------------------------------
Navarre*# 210,150 3,045
---------
Total Electronics & appliance stores 3,045
---------
Value
Shares (000)
- --------------------------------------------------------------------------------
EMPLOYMENT SERVICES--0.6%
- --------------------------------------------------------------------------------
Heidrick & Struggles International* 76,120 $ 2,194
---------
Total Employment services 2,194
---------
- --------------------------------------------------------------------------------
FOOTWEAR MANUFACTURING--1.2%
- --------------------------------------------------------------------------------
Deckers Outdoor*# 127,520 4,336
---------
Total Footwear manufacturing 4,336
---------
- --------------------------------------------------------------------------------
FULL-SERVICE RESTAURANTS--0.7%
- --------------------------------------------------------------------------------
Dave & Buster's*# 143,940 2,732
---------
Total Full-service restaurants 2,732
---------
- --------------------------------------------------------------------------------
HOME HEALTH CARE SERVICES--2.3%
- --------------------------------------------------------------------------------
Amedisys*# 145,857 4,369
Intuitive Surgical*# 170,999 4,232
---------
Total Home health care services 8,601
---------
- --------------------------------------------------------------------------------
HOUSEHOLD APPLIANCE MANUFACTURING--0.8%
- --------------------------------------------------------------------------------
Middleby# 53,390 2,811
---------
Total Household appliance
manufacturing 2,811
---------
- --------------------------------------------------------------------------------
INFORMATION SERVICES--0.7%
- --------------------------------------------------------------------------------
SupportSoft*# 265,178 2,583
---------
Total Information services 2,583
---------
- --------------------------------------------------------------------------------
INSURANCE CARRIERS--4.4%
- --------------------------------------------------------------------------------
American Physicians Capital* 71,490 2,189
ProAssurance*# 96,210 3,369
Triad Guaranty*# 69,480 3,855
United Fire & Casualty# 42,680 2,447
Universal American Financial* 221,110 2,859
WellCare Health Plans*# 76,460 1,449
---------
Total Insurance carriers 16,168
---------
- --------------------------------------------------------------------------------
MANAGEMENT, SCIENTIFIC & TECHNICAL
CONSULTING SERVICES--4.4%
- --------------------------------------------------------------------------------
Charles River Associates*# 136,180 5,214
DiamondCluster International*# 284,320 3,469
HUB Group, Cl A* 79,591 2,965
Navigant Consulting*# 201,420 4,423
---------
Total Management, scientific &
technical consulting services 16,071
---------
34 TURNER FUNDS 2004 ANNUAL REPORT
- --------------------------------------------------------------------------------
STATEMENT OF NET ASSETS
TURNER MICRO CAP GROWTH FUND
Value
Shares (000)
- --------------------------------------------------------------------------------
MEDICAL & DIAGNOSTIC LABORATORIES--0.7%
- --------------------------------------------------------------------------------
Bio-Reference Labs* 177,570 $ 2,475
---------
Total Medical & diagnostic
laboratories 2,475
---------
- --------------------------------------------------------------------------------
MEDICAL EQUIPMENT & SUPPLIES
MANUFACTURING--1.0%
- --------------------------------------------------------------------------------
Align Technology* 124,450 1,901
Arthrocare* 62,610 1,834
---------
Total Medical equipment &
supplies manufacturing 3,735
---------
- --------------------------------------------------------------------------------
METAL ORE MINING--1.8%
- --------------------------------------------------------------------------------
Cleveland-Cliffs*# 82,100 6,639
---------
Total Metal ore mining 6,639
---------
- --------------------------------------------------------------------------------
MINING SUPPORT ACTIVITIES--0.9%
- --------------------------------------------------------------------------------
Oceaneering International*# 91,910 3,386
---------
Total Mining support activities 3,386
---------
- --------------------------------------------------------------------------------
MISCELLANEOUS NONDURABLE
GOODS WHOLESALE--0.5%
- --------------------------------------------------------------------------------
Central Garden and Pet*# 54,630 1,673
---------
Total Miscellaneous nondurable
goods wholesale 1,673
---------
- --------------------------------------------------------------------------------
MOTOR VEHICLE BODY & TRAILER
MANUFACTURING--1.1%
- --------------------------------------------------------------------------------
Wabash National*# 140,010 3,846
---------
Total Motor vehicle body &
trailer manufacturing 3,846
---------
- --------------------------------------------------------------------------------
MOTOR VEHICLE MANUFACTURING--0.3%
- --------------------------------------------------------------------------------
Rush Enterprises, Cl A* 109,000 1,194
---------
Total Motor vehicle manufacturing 1,194
---------
- --------------------------------------------------------------------------------
MOTOR VEHICLE PARTS MANUFACTURING--1.9%
- --------------------------------------------------------------------------------
ESCO Technologies*# 103,590 7,019
---------
Total Motor vehicle parts
manufacturing 7,019
---------
Value
Shares (000)
- --------------------------------------------------------------------------------
NAVIGATIONAL/MEASURING/MEDICAL/
CONTROL INSTRUMENTS MANUFACTURING--3.2%
- --------------------------------------------------------------------------------
Biosite*# 78,440 $ 3,840
Credence Systems*# 316,240 2,277
EDO# 130,100 3,610
Herley Industries*# 71,970 1,345
LeCroy* 49,110 821
---------
Total Navigational/measuring/medical/
control instruments manufacturing 11,893
---------
- --------------------------------------------------------------------------------
NONDEPOSITORY CREDIT INTERMEDIATION--3.0%
- --------------------------------------------------------------------------------
Advanta, Cl B# 59,907 1,449
Cash America International 178,480 4,366
Metris*# 394,820 3,861
United PanAm Financial* 83,030 1,495
---------
Total Nondepository credit
intermediation 11,171
---------
- --------------------------------------------------------------------------------
NONFERROUS PRODUCTION & PROCESSING--0.8%
- --------------------------------------------------------------------------------
Intermagnetics General* 131,460 3,043
---------
Total Nonferrous
production & processing 3,043
---------
- --------------------------------------------------------------------------------
OFFICES OF PHYSICIANS--0.5%
- --------------------------------------------------------------------------------
Symbion*# 120,722 1,944
---------
Total Offices of physicians 1,944
---------
- --------------------------------------------------------------------------------
OIL & GAS EXTRACTION--7.7%
- --------------------------------------------------------------------------------
Brigham Exploration* 416,480 3,915
Comstock Resources* 289,100 6,048
KCS Energy*# 188,030 2,615
Petroleum Development*# 208,990 9,158
Southwestern Energy*# 83,120 3,490
Swift Energy*# 124,030 2,972
---------
Total Oil & gas extraction 28,198
---------
- --------------------------------------------------------------------------------
OTHER FABRICATED METAL PRODUCT
MANUFACTURING--0.3%
- --------------------------------------------------------------------------------
Metals USA* 63,830 1,132
---------
Total Other fabricated metal
product manufacturing 1,132
---------
TURNER FUNDS 2004 ANNUAL REPORT 35
FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
STATEMENT OF NET ASSETS
TURNER MICRO CAP GROWTH FUND
Value
Shares (000)
- --------------------------------------------------------------------------------
OTHER GENERAL PURPOSE MACHINERY
MANUFACTURING--1.2%
- --------------------------------------------------------------------------------
JLG Industries# 258,900 $ 4,350
---------
Total Other general purpose
machinery manufacturing 4,350
---------
- --------------------------------------------------------------------------------
OTHER MISCELLANEOUS MANUFACTURING--2.1%
- --------------------------------------------------------------------------------
Multimedia Games*# 117,970 1,829
Shuffle Master*# 74,930 2,807
WMS Industries*# 118,580 3,046
---------
Total Other miscellaneous
manufacturing 7,682
---------
- --------------------------------------------------------------------------------
OTHER MISCELLANEOUS STORE RETAILERS--0.6%
- --------------------------------------------------------------------------------
Brookstone*# 108,540 2,050
---------
Total Other miscellaneous
store retailers 2,050
---------
- --------------------------------------------------------------------------------
OTHER NONMETALLIC MINERAL
PRODUCT MANUFACTURING--0.4%
- --------------------------------------------------------------------------------
Brush Engineered Materials* 78,430 1,624
---------
Total Other nonmetallic mineral
product manufacturing 1,624
---------
- --------------------------------------------------------------------------------
PESTICIDE, FERTILIZER & OTHER AGRICULTURE
CHEMICAL MANUFACTURING--0.7%
- --------------------------------------------------------------------------------
Terra Industries* 303,280 2,626
---------
Total Pesticide, fertilizer & other
agriculture chemical manufacturing 2,626
---------
- --------------------------------------------------------------------------------
PETROLEUM & COAL PRODUCTS
MANUFACTURING--1.0%
- --------------------------------------------------------------------------------
Elk# 129,340 3,591
---------
Total Petroleum & coal
products manufacturing 3,591
---------
- --------------------------------------------------------------------------------
PHARMACEUTICAL & MEDICINE
MANUFACTURING--4.7%
- --------------------------------------------------------------------------------
Able Laboratories*# 102,720 1,968
Bone Care International* 164,240 3,991
Cypress Bioscience* 192,610 2,248
First Horizon Pharmaceutical*# 151,290 3,027
Noven Pharmaceuticals*# 91,952 1,916
Value
Shares (000)
- --------------------------------------------------------------------------------
Penwest Pharmaceuticals*# 131,690 $ 1,487
Salix Pharmaceuticals*# 115,353 2,483
---------
Total Pharmaceutical &
medicine manufacturing 17,120
---------
- --------------------------------------------------------------------------------
PLASTICS PRODUCT MANUFACTURING--1.4%
- --------------------------------------------------------------------------------
Jarden*# 143,015 5,219
---------
Total Plastics product manufacturing 5,219
---------
- --------------------------------------------------------------------------------
PLUMBING, HEATING & AIR CONDITIONING
CONTRACTOR--1.1%
- --------------------------------------------------------------------------------
Chemed 73,230 4,082
---------
Total Plumbing, heating &
air conditioning contractor 4,082
---------
- --------------------------------------------------------------------------------
PROFESSIONAL & COMMERCIAL EQUIPMENT &
SUPPLY WHOLESALE--1.3%
- --------------------------------------------------------------------------------
Mobility Electronics*# 334,240 2,754
Neoware Systems*# 124,817 1,036
Synaptics* 54,080 1,090
---------
Total Professional & commercial
equipment & supply wholesale 4,880
---------
- --------------------------------------------------------------------------------
RAIL TRANSPORTATION--1.0%
- --------------------------------------------------------------------------------
Genesee & Wyoming, Cl A* 150,177 3,803
---------
Total Rail transportation 3,803
---------
- --------------------------------------------------------------------------------
RAILROAD ROLLING STOCK MANUFACTURING--0.4%
- --------------------------------------------------------------------------------
Greenbrier* 63,500 1,524
---------
Total Railroad rolling
stock manufacturing 1,524
---------
- --------------------------------------------------------------------------------
REMEDIATION & OTHER WASTE
MANAGEMENT SERVICES--1.2%
- --------------------------------------------------------------------------------
Metal Management*# 234,810 4,269
---------
Total Remediation & other waste
management services 4,269
---------
- --------------------------------------------------------------------------------
SCIENTIFIC R&D SERVICES--2.0%
- --------------------------------------------------------------------------------
Anika Therapeutics* 80,740 1,114
Encysive Pharmaceuticals*# 274,825 2,482
GTX*# 53,150 620
NitroMed*# 132,340 3,155
---------
Total Scientific r&d services 7,371
---------
36 TURNER FUNDS 2004 ANNUAL REPORT
- --------------------------------------------------------------------------------
STATEMENT OF NET ASSETS
TURNER MICRO CAP GROWTH FUND
Value
Shares (000)
- --------------------------------------------------------------------------------
SEMICONDUCTOR & OTHER ELECTRONIC
COMPONENT MANUFACTURING--1.4%
- --------------------------------------------------------------------------------
Aeroflex*# 253,190 $ 2,676
Diodes*# 89,910 2,316
---------
Total Semiconductor & other electronic
component manufacturing 4,992
---------
- --------------------------------------------------------------------------------
SHOE STORES--1.5%*
- --------------------------------------------------------------------------------
Genesco*# 225,360 5,307
---------
Total Shoe stores 5,307
---------
- --------------------------------------------------------------------------------
SOCIAL ASSISTANCE--0.8%
- --------------------------------------------------------------------------------
Providence Service*# 151,020 2,925
---------
Total Social assistance 2,925
---------
- --------------------------------------------------------------------------------
SOFTWARE PUBLISHERS--0.8%
- --------------------------------------------------------------------------------
Ansys*# 42,900 2,134
Progress Software* 47,960 954
---------
Total Software publishers 3,088
---------
- --------------------------------------------------------------------------------
STEEL PRODUCT MANUFACTURING
FROM PURCHASED STEEL--1.2%
- --------------------------------------------------------------------------------
NS Group* 235,500 4,357
---------
Total Steel product manufacturing
from purchased steel 4,357
---------
- --------------------------------------------------------------------------------
TELECOMMUNICATIONS--0.7%
- --------------------------------------------------------------------------------
PTEK Holdings* 314,200 2,693
---------
Total Telecommunications 2,693
---------
- --------------------------------------------------------------------------------
TRAVELER ACCOMMODATION--0.5%
- --------------------------------------------------------------------------------
MTR Gaming Group*# 214,870 2,003
---------
Total Traveler accommodation 2,003
---------
- --------------------------------------------------------------------------------
WASTE TREATMENT & DISPOSAL--0.5%
- --------------------------------------------------------------------------------
Casella Waste Systems, Cl A*# 162,779 1,927
---------
Total Waste treatment & disposal 1,927
---------
- --------------------------------------------------------------------------------
WATER, SEWAGE & OTHER SYSTEMS--0.2%
- --------------------------------------------------------------------------------
Artesian Resources, Cl A 28,197 766
---------
Total Water, sewage & other systems 766
---------
- --------------------------------------------------------------------------------
TOTAL COMMON STOCK
(COST $270,956) 341,501
- --------------------------------------------------------------------------------
Value
Shares (000)
- --------------------------------------------------------------------------------
SHORT-TERM INVESTMENT HELD AS COLLATERAL
FOR LOANED SECURITIES--40.4%
- --------------------------------------------------------------------------------
Boston Global Investment Trust--
Quality Portfolio (1) 148,049,190 $ 148,049
- --------------------------------------------------------------------------------
TOTAL SHORT-TERM INVESTMENT HELD AS
COLLATERAL FOR LOANED SECURITIES
(COST $148,049) 148,049
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
CASH EQUIVALENTS--10.5%
- --------------------------------------------------------------------------------
Blackrock TempCash Fund,
Institutional Shares 18,100,711 18,101
PNC Bank Money Market Fund 20,505,175 20,505
- --------------------------------------------------------------------------------
TOTAL CASH EQUIVALENTS
(COST $38,606) 38,606
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
TOTAL INVESTMENTS--144.0%
(COST $457,611) 528,156
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
OTHER ASSETS AND LIABILITIES--(44.0)%
- --------------------------------------------------------------------------------
Obligation to return securities
lending collateral (148,049)
Payable due to investment adviser (277)
Payable due to administrator (44)
Other assets and liabilities, net (13,094)
- --------------------------------------------------------------------------------
TOTAL OTHER ASSETS AND LIABILITIES (161,464)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
NET ASSETS--100.0% $ 366,692
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
NET ASSETS CONSIST OF:
- --------------------------------------------------------------------------------
Portfolio capital of Class I Shares
(unlimited authorization -- no par value)
based on 7,331,555 outstanding shares
of beneficial interest $ 257,343
Accumulated net investment loss (1)
Accumulated net realized gain
on investments 38,805
Net unrealized appreciation
on investments 70,545
- --------------------------------------------------------------------------------
NET ASSETS $ 366,692
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
NET ASSET VALUE, OFFERING AND REDEMPTION
PRICE PER SHARE--CLASS I SHARES $50.02
- --------------------------------------------------------------------------------
* Non-income producing security
# Security fully or partially on loan at September 30, 2004 (see Note 9 in
Notes to Financial Statements). The total value of securities on loan at
September 30, 2004, was $143,639,189.
(1) A private placement security. Units are non-transferable but may be redeemed
at the NAV.
Cl - Class
The accompanying notes are an integral part of the financial statements.
