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, 2005
Date of reporting period: September 30, 2005
Item 1. Reports to Stockholders.
TURNER FUNDS
ANNUAL REPORT
September 30, 2005
GROWTH FUNDS
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Turner Large Cap Growth Fund
Turner Core Growth Fund
Turner Strategic Growth 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
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[BLANK PAGE]
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CONTENTS
2 Letter to Shareholders
6 Total returns of Turner Funds
8 Investment review:
Turner Large Cap Growth Fund
9 Investment review:
Turner Core Growth Fund
10 Investment review:
Turner Strategic Growth Fund
11 Investment review:
Turner Midcap Growth Fund
12 Investment review:
Turner Small Cap Growth Fund
13 Investment review:
Turner Micro Cap Growth Fund
14 Investment review:
Turner Small Cap Equity Fund
15 Investment review:
Turner Technology Fund
16 Investment review:
Turner Concentrated Growth Fund
17 Investment review:
Turner New Enterprise Fund
18 Financial Statements
68 Notes to Financial Statements
73 Report of Independent Registered Public Accounting Firm
74 Board of Trustees Considerations in Approving the Advisory Agreement
75 Notice to Shareholders
76 Trustees and Officers of the Trust
77 Disclosure of Fund Expenses
TURNER FUNDS
As of September 30, 2005 the Turner Funds offered a series of ten mutual funds
to individual and institutional investors. Except for the Turner Core Growth
Fund, Class I, which is for institutional investors only and requires a $250,000
minimum initial investment, the minimum initial investment in a Turner Fund for
regular accounts is $2,500 and $2,000 for individual retirement accounts.
Turner Investment Partners, Inc., based in Berwyn, Pennsylvania, serves as the
investment adviser for the Funds (other than the Turner Small Cap Equity Fund.)
Turner Investment Partners, Inc., founded in 1990, invests approximately $17
billion in equity portfolios on behalf of individuals and institutions. Turner
Investment Management, LLC, an affiliate of Turner Investment Partners, Inc.,
serves as the investment adviser for the Turner Small Cap Equity Fund.
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 2005 ANNUAL REPORT 1
LETTER TO SHAREHOLDERS
TO OUR SHAREHOLDERS
If brevity is the soul of wit, it also is the essence of good news. IT'S A BABY
GIRL. CONGRATULATIONS, YOU'RE PROMOTED. HONEY, WE WON THE SUPER LOTTO.
So, to get to the brief and happy point: the stock market rose smartly for the
12-month period ended September 30, 2005, and most of our stock funds rose even
more.
Specifically, all 10 of our growth, core, and sector/specialty funds recorded
double-digit gains. And eight of the 10 handily beat their benchmarks, by
margins of 2.25 percentage points or more.
THE STOCK MARKET STALLED AT TIMES
However, the stock market in which our funds produced those results didn't rise
with the steady consistency of an elevator throughout the period. In fact, at
times the market resembled a STALLED elevator; the market surged robustly in the
first three months of the period and recorded a gain in the final three months,
sandwiched between a lackluster six-month stretch. For the entire 12-month
period, the S&P 500 Index was up 12.25%, an above-average result by historical
standards. But if you subtract the results of the three months at both the
beginning and end of the period, the S&P 500 Index would have actually been DOWN
0.81%.
As is often the case, the market gave investors inclined to wring their hands
over negative economic buzz plenty of reasons to fret. A hoary Wall Street
cliche is that stocks climb a wall of worry. If so, the wall of worry in the
past 12 months was composed of many stones: energy prices hit record highs,
Hurricanes Rita and Katrina pounded the Gulf Coast states to further impair
tight energy supplies, the inflation rate accelerated, the economy slowed,
consumer spending weakened, terrorist attacks were waged in London and Egypt,
the budget and trade deficits swelled, and the Federal Reserve hiked short-term
interest rates eight times.
In our judgment, the market was able to scale that wall of worry mainly because
of a dazzling show of earnings growth. Corporate America has gone on a profit
tear the likes of which hasn't been seen in modern times. If the companies in
the S&P 500 Index report earnings increases of at least 10% for the third
quarter over the same period last year, it will mark the 14th consecutive
quarter of double-digit earnings growth -- a record that may be akin to Joe
DiMaggio's fabled 56-game hitting streak in baseball in 1941. This remarkable
earnings streak can be attributed to technology-inspired improvements in
productivity, the health of the global economy, relatively low interest rates,
good old-fashioned American management acumen, innovation and cost-cutting.
WE EXPLOITED THE SWEET SPOT
Our own 10 stock funds exploited the earnings bounty during the period. Many of
them had at least some holdings in mid-cap stocks, in what we call the market's
"sweet spot" -- the market-capitalization segment between $2 billion and $10
billion that offers especially high return potential because the companies in
that segment are in the prime of their growth cycle. Indeed, during the period,
mid-cap stocks performed better than large and small stocks did. The Russell
Midcap Index gained 25.10%, compared with the large-cap Russell 1000 Index's
14.26% return and the small-cap Russell 2000 Index's 17.95% advance.
Accordingly, the funds that had at least some representation in mid-cap stocks
- -- the Turner Core Growth Fund, the Turner Midcap Growth Fund, the Turner
Technology Fund, the Turner Concentrated Growth Fund, and the Turner New
Enterprise Fund -- generated superior returns.
Overall, our funds by and large benefited from good stock selection and
overweighted positions in the best-performing stocks -- the stocks in which we
tended to have the most conviction. For instance, if a stock we strongly favored
had a 0.70% weighting in the index, we tended to have a position in it of 0.75%
or more in a fund.
Here are the returns for each of our funds, net of fees and expenses, and their
benchmarks in the past 12 months:
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.
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TOTAL RETURNS
12-month period ended September 30, 2005
GROWTH FUNDS
TURNER LARGE CAP GROWTH FUND 12.09%
Russell Top 200 Growth Index 7.78
Russell 1000 Growth Index 11.60
TURNER CORE GROWTH FUND, CLASS I 23.64
Russell 1000 Growth Index 11.60
S&P 500 Index 12.25
TURNER STRATEGIC GROWTH FUND 18.22
Russell Top 200 Growth Index 7.78
Russell 1000 Growth Index 11.60
S&P 500 Index 12.25
2 TURNER FUNDS 2005 ANNUAL REPORT
September 30, 2005
TURNER MIDCAP GROWTH FUND, CLASS I 25.73%
Russell Midcap Growth Index 23.48
TURNER SMALL CAP GROWTH FUND 15.71
Russell 2000 Growth Index 17.97
TURNER MICRO CAP GROWTH FUND 27.90
Russell 2000 Growth Index 17.97
CORE FUND
TURNER SMALL CAP EQUITY FUND 15.37
Russell 2000 Index 17.95
SECTOR/SPECIALTY FUNDS
TURNER TECHNOLOGY FUND 18.74
Pacific Stock Exchange
Technology 100 Index 20.80
Goldman Sachs Technology
Composite Index 13.83
TURNER CONCENTRATED GROWTH FUND 21.99
S&P 500 Index 12.25
Nasdaq 100 Index 13.81
TURNER NEW ENTERPRISE FUND 29.65
Nasdaq Composite Index 14.19
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For more details on the performance of all 10 of our funds, please see the
INVESTMENT REVIEW beginning on page 8.
The big question now is, with energy prices high and with the Federal Reserve
signaling its intent to continue raising interest rates through the end of the
year, is there still life in the aging bull market that began in October 2002?
The conventional wisdom is that the sizable increases in energy prices are now
rippling through the economy, causing an acceleration in the inflation rate and
diminishing profits and consumer spending -- and the stock market's return
potential.
WE ANTICIPATE AN EARNINGS-DRIVEN RALLY
But we think a reasonable case can be made that the current rising wave of
inflation may be cresting, that any inflationary influences going forward will
be tempered by modest increases in the nation's money supply and wages. If
energy prices stabilize (even at their high current levels) and if the Federal
Reserve shows even a hint that it's nearing the end of the tightening cycle, we
think stocks may rally over the next six to 12 months, propelled by a slowing
but still-satisfactory rate of earnings growth. However, if earnings are
disappointing and corporate earnings guidance becomes increasingly negative, we
believe the probability of a rally materializing would be nearly as thin as a
threadbare linen shirt.
About the earnings outlook, we remain cautious optimists. According to a study
by Morgan Stanley, more than 80% of the price appreciation in this bull market
has come from growth in earnings, not from an expansion of price/earnings
ratios. (Historically, about 70% of a bull market's gains have come from
expanding P/E ratios.) In short, this bull market has been driven largely by
earnings growth. And we anticipate that earnings growth will continue to be a
positive market catalyst. Wall Street analysts, who are often accused of
over-optimism about companies' profitability but whose projections in recent
years have actually proven conservative, expect the companies in the S&P 500
Index to report a 14.2% increase in earnings per share over the next 12 months,
notes I/B/E/S International.
Here are three additional reasons, among others, why we think stocks may go up:
o The valuations of stocks are reasonable and are downright attractive relative
to those of other asset classes, especially bonds. As of September 30, 2005,
the earnings yield of the S&P 500 Index is 5.30%, versus a yield of 4.32% for
the 10-year Treasury bond.
o Historically stocks have typically done well at this stage of the Fed's
tightening cycle. A study by the ISI research firm shows that in the seven
previous tightening cycles since 1985, the S&P 500 Index has risen an average
of 10.4% in the six months prior to the last Fed rate hike and gained an
average of 8.9% in the six following months.
o Today's low level of stock-market volatility may lead to rising stock prices,
according to our research. Standard deviation, the most conventional measure
of volatility, has been 2.1% for the S&P 500 Index's monthly returns in the
year-to-date (in contrast to a 5.6% rate from 1928 to 2004). When market
volatility is as low as it is now, a stock-market rally tends to ensue. For
instance, from 1992 to 1995, the standard deviation of monthly returns was
less than 3.1%. From such a low base, the market took off, rising at a
compound annual rate of 28.6% from 1995 to 1999. Similarly, we think today's
below-average level of volatility may help ignite another rally (although
it's unlikely to be of 1995-1999 dimensions).
TURNER FUNDS 2005 ANNUAL REPORT 3
LETTER TO SHAREHOLDERS (continued)
HOW OUR FUNDS ARE POSITIONED
In anticipation of what the market may bring, our growth funds are overweighted
in the stocks of companies in which we have the greatest conviction about their
earnings prospects, and our core and value funds are focused on stocks that we
think have either undervalued assets or formidable prospective earnings power.
Generally, we favor Internet, energy, specialty-retailing, gaming, brokerage,
financial-transaction-processing, natural-gas distribution, highway-aggregates,
managed-care, biotechnology, semiconductor, telecommunications-technology, and
wireless shares.
In closing, we hope our future reports will be distinguished by the brevity of
more good news. We can't guarantee that our funds' performance over the next 12
months will match that of the past 12 months. But we do guarantee that we will
continue to do our level best to maximize the returns on your -- and our --
money. (The money of our portfolio managers is invested in our funds as well.)
We look forward to reporting to you six months hence about how we performed in
maximizing those returns for you and for us.
/S/ BOB TURNER
Bob Turner
CHAIRMAN AND CHIEF INVESTMENT OFFICER
TURNER INVESTMENT PARTNERS, ADVISER TO THE TURNER FUNDS
PAST PERFORMANCE IS NO ASSURANCE OF FUTURE RESULTS. THE VIEWS EXPRESSED ARE
THOSE OF TURNER INVESTMENT PARTNERS, INC., AS OF SEPTEMBER 30, 2005, AND ARE NOT
INTENDED AS A FORECAST OR INVESTMENT RECOMMENDATIONS. THE INDICES MENTIONED ARE
NOT AVAILABLE FOR INVESTMENT.
[PHOTO OMITTED]
BOB TURNER
4 TURNER FUNDS 2005 ANNUAL REPORT
September 30, 2005
LIPPER INC. PERFORMANCE RANKINGS OF MUTUAL FUNDS WITH AT LEAST THREE YEARS OF
HISTORY
Periods ending September 30, 2005
ONE TWO THREE FOUR FIVE SEVEN TEN
YEAR YEARS YEARS YEARS YEARS YEARS YEARS
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MULTI CAP GROWTH FUNDS
TURNER CONCENTRATED
GROWTH FUND
Ranking versus competitors 77/414 365/385 99/358 229/316 238/255 -- --
Percentile ranking 19 95 28 72 93 -- --
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LARGE CAP GROWTH FUNDS
TURNER CORE GROWTH FUND
Ranking versus competitors 5/678 16/625 13/577 51/503 -- -- --
Percentile ranking 1 3 2 10 -- -- --
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TURNER LARGE CAP GROWTH FUND
Ranking versus competitors 349/678 436/625 97/577 216/503 372/453 -- --
Percentile ranking 51 70 17 43 82 -- --
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TURNER STRATEGIC GROWTH FUND
Ranking versus competitors 68/678 139/625 10/577 70/503 322/453 107/307 --
Percentile ranking 10 22 2 14 71 35 --
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MID-CAP GROWTH FUNDS
TURNER MIDCAP GROWTH FUND
Ranking versus competitors 79/541 210/497 38/441 94/389 235/320 22/224 --
Percentile ranking 15 42 9 24 73 10 --
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SCIENCE AND TECHNOLOGY FUNDS
TURNER TECHNOLOGY FUND
Ranking versus competitors 123/288 77/275 52/265 81/244 175/210 -- --
Percentile ranking 43 28 20 33 83 -- --
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TURNER NEW ENTERPRISE FUND
Ranking versus competitors 10/288 24/275 10/265 10/244 65/210 --
Percentile ranking 3 9 4 4 31 -- --
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SMALL-CAP GROWTH FUNDS
TURNER MICRO CAP GROWTH FUND
Ranking versus competitors 30/522 1/483 33/436 20/384 20/327 1/223 --
Percentile ranking 6 1 8 5 6 1 --
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TURNER SMALL CAP EQUITY FUND
Ranking versus competitors 377/522 49/483 106/436 -- -- -- --
Percentile ranking 72 10 24 -- -- -- --
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TURNER SMALL CAP GROWTH FUND
Ranking versus competitors 359/522 218/483 71/436 128/384 214/327 100/223 18/93
Percentile ranking 69 45 16 33 65 45 19
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Source: Lipper Inc.
Total return is ranking criteria.Past performance is no guarantee of future
results.
TURNER FUNDS 2005 ANNUAL REPORT 5
PERFORMANCE
TOTAL RETURNS OF TURNER FUNDS
Through September 30, 2005
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.
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 THAT OWNING
SECURITIES OF COMPANIES RELATIVELY HIGH PRICE-TO-EARNINGS RATIOS WILL CAUSE THE
PORTFOLIO TO OUTPERFORM 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.
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.
Year (Annualized) Total
Six to One Three Five Ten Since Net Assets
Fund Name/Index Month Date Year Years Years Years inception ($mil)
GROWTH
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TURNER LARGE CAP GROWTH FUND 7.77 2.08 12.09 15.69 (11.19) N/A (10.93) $43.03
Russell Top 200 Growth Index 5.23 0.08 7.78 11.93 (9.85) n/a (10.12)
Russell 1000 Growth Index 6.57 2.22 11.60 14.74 (8.64) n/a (8.72)
INCEPTION DATE: 6/14/00
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TURNER CORE GROWTH FUND --
CLASS I SHARES 13.15 10.40 23.64 20.22 N/A N/A 1.96 $40.86
CLASS II SHARES N/A N/A N/A N/A N/A N/A 3.31 --
S&P 500 Index 5.02 2.76 12.25 16.72 n/a n/a 1.47
Russell 1000 Growth Index 6.57 2.22 11.60 14.74 n/a n/a (1.47)
INCEPTION DATE: 02/28/01
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TURNER STRATEGIC GROWTH FUND 9.47 3.18 18.22 21.02 (9.71) N/A 7.17 $7.16
Russell Top 200 Growth Index 5.23 0.08 7.78 11.93 (9.85) n/a 3.29
Russell 1000 Growth Index 6.57 2.22 11.60 14.74 (8.64) n/a 4.07
S&P 500 Index 5.02 2.76 12.25 16.72 (1.49) n/a 6.93
INCEPTION DATE: 1/31/97
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TURNER MIDCAP GROWTH FUND(1) --
CLASS I SHARES 10.84 8.02 25.73 24.18 (9.06) N/A 14.15 $955.73
CLASS II SHARES 10.59 7.65 25.13 23.57 (9.04)* N/A 13.91 1.83
Russell Midcap Growth Index 10.21 8.37 23.48 24.92 (4.49) n/a 8.38
INCEPTION DATE: 10/1/96
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* 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.
Amounts designated as "--" are either $0 or have been rounded to $0.
6 TURNER FUNDS 2005 ANNUAL REPORT
Year (Annualized) Total
Six to One Three Five Ten Since Net Assets
Fund Name/Index Month Date Year Years Years Years inception ($mil)
TURNER SMALL CAP GROWTH FUND(1) 11.07 2.96 15.71 25.05 (4.57) 11.25 14.18 $257.15
Russell 2000 Growth Index 10.02 2.51 17.97 23.23 (2.54) 4.67 6.03
INCEPTION DATE: 2/7/94
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TURNER MICRO CAP GROWTH FUND(1) 12.74 11.23 27.90 26.84 10.21 N/A 31.21 $502.11
Russell 2000 Growth Index 10.02 2.51 17.97 23.23 (2.54) n/a 1.89
INCEPTION DATE: 2/27/98
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CORE FUNDS
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TURNER SMALL CAP EQUITY FUND(1) --
CLASS II SHARES 7.86 5.38 15.37 23.86 N/A N/A 17.28 $67.71
Russell 2000 Index 9.21 3.38 17.95 24.12 n/a n/a 10.54
INCEPTION DATE: 3/4/02
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SPECIALTY
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TURNER TECHNOLOGY FUND(1)(2) 12.84 (0.60) 18.74 29.56 (23.91) N/A (1.78) $12.91
Pacific Stock Exchange
Technology 100 Index 13.16 5.40 20.80 28.95 (4.37) n/a 5.37
Goldman Sachs Technology
Composite Index** 8.61 (0.84) 13.83 24.39 (15.23) n/a (7.27)
INCEPTION DATE: 6/30/99
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TURNER CONCENTRATED
GROWTH FUND 16.01 6.45 21.99 20.78 (18.26) N/A 0.22 $30.78
S&P 500 Index 5.02 2.76 12.25 16.72 (1.49) n/a (0.24)
NASDAQ 100 Index 8.23 (0.92) 13.81 24.72 (14.65) n/a (5.45)
INCEPTION DATE: 6/30/99
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TURNER NEW ENTERPRISE FUND 16.27 4.83 29.65 37.18 (14.09) N/A (9.68) $9.14
NASDAQ Composite Index 8.00 (0.59) 14.19 23.10 (9.73) n/a (10.59)
INCEPTION DATE: 6/30/00
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** The Turner Technology Fund uses the Goldman Sachs Technology Composite Index
for comparison purposes only. The Goldman Sachs technology industry composite
is a market-capitalization weighted index of 190 stocks designated to measure
the performance of companies in the technology sector.
Returns of less than one year are cumulative.
TURNER FUNDS 2005 ANNUAL REPORT 7
INVESTMENT REVIEW
TURNER LARGE CAP GROWTH FUND
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FUND PROFILE
SEPTEMBER 30, 2005
[] Ticker symbol TSGEX
[] CUSIP #87252R839
[] Top 5 holdings
(1) Microsoft
(2) General Electric
(3) Procter & Gamble
(4) Johnson & Johnson
(5) PepsiCo
[] % in 5 largest holdings 27.2%+
[] Number of holdings 51
[] Price/earnings ratio 21.4
[] Weighted average market capitalization $96.60 billion
[] % of holdings with positive earnings surprises 94.8%
[] % of holdings with negative earnings surprises 1.8%
[] Net assets $43 million
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FUND PROFILE
SEPTEMBER 30, 2005
M L -----------------------------------
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E E | | X
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A | |
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VALUE GROWTH
INVESTMENT STYLE
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GROWTH OF A $10,000 INVESTMENT IN THE
TURNER LARGE CAP GROWTH FUND:
JUNE 14, 2000-SEPTEMBER 30, 2005*
[LINE CHART OMITTED, PLOT POINTS FOLLOWS]
INITIAL INVESTMENT DATE 6/14/00 SEP 00 SEP 01 SEP 02 SEP 03 SEP 04 SEP 05
TURNER LARGE CAP GROWTH FUND $10,000 $9,810 $4,700 $3,500 $4,620 $4,835 $5,419
RUSSELL TOP 200 GROWTH INDEX $10,000 $9,546 $5,318 $4,053 $4,978 $5,273 $5,683
RUSSELL 1000 GROWTH INDEX $10,000 $9,691 $5,268 $4,082 $5,140 $5,526 $6,167
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AVERAGE ANNUAL TOTAL RETURNS (PERIODS ENDING SEPTEMBER 30, 2005)
SINCE
ONE YEAR THREE YEARS FIVE YEARS INCEPTION
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Turner Large Cap Growth Fund 12.09% 15.69% (11.19)% (10.93)%
Russell Top 200 Growth Index 7.78% 11.93% (9.85)% (10.12)%
Russell 1000 Growth Index 11.60% 14.74% (8.64)% (8.72)%
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SECTOR WEIGHTINGS+:
[BAR CHART OMITTED, PLOT POINTS FOLLOWS]
31.0% INFORMATION TECHNOLOGY
20.2% HEALTH CARE
12.4% INDUSTRIALS
12.0% CONSUMER DISCRETIONARY
9.8% CONSUMER STAPLES
6.2% FINANCIALS
3.9% CASH EQUIVALENTS/SHORT-TERM INVESTMENTS++
2.6% TELECOMMUNICATION SERVICES
1.0% ENERGY
0.9% MATERIALS & PROCESSING
MANAGERS DISCUSSION AND ANALYSIS
Substantial outperformance in technology and consumer-discretionary/services
shares helped boost the performance of the Turner Large Cap Growth Fund in the
12-month period ended September 30. The Fund gained 12.09%, outperforming the
Russell Top 200 Growth Index by 4.31 percentage points and the Russell 1000
Growth Index by 0.49 percentage points.
Semiconductor, personal-computer, Internet, gaming, and retailing stocks in
particular enhanced the Fund's technology and consumer-discretionary/services
positions, which accounted for 43% of the portfolio and outperformed their
corresponding index sectors markedly. All nine of the Fund's sector positions
beat their index sectors. Industrials stocks, a 12% weighting, impaired results
the most; underperformers here included semiconductor-capital-equipment,
aerospace, and heavy-equipment 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 Large Cap
Growth Fund was June 14, 2000.
** Cumulative return, not annualized.
+ Percentages based on total investments.
++ Cash equivalents include short-term investments held as collateral for
securities lending activity. Please see Note 9 in Notes to Financial
Statements for more detailed information.
8 TURNER FUNDS 2005 ANNUAL REPORT
INVESTMENT REVIEW
TURNER CORE GROWTH FUND
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FUND PROFILE
SEPTEMBER 30, 2005
[] Ticker symbol TTMEX
Class I Shares
[] CUSIP #900297847
Class I Shares
[] Top 5 holdings
(1) General Electric
(2) Microsoft
(3) Johnson & Johnson
(4) Proctor & Gamble
(5) Google, Cl A
[] % in 5 largest holdings 16.3%+
[] Number of holdings 87
[] Price/earnings ratio 20.0
[] Weighted average market capitalization $67.95 billion
[] % of holdings with positive earnings surprises 88.7%
[] % of holdings with negative earnings surprises 9.0%
[] Net assets $41 million, Class I Shares
- --------------------------------------------------------------------------------
FUND PROFILE
SEPTEMBER 30, 2005
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- --------------------------------------------------------------------------------
GROWTH OF A $10,000 INVESTMENT IN THE
TURNER CORE GROWTH FUND, CLASS I SHARES:
FEBRUARY 28, 2001-SEPTEMBER 30, 2005*
[LINE CHART OMITTED, PLOT POINTS FOLLOWS]
INITIAL INVESTMENT DATE 2/28/01 SEP 01 SEP 02 SEP 03 SEP 04 SEP 05
TURNER CORE GROWTH FUND $10,000 $8,181 $6,291 $8,041 $8,841 $10,931
S&P 500 INDEX $10,000 $8,459 $6,726 $8,366 $9,527 $10,694
RUSSELL 1000 GROWTH INDEX $10,000 $7,787 $6,034 $7,598 $8,169 $9,116
- ------------------------------------------------------------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS (PERIODS ENDING SEPTEMBER 30, 2005)
ONE YEAR THREE YEARS SINCE INCEPTION
- ------------------------------------------------------------------------------------------------------------------------------------
Turner Core Growth Fund, Class I Shares 23.64% 20.22% 1.96%
Turner Core Growth Fund, Class II Shares n/a n/a 3.31%**
S&P 500 Index 12.25% 16.72% 1.47%
Russell 1000 Growth Index 11.60% 14.74% (1.47)%
- ------------------------------------------------------------------------------------------------------------------------------------
SECTOR WEIGHTINGS+:
[BAR CHART OMITTED, PLOT POINTS FOLLOWS]
21.1% INFORMATION TECHNOLOGY
18.4% FINANCIALS
12.7% HEALTH CARE
11.8% ENERGY
10.8% INDUSTRIALS
8.1% CONSUMER STAPLES
7.7% CONSUMER DISCRETIONARY
3.0% TELECOMMUNICATION SERVICES
2.7% CASH EQUIVALENTS/SHORT-TERM INVESTMENTS++
2.2% UTILITIES
1.5% MATERIALS & PROCESSING
MANAGERS DISCUSSION AND ANALYSIS
Strong stock selection powered the Turner Core Growth Fund's Class I Shares to a
23.64% gain in the 12-month period ended September 30. As a result the Fund
outperformed the Russell 1000 Growth Index by 12.04 percentage points and the
S&P 500 Index by 11.39 percentage points.
All 10 of the Fund's sector positions beat their index sectors. Contributing the
most to results were positions in the energy, utilities/telecommunication
services, and consumer-discretionary/services sectors, which accounted for 25%
of the portfolio; oil-services, oil-refining, oil exploration- and-production,
natural-gas distribution, wireless-communications, Internet, and retailing
shares especially added value. Industrials shares, an 11% weighting, were the
sole detractor from performance; semiconductor-capital-equipment and
industrial-machinery stocks produced respectable absolute but weak relative
returns.
- --------------------------------------------------------------------------------
* 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. On February 25, 2005, the Constellation
TIP Core Growth Fund reorganized into the Turner Core Growth Fund. The
inception date of the Turner Core Growth Fund (Class I Shares) was February
28, 2001.
** Cumulative return, not annualized.
+ Percentages based on total investments.
++ Cash equivalents include short-term investments held as collateral for
securities lending activity. Please see Note 9 in Notes to Financial
Statements for more detailed information.
TURNER FUNDS 2005 ANNUAL REPORT 9
INVESTMENT REVIEW
TURNER STRATEGIC GROWTH FUND
- --------------------------------------------------------------------------------
FUND PROFILE
SEPTEMBER 30, 2005
[] Ticker symbol TLCGX
[] CUSIP #900297870
[] Top 5 holdings
(1) General Electric
(2) Microsoft
(3) Google, Cl A
(4) Johnson & Johnson
(5) Broadcom, Cl A
[] % in 5 largest holdings 19.3%+
[] Number of holdings 67
[] Price/earnings ratio 22.4
[] Weighted average market capitalization $69.35 billion
[] % of holdings with positive earnings surprises 91.9%
[] % of holdings with negative earnings surprises 4.2%
[] Net assets $7 million
- --------------------------------------------------------------------------------
FUND PROFILE
SEPTEMBER 30, 2005
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GROWTH OF A $10,000 INVESTMENT IN THE
TURNER STRATEGIC GROWTH FUND:
JANUARY 31, 1997-SEPTEMBER 30, 2005*
[LINE CHART OMITTED PLOT POINTS FOLLOWS]
INITIAL INVESTMENT DATE 1/31/97 SEP 97 SEP 98 SEP 99 SEP 00 SEP 01
TURNER STRATEGIC GROWTH FUND $10,000 $12,280 $14,399 $20,587 $30,363 $14,055
RUSSELL TOP 200 GROWTH INDEX $10,000 $12,013 $14,166 $19,019 $22,233 $12,386
S&P 500 INDEX $10,000 $12,202 $13,307 $17,006 $19,264 $14,136
RUSSELL 1000 GROWTH INDEX $10,000 $12,011 $13,344 $17,995 $22,211 $12,074
INITIAL INVESTMENT DATE SEP 02 SEP 03 SEP 04 SEP 05
TURNER STRATEGIC GROWTH FUND $10,280 $14,585 $15,412 $18,220
RUSSELL TOP 200 GROWTH INDEX $9,439 $11,593 $12,281 $13,236
S&P 500 INDEX $11,240 $13,981 $15,920 $17,870
RUSSELL 1000 GROWTH INDEX $9,356 $11,781 $12,666 $14,135
- ------------------------------------------------------------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS (1) (PERIODS ENDING SEPTEMBER 30, 2005)
SINCE
ONE YEAR THREE YEARS FIVE YEARS INCEPTION
- ------------------------------------------------------------------------------------------------------------------------------------
Turner Strategic Growth Fund 18.22% 21.02% (9.71)% 7.17%
Russell 1000 Growth Index (2) 11.60% 14.74% (8.64)% 4.07%
Russell Top 200 Growth Index 7.78% 11.93% (9.85)% 3.29%
S&P 500 Index 12.25% 16.72% (1.49)% 6.93%
- ------------------------------------------------------------------------------------------------------------------------------------
SECTOR WEIGHTINGS+:
[BAR CHART OMITTED, PLOT POINTS FOLLOWS]
36.1% INFORMATION TECHNOLOGY
19.3% HEALTH CARE
13.1% CONSUMER DISCRETIONARY
12.3% INDUSTRIALS
4.9% FINANCIALS
4.3% CASH EQUIVALENTS/SHORT-TERM INVESTMENTS++
3.7% TELECOMMUNICATION SERVICES
3.7% ENERGY
1.7% MATERIALS & PROCESSING
0.9% CONSUMER STAPLES
MANAGERS DISCUSSION AND ANALYSIS
Robust gains in consumer-discretionary/services, technology, financial-services,
and materials/processing stocks helped the Turner Strategic Growth Fund to
deliver an 18.22% return in the 12-month period ended September 30. The Fund
beat the Russell 1000 Growth Index by 6.62 percentage points, the Russell Top
200 Growth Index by 10.44 percentage points, and the S&P 500 Index by 5.97
percentage points.
All nine of the Fund's sector investments returned more than their index sectors
did. Altogether, the consumer-discretionary/services, technology,
financial-services, and materials/processing holdings amounted to a 56%
weighting and added the most value to results. Winners here included Internet,
gaming, semiconductor, brokerage, and metals stocks. Conversely, the Fund's
health-care holdings, a 19% weighting, impaired performance. Biotechnology,
pharmaceutical, and health-care services stocks detracted the most.
- --------------------------------------------------------------------------------
* 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 Strategic Growth Fund was January 31, 1997.
(1) Returns prior to August 17, 2002, represent performance of the Mercury
Select Growth Fund, Class I.
(2) Effective January 31, 2005, the Russell 1000 Growth Index replaced the
Russell Top 200 Growth Index as the Fund's primary benchmark to reflect the
change in the Fund's investment strategy.
+ Percentages based on total investments.
++ Cash equivalents include short-term investments held as collateral for
securities lending activity. Please see Note 9 in Notes to Financial
Statements for more detailed information.
10 TURNER FUNDS 2005 ANNUAL REPORT
INVESTMENT REVIEW
TURNER MIDCAP GROWTH FUND
- --------------------------------------------------------------------------------
FUND PROFILE
SEPTEMBER 30, 2005
[] Ticker symbol TMGFX,
Class I Shares
[] CUSIP #900297409,
Class I Shares
[] Top 5 holdings
(1) Broadcom, Cl A
(2) Kla-Tencor
(3) T. Rowe Price Group
(4) Sandisk
(5) Advanced Micro Devices
[] % in 5 largest holdings 8.1%+
[] Number of holdings 115
[] Price/earnings ratio 22.2
[] Weighted average market capitalization $6.59 billion
[] % of holdings with positive earnings surprises 86.9%
[] % of holdings with negative earnings surprises 12.4%
[] Net assets $956 million, Class I Shares
- --------------------------------------------------------------------------------
FUND PROFILE
SEPTEMBER 30, 2005
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- --------------------------------------------------------------------------------
GROWTH OF A $10,000 INVESTMENT IN THE
TURNER MIDCAP GROWTH FUND, CLASS I SHARES:
OCTOBER 1, 1996-SEPTEMBER 30, 2005*
[LINE CHART OMITTED, PLOT POINTS FOLLOWS]
INITIAL INVESTMENT DATE 10/1/96 SEP 97 SEP 98 SEP 99 SEP 00 SEP 01
TURNER MID CAP GROWTH FUND, CLASS I $10,000 $14,377 $14,555 $26,792 $52,874 $21,678
RUSSELL MIDCAP GROWTH INDEX $10,000 $13,029 $11,808 $16,200 $25,979 $12,530
INITIAL INVESTMENT DATE SEP 02 SEP 03 SEP 04 SEP 05
TURNER MID CAP GROWTH FUND, CLASS I $17,169 $24,346 $26,152 $32,881
RUSSELL MIDCAP GROWTH INDEX $10,588 $14,705 $16,717 $20,642
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS (PERIODS ENDING SEPTEMBER 30, 2005)
SINCE
ONE YEAR THREE YEARS FIVE YEARS INCEPTION
- ------------------------------------------------------------------------------------------------------------------------------------
Turner Midcap Growth Fund, Class I Shares 25.73% 24.18% (9.06)% 14.15%
Turner Midcap Growth Fund, Class II Shares 25.13% 23.57% (9.04)%** 13.91%**
Russell Midcap Growth Index 23.48% 24.92% (4.49)% 8.38%
- ------------------------------------------------------------------------------------------------------------------------------------
SECTOR WEIGHTINGS+:
[BAR CHART OMITTED, PLOT POINTS FOLLOWS]
23.4% INFORMATION TECHNOLOGY
16.3% CONSUMER DISCRETIONARY
15.6% HEALTH CARE
11.1% CASH EQUIVALENTS/SHORT-TERM INVESTMENTS++
10.1% ENERGY
8.6% INDUSTRIALS
8.6% FINANCIALS
2.8% MATERIALS & PROCESSING
1.6% CONSUMER STAPLES
1.4% TELECOMMUNICATION SERVICES
0.5% 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 23.48%, a return distinctly superior to that of large-cap
growth and small-cap growth indexes. And the Fund's Class I Shares performed
even better, rising 25.73% to beat the Russell Midcap Growth Index by 2.25
percentage points.
Performance was enhanced by strong returns in consumer discretionary/services
and energy stocks, with a combined weighting of 26%. Retail, restaurant,
Internet, new-media, commercial-services, oil exploration-and-production, coal,
and oil-refining stocks contributed heavily to the outperformance. Weak relative
returns in the health-care sector, which accounted for 16% of the portfolio,
detracted from results. Altogether, six of 10 sector positions outperformed
their corresponding index sectors.
- --------------------------------------------------------------------------------
* 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) was 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.
+ Percentages based on total investments.
++ Cash equivalents include short-term investments held as collateral for
securities lending activity. Please see Note 9 in Notes to Financial
Statements for more detailed information.
