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 811-07527
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, 2006
Date of reporting period: September 30, 2006
Item 1. Reports to Stockholders.
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[TURNER FUNDS LOGO] ANNUAL REPORT
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September 30, 2006
Turner Concentrated Growth Fund
Turner Core Growth Fund
Turner Emerging Growth Fund
Turner Large Cap Growth Fund
Turner Large Cap Value Fund
Turner Midcap Growth Fund
Turner New Enterprise Fund
Turner Small Cap Equity Fund
Turner Small Cap Growth Fund
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CONTENTS
2 Letter to shareholders
6 Total returns of Turner Funds
8 Investment review:
Turner Concentrated Growth Fund
9 Investment review:
Turner Core Growth Fund
10 Investment review:
Turner Emerging Growth Fund
11 Investment review:
Turner Large Cap Growth Fund
12 Investment review:
Turner Large Cap Value Fund
13 Investment review:
Turner Midcap Growth Fund
14 Investment review:
Turner New Enterprise Fund
15 Investment review:
Turner Small Cap Equity Fund
16 Investment review:
Turner Small Cap Growth Fund
17 Financial statements
64 Notes to financial statements
70 Report of independent registered public
accounting firm
71 Notice to shareholders
72 Trustees and officers of the Trust
73 Disclosure of fund expenses
74 Shareholder voting results
TURNER FUNDS
As of September 30, 2006 the Turner Funds offered a series of nine mutual funds
to individual and institutional investors. Except for the Turner Core Growth
Fund, Class I Shares, and the Turner Large Cap Value Fund, which require 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 $20
billion in equity portfolios on behalf of individuals and institutions. Turner
Investment Management LLC, a subsidiary 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, may
visit our website, www.turnerinvestments.com, or may write to Turner Funds, P.O.
Box 219805, Kansas City, Missouri 64121-9805.
TURNER FUNDS 2006 ANNUAL REPORT | 1
LETTER TO SHAREHOLDERS
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TO OUR SHAREHOLDERS
In the 12-month period ended September 30, 2006, the stock market performed like
a sprinter in the 400-meter dash who starts out strongly, stumbles midway
through the race, then recovers and ends with a strong kick.
For instance, the S&P 500 Index bolted out of the starting blocks to achieve a
6.38% gain in the first half of the period, then floundered with a loss of
nearly 8% from May 5 to June 13, but finished well to record a 10.79% gain for
the entire period. For smaller stocks, however, performance in the second half
of the race was less favorable: indeed, they faded badly. The small-cap Russell
2000 Growth Index, for example, zoomed to a 16.20% return in the first half,
faltered, and finished with a 5.88% result for the full 12 months.
VALUE TROUNCED GROWTH
The downturn in May and June was particularly hard on growth stocks -- and was a
big reason why value soundly outperformed growth for the entire 12 months. The
broad-based Russell 3000 Value Index soared 14.55% for the period, beating its
growth counterpart by 8.50 percentage points. In such a value-oriented market,
the stocks with the most cyclical earnings patterns and below-average
price/earnings ratios tended to do best, at the expense of stocks with the
highest earnings-growth rates and above-average price/earnings ratios.
Such a market environment was less-than-ideal for most of the nine Turner Funds,
particularly our growth funds, which are invested in stocks of companies that we
think will meet or exceed earnings expectations. In terms of absolute
performance (positive or negative returns), all nine of our funds made money for
the 12-month period. But in relative terms (performance versus an index), our
funds met with less success: two of them outperformed their benchmarks. This was
somewhat atypical, in that our funds tend to perform most strongly in rising or
flat markets. The bottom line: our funds generally were hurt by the market's
bias against the stocks of companies that are earnings leaders and were hurt
even more by the May-June slump.
Here are the returns for each of our funds and their benchmarks in the past 12
months:
(CURRENT PERFORMANCE MAY BE LOWER OR HIGHER THAN THE PERFORMANCE DATA QUOTED.
PLEASE CALL 1.800.224.6312 OR VISIT OUR WEBSITE AT WWW.TURNERINVESTMENTS.COM FOR
THE MOST RECENT MONTH-END PERFORMANCE INFORMATION.)
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TOTAL RETURNS
12-month period ended September 30, 2006
TURNER CONCENTRATED GROWTH FUND (TTOPX) 7.04
S&P 500 Index 10.79
NASDAQ 100 Index 3.75
TURNER CORE GROWTH FUND, CLASS I (TTMEX) 6.91
S&P 500 Index 10.79
Russell 1000 Growth Index 6.04
TURNER EMERGING GROWTH FUND (TMCGX)+ 4.95
(formerly Turner Micro Cap Growth Fund)
Russell 2000 Growth Index 5.88
TURNER LARGE CAP GROWTH FUND (TSGEX) 3.40
Russell Top 200 Growth Index 5.80
Russell 1000 Growth Index 6.04
TURNER LARGE CAP VALUE FUND (TLVFX) 14.92*
Russell 1000 Value Index 19.21*
TURNER MIDCAP GROWTH FUND, CLASS I (TMGFX) 4.70
Russell Midcap Growth Index 7.03
TURNER NEW ENTERPRISE FUND (TBTBX) 6.83
NASDAQ Composite Index 5.83
TURNER SMALL CAP EQUITY FUND (TSEIX)+ 5.48
Russell 2000 Index 9.92
TURNER SMALL CAP GROWTH FUND (TSCEX)+ 6.04
Russell 2000 Growth Index 5.88
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* The return is for the period from the fund's inception, on October 10,
2005, to September 30, 2006.
+ Closed to new investors.
For more details on the performance of all nine of our Funds, please see the
INVESTMENT REVIEW beginning on page 8.
OUR LONG-TERM RESULTS REMAIN GOOD
Since few people invest in stock funds with a time horizon of just 12 months,
talk of short-term performance in a shareholder letter like this one has always
struck us as a tad academic. As we've emphasized repeatedly to you in past
letters, it's LONG-TERM PERFORMANCE that's most important. We think it's
inadvisable to get too euphoric or too anxious about good or bad short-term
results for any fund. For us, the results of our own funds over time impart a
more meaningful story: of the eight funds that have track records longer than 12
months, seven of them have outperformed their benchmarks since inception. We
think this record has served the shareholders of the Turner Funds well.
As for the most recent 12-month period, it seemed to us that the stock market
resembled a fish tangled in a net: it was enmeshed in investor uncertainty about
when the Federal Reserve would finally stop raising interest rates. Investors
fretted that the Fed would
2 | TURNER FUNDS 2006 ANNUAL REPORT
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September 30, 2006
ultimately either hike rates NOT enough, which could intensify inflationary
trends in the economy, or hike rates TOO much, which could bring on a recession.
After 17 consecutive rate increases since 2004, the Fed held the line in August,
keeping its short-term federal-funds rate at 5.25%.
In announcing the pause in rates, the Fed suggested that it wanted to evaluate
the outlook for both inflation and economic growth before deciding whether any
further rate hikes might be needed. Recent Commerce Department reports showed
that inflation and economic growth were in fact slowing, and the Fed again chose
to stand pat on rates at its September meeting. That in turn buoyed investors'
hopes that the Fed might be through raising rates and inspired a market rally in
September.
OIL STILL LESS PRICEY THAN COFFEE
Also contributing to investor jitters during the period were high oil prices,
which were perceived as a drag on consumer spending, corporate profits, and the
economy as well as a catalyst for inflation -- all bad for the stock market
(except for energy stocks). Oil prices hit a record $77.03 in mid-July, then
began declining to $61 by September 30. High oil prices were the source of a
seemingly endless series of grumbling sound bites by your Typical American
Motorist on TV-news programs and were blamed variously on speculators,
insatiable demand from Chinese industry, tight global supply, violence in the
Middle East, and a lack of refining capacity. Gasoline prices nationwide
exceeded $3 per gallon at one point during the summer. (To help keep things in
perspective at the time, the ISI economic-research firm made the wry observation
that the average price of a gallon of Starbucks coffee was $13.29.)
Perhaps the biggest story as the period progressed was the improvement in
relative strength of large-cap stocks versus their smaller siblings. Over the
last three months of the period, the Russell Top 200 Index (composed of mega-cap
stocks, the largest of large-cap stocks) climbed 6.29% -- a performance premium
of 4.18 percentage points over mid-cap stocks and 5.85 percentage points over
small-cap stocks.
As THE NEW YORK TIMES observed about the large-cap rally, "The market's bruised
giants finally may be getting off the mat." Previously, for more than six years,
large-cap stocks had taken a battering, markedly underperforming small-cap
stocks. Many market strategists believed that large-cap stocks would inevitably
revert to the mean and begin flourishing. Indeed, some strategists now point to
the performance in the final three months of the period as an indication that
large-cap stocks are at last coming into vogue. We think that may yet prove
true, but more evidence is needed.
MARKET RETURNS LAG PROFITS
Whether or not large-cap stocks will in fact lead the market going forward is a
matter for supposition. What's irrefutable, however, is that the market as a
whole has had an upward bias since late 2002. We think that upward bias should
continue into 2007. On a duration basis, the bull market is admittedly getting
long in the tooth. But there's been a steady reduction in the market's
price/earnings multiple since 2002; during that time, corporate profits are up
more than 120%, but the market is up only about 70%. By that standard, we think
the market still has a measure of upside potential. We look at things from the
bottom up, and what we see are a healthy rate of earnings growth continuing, a
synchronized global economic expansion, and productivity gains keeping inflation
in check. All of which we believe should be good for stocks.
What could darken our sunny scenario for stocks? A recession is the most obvious
rain cloud, a threat that's manifest in an inverted yield curve, in which
short-term rates are higher than long-term ones. An inverted yield curve has
been a reliable warning sign historically of bad economic times ahead: in the
past 30 years, every time the yield curve was inverted, a recession followed 12
months later.
Nevertheless, we remain optimistic that over the next 12 months a recession
should be avoided and corporate profits -- whether earned by large, medium, or
small companies -- should continue to beat Wall Street's expectations.
(According to I/B/E/S, the consensus of Wall Street analysts is that over the
next 12 months the S&P 500 Index companies will increase their earnings per
share by 13.0% -- although the estimates of some analysts, such as those at
Morgan Stanley, are significantly lower, in the 6-7% range. In other I/B/E/S
consensus forecasts, earnings per share are expected to rise for the Russell
Midcap Index companies by 12.6% and the Russell 2000 Index companies by 16.0%.
Our own funds, we think it's worth noting, generally are invested in companies
believed to have even greater prospective earnings potential.)
And we remain convinced that growth stocks are overdue for a sustained run of
performance -- or as BARRON'S put it, for growth to cast off its multiyear role
as "bridesmaid to value's bride." As we see it, growth should become the bride
in the months ahead, as investors gravitate to the shares of companies with the
best earnings and turn away from cyclical firms that are less able to sustain
profitability.
TURNER FUNDS 2006 ANNUAL REPORT | 3
LETTER TO SHAREHOLDERS (continued)
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HOW OUR FUNDS ARE POSITIONED
For their part, our growth funds currently favor shares of companies in the
retail, Internet, consumer-electronics, restaurant, gaming, lodging,
investment-exchange, brokerage, commercial real-estate, oil-service,
medical-products, biotechnology, semiconductor, telecommunications and wireless
industries.
Our core and value funds, as always, are holding stocks that we think have
either undervalued assets or strong prospective earnings power. They have
overweighted positions in several cyclical sectors: utilities/communication,
producer durables, materials/processing, and autos/transportation.
We look forward to reporting to you about how our funds performed in the next
round of the stock-market 400-meter dash. In closing, we reaffirm our pledge to
do our best for you to make that performance superior.
/s/ Bob Turner
Bob Turner
CHAIRMAN AND CHIEF INVESTMENT OFFICER
TURNER INVESTMENT PARTNERS, ADVISER TO THE TURNER FUNDS
(EXCEPT TURNER SMALL CAP EQUITY FUND)
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS. THE VIEWS EXPRESSED ARE
THOSE OF TURNER INVESTMENT PARTNERS AS OF SEPTEMBER 30, 2006, AND ARE NOT
INTENDED AS A FORECAST OR INVESTMENT RECOMMENDATIONS. THE INDEXES MENTIONED ARE
NOT AVAILABLE FOR INVESTMENT.
[BOB TURNER PICTURE]
4 | TURNER FUNDS 2006 ANNUAL REPORT
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September 30, 2006
LIPPER INC. PERFORMANCE RANKINGS OF MUTUAL FUNDS WITH AT LEAST THREE YEARS OF
HISTORY
Periods ending September 30, 2006
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 142/427 76/396 298/366 99/339 187/295 148/181 --
Percentile ranking 33 19 81 29 63 82 --
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LARGE CAP GROWTH FUNDS
TURNER CORE GROWTH FUND,
CLASS I SHARES
Ranking versus competitors 80/717 2/663 5/612 4/568 27/498 -- --
Percentile ranking 11 1 1 1 5 -- --
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TURNER LARGE CAP GROWTH FUND
Ranking versus competitors 392/717 376/663 438/612 112/568 230/498 -- --
Percentile ranking 55 57 72 20 46 -- --
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MID-CAP GROWTH FUNDS
TURNER MIDCAP GROWTH FUND,
CLASS I SHARES
Ranking versus competitors 300/605 136/532 220/479 53/424 105/373 137/245 --
Percentile ranking 50 26 46 13 28 56 --
CLASS II SHARES
Ranking versus competitors 336/605 169/532 265/479 73/424 128/373 -- --
Percentile ranking 56 32 55 17 34 -- --
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SCIENCE AND TECHNOLOGY FUNDS
TURNER NEW ENTERPRISE FUND
Ranking versus competitors 95/288 23/271 32/259 10/248 7/227 -- --
Percentile ranking 33 8 12 4 3 -- --
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SMALL-CAP GROWTH FUNDS
TURNER EMERGING GROWTH FUND
Ranking versus competitors 234/558 47/501 4/463 30/419 13/370 3/255 --
Percentile ranking 42 9 1 7 4 1 --
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TURNER SMALL CAP EQUITY FUND
Ranking versus competitors 209/558 289/501 54/463 76/419 -- -- --
Percentile ranking 37 58 12 18 -- -- --
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TURNER SMALL CAP GROWTH FUND
Ranking versus competitors 176/558 259/501 187/463 52/419 106/370 152/255 62/132
Percentile ranking 32 52 40 12 29 60 47
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Source: Lipper Inc.
Total return is ranking criteria. Past performance is no guarantee of future
results.
TURNER FUNDS 2006 ANNUAL REPORT | 5
PERFORMANCE
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TOTAL RETURNS OF TURNER FUNDS
Through September 30, 2006
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.
THE TURNER FUNDS ARE DISTRIBUTED BY SEI INVESTMENTS DISTRIBUTION COMPANY, OAKS,
PA 19456. 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 Months Date Year Years Years Years inception ($mil)
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TURNER CONCENTRATED
GROWTH FUND (8.87)% 0.53% 7.04% 7.90% 5.70% N/A 1.13% $ 38.18
S&P 500 Index 4.14 8.53 10.79 12.30 6.97 n/a 1.21
NASDAQ 100 Index (2.69) 0.89 3.75 8.66 7.49 n/a (4.23)
INCEPTION DATE: 6/30/99
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TURNER CORE GROWTH FUND --
CLASS I SHARES (2.18) 3.56 6.91 13.27 7.39 N/A 2.83 71.93
CLASS II SHARES** (2.27) 3.29 6.52 N/A N/A N/A 8.57 23.42
S&P 500 Index 4.14 8.53 10.79 12.30 6.97 n/a 3.08
Russell 1000 Growth Index (0.12) 2.97 6.04 8.35 4.42 n/a (0.61)
INCEPTION DATE: 02/28/01
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TURNER EMERGING GROWTH FUND(1) (7.38) 5.31 4.95 18.37 16.43 N/A 27.85 565.23
Russell 2000 Growth Index (8.88) 4.21 5.88 11.81 10.15 n/a 2.35
INCEPTION DATE: 2/27/98
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TURNER LARGE CAP GROWTH FUND (2.96) 0.90 3.40 6.64 3.58 N/A (8.79) 19.51
Russell Top 200 Growth Index 1.54 2.92 5.80 6.50 2.49 n/a (7.76)
Russell 1000 Growth Index (0.12) 2.97 6.04 8.35 4.42 n/a (6.52)
INCEPTION DATE: 6/14/00
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TURNER LARGE CAP VALUE FUND 4.09 10.21 N/A N/A N/A N/A 14.92* 0.58
Russell 1000 Value Index 6.85 13.19 n/a n/a n/a n/a 19.21*
INCEPTION DATE: 10/10/05
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6 | TURNER FUNDS 2006 ANNUAL REPORT
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Year (Annualized) Total
Six to One Three Five Ten Since Net Assets
Fund Name/Index Months Date Year Years Years Years inception ($mil)
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TURNER MIDCAP GROWTH FUND(1) --
CLASS I SHARES (9.68)% 0.95% 4.70% 12.24% 9.69% N/A 13.16% $ 1,113.20
CLASS II SHARES*** (9.92) 0.56 4.13 11.67 9.14 N/A 9.25 2.44
Russell Midcap Growth Index (3.85) 3.47 7.03 14.53 12.01 n/a 8.25
INCEPTION DATE: 10/1/96
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TURNER NEW ENTERPRISE FUND (13.77) 0.64 6.83 12.99 13.73 N/A (7.22) 24.04
NASDAQ Composite Index (3.15) 3.02 5.83 8.84 9.15 n/a (8.15)
INCEPTION DATE: 6/30/00
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TURNER SMALL CAP EQUITY FUND(1) --
CLASS II SHARES (8.78) 5.09 5.48 14.93 N/A N/A 14.59 81.34
Russell 2000 Index (4.61) 8.69 9.92 15.48 n/a n/a 10.41
INCEPTION DATE: 3/4/02
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TURNER SMALL CAP GROWTH FUND(1) (11.92) 3.15 6.04 11.50 10.83 7.29 13.51 248.27
Russell 2000 Growth Index (8.88) 4.21 5.88 11.81 10.15 4.03 6.02
INCEPTION DATE: 2/7/94
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* Returns of less than one year are cumulative and are not annualized.
** Commenced operations on August 1, 2005.
*** Commenced operations on September 24, 2001.
TURNER FUNDS 2006 ANNUAL REPORT | 7
INVESTMENT REVIEW
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TURNER CONCENTRATED GROWTH FUND
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FUND PROFILE
SEPTEMBER 30, 2006
o Ticker symbol TTOPX
o CUSIP #87252R862
o Top 5 holdings
(1) Gilead Sciences
(2) Google, Cl A
(3) Coach
(4) General Electric
(5) Akamai Technologies
o % in 5 largest holdings 20.8%+
o Number of holdings 30
o Price/earnings ratio 25.3
o Weighted average market capitalization $46.69 billion
o % of holdings with positive earnings surprises 79.7%
o % of holdings with negative earnings surprises 20.3%
o Net assets $38 million
[CHART]
MARKET CAPITALIZATION [ ] [ ] [X]
SMALL <---> LARGE [ ] [ ] [ ]
[ ] [ ] [ ]
VALUE <---> GROWTH
INVESTMENT STYLE
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GROWTH OF A $10,000 INVESTMENT IN THE TURNER CONCENTRATED GROWTH FUND:
JUNE 30, 1999-SEPTEMBER 30, 2006*
[LINE GRAPH]
Initial Investment Date 6/30/99 Sep 99 Sep 00 Sep 01 Sep 02 Sep 03 Sep 04 Sep 05 Sep 06
- ------------------------------- ------- ------- ------- ------ ------ ------ ------ ------- -------
TURNER CONCENTRATED GROWTH FUND $10,000 $13,990 $27,782 $8,223 $5,754 $8,638 $8,310 $10,137 $10,850
S&P 500 Index $10,000 $ 9,376 $10,622 $7,794 $6,197 $7,709 $8,778 $ 9,853 $10,916
NASDAQ 100 Index $10,000 $10,485 $15,553 $5,092 $3,631 $5,696 $6,190 $ 7,044 $ 7,308
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AVERAGE ANNUAL TOTAL RETURNS (PERIODS ENDING SEPTEMBER 30, 2006)
ONE THREE FIVE SINCE
YEAR YEARS YEARS INCEPTION
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Turner Concentrated Growth Fund 7.04% 7.90% 5.70% 1.13%
S&P 500 Index 10.79% 12.30% 6.97% 1.21%
NASDAQ 100 Index** 3.75% 8.66% 7.49% (4.23)%
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SECTOR WEIGHTINGS+:
41.4% Information technology
17.2% Cash equivalents/short-term investments++
12.1% Consumer discretionary
10.0% Health care
7.0% Financials
6.4% Industrials
5.9% Telecommunication services
MANAGER'S DISCUSSION AND ANALYSIS
The Turner Concentrated Growth Fund (TTOPX) contains a select few stocks --
15-30 -- that Turner thinks have the greatest return potential. The fund's
investment strategy favors stocks of companies with the strongest growth
prospects and a short-term catalyst for price appreciation. That strategy worked
well for most of the 12-month period ended September 30, and the fund gained
7.04%, outperforming the NASDAQ 100 Index by 3.29 percentage points and
underperforming the S&P 500 Index by 3.75 percentage points.