TURNER FUNDS 2004 ANNUAL REPORT 37
FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
STATEMENT OF NET ASSETS
TURNER SMALL CAP EQUITY FUND
September 30, 2004
Value
Shares (000)
- --------------------------------------------------------------------------------
COMMON STOCK--94.7%
- --------------------------------------------------------------------------------
AGENCIES & OTHER INSURANCE
RELATED ACTIVITIES--0.6%
- --------------------------------------------------------------------------------
LabOne* 5,848 $ 171
---------
Total Agencies & other insurance
related activities 171
---------
- --------------------------------------------------------------------------------
AGRICULTURE, CONSTRUCTION & MINING
MACHINERY MANUFACTURING--4.5%
- --------------------------------------------------------------------------------
Joy Global 11,820 406
Lone Star Technologies* 12,423 470
Terex* 10,259 445
---------
Total Agriculture, construction &
mining machinery manufacturing 1,321
---------
- --------------------------------------------------------------------------------
ARCHITECTURAL, ENGINEERING &
RELATED SERVICES--1.3%
- --------------------------------------------------------------------------------
Washington Group International* 10,855 376
---------
Total Architectural, engineering &
related services 376
---------
- --------------------------------------------------------------------------------
BASIC CHEMICAL MANUFACTURING--2.5%
- --------------------------------------------------------------------------------
FMC* 8,300 403
Minerals Technologies 5,549 327
---------
Total Basic chemical manufacturing 730
---------
- --------------------------------------------------------------------------------
CEMENT & CONCRETE PRODUCT
MANUFACTURING--0.9%
- --------------------------------------------------------------------------------
Texas Industries 5,037 259
---------
Total Cement & concrete
product manufacturing 259
---------
- --------------------------------------------------------------------------------
CHEMICAL MANUFACTURING--0.4%
- --------------------------------------------------------------------------------
Georgia Gulf 2,790 124
---------
Total Chemical manufacturing 124
---------
- --------------------------------------------------------------------------------
CLAY PRODUCT & REFRACTORY
MANUFACTURING--1.3%
- --------------------------------------------------------------------------------
Ceradyne*# 8,400 369
---------
Total Clay product &
refractory manufacturing 369
---------
Value
Shares (000)
- --------------------------------------------------------------------------------
CLOTHING STORES--1.1%
- --------------------------------------------------------------------------------
Claire's Stores 12,430 $ 311
---------
Total Clothing stores 311
---------
- --------------------------------------------------------------------------------
COAL MINING--1.8%
- --------------------------------------------------------------------------------
Arch Coal 9,880 351
Fording Canadian Coal Trust 3,094 173
---------
Total Coal mining 524
---------
- --------------------------------------------------------------------------------
COMPUTER SYSTEMS DESIGN &
RELATED SERVICES--2.3%
- --------------------------------------------------------------------------------
Avid Technology* 3,040 143
Intergraph* 19,036 517
---------
Total Computer systems design &
related services 660
---------
- --------------------------------------------------------------------------------
CONSUMER GOODS RENTAL--0.4%
- --------------------------------------------------------------------------------
Blockbuster, Cl A# 14,950 114
---------
Total Consumer goods rental 114
---------
- --------------------------------------------------------------------------------
CUT & SEW APPAREL MANUFACTURING--1.3%
- --------------------------------------------------------------------------------
Quiksilver* 5,550 141
Warnaco Group* 10,310 229
---------
Total Cut & sew apparel
manufacturing 370
---------
- --------------------------------------------------------------------------------
DEEP SEA, COASTAL & GREAT LAKES
WATER TRANSPORTATION--2.8%
- --------------------------------------------------------------------------------
General Maritime* 8,860 309
OMI 31,846 510
---------
Total Deep sea, coastal & great lakes
water transportation 819
---------
- --------------------------------------------------------------------------------
DEPOSITORY CREDIT INTERMEDIATION--8.7%
- --------------------------------------------------------------------------------
BankAtlantic Bancorp, Cl A 12,183 223
Brookline Bancorp 13,242 208
Commercial Capital Bancorp* 12,940 294
East-West Bancorp 5,320 179
People's Bank# 14,323 512
South Financial Group 9,340 263
Southwest Bancorp of Texas 10,184 205
Umpqua Holdings 9,990 225
Webster Financial 8,548 422
---------
Total Depository credit intermediation 2,531
---------
38 TURNER FUNDS 2004 ANNUAL REPORT
- --------------------------------------------------------------------------------
STATEMENT OF NET ASSETS
TURNER SMALL CAP EQUITY FUND
Value
Shares (000)
- --------------------------------------------------------------------------------
DRUGS & DRUGGISTS' SUNDRIES WHOLESALE--1.0%
- --------------------------------------------------------------------------------
Endo Pharmaceuticals Holdings* 15,480 $ 284
---------
Total Drugs & druggists'
sundries wholesale 284
---------
- --------------------------------------------------------------------------------
ELECTRONIC SHOPPING & MAIL-ORDER HOUSES--0.8%
- --------------------------------------------------------------------------------
PolyMedica 7,140 220
---------
Total Electronic shopping &
mail-order houses 220
---------
- --------------------------------------------------------------------------------
FULL-SERVICE RESTAURANTS--0.9%
- --------------------------------------------------------------------------------
Red Robin Gourmet Burgers*# 6,140 268
---------
Total Full-service restaurants 268
---------
- --------------------------------------------------------------------------------
GENERAL FREIGHT TRUCKING--1.2%
- --------------------------------------------------------------------------------
Overnite 11,048 347
---------
Total General freight trucking 347
---------
- --------------------------------------------------------------------------------
GRAIN & OILSEED MILLING--1.2%
- --------------------------------------------------------------------------------
Ralcorp Holdings* 9,386 339
---------
Total Grain & oilseed milling 339
---------
- --------------------------------------------------------------------------------
INDUSTRIAL MACHINERY MANUFACTURING--1.4%
- --------------------------------------------------------------------------------
Imation 6,701 238
Tessera Technologies* 7,820 173
---------
Total Industrial machinery
manufacturing 411
---------
- --------------------------------------------------------------------------------
INFORMATION SERVICES--1.4%
- --------------------------------------------------------------------------------
Interactive Data* 2,712 51
Websense* 8,330 347
---------
Total Information services 398
---------
- --------------------------------------------------------------------------------
INSURANCE CARRIERS--2.0%
- --------------------------------------------------------------------------------
Amerigroup*# 3,950 222
IPC Holdings 3,911 149
ProAssurance* 6,021 211
---------
Total Insurance carriers 582
---------
- --------------------------------------------------------------------------------
INVESTIGATION & SECURITY SERVICES--1.3%
- --------------------------------------------------------------------------------
Brink's 12,470 376
---------
Total Investigation & security services 376
---------
Value
Shares (000)
- --------------------------------------------------------------------------------
JEWELRY, LUGGAGE & LEATHER GOODS STORES--0.6%
- --------------------------------------------------------------------------------
Zale* 6,020 $ 169
---------
Total Jewelry, luggage &
leather goods stores 169
---------
- --------------------------------------------------------------------------------
LESSORS OF OTHER NONFINANCIAL
INTANGIBLE ASSET--0.7%
- --------------------------------------------------------------------------------
4Kids Entertainment*# 9,484 192
---------
Total Lessors of other nonfinancial
intangible asset 192
---------
- --------------------------------------------------------------------------------
LIMITED-SERVICE EATING PLACES--0.8%
- --------------------------------------------------------------------------------
Sonic* 8,820 226
---------
Total Limited-service eating places 226
---------
- --------------------------------------------------------------------------------
METAL ORE MINING--1.9%
- --------------------------------------------------------------------------------
Apex Silver Mines*# 15,172 329
Cleveland-Cliffs*# 2,950 239
---------
Total Metal ore mining 568
---------
- --------------------------------------------------------------------------------
MINING SUPPORT ACTIVITIES--1.1%
- --------------------------------------------------------------------------------
Cal Dive International* 8,853 315
---------
Total Mining support activities 315
---------
- --------------------------------------------------------------------------------
MOTOR VEHICLE BODY & TRAILER
MANUFACTURING--1.1%
- --------------------------------------------------------------------------------
Wabash National* 11,323 311
---------
Total Motor vehicle body &
trailer manufacturing 311
---------
- --------------------------------------------------------------------------------
NATURAL GAS DISTRIBUTION--2.4%
- --------------------------------------------------------------------------------
AGL Resources# 12,048 371
Southern Union* 16,317 334
---------
Total Natural gas distribution 705
---------
- --------------------------------------------------------------------------------
NAVIGATIONAL/MEASURING/MEDICAL/
CONTROL INSTRUMENTS MANUFACTURING--2.1%
- --------------------------------------------------------------------------------
Analogic 7,046 294
Roper Industries 5,728 329
---------
Total Navigational/measuring/medical/
control instruments manufacturing 623
---------
TURNER FUNDS 2004 ANNUAL REPORT 39
FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
STATEMENT OF NET ASSETS
TURNER SMALL CAP EQUITY FUND
Value
Shares (000)
- --------------------------------------------------------------------------------
NEWSPAPER/PERIODICAL/BOOK/
DATABASE PUBLISHERS--1.5%
- --------------------------------------------------------------------------------
R.H. Donnelley* 9,122 $ 450
---------
Total Newspaper/periodical/book/
database publishers 450
---------
- --------------------------------------------------------------------------------
NONDEPOSITORY CREDIT INTERMEDIATION--2.5%
- --------------------------------------------------------------------------------
Accredited Home Lenders Holding* 7,890 304
Cash America International 8,758 214
New Century Financial 3,720 224
---------
Total Nondepository
credit intermediation 742
---------
- --------------------------------------------------------------------------------
NONFERROUS PRODUCTION & PROCESSING--0.7%
- --------------------------------------------------------------------------------
Carpenter Technology# 4,160 199
---------
Total Nonferrous production &
processing 199
---------
- --------------------------------------------------------------------------------
NURSING CARE FACILITIES--0.6%
- --------------------------------------------------------------------------------
Beverly Enterprises* 24,878 188
---------
Total Nursing care facilities 188
---------
- --------------------------------------------------------------------------------
OFFICE SUPPLIES, STATIONERY & GIFT STORES--0.6%
- --------------------------------------------------------------------------------
School Specialty* 4,248 167
---------
Total Office supplies, stationery &
gift stores 167
---------
- --------------------------------------------------------------------------------
OIL & GAS EXTRACTION--2.2%
- --------------------------------------------------------------------------------
Range Resources 12,039 211
Southwestern Energy* 10,000 420
---------
Total Oil & gas extraction 631
---------
- --------------------------------------------------------------------------------
OTHER GENERAL MERCHANDISE STORES--0.7%
- --------------------------------------------------------------------------------
BJ's Wholesale Club* 7,860 215
---------
Total Other general merchandise stores 215
---------
- --------------------------------------------------------------------------------
OTHER GENERAL PURPOSE MACHINERY
MANUFACTURING--0.9%
- --------------------------------------------------------------------------------
IDEX 7,522 255
---------
Total Other general purpose
machinery manufacturing 255
---------
Value
Shares (000)
- --------------------------------------------------------------------------------
OTHER INVESTMENT POOLS & FUNDS--5.7%
- --------------------------------------------------------------------------------
Alexandria Real Estate Equities# 5,575 $ 366
Capital Automotive REIT 12,939 405
Maguire Properties 5,960 145
Reckson Associates Realty 12,030 346
Ventas 15,557 403
---------
Total Other investment pools & funds 1,665
---------
- --------------------------------------------------------------------------------
OTHER TRANSIT & GROUND PASSENGER
TRANSPORTATION--1.2%
- --------------------------------------------------------------------------------
Laidlaw International* 22,142 364
---------
Total Other transit & ground
passenger transportation 364
---------
- --------------------------------------------------------------------------------
PAINT, COATING & ADHESIVE
MANUFACTURING--0.7%
- --------------------------------------------------------------------------------
RPM International 12,380 219
---------
Total Paint, coating & adhesive
manufacturing 219
---------
- --------------------------------------------------------------------------------
PESTICIDE, FERTILIZER & OTHER AGRICULTURE
CHEMICAL MANUFACTURING--1.2%
- --------------------------------------------------------------------------------
Agrium 19,090 339
---------
Total Pesticide, fertilizer & other
agriculture chemical manufacturing 339
---------
- --------------------------------------------------------------------------------
PHARMACEUTICAL & MEDICINE
MANUFACTURING--3.1%
- --------------------------------------------------------------------------------
Angiotech Pharmaceuticals* 12,860 261
Dade Behring Holdings* 5,022 280
Digene* 7,880 204
United Therapeutics* 4,670 163
---------
Total Pharmaceutical &
medicine manufacturing 908
---------
- --------------------------------------------------------------------------------
PIPELINE TRANSPORTATION OF NATURAL GAS--0.7%
- --------------------------------------------------------------------------------
Dynegy, Cl A* 39,390 197
---------
Total Pipeline transportation
of natural gas 197
---------
- --------------------------------------------------------------------------------
PLASTICS PRODUCT MANUFACTURING--0.6%
- --------------------------------------------------------------------------------
Jarden* 5,037 184
---------
Total Plastics product manufacturing 184
---------
40 TURNER FUNDS 2004 ANNUAL REPORT
- --------------------------------------------------------------------------------
STATEMENT OF NET ASSETS
TURNER SMALL CAP EQUITY FUND
Value
Shares (000)
- --------------------------------------------------------------------------------
PRIMARY METAL MANUFACTURING--0.8%
- --------------------------------------------------------------------------------
Allegheny Technologies 12,953 $ 236
---------
Total Primary metal manufacturing 236
---------
- --------------------------------------------------------------------------------
REAL ESTATE--1.0%
- --------------------------------------------------------------------------------
MI Developments, Cl A 12,140 307
---------
Total Real estate 307
---------
- --------------------------------------------------------------------------------
RESIDENTIAL BUILDING CONSTRUCTION--1.2%
- --------------------------------------------------------------------------------
Hovnanian Enterprises, Cl A* 8,770 352
---------
Total Residential building construction 352
---------
- --------------------------------------------------------------------------------
RUBBER PRODUCT MANUFACTURING--1.2%
- --------------------------------------------------------------------------------
Goodyear Tire & Rubber*# 31,470 338
---------
Total Rubber product manufacturing 338
---------
- --------------------------------------------------------------------------------
SCIENTIFIC R&D SERVICES--0.5%
- --------------------------------------------------------------------------------
Encysive Pharmaceuticals* 15,350 139
---------
Total Scientific r&d services 139
---------
- --------------------------------------------------------------------------------
SEMICONDUCTOR & OTHER ELECTRONIC
COMPONENT MANUFACTURING--4.0%
- --------------------------------------------------------------------------------
Cree* 6,090 186
DSP Group* 10,410 219
Exar* 14,500 205
NAM TAI Electronics# 26,296 562
---------
Total Semiconductor & other
electronic component manufacturing 1,172
---------
- --------------------------------------------------------------------------------
SHIP & BOAT BUILDING--1.1%
- --------------------------------------------------------------------------------
McDermott International* 27,350 323
---------
Total Ship & boat building 323
---------
- --------------------------------------------------------------------------------
SOAP, CLEANERS & TOILET PREPARATION
MANUFACTURING--0.8%
- --------------------------------------------------------------------------------
Elizabeth Arden* 10,891 229
---------
Total Soap, cleaners & toilet
preparation manufacturing 229
---------
- --------------------------------------------------------------------------------
SOCIAL ASSISTANCE--1.2%
- --------------------------------------------------------------------------------
Magellan Health Services* 9,771 357
---------
Total Social assistance 357
---------
Value
Shares (000)
- --------------------------------------------------------------------------------
SOFTWARE PUBLISHERS--0.5%
- --------------------------------------------------------------------------------
Transaction Systems Architects, Cl A* 8,500 $ 158
---------
Total Software publishers 158
---------
- --------------------------------------------------------------------------------
SPORTING GOODS/HOBBY/MUSICAL
INSTRUMENT STORES--1.5%
- --------------------------------------------------------------------------------
Dick's Sporting Goods* 6,940 247
Guitar Center*# 4,680 203
---------
Total Sporting goods/hobby/
musical instrument stores 450
---------
- --------------------------------------------------------------------------------
TELECOMMUNICATIONS--5.5%
- --------------------------------------------------------------------------------
Alamosa Holdings*# 62,725 479
j2 Global Communications*# 11,580 366
NII Holdings* 8,238 339
Spectrasite* 8,880 413
---------
Total Telecommunications 1,597
---------
- --------------------------------------------------------------------------------
TRAVELER ACCOMMODATION--0.2%
- --------------------------------------------------------------------------------
Choice Hotels International 1,110 64
---------
Total Traveler accommodation 64
---------
- --------------------------------------------------------------------------------
WASTE COLLECTION--0.5%
- --------------------------------------------------------------------------------
Waste Connections* 4,710 148
---------
Total Waste collection 148
---------
- --------------------------------------------------------------------------------
TOTAL COMMON STOCK
(COST $25,495) 27,606
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SHORT-TERM INVESTMENT HELD AS COLLATERAL
FOR LOANED SECURITIES--9.0%
- --------------------------------------------------------------------------------
Boston Global Investment Trust--
Quality Portfolio (1) 2,619,700 2,620
- --------------------------------------------------------------------------------
TOTAL SHORT-TERM INVESTMENT HELD AS
COLLATERAL FOR LOANED SECURITIES
(COST $2,620) 2,620
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
CASH EQUIVALENTS--5.7%
- --------------------------------------------------------------------------------
Blackrock TempCash Fund,
Institutional Shares 1,452,789 1,453
PNC Bank Money Market Fund 222,721 223
- --------------------------------------------------------------------------------
TOTAL CASH EQUIVALENTS
(COST $1,676) 1,676
- --------------------------------------------------------------------------------
TURNER FUNDS 2004 ANNUAL REPORT 41
FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
STATEMENT OF NET ASSETS
TURNER SMALL CAP EQUITY FUND
Value
(000)
- --------------------------------------------------------------------------------
TOTAL INVESTMENTS--109.4%
(COST $29,791) $ 31,902
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
OTHER ASSETS AND LIABILITIES--(9.4)%
- --------------------------------------------------------------------------------
Obligation to return securities
lending collateral (2,620)
Receivable due from investment adviser 11
Payable to distributor (6)
Payable due to administrator (3)
Other assets and liabilities, net (113)
- --------------------------------------------------------------------------------
TOTAL OTHER ASSETS AND LIABILITIES (2,731)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
NET ASSETS--100.0% $ 29,171
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
NET ASSETS CONSIST OF:
- --------------------------------------------------------------------------------
Portfolio capital of Class II Shares
(unlimited authorization -- no par value)
based on 2,096,130 outstanding shares
of beneficial interest $ 27,528
Accumulated net realized loss
on investments (468)
Net unrealized appreciation
on investments 2,111
- --------------------------------------------------------------------------------
NET ASSETS $ 29,171
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
NET ASSET VALUE, OFFERING AND REDEMPTION
PRICE PER SHARE--CLASS II SHARES $13.92
- --------------------------------------------------------------------------------
* Non-income producing security
# Security fully or partially on loan at September 30, 2004 (see Note 9 in
Notes to Financial Statements). The total value of securities on loan at
September 30, 2004, was $2,550,685.
(1) A private placement security. Units are non-transferable but may be redeemed
at the NAV.
Cl - Class
REIT - Real estate investment trust
The accompanying notes are an integral part of the financial statements.