TURNER FUNDS 2005 ANNUAL REPORT 11
INVESTMENT REVIEW
TURNER SMALL CAP GROWTH FUND
- --------------------------------------------------------------------------------
FUND PROFILE
SEPTEMBER 30, 2005
[] Ticker symbol TSCEX
[] CUSIP #900297300
[] Top 5 holdings
(1) Sierra Health Services
(2) Trident Microsystems
(3) Microsemi
(4) Psychiatric Solutions
(5) Witness Systems
[] % in 5 largest holdings 5.9%+
[] Number of holdings 133
[] Price/earnings ratio 22.4
[] Weighted average market capitalization $1.35 billion
[] % of holdings with positive earnings surprises 83.3%
[] % of holdings with negative earnings surprises 16.1%
[] Net assets $257 million
- --------------------------------------------------------------------------------
FUND PROFILE
SEPTEMBER 30, 2005
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- --------------------------------------------------------------------------------
GROWTH OF A $10,000 INVESTMENT IN THE
TURNER SMALL CAP GROWTH FUND:
SEPTEMBER 30, 1995-SEPTEMBER 30, 2005*
[LINE CHART OMITTED, PLOT POINTS FOLLOWS]
INITIAL INVESTMENT DATE 9/30/95 SEP 96 SEP 97 SEP 98 SEP 99 SEP 00 SEP 01
TURNER SMALL CAP GROWTH FUND $10,000 $15,243 $17,779 $14,775 $23,512 $36,696 $18,418
RUSSELL 2000 GROWTH INDEX $10,000 $11,261 $13,890 $10,441 $13,848 $17,956 $10,309
INITIAL INVESTMENT DATE SEP 02 SEP 03 SEP 04 SEP 05
TURNER SMALL CAP GROWTH FUND $14,852 $22,219 $25,103 $29,046
RUSSELL 2000 GROWTH INDEX $8,436 $11,956 $13,381 $15,786
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS (PERIODS ENDING SEPTEMBER 30, 2005)
SINCE
ONE YEAR THREE YEARS FIVE YEARS TEN YEARS INCEPTION
- ------------------------------------------------------------------------------------------------------------------------------------
Turner Small Cap Growth Fund 15.71% 25.05% (4.57)% 11.25% 14.18%
Russell 2000 Growth Index 17.97% 23.23% (2.54)% 4.67% 6.03%
- ------------------------------------------------------------------------------------------------------------------------------------
SECTOR WEIGHTINGS+:
[BAR CHART OMITTED, PLOT POINTS FOLLOWS]
21.3% INFORMATION TECHNOLOGY
16.9% HEALTH CARE
16.9% CASH EQUIVALENTS/SHORT-TERM INVESTMENTS++
13.8% CONSUMER DISCRETIONARY
10.5% INDUSTRIALS
7.7% FINANCIALS
6.2% ENERGY
3.5% MATERIALS & PROCESSING
2.1% TELECOMMUNICATION SERVICES
1.1% CONSUMER STAPLES
MANAGERS DISCUSSION AND ANALYSIS
The Turner Small Cap Growth Fund produced good gains in five of the nine market
sectors in which it was invested in the 12-month period ended September 30. But
unfavorable relative returns in the consumer-discretionary/services,
producer-durables, energy, and health-care sectors, which accounted for more
than half of the holdings, hurt results. Overall, the Fund gained 15.71%,
underperforming the Russell 2000 Growth Index by 2.26 percentage points.
The Fund's best relative performers were technology and financial-services
stocks, a 29% weighting. Winners included semiconductor, computer-technology,
telecommunications, software, brokerage, real-estate, and financial-
transaction-processing shares. Retailing, restaurant, apparel, industrial-
machinery, semiconductor-capital-equipment, energy-services, health-care-
management, and biotechnology stocks 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 was February 7, 1994.
+ Percentage based on total investments.
++ Cash equivalents include short-term investments held as collateral for
securities lending activity. Please see Note 9 in Notes to Financial
Statements for more detailed information.
12 TURNER FUNDS 2005 ANNUAL REPORT
INVESTMENT REVIEW
TURNER MICRO CAP GROWTH FUND
- --------------------------------------------------------------------------------
FUND PROFILE
SEPTEMBER 30, 2005
[] Ticker symbol TMCGX
[] CUSIP #872524301
[] Top 5 holdings
(1) United Therapeutics
(2) NS Group
(3) ESCO Technologies
(4) Genesco
(5) Bucyrus International, Cl A
[] % in 5 largest holdings 6.8%+
[] Number of holdings 114
[] Price/earnings ratio 18.0
[] Weighted average market capitalization $0.87 billion
[] % of holdings with positive earnings surprises 82.0%
[] % of holdings with negative earnings surprises 16.1%
[] Net assets $502 million
- --------------------------------------------------------------------------------
FUND PROFILE
SEPTEMBER 30, 2005
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GROWTH OF A $10,000 INVESTMENT IN THE
TURNER MICRO CAP GROWTH FUND:
FEBRUARY 28, 1998-SEPTEMBER 30, 2005*
[LINE CHART OMITTED, PLOT POINTS FOLLOWS]
INITIAL INVESTMENT DATE 2/28/98 SEP 98 SEP 99 SEP 00 SEP 01
TURNER MICRO CAP GROWTH FUND $10,000 $9,882 $21,093 $48,308 $38,535
RUSSELL 2000 GROWTH INDEX $10,000 $7,625 $10,113 $13,113 $7,528
INITIAL INVESTMENT DATE SEP 02 SEP 03 SEP 04 SEP 05
TURNER MICRO CAP GROWTH FUND $38,489 $49,709 $61,410 $78,544
RUSSELL 2000 GROWTH INDEX $6,161 $8,731 $9,772 $11,528
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS (PERIODS ENDING SEPTEMBER 30, 2005)
SINCE
ONE YEAR THREE YEARS FIVE YEARS INCEPTION
- ------------------------------------------------------------------------------------------------------------------------------------
Turner Micro Cap Growth Fund 27.90% 26.84% 10.21% 31.21%
Russell 2000 Growth Index 17.97% 23.23% (2.54)% 1.89%
- ------------------------------------------------------------------------------------------------------------------------------------
SECTOR WEIGHTINGS+:
[BAR CHART OMITTED, PLOT POINTS FOLLOWS]
35.7% CASH EQUIVALENTS/SHORT-TERM INVESTMENTS++
14.4% HEALTH CARE
12.4% CONSUMER DISCRETIONARY
10.5% ENERGY
10.0% INDUSTRIALS
9.2% INFORMATION TECHNOLOGY
3.8% FINANCIALS
3.2% MATERIALS & PROCESSING
0.8% TELECOMMUNICATION SERVICES
MANAGER DISCUSSION AND ANALYSIS
The Turner Micro Cap Growth Fund continued to generate exceptional results in
the 12 months ended September 30. The Fund returned 27.90%, a gain that
outdistanced its benchmark, the Russell 2000 Growth Index, by 9.93 percentage
points.
The Fund's stock selection was good, with all eight sector positions
outperforming their corresponding index sectors. Materials/processing,
health-care, and industrials holdings, a 28% weighting in aggregate, contributed
the most, each rising more than 39%. Metals, engineering-services,
medical-systems, biopharmaceutical, specialty-machinery, and systems-engineering
stocks were especially strong. The primary detractor from performance was
energy, an 11% weighting. Laggards included energy-services and integrated-oil
stocks.
- --------------------------------------------------------------------------------
* 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 was February 27, 1998.
+ Percentages based on total investments.
++ Cash equivalents include short-term investments held as collateral for
securities lending activity. Please see Note 9 in Notes to Financial
Statements for more detailed information.
TURNER FUNDS 2005 ANNUAL REPORT 13
INVESTMENT REVIEW
TURNER SMALL CAP EQUITY FUND
- --------------------------------------------------------------------------------
FUND PROFILE
SEPTEMBER 30, 2005
[] Ticker symbol TSEIX
[] CUSIP #87252R714
[] Top 5 holdings
(1) Walter Industries
(2) Intergraph
(3) Jarden
(4) Washington Group International
(5) Leap Wireless International
[] % in 5 largest holdings 10.0%+
[] Number of holdings 99
[] Price/earnings ratio 18.5
[] Weighted average market capitalization $1.35 billion
[] % of holdings with positive earnings surprises 74.4%
[] % of holdings with negative earnings surprises 23.1%
[] Net assets $68 million
- --------------------------------------------------------------------------------
FUND PROFILE
SEPTEMBER 30, 2005
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GROWTH OF A $10,000 INVESTMENT IN THE
TURNER SMALL CAP EQUITY FUND:
MARCH 4, 2002-SEPTEMBER 30, 2005*
[LINE CHART OMITTED, PLOT POINTS FOLLOWS]
INITIAL INVESTMENT DATE 3/4/02 SEP 02 SEP 03 SEP 04 SEP 05
TURNER SMALL CAP EQUITY FUND $10,000 $9,299 $12,278 $15,317 $17,671
RUSSELL 2000 INDEX $10,000 $7,485 $10,217 $12,134 $14,313
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS (PERIODS ENDING SEPTEMBER 30, 2005)
SINCE
ONE YEAR THREE YEARS INCEPTION
- -------------------------------------------------------------------------------------------------------------------
Turner Small Cap Equity Fund 15.37% 23.86% 17.28%
Russell 2000 Index 17.95% 24.12% 10.54%
- -------------------------------------------------------------------------------------------------------------------
SECTOR WEIGHTINGS+:
[BAR CHART OMITTED, PLOT POINTS FOLLOWS]
19.9% FINANCIALS
16.4% CONSUMER DISCRETIONARY
16.1% INDUSTRIALS
15.0% INFORMATION TECHNOLOGY
9.1% HEALTH CARE
7.6% MATERIALS & PROCESSING
6.8% ENERGY
5.4% TELECOMMUNICATION SERVICES
2.2% CASH EQUIVALENTS/SHORT-TERM INJVESTMENTS++
1.0% CONSUMER STAPLES
0.5% UTILITIES
MANAGERS DISCUSSION AND ANALYSIS
The Turner Small Cap Equity Fund returned 15.37% in the 12-month period ended
September 30. That return trailed the Russell 2000 Index by 2.58 percentage
points.
The Fund is invested in both growth and value stocks, all of which registered
positive returns in aggregate. Four of the Fund's 10 sector positions beat their
corresponding index sectors. The greatest degree of outperformance was supplied
by utilities/ telecommunication services and technology stocks, which
represented 21% of the portfolio; telecommunications-utility, electric-utility,
semiconductor, information-services, and computer-technology stocks were
standouts. Energy and utility stocks produced the highest absolute returns, more
than 60%. A slightly underweighted 26% position in health-care and
consumer-discretionary/services stocks hurt results the most.
- --------------------------------------------------------------------------------
* 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 was March 4, 2002.
+ Percentages based on total investments.
++ Cash equivalents include short-term investments held as collateral for
securities lending activity. Please see Note 9 in Notes to Financial
Statements for more detailed information.
14 TURNER FUNDS 2005 ANNUAL REPORT
INVESTMENT REVIEW
TURNER TECHNOLOGY FUND
- --------------------------------------------------------------------------------
FUND PROFILE
SEPTEMBER 30, 2005
[] Ticker symbol TTECX
[] CUSIP #87252R870
[] Top 5 holdings
(1) Broadcom, Cl A
(2) Microsoft
(3) Marvell Technology Group
(4) Comverse Technology
(5) Kla-Tencor
[] % in 5 largest holdings 21.8%+
[] Number of holdings 36
[] Price/earnings ratio 28.5
[] Weighted average market capitalization $33.76 billion
[] % of holdings with positive earnings surprises 88.8%
[] % of holdings with negative earnings surprises 6.7%
[] Net assets $13 million
- --------------------------------------------------------------------------------
FUND PROFILE
SEPTEMBER 30, 2005
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INVESTMENT STYLE
- --------------------------------------------------------------------------------
GROWTH OF A $10,000 INVESTMENT IN THE
TURNER TECHNOLOGY FUND:
JUNE 30, 1999-SEPTEMBER 30, 2005*
[LINE CHART OMITTED, PLOT POINTS FOLLOWS]
INITIAL INVESTMENT DATE 6/30/99 SEP 99 SEP 00 SEP 01
TURNER TECHNOLOGY FUND $10,000 $14,060 $35,059 $6,619
PACIFIC STOCK EXCHANGE TECHNOLOGY 100 INDEX $10,000 $10,467 $17,345 $8,652
GOLDMAN SACHS TECHNOLOGY COMPOSITE INDEX $10,000 $10,523 $14,251 $4,972
INITIAL INVESTMENT DATE SEP 02 SEP 03 SEP 04 SEP 05
TURNER TECHNOLOGY FUND $4,110 $7,202 $7,528 $8,939
PACIFIC STOCK EXCHANGE TECHNOLOGY 100 INDEX $6,470 $10,372 $11,484 $13,873
GOLDMAN SACHS TECHNOLOGY COMPOSITE INDEX $3,240 $5,378 $5,479 $6,237
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS (PERIODS ENDING SEPTEMBER 30, 2005)
SINCE
ONE YEAR THREE YEARS FIVE YEARS INCEPTION
- ------------------------------------------------------------------------------------------------------------------------------------
Turner Technology Fund 18.74% 29.56% (23.91)% (1.78)%
Pacific Stock Exchange Technology 100 Index** 20.80% 28.95% (4.37)% 5.37%
Goldman Sachs Technology Composite Index*** 13.83% 24.39% (15.23)% (7.27)%
- ------------------------------------------------------------------------------------------------------------------------------------
SECTOR WEIGHTINGS+:
[BAR CHART OMITTED, PLOT POINTS FOLLOWS]
81.8% INFORMATION TECHNOLOGY
10.6% HEALTHCARE
4.3% TELECOMMUNICATIONS SERVICES
3.3% CASH EQUIVALENTS/SHORT-TERM INVESTMENTS++
MANAGERS DISCUSSION AND ANALYSIS
In the 12-month period ended September 30, the performance of technology stocks
improved sharply over the year-earlier period: the Goldman Sachs Technology
Composite Index surged 13.83%, versus 1.87% previously. The Turner Technology
Fund did even better, rising 18.74%, a performance edge of 4.91 percentage
points over the index. The Fund, however, underperformed the Pacific Stock
Exchange Technology 100 Index by 2.06 percentage points.
Technology stocks' better performance reflected better earnings by tech
companies -- earnings increases that in some cases rivaled those of the go-go
days of the late 1990s. On average the companies in the Goldman Sachs Technology
Composite Index reported a 22.2% increase in earnings per share. The Fund's
winners included semiconductor, software, wireless-communications, e-commerce,
and Internet-search stocks, whose issuers were among the best earnings
performers. Biotechnology and semiconductor-capital-equipment stocks, a 19%
weighting, hurt the Fund's 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 Technology Fund was June 30, 1999.
** The Pacific Stock Exchange Technology 100 Index is a widely-recognized,
price weighted index of the top 100 U.S. technology-oriented companies.
*** The Turner Technology Fund uses the Goldman Sachs Technology Composite Index
for comparison purposes only. The Goldman Sachs technology industry
composite is a market-capitalization weighted index of 190 stocks designated
to measure the performance of companies in the technology sector.
+ Percentages based on total investments.
++ Cash equivalents include short-term investments held as collateral for
securities lending activity. Please see Note 9 in Notes to Financial
Statements for more detailed information.
TURNER FUNDS 2005 ANNUAL REPORT 15
INVESTMENT REVIEW
TURNER CONCENTRATED GROWTH FUND
- --------------------------------------------------------------------------------
FUND PROFILE
SEPTEMBER 30, 2005
[] Ticker symbol TTOPX
[] CUSIP #87252R862
[] Top 5 holdings
(1) Google, Cl A
(2) Microsoft
(3) Advanced Micro Devices
(4) Broadcom, Cl A
(5) General Electric
[] % in 5 largest holdings 26.3%+
[] Number of holdings 26
[] Price/earnings ratio 24.0
[] Weighted average market capitalization $63.48 billion
[] % of holdings with positive earnings surprises 100.0%
[] % of holdings with negative earnings surprises 0.0%
[] Net assets $31 million
- --------------------------------------------------------------------------------
FUND PROFILE
SEPTEMBER 30, 2005
M L -----------------------------------
A A | |
R R | |
K G | |
E E | | X
T | |
| |
C -----------------------------------
A | |
P | |
I | |
T | |
A | |
L -----------------------------------
I | |
Z | |
A S | |
T M | |
I A | |
O L | |
N L -----------------------------------
VALUE GROWTH
INVESTMENT STYLE
- --------------------------------------------------------------------------------
GROWTH OF A $10,000 INVESTMENT IN THE
TURNER CONCENTRATED GROWTH FUND:
JUNE 30, 1999-SEPTEMBER 30, 2005*
[LINE CHART OMITTED, PLOT POINTS FOLLOWS]
INITIAL INVESTMENT DATE 6/30/99 SEP 99 SEP 00 SEP 01
TURNER CONCENTRATED GROWTH FUND $10,000 $13,990 $27,782 $8,223
S&P 500 INDEX $10,000 $9,376 $10,622 $7,794
NASDAQ 100 INDEX $10,000 $10,485 $15,553 $5,092
INITIAL INVESTMENT DATE SEP 02 SEP 03 SEP 04 SEP 05
TURNER CONCENTRATED GROWTH FUND $5,754 $8,638 $8,310 $10,137
S&P 500 INDEX $6,197 $7,709 $8,778 $9,853
NASDAQ 100 INDEX $3,631 $5,696 $6,190 $7,044
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS (PERIODS ENDING SEPTEMBER 30, 2005)
SINCE
ONE YEAR THREE YEARS FIVE YEARS INCEPTION
- ------------------------------------------------------------------------------------------------------------------------------------
Turner Concentrated Growth Fund 21.99% 20.78% (18.26)% 0.22%
S&P 500 Index 12.25% 16.72% (1.49)% (0.24)%
Nasdaq 100 Index** 13.81% 24.72% (14.65)% (5.45)%
- ------------------------------------------------------------------------------------------------------------------------------------
SECTOR WEIGHTINGS+:
[BAR CHART OMITTED, PLOT POINTS FOLLOWS]
51.9% INFORMATION TECHNOLOGY
12.0% CASH EQUIVALENTS/SHORT-TERM INVESTMENTS++
11.2% HEALTHCARE
9.3% INDUSTRIALS
6.4% FINANCIALS
3.5% TELECOMMUNICATION SERVICES
3.5% CONSUMER DISCRETIONARY
2.2% ENERGY
MANAGERS DISCUSSION AND ANALYSIS
The Turner Concentrated Growth Fund contains a select few stocks -- 15-30 --
that Turner thinks have the most return potential. The Fund's holdings emphasize
stocks of companies with the strongest growth prospects and a short-term
catalyst for price appreciation. That style worked well for most of the 12-month
period ended September 30, and the fund gained 21.99%, outperforming the S&P 500
Index by 9.74 percentage points and the Nasdaq 100 Index by 8.18 percentage
points.
Much of the fund's holdings -- 71%, to be precise -- were concentrated in the
technology, financial-services, industrials, and consumer-discretionary/services
sectors. And those holdings added the most value, with semiconductor,
personal-computer, wireless-communications, investment-management, brokerage,
semiconductor-capital-equipment, heavy-equipment, Internet, new-media, and
gaming stocks performing with special distinction. An 11% health-care position,
notably biotechnology and health-care-services stocks, underperformed.
- --------------------------------------------------------------------------------
* 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 was June 30, 1999.
** The Nasdaq 100 Index tracks Nasdaq's largest companies across major industry
groups, including computer hardware and software, telecommunications,
retail/wholesale and biotechnology.
+ Percentages based on total investments.
++ Cash equivalents include short-term investments held as collateral for
securities lending activity. Please see Note 9 in Notes to Financial
Statements for more detailed information.
16 TURNER FUNDS 2005 ANNUAL REPORT
INVESTMENT REVIEW
TURNER NEW ENTERPRISE FUND
- --------------------------------------------------------------------------------
FUND PROFILE
SEPTEMBER 30, 2005
[] Ticker symbol TBTBX
[] CUSIP #87252R797
[] Top 5 holdings
(1) Microsoft
(2) Broadcom, Cl A
(3) Google, Cl A
(4) Comverse Technology
(5) Witness Systems
[] % in 5 largest holdings 18.0%+
[] Number of holdings 43
[] Price/earnings ratio 30.7
[] Weighted average market capitalization $25.48 billion
[] % of holdings with positive earnings surprises 86.1%
[] % of holdings with negative earnings surprises 11.7%
[] Net assets $9 million
- --------------------------------------------------------------------------------
FUND PROFILE
SEPTEMBER 30, 2005
M L -----------------------------------
A A | |
R R | |
K G | |
E E | |
T | |
| |
C -----------------------------------
A | |
P | |
I | | X
T | |
A | |
L -----------------------------------
I | |
Z | |
A S | |
T M | |
I A | |
O L | |
N L -----------------------------------
VALUE GROWTH
INVESTMENT STYLE
- --------------------------------------------------------------------------------
GROWTH OF A $10,000 INVESTMENT IN THE
TURNER NEW ENTERPRISE FUND:
JUNE 30, 2000-SEPTEMBER 30, 2005*
[LINE CHART OMITTED, PLOT POINTS FOLLOWS]
INITIAL INVESTMENT DATE 6/30/00 SEP 00 SEP 01
TURNER NEW ENTERPRISE FUND $10,000 $12,520 $3,290
NASDAQ COMPOSITE INDEX $10,000 $9,264 $3,792
INITIAL INVESTMENT DATE SEP 02 SEP 03 SEP 04 SEP 05
TURNER NEW ENTERPRISE FUND $2,270 $4,340 $4,521 $5,861
NASDAQ COMPOSITE INDEX $2,976 $4,556 $4,862 $5,552
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS (PERIODS ENDING SEPTEMBER 30, 2005)
SINCE
ONE YEAR THREE YEARS FIVE YEARS INCEPTION
- ------------------------------------------------------------------------------------------------------------------------------------
Turner New Enterprise Fund 29.65% 37.18% (14.09)% (9.68)%
Nasdaq Composite Index 14.19% 23.10% (9.73)% (10.59)%
- ------------------------------------------------------------------------------------------------------------------------------------
SECTOR WEIGHTINGS+:
[BAR CHART OMITTED, PLOT POINTS FOLLOWS]
57.2% INFORMATION TECHNOLOGY
11.3% CONSUMER DISCRETIONARY
9.9% CASH EQUIVALENTS/SHORT-TERM INVESTMENTS++
9.3% HEALTH CARE
4.0% ENERGY
3.4% TELECOMMUNICATION SERVICES
2.6% FINANCIALS
2.3% INDUSTRIALS
MANAGERS DISCUSSION AND ANALYSIS
Outsized gains in three sectors were central to the Turner New Enterprise Fund's
29.65% result in the 12 months ended September 30. The Fund's return exceeded
that of the NASDAQ Composite Index by 15.46 percentage points.
Returns in the energy, technology, and consumer-discretionary/services sectors,
a 73% weighting, exceeded those of their corresponding index sectors by at least
80% and provided most of the Fund's margin of outperformance. Oil
exploration-and-production, semiconductor, wireless-communications,
consumer-electronics, Internet, gaming, retail, and new-media stocks led the
way. Detracting from performance was a 9% position in health-care stocks, with
biotechnology, health-care services, and hospital-management stocks losing
money. Overall, five of the Fund's seven sector positions trumped their index
sectors.
- --------------------------------------------------------------------------------
* 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 was June 30, 2000.
+ Percentages based on total investments.
++ Cash equivalents include short-term investments held as collateral for
securities lending activity. Please see Note 9 in Notes to Financials for
more detailed information.
TURNER FUNDS 2005 ANNUAL REPORT 17
FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
STATEMENT OF NET ASSETS
TURNER LARGE CAP GROWTH FUND
September 30, 2005
Value
Shares (000)
- --------------------------------------------------------------------------------
COMMON STOCK--99.5%
- --------------------------------------------------------------------------------
AEROSPACE PRODUCT & PARTS
MANUFACTURING--1.8%
- --------------------------------------------------------------------------------
Boeing 11,740 $ 798
--------
Total Aerospace product &
parts manufacturing 798
--------
- --------------------------------------------------------------------------------
AGRICULTURE, CONSTRUCTION & MINING
MACHINERY MANUFACTURING--1.4%
- --------------------------------------------------------------------------------
Caterpillar 10,390 611
--------
Total Agriculture, construction &
mining machinery manufacturing 611
--------
- --------------------------------------------------------------------------------
BEVERAGE MANUFACTURING--4.1%
- --------------------------------------------------------------------------------
PepsiCo 30,920 1,754
--------
Total Beverage manufacturing 1,754
--------
- --------------------------------------------------------------------------------
CEMENT & CONCRETE PRODUCT
MANUFACTURING--1.0%
- --------------------------------------------------------------------------------
Cemex ADR 8,500 445
--------
Total Cement & concrete
product manufacturing 445
--------
- --------------------------------------------------------------------------------
CLOTHING STORES--1.0%
- --------------------------------------------------------------------------------
Nordstrom 12,630 434
--------
Total Clothing stores 434
--------
- --------------------------------------------------------------------------------
COMMUNICATIONS EQUIPMENT
MANUFACTURING--3.4%
- --------------------------------------------------------------------------------
Ericsson Telephone ADR # 13,000 479
Motorola 31,280 691
Sony ADR 8,290 275
--------
Total Communications equipment
manufacturing 1,445
--------
- --------------------------------------------------------------------------------
COMPUTER & PERIPHERAL EQUIPMENT
MANUFACTURING--3.7%
- --------------------------------------------------------------------------------
Apple Computer* 18,350 984
EMC* 46,880 606
--------
Total Computer & peripheral
equipment manufacturing 1,590
--------
- --------------------------------------------------------------------------------
ELECTRICAL EQUIPMENT MANUFACTURING--6.6%
- --------------------------------------------------------------------------------
General Electric 84,060 2,830
--------
Total Electrical equipment
manufacturing 2,830
--------
Value
Shares (000)
- --------------------------------------------------------------------------------
ELECTRONIC SHOPPING & MAIL-ORDER HOUSES--1.6%
- --------------------------------------------------------------------------------
eBay* 16,730 $ 689
--------
Total Electronic shopping &
mail-order houses 689
--------
- --------------------------------------------------------------------------------
ELECTRONICS & APPLIANCE STORES--0.9%
- --------------------------------------------------------------------------------
Best Buy 9,240 402
--------
Total Electronics & appliance stores 402
--------
- --------------------------------------------------------------------------------
GROCERY STORES--0.9%
- --------------------------------------------------------------------------------
Whole Foods Market 2,820 379
--------
Total Grocery stores 379
--------
- --------------------------------------------------------------------------------
HEALTH & PERSONAL CARE STORES--1.8%
- --------------------------------------------------------------------------------
CVS 26,230 761
--------
Total Health & personal care stores 761
--------
- --------------------------------------------------------------------------------
INFORMATION SERVICES--6.4%
- --------------------------------------------------------------------------------
Google, Cl A* 4,260 1,348
Juniper Networks* 23,150 551
Yahoo!* 25,090 849
--------
Total Information services 2,748
--------
- --------------------------------------------------------------------------------
INSURANCE CARRIERS--6.4%
- --------------------------------------------------------------------------------
American International Group 11,410 707
Prudential Financial 5,550 375
UnitedHealth Group 13,600 764
WellPoint* 11,740 890
--------
Total Insurance carriers 2,736
--------
- --------------------------------------------------------------------------------
LIMITED-SERVICE EATING PLACES--1.2%
- --------------------------------------------------------------------------------
Starbucks* 10,540 528
--------
Total Limited-service eating places 528
--------
- --------------------------------------------------------------------------------
MEDICAL EQUIPMENT & SUPPLIES
MANUFACTURING--1.4%
- --------------------------------------------------------------------------------
St. Jude Medical* 13,340 624
--------
Total Medical equipment &
supplies manufacturing 624
--------
- --------------------------------------------------------------------------------
MINING SUPPORT ACTIVITIES--1.0%
- --------------------------------------------------------------------------------
Halliburton 6,600 452
--------
Total Mining support activities 452
--------
18 TURNER FUNDS 2005 ANNUAL REPORT
STATEMENT OF NET ASSETS
TURNER LARGE CAP GROWTH FUND
Value
Shares (000)
- --------------------------------------------------------------------------------
MOTOR VEHICLE MANUFACTURING--0.9%
- --------------------------------------------------------------------------------
Toyota Motor ADR # 4,030 $ 372
---------
Total Motor vehicle manufacturing 372
---------
- --------------------------------------------------------------------------------
NONDEPOSITORY CREDIT INTERMEDIATION--1.6%
- --------------------------------------------------------------------------------
American Express 11,930 685
---------
Total Nondepository credit
intermediation 685
---------
- --------------------------------------------------------------------------------
OFFICES OF PHYSICIANS--2.4%
- --------------------------------------------------------------------------------
Caremark Rx* 20,830 1,040
---------
Total Offices of physicians 1,040
---------
- --------------------------------------------------------------------------------
OTHER ELECTRICAL EQUIPMENT &
COMPONENT MANUFACTURING--2.1%
- --------------------------------------------------------------------------------
Corning* 46,520 899
---------
Total Other electrical equipment &
component manufacturing 899
---------
- --------------------------------------------------------------------------------
OTHER GENERAL PURPOSE MACHINERY
MANUFACTURING--1.0%
- --------------------------------------------------------------------------------
ITT Industries 3,810 433
---------
Total Other general purpose
machinery manufacturing 433
---------
- --------------------------------------------------------------------------------
OTHER LEATHER & ALLIED PRODUCT
MANUFACTURING--1.1%
- --------------------------------------------------------------------------------
Coach* 14,870 466
---------
Total Other leather & allied
product manufacturing 466
---------
- --------------------------------------------------------------------------------
PHARMACEUTICAL & MEDICINE
MANUFACTURING--10.8%
- --------------------------------------------------------------------------------
Amgen* 19,110 1,523
Gilead Sciences* 21,120 1,030
Johnson & Johnson 32,830 2,077
---------
Total Pharmaceutical &
medicine manufacturing 4,630
---------
- --------------------------------------------------------------------------------
PLUMBING, FIXTURE FITTING
AND TRIM--0.8%
- --------------------------------------------------------------------------------
Fortune Brands 4,060 330
---------
Total Plumbing, fixture fitting
and trim 330
---------
Value
Shares (000)
- --------------------------------------------------------------------------------
RADIO & TELEVISION BROADCASTING--1.0%
- --------------------------------------------------------------------------------
Sirius Satellite Radio* # 69,250 $ 454
---------
Total Radio & television
broadcasting 454
---------
- --------------------------------------------------------------------------------
RAIL TRANSPORTATION--1.0%
- --------------------------------------------------------------------------------
Burlington Northern Santa Fe 6,980 417
---------
Total Rail transportation 417
---------
- --------------------------------------------------------------------------------
SCIENTIFIC R&D SERVICES--2.4%
- --------------------------------------------------------------------------------
Genentech* 12,450 1,049
---------
Total Scientific r&d services 1,049
---------
- --------------------------------------------------------------------------------
SECURITIES & COMMODITY EXCHANGES--0.8%
- --------------------------------------------------------------------------------
Chicago Mercantile
Exchange Holdings 1,010 341
---------
Total Securities &
commodity exchanges 341
---------
- --------------------------------------------------------------------------------
SECURITY & COMMODITY CONTRACTS
INTERMEDIATION & BROKERAGE--1.5%
- --------------------------------------------------------------------------------
Morgan Stanley 12,360 667
---------
Total Security & commodity
contracts intermediation &
brokerage 667
---------
- --------------------------------------------------------------------------------
SEMICONDUCTOR & OTHER ELECTRONIC
COMPONENT MANUFACTURING--8.9%
- --------------------------------------------------------------------------------
Analog Devices 10,240 380
Applied Materials 62,360 1,058
Broadcom, Cl A* 18,770 880
Marvell Technology Group* 16,390 756
Texas Instruments 22,700 770
---------
Total Semiconductor & other
electronic component
manufacturing 3,844
---------
- --------------------------------------------------------------------------------
SOAP, CLEANERS & TOILET PREPARATION
MANUFACTURING--5.2%
- --------------------------------------------------------------------------------
Procter & Gamble 37,330 2,220
---------
Total Soap, cleaners & toilet
preparation manufacturing 2,220
---------
TURNER FUNDS 2005 ANNUAL REPORT 19
FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
STATEMENT OF NET ASSETS
TURNER LARGE CAP GROWTH FUND
Value
Shares (000)
- --------------------------------------------------------------------------------
SOFTWARE PUBLISHERS--9.4%
- --------------------------------------------------------------------------------
Electronic Arts* 14,180 $ 807
Microsoft 125,550 3,230
---------
Total Software publishers 4,037
---------
- --------------------------------------------------------------------------------
STEEL PRODUCT MANUFACTURING
FROM PURCHASED STEEL--0.9%
- --------------------------------------------------------------------------------
Nucor 6,600 389
---------
Total Steel product manufacturing
from purchased steel 389
---------
- --------------------------------------------------------------------------------
TELECOMMUNICATIONS--1.6%
- --------------------------------------------------------------------------------
America Movil ADR, Ser L 26,610 700
---------
Total Telecommunications 700
---------
- --------------------------------------------------------------------------------
TRAVELER ACCOMMODATION--1.5%
- --------------------------------------------------------------------------------
MGM Mirage* 14,410 631
---------
Total Traveler accommodation 631
---------
- --------------------------------------------------------------------------------
TOTAL COMMON STOCK
(COST $35,403) 42,830
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SHORT-TERM INVESTMENT HELD AS COLLATERAL FOR LOANED SECURITIES--3.1%
- --------------------------------------------------------------------------------
Boston Global Investment Trust--
Quality Portfolio (1) 1,348,300 1,348
- --------------------------------------------------------------------------------
TOTAL SHORT-TERM INVESTMENT HELD
AS COLLATERAL FOR LOANED SECURITIES
(COST $1,348) 1,348
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
CASH EQUIVALENT--0.9%
- --------------------------------------------------------------------------------
BlackRock TempCash Fund,
Institutional Shares 370,082 370
- --------------------------------------------------------------------------------
TOTAL CASH EQUIVALENT
(COST $370) 370
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
TOTAL INVESTMENTS--103.5%
(COST $37,121) 44,548
- --------------------------------------------------------------------------------
Value
(000)
- --------------------------------------------------------------------------------
OTHER ASSETS AND LIABILITIES-- (3.5)%
- --------------------------------------------------------------------------------
Obligation to return securities
lending collateral $ (1,348)
Payable for capital shares redeemed (172)
Payable for investment
securities purchased (145)
Payable due to administrator (5)
Receivable from investment adviser 3
Other assets and liabilities, net 144
- --------------------------------------------------------------------------------
TOTAL OTHER ASSETS AND LIABILITIES (1,523)
- --------------------------------------------------------------------------------
NET ASSETS-- 100.0% $43,025
- --------------------------------------------------------------------------------
NET ASSETS CONSIST OF:
- --------------------------------------------------------------------------------
Portfolio capital of Class I Shares
(unlimited authorization -- no par value)
based on 7,951,936 outstanding shares
of beneficial interest $59,339
Undistributed net investment income 83
Accumulated net realized loss
on investments (23,824)
Net unrealized appreciation
on investments 7,427
- --------------------------------------------------------------------------------
NET ASSETS $43,025
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
NET ASSET VALUE, OFFERING AND REDEMPTION
PRICE PER SHARE-- CLASS I SHARES $5.41
- --------------------------------------------------------------------------------
* Non-income producing security
# Security fully or partially on loan at September 30, 2005 (see Note 9 in
Notes to Financial Statements). The total value of securities on loan at
September 30, 2005, was $1,287,393.