Most of the fund's performance can be attributed to a major position, amounting
to 12%, in consumer-discretionary stocks; Internet, retailing, new-media, and
gaming stocks performed with special distinction. A 48% weighting in financials
and information-technology stocks, notably banking,
financial-transaction-processing, semiconductor, and telecommunications stocks,
underperformed.
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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 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.
8 | TURNER FUNDS 2006 ANNUAL REPORT
INVESTMENT REVIEW
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TURNER CORE GROWTH FUND
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FUND PROFILE
SEPTEMBER 30, 2006
o Ticker symbol TTMEX
Class I Shares
o CUSIP #900297847
Class I Shares
o Top 5 holdings
(1) General Electric
(2) Cisco Systems
(3) Google, Cl A
(4) Goldman Sachs Group
(5) PepsiCo
o % in 5 largest holdings 15.7%+
o Number of holdings 81
o Price/earnings ratio 18.6
o Weighted average market capitalization $63.43 billion
o % of holdings with positive earnings surprises 78.6%
o % of holdings with negative earnings surprises 21.4%
o Net assets $72 million, Class I Shares
[CHART]
MARKET CAPITALIZATION [ ] [ ] [X]
SMALL <---> LARGE [ ] [ ] [ ]
[ ] [ ] [ ]
VALUE <---> GROWTH
INVESTMENT STYLE
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GROWTH OF A $10,000 INVESTMENT IN THE TURNER CORE GROWTH FUND, CLASS I SHARES:
FEBRUARY 28, 2001-SEPTEMBER 30, 2006*,**
[LINE GRAPH]
Initial Investment Date 2/28/01 Sep 01 Sep 02 Sep 03 Sep 04 Sep 05 Sep 06
- ------------------------------------------- ------- ------ ------ ------ ------ ------- -------
TURNER CORE GROWTH FUND, CLASS I SHARES $10,000 $8,181 $6,291 $8,041 $8,841 $10,931 $11,686
S&P 500 Index $10,000 $8,459 $6,726 $8,366 $9,527 $10,694 $11,848
Russell 1000 Growth Index $10,000 $7,787 $6,034 $7,598 $8,169 $ 9,116 $ 9,667
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS (PERIODS ENDING SEPTEMBER 30, 2006)
ONE THREE FIVE SINCE
YEAR YEARS YEARS INCEPTION
- --------------------------------------------------------------------------------
Turner Core Growth Fund, Class I Shares 6.91% 13.27% 7.39% 2.83%**
Turner Core Growth Fund, Class II Shares 6.52% n/a n/a 8.57%***
S&P 500 Index 10.79% 12.30% 6.97% 3.08%**
Russell 1000 Growth Index 6.04% 8.35% 4.42% (0.61)%**
- --------------------------------------------------------------------------------
SECTOR WEIGHTINGS+:
21.4% Financials
19.0% Information technology
12.2% Health care
10.9% Consumer discretionary
9.2% Energy
8.0% Consumer staples
6.6% Industrials
4.7% Telecommunication services
4.4% Cash equivalents
2.0% Materials & processing
1.6% Utilities
MANAGER'S DISCUSSION AND ANALYSIS
Good stock selection in five of 11 sectors led to the Turner Core Growth Fund,
Class I Shares (TTMEX), gaining 6.91% in the 12-month period ended September 30.
As a result, the fund outperformed the Russell 1000 Growth Index by 0.87
percentage point and underperformed the S&P 500 Index by 3.88 percentage points.
Contributing the most to results were financial-services shares, which accounted
for 21% of the portfolio; brokerage, financial-exchange, real-estate, and
insurance holdings especially added value. Information-technology and
health-care shares, a 31% weighting, were the primary detractors from
performance; semiconductor, telecommunications, software, pharmaceutical,
biotechnology, and managed-care stocks produced positive 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. Index returns are based on Class I Shares inception
date.
*** The inception date of the Turner Core Growth Fund (Class II Shares) was
August 1, 2005.
+ Percentages based on total investments.
TURNER FUNDS 2006 ANNUAL REPORT | 9
INVESTMENT REVIEW
- --------------------------------------------------------------------------------
TURNER EMERGING GROWTH FUND (FORMERLY TURNER MICRO CAP GROWTH FUND)
- --------------------------------------------------------------------------------
FUND PROFILE
SEPTEMBER 30, 2006
o Ticker symbol TMCGX
o CUSIP #872524301
o Top 5 holdings
(1) Bucyrus International, Cl A
(2) NS Group
(3) Itron
(4) Quality Systems
(5) ESCO Technologies
o % in 5 largest holdings 7.9%+
o Number of holdings 107
o Price/earnings ratio 17.8
o Weighted average market capitalization $0.92 billion
o % of holdings with positive earnings surprises 74.7%
o % of holdings with negative earnings surprises 25.3%
o Net assets $565 million
[CHART]
MARKET CAPITALIZATION [ ] [ ] [ ]
SMALL <---> LARGE [ ] [ ] [ ]
[ ] [ ] [X]
VALUE <---> GROWTH
INVESTMENT STYLE
- --------------------------------------------------------------------------------
GROWTH OF A $10,000 INVESTMENT IN THE TURNER EMERGING GROWTH FUND:
FEBRUARY 27, 1998-SEPTEMBER 30, 2006*
[LINE GRAPH]
Initial Investment Date 2/27/98 Sep 98 Sep 99 Sep 00 Sep 01 Sep 02 Sep 03 Sep 04 Sep 05 Sep 06
- --------------------------- ------- ------ ------- ------- ------- ------- ------- ------- ------- -------
TURNER EMERGING GROWTH FUND $10,000 $9,882 $21,093 $48,308 $38,535 $38,489 $49,709 $61,410 $78,544 $82,432
Russell 2000 Growth Index $10,000 $7,625 $10,113 $13,113 $ 7,528 $ 6,161 $ 8,731 $ 9,772 $11,528 $12,206
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS (PERIODS ENDING SEPTEMBER 30, 2006)
ONE THREE FIVE SINCE
YEAR YEARS YEARS INCEPTION
- --------------------------------------------------------------------------------
Turner Emerging Growth Fund 4.95% 18.37% 16.43% 27.85%
Russell 2000 Growth Index 5.88% 11.81% 10.15% 2.35%
- --------------------------------------------------------------------------------
SECTOR WEIGHTINGS+:
41.0% Cash equivalents/short-term investments++
15.4% Industrials
10.8% Health care
9.6% Information technology
8.9% Energy
6.0% Financials
4.0% Consumer discretionary
2.4% Consumer staples
1.5% Materials & processing
0.3% Telecommunication services
0.1% Utilities
MANAGER'S DISCUSSION AND ANALYSIS
The Turner Emerging Growth Fund (TMCGX), formerly the Turner Micro Cap Growth
Fund, rose 4.95% in the 12 months ended September 30. That return lagged its
benchmark, the Russell 2000 Growth Index, by 0.93 percentage point.
Four of the fund's 11 sector positions outperformed their corresponding index
sectors. Consumer-staples holdings, a 2% weighting, contributed the most,
soaring 134%. Beverage, food-retailing, and food-processing stocks were
especially strong. The primary detractors from performance were
information-technology and financials holdings, a 16% weighting. Laggards
included software, digital-networking, information-services, real-estate, and
financial-services 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 Emerging 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.
10 | TURNER FUNDS 2006 ANNUAL REPORT
INVESTMENT REVIEW
- --------------------------------------------------------------------------------
TURNER LARGE CAP GROWTH FUND
- --------------------------------------------------------------------------------
FUND PROFILE
SEPTEMBER 30, 2006
o Ticker symbol TSGEX
o CUSIP #87252R839
o Top 5 holdings
(1) General Electric
(2) Cisco Systems
(3) PepsiCo
(4) Google, Cl A
(5) Gilead Sciences
o % in 5 largest holdings 21.7%+
o Number of holdings 57
o Price/earnings ratio 19.5
o Weighted average market capitalization $77.04 billion
o % of holdings with positive earnings surprises 82.4%
o % of holdings with negative earnings surprises 17.6%
o Net assets $20 million
[CHART]
MARKET CAPITALIZATION [ ] [ ] [X]
SMALL <---> LARGE [ ] [ ] [ ]
[ ] [ ] [ ]
VALUE <---> GROWTH
INVESTMENT STYLE
- --------------------------------------------------------------------------------
GROWTH OF A $10,000 INVESTMENT IN THE TURNER LARGE CAP GROWTH FUND:
JUNE 14, 2000-SEPTEMBER 30, 2006*
[LINE GRAPH]
Initial Investment Date 6/14/00 Sep 00 Sep 01 Sep 02 Sep 03 Sep 04 Sep 05 Sep 06
- ---------------------------- ------- ------ ------ ------ ------ ------ ------ ------
TURNER LARGE CAP GROWTH FUND $10,000 $9,810 $4,700 $3,500 $4,620 $4,835 $5,419 $5,604
Russell Top 200 Growth Index $10,000 $9,546 $5,318 $4,053 $4,978 $5,273 $5,683 $6,013
Russell 1000 Growth Index $10,000 $9,691 $5,268 $4,082 $5,140 $5,526 $6,167 $6,540
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS (PERIODS ENDING SEPTEMBER 30, 2006)
ONE THREE FIVE SINCE
YEAR YEARS YEARS INCEPTION
- --------------------------------------------------------------------------------
Turner Large Cap Growth Fund 3.40% 6.64% 3.58% (8.79)%
Russell Top 200 Growth Index 5.80% 6.50% 2.49% (7.76)%
Russell 1000 Growth Index 6.04% 8.35% 4.42% (6.52)%
- --------------------------------------------------------------------------------
SECTOR WEIGHTINGS+:
31.1% Information technology
18.9% Health care
13.8% Consumer discretionary
9.5% Industrials
9.4% Consumer staples
9.4% Financials
2.3% Energy
2.2% Materials & processing
2.2% Telecommunication services
1.2% Cash equivalents
MANAGER'S DISCUSSION AND ANALYSIS
Substantial underperformance in industrials and information-technology shares
impaired the performance of the Turner Large Cap Growth Fund (TSGEX) in the
12-month period ended September 30. The fund gained 3.40%, trailing the Russell
Top 200 Growth Index by 2.40 percentage points and the Russell 1000 Growth Index
by 2.64 percentage points.
Five of the fund's 10 sector positions beat their index sectors. In industrials
and information-technology, a 41% weighting, semiconductor-capital-equipment,
heavy-equipment, semiconductor, telecommunications, and software stocks
detracted most from results. Telecommunication-services and financials shares,
which accounted for 12% of the portfolio, outperformed their corresponding index
sectors markedly. Strong performers in those sectors included
telecommunications, natural-gas-utility, investment-management, brokerage, and
financial-exchange 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 Large Cap Growth Fund was June 14, 2000.
+ Percentages based on total investments.
TURNER FUNDS 2006 ANNUAL REPORT | 11
INVESTMENT REVIEW
- --------------------------------------------------------------------------------
TURNER LARGE CAP VALUE FUND
- --------------------------------------------------------------------------------
FUND PROFILE
SEPTEMBER 30, 2006
o Ticker symbol TLVFX
o CUSIP #900297821
o Top 5 holdings
(1) Bank of America
(2) Exxon Mobil
(3) Citigroup
(4) JPMorgan Chase
(5) Pfizer
o % in 5 largest holdings 20.8%+
o Number of holdings 77
o Price/earnings ratio 13.2
o Weighted average market capitalization $100.31 billion
o % of holdings with positive earnings surprises 83.3%
o % of holdings with negative earnings surprises 16.0%
o Net assets $0.6 million
[CHART]
MARKET CAPITALIZATION [X] [ ] [ ]
SMALL <---> LARGE [ ] [ ] [ ]
[ ] [ ] [ ]
VALUE <---> GROWTH
INVESTMENT STYLE
- --------------------------------------------------------------------------------
GROWTH OF A $10,000 INVESTMENT IN THE TURNER LARGE CAP VALUE FUND:
OCTOBER 10, 2005-SEPTEMBER 30, 2006*
[LINE GRAPH]
Initial Investment Date 10/10/05 Sep 06
- --------------------------- -------- -------
TURNER LARGE CAP VALUE FUND $10,000 $11,492
Russell 1000 Value Index $10,000 $11,921
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS (PERIODS ENDING SEPTEMBER 30, 2006)
SINCE
INCEPTION
- --------------------------------------------------------------------------------
Turner Large Cap Value Fund 14.92%**
Russell 1000 Value Index 19.21%**
- --------------------------------------------------------------------------------
SECTOR WEIGHTINGS+:
36.4% Financials
13.0% Energy
9.4% Industrials
9.2% Health care
7.7% Consumer discretionary
6.9% Consumer staples
5.9% Utilities
4.6% Telecommunication services
4.1% Information technology
1.8% Cash equivalents
1.0% Materials & processing
MANAGER'S DISCUSSION AND ANALYSIS
In its first 11-plus months, the Turner Large Cap Value Fund (TLVFX) gained
14.92%. That return trailed the Russell 1000 Value Index's 19.21% gain by 4.29
percentage points.
The fund is invested in large-cap value stocks that rank highly in a proprietary
quantitative model. Financials stocks, a 36% weighting, enhanced performance to
the greatest degree. Four of the fund's 11 sector positions beat their
corresponding index sectors. Hurting results the most were utilities and
health-care stocks, which represented 15% of the portfolio. Industrials stocks
produced the highest return, more than 20%. Materials/ processing stocks
recorded the biggest loss, 10%.
- --------------------------------------------------------------------------------
* 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 Value Fund was October 10, 2005.
** Cumulative return, not annualized.
+ Percentages based on total investments.
12 | TURNER FUNDS 2006 ANNUAL REPORT
INVESTMENT REVIEW
- --------------------------------------------------------------------------------
TURNER MIDCAP GROWTH FUND
- --------------------------------------------------------------------------------
FUND PROFILE
SEPTEMBER 30, 2006
o Ticker symbol TMGFX,
Class I Shares
o CUSIP #900297409,
Class I Shares
o Top 5 holdings
(1) NII Holdings
(2) International Game Technology
(3) Coach
(4) T. Rowe Price Group
(5) Precision Castparts
o % in 5 largest holdings 9.4%+
o Number of holdings 121
o Price/earnings ratio 20.8
o Weighted average market capitalization $7.26 billion
o % of holdings with positive earnings surprises 83.5%
o % of holdings with negative earnings surprises 16.1%
o Net assets $1 billion, Class I Shares
[CHART]
MARKET CAPITALIZATION [ ] [ ] [ ]
SMALL <---> LARGE [ ] [ ] [X]
[ ] [ ] [ ]
VALUE <---> GROWTH
INVESTMENT STYLE
- --------------------------------------------------------------------------------
GROWTH OF A $10,000 INVESTMENT IN THE TURNER MIDCAP GROWTH FUND, CLASS I SHARES:
OCTOBER 1, 1996-SEPTEMBER 30, 2006*,**
[LINE GARPH]
Initial Investment Date 10/1/96 Sep 97 Sep 98 Sep 99 Sep 00 Sep 01 Sep 02 Sep 03 Sep 04 Sep 05 Sep 06
- ----------------------- ------- ------- ------- ------- ------- ------- ------- ------- ------- ------- -------
TURNER MID CAP GROWTH
FUND, CLASS I SHARES $10,000 $14,377 $14,555 $26,792 $52,874 $21,678 $17,169 $24,346 $26,152 $32,881 $34,427
Russell Midcap Growth
Index $10,000 $13,029 $11,808 $16,200 $25,979 $12,530 $10,588 $14,705 $16,717 $20,642 $22,093
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS (PERIODS ENDING SEPTEMBER 30, 2006)
ONE THREE FIVE SINCE
YEAR YEARS YEARS INCEPTION
- --------------------------------------------------------------------------------
Turner Midcap Growth Fund, Class I Shares 4.70% 12.24% 9.69% 13.16%**
Turner Midcap Growth Fund, Class II Shares 4.13% 11.67% 9.14% 9.25%***
Russell Midcap Growth Index 7.03% 14.53% 12.01% 8.25%**
- --------------------------------------------------------------------------------
SECTOR WEIGHTINGS+:
20.0% Information technology
16.7% Consumer discretionary
13.3% Health care
12.9% Cash equivalents/short-term investments++
11.0% Industrials
9.7% Financials
6.2% Energy
5.5% Telecommunication services
2.9% Consumer staples
1.4% Materials & processing
0.4% Utilities
MANAGER'S DISCUSSION AND ANALYSIS
In the 12-month period ended September 30, the Turner Midcap Growth Fund, Class
I Shares (TMGFX), returned 4.70%, a performance that trailed the Russell Midcap
Growth Index by 2.33 percentage points.
Performance was enhanced by strong returns in industrials and consumer-staples
stocks, with a combined weighting of 14%. Semiconductor-capital-equipment,
industrial-equipment, beverage, food-processing, and food-retailing stocks were
the big gainers. Weak relative returns in the health-care and
consumer-discretionary sectors, which accounted for 30% of the portfolio,
detracted from results. Altogether, five of 11 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. Index returns are based on Class I Shares inception date.
*** The inception date of the Turner Midcap Growth Fund (Class II Shares) was
September 24, 2001.
+ 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 2006 ANNUAL REPORT | 13
INVESTMENT REVIEW
- --------------------------------------------------------------------------------
TURNER NEW ENTERPRISE FUND
- --------------------------------------------------------------------------------
FUND PROFILE
SEPTEMBER 30, 2006
o Ticker symbol TBTBX
o CUSIP #87252R797
o Top 5 holdings
(1) Apple Computer
(2) Akamai Technologies
(3) Google, Cl A
(4) NII Holdings
(5) Gilead Sciences
o % in 5 largest holdings 22.3%+
o Number of holdings 48
o Price/earnings ratio 25.7
o Weighted average market capitalization $22.42 billion
o % of holdings with positive earnings surprises 84.8%
o % of holdings with negative earnings surprises 15.2%
o Net assets $24 million
[CHART]
MARKET CAPITALIZATION [ ] [ ] [ ]
SMALL <---> LARGE [ ] [ ] [X]
[ ] [ ] [ ]
VALUE <---> GROWTH
INVESTMENT STYLE
- --------------------------------------------------------------------------------
GROWTH OF A $10,000 INVESTMENT IN THE TURNER NEW ENTERPRISE FUND:
JUNE 30, 2000-SEPTEMBER 30, 2006*
[LINE GRAPH]
Initial Investment Date 6/30/00 Sep 00 Sep 01 Sep 02 Sep 03 Sep 04 Sep 05 Sep 06
- -------------------------- ------- ------- ------ ------ ------ ------ ------ ------
TURNER NEW ENTERPRISE FUND $10,000 $12,520 $3,290 $2,270 $4,340 $4,521 $5,861 $6,261
NASDAQ Composite Index $10,000 $ 9,264 $3,792 $2,976 $4,556 $4,862 $5,552 $5,875
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS (PERIODS ENDING SEPTEMBER 30, 2006)
ONE THREE FIVE SINCE
YEAR YEARS YEARS INCEPTION
- --------------------------------------------------------------------------------
Turner New Enterprise Fund 6.83% 12.99% 13.73% (7.22)%
NASDAQ Composite Index 5.83% 8.84% 9.15% (8.15)%
- --------------------------------------------------------------------------------
SECTOR WEIGHTINGS+:
51.9% Information technology
19.7% Cash equivalents/short-term investments++
9.4% Health care
7.4% Consumer discretionary
5.6% Telecommunication services
4.9% Financials
1.1% Industrials
MANAGER'S DISCUSSION AND ANALYSIS
Outsized gains in three sectors were central to the 6.83% advance of the Turner
New Enterprise Fund (TBTBX) in the 12 months ended September 30. The fund's
return exceeded that of the NASDAQ Composite Index by 1.00 percentage point.