42 TURNER FUNDS 2004 ANNUAL REPORT
- --------------------------------------------------------------------------------
STATEMENT OF NET ASSETS
TURNER TECHNOLOGY FUND
September 30, 2004
Value
Shares (000)
- --------------------------------------------------------------------------------
COMMON STOCK--98.4%
- --------------------------------------------------------------------------------
COMMERCIAL/INDUSTRIAL EQUIPMENT
RENTAL & LEASING--2.4%
- --------------------------------------------------------------------------------
Comverse Technology* 20,220 $ 381
---------
Total Commercial/industrial
equipment rental & leasing 381
---------
- --------------------------------------------------------------------------------
COMMUNICATIONS EQUIPMENT
MANUFACTURING--11.4%
- --------------------------------------------------------------------------------
Cisco Systems* 42,620 771
Jamdat Mobile* 7,500 173
Polycom* 20,020 397
Research In Motion* 6,400 489
---------
Total Communications
equipment manufacturing 1,830
---------
- --------------------------------------------------------------------------------
COMPUTER & PERIPHERAL EQUIPMENT
MANUFACTURING--10.0%
- --------------------------------------------------------------------------------
Apple Computer* 10,560 409
Dell* 13,200 470
EMC* 28,720 332
Zebra Technologies, Cl A* 6,300 384
---------
Total Computer & peripheral
equipment manufacturing 1,595
---------
- --------------------------------------------------------------------------------
COMPUTER SYSTEMS DESIGN &
RELATED SERVICES--6.7%
- --------------------------------------------------------------------------------
Digital River* 10,970 327
Sun Microsystems* 185,420 749
---------
Total Computer systems design &
related services 1,076
---------
- --------------------------------------------------------------------------------
ELECTRONICS & APPLIANCE STORES--1.9%
- --------------------------------------------------------------------------------
CDW 5,340 310
---------
Total Electronics & appliance stores 310
---------
- --------------------------------------------------------------------------------
INDUSTRIAL MACHINERY MANUFACTURING--1.9%
- --------------------------------------------------------------------------------
Lam Research* 13,760 301
---------
Total Industrial machinery
manufacturing 301
---------
Value
Shares (000)
- --------------------------------------------------------------------------------
INFORMATION SERVICES--12.3%
- --------------------------------------------------------------------------------
CNET Networks* 32,630 $ 299
Google, Cl A*# 2,420 314
Internet Capital Group* 43,240 279
Juniper Networks* 28,060 662
RSA Security* 21,860 422
---------
Total Information services 1,976
---------
- --------------------------------------------------------------------------------
INVESTIGATION & SECURITY SERVICES--2.5%
- --------------------------------------------------------------------------------
Cogent* 21,920 399
---------
Total Investigation & security services 399
---------
- --------------------------------------------------------------------------------
NAVIGATIONAL/MEASURING/MEDICAL/
CONTROL INSTRUMENTS MANUFACTURING--2.7%
- --------------------------------------------------------------------------------
Fisher Scientific International* 7,530 439
---------
Total Navigational/measuring/medical/
control instruments manufacturing 439
---------
- --------------------------------------------------------------------------------
PHARMACEUTICAL & MEDICINE
MANUFACTURING--6.5%
- --------------------------------------------------------------------------------
Gilead Sciences* 14,180 530
MGI Pharma* 10,220 273
Neurocrine Biosciences* 4,960 234
---------
Total Pharmaceutical &
medicine manufacturing 1,037
---------
- --------------------------------------------------------------------------------
SCIENTIFIC R&D SERVICES--8.9%
- --------------------------------------------------------------------------------
Biogen Idec* 7,170 438
Gen-Probe* 14,080 561
Genentech* 8,120 426
---------
Total Scientific r&d services 1,425
---------
- --------------------------------------------------------------------------------
SEMICONDUCTOR & OTHER ELECTRONIC
COMPONENT MANUFACTURING--10.5%
- --------------------------------------------------------------------------------
Applied Materials* 26,200 432
Benchmark Electronics* 6,490 194
JDS Uniphase* 122,020 411
Marvell Technology Group* 12,130 317
Silicon Laboratories* 9,860 326
---------
Total Semiconductor & other
electronic component manufacturing 1,680
---------
TURNER FUNDS 2004 ANNUAL REPORT 43
FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
STATEMENT OF NET ASSETS
TURNER TECHNOLOGY FUND
Value
Shares (000)
- --------------------------------------------------------------------------------
SOFTWARE PUBLISHERS--18.2%
- --------------------------------------------------------------------------------
Akamai Technologies* 28,890 $ 406
Citrix Systems* 23,030 403
Electronic Arts* 6,380 293
F5 Networks* 10,240 312
SAP ADR* 15,730 613
TIBCO Software* 58,770 500
VeriSign* 19,610 390
---------
Total Software publishers 2,917
---------
- --------------------------------------------------------------------------------
SPECIALIZED DESIGN SERVICES--2.5%
- --------------------------------------------------------------------------------
Avaya* 29,110 406
---------
Total Specialized design services 406
---------
- --------------------------------------------------------------------------------
TOTAL COMMON STOCK
(COST $15,242) 15,772
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
WARRANTS--0.0%
- --------------------------------------------------------------------------------
MicroStrategy, Expires 06/24/07* 3,426 1
- --------------------------------------------------------------------------------
TOTAL WARRANTS
(COST $0) 1
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SHORT-TERM INVESTMENT HELD AS COLLATERAL
FOR LOANED SECURITIES--4.3%
- --------------------------------------------------------------------------------
Boston Global Investment Trust--
Quality Portfolio (1) 696,800 697
- --------------------------------------------------------------------------------
TOTAL SHORT-TERM INVESTMENT HELD AS
COLLATERAL FOR LOANED SECURITIES
(COST $697) 697
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
CASH EQUIVALENT--0.7%
- --------------------------------------------------------------------------------
Blackrock TempCash Fund,
Institutional Shares 113,413 113
- --------------------------------------------------------------------------------
TOTAL CASH EQUIVALENT
(COST $113) 113
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
TOTAL INVESTMENTS--103.4%
(COST $16,052) 16,583
- --------------------------------------------------------------------------------
Value
(000)
- --------------------------------------------------------------------------------
OTHER ASSETS AND LIABILITIES--(3.4)%
- --------------------------------------------------------------------------------
Obligation to return securities
lending collateral $ (697)
Payable due to investment adviser (13)
Payable due to administrator (2)
Other assets and liabilities, net 159
- --------------------------------------------------------------------------------
TOTAL OTHER ASSETS AND LIABILITIES (553)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
NET ASSETS--100.0% $ 16,030
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
NET ASSETS CONSIST OF:
- --------------------------------------------------------------------------------
Portfolio capital of Class I Shares
(unlimited authorization -- no par value)
based on 2,888,852 outstanding shares
of beneficial interest $ 146,156
Accumulated net realized loss
on investments (130,657)
Net unrealized appreciation
on investments 531
- --------------------------------------------------------------------------------
NET ASSETS $ 16,030
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
NET ASSET VALUE, OFFERING AND REDEMPTION
PRICE PER SHARE--CLASS I SHARES $5.55
- --------------------------------------------------------------------------------
* Non-income producing security
# Security fully or partially on loan at September 30, 2004 (see Note 9 in
Notes to Financial Statements). The total value of securities on loan at
September 30, 2004, was $673,920.
(1) A private placement security. Units are non-transferable but may be redeemed
at the NAV.
ADR - American depositary receipt
Cl - Class
The accompanying notes are an integral part of the financial statements.
44 TURNER FUNDS 2004 ANNUAL REPORT
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
TURNER CONCENTRATED GROWTH FUND
September 30, 2004
Value
Shares (000)
- --------------------------------------------------------------------------------
COMMON STOCK--100.1%
- --------------------------------------------------------------------------------
AGRICULTURE, CONSTRUCTION & MINING
MACHINERY MANUFACTURING--3.6%
- --------------------------------------------------------------------------------
Caterpillar 17,760 $ 1,429
---------
Total Agriculture, construction &
mining machinery manufacturing 1,429
---------
- --------------------------------------------------------------------------------
CLOTHING STORES--2.4%
- --------------------------------------------------------------------------------
Chico's FAS* 27,190 930
---------
Total Clothing stores 930
---------
- --------------------------------------------------------------------------------
COAL MINING--2.7%
- --------------------------------------------------------------------------------
Peabody Energy 17,990 1,070
---------
Total Coal mining 1,070
---------
- --------------------------------------------------------------------------------
COMMUNICATIONS EQUIPMENT
MANUFACTURING--16.0%
- --------------------------------------------------------------------------------
Cisco Systems* 118,910 2,152
Ericsson Telephone ADR*# 63,970 1,999
Polycom* 56,780 1,125
Research In Motion* 12,780 976
---------
Total Communications
equipment manufacturing 6,252
---------
- --------------------------------------------------------------------------------
COMPUTER & PERIPHERAL EQUIPMENT
MANUFACTURING--13.0%
- --------------------------------------------------------------------------------
Apple Computer* 48,800 1,891
Dell* 53,940 1,920
EMC* 108,920 1,257
---------
Total Computer & peripheral
equipment manufacturing 5,068
---------
- --------------------------------------------------------------------------------
COMPUTER SYSTEMS DESIGN &
RELATED SERVICES--5.5%
- --------------------------------------------------------------------------------
Sun Microsystems* 535,970 2,165
---------
Total Computer systems design &
related services 2,165
---------
- --------------------------------------------------------------------------------
ELECTRONICS & APPLIANCE STORES--2.7%
- --------------------------------------------------------------------------------
CDW 17,890 1,038
---------
Total Electronics & appliance stores 1,038
---------
Value
Shares (000)
- --------------------------------------------------------------------------------
INFORMATION SERVICES--8.4%
- --------------------------------------------------------------------------------
Juniper Networks* 82,350 $ 1,944
Yahoo!* 39,700 1,346
---------
Total Information services 3,290
---------
- --------------------------------------------------------------------------------
INSURANCE CARRIERS--3.1%
- --------------------------------------------------------------------------------
Anthem* 13,790 1,203
---------
Total Insurance carriers 1,203
---------
- --------------------------------------------------------------------------------
MANAGEMENT, SCIENTIFIC & TECHNICAL
CONSULTING SERVICES--2.4%
- --------------------------------------------------------------------------------
Monster Worldwide* 37,400 922
---------
Total Management, scientific &
technical consulting services 922
---------
- --------------------------------------------------------------------------------
OTHER FINANCIAL INVESTMENT ACTIVITIES--4.7%
- --------------------------------------------------------------------------------
T. Rowe Price Group# 36,370 1,853
---------
Total Other financial
investment activities 1,853
---------
- --------------------------------------------------------------------------------
PHARMACEUTICAL & MEDICINE
MANUFACTURING--4.1%
- --------------------------------------------------------------------------------
Gilead Sciences* 43,260 1,617
---------
Total Pharmaceutical &
medicine manufacturing 1,617
---------
- --------------------------------------------------------------------------------
SCIENTIFIC R&D SERVICES--9.6%
- --------------------------------------------------------------------------------
Biogen Idec* 25,660 1,570
Genentech* 41,350 2,167
---------
Total Scientific r&d services 3,737
---------
- --------------------------------------------------------------------------------
SEMICONDUCTOR & OTHER ELECTRONIC
COMPONENT MANUFACTURING--15.6%
- --------------------------------------------------------------------------------
Applied Materials* 101,520 1,674
ASML Holding* 112,390 1,447
Marvell Technology Group* 31,360 819
Maxim Integrated Products 27,880 1,179
Texas Instruments 45,450 967
---------
Total Semiconductor & other
electronic component
manufacturing 6,086
---------
TURNER FUNDS 2004 ANNUAL REPORT 45
FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
TURNER CONCENTRATED GROWTH FUND
Value
Shares (000)
- --------------------------------------------------------------------------------
SOFTWARE PUBLISHERS--6.3%
- --------------------------------------------------------------------------------
Symantec* 23,740 $ 1,303
VeriSign* 59,130 1,175
---------
Total Software publishers 2,478
---------
- --------------------------------------------------------------------------------
TOTAL COMMON STOCK
(COST $38,669) 39,138
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
WARRANTS--0.0%
- --------------------------------------------------------------------------------
MicroStrategy, Expires 06/24/07* 166 --
- --------------------------------------------------------------------------------
TOTAL WARRANTS
(COST $0) --
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SHORT-TERM INVESTMENT HELD AS COLLATERAL
FOR LOANED SECURITIES--5.5%
- --------------------------------------------------------------------------------
Boston Global Investment Trust--
Quality Portfolio (1) 2,158,400 2,158
- --------------------------------------------------------------------------------
TOTAL SHORT-TERM INVESTMENT HELD AS
COLLATERAL FOR LOANED SECURITIES
(COST $2,158) 2,158
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
CASH EQUIVALENT--0.9%
- --------------------------------------------------------------------------------
Blackrock TempCash Fund,
Institutional Shares 337,643 338
- --------------------------------------------------------------------------------
TOTAL CASH EQUIVALENT
(COST $338) 338
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
TOTAL INVESTMENTS--106.5%
(COST $41,165) $41,634
- --------------------------------------------------------------------------------
Percentages are based on net assets of $39,109,193.
* Non-income producing security
# Security fully or partially on loan at September 30, 2004 (see Note 9 in
Notes to Financial Statements). The total value of securities on loan at
September 30, 2004, was $2,110,988.
(1) A private placement security. Units are non-transferable but may be redeemed
at the NAV.
ADR - American depositary receipt
Amounts designated as "_" are $0 or have been rounded to $0.
The accompanying notes are an integral part of the financial statements.
46 TURNER FUNDS 2004 ANNUAL REPORT
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
TURNER NEW ENTERPRISE FUND
September 30, 2004
Value
Shares (000)
- --------------------------------------------------------------------------------
COMMON STOCK--101.6%
- --------------------------------------------------------------------------------
COMMERCIAL/INDUSTRIAL EQUIPMENT
RENTAL & LEASING--3.5%
- --------------------------------------------------------------------------------
Applied Signal Technology 5,130 $ 164
Comverse Technology* 11,650 219
---------
Total Commercial/industrial
equipment rental & leasing 383
---------
- --------------------------------------------------------------------------------
COMMUNICATIONS EQUIPMENT
MANUFACTURING--13.7%
- --------------------------------------------------------------------------------
Cisco Systems* 27,960 506
Jamdat Mobile* 7,500 173
Plantronics* 3,800 164
Polycom* 12,690 252
Research In Motion* 3,210 245
Western Wireless, Cl A* 5,420 139
---------
Total Communications
equipment manufacturing 1,479
---------
- --------------------------------------------------------------------------------
COMPUTER & PERIPHERAL EQUIPMENT
MANUFACTURING--5.5%
- --------------------------------------------------------------------------------
Apple Computer* 9,750 378
EMC* 19,050 220
---------
Total Computer & peripheral
equipment manufacturing 598
---------
- --------------------------------------------------------------------------------
COMPUTER SYSTEMS DESIGN &
RELATED SERVICES--5.4%
- --------------------------------------------------------------------------------
Sun Microsystems* 72,190 292
Witness Systems* 17,930 288
---------
Total Computer systems design &
related services 580
---------
- --------------------------------------------------------------------------------
CUTLERY & HANDTOOL MANUFACTURING--2.3%
- --------------------------------------------------------------------------------
Pentair# 7,020 245
---------
Total Cutlery & handtool manufacturing 245
---------
- --------------------------------------------------------------------------------
ELECTRONIC SHOPPING &
MAIL-ORDER HOUSES--2.1%
- --------------------------------------------------------------------------------
eBay* 2,490 229
---------
Total Electronic shopping &
mail-order houses 229
---------
Value
Shares (000)
- --------------------------------------------------------------------------------
ELECTRONICS & APPLIANCE STORES--2.8%
- --------------------------------------------------------------------------------
Navarre* 20,940 $ 303
---------
Total Electronics & appliance stores 303
---------
- --------------------------------------------------------------------------------
INFORMATION SERVICES--13.0%
- --------------------------------------------------------------------------------
CNET Networks* 38,190 349
Google, Cl A* 1,250 162
Juniper Networks* 18,430 435
Phase Forward* 30,000 248
Yahoo!* 6,220 211
---------
Total Information services 1,405
---------
- --------------------------------------------------------------------------------
INVESTIGATION & SECURITY SERVICES--2.5%
- --------------------------------------------------------------------------------
Cogent* 14,660 267
---------
Total Investigation & security services 267
---------
- --------------------------------------------------------------------------------
MANAGEMENT, SCIENTIFIC & TECHNICAL
CONSULTING SERVICES--3.4%
- --------------------------------------------------------------------------------
Monster Worldwide* 14,800 365
---------
Total Management, scientific &
technical consulting services 365
---------
- --------------------------------------------------------------------------------
MEDICAL EQUIPMENT & SUPPLIES
MANUFACTURING--2.9%
- --------------------------------------------------------------------------------
C.R. Bard 5,520 313
---------
Total Medical equipment &
supplies manufacturing 313
---------
- --------------------------------------------------------------------------------
NAVIGATIONAL/MEASURING/MEDICAL/
CONTROL INSTRUMENTS MANUFACTURING--3.0%
- --------------------------------------------------------------------------------
Fisher Scientific International* 5,620 328
---------
Total Navigational/measuring/medical/
control instruments manufacturing 328
---------
- --------------------------------------------------------------------------------
OTHER LEATHER & ALLIED PRODUCT
MANUFACTURING--2.0%
- --------------------------------------------------------------------------------
Coach* 5,240 222
---------
Total Other leather & allied
product manufacturing 222
---------
TURNER FUNDS 2004 ANNUAL REPORT 47
FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
TURNER NEW ENTERPRISE FUND
Value
Shares (000)
- --------------------------------------------------------------------------------
PHARMACEUTICAL & MEDICINE
MANUFACTURING--10.9%
- --------------------------------------------------------------------------------
Gilead Sciences* 4,860 $ 182
MGI Pharma* 7,440 198
OSI Pharmaceuticals* 5,730 352
Sepracor*# 4,730 231
USANA Health Sciences*# 6,090 212
---------
Total Pharmaceutical &
medicine manufacturing 1,175
---------
- --------------------------------------------------------------------------------
PROFESSIONAL & COMMERCIAL
EQUIPMENT & SUPPLY WHOLESALE--3.5%
- --------------------------------------------------------------------------------
Patterson* 2,990 229
Synaptics* 7,240 146
---------
Total Professional & commercial
equipment & supply wholesale 375
---------
- --------------------------------------------------------------------------------
SEMICONDUCTOR & OTHER ELECTRONIC
COMPONENT MANUFACTURING--9.7%
- --------------------------------------------------------------------------------
Marvell Technology Group* 12,090 316
Sanmina-SCI* 35,440 250
Silicon Image* 22,730 287
Silicon Laboratories* 5,850 194
---------
Total Semiconductor & other
electronic component manufacturing 1,047
---------
- --------------------------------------------------------------------------------
SOFTWARE PUBLISHERS--11.3%
- --------------------------------------------------------------------------------
Akamai Technologies* 20,470 288
Citrix Systems* 10,990 192
F5 Networks* 14,540 443
VeriSign* 14,890 296
---------
Total Software publishers 1,219
---------
Value
Shares (000)
- --------------------------------------------------------------------------------
TELECOMMUNICATIONS--1.7%
- --------------------------------------------------------------------------------
Sonus Networks* 31,870 $ 179
---------
Total Telecommunications 179
---------
- --------------------------------------------------------------------------------
TRAVELER ACCOMMODATION--2.4%
- --------------------------------------------------------------------------------
Station Casinos 5,400 265
---------
Total Traveler accommodation 265
---------
- --------------------------------------------------------------------------------
TOTAL COMMON STOCK
(COST $10,039) 10,977
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SHORT-TERM INVESTMENT HELD AS COLLATERAL
FOR LOANED SECURITIES--15.1%
- --------------------------------------------------------------------------------
Boston Global Investment Trust--
Quality Portfolio (1) 1,628,200 1,628
- --------------------------------------------------------------------------------
TOTAL SHORT-TERM INVESTMENT HELD AS
COLLATERAL FOR LOANED SECURITIES
(COST $1,628) 1,628
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
TOTAL INVESTMENTS--116.7%
(COST $11,667) $ 12,605
- --------------------------------------------------------------------------------
Percentages are based on net assets of $10,805,424.