(1) A private placement security. Units are non-transferable but may be redeemed
at the NAV. The Fund lends securities in its 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 Fund, as such, the
Fund is liable for the investment losses. The Fund receives an annual fee
for its participation in the Lending Agreement based on projected lending
activity.
ADR -- American Depositary Receipt
Cl -- Class
Ser -- Series
The accompanying notes are an integral part of the financial statements.
20 TURNER FUNDS 2005 ANNUAL REPORT
STATEMENT OF NET ASSETS
TURNER CORE GROWTH FUND
September 30, 2005
Value
Shares (000)
- --------------------------------------------------------------------------------
COMMON STOCK--98.1%
- --------------------------------------------------------------------------------
AEROSPACE PRODUCT & PARTS
MANUFACTURING--1.2%
- --------------------------------------------------------------------------------
Boeing 7,400 $ 503
---------
Total Aerospace product &
parts manufacturing 503
---------
- --------------------------------------------------------------------------------
AGENCIES & OTHER INSURANCE
RELATED ACTIVITIES--0.4%
- --------------------------------------------------------------------------------
Medco Health Solutions* 3,180 174
---------
Total Agencies & other insurance
related activities 174
---------
- --------------------------------------------------------------------------------
AGRICULTURE, CONSTRUCTION & MINING
MACHINERY MANUFACTURING--1.5%
- --------------------------------------------------------------------------------
Joy Global 4,130 208
National Oilwell Varco* 5,910 389
---------
Total Agriculture, construction &
mining machinery manufacturing 597
---------
- --------------------------------------------------------------------------------
ALUMINA & ALUMINUM PRODUCTION &
PROCESSING--0.8%
- --------------------------------------------------------------------------------
Cia Vale do Rio Doce ADR* 7,230 317
---------
Total Alumina & aluminum
production & processing 317
---------
- --------------------------------------------------------------------------------
BEER/WINE/DISTILLED ALCOHOLIC
BEVERAGE WHOLESALE--0.4%
- --------------------------------------------------------------------------------
Brown-Forman, Cl B 2,620 156
---------
Total Beer/wine/distilled alcoholic
beverage wholesale 156
---------
- --------------------------------------------------------------------------------
BEVERAGE MANUFACTURING--2.3%
- --------------------------------------------------------------------------------
PepsiCo 16,670 945
---------
Total Beverage manufacturing 945
---------
- --------------------------------------------------------------------------------
CEMENT & CONCRETE PRODUCT
MANUFACTURING--0.7%
- --------------------------------------------------------------------------------
Cemex ADR 5,570 291
---------
Total Cement & concrete
product manufacturing 291
---------
Value
Shares (000)
- --------------------------------------------------------------------------------
CLOTHING STORES--1.0%
- --------------------------------------------------------------------------------
Chico's FAS* 6,270 $ 231
Urban Outfitters* 6,240 183
---------
Total Clothing stores 414
---------
- --------------------------------------------------------------------------------
COAL MINING--1.4%
- --------------------------------------------------------------------------------
Peabody Energy 6,730 568
---------
Total Coal mining 568
---------
- --------------------------------------------------------------------------------
COMPUTER & PERIPHERAL EQUIPMENT
MANUFACTURING--2.3%
- --------------------------------------------------------------------------------
Apple Computer* 10,720 575
EMC* 28,080 363
---------
Total Computer & peripheral
equipment manufacturing 938
---------
- --------------------------------------------------------------------------------
DATA PROCESSING SERVICES--0.5%
- --------------------------------------------------------------------------------
Global Payments 2,860 222
---------
Total Data processing services 222
---------
- --------------------------------------------------------------------------------
DEPOSITORY CREDIT INTERMEDIATION--4.1%
- --------------------------------------------------------------------------------
Bank of America 9,430 397
HDFC Bank ADR* 910 47
Mellon Financial 13,850 443
Mitsubishi UFJ Financial
Group ADR 16,270 212
Northern Trust 11,160 564
---------
Total Depository credit
intermediation 1,663
---------
- --------------------------------------------------------------------------------
ELECTRIC POWER GENERATION,
TRANSMISSION & DISTRIBUTION--0.7%
- --------------------------------------------------------------------------------
CMS Energy* 16,270 268
---------
Total Electric power generation,
transmission & distribution 268
---------
- --------------------------------------------------------------------------------
ELECTRICAL EQUIPMENT MANUFACTURING--4.4%
- --------------------------------------------------------------------------------
General Electric 53,240 1,793
---------
Total Electrical equipment
manufacturing 1,793
---------
TURNER FUNDS 2005 ANNUAL REPORT 21
FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
STATEMENT OF NET ASSETS
TURNER CORE GROWTH FUND
Value
Shares (000)
- --------------------------------------------------------------------------------
ELECTRONIC SHOPPING & MAIL-ORDER HOUSES--1.2%
- --------------------------------------------------------------------------------
eBay* 11,900 $ 490
---------
Total Electronic shopping &
mail-order houses 490
---------
- --------------------------------------------------------------------------------
ELECTRONICS & APPLIANCE STORES--0.8%
- --------------------------------------------------------------------------------
Best Buy 7,160 312
---------
Total Electronics & appliance stores 312
---------
- --------------------------------------------------------------------------------
FOUNDRIES--0.6%
- --------------------------------------------------------------------------------
Precision Castparts 4,840 257
---------
Total Foundries 257
---------
- --------------------------------------------------------------------------------
GROCERY STORES--0.8%
- --------------------------------------------------------------------------------
Whole Foods Market 2,430 327
---------
Total Grocery stores 327
---------
- --------------------------------------------------------------------------------
HEALTH & PERSONAL CARE STORES--1.0%
- --------------------------------------------------------------------------------
CVS 13,800 400
---------
Total Health & personal care stores 400
---------
- --------------------------------------------------------------------------------
INFORMATION SERVICES--4.5%
- --------------------------------------------------------------------------------
Google, Cl A* 2,990 946
Juniper Networks* 13,530 322
Yahoo!* 16,600 562
---------
Total Information services 1,830
---------
- --------------------------------------------------------------------------------
INSURANCE CARRIERS--6.5%
- --------------------------------------------------------------------------------
American International Group 14,920 925
Fidelity National Financial 6,810 303
Pacificare Health Systems* 3,760 300
Prudential Financial 9,920 670
WellPoint* 6,210 471
---------
Total Insurance carriers 2,669
---------
- --------------------------------------------------------------------------------
LIMITED-SERVICE EATING PLACES--0.8%
- --------------------------------------------------------------------------------
Starbucks* 6,590 330
---------
Total Limited-service eating places 330
---------
Value
Shares (000)
- --------------------------------------------------------------------------------
MANAGEMENT, SCIENTIFIC & TECHNICAL
CONSULTING SERVICES--0.7%
- --------------------------------------------------------------------------------
CH Robinson Worldwide* 4,560 $ 292
---------
Total Management, scientific &
technical consulting services 292
---------
- --------------------------------------------------------------------------------
MEDICAL EQUIPMENT & SUPPLIES
MANUFACTURING--0.8%
- --------------------------------------------------------------------------------
St. Jude Medical* 6,780 317
---------
Total Medical equipment &
supplies manufacturing 317
---------
- --------------------------------------------------------------------------------
METAL ORE MINING--0.7%
- --------------------------------------------------------------------------------
Freeport-McMoRan Copper &
Gold, Cl B 6,090 296
---------
Total Metal ore mining 296
---------
- --------------------------------------------------------------------------------
MINING SUPPORT ACTIVITIES--2.0%
- --------------------------------------------------------------------------------
Halliburton 6,720 460
Noble 5,430 372
---------
Total Mining support activities 832
---------
- --------------------------------------------------------------------------------
MOTOR VEHICLE MANUFACTURING--0.7%
- --------------------------------------------------------------------------------
Toyota Motor ADR 3,160 292
---------
Total Motor vehicle manufacturing 292
---------
- --------------------------------------------------------------------------------
NATURAL GAS DISTRIBUTION--0.9%
- --------------------------------------------------------------------------------
Williams 14,340 359
---------
Total Natural gas distribution 359
---------
- --------------------------------------------------------------------------------
NAVIGATIONAL/MEASURING/MEDICAL/CONTROL INSTRUMENTS MANUFACTURING--0.9%
- --------------------------------------------------------------------------------
Roper Industries 9,040 355
---------
Total Navigational/measuring/
medical/control instruments
manufacturing 355
---------
- --------------------------------------------------------------------------------
NONDEPOSITORY CREDIT INTERMEDIATION--1.1%
- --------------------------------------------------------------------------------
American Express 7,880 453
---------
Total Nondepository credit intermediation 453
---------
22 TURNER FUNDS 2005 ANNUAL REPORT
STATEMENT OF NET ASSETS
TURNER CORE GROWTH FUND
Value
Shares (000)
- --------------------------------------------------------------------------------
OFFICES OF PHYSICIANS--1.1%
- --------------------------------------------------------------------------------
Caremark Rx* 8,700 $ 434
---------
Total Offices of physicians 434
---------
- --------------------------------------------------------------------------------
OIL & GAS EXTRACTION--3.4%
- --------------------------------------------------------------------------------
Southwestern Energy* 5,510 405
Ultra Petroleum* 9,250 526
XTO Energy 9,956 451
---------
Total Oil & gas extraction 1,382
---------
- --------------------------------------------------------------------------------
OTHER ELECTRICAL EQUIPMENT &
COMPONENT MANUFACTURING--1.0%
- --------------------------------------------------------------------------------
Corning* 20,940 405
---------
Total Other electrical equipment &
component manufacturing 405
---------
- --------------------------------------------------------------------------------
OTHER FINANCIAL INVESTMENT ACTIVITIES--2.5%
- --------------------------------------------------------------------------------
SEI Investments 7,250 273
T. Rowe Price Group 11,320 739
---------
Total Other financial
investment activities 1,012
---------
- --------------------------------------------------------------------------------
OTHER GENERAL PURPOSE MACHINERY
MANUFACTURING--0.7%
- --------------------------------------------------------------------------------
ITT Industries 2,650 301
---------
Total Other general purpose
machinery manufacturing 301
---------
- --------------------------------------------------------------------------------
OTHER LEATHER & ALLIED PRODUCT
MANUFACTURING--0.5%
- --------------------------------------------------------------------------------
Coach* 6,900 216
---------
Total Other leather & allied
product manufacturing 216
---------
- --------------------------------------------------------------------------------
OTHER MISCELLANEOUS MANUFACTURING--0.4%
- --------------------------------------------------------------------------------
Scientific Games, Cl A* 5,210 162
---------
Total Other miscellaneous
manufacturing 162
---------
Value
Shares (000)
- --------------------------------------------------------------------------------
PETROLEUM & COAL PRODUCTS
MANUFACTURING--2.2%
- --------------------------------------------------------------------------------
ConocoPhillips 6,560 $ 459
Valero Energy 3,870 437
---------
Total Petroleum & coal products
manufacturing 896
---------
- --------------------------------------------------------------------------------
PHARMACEUTICAL & MEDICINE
MANUFACTURING--7.7%
- --------------------------------------------------------------------------------
Amgen* 11,070 882
Forest Laboratories* 6,400 249
Genzyme* 3,900 279
Gilead Sciences* 9,320 455
Johnson & Johnson 19,930 1,261
---------
Total Pharmaceutical &
medicine manufacturing 3,126
---------
- --------------------------------------------------------------------------------
PIPELINE TRANSPORTATION OF NATURAL GAS--2.0%
- --------------------------------------------------------------------------------
Kinder Morgan 4,610 444
Questar 4,190 369
---------
Total Pipeline transportation
of natural gas 813
---------
- --------------------------------------------------------------------------------
PLUMBING, FIXTURE FITTING
AND TRIM--0.6%
- --------------------------------------------------------------------------------
Fortune Brands 2,860 233
---------
Total Plumbing, fixture fitting
and trim 233
---------
- --------------------------------------------------------------------------------
PROFESSIONAL, SCIENTIFIC &
TECHNICAL SERVICES--0.7%
- --------------------------------------------------------------------------------
Alliance Data Systems* 7,340 287
---------
Total Professional, scientific &
technical services 287
---------
- --------------------------------------------------------------------------------
RADIO & TELEVISION BROADCASTING--0.6%
- --------------------------------------------------------------------------------
Sirius Satellite Radio* 40,040 262
---------
Total Radio & television broadcasting 262
---------
- --------------------------------------------------------------------------------
RAIL TRANSPORTATION--1.1%
- --------------------------------------------------------------------------------
Burlington Northern Santa Fe 7,350 440
---------
Total Rail transportation 440
---------
TURNER FUNDS 2005 ANNUAL REPORT 23
FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
STATEMENT OF NET ASSETS
TURNER CORE GROWTH FUND
Value
Shares (000)
- --------------------------------------------------------------------------------
SCIENTIFIC R&D SERVICES--1.1%
- --------------------------------------------------------------------------------
Genentech* 5,530 $ 466
---------
Total Scientific r&d services 466
---------
- --------------------------------------------------------------------------------
SECURITIES & COMMODITY EXCHANGES--0.9%
- --------------------------------------------------------------------------------
Chicago Mercantile
Exchange Holdings 1,080 364
---------
Total Securities & commodity
exchanges 364
---------
- --------------------------------------------------------------------------------
SECURITY & COMMODITY CONTRACTS
INTERMEDIATION & BROKERAGE--5.3%
- --------------------------------------------------------------------------------
Charles Schwab 43,530 628
Legg Mason 3,150 345
Lehman Brothers Holdings 3,990 465
Morgan Stanley 13,700 739
---------
Total Security & commodity
contracts intermediation &
brokerage 2,177
---------
- --------------------------------------------------------------------------------
SEMICONDUCTOR & OTHER ELECTRONIC
COMPONENT MANUFACTURING--7.2%
- --------------------------------------------------------------------------------
Advanced Micro Devices* 12,270 309
Analog Devices 7,490 278
Applied Materials 43,290 734
Broadcom, Cl A* 13,780 647
Marvell Technology Group* 10,210 471
Texas Instruments 15,010 509
---------
Total Semiconductor & other
electronic component
manufacturing 2,948
---------
- --------------------------------------------------------------------------------
SOAP, CLEANERS & TOILET PREPARATION
MANUFACTURING--2.8%
- --------------------------------------------------------------------------------
Procter & Gamble 19,300 1,148
---------
Total Soap, cleaners & toilet
preparation manufacturing 1,148
---------
- --------------------------------------------------------------------------------
SOFTWARE PUBLISHERS--5.0%
- --------------------------------------------------------------------------------
Electronic Arts* 8,210 467
Microsoft 61,490 1,582
---------
Total Software publishers 2,049
---------
Value
Shares (000)
- --------------------------------------------------------------------------------
SUGAR & CONFECTIONERY PRODUCT
MANUFACTURING--0.9%
- --------------------------------------------------------------------------------
WM Wrigley Jr 5,070 $ 364
---------
Total Sugar & confectionery
product manufacturing 364
---------
- --------------------------------------------------------------------------------
TELECOMMUNICATIONS--3.0%
- --------------------------------------------------------------------------------
America Movil ADR, Ser L 31,530 830
NII Holdings* 4,560 385
---------
Total Telecommunications 1,215
---------
- --------------------------------------------------------------------------------
TRAVELER ACCOMMODATION--1.1%
- --------------------------------------------------------------------------------
MGM Mirage* 10,660 467
---------
Total Traveler accommodation 467
---------
- --------------------------------------------------------------------------------
WATER, SEWAGE & OTHER SYSTEMS--0.6%
- --------------------------------------------------------------------------------
Aqua America 6,600 251
---------
Total Water, sewage & other systems 251
---------
- --------------------------------------------------------------------------------
TOTAL COMMON STOCK
(COST $36,141) 40,078
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
CASH EQUIVALENT--2.7%
- --------------------------------------------------------------------------------
BlackRock TempCash Fund,
Institutional Shares 1,096,441 1,096
- --------------------------------------------------------------------------------
TOTAL CASH EQUIVALENT
(COST $1,096) 1,096
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
TOTAL INVESTMENTS--100.8%
(COST $37,237) 41,174
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
OTHER ASSETS AND LIABILITIES-- (0.8)%
- --------------------------------------------------------------------------------
Receivable from investment adviser 10
Payable for investment
securities purchased (695)
Payable due to administrator (5)
Payable for capital shares redeemed (1)
Other assets and liabilities, net 375
- --------------------------------------------------------------------------------
TOTAL OTHER ASSETS AND LIABILITIES (316)
- --------------------------------------------------------------------------------
NET ASSETS-- 100.0% $40,858
- --------------------------------------------------------------------------------
24 TURNER FUNDS 2005 ANNUAL REPORT
STATEMENT OF NET ASSETS
TURNER CORE GROWTH FUND
Value
(000)
- --------------------------------------------------------------------------------
NET ASSETS CONSIST OF:
- --------------------------------------------------------------------------------
Portfolio capital of Class I Shares
(unlimited authorization -- no par value)
based on 3,737,140 outstanding shares
of beneficial interest $ 38,472
Portfolio capital of Class II Shares
(unlimited authorization -- no par value)
based on 47 outstanding shares
of beneficial interest 1
Undistributed net investment income 65
Accumulated net realized loss
on investments (1,617)
Net unrealized appreciation
on investments 3,937
- --------------------------------------------------------------------------------
NET ASSETS $40,858
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
NET ASSET VALUE, OFFERING AND REDEMPTION
PRICE PER SHARE -- CLASS I SHARES
($40,856,593 / 3,737,140 SHARES) $10.93
- --------------------------------------------------------------------------------
NET ASSET VALUE, OFFERING AND REDEMPTION
PRICE PER SHARE -- CLASS II SHARES
($514 / 47 SHARES) $10.93
- --------------------------------------------------------------------------------
* Non-income producing security
ADR -- American Depositary Receipt
Cl -- Class
Ser -- Series
The accompanying notes are an integral part of the financial statements.
TURNER FUNDS 2005 ANNUAL REPORT 25
FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
STATEMENT OF NET ASSETS
TURNER STRATEGIC GROWTH FUND
September 30, 2005
Value
Shares (000)
- --------------------------------------------------------------------------------
COMMON STOCK--99.3%
- --------------------------------------------------------------------------------
AEROSPACE PRODUCT & PARTS
MANUFACTURING--1.4%
- --------------------------------------------------------------------------------
Boeing 1,500 $ 102
---------
Total Aerospace product &
parts manufacturing 102
---------
- --------------------------------------------------------------------------------
AGRICULTURE, CONSTRUCTION & MINING
MACHINERY MANUFACTURING--2.5%
- --------------------------------------------------------------------------------
Caterpillar 1,960 115
Joy Global 1,320 67
---------
Total Agriculture, construction &
mining machinery manufacturing 182
---------
- --------------------------------------------------------------------------------
ALUMINA & ALUMINUM PRODUCTION &
PROCESSING--0.9%
- --------------------------------------------------------------------------------
Cia Vale do Rio Doce ADR* 1,470 65
---------
Total Alumina & aluminum
production & processing 65
---------
- --------------------------------------------------------------------------------
CEMENT & CONCRETE PRODUCT
MANUFACTURING--0.9%
- --------------------------------------------------------------------------------
Cemex ADR 1,260 66
---------
Total Cement & concrete
product manufacturing 66
---------
- --------------------------------------------------------------------------------
CLOTHING STORES--2.5%
- --------------------------------------------------------------------------------
Chico's FAS* 1,530 56
Nordstrom 2,160 74
Urban Outfitters* 1,730 51
---------
Total Clothing stores 181
---------
- --------------------------------------------------------------------------------
COAL MINING--1.0%
- --------------------------------------------------------------------------------
Peabody Energy 830 70
---------
Total Coal mining 70
---------
- --------------------------------------------------------------------------------
COMMUNICATIONS EQUIPMENT
MANUFACTURING--4.1%
- --------------------------------------------------------------------------------
Ericsson Telephone ADR # 2,710 100
Motorola 6,150 136
Sony ADR 1,760 58
---------
Total Communications equipment
manufacturing 294
---------
Value
Shares (000)
- --------------------------------------------------------------------------------
COMPUTER & PERIPHERAL EQUIPMENT
MANUFACTURING--4.9%
- --------------------------------------------------------------------------------
Apple Computer* 2,580 $ 138
EMC* 11,020 143
Sandisk* 1,430 69
---------
Total Computer & peripheral
equipment manufacturing 350
---------
- --------------------------------------------------------------------------------
ELECTRICAL EQUIPMENT MANUFACTURING--5.7%
- --------------------------------------------------------------------------------
General Electric 12,200 411
---------
Total Electrical equipment
manufacturing 411
---------
- --------------------------------------------------------------------------------
ELECTRONIC SHOPPING & MAIL-ORDER HOUSES--1.8%
- --------------------------------------------------------------------------------
eBay* 3,110 128
---------
Total Electronic shopping &
mail-order houses 128
---------
- --------------------------------------------------------------------------------
ELECTRONICS & APPLIANCE STORES--0.9%
- --------------------------------------------------------------------------------
Best Buy 1,525 66
---------
Total Electronics & appliance stores 66
---------
- --------------------------------------------------------------------------------
FOUNDRIES--0.9%
- --------------------------------------------------------------------------------
Precision Castparts 1,260 67
---------
Total Foundries 67
---------
- --------------------------------------------------------------------------------
GROCERY STORES--0.9%
- --------------------------------------------------------------------------------
Whole Foods Market 500 67
---------
Total Grocery stores 67
---------
- --------------------------------------------------------------------------------
INDUSTRIAL MACHINERY MANUFACTURING--1.9%
- --------------------------------------------------------------------------------
Kla-Tencor* 1,300 64
Teradyne* 4,250 70
---------
Total Industrial machinery
manufacturing 134
---------
- --------------------------------------------------------------------------------
INFORMATION SERVICES--7.8%
- --------------------------------------------------------------------------------
Google, Cl A* 790 250
Juniper Networks* 5,120 122
Netease.com ADR* 540 48
Yahoo!* 4,010 136
---------
Total Information services 556
---------
26 TURNER FUNDS 2005 ANNUAL REPORT
STATEMENT OF NET ASSETS
TURNER STRATEGIC GROWTH FUND
Value
Shares (000)
- --------------------------------------------------------------------------------
INSURANCE CARRIERS--3.9%
- --------------------------------------------------------------------------------
UnitedHealth Group 2,600 $ 146
WellPoint* 1,780 135
---------
Total Insurance carriers 281
---------
- --------------------------------------------------------------------------------
INVESTIGATION & SECURITY SERVICES--0.2%
- --------------------------------------------------------------------------------
Cogent* 650 16
---------
Total Investigation & security services 16
---------
- --------------------------------------------------------------------------------
LIMITED-SERVICE EATING PLACES--0.9%
- --------------------------------------------------------------------------------
Starbucks* 1,290 65
---------
Total Limited-service eating places 65
---------
- --------------------------------------------------------------------------------
MEDICAL EQUIPMENT & SUPPLIES
MANUFACTURING--1.3%
- --------------------------------------------------------------------------------
St. Jude Medical* 1,970 92
---------
Total Medical equipment &
supplies manufacturing 92
---------
- --------------------------------------------------------------------------------
MOTOR VEHICLE MANUFACTURING--1.1%
- --------------------------------------------------------------------------------
Toyota Motor ADR # 880 81
---------
Total Motor vehicle manufacturing 81
---------
- --------------------------------------------------------------------------------
NATURAL GAS DISTRIBUTION--1.0%
- --------------------------------------------------------------------------------
Williams 2,830 71
---------
Total Natural gas distribution 71
---------
- --------------------------------------------------------------------------------
OFFICES OF PHYSICIANS--2.0%
- --------------------------------------------------------------------------------
Caremark Rx* 2,860 143
---------
Total Offices of physicians 143
---------
- --------------------------------------------------------------------------------
OTHER ELECTRICAL EQUIPMENT &
COMPONENT MANUFACTURING--2.0%
- --------------------------------------------------------------------------------
Corning* 7,210 139
---------
Total Other electrical equipment &
component manufacturing 139
---------
- --------------------------------------------------------------------------------
OTHER FINANCIAL INVESTMENT ACTIVITIES--2.1%
- --------------------------------------------------------------------------------
SEI Investments 1,740 65
T. Rowe Price Group 1,310 86
---------
Total Other financial
investment activities 151
---------
Value
Shares (000)
- --------------------------------------------------------------------------------
OTHER GENERAL PURPOSE MACHINERY
MANUFACTURING--1.2%
- --------------------------------------------------------------------------------
ITT Industries 780 $ 89
---------
Total Other general purpose
machinery manufacturing 89
---------
- --------------------------------------------------------------------------------
OTHER LEATHER & ALLIED PRODUCT
MANUFACTURING--1.1%
- --------------------------------------------------------------------------------
Coach* 2,560 80
---------
Total Other leather & allied product
manufacturing 80
---------
- --------------------------------------------------------------------------------
OTHER MISCELLANEOUS MANUFACTURING--0.8%
- --------------------------------------------------------------------------------
Scientific Games, Cl A* 1,850 57
---------
Total Other miscellaneous
manufacturing 57
---------
- --------------------------------------------------------------------------------
PETROLEUM & COAL PRODUCTS
MANUFACTURING--1.0%
- --------------------------------------------------------------------------------
Valero Energy 600 68
---------
Total Petroleum & coal products
manufacturing 68
---------
- --------------------------------------------------------------------------------
PHARMACEUTICAL & MEDICINE
MANUFACTURING--9.9%
- --------------------------------------------------------------------------------
Amgen* 2,020 161
Genzyme* 1,750 125
Gilead Sciences* 2,950 144
Johnson & Johnson 3,280 207
Sepracor* 1,130 67
---------
Total Pharmaceutical &
medicine manufacturing 704
---------
- --------------------------------------------------------------------------------
PHARMACEUTICAL PREPARATION--0.9%
- --------------------------------------------------------------------------------
Bausch & Lomb 780 63
---------
Total Pharmaceutical preparation 63
---------
- --------------------------------------------------------------------------------
PIPELINE TRANSPORTATION OF
NATURAL GAS--1.0%
- --------------------------------------------------------------------------------
Kinder Morgan 700 67
---------
Total Pipeline transportation
of natural gas 67
---------
TURNER FUNDS 2005 ANNUAL REPORT 27
FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
STATEMENT OF NET ASSETS
TURNER STRATEGIC GROWTH FUND
Value
Shares (000)
- --------------------------------------------------------------------------------
PLUMBING, FIXTURE FITTING
AND TRIM--1.0%
- --------------------------------------------------------------------------------
Fortune Brands 910 $ 74
---------
Total Plumbing, fixture fitting
and trim 74
---------
- --------------------------------------------------------------------------------
RADIO & TELEVISION BROADCASTING--1.3%
- --------------------------------------------------------------------------------
Sirius Satellite Radio* # 13,920 91
---------
Total Radio & television
broadcasting 91
---------
- --------------------------------------------------------------------------------
SCIENTIFIC R&D SERVICES--2.1%
- --------------------------------------------------------------------------------
Genentech* 1,740 147
---------
Total Scientific r&d services 147
---------
- --------------------------------------------------------------------------------
SECURITIES & COMMODITY EXCHANGES--1.1%
- --------------------------------------------------------------------------------
Chicago Mercantile
Exchange Holdings 240 81
---------
Total Securities & commodity exchanges 81
---------
- --------------------------------------------------------------------------------
SECURITY & COMMODITY CONTRACTS
INTERMEDIATION & BROKERAGE--1.8%
- --------------------------------------------------------------------------------
Charles Schwab 4,700 68
Morgan Stanley 1,160 62
---------
Total Security & commodity contracts
intermediation & brokerage 130
---------
- --------------------------------------------------------------------------------
SEMICONDUCTOR & OTHER ELECTRONIC
COMPONENT MANUFACTURING--10.7%
- --------------------------------------------------------------------------------
Advanced Micro Devices* 4,810 121
Analog Devices 1,720 64
Applied Materials 8,070 137
Broadcom, Cl A* 3,560 167
Marvell Technology Group* 3,040 140
Texas Instruments 3,930 133
---------
Total Semiconductor & other electronic
component manufacturing 762
---------
- --------------------------------------------------------------------------------
SOFTWARE PUBLISHERS--7.3%
- --------------------------------------------------------------------------------
Electronic Arts* 2,130 121
Microsoft 15,500 399
---------
Total Software publishers 520
---------
Value
Shares (000)
- --------------------------------------------------------------------------------
STEEL PRODUCT MANUFACTURING
FROM PURCHASED STEEL--0.9%
- --------------------------------------------------------------------------------
Nucor 1,100 $ 65
---------
Total Steel product manufacturing
from purchased steel 65
---------
- --------------------------------------------------------------------------------
TELECOMMUNICATIONS--2.4%
- --------------------------------------------------------------------------------
America Movil ADR, Ser L 3,870 102
NII Holdings* 840 71
---------
Total Telecommunications 173
---------
- --------------------------------------------------------------------------------
TELEPHONE APPARATUS
MANUFACTURING--0.9%
- --------------------------------------------------------------------------------
Comverse Technology* 2,440 64
---------
Total Telephone apparatus
manufacturing 64
---------
- --------------------------------------------------------------------------------
TRAVELER ACCOMMODATION--1.3%
- --------------------------------------------------------------------------------
MGM Mirage* 2,080 91
---------
Total Traveler accommodation 91
---------
- --------------------------------------------------------------------------------
TOTAL COMMON STOCK
(COST $6,032) 7,104
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SHORT-TERM INVESTMENT HELD AS COLLATERAL
FOR LOANED SECURITIES--3.4%
- --------------------------------------------------------------------------------
Boston Global Investment Trust--
Quality Portfolio (1) 243,600 244
- --------------------------------------------------------------------------------
TOTAL SHORT-TERM INVESTMENT HELD
AS COLLATERAL FOR LOANED SECURITIES
(COST $244) 244
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
CASH EQUIVALENT--1.0%
- --------------------------------------------------------------------------------
BlackRock TempCash Fund,
Institutional Shares 72,194 72
- --------------------------------------------------------------------------------
TOTAL CASH EQUIVALENT
(COST $72) 72
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
TOTAL INVESTMENTS--103.7%
(COST $6,348) 7,420
- --------------------------------------------------------------------------------
28 TURNER FUNDS 2005 ANNUAL REPORT
STATEMENT OF NET ASSETS
TURNER STRATEGIC GROWTH FUND
Value
(000)
- --------------------------------------------------------------------------------
OTHER ASSETS AND LIABILITIES-- (3.7)%
- --------------------------------------------------------------------------------
Obligation to return securities
lending collateral $ (244)
Payable for investment securities purchased (94)
Payable due to investment adviser (1)
Payable due to administrator (1)
Other assets and liabilities, net 78
- --------------------------------------------------------------------------------
TOTAL OTHER ASSETS AND LIABILITIES (262)
- --------------------------------------------------------------------------------
NET ASSETS -- 100.0% $7,158
- --------------------------------------------------------------------------------
NET ASSETS CONSIST OF:
- --------------------------------------------------------------------------------
Portfolio capital of Class I Shares
(unlimited authorization -- no par value)
based on 613,019 outstanding shares
of beneficial interest $ 19,137
Accumulated net realized loss
on investments (13,051)
Net unrealized appreciation
on investments 1,072
- --------------------------------------------------------------------------------
NET ASSETS $ 7,158
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
NET ASSET VALUE, OFFERING AND REDEMPTION
PRICE PER SHARE-- CLASS I SHARES $11.68
- --------------------------------------------------------------------------------
* Non-income producing security
# Security fully or partially on loan at September 30, 2005 (see Note 9 in
Notes to Financial Statements). The total value of securities on loan at
September 30, 2005, was $232,275.
(1) A private placement security. Units are non-transferable but may be redeemed
at the NAV. The Fund lends securities in its 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 Fund, as such, the
Fund is liable for the investment losses. The Fund receives an annual fee
for its participation in the Lending Agreement based on projected lending
activity.
ADR -- American Depositary Receipt
Cl -- Class
Ser -- Series
The accompanying notes are an integral part of the financial statements.