Returns in the industrials and health-care sectors, an 11% weighting, exceeded
those of their corresponding index sectors and provided most of the fund's
margin of outperformance. Beverage, food-retailing,
semiconductor-capital-equipment, pharmaceutical, and biotechnology stocks led
the way. Detracting from performance was a 57% position in financials and
information-technology stocks, with investment-management,
financial-transaction-processing, telecommunications, and software stocks
recording poor relative returns. Overall, four 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.
14 | TURNER FUNDS 2006 ANNUAL REPORT
INVESTMENT REVIEW
- --------------------------------------------------------------------------------
TURNER SMALL CAP EQUITY FUND
- --------------------------------------------------------------------------------
FUND PROFILE
SEPTEMBER 30, 2006
o Ticker symbol TSEIX
o CUSIP #87252R714
o Top 5 holdings
(1) Clean Harbors
(2) Washington Group International
(3) iShares Russell 2000 Index Fund
(4) PolyMedica
(5) Vail Resorts
o % in 5 largest holdings 7.5%+
o Number of holdings 101
o Price/earnings ratio 17.4
o Weighted average market capitalization $1.43 billion
o % of holdings with positive earnings surprises 72.2%
o % of holdings with negative earnings surprises 26.6%
o Net assets $81 million
[CHART]
MARKET CAPITALIZATION [ ] [ ] [ ]
SMALL <---> LARGE [ ] [ ] [ ]
[ ] [X] [ ]
VALUE <---> GROWTH
INVESTMENT STYLE
- --------------------------------------------------------------------------------
GROWTH OF A $10,000 INVESTMENT IN THE TURNER SMALL CAP EQUITY FUND:
MARCH 4, 2002-SEPTEMBER 30, 2006*
[LINE GRAPH]
Initial Investment Date 3/4/02 Sep 02 Sep 03 Sep 04 Sep 05 Sep 06
- ---------------------------- ------- ------ ------- ------- ------- -------
TURNER SMALL CAP EQUITY FUND $10,000 $9,299 $12,278 $15,317 $17,671 $18,639
Russell 2000 Index $10,000 $7,485 $10,217 $12,134 $14,313 $15,732
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS (PERIODS ENDING SEPTEMBER 30, 2006)
ONE THREE SINCE
YEAR YEARS INCEPTION
- --------------------------------------------------------------------------------
Turner Small Cap Equity Fund 5.48% 14.93% 14.59%
Russell 2000 Index 9.92% 15.48% 10.41%
- --------------------------------------------------------------------------------
SECTOR WEIGHTINGS+:
21.5% Financials
20.5% Information technology
14.3% Consumer discretionary
12.7% Industrials
9.5% Health care
6.2% Cash equivalents/short-term investments++
4.2% Utilities
3.4% Energy
3.3% Materials & processing
2.2% Consumer staples
2.2% Telecommunication services
MANAGER'S DISCUSSION AND ANALYSIS
The Turner Small Cap Equity Fund (TSEIX) returned 5.48% in the 12-month period
ended September 30. That return lagged the Russell 2000 Index by 4.44 percentage
points.
The fund is invested in both growth and value stocks in the 11 market sectors,
most of which registered positive returns. However, the fund's growth holdings
and positions in the materials/processing and energy sectors fared poorly.
Energy holdings, a 3% weighting, lost 19%; oil-service shares were especially
weak. Three of the fund's 11 sector positions -- financials, industrials, and
consumer discretionary, constituting 49% of the portfolio -- beat their
corresponding index sectors; banking, financial-technology, heavy-equipment, and
retailing stocks were standouts. Industrials stocks produced the highest
absolute return, more than 10%.
- --------------------------------------------------------------------------------
* 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.
TURNER FUNDS 2006 ANNUAL REPORT | 15
INVESTMENT REVIEW
- --------------------------------------------------------------------------------
TURNER SMALL CAP GROWTH FUND
- --------------------------------------------------------------------------------
FUND PROFILE
SEPTEMBER 30, 2006
o Ticker symbol TSCEX
o CUSIP #900297300
o Top 5 holdings
(1) Psychiatric Solutions
(2) Mentor
(3) Time Warner Telecom, Cl A
(4) Digital River
(5) aQuantive
o % in 5 largest holdings 6.1%+
o Number of holdings 141
o Price/earnings ratio 20.8
o Weighted average market capitalization $1.38 billion
o % of holdings with positive earnings surprises 82.7%
o % of holdings with negative earnings surprises 16.6%
o Net assets $248 million
[CHART]
MARKET CAPITALIZATION [ ] [ ] [ ]
SMALL <---> LARGE [ ] [ ] [ ]
[ ] [ ] [X]
VALUE <---> GROWTH
INVESTMENT STYLE
- --------------------------------------------------------------------------------
GROWTH OF A $10,000 INVESTMENT IN THE TURNER SMALL CAP GROWTH FUND:
SEPTEMBER 30, 1996-SEPTEMBER 30, 2006*
[LINE GRAPH]
Initial Investment Date 9/30/96 Sep 97 Sep 98 Sep 99 Sep 00 Sep 01 Sep 02 Sep 03 Sep 04 Sep 05 Sep 06
- ---------------------------- ------- ------- ------ ------- ------ ------- ------ ------- ------- ------- -------
Turner Small Cap Growth Fund $10,000 $11,664 $9,693 $15,425 $24,074 $12,083 $9,744 $14,576 $16,468 $19,055 $20,206
Russell 2000 Growth Index $10,000 $12,335 $9,272 $12,298 $15,945 $ 9,154 $7,492 $10,617 $11,883 $14,018 $14,843
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS (PERIODS ENDING SEPTEMBER 30, 2006)
ONE THREE FIVE TEN SINCE
YEAR YEARS YEARS YEARS INCEPTION
- --------------------------------------------------------------------------------
Turner Small Cap Growth Fund 6.04% 11.50% 10.83% 7.29% 13.51%
Russell 2000 Growth Index 5.88% 11.81% 10.15% 4.03% 6.02%
- --------------------------------------------------------------------------------
SECTOR WEIGHTINGS+:
25.3% Information technology
16.3% Health care
14.2% Cash equivalents/short-term investments++
12.7% Consumer discretionary
10.9% Industrials
7.8% Financials
5.4% Energy
2.9% Materials & processing
2.4% Consumer staples
2.1% Telecommunication services
MANAGER'S DISCUSSION AND ANALYSIS
The Turner Small Cap Growth Fund (TSCEX) produced double-digit gains in six of
the 10 market sectors in which it was invested in the 12-month period ended
September 30. That powered the fund to a 6.04% gain, outperforming the Russell
2000 Growth Index by 0.16 percentage point.
The fund's best relative performers were consumer-discretionary and financials
stocks, a 21% weighting. Winners included Internet, retailing,
staffing-services, consulting, brokerage, real-estate, and investment-management
shares. Information-technology and health-care stocks, a 42% weighting, were the
biggest drags on performance; telecommunications, digital-networking,
biotechnology, and health-services shares lost money.
- --------------------------------------------------------------------------------
* 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.
+ 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 2006 ANNUAL REPORT
FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
TURNER CONCENTRATED GROWTH FUND
September 30, 2006
Value
Shares (000)
- --------------------------------------------------------------------------------
COMMON STOCK--99.8%
- --------------------------------------------------------------------------------
COMPUTER & PERIPHERAL EQUIPMENT MANUFACTURING--8.2%
- --------------------------------------------------------------------------------
Apple Computer* 21,560 $ 1,661
SanDisk* # 27,700 1,483
--------------
Total Computer & peripheral equipment manufacturing 3,144
--------------
- --------------------------------------------------------------------------------
COMPUTER SYSTEMS DESIGN & RELATED SERVICES--3.7%
- --------------------------------------------------------------------------------
Sun Microsystems* 282,140 1,402
--------------
Total Computer systems design & related services 1,402
--------------
- --------------------------------------------------------------------------------
DEPOSITORY CREDIT INTERMEDIATION--4.2%
- --------------------------------------------------------------------------------
UBS 27,300 1,619
--------------
Total Depository credit intermediation 1,619
--------------
- --------------------------------------------------------------------------------
ELECTRICAL EQUIPMENT MANUFACTURING--4.8%
- --------------------------------------------------------------------------------
General Electric 51,980 1,835
--------------
Total Electrical equipment manufacturing 1,835
--------------
- --------------------------------------------------------------------------------
ELECTRONIC SHOPPING & MAIL-ORDER HOUSES--2.5%
- --------------------------------------------------------------------------------
Nutri/System* # 15,160 944
--------------
Total Electronic shopping & mail-order houses 944
--------------
- --------------------------------------------------------------------------------
HOME HEALTH CARE SERVICES--3.3%
- --------------------------------------------------------------------------------
Intuitive Surgical* 11,840 1,248
--------------
Total Home health care services 1,248
--------------
- --------------------------------------------------------------------------------
INFORMATION SERVICES--5.1%
- --------------------------------------------------------------------------------
Google, Cl A* 4,810 1,933
--------------
Total Information services 1,933
--------------
- --------------------------------------------------------------------------------
MOTOR VEHICLE MANUFACTURING--3.6%
- --------------------------------------------------------------------------------
Toyota Motor ADR 12,830 1,397
--------------
Total Motor vehicle manufacturing 1,397
--------------
- --------------------------------------------------------------------------------
NATURAL GAS TRANSMISSION & DISTRIBUTION--2.9%
- --------------------------------------------------------------------------------
ABB ADR # 84,000 1,107
--------------
Total Natural gas transmission & distribution 1,107
--------------
Value
Shares (000)
- --------------------------------------------------------------------------------
OTHER ELECTRICAL EQUIPMENT & COMPONENT MANUFACTURING--3.2%
- --------------------------------------------------------------------------------
Ciena* 44,845 $ 1,222
--------------
Total Other electrical equipment & component
manufacturing 1,222
--------------
- --------------------------------------------------------------------------------
OTHER LEATHER & ALLIED PRODUCT MANUFACTURING--4.8%
- --------------------------------------------------------------------------------
Coach* 53,750 1,849
--------------
Total Other leather & allied product manufacturing 1,849
--------------
- --------------------------------------------------------------------------------
OTHER MISCELLANEOUS MANUFACTURING--3.6%
- --------------------------------------------------------------------------------
International Game Technology 33,560 1,393
--------------
Total Other miscellaneous manufacturing 1,393
--------------
- --------------------------------------------------------------------------------
PHARMACEUTICAL & MEDICINE MANUFACTURING--8.8%
- --------------------------------------------------------------------------------
Allergan 10,140 1,142
Gilead Sciences* 32,150 2,209
--------------
Total Pharmaceutical & medicine manufacturing 3,351
--------------
- --------------------------------------------------------------------------------
SECURITIES & COMMODITY EXCHANGES--4.2%
- --------------------------------------------------------------------------------
Chicago Mercantile Exchange Holdings 3,340 1,597
--------------
Total Securities & commodity exchanges 1,597
--------------
- --------------------------------------------------------------------------------
SEMICONDUCTOR & ELECTRONIC COMPONENT MANUFACTURING--18.5%
- --------------------------------------------------------------------------------
Applied Materials 72,910 1,293
Broadcom, Cl A* # 39,950 1,212
Flextronics International* # 74,730 945
JDS Uniphase* 588,150 1,288
MEMC Electronic Materials* 34,880 1,278
Texas Instruments 31,290 1,040
--------------
Total Semiconductor & electronic component
manufacturing 7,056
--------------
- --------------------------------------------------------------------------------
SOFTWARE PUBLISHERS--11.2%
- --------------------------------------------------------------------------------
Activision* 50,870 768
Akamai Technologies* # 34,580 1,729
Citrix Systems* 28,900 1,046
Salesforce.com* 20,350 730
--------------
Total Software publishers 4,273
--------------
TURNER FUNDS 2006 ANNUAL REPORT | 17
FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
TURNER CONCENTRATED GROWTH FUND
Value
Shares (000)
- --------------------------------------------------------------------------------
TELECOMMUNICATIONS--7.2%
- --------------------------------------------------------------------------------
Crown Castle International* 32,900 $ 1,159
NII Holdings* 25,350 1,576
--------------
Total Telecommunications 2,735
--------------
- --------------------------------------------------------------------------------
TOTAL COMMON STOCK
(COST $32,767) 38,105
================================================================================
- --------------------------------------------------------------------------------
SHORT-TERM INVESTMENT HELD AS COLLATERAL FOR LOANED SECURITIES--20.4%
- --------------------------------------------------------------------------------
Boston Global Investment Trust -- Quality
Portfolio (1) 7,797,600 7,798
--------------
- --------------------------------------------------------------------------------
TOTAL SHORT-TERM INVESTMENT HELD AS COLLATERAL FOR LOANED SECURITIES
(COST $7,798) 7,798
================================================================================
- --------------------------------------------------------------------------------
CASH EQUIVALENT--0.3%
- --------------------------------------------------------------------------------
BlackRock TempCash Fund, Institutional
Shares, 5.212%** 97,709 98
- --------------------------------------------------------------------------------
TOTAL CASH EQUIVALENT
(COST $98) 98
================================================================================
- --------------------------------------------------------------------------------
TOTAL INVESTMENTS--120.5%
(COST $40,663) $ 46,001
================================================================================
Percentages are based on Net Assets of $38,180.***
* Non-income producing security
** Rate shown is the 7-day effective yield as of September 30, 2006.
*** This number has been rounded to the nearest thousands.
# Security fully or partially on loan at September 30, 2006. The total value
of securities on loan at September 30, 2006, was $7,410,186.
(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.
18 | TURNER FUNDS 2006 ANNUAL REPORT
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
TURNER CORE GROWTH FUND
September 30, 2006
Value
Shares (000)
- --------------------------------------------------------------------------------
COMMON STOCK--99.0%
- --------------------------------------------------------------------------------
ACTIVITIES RELATED TO REAL ESTATE--0.8%
- --------------------------------------------------------------------------------
CB Richard Ellis Group, Cl A* 29,950 $ 737
--------------
Total Activities related to real estate 737
--------------
- --------------------------------------------------------------------------------
ADMINISTRATION OF HUMAN RESOURCE PROGRAMS--0.9%
- --------------------------------------------------------------------------------
Express Scripts* 11,590 875
--------------
Total Administration of human resource programs 875
--------------
- --------------------------------------------------------------------------------
ADVERTISING & RELATED SERVICES--1.0%
- --------------------------------------------------------------------------------
Omnicom Group 9,830 920
--------------
Total Advertising & related services 920
--------------
- --------------------------------------------------------------------------------
AGRICULTURE, CONSTRUCTION & MINING MACHINERY MANUFACTURING--2.4%
- --------------------------------------------------------------------------------
Cameron International* 25,100 1,213
National Oilwell Varco* 18,570 1,087
--------------
Total Agriculture, construction & mining machinery
manufacturing 2,300
--------------
- --------------------------------------------------------------------------------
BEVERAGE MANUFACTURING--3.3%
- --------------------------------------------------------------------------------
Fomento Economico Mexicano ADR 8,550 829
PepsiCo 36,110 2,356
--------------
Total Beverage manufacturing 3,185
--------------
- --------------------------------------------------------------------------------
CABLE NETWORKS & PROGRAM DISTRIBUTION--1.7%
- --------------------------------------------------------------------------------
Comcast, Cl A* 43,690 1,610
--------------
Total Cable networks & program distribution 1,610
--------------
- --------------------------------------------------------------------------------
COMMUNICATIONS EQUIPMENT MANUFACTURING--2.5%
- --------------------------------------------------------------------------------
Motorola 51,110 1,278
Qualcomm 29,150 1,059
--------------
Total Communications equipment manufacturing 2,337
--------------
Value
Shares (000)
- --------------------------------------------------------------------------------
COMPUTER & PERIPHERAL EQUIPMENT MANUFACTURING--2.7%
- --------------------------------------------------------------------------------
Apple Computer* 25,030 $ 1,928
SanDisk* 12,290 658
--------------
Total Computer & peripheral equipment manufacturing 2,586
--------------
- --------------------------------------------------------------------------------
DATA PROCESSING SERVICES--0.7%
- --------------------------------------------------------------------------------
Global Payments 14,330 631
--------------
Total Data processing services 631
--------------
- --------------------------------------------------------------------------------
DEPARTMENT STORES--0.8%
- --------------------------------------------------------------------------------
TJX 26,370 739
--------------
Total Department stores 739
--------------
- --------------------------------------------------------------------------------
DEPOSITORY CREDIT INTERMEDIATION--7.2%
- --------------------------------------------------------------------------------
Kookmin Bank ADR 8,230 642
Mellon Financial 51,550 2,016
UBS 34,770 2,062
Wells Fargo 60,480 2,188
--------------
Total Depository credit intermediation 6,908
--------------
- --------------------------------------------------------------------------------
DRUGS & DRUGGISTS' SUNDRIES WHOLESALE--0.7%
- --------------------------------------------------------------------------------
Henry Schein* 13,430 673
--------------
Total Drugs & druggists' sundries wholesale 673
--------------
- --------------------------------------------------------------------------------
ELECTRICAL EQUIPMENT MANUFACTURING--4.8%
- --------------------------------------------------------------------------------
General Electric 128,500 4,536
--------------
Total Electrical equipment manufacturing 4,536
--------------
- --------------------------------------------------------------------------------
ELECTRONIC INSTRUMENT MANUFACTURING--1.6%
- --------------------------------------------------------------------------------
Roper Industries 16,140 722
Thermo Electron* 20,020 788
--------------
Total Electronic instrument manufacturing 1,510
--------------
- --------------------------------------------------------------------------------
ELECTRONIC SHOPPING & MAIL-ORDER HOUSES--0.5%
- --------------------------------------------------------------------------------
Nutri/System* 7,380 460
--------------
Total Electronic shopping & mail-order houses 460
--------------
TURNER FUNDS 2006 ANNUAL REPORT | 19
FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
TURNER CORE GROWTH FUND
Value
Shares (000)
- --------------------------------------------------------------------------------
FOUNDRIES--0.7%
- --------------------------------------------------------------------------------
Precision Castparts 10,650 $ 673
--------------
Total Foundries 673
--------------
- --------------------------------------------------------------------------------
GRAIN & OILSEED MILLING--1.2%
- --------------------------------------------------------------------------------
Archer-Daniels-Midland 30,370 1,150
--------------
Total Grain & oilseed milling 1,150
--------------
- --------------------------------------------------------------------------------
HEALTH & PERSONAL CARE STORES--0.6%
- --------------------------------------------------------------------------------
CVS 18,270 587
--------------
Total Health & personal care stores 587
--------------
- --------------------------------------------------------------------------------
HOME HEALTH CARE SERVICES--0.4%
- --------------------------------------------------------------------------------
Intuitive Surgical* 3,830 404
--------------
Total Home health care services 404
--------------
- --------------------------------------------------------------------------------
INDUSTRIAL MACHINERY MANUFACTURING--1.0%
- --------------------------------------------------------------------------------
Kla-Tencor 22,170 986
--------------
Total Industrial machinery manufacturing 986
--------------
- --------------------------------------------------------------------------------
INFORMATION SERVICES--3.0%
- --------------------------------------------------------------------------------
Google, Cl A* 7,160 2,878
--------------
Total Information services 2,878
--------------
- --------------------------------------------------------------------------------
INSURANCE CARRIERS--4.2%
- --------------------------------------------------------------------------------
Chubb 31,800 1,652
W.R. Berkley 33,780 1,196
WellPoint* 15,230 1,173
--------------
Total Insurance carriers 4,021
--------------
- --------------------------------------------------------------------------------
LIMITED-SERVICE EATING PLACES--0.7%
- --------------------------------------------------------------------------------
Starbucks* 19,190 653
--------------
Total Limited-service eating places 653
--------------
- --------------------------------------------------------------------------------
MANAGEMENT & TECHNICAL CONSULTING SERVICES--0.6%
- --------------------------------------------------------------------------------
C.H. Robinson Worldwide 12,850 573
--------------
Total Management & technical consulting services 573
--------------
Value
Shares (000)
- --------------------------------------------------------------------------------
MEDICAL EQUIPMENT & SUPPLIES MANUFACTURING--1.3%