* Non-income producing security
# Security fully or partially on loan at September 30, 2004 (see Note 9 in
Notes to Financial Statements). The total value of securities on loan at
September 30, 2004, was $1,588,105.
(1) A private placement security. Units are non-transferable but may be redeemed
at the NAV.
Cl - Class
The accompanying notes are an integral part of the financial statements.
48 TURNER FUNDS 2004 ANNUAL REPORT
- ---------------------------------------------------------------------------------------------------------------------------
STATEMENTS OF ASSETS AND LIABILITIES (000)
Turner
Concentrated Turner
Growth New Enterprise
Fund Fund
- ---------------------------------------------------------------------------------------------------------------------------
09/30/04 09/30/04
- ---------------------------------------------------------------------------------------------------------------------------
Assets:
- ---------------------------------------------------------------------------------------------------------------------------
Investment securities at cost $ 41,165 $ 11,667
- ---------------------------------------------------------------------------------------------------------------------------
Investment securities at value $ 41,634 $ 12,605
Receivable for investment securities sold 2,457 1,020
Receivable for dividend and interest income 10 1
- ---------------------------------------------------------------------------------------------------------------------------
Total assets 44,101 13,626
- ---------------------------------------------------------------------------------------------------------------------------
Liabilities:
Payable for investment securities purchased 2,750 1,028
Obligation to return securities lending collateral 2,158 1,628
Payable for capital shares redeemed 27 --
Payable due to investment adviser 26 10
Payable due to administrator 5 1
Accrued expenses 26 13
Payable to custodian -- 141
- ---------------------------------------------------------------------------------------------------------------------------
Total liabilities 4,992 2,821
- ---------------------------------------------------------------------------------------------------------------------------
Net assets $ 39,109 $ 10,805
- ---------------------------------------------------------------------------------------------------------------------------
Net assets:
Portfolio capital, Class I Shares $ 199,595 $ 20,468
Accumulated net realized loss on investments (160,955) (10,601)
Net unrealized appreciation on investments 469 938
- ---------------------------------------------------------------------------------------------------------------------------
Net assets $ 39,109 $ 10,805
- ---------------------------------------------------------------------------------------------------------------------------
Outstanding shares of beneficial interest:(1)
Class I Shares(2) 6,717,115 2,389,784
- ---------------------------------------------------------------------------------------------------------------------------
Net asset value, offering and redemption
price per share, Class I Shares $5.82 $4.52
- ---------------------------------------------------------------------------------------------------------------------------
(1) Unlimited authorization-- no par value.
(2) Shares have not been rounded.
Amounts designated as "--" are either $0 or have been rounded to $0
The accompanying notes are an integral part of the financial statements.
TURNER FUNDS 2004 ANNUAL REPORT 49
FINANCIAL STATEMENTS
- ---------------------------------------------------------------------------------------------------------------------------
STATEMENTS OF OPERATIONS (000)
Turner
Turner Large Cap
Disciplined Growth Turner
Large Cap Opportunities Midcap
Growth Fund Fund Growth Fund
- ---------------------------------------------------------------------------------------------------------------------------
year ended year ended year ended
9/30/04 9/30/04 9/30/04
- ---------------------------------------------------------------------------------------------------------------------------
Investment Income:
Dividend $ 833 $ 24 $ 2,565
Interest -- -- 14
Securities lending 1 1 295
Foreign taxes withheld (7) -- (1)
- ---------------------------------------------------------------------------------------------------------------------------
Total Investment Income 827 25 2,873
- ---------------------------------------------------------------------------------------------------------------------------
Expenses:
Investment advisory fees 574 35 6,741
Administrator fees 138 7 1,294
Trustees' fees 5 -- 53
Distribution fees (1) -- -- 2
Shareholder servicing fee (1) -- -- 2
Transfer agent fees 93 29 1,650
Professional fees 24 1 205
Custodian fees 23 10 158
Printing fees 18 1 165
Registration fees 14 1 132
Insurance and other fees 5 1 45
- ---------------------------------------------------------------------------------------------------------------------------
Total expenses 894 85 10,447
Less:
Investment advisory fee waiver (177) (27) --
- ---------------------------------------------------------------------------------------------------------------------------
Net expenses 717 58 10,447
- ---------------------------------------------------------------------------------------------------------------------------
Net investment income (loss) 110 (33) (7,574)
- ---------------------------------------------------------------------------------------------------------------------------
Net realized gain (loss) from securities sold 3,472 211 78,392
Net unrealized appreciation (depreciation)
of investment securities (298) (12) (22,549)
- ---------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss)
on investments 3,174 199 55,843
- ---------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
resulting from operations $3,284 $166 $ 48,269
- ---------------------------------------------------------------------------------------------------------------------------
(1) Attributable to Class II Shares only.
(2) Includes realized gain of $3,104,328 due to in-kind redemption (see Note 10
in Notes to Financial Statements).
Amounts designated as "--" are either $0 or have been rounded to $0
The accompanying notes are an integral part of the financial statements.
50 TURNER FUNDS 2004 ANNUAL REPORT & TURNER FUNDS 2004 ANNUAL REPORT 51
Turner Turner Turner Turner
Small Cap Micro Cap Small Cap Technology
Growth Fund Growth Fund Equity Fund Fund
- -----------------------------------------------------------------------------------------------------------------------------------
year ended year ended year ended year ended
9/30/04 9/30/04 9/30/04 9/30/04
- -----------------------------------------------------------------------------------------------------------------------------------
Investment Income:
Dividend $ 514 $ 1,579 $ 236 $ 20
Interest 3 23 1 --
Securities lending 173 241 1 12
Foreign taxes withheld -- (5) (3) (1)
- -----------------------------------------------------------------------------------------------------------------------------------
Total Investment Income 690 1,838 235 31
- -----------------------------------------------------------------------------------------------------------------------------------
Expenses:
Investment advisory fees 2,270 3,379 202 249
Administrator fees 327 487 31 30
Trustees' fees 13 19 1 1
Distribution fees (1) -- -- 53 --
Shareholder servicing fee (1) -- -- -- --
Transfer agent fees 378 617 74 69
Professional fees 53 82 6 4
Custodian fees 61 68 35 11
Printing fees 42 65 5 4
Registration fees 34 45 2 3
Insurance and other fees 12 20 2 1
- -----------------------------------------------------------------------------------------------------------------------------------
Total expenses 3,190 4,782 411 372
Less:
Investment advisory fee waiver (352) (58) (124) (32)
- -----------------------------------------------------------------------------------------------------------------------------------
Net expenses 2,838 4,724 287 340
- -----------------------------------------------------------------------------------------------------------------------------------
Net investment income (loss) (2,148) (2,886) (52) (309)
- -----------------------------------------------------------------------------------------------------------------------------------
Net realized gain (loss) from securities sold 29,912 46,458 3,270 (2) 2,395
Net unrealized appreciation (depreciation)
of investment securities (3,548) 17,638 708 (1,105)
- -----------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss)
on investments 26,364 64,096 3,978 1,290
- -----------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
resulting from operations $24,216 $61,210 $3,926 $ 981
- -----------------------------------------------------------------------------------------------------------------------------------
Turner
Concentrated Turner
Growth New Enterprise
Fund Fund
- -------------------------------------------------------------------------------------------
year ended year ended
9/30/04 9/30/04
- -------------------------------------------------------------------------------------------
Investment Income:
Dividend $ 187 $ 53
Interest 1 --
Securities lending 20 9
Foreign taxes withheld (2) --
- -------------------------------------------------------------------------------------------
Total Investment Income 206 62
- -------------------------------------------------------------------------------------------
Expenses:
Investment advisory fees 571 172
Administrator fees 69 26
Trustees' fees 3 1
Distribution fees (1) -- --
Shareholder servicing fee (1) -- --
Transfer agent fees 66 52
Professional fees 10 3
Custodian fees 18 12
Printing fees 8 3
Registration fees 7 2
Insurance and other fees 2 1
- -------------------------------------------------------------------------------------------
Total expenses 754 272
Less:
Investment advisory fee waiver (73) (60)
- -------------------------------------------------------------------------------------------
Net expenses 681 212
- -------------------------------------------------------------------------------------------
Net investment income (loss) (475) (150)
- -------------------------------------------------------------------------------------------
Net realized gain (loss) from securities sold (396) (1,382)
Net unrealized appreciation (depreciation)
of investment securities (545) 224
- -------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss)
on investments (941) (1,158)
- -------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
resulting from operations $(1,416) $(1,308)
- -------------------------------------------------------------------------------------------
FINANCIAL STATEMENTS
- ---------------------------------------------------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS (000)
Turner Turner
Disciplined Large Large Cap Growth
Cap Growth Fund Opportunities Fund
- ---------------------------------------------------------------------------------------------------------------------------
year year year year
ended ended ended ended
9/30/04 9/30/03 9/30/04 9/30/03
- ---------------------------------------------------------------------------------------------------------------------------
Investment activities:
Net investment income (loss) $ 110 $ 19 $ (33) $ (23)
Net realized gain from securities sold 3,472 5,005 211 347
Net change in unrealized
appreciation (depreciation) of investments (298) 13,660 (12) 724
- --------------------------------------------------------------------------------------------------------------------------
Net increase in net assets resulting
from operations 3,284 18,684 166 1,048
- --------------------------------------------------------------------------------------------------------------------------
Dividends and distributions to shareholders:
Net investment income
Class I Shares (87) (3) -- --
Realized capital gains
Class I Shares -- -- -- --
- ---------------------------------------------------------------------------------------------------------------------------
Total dividends and distributions (87) (3) -- --
- ---------------------------------------------------------------------------------------------------------------------------
Capital share transactions:
Class I Shares
Proceeds from shares issued 50,271 45,621 2,372 2,060
Proceeds from shares issued in lieu
of cash distributions 87 3 -- --
Cost of shares redeemed (64,980) (44,860) (1,659) (4,404)
- ---------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets from
Class I Shares transactions (14,622) 764 713 (2,344)
- ---------------------------------------------------------------------------------------------------------------------------
Class II Shares
Proceeds from shares issued -- -- -- --
Cost of shares redeemed -- -- -- --
- ---------------------------------------------------------------------------------------------------------------------------
Increase in net assets from Class II
Shares transactions -- -- -- --
- ---------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
from capital share transactions (14,622) 764 713 (2,344)
- ---------------------------------------------------------------------------------------------------------------------------
Total increase (decrease) in net assets (11,425) 19,445 879 (1,296)
- ---------------------------------------------------------------------------------------------------------------------------
Net assets:
Beginning of year 79,416 59,971 3,551 4,847
- ---------------------------------------------------------------------------------------------------------------------------
End of year $ 67,991 $ 79,416 $4,430 $ 3,551
- ---------------------------------------------------------------------------------------------------------------------------
Undistributed net investment income
(accumulated net investment loss) $ 42 $ 19 -- --
- ---------------------------------------------------------------------------------------------------------------------------
Shares issued and redeemed:
Class I Shares
Issued 10,119 11,156 235 264
Issued in lieu of cash distributions 17 1 -- --
Redeemed (13,274) (11,102) (167) (619)
- ---------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in Class I Shares (3,138) 55 68 (355)
- ---------------------------------------------------------------------------------------------------------------------------
Class II Shares
Issued -- -- -- --
Redeemed -- -- -- --
- ---------------------------------------------------------------------------------------------------------------------------
Increase in Class II Shares -- -- -- --
- ---------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in shares (3,138) 55 68 (355)
- ---------------------------------------------------------------------------------------------------------------------------
Amounts designated as "--" are either $0 or have been rounded to $0
The accompanying notes are an integral part of the financial statements.
52 TURNER FUNDS 2004 ANNUAL REPORT & TURNER FUNDS 2004 ANNUAL REPORT 53
Turner Turner
Midcap Growth Small Cap Growth
Fund Fund
- -----------------------------------------------------------------------------------------------------------------------------------
year year year year
ended ended ended ended
9/30/04 9/30/03 9/30/04 9/30/03
- -----------------------------------------------------------------------------------------------------------------------------------
Investment activities:
Net investment income (loss) $ (7,574) $ (5,270) $ (2,148) $ (1,268)
Net realized gain from securities sold 78,392 70,989 29,912 21,681
Net change in unrealized
appreciation (depreciation) of investments (22,549) 145,875 (3,548) 45,503
- -----------------------------------------------------------------------------------------------------------------------------------
Net increase in net assets resulting
from operations 48,269 211,594 24,216 65,916
- -----------------------------------------------------------------------------------------------------------------------------------
Dividends and distributions to shareholders:
Net investment income
Class I Shares -- -- -- --
Realized capital gains
Class I Shares -- -- -- --
- -----------------------------------------------------------------------------------------------------------------------------------
Total dividends and distributions -- -- -- --
- -----------------------------------------------------------------------------------------------------------------------------------
Capital share transactions:
Class I Shares
Proceeds from shares issued 433,824 383,552 134,231 99,160
Proceeds from shares issued in lieu
of cash distributions -- -- -- --
Cost of shares redeemed (398,027) (382,529) (114,025) (116,466)
- -----------------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets from
Class I Shares transactions 35,797 1,023 20,206 (17,306)
- -----------------------------------------------------------------------------------------------------------------------------------
Class II Shares
Proceeds from shares issued 1,285 281 -- --
Cost of shares redeemed (268) (33) -- --
- -----------------------------------------------------------------------------------------------------------------------------------
Increase in net assets from Class II
Shares transactions 1,017 248 -- --
- -----------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
from capital share transactions 36,814 1,271 20,206 (17,306)
- -----------------------------------------------------------------------------------------------------------------------------------
Total increase (decrease) in net assets 85,083 212,865 44,422 48,610
- -----------------------------------------------------------------------------------------------------------------------------------
Net assets:
Beginning of year 774,211 561,346 192,791 144,181
- -----------------------------------------------------------------------------------------------------------------------------------
End of year $ 859,294 $ 774,211 $237,213 $ 192,791
- -----------------------------------------------------------------------------------------------------------------------------------
Undistributed net investment income
(accumulated net investment loss) -- -- -- --
- -----------------------------------------------------------------------------------------------------------------------------------
Shares issued and redeemed:
Class I Shares
Issued 19,641 23,309 6,279 6,123
Issued in lieu of cash distributions -- -- -- --
Redeemed (18,363) (24,432) (5,366) (7,335)
- -----------------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in Class I Shares 1,278 (1,123) 913 (1,212)
- -----------------------------------------------------------------------------------------------------------------------------------
Class II Shares
Issued 58 17 -- --
Redeemed (13) (2) -- --
- -----------------------------------------------------------------------------------------------------------------------------------
Increase in Class II Shares 45 15 -- --
- -----------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in shares 1,323 (1,108) 913 (1,212)
- -----------------------------------------------------------------------------------------------------------------------------------
Turner
Micro Cap Growth
Fund
- -----------------------------------------------------------------------------------------------
year year
ended ended
9/30/04 9/30/03
- -----------------------------------------------------------------------------------------------
Investment activities:
Net investment income (loss) $ (2,886) $ (1,563)
Net realized gain from securities sold 46,458 17,304
Net change in unrealized
appreciation (depreciation) of investments 17,638 37,172
- -----------------------------------------------------------------------------------------------
Net increase in net assets resulting
from operations 61,210 52,913
- -----------------------------------------------------------------------------------------------
Dividends and distributions to shareholders:
Net investment income
Class I Shares -- --
Realized capital gains
Class I Shares (6,514) --
- -----------------------------------------------------------------------------------------------
Total dividends and distributions (6,514) --
- -----------------------------------------------------------------------------------------------
Capital share transactions:
Class I Shares
Proceeds from shares issued 135,004 99,782
Proceeds from shares issued in lieu
of cash distributions 6,268 --
Cost of shares redeemed (83,116) (76,985)
- -----------------------------------------------------------------------------------------------
Increase (decrease) in net assets from
Class I Shares transactions 58,156 22,797
- -----------------------------------------------------------------------------------------------
Class II Shares
Proceeds from shares issued -- --
Cost of shares redeemed -- --
- -----------------------------------------------------------------------------------------------
Increase in net assets from Class II
Shares transactions -- --
- -----------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
from capital share transactions 58,156 22,797
- -----------------------------------------------------------------------------------------------
Total increase (decrease) in net assets 112,852 75,710
- -----------------------------------------------------------------------------------------------
Net assets:
Beginning of year 253,840 178,130
- -----------------------------------------------------------------------------------------------
End of year $366,692 $253,840
- -----------------------------------------------------------------------------------------------
Undistributed net investment income
(accumulated net investment loss) $ (1) $ (1)
- -----------------------------------------------------------------------------------------------
Shares issued and redeemed:
Class I Shares
Issued 2,824 2,849
Issued in lieu of cash distributions 137 --
Redeemed (1,764) (2,273)
- -----------------------------------------------------------------------------------------------
Increase (decrease) in Class I Shares 1,197 576
- -----------------------------------------------------------------------------------------------
Class II Shares
Issued -- --
Redeemed -- --
- -----------------------------------------------------------------------------------------------
Increase in Class II Shares -- --
- -----------------------------------------------------------------------------------------------
Net increase (decrease) in shares 1,197 576
- -----------------------------------------------------------------------------------------------
FINANCIAL STATEMENTS
- ---------------------------------------------------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS (000)
Turner
Small Cap
Equity Fund
- ---------------------------------------------------------------------------------------------------------------------------
year year
ended ended
9/30/04 9/30/03
- ---------------------------------------------------------------------------------------------------------------------------
Investment activities:
Net investment loss $ (52) $ (24)
Net realized gain (loss) from securities sold 3,270 (1) 922
Net change in unrealized appreciation (depreciation) of investments 708 1,619
- ---------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from operations 3,926 2,517
- ---------------------------------------------------------------------------------------------------------------------------
Dividends and distributions to shareholders:
Net investment income
Class II Shares -- (6)
Realized capital gains
Class II Shares (1,316) --
Return of capital
Class II Shares (51) --
- ---------------------------------------------------------------------------------------------------------------------------
Total dividends and distributions (1,367) (6)
- ---------------------------------------------------------------------------------------------------------------------------
Capital share transactions:
Class I Shares
Proceeds from shares issued -- --
Cost of shares redeemed -- --
- ---------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets from Class I Shares transactions -- --
- ---------------------------------------------------------------------------------------------------------------------------
Class II Shares
Proceeds from shares issued 54,757 8,457
Proceeds from shares issued in lieu of cash distributions 1,362 6
Cost of shares redeemed (42,064) (2) (5,677)
- ---------------------------------------------------------------------------------------------------------------------------
Increase in net assets from Class II Shares transactions 14,055 2,786
- ---------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets from capital share transactions 14,055 2,786
- ---------------------------------------------------------------------------------------------------------------------------
Total increase (decrease) in net assets 16,614 5,297
- ---------------------------------------------------------------------------------------------------------------------------
Net assets:
Beginning of year 12,557 7,260
- ---------------------------------------------------------------------------------------------------------------------------
End of year $29,171 $12,557
- ---------------------------------------------------------------------------------------------------------------------------
Undistributed net investment income -- --
- ---------------------------------------------------------------------------------------------------------------------------
Shares issued and redeemed:
Class I Shares
Issued -- --
Redeemed -- --
- ---------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in Class I Shares -- --
- ---------------------------------------------------------------------------------------------------------------------------
Class II Shares
Issued 4,083 825
Issued in lieu of cash distributions 106 1
Redeemed (3,116)(2) (583)
- ---------------------------------------------------------------------------------------------------------------------------
Increase in Class II Shares 1,073 243
- ---------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in shares 1,073 243
- ---------------------------------------------------------------------------------------------------------------------------
(1) Includes realized gain of $3,104,328 due to in-kind redemption (see Note 10
in Notes to Financial Statements).