TURNER FUNDS 2005 ANNUAL REPORT 29
FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
STATEMENT OF NET ASSETS
TURNER MIDCAP GROWTH FUND
September 30, 2005
Value
Shares (000)
- --------------------------------------------------------------------------------
COMMON STOCK--99.4%
- --------------------------------------------------------------------------------
ADMINISTRATION OF HUMAN
RESOURCE PROGRAMS--0.7%
- --------------------------------------------------------------------------------
Express Scripts* # 105,328 $ 6,551
---------
Total Administration of human
resource programs 6,551
---------
- --------------------------------------------------------------------------------
ADVERTISING & RELATED SERVICES--1.4%
- --------------------------------------------------------------------------------
aQuantive* 211,670 4,261
Getty Images* # 108,740 9,356
---------
Total Advertising & related services 13,617
---------
- --------------------------------------------------------------------------------
AEROSPACE PRODUCT & PARTS
MANUFACTURING--0.4%
- --------------------------------------------------------------------------------
Empresa Brasileira de
Aeronautica ADR 92,060 3,554
---------
Total Aerospace product &
parts manufacturing 3,554
---------
- --------------------------------------------------------------------------------
AGRICULTURE, CONSTRUCTION & MINING MACHINERY MANUFACTURING--3.7%
- --------------------------------------------------------------------------------
Grant Prideco* 209,550 8,518
Joy Global 195,770 9,878
National Oilwell Varco* 191,940 12,630
Terex* 99,470 4,917
---------
Total Agriculture, construction &
mining machinery manufacturing 35,943
---------
- --------------------------------------------------------------------------------
BEVERAGE MANUFACTURING--0.4%
- --------------------------------------------------------------------------------
Hansen Natural* # 80,690 3,799
---------
Total Beverage manufacturing 3,799
---------
- --------------------------------------------------------------------------------
CEMENT & CONCRETE PRODUCT
MANUFACTURING--0.8%
- --------------------------------------------------------------------------------
Florida Rock Industries 120,140 7,700
---------
Total Cement & concrete
product manufacturing 7,700
---------
- --------------------------------------------------------------------------------
CLAY PRODUCT & REFRACTORY MANUFACTURING--0.4%
- --------------------------------------------------------------------------------
Ceradyne* 102,070 3,744
---------
Total Clay product & refractory
manufacturing 3,744
---------
Value
Shares (000)
- --------------------------------------------------------------------------------
CLOTHING STORES--3.1%
- --------------------------------------------------------------------------------
Chico's FAS* 327,750 $12,061
Nordstrom # 184,640 6,337
Urban Outfitters* # 382,620 11,249
---------
Total Clothing stores 29,647
---------
- --------------------------------------------------------------------------------
COAL MINING--1.8%
- --------------------------------------------------------------------------------
Consol Energy # 95,580 7,290
Peabody Energy 116,980 9,867
---------
Total Coal mining 17,157
---------
- --------------------------------------------------------------------------------
COMPUTER & PERIPHERAL EQUIPMENT
MANUFACTURING--1.6%
- --------------------------------------------------------------------------------
Sandisk* 327,160 15,785
---------
Total Computer & peripheral
equipment manufacturing 15,785
---------
- --------------------------------------------------------------------------------
COMPUTER SYSTEMS DESIGN &
RELATED SERVICES--1.4%
- --------------------------------------------------------------------------------
Foundry Networks* 563,510 7,157
Ixia* # 31,833 468
Netgear* 232,712 5,599
---------
Total Computer systems design &
related services 13,224
---------
- --------------------------------------------------------------------------------
CUT & SEW APPAREL MANUFACTURING--0.8%
- --------------------------------------------------------------------------------
Polo Ralph Lauren # 161,660 8,132
---------
Total Cut & sew apparel
manufacturing 8,132
---------
- --------------------------------------------------------------------------------
DAIRY PRODUCT MANUFACTURING--0.6%
- --------------------------------------------------------------------------------
Dean Foods* 153,590 5,969
---------
Total Dairy product manufacturing 5,969
---------
- --------------------------------------------------------------------------------
DATA PROCESSING SERVICES--0.9%
- --------------------------------------------------------------------------------
Global Payments # 105,660 8,212
---------
Total Data processing services 8,212
---------
- --------------------------------------------------------------------------------
DEPOSITORY CREDIT INTERMEDIATION--1.6%
- --------------------------------------------------------------------------------
Mellon Financial 231,300 7,394
Northern Trust 162,151 8,197
---------
Total Depository credit
intermediation 15,591
---------
30 TURNER FUNDS 2005 ANNUAL REPORT
STATEMENT OF NET ASSETS
TURNER MIDCAP GROWTH FUND
Value
Shares (000)
- --------------------------------------------------------------------------------
DRUGS & DRUGGISTS' SUNDRIES WHOLESALE--0.9%
- --------------------------------------------------------------------------------
Henry Schein* 200,000 $ 8,524
---------
Total Drugs & druggists'
sundries wholesale 8,524
---------
- --------------------------------------------------------------------------------
ELECTRICAL GOODS WHOLESALE--0.8%
- --------------------------------------------------------------------------------
WESCO International* 216,520 7,334
---------
Total Electrical goods wholesale 7,334
---------
- --------------------------------------------------------------------------------
ELECTRONICS & APPLIANCE STORES--0.8%
- --------------------------------------------------------------------------------
CDW # 126,137 7,432
---------
Total Electronics & appliance stores 7,432
---------
- --------------------------------------------------------------------------------
EMPLOYMENT SERVICES--0.7%
- --------------------------------------------------------------------------------
Manpower # 150,060 6,661
---------
Total Employment services 6,661
---------
- --------------------------------------------------------------------------------
FOUNDRIES--1.1%
- --------------------------------------------------------------------------------
Precision Castparts 199,760 10,607
---------
Total Foundries 10,607
---------
- --------------------------------------------------------------------------------
FREIGHT TRANSPORTATION ARRANGEMENT--0.7%
- --------------------------------------------------------------------------------
UTI Worldwide # 85,320 6,629
---------
Total Freight transportation
arrangement 6,629
---------
- --------------------------------------------------------------------------------
GENERAL MEDICAL & SURGICAL HOSPITALS--0.5%
- --------------------------------------------------------------------------------
Community Health Systems* 118,220 4,588
---------
Total General medical &
surgical hospitals 4,588
---------
- --------------------------------------------------------------------------------
GROCERY STORES--0.8%
- --------------------------------------------------------------------------------
Whole Foods Market # 57,180 7,688
---------
Total Grocery stores 7,688
---------
- --------------------------------------------------------------------------------
HEALTH & PERSONAL CARE STORES--1.2%
- --------------------------------------------------------------------------------
Omnicare 206,540 11,614
---------
Total Health & personal care stores 11,614
---------
- --------------------------------------------------------------------------------
HOME FURNISHINGS STORES--0.9%
- --------------------------------------------------------------------------------
Williams-Sonoma* # 224,120 8,595
---------
Total Home furnishings stores 8,595
---------
Value
Shares (000)
- --------------------------------------------------------------------------------
INDUSTRIAL MACHINERY MANUFACTURING--3.7%
- --------------------------------------------------------------------------------
Kla-Tencor* 346,240 $16,883
Teradyne* 559,820 9,237
Varian Semiconductor
Equipment Associates* # 225,990 9,575
---------
Total Industrial machinery
manufacturing 35,695
---------
- --------------------------------------------------------------------------------
INFORMATION SERVICES--1.9%
- --------------------------------------------------------------------------------
CNET Networks* # 760,130 10,315
Netease.com ADR* # 47,980 4,319
Valueclick* 198,663 3,395
---------
Total Information services 18,029
---------
- --------------------------------------------------------------------------------
INSURANCE CARRIERS--2.8%
- --------------------------------------------------------------------------------
Fidelity National Financial 205,580 9,152
Pacificare Health Systems* 150,990 12,046
WellChoice* 70,790 5,373
---------
Total Insurance carriers 26,571
---------
- --------------------------------------------------------------------------------
INVESTIGATION & SECURITY SERVICES--0.8%
- --------------------------------------------------------------------------------
Cogent* # 328,281 7,797
---------
Total Investigation & security services 7,797
---------
- --------------------------------------------------------------------------------
MANAGEMENT, SCIENTIFIC & TECHNICAL
CONSULTING SERVICES--2.1%
- --------------------------------------------------------------------------------
CH Robinson Worldwide* 121,980 7,821
Monster Worldwide* # 387,625 11,904
---------
Total Management, scientific &
technical consulting services 19,725
---------
- --------------------------------------------------------------------------------
MEDICAL EQUIPMENT & SUPPLIES
MANUFACTURING--0.7%
- --------------------------------------------------------------------------------
C.R. Bard 97,430 6,433
---------
Total Medical equipment &
supplies manufacturing 6,433
---------
- --------------------------------------------------------------------------------
METAL ORE MINING--0.3%
- --------------------------------------------------------------------------------
Freeport-McMoRan Copper &
Gold, Cl B 61,730 2,999
---------
Total Metal ore mining 2,999
---------
TURNER FUNDS 2005 ANNUAL REPORT 31
FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
STATEMENT OF NET ASSETS
TURNER MIDCAP GROWTH FUND
Value
Shares (000)
- --------------------------------------------------------------------------------
MINING SUPPORT ACTIVITIES--1.5%
- --------------------------------------------------------------------------------
Patterson-UTI Energy 203,740 $ 7,351
Tidewater # 152,690 7,431
---------
Total Mining support activities 14,782
---------
- --------------------------------------------------------------------------------
MISCELLANEOUS NONDURABLE
GOODS WHOLESALE--0.7%
- --------------------------------------------------------------------------------
Mosaic* # 427,260 6,845
---------
Total Miscellaneous nondurable
goods wholesale 6,845
---------
- --------------------------------------------------------------------------------
MOTOR VEHICLE MANUFACTURING--0.8%
- --------------------------------------------------------------------------------
Oshkosh Truck 169,890 7,332
---------
Total Motor vehicle manufacturing 7,332
---------
- --------------------------------------------------------------------------------
NAVIGATIONAL/MEASURING/MEDICAL/
CONTROL INSTRUMENTS MANUFACTURING--5.3%
- --------------------------------------------------------------------------------
Agilent Technologies* 362,940 11,886
Ametek 163,770 7,037
DaVita* # 148,050 6,821
Fisher Scientific International* 144,320 8,955
Itron* 97,225 4,439
Roper Industries # 299,360 11,762
---------
Total Navigational/measuring/medical/
control instruments manufacturing 50,900
---------
- --------------------------------------------------------------------------------
OIL & GAS EXTRACTION--4.7%
- --------------------------------------------------------------------------------
Chesapeake Energy 130,890 5,007
Range Resources 289,110 11,163
Southwestern Energy* 95,300 6,995
Ultra Petroleum* 180,820 10,285
XTO Energy 264,506 11,987
---------
Total Oil & gas extraction 45,437
---------
- --------------------------------------------------------------------------------
OTHER FINANCIAL INVESTMENT ACTIVITIES--3.6%
- --------------------------------------------------------------------------------
Affiliated Managers Group* # 137,290 9,943
SEI Investments # 214,310 8,054
T. Rowe Price Group 249,760 16,309
---------
Total Other financial
investment activities 34,306
---------
Value
Shares (000)
- --------------------------------------------------------------------------------
OTHER LEATHER & ALLIED PRODUCT
MANUFACTURING--1.5%
- --------------------------------------------------------------------------------
Coach* 464,430 $ 14,565
---------
Total Other leather & allied product
manufacturing 14,565
---------
- --------------------------------------------------------------------------------
OTHER MISCELLANEOUS MANUFACTURING--1.6%
- --------------------------------------------------------------------------------
Scientific Games, Cl A* 311,600 9,660
WMS Industries* # 217,880 6,129
---------
Total Other miscellaneous
manufacturing 15,789
---------
- --------------------------------------------------------------------------------
OUTPATIENT CARE CENTERS--0.8%
- --------------------------------------------------------------------------------
Coventry Health Care* 95,150 8,185
---------
Total Outpatient care centers 8,185
---------
- --------------------------------------------------------------------------------
PLUMBING, FIXTURE FITTING
AND TRIM--1.2%
- --------------------------------------------------------------------------------
Fortune Brands 138,670 11,278
---------
Total Plumbing, fixure fitting
and trim 11,278
---------
- --------------------------------------------------------------------------------
PETROLEUM & COAL PRODUCTS
MANUFACTURING--1.2%
- --------------------------------------------------------------------------------
Sunoco 148,490 11,612
---------
Total Petroleum & coal products
manufacturing 11,612
---------
- --------------------------------------------------------------------------------
PHARMACEUTICAL & MEDICINE
MANUFACTURING--6.3%
- --------------------------------------------------------------------------------
Allergan 82,080 7,520
Dade Behring Holdings 252,260 9,248
Forest Laboratories* 235,190 9,165
Kos Pharmaceuticals* 96,666 6,470
Medimmune* 211,890 7,130
MGI Pharma* 198,651 4,630
Sepracor* # 138,680 8,181
Shire Pharmaceuticals ADR 208,782 7,723
---------
Total Pharmaceutical &
medicine manufacturing 60,067
---------
32 TURNER FUNDS 2005 ANNUAL REPORT
STATEMENT OF NET ASSETS
TURNER MIDCAP GROWTH FUND
Value
Shares (000)
- --------------------------------------------------------------------------------
PIPELINE TRANSPORTATION OF NATURAL GAS--1.1%
- --------------------------------------------------------------------------------
Kinder Morgan 56,300 $ 5,414
Questar 55,920 4,927
---------
Total Pipeline transportation
of natural gas 10,341
---------
- --------------------------------------------------------------------------------
PHARMACEUTICAL PREPARATION--1.0%
- --------------------------------------------------------------------------------
Bausch & Lomb 115,560 9,323
---------
Total Pharmaceutical preparation 9,323
---------
- --------------------------------------------------------------------------------
PRIMARY METAL MANUFACTURING--0.6%
- --------------------------------------------------------------------------------
Allegheny Technologies 180,830 5,602
---------
Total Primary metal manufacturing 5,602
---------
- --------------------------------------------------------------------------------
PROFESSIONAL, SCIENTIFIC &
TECHNICAL SERVICES--0.8%
- --------------------------------------------------------------------------------
Alliance Data Systems* 187,420 7,338
---------
Total Professional, scientific &
technical services 7,338
---------
- --------------------------------------------------------------------------------
RADIO & TELEVISION BROADCASTING--1.4%
- --------------------------------------------------------------------------------
Sirius Satellite Radio* # 2,065,920 13,532
---------
Total Radio & television
broadcasting 13,532
---------
- --------------------------------------------------------------------------------
SCIENTIFIC R&D SERVICES--2.0%
- --------------------------------------------------------------------------------
Celgene* # 197,217 10,713
Protein Design Labs* 287,220 8,042
---------
Total Scientific r&d services 18,755
---------
- --------------------------------------------------------------------------------
SECURITIES & COMMODITY EXCHANGES--0.8%
- --------------------------------------------------------------------------------
Chicago Mercantile
Exchange Holdings # 22,030 7,431
---------
Total Securities & commodity
exchanges 7,431
---------
- --------------------------------------------------------------------------------
SECURITY & COMMODITY CONTRACTS
INTERMEDIATION & BROKERAGE--2.7%
- --------------------------------------------------------------------------------
Ameritrade Holding* 457,349 9,824
Jefferies Group # 133,617 5,819
Legg Mason 95,330 10,457
---------
Total Security & commodity contracts
intermediation & brokerage 26,100
---------
Value
Shares (000)
- --------------------------------------------------------------------------------
SEMICONDUCTOR & OTHER ELECTRONIC
COMPONENT MANUFACTURING--9.2%
- --------------------------------------------------------------------------------
Advanced Micro Devices* # 612,120 $ 15,426
Analog Devices 312,770 11,616
ASML Holding, NY Shares* 458,050 7,562
Broadcom, Cl A* 484,760 22,740
Cypress Semiconductor* # 516,420 7,772
Genesis Microchip* 218,370 4,793
JDS Uniphase* 2,620,520 5,818
Micron Technology* 342,540 4,556
Silicon Laboratories* 166,890 5,072
Sirf Technology Holdings* 108,870 3,280
---------
Total Semiconductor & other
electronic component
manufacturing 88,635
---------
- --------------------------------------------------------------------------------
SOFTWARE PUBLISHERS--1.7%
- --------------------------------------------------------------------------------
Akamai Technologies* # 348,955 5,566
F5 Networks* # 92,987 4,042
Openwave Systems* # 377,600 6,789
---------
Total Software publishers 16,397
---------
- --------------------------------------------------------------------------------
SPORTING GOODS/HOBBY/
MUSICAL INSTRUMENT STORES--0.6%
- --------------------------------------------------------------------------------
GameStop, Cl A* # 172,250 5,421
---------
Total Sporting goods/hobby/
musical instrument stores 5,421
---------
- --------------------------------------------------------------------------------
TELECOMMUNICATIONS--2.3%
- --------------------------------------------------------------------------------
Adtran 209,219 6,590
NII Holdings* 180,340 15,230
---------
Total Telecommunications 21,820
---------
- --------------------------------------------------------------------------------
TELEPHONE APPARATUS MANUFACTURING--1.2%
- --------------------------------------------------------------------------------
Comverse Technology* 456,430 11,990
---------
Total Telephone apparatus
manufacturing 11,990
---------
TURNER FUNDS 2005 ANNUAL REPORT 33
FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
STATEMENT OF NET ASSETS
TURNER MIDCAP GROWTH FUND
Value
Shares (000)
- --------------------------------------------------------------------------------
TRAVELER ACCOMMODATION--4.5%
- --------------------------------------------------------------------------------
Gaylord Entertainment* 98,960 $ 4,715
Harrah's Entertainment 117,740 7,676
MGM Mirage* # 275,590 12,063
Starwood Hotels &
Resorts Worldwide 167,130 9,555
Station Casinos 134,500 8,925
---------
Total Traveler accommodation 42,934
---------
- --------------------------------------------------------------------------------
TOTAL COMMON STOCK
(COST $752,552) 952,263
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SHORT-TERM INVESTMENT HELD AS COLLATERAL FOR LOANED SECURITIES--11.3%
- --------------------------------------------------------------------------------
Boston Global Investment Trust--
Quality Portfolio (1) 107,981,200 107,981
- --------------------------------------------------------------------------------
TOTAL SHORT-TERM INVESTMENT HELD
AS COLLATERAL FOR LOANED SECURITIES
(COST $107,981) 107,981
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
CASH EQUIVALENT--1.1%
- --------------------------------------------------------------------------------
BlackRock TempCash Fund,
Institutional Shares 10,605,694 10,606
- --------------------------------------------------------------------------------
TOTAL CASH EQUIVALENT
(COST $10,606) 10,606
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
TOTAL INVESTMENTS--111.8%
(COST $871,139) 1,070,850
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
OTHER ASSETS AND LIABILITIES-- (11.8)%
- --------------------------------------------------------------------------------
Obligation to return securities
lending collateral (107,981)
Payable for investment
securities purchased (9,633)
Payable for capital shares redeemed (2,643)
Payable due to investment adviser (581)
Payable due to administrator (116)
Other assets and liabilities, net 7,667
- --------------------------------------------------------------------------------
TOTAL OTHER ASSETS AND LIABILITIES (113,287)
- --------------------------------------------------------------------------------
NET ASSETS 100% $957,563
- --------------------------------------------------------------------------------
Value
(000)
- --------------------------------------------------------------------------------
NET ASSETS CONSIST OF:
- --------------------------------------------------------------------------------
Portfolio capital of Class I Shares
(unlimited authorization -- no par value)
based on 36,214,469 outstanding shares
of beneficial interest $1,251,068
Portfolio capital of Class II Shares
(unlimited authorization -- no par value)
based on 70,793 outstanding shares
of beneficial interest 1,463
Accumulated net investment loss (8)
Accumulated net realized loss
on investments (494,671)
Net unrealized appreciation
on investments 199,711
- --------------------------------------------------------------------------------
NET ASSETS $ 957,563
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
NET ASSET VALUE, OFFERING AND REDEMPTION
PRICE PER SHARE -- CLASS I SHARES
($955,730,038 / 36,214,469 SHARES) $26.39
- --------------------------------------------------------------------------------
NET ASSET VALUE, OFFERING AND REDEMPTION
PRICE PER SHARE -- CLASS II SHARES
($1,832,484 / 70,793 SHARES) $25.89
- --------------------------------------------------------------------------------
* Non-income producing security
# Security fully or partially on loan at September 30, 2005 (see Note 9 in
Notes to Financial Statements). The total value of securities on loan at
September 30, 2005, was $105,028,035.
(1) A private placement security. Units are non-transferable but may be redeemed
at the NAV. The Fund lends securities in its 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 Fund, as such, the
Fund is liable for the investment losses. The Fund receives an annual fee
for its participation in the Lending Agreement based on projected lending
activity.
ADR - American Depositary Receipt
Cl -- Class
NY -- New York
The accompanying notes are an integral part of the financial statements.
34 TURNER FUNDS 2005 ANNUAL REPORT
STATEMENT OF NET ASSETS
TURNER SMALL CAP GROWTH FUND
September 30, 2005
Value
Shares (000)
- --------------------------------------------------------------------------------
COMMON STOCK--97.5%
- --------------------------------------------------------------------------------
ACCOUNTING/TAX PREPARATION/BOOKKEEPING/
PAYROLL SERVICES--0.9%
- --------------------------------------------------------------------------------
Jackson Hewitt Tax Service 93,860 $ 2,244
---------
Total Accounting/tax preparation/
bookkeeping/payroll services 2,244
---------
- --------------------------------------------------------------------------------
ACTIVITIES RELATED TO CREDIT INTERMEDIATION--1.1%
- --------------------------------------------------------------------------------
Euronet Worldwide* # 50,530 1,495
Heartland Payment Systems* # 54,930 1,311
---------
Total Activities related to
credit intermediation 2,806
---------
- --------------------------------------------------------------------------------
ADVERTISING & RELATED SERVICES--1.1%
- --------------------------------------------------------------------------------
aQuantive* # 142,020 2,859
---------
Total Advertising & related services 2,859
---------
- --------------------------------------------------------------------------------
AEROSPACE PRODUCT &
PARTS MANUFACTURING--0.8%
- --------------------------------------------------------------------------------
Hexcel* 110,480 2,021
---------
Total Aerospace product &
parts manufacturing 2,021
---------
- --------------------------------------------------------------------------------
AGRICULTURE, CONSTRUCTION & MINING
MACHINERY MANUFACTURING--2.0%
- --------------------------------------------------------------------------------
Astec Industries* 44,450 1,262
Bucyrus International, Cl A 41,410 2,034
Hydril* 25,620 1,759
---------
Total Agriculture, construction &
mining machinery manufacturing 5,055
---------
- --------------------------------------------------------------------------------
ARCHITECTURAL, ENGINEERING &
RELATED SERVICES--1.2%
- --------------------------------------------------------------------------------
Tetra Tech* 72,480 1,219
Washington Group International* # 34,300 1,849
---------
Total Architectural, engineering &
related services 3,068
---------
- --------------------------------------------------------------------------------
BEVERAGE MANUFACTURING--0.4%
- --------------------------------------------------------------------------------
Hansen Natural* 20,910 984
---------
Total Beverage manufacturing 984
---------
Value
Shares (000)
- --------------------------------------------------------------------------------
CEMENT & CONCRETE PRODUCT
MANUFACTURING--0.7%
- --------------------------------------------------------------------------------
Eagle Materials # 14,990 $ 1,819
---------
Total Cement & concrete
product manufacturing 1,819
---------
- --------------------------------------------------------------------------------
CLAY PRODUCT & REFRACTORY MANUFACTURING--0.5%
- --------------------------------------------------------------------------------
Ceradyne* 34,470 1,264
---------
Total Clay product &
refractory manufacturing 1,264
---------
- --------------------------------------------------------------------------------
CLOTHING STORES--1.2%
- --------------------------------------------------------------------------------
Carter's* # 22,420 1,274
Dress Barn* 76,540 1,742
---------
Total Clothing stores 3,016
---------
- --------------------------------------------------------------------------------
COAL MINING--1.0%
- --------------------------------------------------------------------------------
Alpha Natural Resources* 87,270 2,622
---------
Total Coal mining 2,622
---------
- --------------------------------------------------------------------------------
COMMERCIAL & SERVICE INDUSTRY
MACHINERY MANUFACTURING--0.3%
- --------------------------------------------------------------------------------
Imax* 66,090 689
---------
Total Commercial & service industry
machinery manufacturing 689
---------
- --------------------------------------------------------------------------------
COMMUNITY CARE FACILITIES FOR THE ELDERLY--1.1%
- --------------------------------------------------------------------------------
Sunrise Senior Living* # 41,780 2,788
---------
Total Community care facilities
for the elderly 2,788
---------
- --------------------------------------------------------------------------------
COMPUTER & PERIPHERAL EQUIPMENT
MANUFACTURING--0.8%
- --------------------------------------------------------------------------------
M-Systems Flash Disk Pioneers* 66,000 1,975
---------
Total Computer & peripheral
equipment manufacturing 1,975
---------
- --------------------------------------------------------------------------------
COMPUTER SYSTEMS DESIGN &
RELATED SERVICES--6.8%
- --------------------------------------------------------------------------------
Digital Insight* 61,510 1,603
Foundry Networks* 121,500 1,543
Internet Security Systems* 54,110 1,299
TURNER FUNDS 2005 ANNUAL REPORT 35
FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
STATEMENT OF NET ASSETS
TURNER SMALL CAP GROWTH FUND
Value
Shares (000)
- --------------------------------------------------------------------------------
Ixia* # 49,561 $ 729
Micros Systems* 65,240 2,854
Netgear* # 94,260 2,268
Open Solutions* # 64,700 1,412
Parametric Technology* 370,210 2,581
Witness Systems* 158,790 3,317
---------
Total Computer systems design &
related services 17,606
---------
- --------------------------------------------------------------------------------
CUT & SEW APPAREL MANUFACTURING--1.2%
- --------------------------------------------------------------------------------
Guess ?* 66,100 1,416
Warnaco Group* 78,990 1,731
---------
Total Cut & sew apparel
manufacturing 3,147
---------
- --------------------------------------------------------------------------------
DATA PROCESSING SERVICES--1.0%
- --------------------------------------------------------------------------------
Global Cash Access* 52,080 734
MoneyGram International 84,600 1,837
---------
Total Data processing services 2,571
---------
- --------------------------------------------------------------------------------
DEEP SEA, COASTAL & GREAT LAKES
WATER TRANSPORTATION--0.6%
- --------------------------------------------------------------------------------
Hornbeck Offshore Services* 39,170 1,435
---------
Total Deep sea, coastal &
great lakes water transportation 1,435
---------
- --------------------------------------------------------------------------------
DEPARTMENT STORES--0.4%
- --------------------------------------------------------------------------------
Stein Mart # 54,890 1,114
---------
Total Department stores 1,114
---------
- --------------------------------------------------------------------------------
DEPOSITORY CREDIT INTERMEDIATION--2.3%
- --------------------------------------------------------------------------------
Boston Private Financial
Holdings # 67,210 1,784
East West Bancorp 75,962 2,586
Wintrust Financial # 31,160 1,566
---------
Total Depository credit
intermediation 5,936
---------
- --------------------------------------------------------------------------------
ELECTRICAL GOODS WHOLESALE--1.0%
- --------------------------------------------------------------------------------
WESCO International* 77,800 2,635
---------
Total Electrical goods wholesale 2,635
---------
Value
Shares (000)
- --------------------------------------------------------------------------------
ELECTRONIC SHOPPING & MAIL-ORDER HOUSES--1.5%
- --------------------------------------------------------------------------------
Coldwater Creek* 96,613 $ 2,436
GSI Commerce* # 72,350 1,440
---------
Total Electronic shopping &
mail-order houses 3,876
---------
- --------------------------------------------------------------------------------
EMPLOYMENT SERVICES--1.9%
- --------------------------------------------------------------------------------
Administaff # 71,260 2,832
Labor Ready* # 76,190 1,954
---------
Total Employment services 4,786
---------
- --------------------------------------------------------------------------------
FOOTWEAR MANUFACTURING--0.7%
- --------------------------------------------------------------------------------
Wolverine World Wide 84,070 1,770
---------
Total Footwear manufacturing 1,770
---------
- --------------------------------------------------------------------------------
GENERAL FREIGHT TRUCKING--0.6%
- --------------------------------------------------------------------------------
Forward Air 40,000 1,474
---------
Total General freight trucking 1,474
---------
- --------------------------------------------------------------------------------
GENERAL MEDICAL & SURGICAL HOSPITALS--1.7%
- --------------------------------------------------------------------------------
American Healthways* # 54,000 2,290
United Surgical Partners
International* 55,510 2,171
---------
Total General medical &
surgical hospitals 4,461
---------
- --------------------------------------------------------------------------------
GROCERY & RELATED PRODUCT WHOLESALERS--0.9%
- --------------------------------------------------------------------------------
United Natural Foods* 64,402 2,277
---------
Total Grocery & related
product wholesalers 2,277
---------
- --------------------------------------------------------------------------------
GROCERY STORES--0.4%
- --------------------------------------------------------------------------------
Pantry* 27,840 1,040
---------
Total Grocery stores 1,040
---------
- --------------------------------------------------------------------------------
HARDWARE, & PLUMBING & HEATING EQUIPMENT &
SUPPLIES WHOLESALE--0.9%
- --------------------------------------------------------------------------------
Watsco 45,870 2,436
---------
Total Hardware, & plumbing &
heating equipment & supplies
wholesale 2,436
---------
36 TURNER FUNDS 2005 ANNUAL REPORT
STATEMENT OF NET ASSETS
TURNER SMALL CAP GROWTH FUND
Value
Shares (000)
- --------------------------------------------------------------------------------
HOME HEALTH CARE SERVICES--0.5%
- --------------------------------------------------------------------------------
Intuitive Surgical* 16,980 $ 1,244
---------
Total Home health care services 1,244
---------
- --------------------------------------------------------------------------------
HVAC & COMMERCIAL REFRIGERATION
EQUIPMENT MANUFACTURING--0.5%
- --------------------------------------------------------------------------------
Manitowoc 26,550 1,334
---------
Total Hvac & commercial refrigeration
equipment manufacturing 1,334
---------
- --------------------------------------------------------------------------------
INDUSTRIAL MACHINERY MANUFACTURING--1.4%
- --------------------------------------------------------------------------------
Entegris* 106,182 1,200
Varian Semiconductor
Equipment Associates* # 58,460 2,477
---------
Total Industrial machinery
manufacturing 3,677
---------
- --------------------------------------------------------------------------------
INFORMATION SERVICES--3.8%
- --------------------------------------------------------------------------------
CNET Networks* 175,820 2,386
Homestore* 278,678 1,212
Internet Capital Group* 237,180 2,090
Sina* 45,040 1,239
Valueclick* 169,060 2,889
---------
Total Information services 9,816
---------
- --------------------------------------------------------------------------------
INSURANCE CARRIERS--0.4%
- --------------------------------------------------------------------------------
WellCare Health Plans* 30,070 1,114
---------
Total Insurance carriers 1,114
---------
- --------------------------------------------------------------------------------
INVESTIGATION & SECURITY SERVICES--0.5%
- --------------------------------------------------------------------------------
Cogent* 56,567 1,343
---------
Total Investigation &
security services 1,343
---------
- --------------------------------------------------------------------------------
LAWN & GARDEN EQUIPMENT &
SUPPLIES STORES--0.4%
- --------------------------------------------------------------------------------
Tractor Supply* 21,800 995
---------
Total Lawn & garden equipment &
supplies stores 995
---------
Value
Shares (000)
- --------------------------------------------------------------------------------
LIMITED-SERVICE EATING PLACES--0.4%
- --------------------------------------------------------------------------------
Texas Roadhouse, Cl A* # 72,000 $ 1,073
---------
Total Limited-service eating places 1,073
---------
- --------------------------------------------------------------------------------
LUMBER & OTHER CONSTRUCTION MATERIALS
WHOLESALE--0.4%
- --------------------------------------------------------------------------------
Building Material Holding # 12,120 1,129
---------
Total Lumber & other construction
materials wholesale 1,129
---------
- --------------------------------------------------------------------------------
MACHINERY, EQUIPMENT &
SUPPLIES WHOLESALE--0.6%
- --------------------------------------------------------------------------------
Aviall* 45,410 1,534
---------
Total Machinery, equipment &
supplies wholesale 1,534
---------
- --------------------------------------------------------------------------------
MANAGEMENT, SCIENTIFIC & TECHNICAL
CONSULTING SERVICES--2.3%
- --------------------------------------------------------------------------------
FTI Consulting* 60,070 1,517
Pacer International # 79,910 2,106
Resources Connection* 78,320 2,321
---------
Total Management, scientific &
technical consulting services 5,944
---------
- --------------------------------------------------------------------------------
MEDICAL EQUIPMENT & SUPPLIES
MANUFACTURING--2.1%
- --------------------------------------------------------------------------------
Kyphon* # 62,190 2,733
Sybron Dental Specialties* 62,720 2,608
---------
Total Medical equipment &
supplies manufacturing 5,341
---------
- --------------------------------------------------------------------------------
METAL ORE MINING--0.6%
- --------------------------------------------------------------------------------
Cleveland-Cliffs # 18,950 1,651
---------
Total Metal ore mining 1,651
---------
- --------------------------------------------------------------------------------
MINING SUPPORT ACTIVITIES--2.7%
- --------------------------------------------------------------------------------
Grey Wolf* 197,350 1,664
Superior Energy Services* 99,760 2,303
Todco, Cl A 69,330 2,892
---------
Total Mining support activities 6,859
---------
TURNER FUNDS 2005 ANNUAL REPORT 37
FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
STATEMENT OF NET ASSETS
TURNER SMALL CAP GROWTH FUND
Value
Shares (000)
- --------------------------------------------------------------------------------
NAVIGATIONAL/MEASURING/MEDICAL/
CONTROL INSTRUMENTS MANUFACTURING--3.5%
- --------------------------------------------------------------------------------
American Medical
Systems Holdings* # 80,630 $ 1,625
Biosite* # 21,010 1,300
Itron* 36,950 1,687
Mentor # 40,510 2,228
Teledyne Technologies* 60,600 2,089
---------
Total Navigational/measuring/medical/
control instruments manufacturing 8,929
---------
- --------------------------------------------------------------------------------
NONFERROUS PRODUCTION & PROCESSING--0.9%
- --------------------------------------------------------------------------------
Titanium Metals* # 61,100 2,417
---------
Total Nonferrous production &
processing 2,417
---------
- --------------------------------------------------------------------------------
OFFICES OF PHYSICIANS--0.7%
- --------------------------------------------------------------------------------
Gentiva Health Services* 97,651 1,769
---------
Total Offices of physicians 1,769
---------
- --------------------------------------------------------------------------------
OIL & GAS EXTRACTION--2.5%
- --------------------------------------------------------------------------------
Cheniere Energy* # 37,840 1,565
Energy Partners* 49,190 1,536
Parallel Petroleum* 114,650 1,605
Warren Resources* # 99,350 1,664
---------
Total Oil & gas extraction 6,370
---------
- --------------------------------------------------------------------------------
OTHER FINANCIAL INVESTMENT ACTIVITIES--0.4%
- --------------------------------------------------------------------------------
Calamos Asset Management 44,240 1,092
---------
Total Other financial
investment activities 1,092
---------
- --------------------------------------------------------------------------------
OTHER GENERAL PURPOSE MACHINERY
MANUFACTURING--1.2%
- --------------------------------------------------------------------------------
JLG Industries 82,040 3,002
---------
Total Other general purpose
machinery manufacturing 3,002
---------
- --------------------------------------------------------------------------------
OTHER INVESTMENT POOLS & FUNDS--1.4%
- --------------------------------------------------------------------------------
Kilroy Realty 25,320 1,418
Sunstone Hotel Investors # 90,230 2,201
---------
Total Other investment pools & funds 3,619
---------
Value
Shares (000)
- --------------------------------------------------------------------------------
OTHER MISCELLANEOUS MANUFACTURING--0.7%
- --------------------------------------------------------------------------------
WMS Industries* # 62,390 $ 1,755
---------
Total Other miscellaneous
manufacturing 1,755
---------
- --------------------------------------------------------------------------------
OUTPATIENT CARE CENTERS--3.6%
- --------------------------------------------------------------------------------
LCA-Vision 51,540 1,913
Psychiatric Solutions* 62,390 3,384
Sierra Health Services* 56,440 3,887
---------
Total Outpatient care centers 9,184
---------
- --------------------------------------------------------------------------------
PAPER & PAPER PRODUCT WHOLESALE--0.3%
- --------------------------------------------------------------------------------
VistaPrint* 53,410 814
---------
Total Paper & paper product wholesale 814
---------
- --------------------------------------------------------------------------------
PETROLEUM & COAL PRODUCTS
MANUFACTURING--0.3%
- --------------------------------------------------------------------------------
Alon USA Energy* 37,040 895
---------
Total Petroleum & coal
products manufacturing 895
---------
- --------------------------------------------------------------------------------
PETROLEUM & PETROLEUM
PRODUCTS WHOLESALE--0.6%
- --------------------------------------------------------------------------------
World Fuel Services 45,300 1,470
---------
Total Petroleum & petroleum
products wholesale 1,470
---------
- --------------------------------------------------------------------------------
PHARMACEUTICAL & MEDICINE
MANUFACTURING--6.8%
- --------------------------------------------------------------------------------
Amylin Pharmaceuticals* # 52,860 1,839
Cubist Pharmaceuticals* 74,710 1,609
MGI Pharma* 79,780 1,860
Momenta Pharmaceuticals* # 48,570 1,324
Nabi Biopharmaceuticals* 120,130 1,574
New River Pharmaceuticals* # 30,860 1,479
Serologicals* # 54,360 1,226
United Therapeutics* 42,990 3,001
Vertex Pharmaceuticals* 70,470 1,575
Viropharma* 90,570 1,884
---------
Total Pharmaceutical &
medicine manufacturing 17,371
---------
38 TURNER FUNDS 2005 ANNUAL REPORT
STATEMENT OF NET ASSETS
TURNER SMALL CAP GROWTH FUND
Value
Shares (000)
- --------------------------------------------------------------------------------
PLASTICS PRODUCT MANUFACTURING--1.0%
- --------------------------------------------------------------------------------
Jarden* # 64,630 $ 2,654
---------
Total Plastics product manufacturing 2,654
---------
- --------------------------------------------------------------------------------
RAIL TRANSPORTATION--0.5%
- --------------------------------------------------------------------------------
Kansas City Southern* 57,500 1,340
---------
Total Rail transportation 1,340
---------
- --------------------------------------------------------------------------------
RAILROAD ROLLING STOCK MANUFACTURING--0.7%
- --------------------------------------------------------------------------------
Wabtec 66,530 1,815
---------
Total Railroad rolling stock
manufacturing 1,815
---------
- --------------------------------------------------------------------------------
SCIENTIFIC R&D SERVICES--1.5%
- --------------------------------------------------------------------------------
CV Therapeutics* # 65,330 1,747
Human Genome Sciences* # 66,580 905
Senomyx* # 73,850 1,258
---------
Total Scientific r&d services 3,910
---------
- --------------------------------------------------------------------------------
SECURITIES & COMMODITY EXCHANGES--0.6%
- --------------------------------------------------------------------------------
Nasdaq Stock Market* 57,190 1,450
---------
Total Securities & commodity exchanges 1,450
---------
- --------------------------------------------------------------------------------
SECURITY & COMMODITY CONTRACTS
INTERMEDIATION & BROKERAGE--2.0%
- --------------------------------------------------------------------------------
GFI Group* # 29,330 1,208
Greenhill # 23,370 974
Investment Technology Group* 102,760 3,042
---------
Total Security & commodity contracts
intermediation & brokerage 5,224
---------
- --------------------------------------------------------------------------------
SEMICONDUCTOR & OTHER ELECTRONIC
COMPONENT MANUFACTURING--6.3%
- --------------------------------------------------------------------------------
Cypress Semiconductor* 152,660 2,298
Genesis Microchip* 127,400 2,796
Microsemi* # 136,470 3,485
Silicon Laboratories* 44,230 1,344
Sirf Technology Holdings* # 88,200 2,658
Trident Microsystems* 114,510 3,643
---------
Total Semiconductor & other electronic
component manufacturing 16,224
---------
Value
Shares (000)
- --------------------------------------------------------------------------------
SHOE STORES--1.0%
- --------------------------------------------------------------------------------
Genesco* 67,200 $ 2,503
---------
Total Shoe stores 2,503
---------
- --------------------------------------------------------------------------------
SOFTWARE PUBLISHERS--2.9%
- --------------------------------------------------------------------------------
Advent Software* # 86,910 2,341
Openwave Systems* # 149,020 2,679
Progress Software* 78,860 2,506
---------
Total Software publishers 7,526
---------
- --------------------------------------------------------------------------------
SPORTING GOODS/HOBBY/
MUSICAL INSTRUMENT STORES--1.4%
- --------------------------------------------------------------------------------
GameStop, Cl A* # 59,750 1,880
Hibbett Sporting Goods* 71,955 1,601
---------
Total Sporting goods/hobby/
musical instrument stores 3,481
---------
- --------------------------------------------------------------------------------
STEEL PRODUCT MANUFACTURING
FROM PURCHASED STEEL--0.7%
- --------------------------------------------------------------------------------
NS Group* 48,670 1,910
---------
Total Steel product manufacturing
from purchased steel 1,910
---------
- --------------------------------------------------------------------------------
TELECOMMUNICATIONS--3.6%
- --------------------------------------------------------------------------------
Adtran 93,180 2,935
Dobson Communications, Cl A* 252,580 1,940
SBA Communications, Cl A* 191,220 2,954
Tekelec* 70,260 1,472
---------
Total Telecommunications 9,301
---------
- --------------------------------------------------------------------------------
TRAVELER ACCOMMODATION--0.8%
- --------------------------------------------------------------------------------
Gaylord Entertainment* 41,560 1,980
---------
Total Traveler accommodation 1,980
---------
- --------------------------------------------------------------------------------
TOTAL COMMON STOCK
(COST $204,165) 250,833
- --------------------------------------------------------------------------------
TURNER FUNDS 2005 ANNUAL REPORT 39
FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
STATEMENT OF NET ASSETS
TURNER SMALL CAP GROWTH FUND
Value
Shares (000)
- --------------------------------------------------------------------------------
SHORT-TERM INVESTMENT HELD AS COLLATERAL
FOR LOANED SECURITIES--19.2%
- --------------------------------------------------------------------------------
Boston Global Investment Trust--
Quality Portfolio (1) 49,235,500 $ 49,236
- --------------------------------------------------------------------------------
TOTAL SHORT-TERM INVESTMENT HELD
AS COLLATERAL FOR LOANED SECURITIES
(COST $49,236) 49,236
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
CASH EQUIVALENT--0.7%
- --------------------------------------------------------------------------------
BlackRock TempCash Fund,
Institutional Shares 1,864,977 1,865
- --------------------------------------------------------------------------------
TOTAL CASH EQUIVALENT
(COST $1,865) 1,865
- --------------------------------------------------------------------------------
TOTAL INVESTMENTS--117.4%
(COST $255,266) 301,934
- --------------------------------------------------------------------------------
OTHER ASSETS AND LIABILITIES-- (17.4)%
- --------------------------------------------------------------------------------
Obligation to return securities
lending collateral (49,236)
Payable for investment
securities purchased (5,791)
Payable due to investment adviser (167)
Payable for capital shares redeemed (159)
Payable due to administrator (31)
Other assets and liabilities, net 10,599
- --------------------------------------------------------------------------------
TOTAL OTHER ASSETS AND LIABILITIES (44,785)
- --------------------------------------------------------------------------------
NET ASSETS-- 100.0% $257,149
- --------------------------------------------------------------------------------
Value
(000)
- --------------------------------------------------------------------------------
NET ASSETS CONSIST OF:
- --------------------------------------------------------------------------------
Portfolio capital of Class I Shares
(unlimited authorization -- no par value)
based on 10,420,580 outstanding shares
of beneficial interest $ 342,752
Accumulated net realized loss
on investments (132,271)
Net unrealized appreciation
on investments 46,668
- --------------------------------------------------------------------------------
NET ASSETS $257,149
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
NET ASSET VALUE, OFFERING AND REDEMPTION
PRICE PER SHARE-- CLASS I SHARES $24.68
- --------------------------------------------------------------------------------
* Non-income producing security
# Security fully or partially on loan at September 30, 2005 (see Note 9 in
Notes to Financial Statements). The total value of securities on loan at
September 30, 2005, was $47,630,201.