- --------------------------------------------------------------------------------
Baxter International 28,090 $ 1,277
--------------
Total Medical equipment & supplies
manufacturing 1,277
--------------
- --------------------------------------------------------------------------------
METAL ORE MINING--1.5%
- --------------------------------------------------------------------------------
BHP Billiton ADR 26,920 1,020
Cameco 12,430 454
--------------
Total Metal ore mining 1,474
--------------
- --------------------------------------------------------------------------------
MINING SUPPORT ACTIVITIES--1.7%
- --------------------------------------------------------------------------------
Schlumberger 11,420 708
Weatherford International* 22,840 953
--------------
Total Mining support activities 1,661
--------------
- --------------------------------------------------------------------------------
MOTION PICTURE & VIDEO INDUSTRIES--1.0%
- --------------------------------------------------------------------------------
News, Cl A 47,560 934
--------------
Total Motion picture & video industries 934
--------------
- --------------------------------------------------------------------------------
MOTOR VEHICLE MANUFACTURING--1.4%
- --------------------------------------------------------------------------------
Toyota Motor ADR 12,010 1,308
--------------
Total Motor vehicle manufacturing 1,308
--------------
- --------------------------------------------------------------------------------
NONDEPOSITORY CREDIT INTERMEDIATION--1.8%
- --------------------------------------------------------------------------------
American Express 29,840 1,673
--------------
Total Nondepository credit intermediation 1,673
--------------
- --------------------------------------------------------------------------------
OIL & GAS EXTRACTION--2.1%
- --------------------------------------------------------------------------------
Ultra Petroleum* 14,930 718
XTO Energy 30,106 1,269
--------------
Total Oil & gas extraction 1,987
--------------
- --------------------------------------------------------------------------------
OTHER FINANCIAL INVESTMENT ACTIVITIES--2.1%
- --------------------------------------------------------------------------------
T. Rowe Price Group 42,650 2,041
--------------
Total Other financial investment activities 2,041
--------------
20 | TURNER FUNDS 2006 ANNUAL REPORT
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
TURNER CORE GROWTH FUND
Value
Shares (000)
- --------------------------------------------------------------------------------
OTHER LEATHER & ALLIED PRODUCT MANUFACTURING--0.9%
- --------------------------------------------------------------------------------
Coach* 24,860 $ 855
--------------
Total Other leather & allied product manufacturing 855
--------------
- --------------------------------------------------------------------------------
OTHER MISCELLANEOUS MANUFACTURING--2.0%
- --------------------------------------------------------------------------------
International Game Technology 30,270 1,256
Scientific Games, Cl A* 19,070 607
--------------
Total Other miscellaneous manufacturing 1,863
--------------
- --------------------------------------------------------------------------------
PETROLEUM & COAL PRODUCTS MANUFACTURING--2.8%
- --------------------------------------------------------------------------------
Occidental Petroleum 38,850 1,869
Valero Energy 16,150 831
--------------
Total Petroleum & coal products manufacturing 2,700
--------------
- --------------------------------------------------------------------------------
PHARMACEUTICAL & MEDICINE MANUFACTURING--6.5%
- --------------------------------------------------------------------------------
Abbott Laboratories 28,820 1,400
Allergan 9,770 1,100
Gilead Sciences* 26,280 1,805
Novartis ADR 15,590 911
Roche Holding ADR 11,900 1,026
--------------
Total Pharmaceutical & medicine manufacturing 6,242
--------------
- --------------------------------------------------------------------------------
PIPELINE TRANSPORTATION OF NATURAL GAS--0.8%
- --------------------------------------------------------------------------------
Questar 8,970 733
--------------
Total Pipeline transportation of natural gas 733
--------------
- --------------------------------------------------------------------------------
SCIENTIFIC R&D SERVICES--1.6%
- --------------------------------------------------------------------------------
Celgene* 13,800 598
Monsanto 19,700 926
--------------
Total Scientific R&D services 1,524
--------------
- --------------------------------------------------------------------------------
SECURITIES & COMMODITY CONTRACTS BROKERAGE--4.8%
- --------------------------------------------------------------------------------
Charles Schwab 104,710 1,875
Goldman Sachs Group 15,920 2,693
--------------
Total Securities & commodity contracts brokerage 4,568
--------------
Value
Shares (000)
- --------------------------------------------------------------------------------
SECURITIES & COMMODITY EXCHANGES--2.4%
- --------------------------------------------------------------------------------
Chicago Mercantile Exchange Holdings 4,040 $ 1,932
NASDAQ Stock Market* 12,890 390
--------------
Total Securities & commodity exchanges 2,322
--------------
- --------------------------------------------------------------------------------
SEMICONDUCTOR & ELECTRONIC COMPONENT MANUFACTURING--8.3%
- --------------------------------------------------------------------------------
Applied Materials 91,120 1,616
Cisco Systems* 130,410 2,999
Flextronics International* 37,710 477
MEMC Electronic Materials* 17,720 649
Micron Technology* 43,350 754
Texas Instruments 42,320 1,407
--------------
Total Semiconductor & electronic component
manufacturing 7,902
--------------
- --------------------------------------------------------------------------------
SOAP, CLEANING COMPOUND & TOILETRY MANUFACTURING--3.2%
- --------------------------------------------------------------------------------
Colgate-Palmolive 18,410 1,143
Procter & Gamble 30,070 1,864
--------------
Total Soap, cleaning compound & toiletry
manufacturing 3,007
--------------
- --------------------------------------------------------------------------------
SOFTWARE PUBLISHERS--1.5%
- --------------------------------------------------------------------------------
Akamai Technologies* 8,290 414
Electronic Arts* 11,510 641
Salesforce.com* 10,450 375
--------------
Total Software publishers 1,430
--------------
- --------------------------------------------------------------------------------
TELECOMMUNICATIONS--4.9%
- --------------------------------------------------------------------------------
Crown Castle International* 18,180 641
Leap Wireless International* 18,790 911
NII Holdings* 31,770 1,975
Time Warner Telecom, Cl A* 59,600 1,133
--------------
Total Telecommunications 4,660
--------------
- --------------------------------------------------------------------------------
TRAVELER ACCOMMODATION--1.5%
- --------------------------------------------------------------------------------
Las Vegas Sands* 9,720 664
Starwood Hotels & Resorts Worldwide 14,000 801
--------------
Total Traveler accommodation 1,465
--------------
TURNER FUNDS 2006 ANNUAL REPORT | 21
FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
TURNER CORE GROWTH FUND
Value
Shares (000)
- --------------------------------------------------------------------------------
WATER, SEWAGE & OTHER SYSTEMS--0.9%
- --------------------------------------------------------------------------------
Aqua America 38,506 $ 845
--------------
Total Water, sewage & other systems 845
--------------
- --------------------------------------------------------------------------------
TOTAL COMMON STOCK
(COST $85,969) 94,403
================================================================================
- --------------------------------------------------------------------------------
CASH EQUIVALENT--4.6%
- --------------------------------------------------------------------------------
BlackRock TempCash Fund, Institutional
Shares, 5.212%** 4,372,793 4,373
- --------------------------------------------------------------------------------
TOTAL CASH EQUIVALENT
(COST $4,373) 4,373
================================================================================
- --------------------------------------------------------------------------------
TOTAL INVESTMENTS--103.6%
(COST $90,342) $ 98,776
================================================================================
Percentages are based on Net Assets of $95,353.***
* Non-income producing security
** Rate shown is the 7-day effective yield as of September 30, 2006.
*** This number has been rounded to the nearest thousands.
ADR -- American Depositary Receipt
Cl -- Class
The accompanying notes are an integral part of the financial statements.
22 | TURNER FUNDS 2006 ANNUAL REPORT
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
TURNER EMERGING GROWTH FUND
September 30, 2006
Value
Shares (000)
- --------------------------------------------------------------------------------
COMMON STOCK--87.9%
- --------------------------------------------------------------------------------
ACCOUNTING & BOOKKEEPING SERVICES--0.6%
- --------------------------------------------------------------------------------
CBIZ* # 481,420 $ 3,514
--------------
Total Accounting & bookkeeping services 3,514
--------------
- --------------------------------------------------------------------------------
AEROSPACE PRODUCT & PARTS MANUFACTURING--2.1%
- --------------------------------------------------------------------------------
AAR* # 154,530 3,684
Heico # 128,860 4,420
LMI Aerospace* 215,580 3,988
--------------
Total Aerospace product & parts manufacturing 12,092
--------------
- --------------------------------------------------------------------------------
AGENCIES & OTHER INSURANCE RELATED ACTIVITIES--0.8%
- --------------------------------------------------------------------------------
HealthExtras* # 153,679 4,351
--------------
Total Agencies & other insurance related activities 4,351
--------------
- --------------------------------------------------------------------------------
AGRICULTURE, CONSTRUCTION & MINING MACHINERY MANUFACTURING--4.1%
- --------------------------------------------------------------------------------
Bucyrus International, Cl A # 342,760 14,540
Lufkin Industries # 97,120 5,139
NATCO Group, Cl A* # 122,630 3,532
--------------
Total Agriculture, construction & mining machinery
manufacturing 23,211
--------------
- --------------------------------------------------------------------------------
ARCHITECTURAL & STRUCTURAL METALS MANUFACTURING--3.7%
- --------------------------------------------------------------------------------
Dynamic Materials # 265,320 8,602
RTI International Metals* # 283,527 12,356
--------------
Total Architectural & structural metals manufacturing 20,958
--------------
- --------------------------------------------------------------------------------
BASIC CHEMICAL MANUFACTURING--1.3%
- --------------------------------------------------------------------------------
Tetra Technologies* # 301,270 7,279
--------------
Total Basic chemical manufacturing 7,279
--------------
- --------------------------------------------------------------------------------
BEVERAGE MANUFACTURING--0.3%
- --------------------------------------------------------------------------------
Boston Beer, Cl A* # 53,424 1,755
--------------
Total Beverage manufacturing 1,755
--------------
Value
Shares (000)
- --------------------------------------------------------------------------------
BUSINESS SUPPORT SERVICES--0.9%
- --------------------------------------------------------------------------------
ICT Group* # 159,740 $ 5,027
--------------
Total Business support services 5,027
--------------
- --------------------------------------------------------------------------------
CLOTHING STORES--0.5%
- --------------------------------------------------------------------------------
Mothers Work* # 57,012 2,743
--------------
Total Clothing stores 2,743
--------------
- --------------------------------------------------------------------------------
COMMERCIAL/INDUSTRIAL EQUIPMENT RENTAL & LEASING--0.4%
- --------------------------------------------------------------------------------
H&E Equipment Services* # 83,080 2,026
--------------
Total Commercial/industrial equipment rental
& leasing 2,026
--------------
- --------------------------------------------------------------------------------
COMMUNICATIONS EQUIPMENT MANUFACTURING--1.1%
- --------------------------------------------------------------------------------
Comtech Telecommunications* # 181,485 6,076
--------------
Total Communications equipment manufacturing 6,076
--------------
- --------------------------------------------------------------------------------
COMPUTER SYSTEMS DESIGN & RELATED SERVICES--3.8%
- --------------------------------------------------------------------------------
Computer Programs & Systems # 97,570 3,197
Perficient* 144,164 2,261
Quality Systems # 336,200 13,041
Sapient* # 579,180 3,157
--------------
Total Computer systems design & related services 21,656
--------------
- --------------------------------------------------------------------------------
DEEP SEA, COASTAL & GREAT LAKES WATER TRANSPORTATION--0.9%
- --------------------------------------------------------------------------------
Hornbeck Offshore Services* # 144,440 4,839
--------------
Total Deep sea, coastal & great lakes water
transportation 4,839
--------------
- --------------------------------------------------------------------------------
DEPOSITORY CREDIT INTERMEDIATION--3.6%
- --------------------------------------------------------------------------------
Boston Private Financial Holdings # 162,160 4,521
Hanmi Financial # 179,390 3,516
IBERIABANK # 54,860 3,346
PFF Bancorp # 161,132 5,968
Preferred Bank # 52,870 3,171
--------------
Total Depository credit intermediation 20,522
--------------
TURNER FUNDS 2006 ANNUAL REPORT | 23
FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
TURNER EMERGING GROWTH FUND
Value
Shares (000)
- --------------------------------------------------------------------------------
ELECTRONIC INSTRUMENT MANUFACTURING--4.4%
- --------------------------------------------------------------------------------
Hologic* # 173,400 $ 7,546
Itron* # 237,070 13,229
Novatel* 91,940 4,222
--------------
Total Electronic instrument manufacturing 24,997
--------------
- --------------------------------------------------------------------------------
ENGINE, TURBINE & POWER TRANSMISSION EQUIPMENT MANUFACTURING--0.5%
- --------------------------------------------------------------------------------
EnPro Industries* # 89,940 2,704
--------------
Total Engine, turbine & power transmission
equipment manufacturing 2,704
--------------
- --------------------------------------------------------------------------------
FARM PRODUCT RAW MATERIAL WHOLESALE--0.5%
- --------------------------------------------------------------------------------
The Andersons # 76,080 2,598
--------------
Total Farm product raw material wholesale 2,598
--------------
- --------------------------------------------------------------------------------
FOOTWEAR MANUFACTURING--1.2%
- --------------------------------------------------------------------------------
Deckers Outdoor* # 148,290 7,017
--------------
Total Footwear manufacturing 7,017
--------------
- --------------------------------------------------------------------------------
FORGING & STAMPING--1.0%
- --------------------------------------------------------------------------------
Ladish* # 202,830 5,858
--------------
Total Forging & stamping 5,858
--------------
- --------------------------------------------------------------------------------
FULL-SERVICE RESTAURANTS--0.6%
- --------------------------------------------------------------------------------
Benihana* 26,580 768
Benihana, Cl A* # 92,788 2,691
--------------
Total Full-service restaurants 3,459
--------------
- --------------------------------------------------------------------------------
GENERAL FREIGHT TRUCKING--0.5%
- --------------------------------------------------------------------------------
Universal Truckload Services* # 100,020 2,598
--------------
Total General freight trucking 2,598
--------------
- --------------------------------------------------------------------------------
HOUSEHOLD APPLIANCE MANUFACTURING--0.9%
- --------------------------------------------------------------------------------
Middleby # 69,660 5,368
--------------
Total Household appliance manufacturing 5,368
--------------
Value
Shares (000)
- --------------------------------------------------------------------------------
INDUSTRIAL MACHINERY MANUFACTURING--0.6%
- --------------------------------------------------------------------------------
Intevac* # 207,800 $ 3,491
--------------
Total Industrial machinery manufacturing 3,491
--------------
- --------------------------------------------------------------------------------
INFORMATION SERVICES--0.7%
- --------------------------------------------------------------------------------
24/7 Real Media* # 462,070 3,946
--------------
Total Information services 3,946
--------------
- --------------------------------------------------------------------------------
INSURANCE CARRIERS--4.0%
- --------------------------------------------------------------------------------
American Physicians Capital* # 77,420 3,745
Harleysville Group # 93,560 3,274
Meadowbrook Insurance Group* # 262,080 2,951
Navigators Group* # 104,000 4,993
United Fire & Casualty # 91,330 2,859
WellCare Health Plans* # 88,700 5,023
--------------
Total Insurance carriers 22,845
--------------
- --------------------------------------------------------------------------------
LIMITED-SERVICE EATING PLACES--0.8%
- --------------------------------------------------------------------------------
California Pizza Kitchen* # 153,700 4,600
--------------
Total Limited-service eating places 4,600
--------------
- --------------------------------------------------------------------------------
MANAGEMENT & TECHNICAL CONSULTING SERVICES--4.3%
- --------------------------------------------------------------------------------
CRA International* # 139,200 6,634
HUB Group, Cl A* # 321,114 7,315
Navigant Consulting* # 347,260 6,966
Omnicell* # 203,690 3,644
--------------
Total Management & technical consulting
services 24,559
--------------
- --------------------------------------------------------------------------------
MEDICAL & DIAGNOSTIC LABORATORIES--0.7%
- --------------------------------------------------------------------------------
Icon ADR* 56,720 4,003
--------------
Total Medical & diagnostic laboratories 4,003
--------------
- --------------------------------------------------------------------------------
MEDICAL EQUIPMENT & SUPPLIES MANUFACTURING--0.6%
- --------------------------------------------------------------------------------
Arthrocare* # 66,480 3,115
--------------
Total Medical equipment & supplies manufacturing 3,115
--------------
24 | TURNER FUNDS 2006 ANNUAL REPORT
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
TURNER EMERGING GROWTH FUND
Value
Shares (000)
- --------------------------------------------------------------------------------
MINING SUPPORT ACTIVITIES--2.9%
- --------------------------------------------------------------------------------
Oceaneering International* 231,420 $ 7,128
Pioneer Drilling* # 237,670 3,052
W-H Energy Services* 150,650 6,247
--------------
Total Mining support activities 16,427
--------------
- --------------------------------------------------------------------------------
MISCELLANEOUS NONDURABLE GOODS WHOLESALE--1.7%
- --------------------------------------------------------------------------------
Central Garden and Pet* # 203,080 9,801
--------------
Total Miscellaneous nondurable goods wholesale 9,801
--------------
- --------------------------------------------------------------------------------
MOTOR VEHICLE PARTS MANUFACTURING--2.3%
- --------------------------------------------------------------------------------
ESCO Technologies* # 279,290 12,859
--------------
Total Motor vehicle parts manufacturing 12,859
--------------
- --------------------------------------------------------------------------------
MOTOR VEHICLE/MOTOR VEHICLE PART & SUPPLY WHOLESALE--1.1%
- --------------------------------------------------------------------------------
Keystone Automotive Industries* # 170,930 6,499
--------------
Total Motor vehicle/motor vehicle part & supply
wholesale 6,499
--------------
- --------------------------------------------------------------------------------
NONRESIDENTIAL BUILDING CONSTRUCTION--0.5%
- --------------------------------------------------------------------------------
Perini* # 144,280 3,013
--------------
Total Nonresidential building construction 3,013
--------------
- --------------------------------------------------------------------------------
OFFICES OF PHYSICIANS--0.8%
- --------------------------------------------------------------------------------
Symbion* 236,927 4,350
--------------
Total Offices of physicians 4,350
--------------
- --------------------------------------------------------------------------------
OIL & GAS EXTRACTION--2.6%
- --------------------------------------------------------------------------------
Carrizo Oil & Gas* # 81,380 2,099
Comstock Resources* # 109,650 2,977
Penn Virginia # 92,300 5,853
PetroHawk Energy* # 367,074 3,810
--------------
Total Oil & gas extraction 14,739
--------------
- --------------------------------------------------------------------------------
OTHER AMUSEMENT & RECREATION INDUSTRIES--0.5%
- --------------------------------------------------------------------------------
Great Wolf Resorts* # 240,286 2,874
--------------
Total Other amusement & recreation industries 2,874
--------------
Value
Shares (000)
- --------------------------------------------------------------------------------
OTHER GENERAL PURPOSE MACHINERY MANUFACTURING--1.2%
- --------------------------------------------------------------------------------
JLG Industries 347,360 $ 6,881
--------------
Total Other general purpose machinery manufacturing 6,881
--------------
- --------------------------------------------------------------------------------
OTHER INFORMATION SERVICES--0.9%
- --------------------------------------------------------------------------------
PeopleSupport* # 287,238 5,314
--------------
Total Other information services 5,314
--------------