(2) Includes redemptions as a result of in-kind transfers of securities
(see Note 10 in Notes to Financial Statements).
Amounts designated as "--" are either $0 or have been rounded to $0
The accompanying notes are an integral part of the financial statements.
54 TURNER FUNDS 2004 ANNUAL REPORT & 55 TURNER FUNDS 2004 ANNUAL REPORT
Turner
Technology
Fund
- -------------------------------------------------------------------------------------------------------------------
year year
ended ended
9/30/04 9/30/03
- -------------------------------------------------------------------------------------------------------------------
Investment activities:
Net investment loss $ (309) $ (145)
Net realized gain (loss) from securities sold 2,395 5,352
Net change in unrealized appreciation (depreciation) of investments (1,105) 2,787
- -------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from operations 981 7,994
- -------------------------------------------------------------------------------------------------------------------
Dividends and distributions to shareholders:
Net investment income
Class II Shares -- --
Realized capital gains
Class II Shares -- --
Return of capital
Class II Shares -- --
- -------------------------------------------------------------------------------------------------------------------
Total dividends and distributions -- --
- -------------------------------------------------------------------------------------------------------------------
Capital share transactions:
Class I Shares
Proceeds from shares issued 5,588 10,933
Cost of shares redeemed (10,235) (10,893)
- -------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets from Class I Shares transactions (4,647) 40
- -------------------------------------------------------------------------------------------------------------------
Class II Shares
Proceeds from shares issued -- --
Proceeds from shares issued in lieu of cash distributions -- --
Cost of shares redeemed -- --
- -------------------------------------------------------------------------------------------------------------------
Increase in net assets from Class II Shares transactions -- --
- -------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets from capital share transactions (4,647) 40
- -------------------------------------------------------------------------------------------------------------------
Total increase (decrease) in net assets (3,666) 8,034
- -------------------------------------------------------------------------------------------------------------------
Net assets:
Beginning of year 19,696 11,662
- -------------------------------------------------------------------------------------------------------------------
End of year $16,030 $ 19,696
- -------------------------------------------------------------------------------------------------------------------
Undistributed net investment income -- --
- -------------------------------------------------------------------------------------------------------------------
Shares issued and redeemed:
Class I Shares
Issued 896 2,520
Redeemed (1,714) (2,659)
- -------------------------------------------------------------------------------------------------------------------
Increase (decrease) in Class I Shares (818) (139)
- -------------------------------------------------------------------------------------------------------------------
Class II Shares
Issued -- --
Issued in lieu of cash distributions -- --
Redeemed -- --
- -------------------------------------------------------------------------------------------------------------------
Increase in Class II Shares -- --
- -------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in shares (818) (139)
- -------------------------------------------------------------------------------------------------------------------
Turner
Concentrated
Growth Fund
- --------------------------------------------------------------------------------------------------------------------
year year
ended ended
9/30/04 9/30/03
- --------------------------------------------------------------------------------------------------------------------
Investment activities:
Net investment loss $ (475) $ (312)
Net realized gain (loss) from securities sold (396) 11,689
Net change in unrealized appreciation (depreciation) of investments (545) 2,298
- --------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from operations (1,416) 13,675
- --------------------------------------------------------------------------------------------------------------------
Dividends and distributions to shareholders:
Net investment income
Class II Shares -- --
Realized capital gains
Class II Shares -- --
Return of capital
Class II Shares -- --
- --------------------------------------------------------------------------------------------------------------------
Total dividends and distributions -- --
- --------------------------------------------------------------------------------------------------------------------
Capital share transactions:
Class I Shares
Proceeds from shares issued 15,356 17,521
Cost of shares redeemed (21,835) (13,374)
- --------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets from Class I Shares transactions (6,479) 4,147
- --------------------------------------------------------------------------------------------------------------------
Class II Shares
Proceeds from shares issued -- --
Proceeds from shares issued in lieu of cash distributions -- --
Cost of shares redeemed -- --
- --------------------------------------------------------------------------------------------------------------------
Increase in net assets from Class II Shares transactions -- --
- --------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets from capital share transactions (6,479) 4,147
- --------------------------------------------------------------------------------------------------------------------
Total increase (decrease) in net assets (7,895) 17,822
- --------------------------------------------------------------------------------------------------------------------
Net assets:
Beginning of year 47,004 29,182
- --------------------------------------------------------------------------------------------------------------------
End of year $ 39,109 $ 47,004
- --------------------------------------------------------------------------------------------------------------------
Undistributed net investment income -- --
- --------------------------------------------------------------------------------------------------------------------
Shares issued and redeemed:
Class I Shares
Issued 2,338 3,316
Redeemed (3,394) (2,791)
- --------------------------------------------------------------------------------------------------------------------
Increase (decrease) in Class I Shares (1,056) 525
- --------------------------------------------------------------------------------------------------------------------
Class II Shares
Issued -- --
Issued in lieu of cash distributions -- --
Redeemed -- --
- --------------------------------------------------------------------------------------------------------------------
Increase in Class II Shares -- --
- --------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in shares (1,056) 525
- --------------------------------------------------------------------------------------------------------------------
Turner
New
Enterprise Fund
- --------------------------------------------------------------------------------------------------------------------
year year
ended ended
9/30/04 9/30/03
- --------------------------------------------------------------------------------------------------------------------
<c>
Investment activities:
Net investment loss $ (150) $ (57)
Net realized gain (loss) from securities sold (1,382) 2,039
Net change in unrealized appreciation (depreciation) of investments 224 1,041
- --------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from operations (1,308) 3,023
- --------------------------------------------------------------------------------------------------------------------
Dividends and distributions to shareholders:
Net investment income
Class II Shares -- --
Realized capital gains
Class II Shares -- --
Return of capital
Class II Shares -- --
- --------------------------------------------------------------------------------------------------------------------
Total dividends and distributions -- --
- --------------------------------------------------------------------------------------------------------------------
Capital share transactions:
Class I Shares
Proceeds from shares issued 25,236 13,046
Cost of shares redeemed (26,591) (5,799)
- --------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets from Class I Shares transactions (1,355) 7,247
- --------------------------------------------------------------------------------------------------------------------
Class II Shares
Proceeds from shares issued -- --
Proceeds from shares issued in lieu of cash distributions -- --
Cost of shares redeemed -- --
- --------------------------------------------------------------------------------------------------------------------
Increase in net assets from Class II Shares transactions -- --
- --------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets from capital share transactions (1,355) 7,247
- --------------------------------------------------------------------------------------------------------------------
Total increase (decrease) in net assets (2,663) 10,270
- --------------------------------------------------------------------------------------------------------------------
Net assets:
Beginning of year 13,468 3,198
- --------------------------------------------------------------------------------------------------------------------
End of year $ 10,805 $13,468
- --------------------------------------------------------------------------------------------------------------------
Undistributed net investment income -- --
- --------------------------------------------------------------------------------------------------------------------
Shares issued and redeemed:
Class I Shares
Issued 4,681 3,150
Redeemed (5,392) (1,455)
- --------------------------------------------------------------------------------------------------------------------
Increase (decrease) in Class I Shares (711) 1,695
- --------------------------------------------------------------------------------------------------------------------
Class II Shares
Issued -- --
Issued in lieu of cash distributions -- --
Redeemed -- --
- --------------------------------------------------------------------------------------------------------------------
Increase in Class II Shares -- --
- --------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in shares (711) 1,695
- --------------------------------------------------------------------------------------------------------------------
FINANCIAL STATEMENTS
- ---------------------------------------------------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
Realized and
Net asset Net unrealized Dividends Distributions
value, investment gains from net from Net asset
beginning Income (losses) on investment capital value, end
of period (Loss) investments income gains of period
- ---------------------------------------------------------------------------------------------------------------------------
Turner Disciplined Large Cap Growth Fund-- Class I Shares
- ---------------------------------------------------------------------------------------------------------------------------
2004 $ 4.62 -- 0.21 --* -- $ 4.83
2003 $ 3.50 -- 1.12 --* -- $ 4.62
2002 $ 4.70 -- (1.20) -- -- $ 3.50
2001 $ 9.81 -- (5.11) -- -- $ 4.70
2000 (1) $10.00 -- (0.19) -- -- $ 9.81
- ---------------------------------------------------------------------------------------------------------------------------
Turner Large Cap Growth Opportunities Fund-- Class I Shares(2)
- ---------------------------------------------------------------------------------------------------------------------------
2004 $ 9.35 (0.07) 0.60 -- -- $ 9.88
2003 $ 6.59 (0.06) 2.82 -- -- $ 9.35
2002 $ 9.01 (0.08) (2.34) -- -- $ 6.59
2001 $26.20 (0.10)(3) (11.63) -- (5.46) $ 9.01
2000 $18.90 (0.16) 8.94 -- (1.48) $26.20
- ---------------------------------------------------------------------------------------------------------------------------
Turner Midcap Growth Fund -- Class I Shares
- ---------------------------------------------------------------------------------------------------------------------------
2004 $19.54 (0.18) (3) 1.63 -- -- $20.99
2003 $13.78 (0.14) (3) 5.90 -- -- $19.54
2002 $17.40 (0.14) (3.48) -- -- $13.78
2001 $46.52 (0.16) (25.89) -- (3.07) $17.40
2000 $25.53 (0.10) 23.79 -- (2.70) $46.52
- ---------------------------------------------------------------------------------------------------------------------------
Turner Midcap Growth Fund -- Class II Shares
- ---------------------------------------------------------------------------------------------------------------------------
2004 $19.36 (0.28) (3) 1.61 -- -- $20.69
2003 $13.72 (0.23) (3) 5.87 -- -- $19.36
2002 $17.41 (0.22) (3) (3.47) -- -- $13.72
2001 (5) $17.30 -- 0.11 -- -- $17.41
- ---------------------------------------------------------------------------------------------------------------------------
Turner Small Cap Growth Fund -- Class I Shares
- ---------------------------------------------------------------------------------------------------------------------------
2004 $18.88 (0.19) 2.64 -- -- $21.33
2003 $12.62 (0.12) 6.38 -- -- $18.88
2002 $15.65 (0.20) (2.83) -- -- $12.62
2001 $44.79 (0.04) (18.63) -- (10.47) $15.65
2000 $34.20 (0.12) 17.89 -- (7.18) $44.79
- ---------------------------------------------------------------------------------------------------------------------------
Turner Micro Cap Growth Fund -- Class I Shares
- ---------------------------------------------------------------------------------------------------------------------------
2004 $41.38 (0.39) 10.04 -- (1.01) $50.02
2003 $32.04 (0.25) 9.59 -- -- $41.38
2002 $32.08 (0.33) 0.29(6) -- -- $32.04
2001 $45.92 (0.12) (9.02) -- (4.70) $32.08
2000 $21.09 (0.18) 26.52 -- (1.51) $45.92
* Amount represents less than $0.01 per share.
+ Returns are for the period indicated and have not been annualized.
++ Inclusive of directed brokerage arrangements, waivers and reimbursements.
+++ Excludes effect of in-kind transfers and mergers.
(1) Commenced operations on June 14, 2000. All ratios for the period have been
annualized.
(2) The information set forth in this table for the periods prior to August 17,
2002, is the financial data of the Mercury Select Growth Fund, Class I
Shares. From the period June 19, 2000, to August 17, 2002 the Mercury Select
Growth Fund operated as a "feeder" fund that seeks to achieve its investment
objective by investing all of its assets in the "master" portfolio, a mutual
fund that has the same investment objective as the Fund. All investments are
made at the master level. This stucture is sometimes called a
"master/feeder" structure. Prior to June 19, 2000, the Fund operated as a
stand-alone investment company called the Turner Large Cap Growth Equity
Fund.
56 & 57 TURNER FUNDS 2004 ANNUAL REPORT
Ratio of net
Net Ratio of Ratio of total investment
assets end net expenses expenses income (loss) Portfolio
Total of period to average to average to average turnover
return (000) net assets++ net assets net assets++ rate+++
- ------------------------------------------------------------------------------------------------------------------------------------
Turner Disciplined Large Cap Growth Fund-- Class I Shares
- -----------------------------------------------------------------------------------------------------------------------------------
2004 4.64% $ 67,991 0.75% 0.94% 0.11% 165.94%
2003 32.01% $ 79,416 0.75% 0.97% 0.03% 201.35%
2002 (25.53)% $ 59,971 0.65% 0.90% -- % 272.99%
2001 (52.09)% $ 53,048 0.74% 1.03% (0.14)% 376.49%
2000 (1) (1.90)%+ $ 4,656 0.75% 3.35% (0.14)% 128.14%
- ------------------------------------------------------------------------------------------------------------------------------------
Turner Large Cap Growth Opportunities Fund-- Class I Shares(2)
- ------------------------------------------------------------------------------------------------------------------------------------
2004 5.67% $ 4,430 1.25% 1.83% (0.70)% 262.01%
2003 41.88% $ 3,551 1.25% 1.53% (0.77)% 282.15%
2002 (26.86)% $ 4,847 1.26%(4) 5.98%(4) (0.71)% 391.98%
2001 (53.71)% $ 9,776 1.25%(4) 3.49%(4) (0.69)% 400.04%
2000 47.49% $ 41,555 0.84%(4) 1.37%(4) (0.71)% 131.19%
- ------------------------------------------------------------------------------------------------------------------------------------
Turner Midcap Growth Fund -- Class I Shares
- ------------------------------------------------------------------------------------------------------------------------------------
2004 7.42% $ 857,899 1.16% 1.16% (0.84)% 167.17%
2003 41.80% $ 773,788 1.15% 1.18% (0.87)% 208.80%
2002 (20.80)% $ 561,244 1.05% 1.16% (0.81)% 259.62%
2001 (59.00)% $ 595,761 1.04% 1.12% (0.77)% 335.57%
2000 97.35% $1,203,756 1.03% 1.07% (0.68)% 306.97%
- ------------------------------------------------------------------------------------------------------------------------------------
Turner Midcap Growth Fund -- Class II Shares
- ------------------------------------------------------------------------------------------------------------------------------------
2004 6.87% $ 1,395 1.66% 1.66% (1.35)% 167.17%
2003 41.11% $ 423 1.65% 1.68% (1.36)% 208.80%
2002 (21.19)% $ 102 1.55% 1.66% (1.25)% 259.62%
2001 (5) 0.64%+ $ 7 1.54% 1.95% (1.04)% 335.57%
- ------------------------------------------------------------------------------------------------------------------------------------
Turner Small Cap Growth Fund -- Class I Shares
- ------------------------------------------------------------------------------------------------------------------------------------
2004 12.98% $ 237,213 1.25% 1.41% (0.95)% 151.02%
2003 49.60% $ 192,791 1.25% 1.41% (0.79)% 187.95%
2002 (19.36)% $ 144,181 1.25% 1.40% (0.99)% 188.34%
2001 (49.81)% $ 241,876 1.25% 1.40% (0.96)% 176.11%
2000 56.07% $ 528,928 1.25% 1.27% (0.93)% 203.01%
- ------------------------------------------------------------------------------------------------------------------------------------
Turner Micro Cap Growth Fund -- Class I Shares
- ------------------------------------------------------------------------------------------------------------------------------------
2004 23.54% $ 366,692 1.40% 1.42% (0.85)% 122.45%
2003 29.15% $ 253,840 1.40% 1.44% (0.81)% 147.77%
2002 (0.12)% $ 178,130 1.31% 1.42% (0.88)% 88.89%
2001 (20.23)% $ 160,010 1.25% 1.40% (0.50)% 121.96%
2000 129.02% $ 187,107 1.25% 1.35% (0.79)% 179.08%
(3) Based on average shares outstanding.
(4) Expense ratios include the Mercury Select Growth Fund's, Class I Shares
portion of the master's allocated expenses.
(5) Commenced operations on September 24, 2001. All ratios for the period
have been annualized.
(6) The amount shown for a share outstanding throughout the period does not
accord with the aggregate net losses on investments for the period
because of the sales and repurchases of fund shares in relation to
fluctuating market value of the investments of the Fund.
Amounts designated as "--" are either $0 or have been rounded to $0.
The accompanying notes are an integral part of the financial statements.