(1) A private placement security. Units are non-transferable but may be redeemed
at the NAV. The Fund lends securities in its 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 Fund, as such, the
Fund is liable for the investment losses. The Fund receives an annual fee
for its participation in the Lending Agreement based on projected lending
activity.
Cl -- Class
The accompanying notes are an integral part of the financial statements.
40 TURNER FUNDS 2005 ANNUAL REPORT
STATEMENT OF NET ASSETS
TURNER MICRO CAP GROWTH FUND
September 30, 2005
Value
Shares (000)
- --------------------------------------------------------------------------------
COMMON STOCK--86.7%
- --------------------------------------------------------------------------------
ADVERTISING & RELATED SERVICES--0.4%
- --------------------------------------------------------------------------------
Valuevision Media, Cl A* # 169,039 $ 1,919
---------
Total Advertising & related services 1,919
---------
- --------------------------------------------------------------------------------
AGENCIES & OTHER INSURANCE
RELATED ACTIVITIES--1.6%
- --------------------------------------------------------------------------------
HealthExtras* 84,145 1,799
LabOne* 145,280 6,320
---------
Total Agencies & other insurance
related activities 8,119
---------
- --------------------------------------------------------------------------------
AGRICULTURE, CONSTRUCTION & MINING
MACHINERY MANUFACTURING--2.4%
- --------------------------------------------------------------------------------
Bucyrus International, Cl A # 169,680 8,337
Lufkin Industries # 80,920 3,524
---------
Total Agriculture, construction &
mining machinery manufacturing 11,861
---------
- --------------------------------------------------------------------------------
ARCHITECTURAL & STRUCTURAL METALS
MANUFACTURING--1.0%
- --------------------------------------------------------------------------------
RTI International Metals* # 127,420 5,014
---------
Total Architectural & structural
metals manufacturing 5,014
---------
- --------------------------------------------------------------------------------
ARCHITECTURAL, ENGINEERING &
RELATED SERVICES--0.8%
- --------------------------------------------------------------------------------
MTC Technologies* # 122,300 3,911
---------
Total Architectural, engineering &
related services 3,911
---------
- --------------------------------------------------------------------------------
AUTOMOTIVE PARTS, ACCESSORIES & TIRE STORES--0.6%
- --------------------------------------------------------------------------------
MarineMax* # 119,730 3,052
---------
Total Automotive parts,
accessories & tire stores 3,052
---------
- --------------------------------------------------------------------------------
BAKERIES & TORTILLA MANUFACTURING--0.4%
- --------------------------------------------------------------------------------
Interstate Bakeries* 194,420 1,886
---------
Total Bakeries & tortilla manufacturing 1,886
---------
Value
Shares (000)
- --------------------------------------------------------------------------------
BASIC CHEMICAL MANUFACTURING--1.2%
- --------------------------------------------------------------------------------
Tetra Technologies* # 185,145 $ 5,780
---------
Total Basic chemical manufacturing 5,780
---------
- --------------------------------------------------------------------------------
BEER/WINE/DISTILLED ALCOHOLIC
BEVERAGE WHOLESALE--0.8%
- --------------------------------------------------------------------------------
Central European Distribution* # 94,660 4,032
---------
Total Beer/wine/distilled alcoholic
beverage wholesale 4,032
---------
- --------------------------------------------------------------------------------
BEVERAGE MANUFACTURING--1.4%
- --------------------------------------------------------------------------------
Hansen Natural* # 144,740 6,814
---------
Total Beverage manufacturing 6,814
---------
- --------------------------------------------------------------------------------
CLOTHING STORES--0.9%
- --------------------------------------------------------------------------------
Dress Barn* # 117,470 2,674
Eddie Bauer Holdings* # 75,530 1,869
---------
Total Clothing stores 4,543
---------
- --------------------------------------------------------------------------------
COAL MINING--1.0%
- --------------------------------------------------------------------------------
Penn Virginia # 83,180 4,800
---------
Total Coal mining 4,800
---------
- --------------------------------------------------------------------------------
COMMUNICATIONS EQUIPMENT
MANUFACTURING--1.3%
- --------------------------------------------------------------------------------
Comtech Telecommunications* # 101,025 4,190
Orckit Communications ADR* # 89,950 2,251
---------
Total Communications
equipment manufacturing 6,441
---------
- --------------------------------------------------------------------------------
COMPUTER & PERIPHERAL EQUIPMENT
MANUFACTURING--1.5%
- --------------------------------------------------------------------------------
Metrologic Instruments* # 201,840 3,672
Neoware Systems* # 124,817 2,090
PAR Technology* # 87,620 2,015
---------
Total Computer & peripheral
equipment manufacturing 7,777
---------
TURNER FUNDS 2005 ANNUAL REPORT 41
FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
STATEMENT OF NET ASSETS
TURNER MICRO CAP GROWTH FUND
Value
Shares (000)
- --------------------------------------------------------------------------------
COMPUTER SYSTEMS DESIGN &
RELATED SERVICES--4.9%
- --------------------------------------------------------------------------------
Covansys* 346,160 $ 5,525
Kanbay International* # 283,913 5,338
Optimal Group, Cl A* 205,680 4,253
Perficient* # 199,040 1,646
Quality Systems # 84,130 5,812
Sapient* # 349,720 2,186
---------
Total Computer systems design &
related services 24,760
---------
- --------------------------------------------------------------------------------
DEEP SEA, COASTAL & GREAT LAKES
WATER TRANSPORTATION--0.8%
- --------------------------------------------------------------------------------
Hornbeck Offshore Services* # 115,210 4,220
---------
Total Deep sea, coastal &
great lakes water transportation 4,220
---------
- --------------------------------------------------------------------------------
DEPARTMENT STORES--0.3%
- --------------------------------------------------------------------------------
Citi Trends* # 74,140 1,619
---------
Total Department stores 1,619
---------
- --------------------------------------------------------------------------------
DEPOSITORY CREDIT INTERMEDIATION--3.7%
- --------------------------------------------------------------------------------
Bankunited Financial, Cl A 73,860 1,689
Boston Private Financial
Holdings # 97,240 2,581
FirstFed Financial* # 62,850 3,382
Hanmi Financial 168,920 3,032
IBERIABANK # 40,490 2,152
PFF Bancorp 133,872 4,051
Preferred Bank* # 40,560 1,630
---------
Total Depository credit intermediation 18,517
---------
- --------------------------------------------------------------------------------
ENGINE, TURBINE & POWER TRANSMISSION
EQUIPMENT MANUFACTURING--0.5%
- --------------------------------------------------------------------------------
EnPro Industries* # 80,530 2,713
---------
Total Engine, turbine & power
transmission equipment
manufacturing 2,713
---------
- --------------------------------------------------------------------------------
FOOTWEAR MANUFACTURING--1.9%
- --------------------------------------------------------------------------------
Deckers Outdoor* # 298,910 7,192
Skechers U.S.A.* # 140,400 2,298
---------
Total Footwear manufacturing 9,490
---------
Value
Shares (000)
- --------------------------------------------------------------------------------
FORGING & STAMPING--0.5%
- --------------------------------------------------------------------------------
Ladish* 148,630 $ 2,592
---------
Total Forging & stamping 2,592
---------
- --------------------------------------------------------------------------------
GENERAL FREIGHT TRUCKING--0.3%
- --------------------------------------------------------------------------------
Universal Truckload Services* # 94,180 1,750
---------
Total General freight trucking 1,750
---------
- --------------------------------------------------------------------------------
HOME HEALTH CARE SERVICES--2.1%
- --------------------------------------------------------------------------------
Amedisys* # 123,067 4,799
Intuitive Surgical* # 78,219 5,733
---------
Total Home health care services 10,532
---------
- --------------------------------------------------------------------------------
HOUSEHOLD APPLIANCE MANUFACTURING--0.9%
- --------------------------------------------------------------------------------
Middleby # 60,150 4,361
---------
Total Household appliance
manufacturing 4,361
---------
- --------------------------------------------------------------------------------
INFORMATION SERVICES--0.4%
- --------------------------------------------------------------------------------
SupportSoft* 401,558 2,024
---------
Total Information services 2,024
---------
- --------------------------------------------------------------------------------
INSURANCE CARRIERS--2.9%
- --------------------------------------------------------------------------------
American Physicians Capital* 38,740 1,903
Triad Guaranty* # 40,284 1,580
United Fire & Casualty # 65,780 2,967
Universal American Financial* # 219,130 4,983
WellCare Health Plans* # 88,030 3,262
---------
Total Insurance carriers 14,695
---------
- --------------------------------------------------------------------------------
LIMITED-SERVICE EATING PLACES--0.6%
- --------------------------------------------------------------------------------
California Pizza Kitchen* # 110,160 3,221
---------
Total Limited-service eating places 3,221
---------
- --------------------------------------------------------------------------------
MANAGEMENT, SCIENTIFIC & TECHNICAL
CONSULTING SERVICES--3.5%
- --------------------------------------------------------------------------------
Conor Medsystems* # 123,000 2,890
HUB Group, Cl A* # 144,392 5,301
Huron Consulting Group # 137,707 3,693
Navigant Consulting* # 304,590 5,836
---------
Total Management, scientific &
technical consulting services 17,720
---------
42 TURNER FUNDS 2005 ANNUAL REPORT
STATEMENT OF NET ASSETS
TURNER MICRO CAP GROWTH FUND
Value
Shares (000)
- --------------------------------------------------------------------------------
MEDICAL EQUIPMENT & SUPPLIES
MANUFACTURING--0.5%
- --------------------------------------------------------------------------------
Arthrocare* # 62,610 $ 2,518
---------
Total Medical equipment &
supplies manufacturing 2,518
---------
- --------------------------------------------------------------------------------
MINING SUPPORT ACTIVITIES--2.7%
- --------------------------------------------------------------------------------
Oceaneering International* # 91,910 4,909
Pioneer Drilling* # 219,050 4,276
W-H Energy Services* # 127,120 4,121
---------
Total Mining support activities 13,306
---------
- --------------------------------------------------------------------------------
MISCELLANEOUS NONDURABLE
GOODS WHOLESALE--0.9%
- --------------------------------------------------------------------------------
Central Garden and Pet* # 96,570 4,370
---------
Total Miscellaneous nondurable
goods wholesale 4,370
---------
- --------------------------------------------------------------------------------
MOTOR VEHICLE PARTS MANUFACTURING--1.8%
- --------------------------------------------------------------------------------
ESCO Technologies* 180,400 9,033
---------
Total Motor vehicle parts
manufacturing 9,033
---------
- --------------------------------------------------------------------------------
NAVIGATIONAL/MEASURING/MEDICAL/
CONTROL INSTRUMENTS MANUFACTURING--5.1%
- --------------------------------------------------------------------------------
American Science & Engineering* # 75,484 4,951
Biosite* # 58,210 3,601
Credence Systems* # 189,660 1,513
EDO # 141,350 4,245
FARO Technologies* # 56,616 1,103
Hologic* 87,740 5,067
Itron* # 115,500 5,274
---------
Total Navigational/measuring/
medical/control instruments
manufacturing 25,754
---------
- --------------------------------------------------------------------------------
NONFERROUS PRODUCTION & PROCESSING--0.5%
- --------------------------------------------------------------------------------
Intermagnetics General* # 86,550 2,418
---------
Total Nonferrous production &
processing 2,418
---------
Value
Shares (000)
- --------------------------------------------------------------------------------
OFFICES OF PHYSICIANS--1.8%
- --------------------------------------------------------------------------------
Horizon Health* # 194,830 $ 5,293
Symbion* # 141,622 3,664
---------
Total Offices of physicians 8,957
---------
- --------------------------------------------------------------------------------
OIL & GAS EXTRACTION--5.3%
- --------------------------------------------------------------------------------
Carrizo Oil & Gas* # 132,740 3,889
Comstock Resources* # 253,830 8,328
Energy Partners* 204,510 6,385
KCS Energy* 255,570 7,036
Parallel Petroleum* 71,198 997
---------
Total Oil & gas extraction 26,635
---------
- --------------------------------------------------------------------------------
OTHER FABRICATED METAL PRODUCT
MANUFACTURING--0.7%
- --------------------------------------------------------------------------------
Sun Hydraulics 145,490 3,535
---------
Total Other fabricated metal
product manufacturing 3,535
---------
- --------------------------------------------------------------------------------
OTHER GENERAL PURPOSE MACHINERY
MANUFACTURING--1.8%
- --------------------------------------------------------------------------------
Cascade # 42,340 2,062
JLG Industries 185,800 6,798
---------
Total Other general purpose
machinery manufacturing 8,860
---------
- --------------------------------------------------------------------------------
OTHER HEAVY CONSTRUCTION--1.1%
- --------------------------------------------------------------------------------
Foster Wheeler* # 186,090 5,748
---------
Total Other heavy construction 5,748
---------
- --------------------------------------------------------------------------------
OTHER MISCELLANEOUS MANUFACTURING--0.4%
- --------------------------------------------------------------------------------
Shuffle Master* # 72,075 1,905
---------
Total Other miscellaneous
manufacturing 1,905
---------
- --------------------------------------------------------------------------------
OTHER MOTOR VEHICLE DEALERS--0.4%
- --------------------------------------------------------------------------------
Rush Enterprises, Cl A* # 145,660 2,226
---------
Total Other motor vehicle dealers 2,226
---------
- --------------------------------------------------------------------------------
OTHER TEXTILE PRODUCT MILLS--0.3%
- --------------------------------------------------------------------------------
Stride Rite # 134,780 1,728
---------
Total Other textile product mills 1,728
---------
TURNER FUNDS 2005 ANNUAL REPORT 43
FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
STATEMENT OF NET ASSETS
TURNER MICRO CAP GROWTH FUND
Value
Shares (000)
- --------------------------------------------------------------------------------
OTHER WOOD PRODUCT MANUFACTURING--0.5%
- --------------------------------------------------------------------------------
Champion Enterprises* # 183,420 $ 2,711
---------
Total Other wood product manufacturing 2,711
---------
- --------------------------------------------------------------------------------
OUTPATIENT CARE CENTERS--0.6%
- --------------------------------------------------------------------------------
LCA-Vision # 80,460 2,987
---------
Total Outpatient care centers 2,987
---------
- --------------------------------------------------------------------------------
PETROLEUM & COAL PRODUCTS
MANUFACTURING--0.8%
- --------------------------------------------------------------------------------
Giant Industries* 66,640 3,901
---------
Total Petroleum & coal products
manufacturing 3,901
---------
- --------------------------------------------------------------------------------
PHARMACEUTICAL & MEDICINE
MANUFACTURING--5.3%
- --------------------------------------------------------------------------------
CRA International* # 117,230 4,887
First Horizon Pharmaceutical* # 174,340 3,464
Meridian Bioscience # 136,540 2,827
Momenta Pharmaceuticals* # 77,630 2,116
SuperGen* # 331,140 2,086
United Therapeutics* # 159,230 11,114
---------
Total Pharmaceutical &
medicine manufacturing 26,494
---------
- --------------------------------------------------------------------------------
PLASTICS PRODUCT MANUFACTURING--1.2%
- --------------------------------------------------------------------------------
Jarden* # 144,457 5,933
---------
Total Plastics product manufacturing 5,933
---------
- --------------------------------------------------------------------------------
PLUMBING, HEATING & AC CONTRACTOR--1.1%
- --------------------------------------------------------------------------------
Chemed # 127,640 5,532
---------
Total Plumbing, heating &
ac contractor 5,532
---------
- --------------------------------------------------------------------------------
RAIL TRANSPORTATION--1.2%
- --------------------------------------------------------------------------------
Genesee & Wyoming, Cl A* # 190,627 6,043
---------
Total Rail transportation 6,043
---------
- --------------------------------------------------------------------------------
RAILROAD ROLLING STOCK MANUFACTURING--0.6%
- --------------------------------------------------------------------------------
Greenbrier # 91,800 3,052
---------
Total Railroad rolling stock
manufacturing 3,052
---------
Value
Shares (000)
- --------------------------------------------------------------------------------
SCIENTIFIC R&D SERVICES--2.8%
- --------------------------------------------------------------------------------
Encysive Pharmaceuticals* 564,385 $ 6,648
NitroMed* # 101,490 1,827
SFBC International* # 122,193 5,424
---------
Total Scientific r&d services 13,899
---------
- --------------------------------------------------------------------------------
SEMICONDUCTOR & OTHER ELECTRONIC
COMPONENT MANUFACTURING--1.2%
- --------------------------------------------------------------------------------
Aeroflex* 253,190 2,370
Diodes* # 50,530 1,832
Genesis Microchip* # 89,100 1,956
---------
Total Semiconductor & other electronic
component manufacturing 6,158
---------
- --------------------------------------------------------------------------------
SHOE STORES--1.7%
- --------------------------------------------------------------------------------
Genesco* # 225,360 8,392
---------
Total Shoe stores 8,392
---------
- --------------------------------------------------------------------------------
SOCIAL ASSISTANCE--0.9%
- --------------------------------------------------------------------------------
Providence Service* # 141,116 4,317
---------
Total Social assistance 4,317
---------
- --------------------------------------------------------------------------------
SOFTWARE PUBLISHERS--1.4%
- --------------------------------------------------------------------------------
Ansys* # 111,300 4,284
Progress Software* # 91,980 2,922
---------
Total Software publishers 7,206
---------
- --------------------------------------------------------------------------------
SPECIALTY FOOD STORES--0.5%
- --------------------------------------------------------------------------------
Wild Oats Markets* # 195,430 2,513
---------
Total Specialty food stores 2,513
---------
- --------------------------------------------------------------------------------
SPORTING GOODS/HOBBY/
MUSICAL INSTRUMENT STORES--0.5%
- --------------------------------------------------------------------------------
Hibbett Sporting Goods* # 113,025 2,515
Orange 21* # 6,806 33
---------
Total Sporting goods/hobby/
musical instrument stores 2,548
---------
- --------------------------------------------------------------------------------
SPRING & WIRE PRODUCT MANUFACTURING--0.5%
- --------------------------------------------------------------------------------
Barnes Group # 74,520 2,672
---------
Total Spring & wire product
manufacturing 2,672
---------
44 TURNER FUNDS 2005 ANNUAL REPORT
STATEMENT OF NET ASSETS
TURNER MICRO CAP GROWTH FUND
Value
Shares (000)
- --------------------------------------------------------------------------------
STEEL PRODUCT MANUFACTURING
FROM PURCHASED STEEL--1.9%
- --------------------------------------------------------------------------------
NS Group* 239,420 $ 9,397
---------
Total Steel product manufacturing
from purchased steel 9,397
---------
- --------------------------------------------------------------------------------
TELECOMMUNICATIONS--0.7%
- --------------------------------------------------------------------------------
Dobson Communications, Cl A* 424,120 3,257
---------
Total Telecommunications 3,257
---------
- --------------------------------------------------------------------------------
TRAVELER ACCOMMODATION--0.3%
- --------------------------------------------------------------------------------
MTR Gaming Group* 208,090 1,667
---------
Total Traveler accommodation 1,667
---------
- --------------------------------------------------------------------------------
WASTE COLLECTION--0.9%
- --------------------------------------------------------------------------------
Clean Harbors* # 133,230 4,523
---------
Total Waste collection 4,523
---------
- --------------------------------------------------------------------------------
WATER, SEWAGE & OTHER SYSTEMS--0.2%
- --------------------------------------------------------------------------------
Artesian Resources, Cl A 28,197 848
---------
Total Water, sewage & other systems 848
---------
- --------------------------------------------------------------------------------
TOTAL COMMON STOCK
(COST $298,059) 435,206
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SHORT-TERM INVESTMENT HELD AS COLLATERAL
FOR LOANED SECURITIES--35.4%
- --------------------------------------------------------------------------------
Boston Global Investment Trust--
Quality Portfolio (1) 178,037,300 178,037
- --------------------------------------------------------------------------------
TOTAL SHORT-TERM INVESTMENT HELD
AS COLLATERAL FOR LOANED SECURITIES
(COST $178,037) 178,037
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
CASH EQUIVALENT--12.6%
- --------------------------------------------------------------------------------
BlackRock TempCash Fund,
Institutional Shares 63,308,284 63,308
- --------------------------------------------------------------------------------
TOTAL CASH EQUIVALENT
(COST $63,308) 63,308
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
TOTAL INVESTMENTS--134.7%
(COST $539,404) 676,551
- --------------------------------------------------------------------------------
Value
(000)
- --------------------------------------------------------------------------------
OTHER ASSETS AND LIABILITIES-- (34.7)%
- --------------------------------------------------------------------------------
Obligation to return securities
lending collateral $(178,037)
Payable for investment
securities purchased (1,142)
Payable due to investment adviser (396)
Payable for capital shares redeemed (208)
Payable due to administrator (61)
Other assets and liabilities, net 5,401
- --------------------------------------------------------------------------------
TOTAL OTHER ASSETS AND LIABILITIES (174,443)
- --------------------------------------------------------------------------------
NET ASSETS-- 100.0% $502,108
- --------------------------------------------------------------------------------
NET ASSETS CONSIST OF:
- --------------------------------------------------------------------------------
Portfolio capital of Class I Shares
(unlimited authorization -- no par value)
based on 8,892,549 outstanding shares
of beneficial interest $ 336,518
Accumulated net realized gain
on investments 28,443
Net unrealized appreciation
on investments 137,147
- --------------------------------------------------------------------------------
NET ASSETS $502,108
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
NET ASSET VALUE, OFFERING AND REDEMPTION
PRICE PER SHARE-- CLASS I SHARES $56.46
- --------------------------------------------------------------------------------
* Non-income producing security
# Security fully or partially on loan at September 30, 2005 (see Note 9 in
Notes to Financial Statements). The total value of securities on loan at
September 30, 2005, was $172,307,626.
(1) A private placement security. Units are non-transferable but may be redeemed
at the NAV. The Fund lends securities in its 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 Fund, as such, the
Fund is liable for the investment losses. The Fund receives an annual fee
for its participation in the Lending Agreement based on projected lending
activity.
ADR -- American Depositary Receipt
Cl -- Class
The accompanying notes are an integral part of the financial statements.