- --------------------------------------------------------------------------------
OTHER INVESTMENT POOLS & FUNDS--0.9%
- --------------------------------------------------------------------------------
Highland Hospitality # 369,370 5,293
--------------
Total Other investment pools & funds 5,293
--------------
- --------------------------------------------------------------------------------
OTHER MISCELLANEOUS MANUFACTURING--0.8%
- --------------------------------------------------------------------------------
Shuffle Master* # 162,825 4,398
--------------
Total Other miscellaneous manufacturing 4,398
--------------
- --------------------------------------------------------------------------------
PETROLEUM & COAL PRODUCTS MANUFACTURING--1.8%
- --------------------------------------------------------------------------------
Giant Industries* 125,360 10,179
--------------
Total Petroleum & coal products manufacturing 10,179
--------------
- --------------------------------------------------------------------------------
PHARMACEUTICAL & MEDICINE MANUFACTURING--7.3%
- --------------------------------------------------------------------------------
Conor Medsystems* # 174,400 4,111
Cypress Bioscience* 254,050 1,854
Medifast* # 191,570 1,663
Myogen* # 345,140 12,107
New River Pharmaceuticals* # 139,010 3,577
Noven Pharmaceuticals* # 283,620 6,841
Panacos Pharmaceuticals* 493,790 2,449
Penwest Pharmaceuticals* # 144,540 2,407
Pozen* # 480,730 6,182
--------------
Total Pharmaceutical & medicine manufacturing 41,191
--------------
- --------------------------------------------------------------------------------
PLUMBING, HEATING & AC CONTRACTOR--0.4%
- --------------------------------------------------------------------------------
Comfort Systems USA # 178,950 2,051
--------------
Total Plumbing, heating & ac contractor 2,051
--------------
TURNER FUNDS 2006 ANNUAL REPORT | 25
FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
TURNER EMERGING GROWTH FUND
Value
Shares (000)
- --------------------------------------------------------------------------------
RAIL TRANSPORTATION--0.7%
- --------------------------------------------------------------------------------
Genesee & Wyoming, Cl A* # 159,835 $ 3,711
--------------
Total Rail transportation 3,711
--------------
- --------------------------------------------------------------------------------
SCHEDULED AIR TRANSPORTATION--1.2%
- --------------------------------------------------------------------------------
Copa Holdings, Cl A # 197,460 6,779
--------------
Total Scheduled air transportation 6,779
--------------
- --------------------------------------------------------------------------------
SCIENTIFIC R&D SERVICES--2.3%
- --------------------------------------------------------------------------------
Arena Pharmaceuticals* 224,640 2,691
Kendle International* # 90,590 2,901
Parexel International* # 216,840 7,175
--------------
Total Scientific R&D services 12,767
--------------
- --------------------------------------------------------------------------------
SECURITIES & COMMODITY CONTRACTS BROKERAGE--0.6%
- --------------------------------------------------------------------------------
Penson Worldwide* # 190,420 3,418
--------------
Total Securities & commodity contracts brokerage 3,418
--------------
- --------------------------------------------------------------------------------
SEMICONDUCTOR & ELECTRONIC COMPONENT MANUFACTURING--2.2%
- --------------------------------------------------------------------------------
Aeroflex* 458,110 4,710
Diodes* # 128,425 5,544
Emcore* # 329,100 1,948
--------------
Total Semiconductor & electronic component
manufacturing 12,202
--------------
- --------------------------------------------------------------------------------
SOCIAL ASSISTANCE--0.8%
- --------------------------------------------------------------------------------
Providence Service* # 157,426 4,343
--------------
Total Social assistance 4,343
--------------
- --------------------------------------------------------------------------------
SOFTWARE PUBLISHERS--3.1%
- --------------------------------------------------------------------------------
Actuate* # 836,470 3,697
Ansys* # 124,830 5,515
Aspen Technology* # 249,330 2,723
DivX* # 147,130 3,497
Smith Micro Software* # 161,990 2,330
--------------
Total Software publishers 17,762
--------------
Value
Shares (000)
- --------------------------------------------------------------------------------
SPECIALTY FOOD STORES--0.7%
- --------------------------------------------------------------------------------
Wild Oats Markets* # 258,351 $ 4,178
--------------
Total Specialty food stores 4,178
--------------
- --------------------------------------------------------------------------------
SPRING & WIRE PRODUCT MANUFACTURING--0.6%
- --------------------------------------------------------------------------------
Barnes Group # 191,310 3,359
--------------
Total Spring & wire product manufacturing 3,359
--------------
- --------------------------------------------------------------------------------
STEEL PRODUCT MANUFACTURING FROM PURCHASED STEEL--2.4%
- --------------------------------------------------------------------------------
NS Group* 207,250 13,378
--------------
Total Steel product manufacturing from
purchased steel 13,378
--------------
- --------------------------------------------------------------------------------
TELECOMMUNICATIONS--0.9%
- --------------------------------------------------------------------------------
Dobson Communications, Cl A* 375,870 2,638
Sirenza Microdevices* # 278,060 2,197
--------------
Total Telecommunications 4,835
--------------
- --------------------------------------------------------------------------------
TRAVELER ACCOMMODATION--0.5%
- --------------------------------------------------------------------------------
Trump Entertainment Resorts* # 160,970 2,730
--------------
Total Traveler accommodation 2,730
--------------
- --------------------------------------------------------------------------------
WASTE COLLECTION--0.6%
- --------------------------------------------------------------------------------
Clean Harbors* # 74,060 3,225
--------------
Total Waste collection 3,225
--------------
- --------------------------------------------------------------------------------
WATER, SEWAGE & OTHER SYSTEMS--0.2%
- --------------------------------------------------------------------------------
Artesian Resources, Cl A 55,845 1,050
--------------
Total Water, sewage & other systems 1,050
--------------
- --------------------------------------------------------------------------------
TOTAL COMMON STOCK
(COST $382,251) 496,813
================================================================================
- --------------------------------------------------------------------------------
REGISTERED INVESTMENT COMPANY--0.7%
- --------------------------------------------------------------------------------
iShares Russell 2000 Growth Index Fund 52,000 3,764
- --------------------------------------------------------------------------------
TOTAL REGISTERED INVESTMENT COMPANY
(COST $3,795) 3,764
================================================================================
26 | TURNER FUNDS 2006 ANNUAL REPORT
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
TURNER EMERGING GROWTH FUND
Value
Shares (000)
- --------------------------------------------------------------------------------
SHORT-TERM INVESTMENT HELD AS COLLATERAL FOR LOANED SECURITIES--50.2%
- --------------------------------------------------------------------------------
Boston Global Investment Trust -- Quality
Portfolio (1) 283,590,964 $ 283,591
--------------
- --------------------------------------------------------------------------------
TOTAL SHORT-TERM INVESTMENT HELD AS COLLATERAL FOR LOANED SECURITIES
(COST $283,591) 283,591
================================================================================
- --------------------------------------------------------------------------------
CASH EQUIVALENTS--11.2%
- --------------------------------------------------------------------------------
BlackRock TempCash Fund, Institutional
Shares, 5.212%** 28,491,536 28,492
PNC Bank Money Market Fund, 4.797%** 35,069,071 35,069
- --------------------------------------------------------------------------------
TOTAL CASH EQUIVALENTS
(COST $63,561) 63,561
================================================================================
- --------------------------------------------------------------------------------
TOTAL INVESTMENTS--150.0%
(COST $733,198) $ 847,729
================================================================================
Percentages are based on Net Assets of $565,227.***
* Non-income producing security
** Rate shown is the 7-day effective yield as of September 30, 2006.
*** This number has been rounded to the nearest thousands.
# Security fully or partially on loan at September 30, 2006. The total value
of securities on loan at September 30, 2006, was $269,788,491.
(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 2006 ANNUAL REPORT | 27
FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
TURNER LARGE CAP GROWTH FUND
September 30, 2006
Value
Shares (000)
- --------------------------------------------------------------------------------
COMMON STOCK--98.9%
- --------------------------------------------------------------------------------
ADMINISTRATION OF HUMAN RESOURCE PROGRAMS--2.0%
- --------------------------------------------------------------------------------
Express Scripts* 5,100 $ 385
--------------
Total Administration of human resource programs 385
--------------
- --------------------------------------------------------------------------------
ADVERTISING & RELATED SERVICES--1.2%
- --------------------------------------------------------------------------------
Omnicom Group 2,540 238
--------------
Total Advertising & related services 238
--------------
- --------------------------------------------------------------------------------
AGRICULTURE, CONSTRUCTION & MINING MACHINERY MANUFACTURING--1.2%
- --------------------------------------------------------------------------------
Caterpillar 3,660 241
--------------
Total Agriculture, construction & mining machinery
manufacturing 241
--------------
- --------------------------------------------------------------------------------
BEVERAGE MANUFACTURING--4.5%
- --------------------------------------------------------------------------------
PepsiCo 13,480 880
--------------
Total Beverage manufacturing 880
--------------
- --------------------------------------------------------------------------------
CABLE NETWORKS & PROGRAM DISTRIBUTION--1.4%
- --------------------------------------------------------------------------------
Comcast, Cl A* 7,130 263
--------------
Total Cable networks & program distribution 263
--------------
- --------------------------------------------------------------------------------
COMMUNICATIONS EQUIPMENT MANUFACTURING--3.3%
- --------------------------------------------------------------------------------
Motorola 18,150 454
Qualcomm 5,330 194
--------------
Total Communications equipment manufacturing 648
--------------
- --------------------------------------------------------------------------------
COMPUTER & PERIPHERAL EQUIPMENT MANUFACTURING--4.2%
- --------------------------------------------------------------------------------
Apple Computer* 7,430 572
SanDisk* 4,650 249
--------------
Total Computer & peripheral equipment manufacturing 821
--------------
Value
Shares (000)
- --------------------------------------------------------------------------------
COMPUTER SYSTEMS DESIGN & RELATED SERVICES--2.7%
- --------------------------------------------------------------------------------
Cognizant Technology Solutions, Cl A* 2,360 $ 175
Sun Microsystems* 71,430 355
--------------
Total Computer systems design & related services 530
--------------
- --------------------------------------------------------------------------------
COURIERS--1.2%
- --------------------------------------------------------------------------------
FedEx 2,190 238
--------------
Total Couriers 238
--------------
- --------------------------------------------------------------------------------
DEPARTMENT STORES--0.9%
- --------------------------------------------------------------------------------
TJX 6,530 183
--------------
Total Department stores 183
--------------
- --------------------------------------------------------------------------------
DEPOSITORY CREDIT INTERMEDIATION--3.3%
- --------------------------------------------------------------------------------
UBS 5,800 344
Wells Fargo 8,400 304
--------------
Total Depository credit intermediation 648
--------------
- --------------------------------------------------------------------------------
ELECTRICAL EQUIPMENT MANUFACTURING--5.6%
- --------------------------------------------------------------------------------
General Electric 30,830 1,088
--------------
Total Electrical equipment manufacturing 1,088
--------------
- --------------------------------------------------------------------------------
ELECTRONIC INSTRUMENT MANUFACTURING--1.4%
- --------------------------------------------------------------------------------
Danaher 4,040 278
--------------
Total Electronic instrument manufacturing 278
--------------
- --------------------------------------------------------------------------------
GRAIN & OILSEED MILLING--1.6%
- --------------------------------------------------------------------------------
Archer-Daniels-Midland 8,410 319
--------------
Total Grain & oilseed milling 319
--------------
- --------------------------------------------------------------------------------
HEALTH & PERSONAL CARE STORES--0.8%
- --------------------------------------------------------------------------------
CVS 4,940 159
--------------
Total Health & personal care stores 159
--------------
- --------------------------------------------------------------------------------
INDUSTRIAL MACHINERY MANUFACTURING--1.1%
- --------------------------------------------------------------------------------
Kla-Tencor 4,950 220
--------------
Total Industrial machinery manufacturing 220
--------------
28 | TURNER FUNDS 2006 ANNUAL REPORT
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
TURNER LARGE CAP GROWTH FUND
Value
Shares (000)
- --------------------------------------------------------------------------------
INFORMATION SERVICES--3.7%
- --------------------------------------------------------------------------------
Google, Cl A* 1,810 $ 727
--------------
Total Information services 727
--------------
- --------------------------------------------------------------------------------
INSURANCE CARRIERS--3.7%
- --------------------------------------------------------------------------------
Chubb 4,570 237
WellPoint* 6,200 478
--------------
Total Insurance carriers 715
--------------
- --------------------------------------------------------------------------------
LIMITED-SERVICE EATING PLACES--1.0%
- --------------------------------------------------------------------------------
Starbucks* 5,680 193
--------------
Total Limited-service eating places 193
--------------
- --------------------------------------------------------------------------------
MEDICAL & DIAGNOSTIC LABORATORIES--2.0%
- --------------------------------------------------------------------------------
Quest Diagnostics 6,470 396
--------------
Total Medical & diagnostic laboratories 396
--------------
- --------------------------------------------------------------------------------
MEDICAL EQUIPMENT & SUPPLIES MANUFACTURING--2.5%
- --------------------------------------------------------------------------------
Baxter International 7,270 330
Luxottica Group ADR 5,640 166
--------------
Total Medical equipment & supplies manufacturing 496
--------------
- --------------------------------------------------------------------------------
METAL ORE MINING--1.1%
- --------------------------------------------------------------------------------
BHP Billiton ADR 5,530 209
--------------
Total Metal ore mining 209
--------------
- --------------------------------------------------------------------------------
MINING SUPPORT ACTIVITIES--1.4%
- --------------------------------------------------------------------------------
Weatherford International* 6,360 265
--------------
Total Mining support activities 265
--------------
- --------------------------------------------------------------------------------
MOTION PICTURE & VIDEO INDUSTRIES--1.8%
- --------------------------------------------------------------------------------
News, Cl A 17,430 343
--------------
Total Motion picture & video industries 343
--------------
- --------------------------------------------------------------------------------
MOTOR VEHICLE MANUFACTURING--1.5%
- --------------------------------------------------------------------------------
Toyota Motor ADR 2,630 286
--------------
Total Motor vehicle manufacturing 286
--------------
Value
Shares (000)
- --------------------------------------------------------------------------------
OIL & GAS EXTRACTION--1.0%
- --------------------------------------------------------------------------------
XTO Energy 4,510 $ 190
--------------
Total Oil & gas extraction 190
--------------
- --------------------------------------------------------------------------------
OTHER LEATHER & ALLIED PRODUCT MANUFACTURING--1.3%
- --------------------------------------------------------------------------------
Coach* 7,100 244
--------------
Total Other leather & allied product
manufacturing 244
--------------
- --------------------------------------------------------------------------------
OTHER MISCELLANEOUS MANUFACTURING--2.0%
- --------------------------------------------------------------------------------
International Game Technology 9,310 386
--------------
Total Other miscellaneous manufacturing 386
--------------
- --------------------------------------------------------------------------------
PHARMACEUTICAL & MEDICINE MANUFACTURING--10.7%
- --------------------------------------------------------------------------------
Abbott Laboratories 6,760 328
Allergan 3,080 347
Gilead Sciences* 9,220 634
Novartis ADR 6,180 361
Roche Holding ADR 4,940 426
--------------
Total Pharmaceutical & medicine manufacturing 2,096
--------------
- --------------------------------------------------------------------------------
SCIENTIFIC R&D SERVICES--1.1%
- --------------------------------------------------------------------------------
Monsanto 4,680 220
--------------
Total Scientific R&D services 220
--------------
- --------------------------------------------------------------------------------
SECURITIES & COMMODITY CONTRACTS BROKERAGE--3.4%
- --------------------------------------------------------------------------------
Charles Schwab 19,080 341
Goldman Sachs Group 1,950 330
--------------
Total Securities & commodity contracts brokerage 671
--------------
- --------------------------------------------------------------------------------
SECURITIES & COMMODITY EXCHANGES--1.4%
- --------------------------------------------------------------------------------
Chicago Mercantile Exchange Holdings 570 273
--------------
Total Securities & commodity exchanges 273
--------------
TURNER FUNDS 2006 ANNUAL REPORT | 29
FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
TURNER LARGE CAP GROWTH FUND
Value
Shares (000)
- --------------------------------------------------------------------------------
SEMICONDUCTOR & ELECTRONIC COMPONENT MANUFACTURING--12.2%
- --------------------------------------------------------------------------------
Applied Materials 18,360 $ 326
Cisco Systems* 40,050 921
Micron Technology* 26,140 455
Nvidia* 5,820 172
Texas Instruments 15,250 507
--------------
Total Semiconductor & electronic component
manufacturing 2,381
--------------
- --------------------------------------------------------------------------------
SOAP, CLEANING COMPOUND & TOILETRY MANUFACTURING--2.5%
- --------------------------------------------------------------------------------
Procter & Gamble 7,740 480
--------------
Total Soap, cleaning compound & toiletry
manufacturing 480
--------------
- --------------------------------------------------------------------------------
SOFTWARE PUBLISHERS--3.9%
- --------------------------------------------------------------------------------
Electronic Arts* 3,100 173
Intuit* 5,640 181
Oracle* 22,450 398
--------------
Total Software publishers 752
--------------
- --------------------------------------------------------------------------------
TELECOMMUNICATIONS--1.3%
- --------------------------------------------------------------------------------
NII Holdings* 4,170 259
--------------
Total Telecommunications 259
--------------
- --------------------------------------------------------------------------------
TELECOMMUNICATIONS RESELLERS--0.9%
- --------------------------------------------------------------------------------
American Tower, Cl A* 4,790 175
--------------
Total Telecommunications resellers 175
--------------
Value
Shares (000)
- --------------------------------------------------------------------------------
TRAVELER ACCOMMODATION--2.1%
- --------------------------------------------------------------------------------
Las Vegas Sands* 3,430 $ 234
Starwood Hotels & Resorts Worldwide 2,960 169
--------------
Total Traveler accommodation 403
--------------
- --------------------------------------------------------------------------------
TOTAL COMMON STOCK
(COST $16,924) 19,299
================================================================================
- --------------------------------------------------------------------------------
CASH EQUIVALENT--1.3%
- --------------------------------------------------------------------------------
BlackRock TempCash Fund, Institutional Shares,
5.212%** 243,777 244
- --------------------------------------------------------------------------------
TOTAL CASH EQUIVALENT
(COST $244) 244
================================================================================
- --------------------------------------------------------------------------------
TOTAL INVESTMENTS--100.2%
(COST $17,168) $ 19,543
================================================================================
Percentages are based on Net Assets of $19,510.***
* Non-income producing security
** Rate shown is the 7-day effective yield as of September 30, 2006.
*** This number has been rounded to the nearest thousands.
ADR -- American Depositary Receipt
Cl -- Class
The accompanying notes are an integral part of the financial statements.