FINANCIAL STATEMENTS
- ---------------------------------------------------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
Realized and
Net asset unrealized Dividends Distributions
value, Net gains from net from Return
beginning investment (losses) on investment capital of
of period loss investments income gains Capital
- ---------------------------------------------------------------------------------------------------------------------------
Turner Small Cap Equity Fund -- Class II Shares
- ---------------------------------------------------------------------------------------------------------------------------
2004 $12.27 (0.02) 2.95 -- (1.23) (0.05)
2003 $ 9.30 (0.02) 3.00 (0.01) -- --
2002 (1) $10.00 -- (0.70) -- -- --
- ---------------------------------------------------------------------------------------------------------------------------
Turner Technology Fund -- Class I Shares
- ---------------------------------------------------------------------------------------------------------------------------
2004 $ 5.31 (0.10) 0.34 -- -- --
2003 $ 3.03 (0.04) 2.32 -- -- --
2002 $ 4.88 (0.06) (1.79) -- -- --
2001 $32.69 (0.15) (23.42) -- (4.24) --
2000 $14.06 (0.16) 20.33 -- (1.54) --
- ---------------------------------------------------------------------------------------------------------------------------
Turner Concentrated Growth Fund-- Class I Shares
- ---------------------------------------------------------------------------------------------------------------------------
2004 $ 6.05 (0.07) (0.16) -- -- --
2003 $ 4.03 (0.04) 2.06 -- -- --
2002 $ 5.76 -- (1.73) -- -- --
2001 $24.74 (0.09) (14.96) -- (3.93) --
2000 $13.99 (0.11) 13.06 -- (2.20) --
- ---------------------------------------------------------------------------------------------------------------------------
Turner New Enterprise Fund -- Class I Shares
- ---------------------------------------------------------------------------------------------------------------------------
2004 $ 4.34 (0.06) 0.24(4) -- -- --
2003 $ 2.27 (0.02) 2.09 -- -- --
2002 $ 3.29 (0.04) (0.98) -- -- --
2001 (2) $12.52 (0.03) (9.20) -- -- --
2000 (3) $10.00 (0.01) 2.53 -- -- --
+ Returns are for the period indicated and have not been annualized.
++ Inclusive of directed brokerage arrangements, waivers and reimbursements.
+++ Excludes effect of in-kind transfers and mergers.
(1) Commenced operations on March 4, 2002. All ratios for the period have been
annualized.
(2) On May 18, 2001, the Board of Trustees of Turner Funds approved resolutions
to change the name of the B2B E-Commerce Fund to the Turner New Enterprise Fund
and to change a non-fundamental investment policy of the Fund to be consistent
with the Turner New Enterprise Fund's investment objectives.
(3) Commenced operations on June 30, 2000. All ratios for the period have been
annualized.
(4) The amount shown for a share outstanding throughout the period does not
accord with aggregate net losses on investments for the period because of the
sales and repurchases of fund shares in relation to fluctuating market value of
the investments of the Fund. Amounts designated as "--" are either $0 or have
been rounded to $0.
The accompanying notes are an integral part of the financial statements.
58 & 59 TURNER FUNDS 2004 ANNUAL REPORT
Ratio of net
Net Ratio of Ratio of total investment
Net asset assets end net expenses expenses loss Portfolio
value, end Total of period to average to average to average turnover
of period return (000) net assets++ net assets net assets++ rate+++
- ------------------------------------------------------------------------------------------------------------------------------------
Turner Small Cap Equity Fund -- Class II Shares
- ------------------------------------------------------------------------------------------------------------------------------------
2004 $13.92 24.75% $ 29,171 1.35% 1.94% (0.25)% 221.99%
2003 $12.27 32.04% $ 12,557 1.32% 2.05% (0.26)% 287.39%
2002 (1) $ 9.30 (7.00)%+ $ 7,260 1.35% 3.02% (0.07)% 86.94%
- ------------------------------------------------------------------------------------------------------------------------------------
Turner Technology Fund -- Class I Shares
- ------------------------------------------------------------------------------------------------------------------------------------
2004 $ 5.55 4.52% $ 16,030 1.65% 1.80% (1.50)% 331.52%
2003 $ 5.31 75.25% $ 19,696 1.13% 1.49% (0.97)% 523.75%
2002 $ 3.03 (37.91)% $ 11,662 0.88% 1.43% (0.84)% 734.40%
2001 $ 4.88 (81.12)% $ 25,147 1.21% 1.58% (1.10)% 727.24%
2000 $32.69 149.35% $169,353 1.35% 1.67% (1.10)% 1,340.92%
- ------------------------------------------------------------------------------------------------------------------------------------
Turner Concentrated Growth Fund-- Class I Shares
- ------------------------------------------------------------------------------------------------------------------------------------
2004 $ 5.82 (3.80)% $ 39,109 1.42% 1.57% (0.99)% 498.78%
2003 $ 6.05 50.12% $ 47,004 1.23% 1.60% (0.90)% 762.18%
2002 $ 4.03 (30.03)% $ 29,182 0.30% 1.17% (0.03)% 1,182.61%
2001 $ 5.76 (70.40)% $ 56,803 1.05% 1.32% (0.76)% 1,117.77%
2000 $24.74 98.58% $246,621 1.26% 1.62% (0.90)% 1,590.94%
- ------------------------------------------------------------------------------------------------------------------------------------
Turner New Enterprise Fund -- Class I Shares
- ------------------------------------------------------------------------------------------------------------------------------------
2004 $ 4.52 4.15% $ 10,805 1.18% 1.51% (0.83)% 382.08%
2003 $ 4.34 91.19% $ 13,468 1.16% 1.99% (0.95)% 451.37%
2002 $ 2.27 (31.00)% $ 3,198 0.98% 2.04% (0.92)% 754.09%
2001 (2) $ 3.29 (73.72)% $ 6,144 1.28% 3.13% (1.04)% 758.98%
2000 (3) $12.52 25.20%+ $ 13,750 1.35% 2.87% (0.83)% 83.02%
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
September 30, 2004
1. ORGANIZATION:
Turner Funds (the "Trust"), a Massachusetts business trust, is registered under
the Investment Company Act of 1940, as amended, as an open-end management
investment company with nine active portfolios. The financial statements
included herein are those of the Turner Disciplined Large Cap Growth Fund (the
"Disciplined Large Cap Growth Fund"), the Turner Large Cap Growth Opportunities
Fund (the "Large Cap Growth Opportunities Fund"), the Turner Midcap Growth Fund
(the "Midcap Growth Fund"), the Turner Small Cap Growth Fund (the "Small Cap
Growth Fund"), the Turner Micro Cap Growth Fund (the "Micro Cap Growth Fund"),
the Turner Small Cap Equity Fund, (the "Small Cap Equity Fund"), the Turner
Technology Fund (the "Technology Fund"), the Turner Concentrated Growth Fund
(the "Concentrated Growth Fund") and the Turner New Enterprise Fund (the "New
Enterprise Fund"), each a "Fund" and collectively the "Funds."
Each Fund is registered as a diversified portfolio of the Trust with the
exception of the Disciplined Large Cap Growth Fund, the Large Cap Growth
Opportunities Fund and the Concentrated Growth Fund, each of which are
non-diversified.
The Funds are registered to offer different classes of shares: Class I Shares,
Class II Shares, or both. The assets of each Fund are segregated, and a
shareholder's interest is limited to the Fund in which shares are held. The
Funds' prospectus provides a description of each Fund's investment objectives,
policies, and strategies along with information on the classes of shares
currently being offered.
As of September 30, 2004, the Turner International Opportunities Fund and the
Turner International Discovery Fund are also registered as diversified
portfolios of the Trust, but have not yet commenced operations.
The Micro Cap Growth and Small Cap Growth Funds were closed to new investors on
March 7, 2000 and July 31, 2004 respectively.
2. SIGNIFICANT ACCOUNTING POLICIES:
The following is a summary of the significant accounting policies followed by
the Funds.
USE OF ESTIMATES--The preparation of financial statements in conformity with
U.S. generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities at the date of the financial statements, and the reported amounts
of income and expenses during the reported period. Actual results could
differ from those estimates.
SECURITY VALUATION--Securities listed on a securities exchange, market or
automated quotation system for which quotations are readily available (except
for securities traded on NASDAQ) are valued at the last quoted sale price on
the primary exchange or market (foreign or domestic) on which they are
traded, or, if there is no such reported sale, at the most recent quoted bid
price. For securities traded on NASDAQ, the NASDAQ Official Closing Price
will be used. Prices for most securities held in the Funds are provided daily
by recognized independent pricing agents.If a security price cannot be
obtained from an independent, third-party pricing agent, the Funds seek to
obtain a bid price from at least one independent broker.
Securities for which market prices are not "readily available" are valued in
accordance with Fair Value Procedures established by the Funds' Board of
Trustees (the "Board"). The Funds' Fair Value Procedures are implemented
through a Fair Value Committee (the "Committee") designated by the Board.
Some of the more common reasons that may necessitate that a security be
valued using Fair Value Procedures include: the security's trading has been
halted or suspended; the security has been delisted from a national exchange;
the security's primary trading market is temporarily closed at a time when
under normal conditions it would be open; or the security's primary pricing
source is not able or willing to provide a price. When a security is valued
in accordance with the Fair Value Procedures, the Committee will determine
the value after taking into consideration relevant information reasonably
available to the Committee.
SECURITY TRANSACTIONS AND RELATED INCOME--Security transactions are accounted
for on the date the security is purchased or sold (trade date). Dividend
income is recognized on the ex-dividend date. Costs used in determining
realized gains and losses on the sales of investment securities are those of
the specific securities sold during the respective holding period.
REPURCHASE AGREEMENTS--Securities pledged as collateral for repurchase
agreements are held by the custodian bank until the respective agreements
mature. Provisions of the repurchase agreements ensure that the market value
of the collateral, including accrued interest thereon, is not less than 100%.
In the event of default of the counterparty and the value of the collateral
declines or if the counterparty enters an insolvency proceeding, realization
of the collateral by the Funds may be delayed or limited.
EXPENSES--Expenses that are specifically attributed to one of the Funds are
charged to that Fund. Certain other expenses of the Funds are prorated among
the Funds on the basis of relative daily net assets. Other
60 TURNER FUNDS 2004 ANNUAL REPORT
common expenses of the Trust are allocated among the Funds on the basis of
relative daily net assets.
CLASSES--Class specific expenses are borne by that class. Income, non-class
specific expenses and realized/unrealized gains and losses are allocated to
the respective classes on the basis of the relative daily net assets.
DIVIDENDS AND DISTRIBUTIONS--The Funds declare and distribute net investment
income, if any, annually, as a dividend to shareholders. Any net realized
capital gains on sales of securities for all Funds are distributed to
shareholders at least annually.
3. TRANSACTIONS WITH AFFILIATES:
Certain officers and Trustees of the Trust are also officers of Turner
Investment Partners, Inc. ("Turner") and SEI Investments Global Funds Services
("SEI") and/or SEI Investments Distribution Co. Such officers are paid no fees
by the Trust for serving as officers and trustees of the Trust.
The Trust has entered into an agreement with SEI Investments Distribution Co.,
an affiliate of SEI, to act as an agent in placing repurchase agreements for the
Funds. For its services, SEI Investments Distribution Co. received $1,769 for
the year ended September 30, 2004. Effective October 24, 2003, this Agreement
was discontinued.
Prior to March 15, 2004, Turner Investment Distributors, Inc., a wholly owned
subsidiary of Turner, was the distributor for the Funds. Pursuant to separate
distribution and shareholder servicing agreements, Class II shares of the MidCap
Growth Fund and Small Cap Equity Fund paid Turner Investment Distributors, Inc.
$591 and $20,736, respectively. In addition, certain Funds effected trades
through Turner Investment Distributors, Inc. for security purchase and sales
transactions. Commissions paid on those trades were:
AMOUNT
--------
Disciplined Large Cap Growth Fund $ 64,045
Large Cap Growth Opportunities Fund 12,169
Midcap Growth Fund 524,397
Small Cap Growth Fund 180,040
Micro Cap Growth Fund 211,282
Small Cap Equity Fund 13,714
Technology Fund 156,461
Concentrated Growth Fund 343,583
New Enterprise Fund 128,257
Effective March 15, 2004, Constellation Investment Distribution Company, Inc.
(the "Distributor") provides distribution services and shareholder servicing to
the Funds under separate Distribution and Shareholder Servicing Agreements.
4. ADMINISTRATION, SHAREHOLDER SERVICING, AND DISTRIBUTION AGREEMENTS:
Turner provides administrative services to the Funds under an Administration
Agreement with the Trust. For its services, Turner receives an annual fee of
0.15% of the aggregate average daily net assets of the Trust up to $2 billion
and 0.12% assets over $2 billion. Under a separate Sub-Administration Agreement
between Turner and SEI, SEI provides sub-administrative services to the Trust.
For the year ended September 30, 2004, SEI was paid $912,367 by Turner.
The Disciplined Large Cap Growth, Large Cap Growth Opportunities, Midcap Growth,
Small Cap Equity and Concentrated Growth Funds have adopted a Distribution and
Shareholder Service Plan for their Class II Shares (the "Class II Plan"). Under
the Class II Plan, a Plan adopted pursuant to Rule 12b-1 under the Investment
Company Act of 1940, as amended, the Distributor is entitled to receive
aggregate fees not exceeding 0.75% of each Fund's Class II Shares' average daily
net assets in return for providing a broad range of distribution services.
Currently, the Distributor receives aggregate fees of 0.25% of each Fund's Class
II Shares' average daily net assets. In addition, under the Class II Plan, the
Distributor is entitled to receive aggregate fees not exceeding 0.25% of each
Fund's Class II Shares' average daily net assets in return for providing a broad
range of shareholder services.
DST Systems, Inc. serves as the transfer agent and dividend disbursing agent for
the Funds under a transfer agency agreement with the Trust. The following Funds
reimbursed Turner for amounts paid to third parties that provide sub-transfer
agency and other administrative services to the Funds:
AMOUNT
------------
Disciplined Large Cap Growth Fund $ 47,977
Large Cap Growth Opportunities Fund 3,797
MidCap Growth Fund 1,288,978
Small Cap Growth Fund 286,492
Micro Cap Growth Fund 492,451
Small Cap Equity Fund 45,829
Technology Fund 24,572
Concentrated Growth Fund 20,225
New Enterprise Fund 24,883
5. INVESTMENT ADVISORY AGREEMENT:
The Trust and Turner are parties to an Investment Advisory Agreement dated April
28, 1996 under which Turner receives a fee, that is calculated daily and paid
monthly, based on the average daily net assets of certain Funds. Pursuant to an
Advisory Agreement dated February 28, 2002, Turner Investment Management, LLC,
an affiliate of Turner serves as the investment adviser for the Small Cap Equity
Fund.
TURNER FUNDS 2004 ANNUAL REPORT 61
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
For its services, Turner and Turner Investment Management, LLC receive annual
fees, which are calculated daily and paid monthly, based on average daily net
assets. Turner and Turner Investment Management, LLC have agreed to waive all or
a portion of their fees and to reimburse expenses in order to limit operating
expenses to a specified percentage of the average daily net assets of certain
Funds on an annualized basis. These waivers and reimbursements may be terminated
at any time. Accordingly, the advisory fee and expense caps for certain funds
are as follows:
TOTAL
ADVISORY EXPENSE
FEES CAP
----- ------
Disciplined Large Cap Growth Fund 0.60% 0.75%
Large Cap Growth Opportunities Fund 0.75 1.25
Midcap Growth Fund 0.75 1.25(1)
Small Cap Growth Fund 1.00 1.25
Micro Cap Growth Fund 1.00 1.40
Small Cap Equity Fund(2) 0.85 1.35
(1) REPRESENTS MAXIMUM EXPENSE RATIO FOR CLASS I SHARES WHERE FUNDS OFFER BOTH
CLASS I SHARES AND CLASS II SHARES.
(2) TURNER MANAGEMENT, LLCHAS CONTRACTUALLY AGREED TO REDUCE THE ADVISORY FEE BY
0.10% FROM 0.95% TO 0.85% AND TO KEEP "OTHER" EXPENSES FROM EXCEEDING 0.25%
THROUGH JANUARY 31, 2005.
For the remaining Funds, the advisory fee is comprised of a base fee and a
performance adjustment that increases or decreases the total fee depending upon
the performance of the Fund relative to the Fund's performance benchmark. The
Fund's base fee is accrued daily and paid monthly, based on average net assets
during the performance period. The performance period consists of the current
month plus the previous 11 months.
The performance adjustment is calculated and paid monthly by comparing the
Fund's performance to that of the Fund's performance benchmark over the 12-month
period. The annual performance adjustment is multiplied by the average net
assets of the Fund over the entire performance period, which is then multiplied
by a fraction, the numerator of which is the number of days in the month and the
denominator of which is 365 (366 in leap years). The resulting amount is then
added to (in the case of overperformance) or subtracted from (in the case of
underperformance) the base fee.
In cases where the advisory fee is comprised of a base fee and a performance
adjustment, Turner has voluntarily agreed to waive all or a portion of their
fees and to reimburse expenses in order to keep such Fund's "other expenses"
(excluding distribution fees) from exceeding a specified percentage of the
average daily net assets of the Fund on an annualized basis. Accordingly, the
base advisory fee, annual adjustment rate, over/under performance relative to
the benchmark threshold, and other expense cap are as follows:
BASE ANNUAL OTHER
ADVISORY ADJUSTMENT BENCHMARK EXPENSES
FEE RATE THRESHOLD(1) CAP
------ ------- --------- -------
Technology Fund 1.10% +/-0.40% +/-2.00% 0.50%
Concentrated Growth Fund 1.10 +/-0.40 +/-2.50 0.25
New Enterprise Fund 1.10 +/-0.40 +/-2.50 0.25
(1) SEE THE FUND'S PROSPECTUS AND STATEMENT OF ADDITIONAL INFORMATION FOR MORE
INFORMATION REGARDING THE FUNDS' PERFORMANCE BENCHMARK.