TURNER FUNDS 2005 ANNUAL REPORT 45
FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
STATEMENT OF NET ASSETS
TURNER SMALL CAP EQUITY FUND
September 30, 2005
Value
Shares (000)
- --------------------------------------------------------------------------------
COMMON STOCK--95.1%
- --------------------------------------------------------------------------------
ACTIVITIES RELATED TO CREDIT INTERMEDIATION--0.9%
- --------------------------------------------------------------------------------
Euronet Worldwide* 21,430 $ 634
---------
Total Activities related to
credit intermediation 634
---------
- --------------------------------------------------------------------------------
AEROSPACE PRODUCT &
PARTS MANUFACTURING--2.0%
- --------------------------------------------------------------------------------
Curtiss-Wright 10,070 621
Hexcel* 39,070 715
---------
Total Aerospace product &
parts manufacturing 1,336
---------
- --------------------------------------------------------------------------------
AGRICULTURE, CONSTRUCTION & MINING
MACHINERY MANUFACTURING--4.5%
- --------------------------------------------------------------------------------
Bucyrus International, Cl A 13,970 687
Lone Star Technologies* 14,703 817
Oil States International* 22,330 811
Universal Compression Holdings* 17,910 712
---------
Total Agriculture, construction &
mining machinery manufacturing 3,027
---------
- --------------------------------------------------------------------------------
ARCHITECTURAL & STRUCTURAL
METALS MANUFACTURING--0.9%
- --------------------------------------------------------------------------------
Griffon* 25,240 621
---------
Total Architectural & structural
metals manufacturing 621
---------
- --------------------------------------------------------------------------------
ARCHITECTURAL, ENGINEERING &
RELATED SERVICES--1.6%
- --------------------------------------------------------------------------------
Washington Group International* 20,635 1,112
---------
Total Architectural, engineering &
related services 1,112
---------
- --------------------------------------------------------------------------------
AUTOMOTIVE EQUIPMENT RENTAL & LEASING--0.8%
- --------------------------------------------------------------------------------
PHH* 18,550 509
---------
Total Automotive equipment
rental & leasing 509
---------
- --------------------------------------------------------------------------------
AUTOMOTIVE PARTS, ACCESSORIES & TIRE STORES--0.7%
- --------------------------------------------------------------------------------
CSK Auto* 30,990 461
---------
Total Automotive parts,
accessories & tire stores 461
---------
Value
Shares (000)
- --------------------------------------------------------------------------------
BASIC CHEMICAL MANUFACTURING--0.5%
- --------------------------------------------------------------------------------
Minerals Technologies 6,239 $ 357
---------
Total Basic chemical manufacturing 357
---------
- --------------------------------------------------------------------------------
COAL MINING--1.5%
- --------------------------------------------------------------------------------
Foundation Coal Holdings* 26,050 1,002
---------
Total Coal mining 1,002
---------
- --------------------------------------------------------------------------------
COMPUTER & PERIPHERAL
EQUIPMENT MANUFACTURING--0.7%
- --------------------------------------------------------------------------------
Advanced Digital Information* 50,420 474
---------
Total Computer & peripheral
equipment manufacturing 474
---------
- --------------------------------------------------------------------------------
COMPUTER SYSTEMS DESIGN & RELATED
SERVICES--2.7%
- --------------------------------------------------------------------------------
Digital Insight* 18,050 470
Intergraph* 30,636 1,370
---------
Total Computer systems
design & related services 1,840
---------
- --------------------------------------------------------------------------------
CONVERTED PAPER PRODUCT MANUFACTURING--0.8%
- --------------------------------------------------------------------------------
Playtex Products* 48,500 533
---------
Total Converted paper
product manufacturing 533
---------
- --------------------------------------------------------------------------------
CUT & SEW APPAREL MANUFACTURING--0.7%
- --------------------------------------------------------------------------------
Quiksilver* 31,640 457
---------
Total Cut & sew apparel
manufacturing 457
---------
- --------------------------------------------------------------------------------
DEEP SEA, COASTAL & GREAT LAKES
WATER TRANSPORTATION--0.6%
- --------------------------------------------------------------------------------
Genco Shipping & Trading* 20,550 392
---------
Total Deep sea, coastal & great lakes
water transportation 392
---------
- --------------------------------------------------------------------------------
DEPOSITORY CREDIT INTERMEDIATION--2.2%
- --------------------------------------------------------------------------------
Brookline Bancorp 19,712 312
Hanmi Financial 17,920 321
Provident Bankshares 13,370 465
W Holding 40,900 391
---------
Total Depository credit intermediation 1,489
---------
46 TURNER FUNDS 2005 ANNUAL REPORT
STATEMENT OF NET ASSETS
TURNER SMALL CAP EQUITY FUND
Value
Shares (000)
- --------------------------------------------------------------------------------
ELECTRIC POWER GENERATION,
TRANSMISSION & DISTRIBUTION--0.5%
- --------------------------------------------------------------------------------
Allete 7,390 $ 339
---------
Total Electric power generation,
transmission & distribution 339
---------
- --------------------------------------------------------------------------------
ELECTRICAL GOODS WHOLESALE--0.7%
- --------------------------------------------------------------------------------
WESCO International* 13,420 455
---------
Total Electrical goods wholesale 455
---------
- --------------------------------------------------------------------------------
FULL-SERVICE RESTAURANTS--0.6%
- --------------------------------------------------------------------------------
Red Robin Gourmet Burgers* 9,050 415
---------
Total Full-service restaurants 415
---------
- --------------------------------------------------------------------------------
GENERAL MEDICAL & SURGICAL HOSPITALS--0.9%
- --------------------------------------------------------------------------------
United Surgical Partners
International* 15,240 596
---------
Total General medical &
surgical hospitals 596
---------
- --------------------------------------------------------------------------------
GROCERY & RELATED PRODUCT WHOLESALERS--1.0%
- --------------------------------------------------------------------------------
United Natural Foods* 18,930 669
---------
Total Grocery & related
product wholesalers 669
---------
- --------------------------------------------------------------------------------
GROCERY STORES--0.8%
- --------------------------------------------------------------------------------
Pantry* 14,790 553
---------
Total Grocery stores 553
---------
- --------------------------------------------------------------------------------
HOME HEALTH CARE SERVICES--1.5%
- --------------------------------------------------------------------------------
Amedisys* 9,610 375
Option Care 44,335 649
---------
Total Home health care services 1,024
---------
- --------------------------------------------------------------------------------
HVAC & COMMERCIAL REFRIGERATION
EQUIPMENT MANUFACTURING--1.5%
- --------------------------------------------------------------------------------
Manitowoc 19,960 1,003
---------
Total Hvac & commercial refrigeration
equipment manufacturing 1,003
---------
Value
Shares (000)
- --------------------------------------------------------------------------------
INDUSTRIAL MACHINERY MANUFACTURING--0.5%
- --------------------------------------------------------------------------------
Varian Semiconductor
Equipment Associates* 8,820 $ 374
---------
Total Industrial machinery
manufacturing 374
---------
- --------------------------------------------------------------------------------
INFORMATION SERVICES--2.2%
- --------------------------------------------------------------------------------
Valueclick* 45,970 785
Websense* 13,450 689
---------
Total Information services 1,474
---------
- --------------------------------------------------------------------------------
INSURANCE CARRIERS--6.4%
- --------------------------------------------------------------------------------
Allmerica Financial* 20,020 824
Centene* 11,840 296
Delphi Financial Group, Cl A 8,710 408
IPC Holdings 8,140 266
Ohio Casualty 31,470 853
Philadelphia Consolidated
Holding* 8,240 700
Phoenix 30,690 374
ProAssurance* 13,461 628
---------
Total Insurance carriers 4,349
---------
- --------------------------------------------------------------------------------
LIMITED-SERVICE EATING PLACES--0.8%
- --------------------------------------------------------------------------------
Domino's Pizza 23,740 554
---------
Total Limited-service eating places 554
---------
- --------------------------------------------------------------------------------
MACHINERY, EQUIPMENT &
SUPPLIES WHOLESALE--0.7%
- --------------------------------------------------------------------------------
Aviall* 14,950 505
---------
Total Machinery, equipment &
supplies wholesale 505
---------
- --------------------------------------------------------------------------------
MEDICAL EQUIPMENT & SUPPLIES
MANUFACTURING--1.6%
- --------------------------------------------------------------------------------
Advanced Neuromodulation
Systems* 13,620 647
Conmed* 15,040 419
---------
Total Medical equipment &
supplies manufacturing 1,066
---------
TURNER FUNDS 2005 ANNUAL REPORT 47
FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
STATEMENT OF NET ASSETS
TURNER SMALL CAP EQUITY FUND
Value
Shares (000)
- --------------------------------------------------------------------------------
METAL ORE MINING--2.7%
- --------------------------------------------------------------------------------
Apex Silver Mines* 26,070 $ 410
Cleveland-Cliffs 11,600 1,010
Randgold Resources ADR* 24,480 385
---------
Total Metal ore mining 1,805
---------
- --------------------------------------------------------------------------------
MISCELLANEOUS NONDURABLE
GOODS WHOLESALE--0.5%
- --------------------------------------------------------------------------------
Central Garden and Pet* 7,850 355
---------
Total Miscellaneous nondurable
goods wholesale 355
---------
- --------------------------------------------------------------------------------
NAVIGATIONAL/MEASURING/MEDICAL/CONTROL INSTRUMENTS MANUFACTURING--2.8%
- --------------------------------------------------------------------------------
Analogic 9,276 468
Coherent* 16,650 487
DRS Technologies 18,570 917
---------
Total Navigational/measuring/medical/
control instruments manufacturing 1,872
---------
- --------------------------------------------------------------------------------
NEWSPAPER/PERIODICAL/BOOK/
DATABASE PUBLISHERS--1.5%
- --------------------------------------------------------------------------------
R.H. Donnelley* 16,402 1,038
---------
Total Newspaper/periodical/book/
database publishers 1,038
---------
- --------------------------------------------------------------------------------
NONDEPOSITORY CREDIT INTERMEDIATION--0.9%
- --------------------------------------------------------------------------------
Metris* 43,980 643
---------
Total Nondepository credit
intermediation 643
---------
- --------------------------------------------------------------------------------
OIL & GAS EXTRACTION--2.5%
- --------------------------------------------------------------------------------
Comstock Resources* 29,550 969
Remington Oil & Gas* 17,320 719
---------
Total Oil & gas extraction 1,688
---------
- --------------------------------------------------------------------------------
OTHER ELECTRICAL EQUIPMENT &
COMPONENT MANUFACTURING--0.8%
- --------------------------------------------------------------------------------
Distributed Energy Systems* 66,750 557
---------
Total Other electrical equipment &
component manufacturing 557
---------
Value
Shares (000)
- --------------------------------------------------------------------------------
OTHER FINANCIAL INVESTMENT ACTIVITIES--1.3%
- --------------------------------------------------------------------------------
National Financial Partners 19,010 $ 858
---------
Total Other financial
investment activities 858
---------
- --------------------------------------------------------------------------------
OTHER INVESTMENT POOLS & FUNDS--7.7%
- --------------------------------------------------------------------------------
Alexandria Real Estate Equities 9,405 778
Apollo Investment # 34,640 686
BioMed Realty Trust 23,550 584
Corporate Office Properties Trust 18,870 659
Kilroy Realty 12,650 709
Maguire Properties 27,310 821
Strategic Hotel Capital 20,950 382
Taubman Centers 18,520 587
---------
Total Other investment pools & funds 5,206
---------
- --------------------------------------------------------------------------------
OTHER MISCELLANEOUS MANUFACTURING--0.6%
- --------------------------------------------------------------------------------
Leapfrog Enterprises* # 26,550 392
---------
Total Other miscellaneous manufacturing 392
---------
- --------------------------------------------------------------------------------
OTHER TRANSIT & GROUND PASSENGER
TRANSPORTATION--1.4%
- --------------------------------------------------------------------------------
Laidlaw International* 40,302 974
---------
Total Other transit & ground
passenger transportation 974
---------
- --------------------------------------------------------------------------------
OUTPATIENT CARE CENTERS--2.2%
- --------------------------------------------------------------------------------
Psychiatric Solutions* 17,080 926
Sierra Health Services* 8,200 565
---------
Total Outpatient care centers 1,491
---------
- --------------------------------------------------------------------------------
PAINT, COATING & ADHESIVE MANUFACTURING--0.7%
- --------------------------------------------------------------------------------
HB Fuller 16,020 498
---------
Total Paint, coating &
adhesive manufacturing 498
---------
- --------------------------------------------------------------------------------
PHARMACEUTICAL & MEDICINE
MANUFACTURING--0.8%
- --------------------------------------------------------------------------------
Alkermes* 32,780 551
---------
Total Pharmaceutical &
medicine manufacturing 551
---------
48 TURNER FUNDS 2005 ANNUAL REPORT
STATEMENT OF NET ASSETS
TURNER SMALL CAP EQUITY FUND
Value
Shares (000)
- --------------------------------------------------------------------------------
PLASTICS PRODUCT MANUFACTURING--2.8%
- --------------------------------------------------------------------------------
Jarden* # 31,840 $ 1,307
Tupperware 25,230 575
---------
Total Plastics product manufacturing 1,882
---------
- --------------------------------------------------------------------------------
PLUMBING, HEATING & AC CONTRACTOR--0.9%
- --------------------------------------------------------------------------------
Chemed 14,720 638
---------
Total Plumbing, heating &
ac contractor 638
---------
- --------------------------------------------------------------------------------
RAILROAD ROLLING STOCK MANUFACTURING--0.9%
- --------------------------------------------------------------------------------
Wabtec 22,470 613
---------
Total Railroad rolling
stock manufacturing 613
---------
- --------------------------------------------------------------------------------
RESIDENTIAL BUILDING CONSTRUCTION--3.1%
- --------------------------------------------------------------------------------
Walter Industries 36,860 1,803
WCI Communities* 11,180 317
---------
Total Residential building construction 2,120
---------
- --------------------------------------------------------------------------------
SCHEDULED AIR TRANSPORTATION--0.5%
- --------------------------------------------------------------------------------
Skywest 12,630 339
---------
Total Scheduled air transportation 339
---------
- --------------------------------------------------------------------------------
SEMICONDUCTOR & OTHER ELECTRONIC
COMPONENT MANUFACTURING--6.6%
- --------------------------------------------------------------------------------
DSP Group* 29,300 752
Genesis Microchip* 29,550 649
NAM TAI Electronics 33,706 857
Silicon Laboratories* 24,950 758
Sirf Technology Holdings* 20,890 629
Standard Microsystems* 28,280 846
---------
Total Semiconductor & other
electronic component
manufacturing 4,491
---------
- --------------------------------------------------------------------------------
SHIP & BOAT BUILDING--1.4%
- --------------------------------------------------------------------------------
McDermott International* 25,010 916
---------
Total Ship & boat building 916
---------
Value
Shares (000)
- --------------------------------------------------------------------------------
SOFTWARE PUBLISHERS--2.6%
- --------------------------------------------------------------------------------
THQ* 21,525 $ 459
Transaction Systems Architects* 30,440 848
Verint Systems* 10,340 423
---------
Total Software publishers 1,730
---------
- --------------------------------------------------------------------------------
SPORTING GOODS/HOBBY/MUSICAL INSTRUMENT STORES--0.8%
- --------------------------------------------------------------------------------
Guitar Center* # 10,000 552
---------
Total Sporting goods/hobby/
musical instrument stores 552
---------
- --------------------------------------------------------------------------------
STEEL PRODUCT MANUFACTURING
FROM PURCHASED STEEL--1.1%
- --------------------------------------------------------------------------------
Oregon Steel Mills* 25,700 717
---------
Total Steel product manufacturing
from purchased steel 717
---------
- --------------------------------------------------------------------------------
TELECOMMUNICATIONS--6.2%
- --------------------------------------------------------------------------------
Alamosa Holdings* 45,175 773
Brightpoint* 29,430 563
Dobson Communications, Cl A* 86,770 666
Leap Wireless International* 31,470 1,108
Tekelec* 23,920 501
Ubiquitel* 64,370 563
---------
Total Telecommunications 4,174
---------
- --------------------------------------------------------------------------------
TRAVELER ACCOMMODATION--1.0%
- --------------------------------------------------------------------------------
Gaylord Entertainment* 14,460 689
---------
Total Traveler accommodation 689
---------
- --------------------------------------------------------------------------------
TOTAL COMMON STOCK
(COST $55,577) 64,409
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SHORT-TERM INVESTMENT HELD AS COLLATERAL
FOR LOANED SECURITIES--2.1%
- --------------------------------------------------------------------------------
Boston Global Investment Trust--
Quality Portfolio (1) 1,459,200 1,459
- --------------------------------------------------------------------------------
TOTAL SHORT-TERM INVESTMENT HELD
AS COLLATERAL FOR LOANED SECURITIES
(COST $1,459) 1,459
- --------------------------------------------------------------------------------
TURNER FUNDS 2005 ANNUAL REPORT 49
FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
STATEMENT OF NET ASSETS
TURNER SMALL CAP EQUITY FUND
Value
Shares (000)
- -------------------------------------------------------------------------------
CASH EQUIVALENT--1.2%
- -------------------------------------------------------------------------------
BlackRock TempCash Fund,
Institutional Shares 799,762 $ 800
- -------------------------------------------------------------------------------
TOTAL CASH EQUIVALENT
(COST $800) 800
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
REGISTERED INVESTMENT COMPANY--0.8%
- -------------------------------------------------------------------------------
iShares Russell 2000 Index Fund* # 7,850 521
- -------------------------------------------------------------------------------
TOTAL REGISTERED INVESTMENT COMPANY
(COST $479) 521
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
TOTAL INVESTMENTS--99.2%
(COST $58,315) 67,189
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
OTHER ASSETS AND LIABILITIES-- 0.8%
- -------------------------------------------------------------------------------
Obligation to return securities
lending collateral (1,459)
Payable for investment
securities purchased (293)
Payable for capital shares redeemed (199)
Payable due to investment adviser (41)
Payable due to distributor (14)
Payable due to administrator (8)
Other assets and liabilities, net 2,538
- -------------------------------------------------------------------------------
TOTAL OTHER ASSETS AND LIABILITIES 524
- -------------------------------------------------------------------------------
NET ASSETS-- 100.0% $67,713
- -------------------------------------------------------------------------------
Value
(000)
- --------------------------------------------------------------------------------
NET ASSETS CONSIST OF:
- --------------------------------------------------------------------------------
Portfolio capital of Class II Shares
(unlimited authorization -- no par value)
based on 4,217,420 outstanding shares
of beneficial interest $ 59,194
Accumulated net investment loss (17)
Accumulated net realized loss
on investments (338)
Net unrealized appreciation
on investments 8,874
- --------------------------------------------------------------------------------
NET ASSETS $67,713
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
NET ASSET VALUE, OFFERING AND REDEMPTION
PRICE PER SHARE-- CLASS II SHARES $16.06
- --------------------------------------------------------------------------------
* Non-income producing security
# Security fully or partially on loan at September 30, 2005 (see Note 9 in
Notes to Financial Statements). The total value of securities on loan at
September 30, 2005, was $1,415,551.
(1) A private placement security. Units are non-transferable but may be redeemed
at the NAV. The Fund lends securities in its 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 Fund, as such, the
Fund is liable for the investment losses. The Fund receives an annual fee
for its participation in the Lending Agreement based on projected lending
activity.
ADR -- American Depositary Receipt
Cl -- Class
The accompanying notes are an integral part of the financial statements.
50 TURNER FUNDS 2005 ANNUAL REPORT
STATEMENT OF NET ASSETS
TURNER TECHNOLOGY FUND
September 30, 2005
Value
Shares (000)
- --------------------------------------------------------------------------------
COMMON STOCK--99.0%
- --------------------------------------------------------------------------------
COMMUNICATIONS EQUIPMENT
MANUFACTURING--5.6%
- --------------------------------------------------------------------------------
Ericsson Telephone ADR # 7,370 $ 271
Motorola 20,410 451
---------
Total Communications
equipment manufacturing 722
---------
- --------------------------------------------------------------------------------
COMPUTER & PERIPHERAL EQUIPMENT
MANUFACTURING--9.9%
- --------------------------------------------------------------------------------
Apple Computer* 8,830 473
EMC* 28,720 372
Sandisk* 9,050 437
---------
Total Computer & peripheral
equipment manufacturing 1,282
---------
- --------------------------------------------------------------------------------
COMPUTER SYSTEMS DESIGN &
RELATED SERVICES--4.5%
- --------------------------------------------------------------------------------
Foundry Networks* 22,550 287
Witness Systems* 13,850 289
---------
Total Computer systems design &
related services 576
---------
- --------------------------------------------------------------------------------
INDUSTRIAL MACHINERY MANUFACTURING--6.2%
- --------------------------------------------------------------------------------
Kla-Tencor* 9,840 480
Teradyne* 19,690 325
---------
Total Industrial machinery manufacturing 805
---------
- --------------------------------------------------------------------------------
INFORMATION SERVICES--7.9%
- --------------------------------------------------------------------------------
Google, Cl A* 1,450 459
Internet Capital Group* 43,240 381
Yahoo!* 5,440 184
---------
Total Information services 1,024
---------
- --------------------------------------------------------------------------------
INVESTIGATION & SECURITY SERVICES--2.5%
- --------------------------------------------------------------------------------
Cogent* 13,870 329
---------
Total Investigation & security services 329
---------
- --------------------------------------------------------------------------------
OTHER ELECTRICAL EQUIPMENT & COMPONENT
MANUFACTURING--2.6%
- --------------------------------------------------------------------------------
Corning* 17,100 331
---------
Total Other electrical equipment &
component manufacturing 331
---------
Value
Shares (000)
- --------------------------------------------------------------------------------
PHARMACEUTICAL & MEDICINE
MANUFACTURING--5.8%
- --------------------------------------------------------------------------------
Genzyme* 2,790 $ 200
Gilead Sciences* 8,090 394
Sepracor* 2,610 154
---------
Total Pharmaceutical &
medicine manufacturing 748
---------
- --------------------------------------------------------------------------------
SCIENTIFIC R&D SERVICES--5.1%
- --------------------------------------------------------------------------------
Celgene* 5,750 312
Genentech* 4,050 341
---------
Total Scientific r&d services 653
---------
- --------------------------------------------------------------------------------
SEMICONDUCTOR & OTHER ELECTRONIC
COMPONENT MANUFACTURING--33.4%
- --------------------------------------------------------------------------------
Advanced Micro Devices* 14,360 362
Applied Materials 23,090 392
ASML Holding, NY Shares* 22,650 374
Broadcom, Cl A* 14,310 671
Cypress Semiconductor* 21,330 321
Genesis Microchip* 7,920 174
JDS Uniphase* 108,530 241
Marvell Technology Group* 12,130 559
Micron Technology* 23,980 319
Microsemi* 11,820 302
Texas Instruments 9,790 332
Trident Microsystems* 8,150 259
---------
Total Semiconductor & other
electronic component
manufacturing 4,306
---------
- --------------------------------------------------------------------------------
SOFTWARE PUBLISHERS--9.2%
- --------------------------------------------------------------------------------
F5 Networks* 5,570 242
Microsoft 25,130 647
Openwave Systems* 16,990 305
---------
Total Software publishers 1,194
---------
- --------------------------------------------------------------------------------
TELECOMMUNICATIONS--2.2%
- --------------------------------------------------------------------------------
Adtran 8,870 279
---------
Total Telecommunications 279
---------
TURNER FUNDS 2005 ANNUAL REPORT 51
FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
STATEMENT OF NET ASSETS
TURNER TECHNOLOGY FUND
Value
Shares (000)
- --------------------------------------------------------------------------------
TELEPHONE APPARATUS MANUFACTURING--4.1%
- --------------------------------------------------------------------------------
Comverse Technology* 20,220 $ 531
---------
Total Telephone apparatus
manufacturing 531
---------
- --------------------------------------------------------------------------------
TOTAL COMMON STOCK
(COST $10,306) 12,780
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SHORT-TERM INVESTMENT HELD AS COLLATERAL
FOR LOANED SECURITIES--2.1%
- --------------------------------------------------------------------------------
Boston Global Investment Trust--
Quality Portfolio (1) 273,600 274
- --------------------------------------------------------------------------------
TOTAL SHORT-TERM INVESTMENT HELD
AS COLLATERAL FOR LOANED SECURITIES
(COST $274) 274
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
CASH EQUIVALENT--1.3%
- --------------------------------------------------------------------------------
BlackRock TempCash Fund,
Institutional Shares 166,688 167
- --------------------------------------------------------------------------------
TOTAL CASH EQUIVALENT
(COST $167) 167
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
TOTAL INVESTMENTS--102.4%
(COST $10,747) 13,221
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
OTHER ASSETS AND LIABILITIES-- (2.4)%
- --------------------------------------------------------------------------------
Obligation to return securities
lending collateral (274)
Payable for capital shares redeemed (18)
Payable due to investment adviser (10)
Payable due to administrator (1)
Other assets and liabilities, net (11)
- --------------------------------------------------------------------------------
TOTAL OTHER ASSETS AND LIABILITIES (314)
- --------------------------------------------------------------------------------
NET ASSETS-- 100.0% $12,907
- --------------------------------------------------------------------------------
Value
(000)
- --------------------------------------------------------------------------------
NET ASSETS CONSIST OF:
- --------------------------------------------------------------------------------
Portfolio capital of Class I Shares
(unlimited authorization -- no par value)
based on 1,958,515 outstanding shares
of beneficial interest $140,246
Accumulated net realized loss
on investments (129,813)
Net unrealized appreciation
on investments 2,474
- --------------------------------------------------------------------------------
NET ASSETS $12,907
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
NET ASSET VALUE, OFFERING AND REDEMPTION
PRICE PER SHARE-- CLASS I SHARES $6.59
- --------------------------------------------------------------------------------
* Non-income producing security
# Security fully or partially on loan at September 30, 2005 (see Note 9 in
Notes to Financial Statements). The total value of securities on loan at
September 30, 2005, was $265,248.
(1) A private placement security. Units are non-transferable but may be redeemed
at the NAV. The Fund lends securities in its 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 Fund, as such, the
Fund is liable for the investment losses. The Fund receives an annual fee
for its participation in the Lending Agreement based on projected lending
activity.
Cl -- Class
ADR -- American Depositary Receipt
NY -- New York
The accompanying notes are an integral part of the financial statements.
52 TURNER FUNDS 2005 ANNUAL REPORT
STATEMENT OF NET ASSETS
TURNER CONCENTRATED GROWTH FUND
September 30, 2005
Value
Shares (000)
- --------------------------------------------------------------------------------
COMMON STOCK--98.5%
- --------------------------------------------------------------------------------
CEMENT & CONCRETE PRODUCT
MANUFACTURING--3.0%
- --------------------------------------------------------------------------------
Cemex ADR 17,600 $ 920
---------
Total Cement & concrete
product manufacturing 920
---------
- --------------------------------------------------------------------------------
COAL MINING--2.4%
- --------------------------------------------------------------------------------
Peabody Energy 8,920 752
---------
Total Coal mining 752
---------
- --------------------------------------------------------------------------------
COMMUNICATIONS EQUIPMENT
MANUFACTURING--10.1%
- --------------------------------------------------------------------------------
Ericsson Telephone ADR # 32,870 1,211
Lucent Technologies* 300,500 977
Qualcomm 20,860 933
---------
Total Communications
equipment manufacturing 3,121
---------
- --------------------------------------------------------------------------------
COMPUTER & PERIPHERAL EQUIPMENT
MANUFACTURING--4.8%
- --------------------------------------------------------------------------------
Apple Computer* 27,340 1,466
---------
Total Computer & peripheral
equipment manufacturing 1,466
---------
- --------------------------------------------------------------------------------
ELECTRICAL EQUIPMENT MANUFACTURING--5.0%
- --------------------------------------------------------------------------------
General Electric 45,710 1,539
---------
Total Electrical equipment manufacturing 1,539
---------
- --------------------------------------------------------------------------------
INDUSTRIAL MACHINERY MANUFACTURING--3.2%
- --------------------------------------------------------------------------------
Kla-Tencor* # 20,330 991
---------
Total Industrial machinery
manufacturing 991
---------
- --------------------------------------------------------------------------------
INFORMATION SERVICES--6.3%
- --------------------------------------------------------------------------------
Google, Cl A* 6,110 1,934
---------
Total Information services 1,934
---------
- --------------------------------------------------------------------------------
INVESTIGATION & SECURITY SERVICES--0.5%
- --------------------------------------------------------------------------------
Cogent* 6,420 152
---------
Total Investigation &
security services 152
---------
Value
Shares (000)
- --------------------------------------------------------------------------------
MANAGEMENT, SCIENTIFIC &
TECHNICAL CONSULTING SERVICES--2.5%
- --------------------------------------------------------------------------------
Monster Worldwide* 24,850 $ 763
---------
Total Management, scientific &
technical consulting services 763
---------
- --------------------------------------------------------------------------------
MEDICAL EQUIPMENT & SUPPLIES
MANUFACTURING--3.9%
- --------------------------------------------------------------------------------
St. Jude Medical* 25,760 1,206
---------
Total Medical equipment &
supplies manufacturing 1,206
---------
- --------------------------------------------------------------------------------
OTHER ELECTRICAL EQUIPMENT &
COMPONENT MANUFACTURING--3.4%
- --------------------------------------------------------------------------------
Corning* 53,930 1,042
---------
Total Other electrical equipment &
component manufacturing 1,042
---------
- --------------------------------------------------------------------------------
OTHER FINANCIAL INVESTMENT ACTIVITIES--4.1%
- --------------------------------------------------------------------------------
T. Rowe Price Group 19,300 1,260
---------
Total Other financial
investment activities 1,260
---------
- --------------------------------------------------------------------------------
PHARMACEUTICAL & MEDICINE
MANUFACTURING--4.6%
- --------------------------------------------------------------------------------
Gilead Sciences* 29,280 1,428
---------
Total Pharmaceutical &
medicine manufacturing 1,428
---------
- --------------------------------------------------------------------------------
PROFESSIONAL, SCIENTIFIC &
TECHNICAL SERVICES--2.4%
- --------------------------------------------------------------------------------
Alliance Data Systems* 18,640 730
---------
Total Professional, scientific &
technical services 730
---------
- --------------------------------------------------------------------------------
RADIO & TELEVISION BROADCASTING--3.9%
- --------------------------------------------------------------------------------
Sirius Satellite Radio* # 181,460 1,189
---------
Total Radio & television broadcasting 1,189
---------
- --------------------------------------------------------------------------------
SCIENTIFIC R&D SERVICES--3.9%
- --------------------------------------------------------------------------------
Genentech* 14,460 1,218
---------
Total Scientific r&d services 1,218
---------
TURNER FUNDS 2005 ANNUAL REPORT 53
FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
STATEMENT OF NET ASSETS
TURNER CONCENTRATED GROWTH FUND
Value
Shares (000)
- --------------------------------------------------------------------------------
SECURITY & COMMODITY CONTRACTS
INTERMEDIATION & BROKERAGE--3.1%
- --------------------------------------------------------------------------------
Morgan Stanley 17,465 $ 942
---------
Total Security & commodity
contracts intermediation &
brokerage 942
---------
- --------------------------------------------------------------------------------
SEMICONDUCTOR & OTHER ELECTRONIC
COMPONENT MANUFACTURING--22.3%
- --------------------------------------------------------------------------------
Advanced Micro Devices* 73,680 1,857
Analog Devices 20,135 748
Applied Materials 89,740 1,522
Broadcom, Cl A* 39,150 1,837
Texas Instruments 26,680 904
---------
Total Semiconductor & other
electronic component
manufacturing 6,868
---------
- --------------------------------------------------------------------------------
SOFTWARE PUBLISHERS--9.1%
- --------------------------------------------------------------------------------
Electronic Arts* 16,240 924
Microsoft 73,050 1,879
---------
Total Software publishers 2,803
---------
- --------------------------------------------------------------------------------
TOTAL COMMON STOCK
(COST $26,933) 30,324
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SHORT-TERM INVESTMENT HELD AS COLLATERAL
FOR LOANED SECURITIES--7.6%
- --------------------------------------------------------------------------------
Boston Global Investment Trust--
Quality Portfolio (1) 2,341,900 2,342
- --------------------------------------------------------------------------------
TOTAL SHORT-TERM INVESTMENT HELD
AS COLLATERAL FOR LOANED SECURITIES
(COST $2,342) 2,342
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
CASH EQUIVALENT--5.8%
- --------------------------------------------------------------------------------
BlackRock TempCash Fund,
Institutional Shares 1,783,808 1,784
- --------------------------------------------------------------------------------
TOTAL CASH EQUIVALENT
(COST $1,784) 1,784
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
TOTAL INVESTMENTS--111.9%
(COST $31,059) 34,450
- --------------------------------------------------------------------------------
Value
(000)
- --------------------------------------------------------------------------------
OTHER ASSETS AND LIABILITIES-- (11.9)%
- --------------------------------------------------------------------------------
Obligation to return securities
lending collateral $ (2,342)
Payable for investment
securities purchased (1,430)
Payable due to investment adviser (32)
Payable for capital shares redeemed (15)
Payable due to administrator (4)
Other assets and liabilities, net 152
- --------------------------------------------------------------------------------
TOTAL OTHER ASSETS AND LIABILITIES (3,671)
- --------------------------------------------------------------------------------
NET ASSETS-- 100.0% $30,779
- --------------------------------------------------------------------------------
NET ASSETS CONSIST OF:
- --------------------------------------------------------------------------------
Portfolio capital of Class I Shares
(unlimited authorization -- no par value)
based on 4,333,671 outstanding shares
of beneficial interest $183,987
Accumulated net realized loss
on investments (156,599)
Net unrealized appreciation
on investments 3,391
- --------------------------------------------------------------------------------
NET ASSETS $30,779
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
NET ASSET VALUE, OFFERING AND REDEMPTION
PRICE PER SHARE -- CLASS I SHARES $7.10
- --------------------------------------------------------------------------------
* Non-income producing security
# Security fully or partially on loan at September 30, 2005 (see Note 9 in
Notes to Financial Statements). The total value of securities on loan at
September 30, 2005, was $2,226,326.
(1) A private placement security. Units are non-transferable but may be redeemed
at the NAV. The Fund lends securities in its 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 Fund, as such, the
Fund is liable for the investment losses. The Fund receives an annual fee
for its participation in the Lending Agreement based on projected lending
activity.
ADR -- American Depositary Receipt
Cl -- Class
The accompanying notes are an integral part of the financial statements.
54 TURNER FUNDS 2005 ANNUAL REPORT
STATEMENT OF NET ASSETS
TURNER NEW ENTERPRISE FUND
September 30, 2005
Value
Shares (000)
- --------------------------------------------------------------------------------
COMMON STOCK--99.1%
- --------------------------------------------------------------------------------
ADVERTISING & RELATED SERVICES--1.5%
- --------------------------------------------------------------------------------
aQuantive* 6,930 $ 140
---------
Total Advertising & related services 140
---------
- --------------------------------------------------------------------------------
CLOTHING STORES--2.8%
- --------------------------------------------------------------------------------
Urban Outfitters* 8,600 253
---------
Total Clothing stores 253
---------
- --------------------------------------------------------------------------------
COMPUTER & PERIPHERAL EQUIPMENT
MANUFACTURING--4.6%
- --------------------------------------------------------------------------------
Apple Computer* 2,730 146
Sandisk* 5,690 275
---------
Total Computer & peripheral
equipment manufacturing 421
---------
- --------------------------------------------------------------------------------
COMPUTER SYSTEMS DESIGN &
RELATED SERVICES--7.4%
- --------------------------------------------------------------------------------
Foundry Networks* # 15,220 193
Ixia* 2,190 32
Netgear* 4,970 120
Witness Systems* # 15,990 334
---------
Total Computer systems design &
related services 679
---------
- --------------------------------------------------------------------------------
INDUSTRIAL MACHINERY MANUFACTURING--5.3%
- --------------------------------------------------------------------------------
Kla-Tencor* 5,330 260
Varian Semiconductor
Equipment Associates* # 5,390 228
---------
Total Industrial machinery
manufacturing 488
---------
- --------------------------------------------------------------------------------
INFORMATION SERVICES--8.8%
- --------------------------------------------------------------------------------
CNET Networks* 18,510 251
Google, Cl A* 1,100 348
Yahoo!* 6,040 205
---------
Total Information services 804
---------
- --------------------------------------------------------------------------------
INVESTIGATION & SECURITY SERVICES--2.0%
- --------------------------------------------------------------------------------
Cogent* # 7,570 180
---------
Total Investigation &
security services 180
---------
Value
Shares (000)
- --------------------------------------------------------------------------------
MANAGEMENT, SCIENTIFIC &
TECHNICAL CONSULTING SERVICES--2.5%
- --------------------------------------------------------------------------------
Monster Worldwide* 7,590 $ 233
---------
Total Management, scientific &
technical consulting services 233
---------
- --------------------------------------------------------------------------------
OIL & GAS EXTRACTION--4.5%
- --------------------------------------------------------------------------------
Range Resources 5,180 200
Ultra Petroleum* 3,660 208
---------
Total Oil & gas extraction 408
---------
- --------------------------------------------------------------------------------
OTHER ELECTRICAL EQUIPMENT &
COMPONENT MANUFACTURING--1.7%
- --------------------------------------------------------------------------------
Corning* 7,870 152
---------
Total Other electrical equipment &
component manufacturing 152
---------
- --------------------------------------------------------------------------------
OTHER LEATHER & ALLIED PRODUCT
MANUFACTURING--1.6%
- --------------------------------------------------------------------------------
Coach* 4,690 147
---------
Total Other leather & allied
product manufacturing 147
---------
- --------------------------------------------------------------------------------
OTHER MISCELLANEOUS MANUFACTURING--2.9%
- --------------------------------------------------------------------------------
Scientific Games, Cl A* 8,530 264
---------
Total Other miscellaneous
manufacturing 264
---------
- --------------------------------------------------------------------------------
PHARMACEUTICAL & MEDICINE
MANUFACTURING--5.4%
- --------------------------------------------------------------------------------
Gilead Sciences* 2,700 131
Sepracor* 2,300 136
United Therapeutics* 3,240 226
---------
Total Pharmaceutical &
medicine manufacturing 493
---------
- --------------------------------------------------------------------------------
RADIO & TELEVISION BROADCASTING--1.2%
- --------------------------------------------------------------------------------
Sirius Satellite Radio* # 16,740 110
---------
Total Radio & television broadcasting 110
---------
TURNER FUNDS 2005 ANNUAL REPORT 55
FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
STATEMENT OF NET ASSETS
TURNER NEW ENTERPRISE FUND
Value
Shares (000)
- --------------------------------------------------------------------------------
SCIENTIFIC R&D SERVICES--4.8%
- --------------------------------------------------------------------------------
Celgene* 3,870 $ 210
Genentech* 2,720 229
---------
Total Scientific r&d services 439
---------
- --------------------------------------------------------------------------------
SECURITIES & COMMODITY EXCHANGES--1.5%
- --------------------------------------------------------------------------------
Chicago Mercantile
Exchange Holdings 420 142
---------
Total Securities &
commodity exchanges 142
---------
- --------------------------------------------------------------------------------
SECURITY & COMMODITY CONTRACTS
INTERMEDIATION & BROKERAGE--1.3%
- --------------------------------------------------------------------------------
Ameritrade Holding* 5,600 120
---------
Total Security & commodity contracts
intermediation & brokerage 120
---------
- --------------------------------------------------------------------------------
SEMICONDUCTOR & OTHER ELECTRONIC
COMPONENT MANUFACTURING--22.4%
- --------------------------------------------------------------------------------
Advanced Micro Devices* 7,780 196
Applied Materials 14,090 239
Broadcom, Cl A* 8,320 390
Cypress Semiconductor* 14,220 214
JDS Uniphase* 100,470 223
Marvell Technology Group* 6,670 308
Microsemi* # 9,230 236
Trident Microsystems* 7,620 242
---------
Total Semiconductor & other
electronic component
manufacturing 2,048
---------
- --------------------------------------------------------------------------------
SOFTWARE PUBLISHERS--7.0%
- --------------------------------------------------------------------------------
F5 Networks* 3,230 140
Microsoft 15,270 393
Openwave Systems* # 5,950 107
---------
Total Software publishers 640
---------
- --------------------------------------------------------------------------------
TELECOMMUNICATIONS--3.7%
- --------------------------------------------------------------------------------
Dobson Communications, Cl A* 19,250 148
NII Holdings* 2,270 192
---------
Total Telecommunications 340
---------
Value
Shares (000)
- --------------------------------------------------------------------------------
TELEPHONE APPARATUS MANUFACTURING --3.8%
- --------------------------------------------------------------------------------
Comverse Technology* 13,070 $ 343
---------
Total Telephone apparatus
manufacturing 343
---------
- --------------------------------------------------------------------------------
TRAVELER ACCOMMODATION--2.4%
- --------------------------------------------------------------------------------
MGM Mirage* 5,020 220
---------
Total Traveler accommodation 220
---------
- --------------------------------------------------------------------------------
TOTAL COMMON STOCK
(COST $7,241) 9,064
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SHORT-TERM INVESTMENT HELD AS COLLATERAL
FOR LOANED SECURITIES--9.1%
- --------------------------------------------------------------------------------
Boston Global Investment Trust--
Quality Portfolio (1) 829,800 830
- --------------------------------------------------------------------------------
TOTAL SHORT-TERM INVESTMENT HELD
AS COLLATERAL FOR LOANED SECURITIES
(COST $830) 830
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
CASH EQUIVALENT--1.9%
- --------------------------------------------------------------------------------
BlackRock TempCash Fund,
Institutional Shares 168,861 169
- --------------------------------------------------------------------------------
TOTAL CASH EQUIVALENT
(COST $169) 169
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
TOTAL INVESTMENTS--110.1%
(COST $8,240) 10,063
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
OTHER ASSETS AND LIABILITIES-- (10.1)%
- --------------------------------------------------------------------------------
Obligation to return securities
lending collateral (830)
Payable for investment
securities purchased (114)
Payable for capital shares redeemed (16)
Payable due to investment adviser (8)
Payable due to administrator (1)
Other assets and liabilities, net 50
- --------------------------------------------------------------------------------
TOTAL OTHER ASSETS AND LIABILITIES (919)
- --------------------------------------------------------------------------------
NET ASSETS-- 100.0% $9,144
- --------------------------------------------------------------------------------
56 TURNER FUNDS 2005 ANNUAL REPORT
STATEMENT OF NET ASSETS
TURNER NEW ENTERPRISE FUND
Value
(000)
- --------------------------------------------------------------------------------
NET ASSETS CONSIST OF:
- --------------------------------------------------------------------------------
Portfolio capital of Class I Shares
(unlimited authorization -- no par value)
based on 1,560,158 outstanding shares
of beneficial interest $15,951
Accumulated net realized loss
on investments (8,630)
Net unrealized appreciation
on investments 1,823
- --------------------------------------------------------------------------------
NET ASSETS $ 9,144
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
NET ASSET VALUE, OFFERING AND REDEMPTION
PRICE PER SHARE-- CLASS I SHARES $5.86
- --------------------------------------------------------------------------------
* Non-income producing security
# Security fully or partially on loan at September 30, 2005 (see Note 9 in
Notes to Financial Statements). The total value of securities on loan at
September 30, 2005, was $796,238.