30 | TURNER FUNDS 2006 ANNUAL REPORT
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
TURNER LARGE CAP VALUE FUND
September 30, 2006
Value
Shares (000)
- --------------------------------------------------------------------------------
COMMON STOCK--98.3%
- --------------------------------------------------------------------------------
ADVERTISING & RELATED SERVICES--0.7%
- --------------------------------------------------------------------------------
Time Warner 230 $ 4
--------------
Total Advertising & related services 4
--------------
- --------------------------------------------------------------------------------
AEROSPACE PRODUCT & PARTS MANUFACTURING--1.6%
- --------------------------------------------------------------------------------
Northrop Grumman 70 5
Textron 50 4
--------------
Total Aerospace product & parts manufacturing 9
--------------
- --------------------------------------------------------------------------------
AGRICULTURE, CONSTRUCTION & MINING MACHINERY MANUFACTURING--1.5%
- --------------------------------------------------------------------------------
Baker Hughes 70 5
Caterpillar 60 4
--------------
Total Agriculture, construction & mining machinery
manufacturing 9
--------------
- --------------------------------------------------------------------------------
ARCHITECTURAL & ENGINEERING SERVICES--0.5%
- --------------------------------------------------------------------------------
Fluor 40 3
--------------
Total Architectural & engineering services 3
--------------
- --------------------------------------------------------------------------------
BEVERAGE MANUFACTURING--2.6%
- --------------------------------------------------------------------------------
Coca-Cola 120 6
Hansen Natural* 120 4
Pepsi Bottling Group 150 5
--------------
Total Beverage manufacturing 15
--------------
- --------------------------------------------------------------------------------
CABLE NETWORKS & PROGRAM DISTRIBUTION--1.9%
- --------------------------------------------------------------------------------
Comcast, Cl A* 130 5
DIRECTV Group* 340 6
--------------
Total Cable networks & program distribution 11
--------------
- --------------------------------------------------------------------------------
COAL MINING--0.9%
- --------------------------------------------------------------------------------
Peabody Energy 130 5
--------------
Total Coal mining 5
--------------
- --------------------------------------------------------------------------------
COMMUNICATIONS EQUIPMENT MANUFACTURING--0.7%
- --------------------------------------------------------------------------------
U.S. Cellular* 70 4
--------------
Total Communications equipment manufacturing 4
--------------
Value
Shares (000)
- --------------------------------------------------------------------------------
COMPUTER & PERIPHERAL EQUIPMENT MANUFACTURING--1.4%
- --------------------------------------------------------------------------------
Hewlett-Packard 230 $ 8
--------------
Total Computer & peripheral equipment manufacturing 8
--------------
- --------------------------------------------------------------------------------
DEPARTMENT STORES--1.2%
- --------------------------------------------------------------------------------
J.C. Penney 100 7
--------------
Total Department stores 7
--------------
- --------------------------------------------------------------------------------
DEPOSITORY CREDIT INTERMEDIATION--14.3%
- --------------------------------------------------------------------------------
Bank of America 560 30
Citigroup 480 24
Regions Financial 200 7
U.S. Bancorp 180 6
Wachovia 140 8
Wells Fargo 220 8
--------------
Total Depository credit intermediation 83
--------------
- --------------------------------------------------------------------------------
ELECTRIC POWER GENERATION, TRANSMISSION & DISTRIBUTION--5.9%
- --------------------------------------------------------------------------------
AES* 370 8
Allegheny Energy* 160 6
Centerpoint Energy 370 5
Exelon 120 7
TXU 120 8
--------------
Total Electric power generation, transmission
& distribution 34
--------------
- --------------------------------------------------------------------------------
ELECTRICAL EQUIPMENT MANUFACTURING--2.1%
- --------------------------------------------------------------------------------
General Electric 350 12
--------------
Total Electrical equipment manufacturing 12
--------------
- --------------------------------------------------------------------------------
ELECTRONIC INSTRUMENT MANUFACTURING--0.9%
- --------------------------------------------------------------------------------
Raytheon 110 5
--------------
Total Electronic instrument manufacturing 5
--------------
- --------------------------------------------------------------------------------
ENGINE, TURBINE & POWER TRANSMISSION EQUIPMENT MANUFACTURING--1.0%
- --------------------------------------------------------------------------------
Cummins 50 6
--------------
Total Engine, turbine & power transmission equipment
manufacturing 6
--------------
TURNER FUNDS 2006 ANNUAL REPORT | 31
FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
TURNER LARGE CAP VALUE FUND
Value
Shares (000)
- --------------------------------------------------------------------------------
FOUNDRIES--0.7%
- --------------------------------------------------------------------------------
Precision Castparts 70 $ 4
--------------
Total Foundries 4
--------------
- --------------------------------------------------------------------------------
FRUIT & VEGETABLE PRESERVING & SPECIALTY FOOD MANUFACTURING--0.7%
- --------------------------------------------------------------------------------
Smithfield Foods* 140 4
--------------
Total Fruit & vegetable preserving & specialty food
manufacturing 4
--------------
- --------------------------------------------------------------------------------
HEALTH & PERSONAL CARE STORES--0.9%
- --------------------------------------------------------------------------------
CVS 170 5
--------------
Total Health & personal care stores 5
--------------
- --------------------------------------------------------------------------------
INSURANCE CARRIERS--8.8%
- --------------------------------------------------------------------------------
American International Group 140 9
Chubb 140 7
Cigna 40 5
HCC Insurance Holdings 220 7
Loews 200 8
St. Paul Travelers 140 6
W.R. Berkley 250 9
--------------
Total Insurance carriers 51
--------------
- --------------------------------------------------------------------------------
INVESTIGATION & SECURITY SERVICES--1.0%
- --------------------------------------------------------------------------------
Brink's 110 6
--------------
Total Investigation & security services 6
--------------
- --------------------------------------------------------------------------------
LIMITED-SERVICE EATING PLACES--0.9%
- --------------------------------------------------------------------------------
McDonald's 130 5
--------------
Total Limited-service eating places 5
--------------
- --------------------------------------------------------------------------------
LIQUEFIED PETROLEUM GAS (BOTTLED GAS) DEALERS--1.0%
- --------------------------------------------------------------------------------
Energy Transfer Partners LP 120 6
--------------
Total Liquefied petroleum gas (bottled gas) dealers 6
--------------
- --------------------------------------------------------------------------------
MANAGEMENT & TECHNICAL CONSULTING SERVICES--0.7%
- --------------------------------------------------------------------------------
C.H. Robinson Worldwide 100 4
--------------
Total Management & technical consulting services 4
--------------
Value
Shares (000)
- --------------------------------------------------------------------------------
METAL ORE MINING--1.0%
- --------------------------------------------------------------------------------
Phelps Dodge 70 $ 6
--------------
Total Metal ore mining 6
--------------
- --------------------------------------------------------------------------------
MISCELLANEOUS NONDURABLE GOODS WHOLESALE--1.0%
- --------------------------------------------------------------------------------
Altria Group 80 6
--------------
Total Miscellaneous nondurable goods wholesale 6
--------------
- --------------------------------------------------------------------------------
MOTOR VEHICLE MANUFACTURING--0.8%
- --------------------------------------------------------------------------------
General Motors 140 5
--------------
Total Motor vehicle manufacturing 5
--------------
- --------------------------------------------------------------------------------
NONDEPOSITORY CREDIT INTERMEDIATION--1.6%
- --------------------------------------------------------------------------------
Freddie Mac 130 9
--------------
Total Nondepository credit intermediation 9
--------------
- --------------------------------------------------------------------------------
NURSING CARE FACILITIES--0.7%
- --------------------------------------------------------------------------------
Manor Care 80 4
--------------
Total Nursing care facilities 4
--------------
- --------------------------------------------------------------------------------
OFFICE SUPPLIES, STATIONERY & GIFT STORES--1.0%
- --------------------------------------------------------------------------------
Office Depot* 150 6
--------------
Total Office supplies, stationery & gift stores 6
--------------
- --------------------------------------------------------------------------------
OFFICES OF PHYSICIANS--1.2%
- --------------------------------------------------------------------------------
Caremark Rx 120 7
--------------
Total Offices of physicians 7
--------------
- --------------------------------------------------------------------------------
OIL & GAS EXTRACTION--0.7%
- --------------------------------------------------------------------------------
Newfield Exploration* 100 4
--------------
Total Oil & gas extraction 4
--------------
- --------------------------------------------------------------------------------
OTHER GENERAL MERCHANDISE STORES--1.0%
- --------------------------------------------------------------------------------
Sears Holdings* 40 6
--------------
Total Other general merchandise stores 6
--------------
32 | TURNER FUNDS 2006 ANNUAL REPORT
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
TURNER LARGE CAP VALUE FUND
Value
Shares (000)
- --------------------------------------------------------------------------------
OTHER PROFESSIONAL/SCIENTIFIC/ TECHNICAL SERVICE--0.7%
- --------------------------------------------------------------------------------
Emdeon* 330 $ 4
--------------
Total Other professional/scientific/technical
service 4
--------------
- --------------------------------------------------------------------------------
PETROLEUM & COAL PRODUCTS MANUFACTURING--9.8%
- --------------------------------------------------------------------------------
Chevron 170 11
ConocoPhillips 140 8
Exxon Mobil 440 30
Marathon Oil 110 8
--------------
Total Petroleum & coal products manufacturing 57
--------------
- --------------------------------------------------------------------------------
PHARMACEUTICAL & MEDICINE MANUFACTURING--5.9%
- --------------------------------------------------------------------------------
Merck 220 9
Pfizer 630 18
Schering-Plough 310 7
--------------
Total Pharmaceutical & medicine manufacturing 34
--------------
- --------------------------------------------------------------------------------
PROFESSIONAL & TECHNICAL SERVICES--1.2%
- --------------------------------------------------------------------------------
Alliance Data Systems* 120 7
--------------
Total Professional & technical services 7
--------------
- --------------------------------------------------------------------------------
SECURITIES & COMMODITY CONTRACTS BROKERAGE--12.6%
- --------------------------------------------------------------------------------
A.G. Edwards 110 6
Bear Stearns 60 8
E*Trade Financial* 190 4
Goldman Sachs Group 40 7
JPMorgan Chase 420 20
Lehman Brothers Holdings 130 10
Merrill Lynch 110 9
Morgan Stanley 130 9
--------------
Total Securities & commodity contracts brokerage 73
--------------
Value
Shares (000)
- --------------------------------------------------------------------------------
SEMICONDUCTOR & ELECTRONIC COMPONENT MANUFACTURING--1.6%
- --------------------------------------------------------------------------------
Altera* 230 $ 4
Analog Devices 150 5
--------------
Total Semiconductor & electronic component manufacturing 9
--------------
- --------------------------------------------------------------------------------
SOAP, CLEANING COMPOUND & TOILETRY MANUFACTURING--1.7%
- --------------------------------------------------------------------------------
Procter & Gamble 160 10
--------------
Total Soap, cleaning compound & toiletry manufacturing 10
--------------
- --------------------------------------------------------------------------------
TELECOMMUNICATIONS--3.9%
- --------------------------------------------------------------------------------
AT&T 260 9
BellSouth 100 4
Qwest Communications International* 650 6
Telephone & Data Systems 100 4
--------------
Total Telecommunications 23
--------------
- --------------------------------------------------------------------------------
TOTAL COMMON STOCK
(COST $515) 570
================================================================================
- --------------------------------------------------------------------------------
CASH EQUIVALENT--1.9%
- --------------------------------------------------------------------------------
BlackRock TempCash Fund, Institutional Shares,
5.212%** 10,536 11
- --------------------------------------------------------------------------------
TOTAL CASH EQUIVALENT
(COST $11) 11
================================================================================
- --------------------------------------------------------------------------------
TOTAL INVESTMENTS--100.2%
(COST $526) $ 581
================================================================================
Percentages are based on Net Assets of $580.***
* Non-income producing security
** Rate shown is the 7-day effective yield as of September 30, 2006.
*** This number has been rounded to the nearest thousands.
Cl -- Cl
LP -- Limited Partnership
The accompanying notes are an integral part of the financial statements.
TURNER FUNDS 2006 ANNUAL REPORT | 33
FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
TURNER MIDCAP GROWTH FUND
September 30, 2006
Value
Shares (000)
- --------------------------------------------------------------------------------
COMMON STOCK--98.3%
- --------------------------------------------------------------------------------
ACTIVITIES RELATED TO REAL ESTATE--0.8%
- --------------------------------------------------------------------------------
CB Richard Ellis Group, Cl A* 383,490 $ 9,434
--------------
Total Activities related to real estate 9,434
--------------
- --------------------------------------------------------------------------------
ADMINISTRATION OF HUMAN RESOURCE PROGRAMS--1.3%
- --------------------------------------------------------------------------------
Express Scripts* 195,658 14,770
--------------
Total Administration of human resource programs 14,770
--------------
- --------------------------------------------------------------------------------
ADVERTISING & RELATED SERVICES-1.5%
- --------------------------------------------------------------------------------
aQuantive* # 475,558 11,233
Lamar Advertising, Cl A* 100,470 5,366
--------------
Total Advertising & related services 16,599
--------------
- --------------------------------------------------------------------------------
AGRICULTURE, CONSTRUCTION & MINING MACHINERY MANUFACTURING--3.5%
- --------------------------------------------------------------------------------
Cameron International* 239,230 11,557
Grant Prideco* 156,730 5,961
National Oilwell Varco* 185,480 10,860
Smith International 264,670 10,269
--------------
Total Agriculture, construction & mining
machinery manufacturing 38,647
--------------
- --------------------------------------------------------------------------------
BEVERAGE MANUFACTURING--0.7%
- --------------------------------------------------------------------------------
Pepsi Bottling Group # 209,800 7,448
--------------
Total Beverage manufacturing 7,448
--------------
- --------------------------------------------------------------------------------
CLOTHING STORES--3.4%
- --------------------------------------------------------------------------------
Abercrombie & Fitch, Cl A 141,860 9,857
AnnTaylor Stores* # 140,930 5,899
Gymboree* # 168,210 7,095
Nordstrom # 369,490 15,629
--------------
Total Clothing stores 38,480
--------------
- --------------------------------------------------------------------------------
COMMUNICATIONS EQUIPMENT MANUFACTURING--0.7%
- --------------------------------------------------------------------------------
Polycom* 340,026 8,341
--------------
Total Communications equipment manufacturing 8,341
--------------
Value
Shares (000)
- --------------------------------------------------------------------------------
COMPUTER & PERIPHERAL EQUIPMENT MANUFACTURING--3.0%
- --------------------------------------------------------------------------------
Integrated Device Technology* 470,740 $ 7,560
Network Appliance* 297,430 11,008
SanDisk* # 287,740 15,406
--------------
Total Computer & peripheral equipment manufacturing 33,974
--------------
- --------------------------------------------------------------------------------
COMPUTER SYSTEMS DESIGN & RELATED SERVICES--0.9%
- --------------------------------------------------------------------------------
Cognizant Technology Solutions, Cl A* 119,571 8,856
Riverbed Technology* 46,010 897
--------------
Total Computer systems design & related services 9,753
--------------
- --------------------------------------------------------------------------------
CUT & SEW APPAREL MANUFACTURING--1.4%
- --------------------------------------------------------------------------------
Guess?* # 149,200 7,241
Under Armour, Cl A* # 214,521 8,585
--------------
Total Cut & sew apparel manufacturing 15,826
--------------
- --------------------------------------------------------------------------------
DATA PROCESSING SERVICES--1.1%
- --------------------------------------------------------------------------------
Fiserv* 161,701 7,614
MoneyGram International # 174,600 5,074
--------------
Total Data processing services 12,688
--------------
- --------------------------------------------------------------------------------
DEPARTMENT STORES--1.3%
- --------------------------------------------------------------------------------
TJX 516,550 14,479
--------------
Total Department stores 14,479
--------------
- --------------------------------------------------------------------------------
DEPOSITORY CREDIT INTERMEDIATION--2.0%
- --------------------------------------------------------------------------------
Colonial BancGroup 203,000 4,974
East West Bancorp # 218,050 8,637
Northern Trust 151,228 8,836
--------------
Total Depository credit intermediation 22,447
--------------
- --------------------------------------------------------------------------------
DRUGS & DRUGGISTS' SUNDRIES WHOLESALE--0.5%
- --------------------------------------------------------------------------------
Henry Schein* 114,569 5,745
--------------
Total Drugs & druggists' sundries wholesale 5,745
--------------
34 | TURNER FUNDS 2006 ANNUAL REPORT
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
TURNER MIDCAP GROWTH FUND
Value
Shares (000)
- --------------------------------------------------------------------------------
ELECTRICAL GOODS WHOLESALE--0.6%
- --------------------------------------------------------------------------------
WESCO International* # 108,450 $ 6,293
--------------
Total Electrical goods wholesale 6,293
--------------
- --------------------------------------------------------------------------------
ELECTRONIC INSTRUMENT MANUFACTURING--4.9%
- --------------------------------------------------------------------------------
Ametek # 205,830 8,964
DaVita* 168,517 9,752
Dentsply International 200,833 6,047
Itron* # 141,325 7,886
Roper Industries # 241,550 10,807
Thermo Electron* 298,300 11,732
--------------
Total Electronic instrument manufacturing 55,188
--------------
- --------------------------------------------------------------------------------
ELECTRONIC SHOPPING & MAIL-ORDER HOUSES--1.5%
- --------------------------------------------------------------------------------
Nutri/System* # 271,910 16,937
--------------
Total Electronic shopping & mail-order houses 16,937
--------------
- --------------------------------------------------------------------------------
ELECTRONICS & APPLIANCE STORES--0.8%
- --------------------------------------------------------------------------------
Circuit City Stores 340,700 8,555
--------------
Total Electronics & appliance stores 8,555
--------------
- --------------------------------------------------------------------------------
EMPLOYMENT SERVICES--0.7%
- --------------------------------------------------------------------------------
Manpower # 119,610 7,329
--------------
Total Employment services 7,329
--------------
- --------------------------------------------------------------------------------
FOUNDRIES--1.7%
- --------------------------------------------------------------------------------
Precision Castparts 307,160 19,400
--------------
Total Foundries 19,400
--------------
- --------------------------------------------------------------------------------
FRUIT & VEGETABLE PRESERVING & SPECIALTY FOOD MANUFACTURING--0.5%
- --------------------------------------------------------------------------------
Campbell Soup 162,540 5,933
--------------
Total Fruit & vegetable preserving & specialty
food manufacturing 5,933
--------------
- --------------------------------------------------------------------------------
FULL-SERVICE RESTAURANTS--0.4%
- --------------------------------------------------------------------------------
Ruby Tuesday 157,420 4,438
--------------
Total Full-service restaurants 4,438
--------------
Value
Shares (000)
- --------------------------------------------------------------------------------
GENERAL FREIGHT TRUCKING--0.7%
- --------------------------------------------------------------------------------
Landstar System # 177,130 $ 7,563
--------------
Total General freight trucking 7,563
--------------
- --------------------------------------------------------------------------------
GENERAL MEDICAL & SURGICAL HOSPITALS--0.7%
- --------------------------------------------------------------------------------
Universal Health Services, Cl B 121,030 7,253
--------------
Total General medical & surgical hospitals 7,253
--------------
- --------------------------------------------------------------------------------
GROCERY STORES--0.9%
- --------------------------------------------------------------------------------
Whole Foods Market # 170,300 10,121
--------------
Total Grocery stores 10,121
--------------
- --------------------------------------------------------------------------------
HEALTH & PERSONAL CARE STORES--0.5%
- --------------------------------------------------------------------------------
NBTY* 186,870 5,470
--------------
Total Health & personal care stores 5,470
--------------
- --------------------------------------------------------------------------------
HOME HEALTH CARE SERVICES--1.0%
- --------------------------------------------------------------------------------
Intuitive Surgical* # 105,160 11,089
--------------
Total Home health care services 11,089
--------------
- --------------------------------------------------------------------------------
INDUSTRIAL MACHINERY MANUFACTURING--2.8%
- --------------------------------------------------------------------------------
Cymer* 259,300 11,386
Kla-Tencor 175,040 7,784
Varian Semiconductor Equipment Associates* 316,640 11,621
--------------
Total Industrial machinery manufacturing 30,791
--------------
- --------------------------------------------------------------------------------
INFORMATION SERVICES--0.4%
- --------------------------------------------------------------------------------