During the year ended September 30, 2004, the Funds' advisory fees were adjusted
in accordance with the policy described above:
BASE NET ADVISER
ADVISER PERFORMANCE FEE BEFORE
FEE ADJUSTMENT WAIVERS
------- ---------- --------
Technology Fund $226,808 $ 22,055 $248,863
Concentrated Growth Fund 527,838 43,153 570,991
New Enterprise Fund 198,466 (26,044) 172,422
6. INVESTMENT TRANSACTIONS:
The cost of security purchases and the proceeds from security sales, other than
short-term investments, for the year ended September 30, 2004, were as follows
(000):
PURCHASES SALES
(000) (000)
---------- ----------
Disciplined Large Cap
Growth Fund $ 151,626 $ 167,679
Large Cap Growth
Opportunities Fund 12,650 11,980
Midcap Growth Fund 1,532,203 1,478,431
Small Cap Growth Fund 339,246 333,497
Micro Cap Growth Fund 424,683 377,699
Small Cap Equity Fund 83,598 70,812
Technology Fund 67,584 73,107
Concentrated Growth Fund 235,876 242,337
New Enterprise Fund 65,431 66,355
7. FEDERAL TAX POLICIES AND INFORMATION:
Each of the Funds is classified as a separate taxable entity for Federal income
tax purposes. Each of the Funds intends to continue to qualify as a separate
"regulated investment company" under the Internal Revenue Code and make the
requisite distributions to shareholders that will be sufficient to relieve it
from Federal income tax and Federal excise tax. Therefore, no Federal tax
provision is required. To the extent that distributions from net investment
income and net realized capital gains exceed amounts reported in the financial
statements, such amounts are reported separately. The amounts of distributions
from net investment income and net realized capital gains are determined in
accordance with Federal income tax regulations, which may differ from those
amounts determined under accounting principles generally accepted in the United
States of America. These book/tax differences are either
62 TURNER FUNDS 2004 ANNUAL REPORT
- --------------------------------------------------------------------------------
temporary or permanent in nature. These differences are primarily due to wash
sales. The character of distributions made during the year from net investment
income or net realized gains, and the timing of distributions where the fiscal
year in which the amounts are distributed may differ from the year that the
income or realized gains (losses) were recorded by the Fund. To the extent these
differences are permanent, adjustments are made to the appropriate equity
accounts in the period that the differences arise.
Accordingly, the following permanent differences have been reclassified to/from
the following accounts during the fiscal year ended September 30, 2004 (000):
UNDISTRIBUTED ACCUMULATED
FUND NET INVESTMENT INCOME NET REALIZED GAIN/(LOSS) PAID-IN-CAPITAL
- ----- --------------------- ------------------------ ---------------
Large Cap Growth Opportunities Fund $ 33 $ -- $ (33)
Midcap Growth Fund 7,574 -- (7,574)
Small Cap Growth Fund 2,148 -- (2,148)
Micro Cap Growth Fund 2,886 (2,886) --
Small Cap Equity Fund 52 (3,104) 3,052
Technology Fund 309 -- (309)
Concentrated Growth Fund 475 -- (475)
New Enterprise Fund 150 -- (150)
The tax character of dividends and distributions declared during the periods
ended September 30, 2004 and September 30, 2003 were as follows (000):
ORDINARY LONG-TERM RETURN OF
INCOME CAPITAL GAIN CAPITAL TOTAL
--------- ------------ --------- --------
Disciplined Large Cap Growth Fund
2004 $ 87 $ -- $-- $ 87
2003 3 -- -- 3
Micro Cap Growth Fund
2004 330 6,184 -- 6,514
2003 -- -- -- --
Small Cap Equity Fund
2004 1,006 310 51 1,367
2003 6 -- -- 6
As of September 30, 2004, the components of distributable earnings (accumulated
losses) on a tax basis were as follows (000):
TOTAL
DISTRIBUTABLE
UNDISTRIBUTED UNDISTRIBUTED CAPITAL POST- EARNINGS
ORDINARY LONG-TERM LOSS OCTOBER UNREALIZED (ACCUMULATED
INCOME CAPITAL GAIN CARRYFORWARD LOSSES APPRECIATION LOSSES)
-------------- ------------- ------------ ------- ------------ ------------
Disciplined Large Cap Growth Fund $ 41 $ -- $ (30,532) $ -- $ 7,379 $ (23,112)
Large Cap Growth Opportunities Fund -- -- (13,390) -- 350 (13,040)
Midcap Growth Fund -- -- (611,073) -- 96,991 (514,082)
Small Cap Growth Fund -- -- (153,296) -- 29,443 (123,853)
Micro Cap Growth Fund 3,460 35,481 -- -- 70,408 109,349
Small Cap Equity Fund -- -- -- (200) 1,843 1,643
Technology Fund -- -- (130,561) -- 435 (130,126)
Concentrated Growth Fund -- -- (157,347) (3,566) 427 (160,486)
New Enterprise Fund -- -- (8,383) (2,194) 914 (9,663)
Post-October losses represent losses realized on investment transactions from
November 1, 2003 through September 30, 2004 that, in accordance with Federal
income tax regulations, a Fund may elect to defer and treat as having arisen in
the following year. For Federal income tax purposes, capital loss carryforwards
may be carried forward and applied against future capital gains.
TURNER FUNDS 2004 ANNUAL REPORT 63
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
At September 30, 2004, the Funds had capital loss carryforwards available to
offset future realized capital gains through the indicated expiration dates
(000):
EXPIRING SEPTEMBER 30,
---------------------------------------------------------------------
2009 2010 2011 TOTAL
------- --------- --------- ---------
Disciplined Large Cap Growth Fund $ -- $ 15,394 $ 15,138 $ 30,532
Large Cap Growth Opportunities Fund 1,852 8,526 3,012 13,390
Midcap Growth Fund -- 481,574 129,499 611,073
Small Cap Growth Fund -- 127,301 25,995 153,296
Technology Fund 13,991 108,584 7,986 130,561
Concentrated Growth Fund 11,968 132,529 12,850 157,347
New Enterprise Fund 815 7,183 385 8,383
During the year ended September 30, 2004, the Disciplined Large Cap Growth Fund,
Large Cap Growth Opportunities Fund, Midcap Growth Fund, Small Cap Growth Fund,
Technology Fund, Concentrated Growth Fund, and New Enterprise Fund utilized
capital loss carryforwards of $3,360,681, $175,954, $79,483,450, $29,946,092,
$2,490,308, $2,985,261, and $835,882, respectively, to offset capital gains.
At September 30,2004, the total cost of securities for Federal income tax
purposes and the aggregate gross unrealized appreciation and depreciation for
the securities held by the Funds were as follows (000):
NET
FEDERAL UNREALIZED UNREALIZED UNREALIZED
FUND TAX COST APPRECIATION DEPRECIATION APPRECIATION
- ---- -------- ------------ ------------ ------------
Disciplined Large Cap Growth Fund $ 64,443 $ 8,235 $ (856) $ 7,379
Large Cap Growth Opportunities Fund 4,172 421 (71) 350
Midcap Growth Fund 814,351 118,499 (21,508) 96,991
Small Cap Growth Fund 237,544 37,432 (7,989) 29,443
Micro Cap Growth Fund 457,748 78,113 (7,705) 70,408
Small Cap Equity Fund 30,059 2,270 (427) 1,843
Technology Fund 16,148 1,440 (1,005) 435
Concentrated Growth Fund 41,207 2,462 (2,035) 427
New Enterprise Fund 11,691 1,261 (347) 914
8. CONCENTRATIONS/RISKS:
Certain Funds invest a high percentage of their assets in specific sectors of
the market in order to achieve a potentially greater investment return. As a
result, the Funds may be more susceptible to economic, political, and regulatory
developments in a particular sector of the market, positive or negative, and may
experience increased volatility on the Fund's net asset value and magnified
effect on the total return.
The Funds enter into contracts that contain a variety of indemnifications. The
Funds' maximum exposure under these arrangements is unknown. However, the Funds
have not had prior claims or losses pursuant to these contracts and expect the
risk of loss to be remote.
9. LOANS OF PORTFOLIO SECURITIES:
The Funds may lend securities in their portfolio pursuant to a securities
lending agreement ("Lending Agreement") with Goldman Sachs & Co. Unless
otherwise agreed, security loans made pursuant to the Lending Agreement are
required at all times to be secured by collateral equal to at least 102% of the
market value of the securities loaned. Cash collateral received is invested
pursuant to the terms of the Lending Agreement in the Boston Global Investment
Trust -- Quality Portfolio, a pooled investment fund. All such investments are
made at the risk of the Funds and, as such, the Funds are liable for investment
losses. The Funds receive an annual fee for their participation in the Lending
Agreement based on projected lending activity.
In the event of bankruptcy of the borrower, realization/retention of the
collateral may be subject to legal proceedings.
10. IN-KIND TRANSFER OF SECURITIES:
On June 24, 2004, the shareholders of the Small Cap Equity Fund redeemed
2,313,555 shares of beneficial interest in exchange for portfolio assets. The
securities were transferred at their current value of $28,634,186 on the date of
the transaction with a gain of $3,104,328.
64 TURNER FUNDS 2004 ANNUAL REPORT
<page>
- --------------------------------------------------------------------------------
11. CHANGE IN INDEPENDENT PUBLIC ACCOUNTING FIRM (UNAUDITED)
Ernst & Young LLP ("E&Y") was replaced as the Turner Funds' (the "Trust")
independent auditors effective November 19, 2004. The Trust's Audit Committee
participated in, and approved, the decision to change auditors. E&Y's report on
the Trust's financial statements for the fiscal years ended September 30, 2004
and September 30, 2003 contained no adverse opinion or disclaimer of opinion nor
were they qualified or modified as to uncertainty, audit scope or accounting
principles. During the Trust's fiscal years ended September 30, 2004 and
September 30, 2003 and through November 19, 2004, (i) there were no
disagreements with E&Y on any matter of accounting principles or practices,
financial statement disclosure or auditing scope or procedure, which
disagreements, if not resolved to the satisfaction of E&Y, would have caused it
to make reference to the subject matter of the disagreements in connection with
its reports on the Trust's financial statements for such years, and (ii) there
were no "reportable events" of the kind described in Item 304(a)(1)(v) of
Regulation S-K under the Securities Exchange Act of 1934, as amended.
On November 19, 2004, the Trust by action of its Board of Trustees upon the
recommendation of the Trust's Audit Committee engaged KPMG LLP as the
independent registered public accounting firm to audit the Trust's financial
statements for the fiscal year ending September 30, 2005. During the Trust's
fiscal years ended September 30, 2004 and September 30, 2003 and through
November 19, 2004, neither the Trust, its portfolios nor anyone on their behalf
has consulted with KPMG LLP on items which (i) concerned the application of
accounting principles to a specified transaction, either completed or proposed,
or the type of audit opinion that might be rendered on the Trust's financial
statements; or (ii) concerned the subject of a disagreement (as defined in
paragraph (a)(1)(iv) of Item 304 of Regulation S-K) or reportable events (as
described in paragraph (a)(1)(iv) of said Item 304).
TURNER FUNDS 2004 ANNUAL REPORT 65
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
- --------------------------------------------------------------------------------
TO THE SHAREHOLDERS AND BOARD OF TRUSTEES
TURNER FUNDS
We have audited the accompanying statements of net assets of Turner Disciplined
Large Cap Growth Fund, Turner Large Cap Growth Opportunities Fund, Turner Midcap
Growth Fund, Turner Small Cap Growth Fund, Turner Micro Cap Growth Fund, Turner
Small Cap Equity Fund, and Turner Technology Fund and the statements of assets
and liabilities, including the schedules of investments, of Turner Concentrated
Growth Fund and Turner New Enterprise Fund, (collectively, the "Turner Funds")
as of September 30, 2004, and the related statements of operations for the year
then ended, the statements of changes in net assets for each of the two years in
the period then ended, and the financial highlights for each of the periods
presented therein, except the financial highlights for the years ended September
30, 2001 and September 30, 2000 for the Turner Large Cap Growth Opportunities
Fund. These financial statements and financial highlights are the responsibility
of the Funds' management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audits. The financial
highlights for the years ended September 30, 2001 and September 30, 2000 for the
Turner Large Cap Growth Opportunities Fund were audited by other auditors whose
report dated November 13, 2001 expressed an unqualified opinion on those
financial highlights.
We conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements and financial highlights are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements and financial highlights. Our procedures
included confirmation of securities owned as of September 30, 2004, by
correspondence with the custodian and brokers or by other appropriate auditing
procedures where replies from brokers were not received. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of each
of the respective portfolios constituting the Turner Funds at September 30,
2004, the results of their operations for the year then ended, the changes in
their net assets for each of the two years in the period then ended, and their
financial highlights for each of the periods presented therein, except for the
financial highlights for the years ended September 30, 2000 and September 30,
2001 for the Turner Large Cap Growth Opportunities Fund which were audited by
other auditors, in conformity with U.S. generally accepted accounting
principles.
/S/ ERNST & YOUNG LLP
Philadelphia, Pennsylvania
November 3, 2004
66 TURNER FUNDS 2004 ANNUAL REPORT
NOTICE TO SHAREHOLDERS (Unaudited)
- --------------------------------------------------------------------------------
For shareholders that do not have a September 30th, 2004 tax year end, this
notice is for informational purposes only. For shareholders with a September
30th, 2004 year end, please consult your tax advisor as to the pertinance of
this notice. For the fiscal year ended September 30th, 2004, each portfolio is
designating the following items with regard to distributions paid during the
year.
DIVIDENDS
LONG LONG QUALIFYING
TERM TERM FOR
(20% RATE) (15% RATE) CORPORATE
CAPITAL CAPITAL ORDINARY TAX- DIVIDENDS QUALIFYING
GAIN GAIN INCOME EXEMPT TOTAL RECEIVABLE DIVIDENDS
DISTRIBUTION DISTRIBUTION DISTRIBUTIONS INTEREST DISTRIBUTIONS DEDUCTION(1) INCOME(2)
--------------- -------------- -------------- -------- -------------- ------------- ---------
Turner Disciplined Large
Cap Growth 0.00% 0.00% 100.00% 0.00% 100.00% 100.00% 100.00%
Turner Large Cap
Growth Opportunities 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
Turner MidCap Growth
Fund 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
Turner Small Cap Growth 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
Turner Micro Cap
Growth Fund 0.00% 94.93% 5.07% 0.00% 100.00% 17.02% 16.82%
Turner Small Cap Equity 0.00% 23.57% 76.43% 0.00% 100.00% 23.70% 13.84%
Turner Technology Fund 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
Turner Concentrated
Growth Fund 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
Turner New Enterprise
Fund 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
(1) Qualifying dividends represent dividends which qualify for the corporate
dividends received deduction and is reflected as a percentage of "Ordinary
Income Distributions".
(2) The percentage in this column represents the amount of "Qualifying Dividend
Income" as created by the Jobs and Growth Tax Relief Reconciliation Act of
2003 and is reflected as a percentage of "Ordinary Income Distribuions".
It is the intention of each of the aforementioned funds to designate the
maximum amount permitted by law.
The information reported herein may differ from the information and
distributions taxable to the Shareholders for the calendar year ending December
31, 2004. Complete information will be computed and reported in conjunction with
your 2004 Form 1099-DIV.
TURNER FUNDS 2004 ANNUAL REPORT 67
TRUSTEES AND OFFICERS OF THE TRUST (Unaudited)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
INTERESTED TRUSTEE*
- --------------------------------------------------------------------------------
NAME, ADDRESS, AND AGE
Robert E. Turner 1205 Westlakes Drive Suite 100 Berwyn, PA 19312 (48)
POSITION HELD WITH THE FUND
Trustee
TERM OF OFFICE AND LENGTH OF TIME SERVED (2)
Trustee since 1996
PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS
Chairman and Chief Investment Officer of Turner since 1990.
NUMBER OF PORTFOLIOS IN COMPLEX OVERSEEN BY TRUSTEE
9
OTHER DIRECTORSHIPS HELD
Bradley University, Episcopal Academy,
- -------------------------------------------------------------------------------
*Mr. Turner is deemed to be an "Interested Trustee" by virtue of his
relationship with Turner Investment Partners, Inc.
- --------------------------------------------------------------------------------
NON-INTERESTED TRUSTEES (1)
- --------------------------------------------------------------------------------
NAME, ADDRESS, AND AGE
Alfred C. Salvato (46)
POSITION HELD WITH THE FUND
Trustee
TERM OF OFFICE AND LENGTH OF TIME SERVED (2)
Trustee since 1996
PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS
Associate Vice President and Treasurer, Thomas Jefferson University since 2003,
Treasurer since 1995.
NUMBER OF PORTFOLIOS IN COMPLEX OVERSEEN BY TRUSTEE
9
OTHER DIRECTORSHIPS HELD
Trustee, Constellation Funds
- --------------------------------------------------------------------------------
NAME, ADDRESS, AND AGE
Janet F. Sansone (59)
POSITION HELD WITH THE FUND
Trustee
TERM OF OFFICE AND LENGTH OF TIME SERVED (2)
Trustee since 1997
PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS
Self-employed. Consultant since 1999. Senior Vice President of Human Resources
of Frontier Corporation (telecommunications company), (1993-1999).
NUMBER OF PORTFOLIOS IN COMPLEX OVERSEEN BY TRUSTEE
9
OTHER DIRECTORSHIPS HELD
Trustee, Constellation Funds
- --------------------------------------------------------------------------------
NAME, ADDRESS, AND AGE
Dr. John T. Wholihan (66)
POSITION HELD WITH THE FUND
Trustee
TERM OF OFFICE AND LENGTH OF TIME SERVED (2)
Trustee since 1996
PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS
Professor and Dean, Loyola Marymount University, since 1984. Director, TDK
Mediactive.
NUMBER OF PORTFOLIOS IN COMPLEX OVERSEEN BY TRUSTEE
9
OTHER DIRECTORSHIPS HELD
N/A
- --------------------------------------------------------------------------------
EXECUTIVE OFFICERS
- --------------------------------------------------------------------------------
NAME, ADDRESS, AND AGE
Thomas R. Trala, Jr. 1205 Westlakes Drive Suite 100 Berwyn, PA 19312 (37)
POSITION HELD WITH THE FUND
President
TERM OF OFFICE AND LENGTH OF TIME SERVED (2)
President since 2004
PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS
Chief Operating Officer of Turner since 2004 and Chief Financial Officer since
1995.