(1) A private placement security. Units are non-transferable but may be redeemed
at the NAV. The Fund lends securities in its 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 Fund, as such, the
Fund is liable for the investment losses. The Fund receives an annual fee
for its participation in the Lending Agreement based on projected lending
activity.
Cl -- Class
The accompanying notes are an integral part of the financial statements.
TURNER FUNDS 2005 ANNUAL REPORT 57
FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
STATEMENTS OF OPERATIONS (000)
Turner Turner
Turner Core Strategic Turner
Large Cap Growth Growth Midcap
Growth Fund Fund (1) Fund Growth Fund
-------------------------------------------------------------------------------------
year ended year ended year ended year ended
9/30/05 9/30/05 9/30/05 9/30/05
- ------------------------------------------------------------------------------------------------------------------------------------
Investment Income:
Dividend $ 512 $ 143 $ 38 $ 3,582
Interest 16 18 3 57
Securities lending 1 -- 1 288
Foreign taxes withheld -- -- -- (6)
- ------------------------------------------------------------------------------------------------------------------------------------
Total investment income 529 161 42 3,921
- ------------------------------------------------------------------------------------------------------------------------------------
Expenses:
Investment advisory fees 348 104 51 7,015
Administrator fees 87 21 10 1,403
Distribution fees(2) -- -- -- 4
Shareholder service fees(2) -- 5 -- 4
Transfer agent fees 120 35 31 1,705
Custodian fees 38 41 19 258
Registration fees 13 2 1 135
Professional fees 11 6 2 271
Printing fees 9 6 2 250
Trustees' fees 6 1 1 75
Insurance and other fees 9 2 1 114
- ------------------------------------------------------------------------------------------------------------------------------------
Total expenses 641 223 118 11,234
Less:
Investment advisory fee waiver (206) (104) (32) --
Reimbursement from adviser -- (23) -- --
- ------------------------------------------------------------------------------------------------------------------------------------
Net expenses 435 96 86 11,234
- ------------------------------------------------------------------------------------------------------------------------------------
Net investment income (loss) 94 65 (44) (7,313)
- ------------------------------------------------------------------------------------------------------------------------------------
Net realized gain from
securities sold 7,141 395 353 118,724
Net change in unrealized
appreciation (depreciation)
of investment securities (384) 3,222 708 100,398
- ------------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain
on investments 6,757 3,617 1,061 219,122
- ------------------------------------------------------------------------------------------------------------------------------------
Net increase in net assets resulting
from operations $6,851 $3,682 $1,017 $211,809
====================================================================================================================================
Turner Turner Turner
Small Cap Micro Cap Small Cap
Growth Fund Growth Fund Equity Fund
----------------------------------------------------------------
year ended year ended year ended
9/30/05 9/30/05 9/30/05
- ---------------------------------------------------------------------------------------------------------------
Investment Income:
Dividend $ 563 $ 763 $ 322
Interest 97 1,123 41
Securities lending 163 251 1
Foreign taxes withheld -- -- --
- ---------------------------------------------------------------------------------------------------------------
Total investment income 823 2,137 364
- ---------------------------------------------------------------------------------------------------------------
Expenses:
Investment advisory fees 2,456 4,310 469
Administrator fees 369 647 76
Distribution fees(2) -- -- 126
Shareholder service fees(2) -- -- --
Transfer agent fees 416 765 76
Custodian fees 65 94 52
Registration fees 35 55 4
Professional fees 72 128 16
Printing fees 66 124 17
Trustees' fees 20 33 4
Insurance and other fees 32 53 6
- ---------------------------------------------------------------------------------------------------------------
Total expenses 3,531 6,209 846
Less:
Investment advisory fee waiver (460) (175) (123)
Reimbursement from adviser -- -- --
- ---------------------------------------------------------------------------------------------------------------
Net expenses 3,071 6,034 723
- ---------------------------------------------------------------------------------------------------------------
Net investment income (loss) (2,248) (3,897) (359)
- ---------------------------------------------------------------------------------------------------------------
Net realized gain from
securities sold 21,220 42,124 130
Net change in unrealized
appreciation (depreciation)
of investment securities 17,030 66,602 6,763
- ---------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain
on investments 38,250 108,726 6,893
- ---------------------------------------------------------------------------------------------------------------
Net increase in net assets resulting
from operations $36,002 $104,829 $6,534
===============================================================================================================
Turner
Turner Concentrated Turner
Technology Growth New Enterprise
Fund Fund Fund
-----------------------------------------------------
year ended year ended year ended
9/30/05 9/30/05 9/30/05
- ----------------------------------------------------------------------------------------------------
Investment Income:
Dividend $ 12 $ 174 $ 12
Interest 4 8 3
Securities lending 10 24 10
Foreign taxes withheld -- (4) --
- ----------------------------------------------------------------------------------------------------
Total investment income 26 202 25
- ----------------------------------------------------------------------------------------------------
Expenses:
Investment advisory fees 118 311 125
Administrator fees 22 52 17
Distribution fees(2) -- -- --
Shareholder service fees(2) -- -- --
Transfer agent fees 63 69 44
Custodian fees 8 20 14
Registration fees 3 7 2
Professional fees 5 10 3
Printing fees 4 7 3
Trustees' fees 1 3 1
Insurance and other fees 2 5 2
- ----------------------------------------------------------------------------------------------------
Total expenses 226 484 211
Less:
Investment advisory fee waiver (33) (87) (58)
Reimbursement from adviser -- -- --
- ----------------------------------------------------------------------------------------------------
Net expenses 193 397 153
- ----------------------------------------------------------------------------------------------------
Net investment income (loss) (167) (195) (128)
- ----------------------------------------------------------------------------------------------------
Net realized gain from
securities sold 844 4,356 1,971
Net change in unrealized
appreciation (depreciation)
of investment securities 1,943 2,922 885
- ----------------------------------------------------------------------------------------------------
Net realized and unrealized gain
on investments 2,787 7,278 2,856
- ----------------------------------------------------------------------------------------------------
Net increase in net assets resulting
from operations $2,620 $7,083 $2,728
====================================================================================================
(1) Effective February 25, 2005, the Constellation Funds reorganized the
Constellation TIP Core Growth Fund with and into a newly created series of
the Turner Funds, called the Turner Core Growth Fund. For additional
information see Note 1 in the Notes to Financial Statements.
(2) Attributable to Class II Shares only.
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 2005 ANNUAL REPORT
FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS (000)
Turner Large Cap Growth Fund Turner Core Growth Fund (1)
-------------------------------------------------------------------------------
year ended year ended year ended year ended
9/30/05 9/30/04 9/30/05 9/30/04
- ------------------------------------------------------------------------------------------------------------------------------------
Investment activities:
Net investment income (loss) $ 94 $ 110 $ 65 $ (15)
Net realized gain from securities sold 7,141 3,472 395 709
Net change in unrealized
appreciation (depreciation) of investments (384) (298) 3,222 (162)
- ------------------------------------------------------------------------------------------------------------------------------------
Net increase in net assets resulting
from operations 6,851 3,284 3,682 532
- ------------------------------------------------------------------------------------------------------------------------------------
Dividends and distributions to shareholders:
Net investment income
Class I Shares (53) (87) -- --
- ------------------------------------------------------------------------------------------------------------------------------------
Total dividends and distributions (53) (87) -- --
- ------------------------------------------------------------------------------------------------------------------------------------
Capital share transactions:
Class I Shares
Proceeds from shares issued 24,448 50,271 33,622 341
Proceeds from shares issued
in lieu of cash distributions 53 87 -- --
Cost of shares redeemed (56,265) (64,980) (1,527) (1,321)
- ------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets from
Class I Shares transactions (31,764) (14,622) 32,095 (980)
- ------------------------------------------------------------------------------------------------------------------------------------
Class II Shares
Proceeds from shares issued -- -- 1 --
Cost of shares redeemed -- -- -- --
- ------------------------------------------------------------------------------------------------------------------------------------
Net increase in net assets from
Class II Shares transactions -- -- 1 --
- ------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
from capital share transactions (31,764) (14,622) 32,096 (980)
- ------------------------------------------------------------------------------------------------------------------------------------
Total increase (decrease) in net assets (24,966) (11,425) 35,778 (448)
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets:
Beginning of year 67,991 79,416 5,080 5,528
- ------------------------------------------------------------------------------------------------------------------------------------
End of year $43,025 $ 67,991 $40,858 $5,080
====================================================================================================================================
Undistributed net investment income
(accumulated net investment loss) $ 83 $ 42 $ 65 $ --
====================================================================================================================================
Shares issued and redeemed:
Class I Shares
Issued 4,787 10,119 5,458 39
Issued in lieu of cash distributions 10 17 -- --
Redeemed (10,913) (13,274) (2,296) (152)
- ------------------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in Class I Shares (6,116) (3,138) 3,162 (113)
- ------------------------------------------------------------------------------------------------------------------------------------
Class II Shares
Issued -- -- -- --
Redeemed -- -- -- --
- ------------------------------------------------------------------------------------------------------------------------------------
Increase in Class II Shares -- -- -- --
- ------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in shares transaction (6,116) (3,138) 3,162 (113)
====================================================================================================================================
Turner Strategic Growth Fund Turner Midcap Growth Fund
-------------------------------------------------------------------------------
year ended year ended year ended year ended
9/30/05 9/30/04 9/30/05 9/30/04
- ------------------------------------------------------------------------------------------------------------------------------------
Investment activities:
Net investment income (loss) $ (44) $ (33) $ (7,313) $ (7,574)
Net realized gain from securities sold 353 211 118,724 78,392
Net change in unrealized
appreciation (depreciation) of investments 708 (12) 100,398 (22,549)
- ------------------------------------------------------------------------------------------------------------------------------------
Net increase in net assets resulting
from operations 1,017 166 211,809 48,269
- ------------------------------------------------------------------------------------------------------------------------------------
Dividends and distributions to shareholders:
Net investment income
Class I Shares -- -- -- --
- ------------------------------------------------------------------------------------------------------------------------------------
Total dividends and distributions -- -- -- --
- ------------------------------------------------------------------------------------------------------------------------------------
Capital share transactions:
Class I Shares
Proceeds from shares issued 4,312 2,372 259,069 433,824
Proceeds from shares issued
in lieu of cash distributions -- -- -- --
Cost of shares redeemed (2,601) (1,659) (372,696) (398,027)
- ------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets from
Class I Shares transactions 1,711 713 (113,627) 35,797
- ------------------------------------------------------------------------------------------------------------------------------------
Class II Shares
Proceeds from shares issued -- -- 446 1,285
Cost of shares redeemed -- -- (359) (268)
- ------------------------------------------------------------------------------------------------------------------------------------
Net increase in net assets from
Class II Shares transactions -- -- 87 1,017
- ------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
from capital share transactions 1,711 713 (113,540) 36,814
- ------------------------------------------------------------------------------------------------------------------------------------
Total increase (decrease) in net assets 2,728 879 98,269 85,083
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets:
Beginning of year 4,430 3,551 859,294 774,211
- ------------------------------------------------------------------------------------------------------------------------------------
End of year $7,158 $4,430 $957,563 $ 859,294
====================================================================================================================================
Undistributed net investment income
(accumulated net investment loss) $ -- $ -- $ (8) $ --
====================================================================================================================================
Shares issued and redeemed:
Class I Shares
Issued 404 235 10,915 19,641
Issued in lieu of cash distributions -- -- -- --
Redeemed (239) (167) (15,573) (18,363)
- ------------------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in Class I Shares 165 68 (4,658) 1,278
- ------------------------------------------------------------------------------------------------------------------------------------
Class II Shares
Issued -- -- 19 58
Redeemed -- -- (15) (13)
- ------------------------------------------------------------------------------------------------------------------------------------
Increase in Class II Shares -- -- 4 45
- ------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in shares transaction 165 68 (4,654) 1,323
====================================================================================================================================
Turner Small Cap Growth Fund
------------------------------------
year ended year ended
9/30/05 9/30/04
- -----------------------------------------------------------------------------------------
Investment activities:
Net investment income (loss) $ (2,248) $ (2,148)
Net realized gain from securities sold 21,220 29,912
Net change in unrealized
appreciation (depreciation) of investments 17,030 (3,548)
- -----------------------------------------------------------------------------------------
Net increase in net assets resulting
from operations 36,002 24,216
- -----------------------------------------------------------------------------------------
Dividends and distributions to shareholders:
Net investment income
Class I Shares -- --
- -----------------------------------------------------------------------------------------
Total dividends and distributions -- --
- -----------------------------------------------------------------------------------------
Capital share transactions:
Class I Shares
Proceeds from shares issued 77,920 134,231
Proceeds from shares issued
in lieu of cash distributions -- --
Cost of shares redeemed (93,986) (114,025)
- -----------------------------------------------------------------------------------------
Net increase (decrease) in net assets from
Class I Shares transactions (16,066) 20,206
- -----------------------------------------------------------------------------------------
Class II Shares
Proceeds from shares issued -- --
Cost of shares redeemed -- --
- -----------------------------------------------------------------------------------------
Net increase in net assets from
Class II Shares transactions -- --
- -----------------------------------------------------------------------------------------
Net increase (decrease) in net assets
from capital share transactions (16,066) 20,206
- -----------------------------------------------------------------------------------------
Total increase (decrease) in net assets 19,936 44,422
- -----------------------------------------------------------------------------------------
Net assets:
Beginning of year 237,213 192,791
- -----------------------------------------------------------------------------------------
End of year $257,149 $237,213
=========================================================================================
Undistributed net investment income
(accumulated net investment loss) $ -- $ --
=========================================================================================
Shares issued and redeemed:
Class I Shares
Issued 3,390 6,279
Issued in lieu of cash distributions -- --
Redeemed (4,092) (5,366)
- -----------------------------------------------------------------------------------------
Increase (decrease) in Class I Shares (702) 913
- -----------------------------------------------------------------------------------------
Class II Shares
Issued -- --
Redeemed -- --
- -----------------------------------------------------------------------------------------
Increase in Class II Shares -- --
- -----------------------------------------------------------------------------------------
Net increase (decrease) in shares transaction (702) 913
=========================================================================================
(1) Effective February 25, 2005, the Constellation Funds reorganized the
Constellation TIP Core Growth Fund with and into a newly-created series of
the Turner Funds, called the Turner Core Growth Fund. For additional
information see Note 1 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.
60 & 61 TURNER FUNDS 2005 ANNUAL REPORT
FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS (000)
Turner Micro Cap Growth Fund Turner Small Cap Equity Fund
---------------------------------------------------------------------------------
year ended year ended year ended year ended
9/30/05 9/30/04 9/30/05 9/30/04
- ------------------------------------------------------------------------------------------------------------------------------------
Investment activities:
Net investment loss $ (3,897) $ (2,886) $ (359) $ (52)
Net realized gain (loss)
from securities sold 42,124 46,458 130 3,270 (1)
Net change in unrealized appreciation
(depreciation) of investments 66,602 17,638 6,763 708
- ------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in
net assets resulting from operations 104,829 61,210 6,534 3,926
- ------------------------------------------------------------------------------------------------------------------------------------
Dividends and distributions to shareholders:
Net investment income Class I Shares -- -- -- --
Realized capital gains
Class I Shares (48,588) (6,514) -- --
Class II Shares -- -- -- (1,316)
Return of capital Class II Shares -- -- -- (51)
- ------------------------------------------------------------------------------------------------------------------------------------
Total dividends and distributions (48,588) (6,514) -- (1,367)
- ------------------------------------------------------------------------------------------------------------------------------------
Capital share transactions:
Class I Shares
Proceeds from shares issued 125,396 135,004 -- --
Proceeds from shares issued in lieu
of cash distributions 47,598 6,268 -- --
Cost of shares redeemed (93,819) (83,116) -- --
- ------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets from
Class I Shares transactions 79,175 58,156 -- --
- ------------------------------------------------------------------------------------------------------------------------------------
Class II Shares
Proceeds from shares issued -- -- 36,702 54,757
Proceeds from shares issued in lieu
of cash distributions -- -- -- 1,362
Cost of shares redeemed -- -- (4,694) (42,064) (2)
- ------------------------------------------------------------------------------------------------------------------------------------
Net increase in net assets from
Class II Shares transactions -- -- 32,008 14,055
- ------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net
assets from capital share transactions 79,175 58,156 32,008 14,055
- ------------------------------------------------------------------------------------------------------------------------------------
Total increase (decrease) in net assets 135,416 112,852 38,542 16,614
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets:
Beginning of year 366,692 253,840 29,171 12,557
- ------------------------------------------------------------------------------------------------------------------------------------
End of year $502,108 $366,692 $67,713 $29,171
====================================================================================================================================
Undistributed net investment income
(accumulated net investment loss) $ -- $ (1) $ (17) $ --
====================================================================================================================================
Shares issued and redeemed:
Class I Shares
Issued 2,435 2,824 -- --
Issued in lieu of cash distributions 983 137 -- --
Redeemed (1,857) (1,764) -- --
- ------------------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in Class I Shares 1,561 1,197 -- --
- ------------------------------------------------------------------------------------------------------------------------------------
Class II Shares
Issued -- -- 2,430 4,083
Issued in lieu of cash distributions -- -- -- 106
Redeemed -- -- (309) (3,116)(2)
- ------------------------------------------------------------------------------------------------------------------------------------
Increase in Class II Shares -- -- 2,121 1,073
- ------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in shares transaction 1,561 1,197 2,121 1,073
====================================================================================================================================
STATEMENTS OF CHANGES IN NET ASSETS (000)
Turner Technology Fund Turner Concentrated Growth Fund
---------------------------------------------------------------------------------
year ended year ended year ended year ended
9/30/05 9/30/04 9/30/05 9/30/04
- ------------------------------------------------------------------------------------------------------------------------------------
Investment activities:
Net investment loss $ (167) $ (309) $ (195) $ (475)
Net realized gain (loss)
from securities sold 844 2,395 4,356 (396)
Net change in unrealized appreciation
(depreciation) of investments 1,943 (1,105) 2,922 (545)
- ------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in
net assets resulting from operations 2,620 981 7,083 (1,416)
- ------------------------------------------------------------------------------------------------------------------------------------
Dividends and distributions to shareholders:
Net investment income Class I Shares -- -- -- --
Realized capital gains
Class I Shares -- -- -- --
Class II Shares -- -- -- --
Return of capital Class II Shares -- -- -- --
- ------------------------------------------------------------------------------------------------------------------------------------
Total dividends and distributions -- -- -- --
- ------------------------------------------------------------------------------------------------------------------------------------
Capital share transactions:
Class I Shares
Proceeds from shares issued 1,607 5,588 7,012 15,356
Proceeds from shares issued in lieu
of cash distributions -- -- -- --
Cost of shares redeemed (7,350) (10,235) (22,425) (21,835)
- ------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets from
Class I Shares transactions (5,743) (4,647) (15,413) (6,479)
- ------------------------------------------------------------------------------------------------------------------------------------
Class II Shares
Proceeds from shares issued -- -- -- --
Proceeds from shares issued in lieu
of cash distributions -- -- -- --
Cost of shares redeemed -- -- -- --
- ------------------------------------------------------------------------------------------------------------------------------------
Net increase in net assets from
Class II Shares transactions -- -- -- --
- ------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net
assets from capital share transactions (5,743) (4,647) (15,413) (6,479)
- ------------------------------------------------------------------------------------------------------------------------------------
Total increase (decrease) in net assets (3,123) (3,666) (8,330) (7,895)
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets:
Beginning of year 16,030 19,696 39,109 47,004
- ------------------------------------------------------------------------------------------------------------------------------------
End of year $12,907 $ 16,030 $30,779 $ 39,109
====================================================================================================================================
Undistributed net investment income
(accumulated net investment loss) $ -- $ -- $ -- $ --
====================================================================================================================================
Shares issued and redeemed:
Class I Shares
Issued 264 896 1,085 2,338
Issued in lieu of cash distributions -- -- -- --
Redeemed (1,194) (1,714) (3,468) (3,394)
- ------------------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in Class I Shares (930) (818) (2,383) (1,056)
- ------------------------------------------------------------------------------------------------------------------------------------
Class II Shares
Issued -- -- -- --
Issued in lieu of cash distributions -- -- -- --
Redeemed -- -- -- --
- ------------------------------------------------------------------------------------------------------------------------------------
Increase in Class II Shares -- -- -- --
- ------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in shares transaction (930) (818) (2,383) (1,056)
====================================================================================================================================
Turner New Enterprise Fund
------------------------------------
year ended year ended
9/30/05 9/30/04
- ---------------------------------------------------------------------------------------
Investment activities:
Net investment loss $ (128) $ (150)
Net realized gain (loss)
from securities sold 1,971 (1,382)
Net change in unrealized appreciation
(depreciation) of investments 885 224
- ---------------------------------------------------------------------------------------
Net increase (decrease) in
net assets resulting from operations 2,728 (1,308)
- ---------------------------------------------------------------------------------------
Dividends and distributions to shareholders:
Net investment income Class I Shares -- --
Realized capital gains
Class I Shares -- --
Class II Shares -- --
Return of capital Class II Shares -- --
- ---------------------------------------------------------------------------------------
Total dividends and distributions -- --
- ---------------------------------------------------------------------------------------
Capital share transactions:
Class I Shares
Proceeds from shares issued 7,793 25,236
Proceeds from shares issued in lieu
of cash distributions -- --
Cost of shares redeemed (12,182) (26,591)
- ---------------------------------------------------------------------------------------
Net increase (decrease) in net assets from
Class I Shares transactions (4,389) (1,355)
- ---------------------------------------------------------------------------------------
Class II Shares
Proceeds from shares issued -- --
Proceeds from shares issued in lieu
of cash distributions -- --
Cost of shares redeemed -- --
- ---------------------------------------------------------------------------------------
Net increase in net assets from
Class II Shares transactions -- --
- ---------------------------------------------------------------------------------------
Net increase (decrease) in net
assets from capital share transactions (4,389) (1,355)
- ---------------------------------------------------------------------------------------
Total increase (decrease) in net assets (1,661) (2,663)
- ---------------------------------------------------------------------------------------
Net assets:
Beginning of year 10,805 13,468
- ---------------------------------------------------------------------------------------
End of year $ 9,144 $ 10,805
=======================================================================================
Undistributed net investment income
(accumulated net investment loss) $ -- $ --
=======================================================================================
Shares issued and redeemed:
Class I Shares
Issued 1,494 4,681
Issued in lieu of cash distributions -- --
Redeemed (2,324) (5,392)
- ---------------------------------------------------------------------------------------
Increase (decrease) in Class I Shares (830) (711)
- ---------------------------------------------------------------------------------------
Class II Shares
Issued -- --
Issued in lieu of cash distributions -- --
Redeemed -- --
- ---------------------------------------------------------------------------------------
Increase in Class II Shares -- --
- ---------------------------------------------------------------------------------------
Net increase (decrease) in shares transaction (830) (711)
=======================================================================================
(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.
62 & 63 TURNER FUNDS 2005 ANNUAL REPORT
FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
Realized and
Net asset Net unrealized Total Dividends Distributions
value, investment gains from from net from
beginning income (losses) on investment investment capital Total
of period (loss) investments operations income gains distributions
- ------------------------------------------------------------------------------------------------------------------------------------
Turner Large Cap Growth Fund -- Class I Shares
- ----------------------------------------------
2005 $ 4.83 0.01(4) 0.57 0.58 --* -- --
2004 $ 4.62 -- 0.21 0.21 --* -- --
2003 $ 3.50 -- 1.12 1.12 --* -- --
2002 $ 4.70 -- (1.20) (1.20) -- -- --
2001 $ 9.81 -- (5.11) (5.11) -- -- --
- -----------------------------------------
Turner Core Growth Fund -- Class I Shares
- -----------------------------------------
2005 $ 8.84 0.02 2.07 2.09 -- -- --
2004 $ 8.04 (0.03) 0.83 0.80 -- -- --
2003 $ 6.29 (0.03) 1.78 1.75 -- -- --
2002 $ 8.18 (0.03) (1.86) (1.89) -- -- --
2001(2) $10.00 -- (1.82) (1.82) -- -- --
- ------------------------------------------
Turner Core Growth Fund -- Class II Shares
- ------------------------------------------
2005(7) $10.58 -- 0.35 0.35 -- -- --
- ------------------------------------------------
Turner Strategic Growth Fund-- Class I Shares(3)
- ------------------------------------------------
2005 $ 9.88 (0.07)(4) 1.87 1.80 -- -- --
2004 $ 9.35 (0.07) 0.60 0.53 -- -- --
2003 $ 6.59 (0.06) 2.82 2.76 -- -- --
2002 $ 9.01 (0.08) (2.34) (2.42) -- -- --
2001 $26.20 (0.10)(4) (11.63) (11.73) -- (5.46) (5.46)
- -------------------------------------------
Turner Midcap Growth Fund -- Class I Shares
- -------------------------------------------
2005 $20.99 (0.19)(4) 5.59 5.40 -- -- --
2004 $19.54 (0.18)(4) 1.63 1.45 -- -- --
2003 $13.78 (0.14)(4) 5.90 5.76 -- -- --
2002 $17.40 (0.14) (3.48) (3.62) -- -- --
2001 $46.52 (0.16) (25.89) (26.05) -- (3.07) (3.07)
- --------------------------------------------
Turner Midcap Growth Fund -- Class II Shares
- --------------------------------------------
2005 $20.69 (0.30)(4) 5.50 5.20 -- -- --
2004 $19.36 (0.28)(4) 1.61 1.33 -- -- --
2003 $13.72 (0.23)(4) 5.87 5.64 -- -- --
2002 $17.41 (0.22)(4) (3.47) (3.69) -- -- --
2001(6) $17.30 -- 0.11 0.11 -- -- --
- ----------------------------------------------
Turner Small Cap Growth Fund -- Class I Shares
- ----------------------------------------------
2005 $21.33 (0.01) 3.36 3.35 -- -- --
2004 $18.88 (0.19) 2.64 2.45 -- -- --
2003 $12.62 (0.12) 6.38 6.26 -- -- --
2002 $15.65 (0.20) (2.83) (3.03) -- -- --
2001 $44.79 (0.04) (18.63) (18.67) -- (10.47) (10.47)
Ratio of net
Net Ratio of Ratio of total investment
Net asset assets end net expenses expenses income (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 Large Cap Growth Fund -- Class I Shares
- ----------------------------------------------
2005 $ 5.41 12.09% $ 43,025 0.75% 1.10% 0.16% 154.66%
2004 $ 4.83 4.64% $ 67,991 0.75% 0.94% 0.11% 165.94%
2003 $ 4.62 32.01% $ 79,416 0.75% 0.97% 0.03% 201.35%
2002 $ 3.50 (25.53)% $ 59,971 0.65% 0.90% -- % 272.99%
2001 $ 4.70 (52.09)% $ 53,048 0.74% 1.03% (0.14)% 376.49%
- -----------------------------------------
Turner Core Growth Fund -- Class I Shares
- -----------------------------------------
2005 $10.93 23.64% $ 40,857 0.69% (1) 1.60% 0.46% 136.36%
2004 $ 8.84 9.95% $ 5,080 1.25% 1.97% (0.27)% 104.00%
2003 $ 8.04 27.82% $ 5,528 1.25% 2.14% (0.34)% 187.00%
2002 $ 6.29 (23.11)% $ 4,747 1.25% 1.91% (0.33)% 313.00%
2001(2) $ 8.18 (18.20)%+ $ 6,949 1.25% 5.35% (0.20)% 91.00%
- ------------------------------------------
Turner Core Growth Fund -- Class II Shares
- ------------------------------------------
2005(7) $10.93 3.31% $ 1 0.83% 2.50% 0.33% 136.36%
- ------------------------------------------------
Turner Strategic Growth Fund-- Class I Shares(3)
- ------------------------------------------------
2005 $11.68 18.22% $ 7,158 1.25% 1.73% (0.64)% 206.17%
2004 $ 9.88 5.67% $ 4,430 1.25% 1.83% (0.70)% 262.01%
2003 $ 9.35 41.88% $ 3,551 1.25% 1.53% (0.77)% 282.15%
2002 $ 6.59 (26.86)% $ 4,847 1.26%(5) 5.98%(5) (0.71)% 391.98%
2001 $ 9.01 (53.71)% $ 9,776 1.25%(5) 3.49%(5) (0.69)% 400.04%
- -------------------------------------------
Turner Midcap Growth Fund -- Class I Shares
- -------------------------------------------
2005 $26.39 25.73% $ 955,730 1.20% 1.20% (0.78)% 151.63%
2004 $20.99 7.42% $ 857,899 1.16% 1.16% (0.84)% 167.17%
2003 $19.54 41.80% $ 773,788 1.15% 1.18% (0.87)% 208.80%
2002 $13.78 (20.80)% $ 561,244 1.05% 1.16% (0.81)% 259.62%
2001 $17.40 (59.00)% $ 595,761 1.04% 1.12% (0.77)% 335.57%
- --------------------------------------------
Turner Midcap Growth Fund -- Class II Shares
- --------------------------------------------
2005 $25.89 25.13% $ 1,833 1.70% 1.70% (1.28)% 151.63%
2004 $20.69 6.87% $ 1,395 1.66% 1.66% (1.35)% 167.17%
2003 $19.36 41.11% $ 423 1.65% 1.68% (1.36)% 208.80%
2002 $13.72 (21.19)% $ 102 1.55% 1.66% (1.25)% 259.62%
2001(6) $17.41 0.64%+ $ 7 1.54% 1.95% (1.04)% 335.57%
- ----------------------------------------------
Turner Small Cap Growth Fund -- Class I Shares
- ----------------------------------------------
2005 $24.68 15.71% $ 257,149 1.25% 1.44% (0.91)% 152.96%
2004 $21.33 12.98% $ 237,213 1.25% 1.41% (0.95)% 151.02%
2003 $18.88 49.60% $ 192,791 1.25% 1.41% (0.79)% 187.95%
2002 $12.62 (19.36)% $ 144,181 1.25% 1.40% (0.99)% 188.34%
2001 $15.65 (49.81)% $ 241,876 1.25% 1.40% (0.96)% 176.11%
* Amount represents less than $0.01 per share.
+ Returns are for the period indicated and have not been annualized.
++ Inclusive of fees paid indirectly, waivers and/or reimbursements.
+++ Excludes effect of in-kind transfers and mergers.
(1) For the period October 1, 2004 through February 25, 2005, the total expense
cap was 1.25%. Effective February 26, 2005, the total expense cap was
changed to 0.59%.
(2) Commenced operations on February 28, 2001. All ratios for the period have
been annualized.
(3) 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.
(4) Based on average shares outstanding.
(5) Expense ratios include the Mercury Select Growth Fund's, Class I Shares
portion of the master's allocated expenses.
(6) Commenced operations on September 24, 2001. All ratios for the period have
been annualized.
(7) Commenced operations on August 1, 2005. All ratios for the period have been
annualized.
Amounts designated as "--" are either $0 or have been rounded to $0.
The accompanying notes are an integral part of the financial statements.
64 & 65 TURNER FUNDS 2005 ANNUAL REPORT
FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
Realized and
Net asset unrealized Total Dividends Distributions
value, Net gains from from net from Return
beginning investment (losses) on investment investment capital of Total
of period loss investments operations income gains Capital distributions
- ------------------------------------------------------------------------------------------------------------------------------------
Turner Micro Cap Growth Fund -- Class I Shares
- ----------------------------------------------
2005 $50.02 (0.46)(4) 13.35 12.89 -- (6.45) -- (6.45)
2004 $41.38 (0.39) 10.04 9.65 -- (1.01) -- (1.01)
2003 $32.04 (0.25) 9.59 9.34 -- -- -- --
2002 $32.08 (0.33) 0.29 (1) (0.04) -- -- -- --
2001 $45.92 (0.12) (9.02) (9.14) -- (4.70) -- (4.70)
- -----------------------------------------------
Turner Small Cap Equity Fund -- Class II Shares
- -----------------------------------------------
2005 $13.92 (0.11)(4) 2.25 2.14 -- -- -- --
2004 $12.27 (0.02) 2.95 2.93 -- (1.23) (0.05) (1.28)
2003 $ 9.30 (0.02) 3.00 2.98 (0.01) -- -- (0.01)
2002 (2) $10.00 -- (0.70) (0.70) -- -- -- --
- ----------------------------------------
Turner Technology Fund -- Class I Shares
- ----------------------------------------
2005 $ 5.55 (0.03) 1.07 1.04 -- -- -- --
2004 $ 5.31 (0.10) 0.34 0.24 -- -- -- --
2003 $ 3.03 (0.04) 2.32 2.28 -- -- -- --
2002 $ 4.88 (0.06) (1.79) (1.85) -- -- -- --
2001 $32.69 (0.15) (23.42) (23.57) -- (4.24) -- (4.24)
- ------------------------------------------------
Turner Concentrated Growth Fund-- Class I Shares
- ------------------------------------------------
2005 $ 5.82 (0.02) 1.30 1.28 -- -- -- --
2004 $ 6.05 (0.07) (0.16) (0.23) -- -- -- --
2003 $ 4.03 (0.04) 2.06 2.02 -- -- -- --
2002 $ 5.76 -- (1.73) (1.73) -- -- -- --
2001 $24.74 (0.09) (14.96) (15.05) -- (3.93) -- (3.93)
- --------------------------------------------
Turner New Enterprise Fund -- Class I Shares
- --------------------------------------------
2005 $ 4.52 (0.03) 1.37 1.34 -- -- -- --
2004 $ 4.34 (0.06) 0.24(1) 0.18 -- -- -- --
2003 $ 2.27 (0.02) 2.09 2.07 -- -- -- --
2002 $ 3.29 (0.04) (0.98) (1.02) -- -- -- --
2001(3) $12.52 (0.03) (9.20) (9.23) -- -- -- --
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 Micro Cap Growth Fund -- Class I Shares
- ----------------------------------------------
2005 $56.46 27.90% $502,108 1.40% 1.44% (0.90)% 73.50%
2004 $50.02 23.54% $366,692 1.40% 1.42% (0.85)% 122.45%
2003 $41.38 29.15% $253,840 1.40% 1.44% (0.81)% 147.77%
2002 $32.04 (0.12)% $178,130 1.31% 1.42% (0.88)% 88.89%
2001 $32.08 (20.23)% $160,010 1.25% 1.40% (0.50)% 121.96%
- -----------------------------------------------
Turner Small Cap Equity Fund -- Class II Shares
- -----------------------------------------------
2005 $16.06 15.37% $67,713 1.43% 1.67% (0.71)% 170.22%
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 (2) $ 9.30 (7.00)%+ $ 7,260 1.35% 3.02% (0.07)% 86.94%
- ----------------------------------------
Turner Technology Fund -- Class I Shares
- ----------------------------------------
2005 $ 6.59 18.74% $ 12,907 1.29% 1.50% (1.11)% 156.92%
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%
- ------------------------------------------------
Turner Concentrated Growth Fund-- Class I Shares
- ------------------------------------------------
2005 $ 7.10 21.99% $ 30,779 1.15% 1.41% (0.57)% 329.52%
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%
- --------------------------------------------
Turner New Enterprise Fund -- Class I Shares
- --------------------------------------------
2005 $ 5.86 29.65% $ 9,144 1.36% 1.87% (1.14)% 226.82%
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 (3) $ 3.29 (73.72)% $ 6,144 1.28% 3.13% (1.04)% 758.98%
+ Returns are for the period indicated and have not been annualized.