Ctrip.com International ADR # 109,284 4,912
--------------
Total Information services 4,912
--------------
- --------------------------------------------------------------------------------
INSURANCE CARRIERS--1.6%
- --------------------------------------------------------------------------------
Arch Capital Group* 92,020 5,842
HCC Insurance Holdings # 167,070 5,493
Health Net* 139,170 6,057
--------------
Total Insurance carriers 17,392
--------------
TURNER FUNDS 2006 ANNUAL REPORT | 35
FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
TURNER MIDCAP GROWTH FUND
Value
Shares (000)
- --------------------------------------------------------------------------------
MANAGEMENT & TECHNICAL CONSULTING SERVICES--2.0%
- --------------------------------------------------------------------------------
C.H. Robinson Worldwide 298,182 $ 13,293
Monster Worldwide* 264,065 9,556
--------------
Total Management & technical consulting services 22,849
--------------
- --------------------------------------------------------------------------------
MEDICAL & DIAGNOSTIC LABORATORIES--1.5%
- --------------------------------------------------------------------------------
Quest Diagnostics 266,420 16,294
--------------
Total Medical & diagnostic laboratories 16,294
--------------
- --------------------------------------------------------------------------------
MEDICAL EQUIPMENT & SUPPLIES MANUFACTURING-- 0.4%
- --------------------------------------------------------------------------------
Respironics* 122,502 4,730
--------------
Total Medical equipment & supplies manufacturing 4,730
--------------
- --------------------------------------------------------------------------------
OIL & GAS EXTRACTION--3.0%
- --------------------------------------------------------------------------------
CNX Gas* 185,100 4,289
Denbury Resources* 204,390 5,907
Range Resources 465,495 11,749
Southwestern Energy* 167,730 5,010
Ultra Petroleum* 135,760 6,531
--------------
Total Oil & gas extraction 33,486
--------------
- --------------------------------------------------------------------------------
OTHER ELECTRICAL EQUIPMENT & COMPONENT MANUFACTURING-- 1.2%
- --------------------------------------------------------------------------------
Ciena* 188,200 5,128
General Cable* 201,740 7,709
--------------
Total Other electrical equipment & component
manufacturing 12,837
--------------
- --------------------------------------------------------------------------------
OTHER FINANCIAL INVESTMENT ACTIVITIES--2.8%
- --------------------------------------------------------------------------------
Affiliated Managers Group* # 118,900 11,903
T. Rowe Price Group # 413,480 19,785
--------------
Total Other financial investment activities 31,688
--------------
- --------------------------------------------------------------------------------
OTHER GENERAL PURPOSE MACHINERY MANUFACTURING-- 0.6%
- --------------------------------------------------------------------------------
Gardner Denver* 187,700 6,209
--------------
Total Other general purpose machinery manufacturing 6,209
--------------
Value
Shares (000)
- --------------------------------------------------------------------------------
OTHER INVESTMENT POOLS & FUNDS--1.3%
- --------------------------------------------------------------------------------
Host Hotels & Resorts # 412,819 $ 9,466
Kilroy Realty # 64,560 4,864
--------------
Total Other investment pools & funds 14,330
--------------
- --------------------------------------------------------------------------------
OTHER LEATHER & ALLIED PRODUCT MANUFACTURING--2.2%
- --------------------------------------------------------------------------------
Coach* 707,710 24,345
--------------
Total Other leather & allied product
manufacturing 24,345
--------------
- --------------------------------------------------------------------------------
OTHER MISCELLANEOUS MANUFACTURING--3.3%
- --------------------------------------------------------------------------------
International Game Technology 656,320 27,237
Scientific Games, Cl A* 263,720 8,386
WMS Industries* 23,530 688
--------------
Total Other miscellaneous manufacturing 36,311
--------------
- --------------------------------------------------------------------------------
OUTPATIENT CARE CENTERS--0.7%
- --------------------------------------------------------------------------------
Coventry Health Care* 147,700 7,610
--------------
Total Outpatient care centers 7,610
--------------
- --------------------------------------------------------------------------------
PAPER & PAPER PRODUCT WHOLESALE--0.6%
- --------------------------------------------------------------------------------
VistaPrint* 274,690 7,125
--------------
Total Paper & paper product wholesale 7,125
--------------
- --------------------------------------------------------------------------------
PETROLEUM & COAL PRODUCTS MANUFACTURING--0.5%
- --------------------------------------------------------------------------------
Sunoco 88,420 5,499
--------------
Total Petroleum & coal products manufacturing 5,499
--------------
- --------------------------------------------------------------------------------
PHARMACEUTICAL & MEDICINE MANUFACTURING--2.7%
- --------------------------------------------------------------------------------
Allergan 149,580 16,844
Dade Behring Holdings 186,840 7,504
Shire ADR 115,672 5,713
--------------
Total Pharmaceutical & medicine manufacturing 30,061
--------------
- --------------------------------------------------------------------------------
PIPELINE TRANSPORTATION OF NATURAL GAS--0.5%
- --------------------------------------------------------------------------------
Questar 64,670 5,288
--------------
Total Pipeline transportation of natural gas 5,288
--------------
36 | TURNER FUNDS 2006 ANNUAL REPORT
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
TURNER MIDCAP GROWTH FUND
Value
Shares (000)
- --------------------------------------------------------------------------------
RAIL TRANSPORTATION--0.7%
- --------------------------------------------------------------------------------
CSX 222,520 $ 7,305
--------------
Total Rail transportation 7,305
--------------
- --------------------------------------------------------------------------------
RAILROAD ROLLING STOCK MANUFACTURING--0.4%
- --------------------------------------------------------------------------------
Trinity Industries # 155,225 4,994
--------------
Total Railroad rolling stock manufacturing 4,994
--------------
- --------------------------------------------------------------------------------
REMEDIATION & OTHER WASTE MANAGEMENT SERVICES--0.7%
- --------------------------------------------------------------------------------
Harsco 104,520 8,116
--------------
Total Remediation & other waste management services 8,116
--------------
- --------------------------------------------------------------------------------
SCHEDULED AIR TRANSPORTATION--1.0%
- --------------------------------------------------------------------------------
Continental Airlines, Cl B* 117,620 3,330
U.S. Airways Group* # 167,660 7,432
--------------
Total Scheduled air transportation 10,762
--------------
- --------------------------------------------------------------------------------
SCIENTIFIC R&D SERVICES--3.3%
- --------------------------------------------------------------------------------
Celgene* 350,694 15,185
Covance* 133,630 8,871
Pharmaceutical Product Development 347,583 12,405
--------------
Total Scientific R&D services 36,461
--------------
- --------------------------------------------------------------------------------
SECURITIES & COMMODITY CONTRACTS BROKERAGE--2.0%
- --------------------------------------------------------------------------------
E*Trade Financial* 376,710 9,011
Investment Technology Group* 158,110 7,075
Jefferies Group 229,330 6,536
--------------
Total Securities & commodity contracts brokerage 22,622
--------------
- --------------------------------------------------------------------------------
SECURITIES & COMMODITY EXCHANGES--0.9%
- --------------------------------------------------------------------------------
NASDAQ Stock Market* 340,640 10,301
--------------
Total Securities & commodity exchanges 10,301
--------------
- --------------------------------------------------------------------------------
SEMICONDUCTOR & ELECTRONIC COMPONENT MANUFACTURING--6.5%
- --------------------------------------------------------------------------------
ASML Holding, NY Shares* # 335,300 7,806
Benchmark Electronics* # 245,940 6,611
Energy Conversion Devices* 86,384 3,200
Value
Shares (000)
- --------------------------------------------------------------------------------
Finisar* # 1,702,671 $ 6,181
JDS Uniphase* 3,159,040 6,918
MEMC Electronic Materials* 216,310 7,923
Micron Technology* # 586,300 10,202
Nvidia* # 491,901 14,555
Silicon Laboratories* 283,700 8,800
--------------
Total Semiconductor & electronic component
manufacturing 72,196
--------------
- --------------------------------------------------------------------------------
SERVICES TO BUILDINGS & DWELLINGS--1.0%
- --------------------------------------------------------------------------------
Ecolab 259,980 11,132
--------------
Total Services to buildings & dwellings 11,132
--------------
- --------------------------------------------------------------------------------
SHIP & BOAT BUILDING--0.6%
- --------------------------------------------------------------------------------
McDermott International* # 157,660 6,590
--------------
Total Ship & boat building 6,590
--------------
- --------------------------------------------------------------------------------
SOAP, CLEANING COMPOUND & TOILETRY MANUFACTURING--0.5%
- --------------------------------------------------------------------------------
Alberto-Culver # 111,500 5,641
--------------
Total Soap, cleaning compound & toiletry
manufacturing 5,641
--------------
- --------------------------------------------------------------------------------
SOFTWARE PUBLISHERS--5.6%
- --------------------------------------------------------------------------------
Akamai Technologies* # 387,912 19,392
Citrix Systems* 341,520 12,366
Electronic Arts* # 331,673 18,467
F5 Networks* # 102,775 5,521
Salesforce.com* # 195,000 6,997
--------------
Total Software publishers 62,743
--------------
- --------------------------------------------------------------------------------
STEEL PRODUCT MANUFACTURING FROM PURCHASED STEEL--0.6%
- --------------------------------------------------------------------------------
Allegheny Technologies # 105,850 6,583
--------------
Total Steel product manufacturing from purchased
steel 6,583
--------------
- --------------------------------------------------------------------------------
SUGAR & CONFECTIONERY PRODUCT MANUFACTURING--0.2%
- --------------------------------------------------------------------------------
Hershey 48,010 2,566
--------------
Total Sugar & confectionery product manufacturing 2,566
--------------
TURNER FUNDS 2006 ANNUAL REPORT | 37
FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
TURNER MIDCAP GROWTH FUND
Value
Shares (000)
- --------------------------------------------------------------------------------
TELECOMMUNICATIONS--4.7%
- --------------------------------------------------------------------------------
Crown Castle International* 382,240 $ 13,470
Leap Wireless International* # 120,794 5,857
NII Holdings* 444,520 27,631
Time Warner Telecom, Cl A* 295,930 5,626
--------------
Total Telecommunications 52,584
--------------
- --------------------------------------------------------------------------------
TELECOMMUNICATIONS RESELLERS--1.5%
- -------------------------------------------------------------------------------
American Tower, Cl A* 460,210 16,798
--------------
Total Telecommunications resellers 16,798
--------------
- --------------------------------------------------------------------------------
TRAVELER ACCOMMODATION--3.0%
- --------------------------------------------------------------------------------
Hilton Hotels 199,750 5,563
Starwood Hotels & Resorts Worldwide 249,870 14,290
Wynn Resorts* # 195,377 13,288
--------------
Total Traveler accommodation 33,141
--------------
- --------------------------------------------------------------------------------
TOTAL COMMON STOCK
(COST $931,812) 1,096,492
================================================================================
- --------------------------------------------------------------------------------
SHORT-TERM INVESTMENT HELD AS COLLATERAL FOR LOANED SECURITIES--13.9%
- --------------------------------------------------------------------------------
Boston Global Investment Trust -- Quality
Portfolio (1) 154,566,572 154,567
- --------------------------------------------------------------------------------
TOTAL SHORT-TERM INVESTMENT HELD AS COLLATERAL
FOR LOANED SECURITIES
(COST $154,567) 154,567
================================================================================
Value
Shares (000)
- --------------------------------------------------------------------------------
CASH EQUIVALENT--0.7%
- --------------------------------------------------------------------------------
BlackRock TempCash Fund, Institutional Shares,
5.212%** 8,192,442 $ 8,192
- --------------------------------------------------------------------------------
TOTAL CASH EQUIVALENT
(COST $8,192) 8,192
================================================================================
- --------------------------------------------------------------------------------
TOTAL INVESTMENTS--112.9%
(COST $1,094,571) $ 1,259,251
================================================================================
Percentages are based on Net Assets of $1,115,645.***
* Non-income producing security
** Rate shown is the 7-day effective yield as of September 30, 2006.
*** This number has been rounded to the nearest thousands.
# Security fully or partially on loan at September 30, 2006. The total value
of securities on loan at September 30, 2006, was $149,114,095.
(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.
38 | TURNER FUNDS 2006 ANNUAL REPORT
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
TURNER NEW ENTERPRISE FUND
September 30, 2006
Value
Shares (000)
- --------------------------------------------------------------------------------
COMMON STOCK--98.6%
- --------------------------------------------------------------------------------
ADVERTISING & RELATED SERVICES--1.0%
- --------------------------------------------------------------------------------
aQuantive* # 10,610 $ 251
--------------
Total Advertising & related services 251
--------------
- --------------------------------------------------------------------------------
COMMUNICATIONS EQUIPMENT MANUFACTURING--2.8%
- --------------------------------------------------------------------------------
Motorola # 10,700 267
Nice Systems ADR* 14,990 415
--------------
Total Communications equipment manufacturing 682
--------------
- --------------------------------------------------------------------------------
COMPUTER & PERIPHERAL EQUIPMENT MANUFACTURING--10.3%
- --------------------------------------------------------------------------------
Apple Computer* 19,630 1,512
Integrated Device Technology* # 12,170 195
SanDisk* 14,250 763
--------------
Total Computer & peripheral equipment manufacturing 2,470
--------------
- --------------------------------------------------------------------------------
COMPUTER SYSTEMS DESIGN & RELATED SERVICES--2.5%
- --------------------------------------------------------------------------------
Riverbed Technology* # 30,620 597
--------------
Total Computer systems design & related services 597
--------------
- --------------------------------------------------------------------------------
CUT & SEW APPAREL MANUFACTURING--1.1%
- --------------------------------------------------------------------------------
Under Armour, Cl A* # 6,670 267
--------------
Total Cut & sew apparel manufacturing 267
--------------
- --------------------------------------------------------------------------------
ELECTRONIC INSTRUMENT MANUFACTURING--0.9%
- --------------------------------------------------------------------------------
Mentor # 4,400 222
--------------
Total Electronic instrument manufacturing 222
--------------
- --------------------------------------------------------------------------------
ELECTRONIC SHOPPING & MAIL-ORDER HOUSES--2.5%
- --------------------------------------------------------------------------------
Nutri/System* # 9,720 605
--------------
Total Electronic shopping & mail-order houses 605
--------------
- --------------------------------------------------------------------------------
FOUNDRIES--1.3%
- --------------------------------------------------------------------------------
Precision Castparts 4,920 311
--------------
Total Foundries 311
--------------
Value
Shares (000)
- --------------------------------------------------------------------------------
HOME HEALTH CARE SERVICES--3.4%
- --------------------------------------------------------------------------------
Intuitive Surgical* 7,670 $ 809
--------------
Total Home health care services 809
--------------
- --------------------------------------------------------------------------------
INDUSTRIAL MACHINERY MANUFACTURING--6.0%
- --------------------------------------------------------------------------------
Cymer* # 10,550 463
Varian Semiconductor Equipment Associates* 26,890 987
--------------
Total Industrial machinery manufacturing 1,450
--------------
- --------------------------------------------------------------------------------
INFORMATION SERVICES--8.0%
- --------------------------------------------------------------------------------
24/7 Real Media* # 48,050 410
Google, Cl A* 3,240 1,302
Internet Capital Group* # 22,970 217
--------------
Total Information services 1,929
--------------
- --------------------------------------------------------------------------------
OTHER ELECTRICAL EQUIPMENT & COMPONENT MANUFACTURING--2.0%
- --------------------------------------------------------------------------------
Ciena* 17,560 478
--------------
Total Other electrical equipment & component
manufacturing 478
--------------
- --------------------------------------------------------------------------------
OTHER LEATHER & ALLIED PRODUCT MANUFACTURING--1.5%
- --------------------------------------------------------------------------------
Coach* 10,540 363
--------------
Total Other leather & allied product manufacturing 363
--------------
- --------------------------------------------------------------------------------
OTHER MISCELLANEOUS MANUFACTURING--2.3%
- --------------------------------------------------------------------------------
International Game Technology 13,280 551
--------------
Total Other miscellaneous manufacturing 551
--------------
- --------------------------------------------------------------------------------
OTHER TRANSPORTATION EQUIPMENT MANUFACTURING--1.8%
- --------------------------------------------------------------------------------
Comtech Group* # 28,380 425
--------------
Total Other transportation equipment manufacturing 425
--------------
- --------------------------------------------------------------------------------
PHARMACEUTICAL & MEDICINE MANUFACTURING--5.5%
- --------------------------------------------------------------------------------
Allergan 2,600 293
Gilead Sciences* 15,000 1,030
--------------
Total Pharmaceutical & medicine manufacturing 1,323
--------------
TURNER FUNDS 2006 ANNUAL REPORT | 39
FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
TURNER NEW ENTERPRISE FUND
Value
Shares (000)
- --------------------------------------------------------------------------------
SCIENTIFIC R&D SERVICES--1.7%
- --------------------------------------------------------------------------------
Celgene* 9,600 $ 416
--------------
Total Scientific R&D services 416
--------------
- --------------------------------------------------------------------------------
SECURITIES & COMMODITY CONTRACTS BROKERAGE--1.9%
- --------------------------------------------------------------------------------
E*Trade Financial* 18,680 447
--------------
Total Securities & commodity contracts brokerage 447
--------------
- --------------------------------------------------------------------------------
SECURITIES & COMMODITY EXCHANGES--4.2%
- --------------------------------------------------------------------------------
Chicago Mercantile Exchange Holdings 1,580 756
NASDAQ Stock Market* 8,170 247
--------------
Total Securities & commodity exchanges 1,003
--------------
- --------------------------------------------------------------------------------
SEMICONDUCTOR & ELECTRONIC COMPONENT MANUFACTURING--15.1%
- --------------------------------------------------------------------------------
ASML Holding, NY Shares* 16,930 394
Benchmark Electronics* # 18,080 486
Cisco Systems* 21,590 497
Emcore* 23,670 140
Finisar* # 80,350 292
Flextronics International* # 19,530 247
JDS Uniphase* 295,110 646
MEMC Electronic Materials* 12,360 453
Silicon Laboratories* 15,000 465
--------------
Total Semiconductor & electronic component
manufacturing 3,620
--------------
- --------------------------------------------------------------------------------
SOFTWARE PUBLISHERS--12.6%
- --------------------------------------------------------------------------------
Akamai Technologies* # 30,240 1,512
Citrix Systems* 9,760 353
F5 Networks* 3,690 198
Oracle* 21,670 385
Salesforce.com* # 9,370 336
TIBCO Software* # 26,400 237
--------------
Total Software publishers 3,021
--------------
- --------------------------------------------------------------------------------
TELECOMMUNICATIONS--6.8%
- --------------------------------------------------------------------------------
NII Holdings* 19,910 1,238
Sonus Networks* 74,930 394
--------------
Total Telecommunications 1,632
--------------
Value
Shares (000)
- --------------------------------------------------------------------------------
TELECOMMUNICATIONS RESELLERS--1.8%
- --------------------------------------------------------------------------------
American Tower, Cl A* 11,710 $ 427
--------------
Total Telecommunications resellers 427
--------------
- --------------------------------------------------------------------------------
TRAVELER ACCOMMODATION--1.6%
- --------------------------------------------------------------------------------
Starwood Hotels & Resorts Worldwide 6,910 395
--------------
Total Traveler accommodation 395
--------------
- --------------------------------------------------------------------------------
TOTAL COMMON STOCK
(COST $19,525) 23,694
================================================================================
- --------------------------------------------------------------------------------
SHORT-TERM INVESTMENT HELD AS COLLATERAL FOR LOANED SECURITIES--23.5%
- --------------------------------------------------------------------------------
Boston Global Investment Trust --
Quality Portfolio (1) 5,651,400 5,651
--------------
- --------------------------------------------------------------------------------
TOTAL SHORT-TERM INVESTMENT HELD AS
COLLATERAL FOR LOANED SECURITIES
(COST $5,651) 5,651
================================================================================
- --------------------------------------------------------------------------------
CASH EQUIVALENT--0.7%
- --------------------------------------------------------------------------------
BlackRock TempCash Fund, Institutional Shares,
5.212%** 164,676 165
- --------------------------------------------------------------------------------
TOTAL CASH EQUIVALENT
(COST $165) 165
================================================================================
- --------------------------------------------------------------------------------
TOTAL INVESTMENTS--122.8%
(COST $25,341) $ 29,510
================================================================================
Percentages are based on Net Assets of $24,040.***
* Non-income producing security
** Rate shown is the 7-day effective yield as of September 30, 2006.
*** This number has been rounded to the nearest thousands.
# Security fully or partially on loan at September 30, 2006. The total value
of securities on loan at September 30, 2006, was $5,397,279.
(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.