NUMBER OF PORTFOLIOS IN COMPLEX OVERSEEN BY TRUSTEE
N/A
OTHER DIRECTORSHIPS HELD
N/A
- --------------------------------------------------------------------------------
NAME, ADDRESS, AND AGE
Peter Golden SEI Investments, One Freedom Valley Drive Oaks, PA 19456 (40)
POSITION HELD WITH THE FUND
Controller and Chief Financial Officer
TERM OF OFFICE AND LENGTH OF TIME SERVED (2)
Controller and Chief Financial Officer since 2001
PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS
Director of Fund Accounting of SEI Investments since June 2001. Previously, Vice
President of Fund Administration, J.P. Morgan Chase & Co., March 2000 to April
2001; Vice President, Fund and Pension Accounting, Chase Manhattan Bank, June
1997 to March 2000.
NUMBER OF PORTFOLIOS IN COMPLEX OVERSEEN BY TRUSTEE
N/A
OTHER DIRECTORSHIPS HELD
N/A
- --------------------------------------------------------------------------------
NAME, ADDRESS, AND AGE
Lydia A. Gavalis SEI Investments, One Freedom Valley Drive Oaks, PA 19456 (40)
POSITION HELD WITH THE FUND
Vice President and Assistant Secretary
TERM OF OFFICE AND LENGTH OF TIME SERVED (2)
Vice President and Assistant Secretary since 1999
PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS
Vice President and Assistant Secretary of SEI Investments since 1998. Assistant
General Counsel and Director of Arbitration, Philadelphia Stock Exchange,
1989-1998.
NUMBER OF PORTFOLIOS IN COMPLEX OVERSEEN BY TRUSTEE
N/A
OTHER DIRECTORSHIPS HELD
N/A
- --------------------------------------------------------------------------------
NAME, ADDRESS, AND AGE
Timothy D. Barto SEI Investments, One Freedom Valley Drive Oaks, PA 19456 (36)
POSITION HELD WITH THE FUND
Vice President and Assistant Secretary
TERM OF OFFICE AND LENGTH OF TIME SERVED (2)
Vice President and Assistant Secretary since 2000
PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS
Vice President and Assistant Secretary of SEI Investments since December 1999.
Associate at Dechert Price & Rhoads (1997-1999). Associate at Richter, Miller &
Finn (1994-1997).
NUMBER OF PORTFOLIOS IN COMPLEX OVERSEEN BY TRUSTEE
N/A
OTHER DIRECTORSHIPS HELD
N/A
- --------------------------------------------------------------------------------
(1) Each non interested trustee may be contacted by writing to the trustee, c/o
Turner Funds 1205 Westlakes Drive Suite 100 Berwyn, PA 19312 Attn: Brian F.
McNally
(2) Each trustee serves until his/her respective successor has been
dually elected and qualified. Each officer serves a 1 year term.
68 TURNER FUNDS 2004 ANNUAL REPORT
- --------------------------------------------------------------------------------
EXECUTIVE OFFICERS (CONTINUED)
- --------------------------------------------------------------------------------
Christine M. McCullough SEI Investments, One Freedom Valley Drive Oaks, PA 19456
(43)
POSITION HELD WITH THE FUND
Vice President and Assistant Secretary
TERM OF OFFICE AND LENGTH OF TIME SERVED (2)
Vice President and Assistant Secretary since 2000
PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS
NUMBER OF PORTFOLIOS IN COMPLEX OVERSEEN BY TRUSTEE
Vice President and Assistant Secretary of SEI Investments since December 1999.
Associate at White and Williams LLP (1991-1999). Associate at Montgomery,
McCracken, Walker & Rhoads (1990-1991).
NUMBER OF PORTFOLIOS IN COMPLEX OVERSEEN BY TRUSTEE
N/A
OTHER DIRECTORSHIPS HELD
N/A
- --------------------------------------------------------------------------------
NAME, ADDRESS, AND AGE
Brian McNally 1205 Westlakes Drive Suite 100 Berwyn, PA 19312 (46)
POSITION HELD WITH THE FUND
Vice President, Chief Compliance Officer and Secretary
TERM OF OFFICE AND LENGTH OF TIME SERVED (2)
Vice President since 2002 Chief Compliance Officer and Secretary since 2004
PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS
NUMBER OF PORTFOLIOS IN COMPLEX OVERSEEN BY TRUSTEE
Chief Legal and Compliance Officer. Previously Assistant General Counsel with
Bank of America (September 1997- July 2002).
NUMBER OF PORTFOLIOS IN COMPLEX OVERSEEN BY TRUSTEE
N/A
OTHER DIRECTORSHIPS HELD
N/A
- --------------------------------------------------------------------------------
The Trust's Statement of Additional Information ("SAI") includes additional
information about the Trustees and Officers. The SAI may be obtained without
charge by calling 1-800-224-6312.
TURNER FUNDS 2004 ANNUAL REPORT 69
DISCLOSURE OF FUND EXPENSES (Unaudited)
- --------------------------------------------------------------------------------
All mutual funds have operating expenses. As a shareholder of a fund, your
investment is affected by these ongoing costs, which include (among others)
costs for portfolio management, distribution (12B-1) and/or shareholder services
and other expenses. It is important for you to understand the impact of these
costs on your investment returns. Operating expenses such as these are deducted
from the fund's gross income and directly reduce your final investment return.
These expenses are expressed as a percentage of the fund's average net assets;
this percentage is known as the fund's expense ratio.
The following examples use the expense ratio and are intended to help you
understand the ongoing costs (in dollars) of investing in your fund and to
compare these costs with those of other mutual funds. The examples are based on
an investment of $1,000 made at the beginning of the period shown and held for
the entire period.
The table below illustrates your fund's costs in two ways:
o ACTUAL FUND RETURN. This section helps you to estimate the actual expenses
after fee waivers that your fund incurred over the period. The "Expenses Paid
During Period" column shows the actual dollar expense cost incurred by a $1,000
investment in the fund, and the "Ending Account Value" number is derived from
deducting that expense cost from the fund's gross investment return.
You can use this information, together with the actual amount you invested in
the fund, to estimate the expenses you paid over that period. Simply divide your
actual account value by $1,000 to arrive at a ratio (for example, an $8,600
account value divided by $1,000 = 8.6), then multiply that ratio by the number
shown for your fund under "Expenses Paid During Period".
o HYPOTHETICAL 5% RETURN. This section helps you compare your fund's costs with
those of other mutual funds. It provides information about hypothetical account
values and expenses based on a fund's actual expense ratio (column 3) and an
assumed rate of return of 5% per year before expenses, which is not the fund's
actual return. This section is useful in making comparisons because the
Securities and Exchange Commission requires all mutual funds to make this 5%
calculation. You can assess your fund's comparative cost by comparing the
hypothetical result for your fund in the "Expense Paid During Period" column
with those that appear in the same charts in the shareholder reports for other
funds.
NOTE: Because the return is set at 5% for comparison purposes -- NOT your fund's
actual return -- the hypothetical account values and expenses may not be used to
estimate your actual ending account balance or expenses you paid for the period.
BEGINNING ENDING EXPENSES
ACCOUNT ACCOUNT ANNUALIZED PAID
VALUE VALUE EXPENSE DURING
3/31/04 9/30/04 RATIOS PERIOD*
- --------------------------------------------------------------------------------------------------------
Turner Disciplined Large Cap Growth Fund
- --------------------------------------------------------------------------------------------------------
Actual Fund Return $1,000.00 $ 943.40 0.75% $3.64
Hypothetical Fund
Return 1,000.00 1,021.25 0.75 3.79
- --------------------------------------------------------------------------------------------------------
Turner Large Cap Growth Opportunities Fund
- --------------------------------------------------------------------------------------------------------
Actual Fund Return 1,000.00 924.20 1.25 6.01
Hypothetical Fund
Return 1,000.00 1,018.75 1.25 6.31
- --------------------------------------------------------------------------------------------------------
Turner Midcap Growth Fund -- Class I Shares
- --------------------------------------------------------------------------------------------------------
Actual Fund Return 1,000.00 924.30 1.20 5.77
Hypothetical Fund
Return 1,000.00 1,019.00 1.20 6.06
- --------------------------------------------------------------------------------------------------------
Turner Midcap Growth Fund -- Class II Shares
- --------------------------------------------------------------------------------------------------------
Actual Fund Return 1,000.00 922.40 1.71 8.22
Hypothetical Fund
Return 1,000.00 1,016.45 1.71 8.62
- --------------------------------------------------------------------------------------------------------
Turner Small Cap Growth Fund
- --------------------------------------------------------------------------------------------------------
Actual Fund Return 1,000.00 963.00 1.25 6.13
Hypothetical Fund
Return 1,000.00 1,018.75 1.25 6.31
- --------------------------------------------------------------------------------------------------------
BEGINNING ENDING EXPENSES
ACCOUNT ACCOUNT ANNUALIZED PAID
VALUE VALUE EXPENSE DURING
3/31/04 9/30/04 RATIOS PERIOD*
- --------------------------------------------------------------------------------------------------------
Turner Micro Cap Growth Fund
- --------------------------------------------------------------------------------------------------------
Actual Fund Return $1,000.00 $1,009.90 1.42% $7.14
Hypothetical Fund
Return 1,000.00 1,017.90 1.42 7.16
- --------------------------------------------------------------------------------------------------------
Turner Small Cap Equity Fund
- --------------------------------------------------------------------------------------------------------
Actual Fund Return 1,000.00 996.40 1.35 6.74
Hypothetical Fund
Return 1,000.00 1,018.25 1.35 6.81
- --------------------------------------------------------------------------------------------------------
Turner Technology Fund
- --------------------------------------------------------------------------------------------------------
Actual Fund Return 1,000.00 883.80 1.63 7.68
Hypothetical Fund
Return 1,000.00 1,016.85 1.63 8.22
- --------------------------------------------------------------------------------------------------------
Turner Concentrated Growth Fund
- --------------------------------------------------------------------------------------------------------
Actual Fund Return 1,000.00 853.40 1.41 6.53
Hypothetical Fund
Return 1,000.00 1,017.95 1.41 7.11
- --------------------------------------------------------------------------------------------------------
Turner New Enterprise Fund
- --------------------------------------------------------------------------------------------------------
Actual Fund Return 1,000.00 862.60 1.47 6.85
Hypothetical Fund
Return 1,000.00 1,017.65 1.47 7.41
- --------------------------------------------------------------------------------------------------------
*Expenses are equal to the Fund's annualized expense ratio multiplied by the
average account value over the period, multiplied by 183/366 (to reflect
the one-half year period from 3/31/04-9/30/04)
70 TURNER FUNDS 2004 ANNUAL REPORT
THIS PAGE WAS INTENTIONALLY LEFT BLANK
TURNER FUNDS 2004 ANNUAL REPORT 71
- --------------------------------------------------------------------------------
TURNER FUNDS
TURNER FUNDS TRUSTEES
ALFRED C. SALVATO
Treasurer
Thomas Jefferson University Health Care Pension Fund
JANET F. SANSONE
Consultant
ROBERT E. TURNER
Chairman and Chief Investment Officer
Turner Investment Partners, Inc.
DR. JOHN T. WHOLIHAN
Professor and Dean, College of Business
Loyola Marymount University
INVESTMENT ADVISERS
TURNER INVESTMENT PARTNERS, INC.
TURNER INVESTMENT MANAGEMENT, LLC
Berwyn, Pennsylvania
DISTRIBUTOR
CONSTELLATION INVESTMENT DISTRIBUTION
COMPANY, INC.
Berwyn, Pennsylvania
ADMINISTRATOR
TURNER INVESTMENT PARTNERS, INC.
Berwyn, Pennsylvania
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
ERNST & YOUNG LLP
Philadelphia, Pennsylvania
THIS REPORT WAS PREPARED FOR SHAREHOLDERS OF THE TURNER FUNDS. IT MAY BE
DISTRIBUTED TO OTHERS ONLY IF PRECEDED OR ACCOMPANIED BY A TURNER FUNDS'
PROSPECTUS, WHICH CONTAINS DETAILED INFORMATION. ALL TURNER FUNDS ARE OFFERED BY
PROSPECTUS ONLY.
Beginning with the fiscal quarter ended December 31, 2004, Turner Funds will
file its complete schedule of portfolio holdings with the Securities and
Exchange Commission for the first and third quarters of each fiscal year on Form
N-Q within sixty days after the end of the period. The Fund's Forms N-Q will be
available on the Commission's website at http://www.sec.gov, and may be reviewed
and copied at the Commission's Public Reference Room in Washington, DC.
Information on the operation of the Public Reference Room may be obtained by
calling 1-800-SEC-0330.
The Board of Trustees of the Turner Funds has delegated responsibility for
decisions regarding proxy voting for securities held by each Fund to Turner
Investment Management, LLC ("TIM") (with respect to the Small Cap Equity Fund
only) and to Turner Investment Partners, Inc. (with respect to each other Fund).
TIM and Turner Investment Partners, Inc., will vote such proxies in accordance
with their respective proxy policies and procedures, which are included in
Appendix B to the SAI. The Board of Trustees will periodically review each
Fund's proxy voting record.
A description of the policies and procedures that the Funds use to determine how
to vote proxies relating to portfolio securities, as well as information
relating to how the Fund voted proxies relating to portfolio securities during
the most recent 12-month period ended June 30, is available (i) via the Funds'
website, www.turnerinvestments.com and (ii) on the Commission's website at
http://www.sec.gov.
72 TURNER FUNDS 2004 ANNUAL REPORT
[BLANK PAGE]
[TURNER LOGO OMITTED]
TURNER FUNDS
P.O. Box 219805
Kansas City, MO 64121-9805
Telephone: 1-800-224-6312
Email: mutualfunds@turnerinvestments.com
Web Site: www.turnerinvestments.com
TUR-AR-001-0301
Item 2. Code of Ethics.
The registrant has adopted a code of ethics that applies to the registrant's
principal executive officer, principal financial officer and principal
accounting officer.
Item 3. Audit Committee Financial Expert.
The Board of Trustees of the Turner Funds has determined that the Board's Audit
Committee does not have an "audit committee financial expert," as the Securities
and Exchange Commission has defined that term. After carefully considering all
of the factors involved in the definition of "audit committee financial expert,"
the Board determined that none of the members of the audit committee met all
five qualifications in the definition, although some members of the Audit
Committees met some of the qualifications. The Board also determined that while
the Audit Committee members have general financial expertise, given the size and
types of the Turner Funds and in light of the nature of the accounting and
valuation issues they have presented over the past several years, it did not
appear that the Audit Committee members lacked any necessary skill to serve on
the Audit Committee.
Item 4. Principal Accountant Fees and Services.
Fees billed by Ernst & Young, LLP Related to the Trust
Ernst & Young, LLP billed the Trust aggregate fees for services rendered to the
Trust for the last two fiscal years as follows:
(a) Audit Fees
Audit fees for the Turner Funds totaled $146,700 in 2004 and $356,000
in 2003, including fees associated with the annual audits and filing of the
Fund's N-1A.
(b) Audit Related Fees
None
(c) Tax Fees
None
(d) Other Fees
None
(e)(1) Not Applicable
(e)(2) Percentage of fees billed applicable to non-audit services pursuant to
waiver of pre-approval requirement were as follows:
---------------------------- ----------------- ----------------
2004 2003
---------------------------- ----------------- ----------------
---------------------------- ----------------- ----------------
Audit-Related Fees 0.00% 0.00%
---------------------------- ----------------- ----------------
---------------------------- ----------------- ----------------
Tax Fees 0.00% 0.00%
---------------------------- ----------------- ----------------
---------------------------- ----------------- ----------------
All Other Fees 0.00% 0.00%
---------------------------- ----------------- ----------------
(f) Not Applicable
(g) In addition to the fees listed above, the aggregate non-audit fees for the
Funds and all affiliates, as defined, totaled approximately $170,250 in 2004 and
$229,512 in 2003. These fees are primarily for tax compliance and other advisory
services to the advisor, its subsidiaries, and other investment
companies/partnerships in the investment company complex.
(h) The Audit Committee also is required to pre-approve services to certain
entities to the extent that the services are determined to have a direct impact
on the operations or financial reporting of the Funds. This includes services
rendered to the advisor (excluding sub-advisors) and any entity controlling,
controlled by or under common control with the advisor that provides ongoing
services to the registrant (hereinafter referred to as "affiliates"). There were
no services provided to affiliates requiring pre-approval by the Audit
Committee.
Item 5. Audit Committee of Listed Registrants.
Not applicable to open-end management investment companies.
Item 6. Schedule of Investments
Not applicable.
Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End
Management Investment Companies.
Not applicable to open-end management investment companies.
Item 8. Portfolio Managers of Closed-End Management Investment Companies
Not applicable. Effective for closed-end management investment companies for
fiscal years ending on or after December 31, 2005
Item 9. Purchases of Equity Securities by Closed-End Management Company and
Affiliated Purchasers.
Not applicable to open-end management investment companies.
Item 10. Submission of Matters to a Vote of Security Holders.
There have been no material changes to the procedures by which shareholders may
recommend nominees to the Registrant's board of directors since the Registrant's
last proxy solicitation.
Item 11. Controls and Procedures.
(a) The certifying officers, whose certifications are included herewith, have
evaluated the registrant's disclosure controls and procedures within 90 days of
the filing date of this report. In their opinion, based on their evaluation, the
registrant's disclosure controls and procedures are adequately designed, and are
operating effectively to ensure, that information required to be disclosed by
the registrant in the reports it files or submits under the Securities Exchange
Act of 1934 is recorded, processed, summarized and reported within the time
periods specified in the Securities and Exchange Commission's rules and forms.
(b) There were no significant changes in the registrant's internal control over
financial reporting that occurred during the registrant's last fiscal half-year
that has materially affected, or is reasonably likely to materially affect, the
registrants internal control over financial reporting.
Items 12. Exhibits.
(a)(1) Code of Ethics attached hereto.
(a)(2) A separate certification for the principal executive officer and the
principal financial officer of the registrant as required by Rule 30a-2(a) under
the Investment Company Act of 1940, as amended (17 CFR 270.30a-2(a)), are filed
herewith.
(b) Officer certifications as required by Rule 30a-2(b) under the Investment
Company Act of 1940, as amended (17 CFR 270.30a-2(b)) also accompany this filing
as an Exhibit.
SIGNATURES
Pursuant to the requirements of the securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
(Registrant) Turner Funds
By (Signature and Title)* \s\ Thomas R. Trala, Jr.
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Thomas R. Trala, Jr., President and CEO
Date November 26, 2004
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By (Signature and Title)* \s\ Peter J. Golden
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Peter J. Golden, Controller and CFO
Date November 26, 2004