++ Inclusive of fees paid indirectly, waivers and/or reimbursements.
+++ Excludes effect of in-kind transfers and mergers.
(1) 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.
(2) Commenced operations on March 4, 2002. All ratios for the period have been
annualized.
(3) 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.
(4) Based on average shares outstanding.
Amounts designated as "--" are either $0 or have been rounded to $0.
The accompanying notes are an integral part of the financial statements.
66 & 67 TURNER FUNDS 2005 ANNUAL REPORT
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
September 30, 2005
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 ten active portfolios as of September 30, 2005. The
financial statements included herein are those of the Turner Large Cap Growth
Fund (the "Large Cap Growth Fund"), the Turner Core Growth Fund (the "Core
Growth Fund"), the Turner Strategic Growth Fund (the "Strategic Growth 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 Large Cap Growth Fund, the Strategic Growth 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.
Effective February 25, 2005, the Constellation TIP Core Growth Fund reorganized
with and into a newly-created series of the Turner Funds, the Turner Core Growth
Fund. Prior to the reorganization, the Constellation TIP Tax Managed U.S. Equity
Fund changed its name to the Constellation TIP Core Growth Fund. It also changed
the Fund's non-fundamental investment objective from seeking long-term capital
appreciation while attempting to minimize the impact of taxes on returns earned
by shareholders to seeking long-term capital appreciation. Each shareholder
received a number of shares of the Turner Core Growth Fund, Class I Shares,
equal in dollar value and in the number of shares of the Constellation TIP Core
Growth Fund.
The Turner Core Growth Fund's Statement of Operations and Statements of Changes
include activity of the Constellation TIP Core Growth Fund prior to the
reorganization on February 25, 2005.
As of September 30, 2005, 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, Small Cap Growth and Small Cap Equity Funds were closed to
new investors on March 7, 2000, July 31, 2004 and May 1, 2005, 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
generally accepted accounting principles in the United States of America
requires management to make estimates and assumptions that affect the
reported amounts of assets and liabilities and disclosure of contingent
assets and liabilities at the date of the financial statements and the
reported amounts of increases and decreases in net assets from operations
during the reporting period. Actual results could differ from those
estimates.
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 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.
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 common expenses of
the Trust are allocated among the Funds on the basis of relative daily net
assets.
68 TURNER FUNDS 2005 ANNUAL REPORT
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") or SEI Investments ("SEI"). With the
exception of the Trust's Chief Compliance Officer, such officers are paid no
fees by the Trust for serving as officers and trustees of the Trust.
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% of the aggregate average daily net assets of the Trust 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, 2005, SEI was paid $769,641 by Turner.
The Core Growth, Midcap Growth, and Small Cap Equity 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 with respect to distribution
fees only, 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 distribution fees of 0.25% of the Midcap Growth and the Small
Cap Equity Funds' Class II Shares' average daily net assets. In addition, under
the Class II Plan, aggregate fees not exceeding 0.25% of the Midcap Growth and
the Core Growth Funds' Class II Shares' average daily net assets are paid to
servicing agents 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 during the year ended
September 30, 2005:
AMOUNT
--------------
Large Cap Growth Fund $ 86,282
Core Growth Fund 6,148
Strategic Growth Fund 4,718
MidCap Growth Fund 1,387,321
Small Cap Growth Fund 337,598
Micro Cap Growth Fund 646,413
Small Cap Equity Fund 42,336
Technology Fund 16,921
Concentrated Growth Fund 26,338
New Enterprise Fund 16,423
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.
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:
ADVISORY FEES TOTAL EXPENSE CAP
------------- -----------------
Large Cap Growth Fund 0.60% 0.75%
Core Growth Fund 0.75 0.59(1),(4)
Strategic Growth Fund 0.75 1.25(3)
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) 0.95 1.45
(1) REPRESENTS MAXIMUM EXPENSE CAP FOR CLASS I SHARES WHERE FUNDS OFFER BOTH
CLASS I SHARES AND CLASS II SHARES.
(2) TURNER INVESTMENT MANAGEMENT, LLC ("TIM") HAD CONTRACTUALLY AGREED TO REDUCE
THE ADVISORY FEE BY 0.10% FROM 0.95% TO 0.85% THROUGH JANUARY 31, 2005. IN
ADDITION, TIM HAS ALSO AGREED TO KEEP "OTHER" EXPENSES FROM EXCEEDING 0.25%
THROUGH JANUARY 31, 2006.
(3) TURNER INVESTMENT PARTNERS, INC. HAS CONTRACTUALLY AGREED TO WAIVE FUND
EXPENSES TO KEEP THE FUND'S NET TOTAL OPERATING EXPENSES FROM EXCEEDING
1.25% THROUGH JANUARY 31, 2006.
(4) PRIOR TO THE REORGANIZATION OF THE CONSTELLATION TIP CORE GROWTH FUND ON
FEBRUARY 25, 2005, THE MAXIMUM EXPENSE CAP FOR THE FUND WAS 1.25%.
TURNER FUNDS 2005 ANNUAL REPORT 69
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
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.
Effective April 1, 2005, the Fund's base fee (1.10% for all Funds) is accrued
daily and paid monthly, based on the Fund's average net assets during the
current month. Prior to April 1, 2005, the Fund's advisory fee was accrued daily
based on the lowest advisory fee rate (0.70% for all Funds) and adjusted at
month end for relative performance.
The performance adjustment is calculated and paid monthly by comparing the
Fund's performance to that of the Fund's performance benchmark over the current
month plus the previous 11 months (the "performance period"). The annual
performance adjustment rate 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 Fund's 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, 2005, the Funds' advisory fees, before
waivers, were adjusted in accordance with the policy described above:
BASE NET ADVISER
ADVISER PERFORMANCE FEE BEFORE
FEE ADJUSTMENT WAIVERS
------- ---------- --------
Technology Fund $139,265 $ (21,390) $117,875
Concentrated Growth Fund 324,835 (13,819) 311,016
New Enterprise Fund 107,358 17,966 125,324
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, 2005, were as follows
(000):
PURCHASES SALES
------------- -------------
Large Cap Growth Fund $ 87,843 $ 117,691
Core Growth Fund 50,800 19,433
Strategic Growth Fund 15,249 13,621
Midcap Growth Fund 1,417,430 1,548,525
Small Cap Growth Fund 370,584 382,359
Micro Cap Growth Fund 281,463 296,381
Small Cap Equity Fund 113,201 82,759
Technology Fund 23,187 28,959
Concentrated Growth Fund 112,063 128,155
New Enterprise Fund 24,957 29,726
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 dividends and distributions from net investment income and net
realized capital gains, if any, 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 temporary or permanent in nature. These differences are
primarily due to wash sales and net operating losses. The character of dividends
and 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.
70 TURNER FUNDS 2005 ANNUAL REPORT
Accordingly, the following permanent differences have been reclassified to/from
the following accounts during the fiscal year ended September 30, 2005 (000):
UNDISTRIBUTED ACCUMULATED
NET INVESTMENT NET REALIZED PAID-IN-
INCOME GAIN CAPITAL
----------------- --------------- ------------
Strategic Growth Fund $ 44 $ -- $ (44)
Midcap Growth Fund 7,305 -- (7,305)
Small Cap Growth Fund 2,248 -- (2,248)
Micro Cap Growth Fund 3,898 (3,898) --
Small Cap Equity Fund 342 -- (342)
Technology Fund 167 -- (167)
Concentrated Growth Fund 195 -- (195)
New Enterprise Fund 128 -- (128)
These reclassifications have no effect on net assets or net asset value per
share.
The tax character of dividends and distributions declared during the years ended
September 30, 2005 and September 30, 2004 were as follows (000):
ORDINARY LONG-TERM RETURN OF
INCOME CAPITAL GAIN CAPITAL TOTAL
----------- --------------- ------------- --------------
Large Cap Growth Fund
2005 $ 53 $ -- $-- $ 53
2004 87 -- -- 87
Micro Cap Growth Fund
2005 7,955 40,633 -- 48,588
2004 330 6,184 -- 6,514
Small Cap Equity Fund
2005 -- -- -- --
2004 1,006 310 51 1,367
As of September 30, 2005, the components of distributable earnings (accumulated
losses) on a tax basis were as follows (000):
TOTAL
DISTRIBUTABLE
UNDISTRIBUTED UNDISTRIBUTED CAPITAL POST- UNREALIZED EARNINGS
ORDINARY LONG-TERM LOSS OCTOBER APPRECIATION (ACCUMULATED
INCOME CAPITAL GAIN CARRYFORWARD LOSSES (DEPRECIATION) LOSSES)
-------------- -------------- ------------- ------- -------------- ---------------
Large Cap Growth Fund $ 82 $ -- $ (23,756) $ -- $ 7,360 $ (16,314)
Core Growth Fund 65 -- (1,576) -- 3,896 2,385
Strategic Growth Fund -- -- (13,046) -- 1,067 (11,979)
Midcap Growth Fund -- -- (494,561) -- 199,593 (294,968)
Small Cap Growth Fund -- -- (132,053) -- 46,450 (85,603)
Micro Cap Growth Fund 8,774 20,019 -- -- 136,797 165,590
Small Cap Equity Fund -- -- (209) (10) 8,738 8,519
Technology Fund -- -- (129,813) -- 2,474 (127,339)
Concentrated Growth Fund -- -- (156,452) (81) 3,325 (153,208)
New Enterprise Fund -- -- (8,630) -- 1,823 (6,807)
Post-October losses represent losses realized on investment transactions from
November 1, 2004 through September 30, 2005 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 2005 ANNUAL REPORT 71
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
At September 30, 2005, 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 2013 TOTAL
---------------- ------------------ ------------------ ------------------ ------------------
Large Cap Growth Fund $ -- $ 8,618 $ 15,138 $ -- $23,756
Core Growth Fund -- -- 1,576 -- 1,576
Strategic Growth Fund 1,508 8,526 3,012 -- 13,046
Midcap Growth Fund -- 365,062 129,499 -- 494,561
Small Cap Growth Fund -- 106,059 25,994 -- 132,053
Small Cap Equity Fund -- -- -- 209 209
Technology Fund 13,243 108,584 7,986 -- 129,813
Concentrated Growth Fund 11,073 132,529 12,850 -- 156,452
New Enterprise Fund 815 7,183 385 247 8,630
During the year ended September 30, 2005, the Large Cap Growth Fund, Core Growth
Fund, Strategic Growth Fund, Midcap Growth Fund, Small Cap Growth Fund,
Technology Fund, and Concentrated Growth Fund utilized capital loss
carryforwards of $6,776,047, $419,358, $344,483, $116,510,771, $21,241,133,
$748,146, and $893,945, respectively, to offset capital gains.
At September 30, 2005, 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
TAX COST APPRECIATION DEPRECIATION APPRECIATION
----------- ------------ ------------ ------------
Large Cap Growth Fund $ 37,188 $ 7,852 $ (492) $ 7,360
Core Growth Fund 37,278 4,343 (447) 3,896
Strategic Growth Fund 6,353 1,165 (98) 1,067
Midcap Growth Fund 871,257 208,680 (9,087) 199,593
Small Cap Growth Fund 255,484 50,430 (3,980) 46,450
Micro Cap Growth Fund 539,754 143,241 (6,444) 136,797
Small Cap Equity Fund 58,451 9,447 (709) 8,738
Technology Fund 10,747 2,537 (63) 2,474
Concentrated Growth Fund 31,125 3,781 (456) 3,325
New Enterprise Fund 8,240 1,846 (23) 1,823
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.
72 TURNER FUNDS 2005 ANNUAL REPORT
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
- --------------------------------------------------------------------------------
THE BOARD OF TRUSTEES AND SHAREHOLDERS
TURNER FUNDS:
We have audited the accompanying statements of net assets of the Turner Small
Cap Equity Fund, Turner Strategic Growth Fund, Turner New Enterprise Fund,
Turner Concentrated Growth Fund, Turner Technology Fund, Turner Large Cap Growth
Fund, Turner Midcap Growth Fund, Turner Small Cap Growth Fund, Turner Micro Cap
Growth Fund, nine of the funds constituting the Turner Funds, as of September
30, 2005, and the related statements of operations, statements of changes in net
assets and the financial highlights for the year ended September 30, 2005. We
have also audited the accompanying statement of net assets of the Turner Core
Growth Fund, one of the funds constituting the Turner Funds as of September 30,
2005, and the related statement of operations, the statements of changes in net
assets and the financial highlights for each of the years in the two-year period
ended September 30, 2005. These financial statements and financial highlights
are the responsibility of the Trust's management. Our responsibility is to
express an opinion on these financial statements and financial highlights based
on our audits. The statements of changes in net assets and the financial
highlights of the Turner Small Cap Equity Fund, Turner Strategic Growth Fund,
Turner New Enterprise Fund, Turner Concentrated Growth Fund, Turner Technology
Fund, Turner Large Cap Growth Fund, Turner Midcap Growth Fund, Turner Small Cap
Growth Fund, Turner Micro Cap Growth Fund for the years or periods ended
September 30, 2004 and prior, and the financial highlights of the Turner Core
Growth Fund for the years or periods ended September 30, 2003 and prior, were
audited by other auditors. Those auditors expressed unqualified opinions on
those financial statements and financial highlights in their reports dated
November 3, 2004 and November 13, 2003, respectively.
We conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audits to obtain reasonable assurance about whether the
financial statements and financial highlights are free of material misstatement.
An audit includes examining, on a test basis, evidence supporting the amounts
and disclosures in the financial statements. Our procedures included
confirmation of securities owned as of September 30, 2005, by correspondence
with the custodian and brokers. As to securities purchased or sold but not yet
received or delivered, we performed other appropriate auditing procedures. 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 aforementioned funds of the Turner Funds as of September 30, 2005, the
results of their operations, changes in their net assets, and their financial
highlights for the periods indicated in the paragraph above, in conformity with
U.S. generally accepted accounting principles.
/S/ KPMG LLP
Philadelphia, Pennsylvania
November 18, 2005
TURNER FUNDS 2005 ANNUAL REPORT 73
BOARD OF TRUSTEES CONSIDERATIONS IN APPROVING
THE ADVISORY AGREEMENT (Unaudited)
- --------------------------------------------------------------------------------
On November 19, 2004, the Board of Trustees had met to decide whether to approve
the investment advisory agreement (the "Advisory Agreement") with respect to the
Core Growth Fund. In preparation for the meeting, the Board requested and
reviewed a wide variety of information from Turner Investment Partners, Inc.
(the "Adviser"), including, among other things: (1) the performance of the
Constellation TIP Tax Managed U.S. Equity Fund (which was proposed to be
reorganized into the newly formed Core Growth Fund) (the "Predecessor Fund")
over 1, 3, 6 and 9 months and one, two, three and five year periods ended
September 30, 2004 compared to the Predecessor Fund's benchmarks; (2) the
contractual and actual compensation proposed to be paid under the Advisory
Agreement as compared to the compensation paid to relevant peer groups; and (3)
the proposed expense ratio of the Fund, with expense waivers, as compared to
expense ratios for relevant peer groups. At the meeting, representatives from
the Adviser presented additional oral and written information to the Trustees to
help them evaluate the Adviser's fees and other aspects of their Advisory
Agreement. The Trustees discussed the written materials that they received
before the meeting and the Adviser's oral presentation and other information
that the Trustees received at the meeting, and deliberated on the approval of
the Adviser's Advisory Agreement in light of this information. In their
deliberations, the Trustees did not identify any single piece of information
that was all-important or controlling.
Based on the Board's deliberations and its evaluation of the information
described above, the Trustees, including all of the non-interested Trustees,
unanimously: (a) concluded that the compensation payable to the Adviser pursuant
to the Advisory Agreement with respect to the Core Growth Fund was fair and
equitable; and (b) agreed to approve the Advisory Agreement for the Core Growth
Fund.
On February 18, 2005, the Board held a meeting to decide whether to renew the
Advisory Agreements for the upcoming year. In preparation for the meeting, the
Board requested and reviewed a wide variety of information from the Adviser and
Turner Investment Management LLC (each an "Adviser" and together the
"Advisers").
The materials described, among other things: (1) the nature, extent and quality
of the services provided by the Adviser; (2) the performance of the Funds over
1, 3, 6 and 9 months and one, two, three and five year periods ended December
31, 2004 compared to the Funds' benchmarks and versus each Fund's respective
peer group for the one- and three-year periods ended September 30, 2004; (3) the
contractual and actual compensation to be paid under the Advisory Agreements as
compared to the compensation paid to relevant peer groups, and the contractual
advisory fees versus internally determined peer groups; (4) the expense ratios
of the Funds, with expense waivers, as compared to expense ratios for relevant
peer groups; (5) the qualifications of the Adviser's personnel, portfolio
management capabilities and investment methodologies; (6) the Adviser's
operations, compliance program and policies; (7) the financial condition of the
Adviser; (8) the cost of services to be provided by the Adviser and the
Adviser's profitability from each Fund for the year ended September 30, 2004;
(9) "fall-out" benefits to the Adviser and its affiliates from the relationship
with the Funds; and (10) the extent to which economies of scale are relevant
given the Funds' current asset size and current asset growth potential. At the
meeting, representatives from the Advisers presented additional oral and written
information to the Trustees to help them evaluate the Advisers' fees and other
aspects of their Advisory Agreements. Other Fund service providers also provided
the Board with additional information at the meeting. The Trustees discussed the
written materials that they received before the meeting and the Advisers' oral
presentation and any other information that the Trustees received at the
meeting, and deliberated on the approval of the Advisers' Advisory Agreements in
light of this information. In its deliberations, the Trustees did not identify
any single piece of information that was all-important or controlling.
The independent Trustees, in executive session, reached the following
conclusions, among others, regarding the Advisers and the Advisory Agreements:
the performance of the Funds was generally competitive (in some cases
performance was higher than the median and in others it was lower); the gross
and net advisory fees were generally competitive (in some cases they were above
the median and in other cases they were below the median); and the gross and net
total expense ratios of the Funds were generally competitive (while in some
cases the gross total expense ratio was higher than the median, the net total
expense ratios of all of the Funds were below their respective medians). The
independent Trustees also concluded that: they were satisfied with the quality
of services provided by the Adviser in advising the Funds; the profits earned by
the Adviser seemed reasonable in light of the nature, extent and quality of the
services provided to each Fund; and that each Fund was not large enough to
attain significant economies of scale.
Based on the Board's deliberations and its evaluation of the information
described above, the Trustees, including all of the non-interested Trustees,
unanimously: (a) concluded that terms of the Advisers' Advisory Agreements were
fair and reasonable; (b) concluded that the Advisers' fees are reasonable in
light of the services that they provide to the Funds; and (c) agreed to renew
the Advisory Agreements for another year.
74 TURNER FUNDS 2005 ANNUAL REPORT
NOTICE TO SHAREHOLDERS (Unaudited)
- --------------------------------------------------------------------------------
For shareholders that do not have a September 30th, 2005 tax year end, this
notice is for informational purposes only. For shareholders with a September
30th, 2005 year end, please consult your tax advisor as to the pertinance of
this notice. For the fiscal year ended September 30th, 2005, each portfolio is
designating the following items with regard to distributions paid during the
year.
DIVIDENDS
LONG QUALIFYING
TERM FOR
(15% RATE) CORPORATE
CAPITAL ORDINARY DIVIDENDS QUALIFYING
GAIN INCOME TOTAL RECEIVABLE DIVIDENDS
DISTRIBUTION DISTRIBUTIONS DISTRIBUTIONS DEDUCTION(1) INCOME(2)
-------------- -------------- -------------- ------------- ---------
Turner Large Cap Growth Fund 0.00% 100.00% 100.00% 100.00% 100.00%
Turner Core Growth Fund 0.00% 0.00% 0.00% 0.00% 0.00%
Turner Strategic Growth Fund 0.00% 0.00% 0.00% 0.00% 0.00%
Turner MidCap Growth Fund 0.00% 0.00% 0.00% 0.00% 0.00%
Turner Small Cap Growth Fund 0.00% 0.00% 0.00% 0.00% 0.00%
Turner Micro Cap Growth Fund 83.63% 16.37% 100.00% 9.77% 9.48%
Turner Small Cap Equity Fund 0.00% 0.00% 0.00% 0.00% 0.00%
Turner Technology Fund 0.00% 0.00% 0.00% 0.00% 0.00%
Turner Concentrated Growth Fund 0.00% 0.00% 0.00% 0.00% 0.00%
Turner New Enterprise Fund 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, 2005. Complete information will be computed and reported in conjunction with
your 2005 Form 1099-DIV.
TURNER FUNDS 2005 ANNUAL REPORT 75
TRUSTEES AND OFFICERS OF THE TRUST
- --------------------------------------------------------------------------------
NUMBER OF
POSITION TERM OF OFFICE PORTFOLIOS IN OTHER
HELD WITH AND LENGTH PRINCIPAL OCCUPATION(S) COMPLEX OVERSEEN DIRECTORSHIPS
NAME, ADDRESS, AND AGE THE FUND OF TIME SERVED(2) DURING PAST 5 YEARS BY TRUSTEE HELD
- ------------------------------------------------------------------------------------------------------------------------------------
INTERESTED TRUSTEES*
- ------------------------------------------------------------------------------------------------------------------------------------
Robert E. Turner Trustee Trustee Chairman and Chief Investment 10 Bradley University,
1205 Westlakes Drive since 1996 Officer of Turner since 1990. The Crossroads
Suite 100 School
Berwyn, PA 19312
(49)
- ------------------------------------------------------------------------------------------------------------------------------------
*Mr. Turner is deemed to be an "Interested Trustee" by virtue of his relationship with Turner Investment Partners, Inc.
- ------------------------------------------------------------------------------------------------------------------------------------
NON-INTERESTED TRUSTEES(1)
- ------------------------------------------------------------------------------------------------------------------------------------
Alfred C. Salvato Trustee Trustee Associate Vice President and 10 Trustee,
(47) since 1996 Treasurer, Thomas Jefferson Constellation
University since 2003, Funds
Treasurer since 1995.
- ------------------------------------------------------------------------------------------------------------------------------------
Janet F. Sansone Trustee Trustee Self-employed. Consultant since 10 Trustee,
(60) since 1997 1999. Senior Vice President of Human Constellation
Resources of Frontier Corporation Funds
(telecommunications company),
(1993-1999).
- ------------------------------------------------------------------------------------------------------------------------------------
Dr. John T. Wholihan Trustee Trustee Professor and Dean, 10 N/A
(67) since 1996 Loyola Marymount
University, since 1984.
Director, TDK Mediactive.
- ------------------------------------------------------------------------------------------------------------------------------------
EXECUTIVE OFFICERS
- ------------------------------------------------------------------------------------------------------------------------------------
Thomas R. Trala, Jr. President President Chief Operating Officer N/A N/A
1205 Westlakes Drive since 2004 of Turner since 2004
Suite 100 and Chief Financial
Berwyn, PA 19312 Officer since 1995.
(38)
- ------------------------------------------------------------------------------------------------------------------------------------
Michael Lawson Controller Controller Director, SEI Investments since N/A N/A
SEI Investments, and Chief and Chief July 2005. Manager, SEI Investments
One Freedom Financial Financial from April 1995 to February 1998
Valley Drive Officer Officer and November 1998 to July 2005.
Oaks, PA 19456 since 2005
(45)
- ------------------------------------------------------------------------------------------------------------------------------------
Timothy D. Barto Vice Vice Vice President and Assistant N/A N/A
SEI Investments, President President Secretary of SEI Investments
One Freedom and and since December 1999.
Valley Drive Assistant Assistant Associate at Dechert Price &
Oaks, PA 19456 Secretary Secretary Rhoads (1997-1999).
(37) since 2000 Associate at Richter,
Miller & Finn (1994-1997).
- ------------------------------------------------------------------------------------------------------------------------------------
Brian McNally Vice Vice Chief Legal and Compliance N/A N/A
1205 Westlakes Drive President, President Officer of Turner Investment
Suite 100 Chief since 2002 Partners, Inc. Previously
Berwyn, PA 19312 Compliance Chief Assistant General Counsel
(47) Officer and Compliance with Bank of America
Secretary Officer and (September 1997-July 2002).
Secretary
since 2004
- ------------------------------------------------------------------------------------------------------------------------------------
Steve Coburn Vice Vice Mutual Fund Administration N/A N/A
1205 Westlakes Drive President President Coordinator of Turner
Suite 100 and and Investment Partners, Inc.
Berwyn, PA 19312 Assistant Assistant since June 2002.
(27) Secretary Secretary
since 2004
- ------------------------------------------------------------------------------------------------------------------------------------
(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 duly elected
and qualified. Each officer serves a 1 year term.
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.
76 TURNER FUNDS 2005 ANNUAL REPORT
DISCLOSURE OF FUND EXPENSES (Unaudited)
- --------------------------------------------------------------------------------
All mutual funds have operating expenses. As a shareholder of a mutual 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 "Expenses Paid During Period" column
with those that appear in the same charts in the shareholder reports for other
mutual funds.
NOTE: Because the return is set at 5% for comparison purposes -- NOT your Fund's
actual return -- the hypothetical account values and expenses may not be used to
estimate your actual ending account balance or expenses you paid for the period.
BEGINNING ENDING EXPENSES
ACCOUNT ACCOUNT ANNUALIZED PAID
VALUE VALUE EXPENSE DURING
4/01/05 9/30/05 RATIOS PERIOD*
- --------------------------------------------------------------------------------
Turner Large Cap Growth Fund
- --------------------------------------------------------------------------------
Actual Fund Return $1,000.00 $1,077.70 0.75% $3.91
Hypothetical 5%
Return 1,000.00 1,021.31 0.75 3.80
- --------------------------------------------------------------------------------
Turner Core Growth Fund Class I Shares
- --------------------------------------------------------------------------------
Actual Fund Return 1,000.00 1,131.50 0.59 3.15
Hypothetical 5%
Return 1,000.00 1,022.11 0.59 2.99
- --------------------------------------------------------------------------------
Turner Core Growth Fund Class II Shares
- --------------------------------------------------------------------------------
Actual Fund Return 1,000.00 1,033.10 0.83 1.41
Hypothetical 5%
Return 1,000.00 1,020.91 0.83 1.40
- --------------------------------------------------------------------------------
Turner Strategic Growth Fund
- --------------------------------------------------------------------------------
Actual Fund Return 1,000.00 1,094.70 1.25 6.56
Hypothetical 5%
Return 1,000.00 1,018.80 1.25 6.33
- --------------------------------------------------------------------------------
Turner Midcap Growth Fund Class I Shares
- --------------------------------------------------------------------------------
Actual Fund Return 1,000.00 1,108.40 1.20 6.34
Hypothetical 5%
Return 1,000.00 1,019.05 1.20 6.07
- --------------------------------------------------------------------------------
Turner Midcap Growth Fund Class II Shares
- --------------------------------------------------------------------------------
Actual Fund Return 1,000.00 1,105.90 1.70 8.97
Hypothetical 5%
Return 1,000.00 1,016.55 1.70 8.59
- --------------------------------------------------------------------------------
BEGINNING ENDING EXPENSES
ACCOUNT ACCOUNT ANNUALIZED PAID
VALUE VALUE EXPENSE DURING
4/01/05 9/30/05 RATIOS PERIOD*
- --------------------------------------------------------------------------------
Turner Small Cap Growth Fund
- --------------------------------------------------------------------------------
Actual Fund Return $1,000.00 $1,110.70 1.25% $6.61
Hypothetical 5%
Return 1,000.00 1,018.80 1.25 6.33
- --------------------------------------------------------------------------------
Turner Micro Cap Growth Fund
- --------------------------------------------------------------------------------
Actual Fund Return 1,000.00 1,127.40 1.40 7.47
Hypothetical 5%
Return 1,000.00 1,018.05 1.40 7.08
- --------------------------------------------------------------------------------
Turner Small Cap Equity Fund
- --------------------------------------------------------------------------------
Actual Fund Return 1,000.00 1,078.60 1.45 7.56
Hypothetical 5%
Return 1,000.00 1,017.80 1.45 7.33
- --------------------------------------------------------------------------------
Turner Technology Fund
- --------------------------------------------------------------------------------
Actual Fund Return 1,000.00 1,128.40 1.28 6.83
Hypothetical 5%
Return 1,000.00 1,018.65 1.28 6.48
- --------------------------------------------------------------------------------
Turner Concentrated Growth Fund
- --------------------------------------------------------------------------------
Actual Fund Return 1,000.00 1,160.10 1.25 6.77
Hypothetical 5%
Return 1,000.00 1,018.80 1.25 6.33
- --------------------------------------------------------------------------------
Turner New Enterprise Fund
- --------------------------------------------------------------------------------
Actual Fund Return 1,000.00 1,162.70 1.62 8.78
Hypothetical 5%
Return 1,000.00 1,016.95 1.62 8.19
- --------------------------------------------------------------------------------
*Expenses are equal to the Fund's annualized expense ratio multiplied by the
average account value over the period, multiplied by 183/365 (to reflect the
one-half year period from 4/1/05 - 9/30/05)
TURNER FUNDS 2005 ANNUAL REPORT 77
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78 TURNER FUNDS 2005 ANNUAL REPORT
<page>
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TURNER FUNDS 2005 ANNUAL REPORT 79
<page>
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
KPMG LLP
Philadelphia, Pennsylvania
THIS REPORT WAS PREPARED FOR SHAREHOLDERS OF THE TURNER FUNDS. IT MAY BE
DISTRIBUTED TO OTHERS ONLY IF PRECEDED OR ACCOMPANIED BY A TURNER FUNDS'
PROSPECTUS, WHICH CONTAINS DETAILED INFORMATION. ALL TURNER FUNDS ARE OFFERED BY
PROSPECTUS ONLY.
The Funds file their complete schedule of portfolio holdings with the Securities
and Exchange Commission (the "Commission") for the first and third quarters of
each fiscal year on Form N-Q within sixty days after the end of the period. The
Funds' Forms N-Q are available on the Commission's 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.
80 TURNER FUNDS 2005 ANNUAL REPORT
<page>
[BLANK PAGE]
<page>
TURNER
FUNDS
- --------------------------------------------
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-002-0302
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 KPMG LLP ("KPMG") and Ernst & Young, LLP Related to the Trust
KPMG billed the Trust aggregate fees for services rendered to the Trust for
fiscal year 2005 and Ernst & Young, LLP billed the Trust aggregate fees for
services rendered to the Trust for fiscal year 2004 as follows:
- ------------------ ----------------------------------------------------- -----------------------------------------------------
2005* 2004+
- ------------------ ----------------------------------------------------- -----------------------------------------------------
- ------- ---------- ----------------- ----------------- ----------------- ----------------- ----------------- -----------------
All fees and All fees and All other fees All fees and All fees and All other fees
services to the services to and services to services to the services to and services to
Trust that were service service Trust that were service service
pre-approved affiliates that affiliates that pre-approved affiliates that affiliates that
were did not require were did not require
pre-approved pre-approval pre-approved pre-approval
- ------- ---------- ----------------- ----------------- ----------------- ----------------- ----------------- -----------------
- ------- ---------- ----------------- ----------------- ----------------- ----------------- ----------------- -----------------
(a) Audit $178,500 N/A N/A $146,700 N/A N/A
Fees (1)
- ------- ---------- ----------------- ----------------- ----------------- ----------------- ----------------- -----------------
- ------- ---------- ----------------- ----------------- ----------------- ----------------- ----------------- -----------------
(b) Audit-Related N/A N/A N/A N/A N/A N/A
Fees
- ------- ---------- ----------------- ----------------- ----------------- ----------------- ----------------- -----------------
- ------- ---------- ----------------- ----------------- ----------------- ----------------- ----------------- -----------------
(c) Tax Fees N/A N/A N/A N/A N/A N/A
- ------- ---------- ----------------- ----------------- ----------------- ----------------- ----------------- -----------------
- ------- ---------- ----------------- ----------------- ----------------- ----------------- ----------------- -----------------
(d) All N/A N/A N/A N/A N/A N/A
Other
Fees
- ------- ---------- ----------------- ----------------- ----------------- ----------------- ----------------- -----------------
*KPMG
+Ernst & Young, LLP
Notes:
(1) Audit fees include fees associated with annual audits and filing of the
Fund's N-1A.
(e)(1) The audit committee does not have pre-approval policies and procedures.
Instead, the audit committee approves on a case-by-case basis each audit or
non-audit service before the accountant is engaged by the Registrant.
(e)(2) Percentage of fees billed by KPMG and Ernst & Young, LLP applicable to
non-audit services pursuant to waiver of pre-approval requirement were as
follows:
---------------------------- ----------------- ----------------
2005* 2004+
---------------------------- ----------------- ----------------
---------------------------- ----------------- ----------------
Audit-Related Fees 0.00% 0.00%
---------------------------- ----------------- ----------------
---------------------------- ----------------- ----------------
Tax Fees 0.00% 0.00%
--------------------------- ----------------- -----------------
---------------------------- ----------------- ----------------
All Other Fees 0.00% 0.00%
---------------------------- ----------------- ----------------
*KPMG
+Ernst & Young, LLP
(f) Not applicable.
(g)(1) The aggregate non-audit fees and services billed by KPMG for fiscal year
2005 were $0.
(g)(2) In addition to the fees listed above, the aggregate non-audit fees billed
by Ernst & Young, LLP for the Funds and all affiliates, as defined, totaled
approximately $170,250 in 2004. 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
Schedule of Investments is included as part of the Report to Shareholders filed
under Item 1.
Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End
Management Investment Companies.
Not applicable to open-end management investment companies.
Item 8. Portfolio Managers of Closed-End Management Investment Companies
Not applicable. 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 Trustees 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 second fiscal quarter of the period
covered by this report, that have materially affected, or are 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.
---------------------------------------
Thomas R. Trala, Jr., President and CEO
Date: December 6, 2005
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/ Thomas R. Trala, Jr.
---------------------------------------
Thomas R. Trala, Jr., President and CEO
Date: December 6, 2005
By (Signature and Title)* /s/ Michael Lawson
---------------------------------------
Michael Lawson, Controller and CFO
Date: December 2, 2005
* Print the name and title of each signing officer under his or her signature.