40 | TURNER FUNDS 2006 ANNUAL REPORT
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
TURNER SMALL CAP EQUITY FUND
September 30, 2006
Value
Shares (000)
- --------------------------------------------------------------------------------
COMMON STOCK--94.8%
- --------------------------------------------------------------------------------
ADVERTISING & RELATED SERVICES--1.4%
- --------------------------------------------------------------------------------
inVentiv Health* 35,260 $ 1,129
--------------
Total Advertising & related services 1,129
--------------
- --------------------------------------------------------------------------------
AEROSPACE PRODUCT & PARTS MANUFACTURING--1.1%
- --------------------------------------------------------------------------------
AAR* 36,850 878
--------------
Total Aerospace product & parts manufacturing 878
--------------
- --------------------------------------------------------------------------------
AGENCIES & OTHER INSURANCE RELATED ACTIVITIES--0.8%
- --------------------------------------------------------------------------------
HealthExtras* 22,150 627
--------------
Total Agencies & other insurance related activities 627
--------------
- --------------------------------------------------------------------------------
AGRICULTURE, CONSTRUCTION & MINING MACHINERY MANUFACTURING--1.7%
- --------------------------------------------------------------------------------
Hydril* 10,280 576
Oil States International* 29,350 807
--------------
Total Agriculture, construction & mining machinery
manufacturing 1,383
--------------
- --------------------------------------------------------------------------------
APPAREL, PIECE GOODS & NOTIONS WHOLESALE--1.2%
- --------------------------------------------------------------------------------
The Men's Wearhouse 25,470 948
--------------
Total Apparel, piece goods & notions wholesale 948
--------------
- --------------------------------------------------------------------------------
ARCHITECTURAL & ENGINEERING SERVICES--2.3%
- --------------------------------------------------------------------------------
Tetra Tech* 33,930 591
Washington Group International* 21,855 1,286
--------------
Total Architectural & engineering services 1,877
--------------
- --------------------------------------------------------------------------------
ARCHITECTURAL & STRUCTURAL METALS MANUFACTURING--1.0%
- --------------------------------------------------------------------------------
Griffon* 34,740 829
--------------
Total Architectural & structural metals manufacturing 829
--------------
- --------------------------------------------------------------------------------
BAKERIES & TORTILLA MANUFACTURING--0.9%
- --------------------------------------------------------------------------------
Flowers Foods 26,830 721
--------------
Total Bakeries & tortilla manufacturing 721
--------------
Value
Shares (000)
- --------------------------------------------------------------------------------
BASIC CHEMICAL MANUFACTURING--1.2%
- --------------------------------------------------------------------------------
Arch Chemicals 14,300 $ 407
OM Group* 13,070 574
--------------
Total Basic chemical manufacturing 981
--------------
- --------------------------------------------------------------------------------
CLOTHING STORES--0.9%
- --------------------------------------------------------------------------------
Tween Brands* 18,900 711
--------------
Total Clothing stores 711
--------------
- --------------------------------------------------------------------------------
COMMUNICATIONS EQUIPMENT MANUFACTURING--2.4%
- --------------------------------------------------------------------------------
Nice Systems ADR* 31,520 872
Polycom* 44,450 1,091
--------------
Total Communications equipment manufacturing 1,963
--------------
- --------------------------------------------------------------------------------
COMPUTER & PERIPHERAL EQUIPMENT MANUFACTURING--0.9%
- --------------------------------------------------------------------------------
Emulex* 40,040 728
--------------
Total Computer & peripheral equipment manufacturing 728
--------------
- --------------------------------------------------------------------------------
COMPUTER SYSTEMS DESIGN & RELATED SERVICES--0.8%
- --------------------------------------------------------------------------------
CACI International, Cl A* 11,900 655
--------------
Total Computer systems design & related services 655
--------------
- --------------------------------------------------------------------------------
CUT & SEW APPAREL MANUFACTURING--1.3%
- --------------------------------------------------------------------------------
Phillips-Van Heusen 24,960 1,043
--------------
Total Cut & sew apparel manufacturing 1,043
--------------
- --------------------------------------------------------------------------------
DATA PROCESSING SERVICES--0.8%
- --------------------------------------------------------------------------------
eFunds* 25,390 614
--------------
Total Data processing services 614
--------------
- --------------------------------------------------------------------------------
DEPOSITORY CREDIT INTERMEDIATION--3.6%
- --------------------------------------------------------------------------------
First Community Bancorp 12,490 699
First Midwest Bancorp 22,880 867
Greater Bay Bancorp 27,550 777
Provident Bankshares 15,730 583
--------------
Total Depository credit intermediation 2,926
--------------
TURNER FUNDS 2006 ANNUAL REPORT | 41
FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
TURNER SMALL CAP EQUITY FUND
Value
Shares (000)
- --------------------------------------------------------------------------------
ELECTRIC POWER GENERATION, TRANSMISSION & DISTRIBUTION--2.3%
- --------------------------------------------------------------------------------
Allete 11,240 $ 488
El Paso Electric 29,860 667
Unisource Energy 22,190 740
--------------
Total Electric power generation, transmission &
distribution 1,895
--------------
- --------------------------------------------------------------------------------
ELECTRICAL GOODS WHOLESALE--0.9%
- --------------------------------------------------------------------------------
Arris Group* 64,740 742
--------------
Total Electrical goods wholesale 742
--------------
- --------------------------------------------------------------------------------
ELECTRONIC INSTRUMENT MANUFACTURING--3.1%
- --------------------------------------------------------------------------------
Analogic # 18,946 972
Itron* # 16,180 903
United Industrial 11,340 607
--------------
Total Electronic instrument manufacturing 2,482
--------------
- --------------------------------------------------------------------------------
ELECTRONIC SHOPPING & MAIL-ORDER HOUSES--1.4%
- --------------------------------------------------------------------------------
PolyMedica # 27,070 1,159
--------------
Total Electronic shopping & mail-order houses 1,159
--------------
- --------------------------------------------------------------------------------
ENGINE, TURBINE & POWER TRANSMISSION EQUIPMENT MANUFACTURING--0.5%
- --------------------------------------------------------------------------------
EnPro Industries* 12,310 370
--------------
Total Engine, turbine & power transmission
equipment manufacturing 370
--------------
- --------------------------------------------------------------------------------
FOOTWEAR MANUFACTURING--2.2%
- --------------------------------------------------------------------------------
Skechers U.S.A., Cl A 32,980 775
Wolverine World Wide 36,400 1,031
--------------
Total Footwear manufacturing 1,806
--------------
- --------------------------------------------------------------------------------
FULL-SERVICE RESTAURANTS--1.3%
- --------------------------------------------------------------------------------
Bob Evans Farms 35,280 1,068
--------------
Total Full-service restaurants 1,068
--------------
- --------------------------------------------------------------------------------
GAMBLING INDUSTRIES--0.8%
- --------------------------------------------------------------------------------
Pinnacle Entertainment* 22,660 637
--------------
Total Gambling industries 637
--------------
Value
Shares (000)
- --------------------------------------------------------------------------------
HEALTH & PERSONAL CARE STORES--0.7%
- --------------------------------------------------------------------------------
NBTY* 19,160 $ 561
--------------
Total Health & personal care stores 561
--------------
- --------------------------------------------------------------------------------
INDUSTRIAL MACHINERY MANUFACTURING--1.1%
- --------------------------------------------------------------------------------
Varian Semiconductor Equipment Associates* 23,360 857
--------------
Total Industrial machinery manufacturing 857
--------------
- --------------------------------------------------------------------------------
INFORMATION SERVICES--1.4%
- --------------------------------------------------------------------------------
WebEx Communications* 28,590 1,116
--------------
Total Information services 1,116
--------------
- --------------------------------------------------------------------------------
INSURANCE CARRIERS--5.2%
- --------------------------------------------------------------------------------
Delphi Financial Group, Cl A 25,295 1,009
IPC Holdings 27,410 834
ProAssurance* 17,181 847
RLI 9,560 485
Tower Group 32,670 1,089
--------------
Total Insurance carriers 4,264
--------------
- --------------------------------------------------------------------------------
LIMITED-SERVICE EATING PLACES--1.9%
- --------------------------------------------------------------------------------
Domino's Pizza 38,710 993
Jack in the Box* 11,030 575
--------------
Total Limited-service eating places 1,568
--------------
- --------------------------------------------------------------------------------
MANAGEMENT & TECHNICAL CONSULTING SERVICES--1.5%
- --------------------------------------------------------------------------------
FTI Consulting* 24,000 601
Gartner* 33,020 581
--------------
Total Management & technical consulting services 1,182
--------------
- --------------------------------------------------------------------------------
MEDICAL EQUIPMENT & SUPPLIES MANUFACTURING--1.1%
- --------------------------------------------------------------------------------
Haemonetics* 19,890 931
--------------
Total Medical equipment & supplies manufacturing 931
--------------
- --------------------------------------------------------------------------------
METAL ORE MINING--0.9%
- --------------------------------------------------------------------------------
Randgold Resources ADR* 35,890 731
--------------
Total Metal ore mining 731
--------------
42 | TURNER FUNDS 2006 ANNUAL REPORT
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
TURNER SMALL CAP EQUITY FUND
Value
Shares (000)
- --------------------------------------------------------------------------------
MOTION PICTURE & VIDEO INDUSTRIES--1.3%
- --------------------------------------------------------------------------------
Lions Gate Entertainment* 40,390 $ 404
Macrovision* 27,940 662
--------------
Total Motion picture & video industries 1,066
--------------
- --------------------------------------------------------------------------------
MOTOR VEHICLE BODY & TRAILER MANUFACTURING--0.9%
- --------------------------------------------------------------------------------
Tenneco* 32,900 770
--------------
Total Motor vehicle body & trailer manufacturing 770
--------------
- --------------------------------------------------------------------------------
NATURAL GAS DISTRIBUTION--2.0%
- --------------------------------------------------------------------------------
New Jersey Resources 19,780 975
Southwest Gas 19,200 640
--------------
Total Natural gas distribution 1,615
--------------
- --------------------------------------------------------------------------------
NURSING CARE FACILITIES--1.0%
- --------------------------------------------------------------------------------
Genesis HealthCare* 16,780 799
--------------
Total Nursing care facilities 799
--------------
- --------------------------------------------------------------------------------
OIL & GAS EXTRACTION--1.1%
- --------------------------------------------------------------------------------
Comstock Resources* 31,410 853
--------------
Total Oil & gas extraction 853
--------------
- --------------------------------------------------------------------------------
OTHER AMBULATORY HEALTH CARE SERVICES--0.9%
- --------------------------------------------------------------------------------
Magellan Health Services* 17,240 734
--------------
Total Other ambulatory health care services 734
--------------
- --------------------------------------------------------------------------------
OTHER AMUSEMENT & RECREATION INDUSTRIES--1.4%
- --------------------------------------------------------------------------------
Vail Resorts* 28,900 1,157
--------------
Total Other amusement & recreation industries 1,157
--------------
- --------------------------------------------------------------------------------
OTHER ELECTRICAL EQUIPMENT & COMPONENT MANUFACTURING--2.0%
- --------------------------------------------------------------------------------
Belden CDT 13,440 514
CommScope* 33,710 1,108
--------------
Total Other electrical equipment & component
manufacturing 1,622
--------------
Value
Shares (000)
- --------------------------------------------------------------------------------
OTHER FABRICATED METAL PRODUCT MANUFACTURING--1.6%
- --------------------------------------------------------------------------------
Kaydon 24,300 $ 900
Watts Water Technologies, Cl A 13,160 418
--------------
Total Other fabricated metal product manufacturing 1,318
--------------
- --------------------------------------------------------------------------------
OTHER FINANCIAL INVESTMENT ACTIVITIES--1.1%
- --------------------------------------------------------------------------------
Waddell & Reed Financial, Cl A 35,360 875
--------------
Total Other financial investment activities 875
--------------
- --------------------------------------------------------------------------------
OTHER GENERAL MERCHANDISE STORES--0.7%
- --------------------------------------------------------------------------------
BJ's Wholesale Club* 20,540 599
--------------
Total Other general merchandise stores 599
--------------
- --------------------------------------------------------------------------------
OTHER GENERAL PURPOSE MACHINERY MANUFACTURING--0.8%
- --------------------------------------------------------------------------------
Gardner Denver* 19,710 652
--------------
Total Other general purpose machinery manufacturing 652
--------------
- --------------------------------------------------------------------------------
OTHER INVESTMENT POOLS & FUNDS--8.0%
- --------------------------------------------------------------------------------
BioMed Realty Trust # 27,200 825
Corporate Office Properties Trust 18,760 840
First Potomac Realty Trust 16,100 487
LaSalle Hotel Properties 18,330 794
Maguire Properties 20,610 840
Mid-America Apartment Communities 17,600 1,077
Strategic Hotels & Resorts 43,010 855
Taubman Centers 17,160 762
--------------
Total Other investment pools & funds 6,480
--------------
- --------------------------------------------------------------------------------
OTHER MISCELLANEOUS MANUFACTURING--1.2%
- --------------------------------------------------------------------------------
WMS Industries* 32,440 948
--------------
Total Other miscellaneous manufacturing 948
--------------
- --------------------------------------------------------------------------------
OTHER NONMETALLIC MINERAL PRODUCTS--0.7%
- --------------------------------------------------------------------------------
Brush Engineered Materials* 24,210 602
--------------
Total Other nonmetallic mineral products 602
--------------
TURNER FUNDS 2006 ANNUAL REPORT | 43
FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
TURNER SMALL CAP EQUITY FUND
Value
Shares (000)
- --------------------------------------------------------------------------------
OUTPATIENT CARE CENTERS--1.1%
- --------------------------------------------------------------------------------
Psychiatric Solutions* 27,370 $ 933
--------------
Total Outpatient care centers 933
--------------
- --------------------------------------------------------------------------------
PETROLEUM & COAL PRODUCTS MANUFACTURING--0.7%
- --------------------------------------------------------------------------------
Alon USA Energy 19,860 586
--------------
Total Petroleum & coal products manufacturing 586
--------------
- --------------------------------------------------------------------------------
PLASTICS PRODUCT MANUFACTURING--1.1%
- --------------------------------------------------------------------------------
Jarden* # 27,300 900
--------------
Total Plastics product manufacturing 900
--------------
- --------------------------------------------------------------------------------
PULP, PAPER & PAPERBOARD MILLS--0.5%
- --------------------------------------------------------------------------------
Glatfelter 32,220 437
--------------
Total Pulp, paper & paperboard mills 437
--------------
- --------------------------------------------------------------------------------
SCHEDULED AIR TRANSPORTATION--1.2%
- --------------------------------------------------------------------------------
Alaska Air Group* 25,110 955
--------------
Total Scheduled air transportation 955
--------------
- --------------------------------------------------------------------------------
SCIENTIFIC R&D SERVICES--0.8%
- --------------------------------------------------------------------------------
Techne* 12,600 641
--------------
Total Scientific R&D services 641
--------------
- --------------------------------------------------------------------------------
SECURITIES & COMMODITY CONTRACTS BROKERAGE--1.3%
- --------------------------------------------------------------------------------
GFI Group* 19,750 1,092
--------------
Total Securities & commodity contracts brokerage 1,092
--------------
- --------------------------------------------------------------------------------
SECURITIES & COMMODITY EXCHANGES--1.4%
- --------------------------------------------------------------------------------
International Securities Exchange Holdings 24,170 1,133
--------------
Total Securities & commodity exchanges 1,133
--------------
- --------------------------------------------------------------------------------
SEMICONDUCTOR & ELECTRONIC COMPONENT MANUFACTURING--4.7%
- --------------------------------------------------------------------------------
ATMI* 27,600 802
Benchmark Electronics* 34,210 920
DSP Group* 31,280 715
Value
Shares (000)
- --------------------------------------------------------------------------------
ON Semiconductor* 98,660 $ 580
Silicon Image* 65,450 832
--------------
Total Semiconductor & electronic component
manufacturing 3,849
--------------
- --------------------------------------------------------------------------------
SOFTWARE PUBLISHERS--4.1%
- --------------------------------------------------------------------------------
Blackbaud 35,040 771
Brocade Communications Systems* 128,140 905
THQ* 27,695 808
Transaction Systems Architects* 24,270 833
--------------
Total Software publishers 3,317
--------------
- --------------------------------------------------------------------------------
TELECOMMUNICATIONS--2.2%
- --------------------------------------------------------------------------------
Dobson Communications, Cl A* 87,500 614
IDT, Cl B* 47,280 682
NeuStar, Cl A* 18,450 512
--------------
Total Telecommunications 1,808
--------------
- --------------------------------------------------------------------------------
WASTE COLLECTION--1.8%
- --------------------------------------------------------------------------------
Clean Harbors* 33,070 1,440
--------------
Total Waste collection 1,440
--------------
- --------------------------------------------------------------------------------
WATER TRANSPORTATION SUPPORT ACTIVITIES--0.6%
- --------------------------------------------------------------------------------
Kirby* 16,800 526
--------------
Total Water transportation support activities 526
--------------
- --------------------------------------------------------------------------------
TOTAL COMMON STOCK
(COST $70,120) 77,089
================================================================================
- --------------------------------------------------------------------------------
REGISTERED INVESTMENT COMPANY--1.5%
- --------------------------------------------------------------------------------
iShares Russell 2000 Index Fund 17,060 1,228
- --------------------------------------------------------------------------------
TOTAL REGISTERED INVESTMENT COMPANY
(COST $1,163) 1,228
================================================================================
- --------------------------------------------------------------------------------
SHORT-TERM INVESTMENT HELD AS COLLATERAL FOR LOANED SECURITIES--3.5%
- --------------------------------------------------------------------------------
Boston Global Investment Trust -- Quality
Portfolio (1) 2,839,100 2,839
--------------
- --------------------------------------------------------------------------------
TOTAL SHORT-TERM INVESTMENT HELD AS
COLLATERAL FOR LOANED SECURITIES
(COST $2,839) 2,839
- --------------------------------------------------------------------------------
44 | TURNER FUNDS 2006 ANNUAL REPORT
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
TURNER SMALL CAP EQUITY FUND
Value
Shares (000)
- --------------------------------------------------------------------------------
CASH EQUIVALENT--2.8%
- --------------------------------------------------------------------------------
BlackRock TempCash Fund, Institutional Shares,
5.212%** 2,319,359 $ 2,319
- --------------------------------------------------------------------------------
TOTAL CASH EQUIVALENT
(COST $2,319) 2,319
================================================================================
- --------------------------------------------------------------------------------
TOTAL INVESTMENTS--102.6%
(COST $76,441) $ 83,475
================================================================================
Percentages are based on Net Assets of $81,340.***
* Non-income producing security
** Rate shown is the 7-day effective yield as of September 30, 2006.
*** This number has been rounded to the nearest thousands.
# Security fully or partially on loan at September 30, 2006. The total value
of securities on loan at September 30, 2006, was $2,733,636.
(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 2006 ANNUAL REPORT | 45
FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
TURNER SMALL CAP GROWTH FUND
September 30, 2006
Value
Shares (000)
- --------------------------------------------------------------------------------
COMMON STOCK--98.2%
- --------------------------------------------------------------------------------
ACCOUNTING & BOOKKEEPING SERVICES--0.8%
- --------------------------------------------------------------------------------
Jackson Hewitt Tax Service 66,790 $ 2,004
--------------
Total Accounting & bookkeeping services 2,004
--------------
- --------------------------------------------------------------------------------
ACTIVITIES RELATED TO CREDIT INTERMEDIATION--0.5%
- --------------------------------------------------------------------------------
Heartland Payment Systems # 50,880 1,323
--------------
Total Activities related to credit intermediation 1,323
--------------
- --------------------------------------------------------------------------------
ADVERTISING & RELATED SERVICES--1.2%
- --------------------------------------------------------------------------------
aQuantive* # 129,280 3,054
--------------
Total Advertising & related services 3,054
--------------
- --------------------------------------------------------------------------------
AGRICULTURE, CONSTRUCTION & MINING MACHINERY MANUFACTURING--0.4%
- --------------------------------------------------------------------------------
Bucyrus International, Cl A 26,245 1,113
--------------
Total Agriculture, construction & mining
machinery manufacturing 1,113
--------------
- --------------------------------------------------------------------------------
ARCHITECTURAL & ENGINEERING SERVICES--1.3%
- --------------------------------------------------------------------------------
Infrasource Services* 79,860 1,402
Washington Group International* 28,990 1,706
--------------
Total Architectural & engineering services 3,108
--------------
- --------------------------------------------------------------------------------
ARCHITECTURAL & STRUCTURAL METALS MANUFACTURING--1.3%
- --------------------------------------------------------------------------------
RTI International Metals* 27,850 1,214
Valmont Industries 37,360 1,952
--------------
Total Architectural & structural metals
manufacturing 3,166
--------------
- --------------------------------------------------------------------------------
BASIC CHEMICAL MANUFACTURING--0.4%
- --------------------------------------------------------------------------------
Rockwood Holdings* 47,640 952
--------------
Total Basic chemical manufacturing 952
--------------
- --------------------------------------------------------------------------------
BOILER, TANK & SHIPPING CONTAINER MANUFACTURING--0.1%
- --------------------------------------------------------------------------------
Silgan Holdings 8,460 318
--------------
Total Boiler, tank & shipping container
manufacturing 318
--------------
Value
Shares (000)
- --------------------------------------------------------------------------------
CLOTHING STORES--2.7%
- --------------------------------------------------------------------------------
Casual Male Retail Group* 185,846 $ 2,551
Gymboree* 56,230 2,372
The Children's Place* 29,220 1,871
--------------
Total Clothing stores 6,794
--------------
- --------------------------------------------------------------------------------
COLLEGES, UNIVERSITIES & PROFESSIONAL SCHOOLS--1.1%
- --------------------------------------------------------------------------------
Strayer Education # 24,390 2,639
--------------
Total Colleges, universities & professional
schools 2,639
--------------
- --------------------------------------------------------------------------------
COMMUNICATIONS EQUIPMENT MANUFACTURING--1.9%
- --------------------------------------------------------------------------------
Anadigics* # 190,880 1,367
Nice Systems ADR* 60,160 1,665
Polycom* 68,540 1,681
--------------
Total Communications equipment manufacturing 4,713
--------------
- --------------------------------------------------------------------------------
COMMUNITY CARE FACILITIES FOR THE ELDERLY--0.7%
- --------------------------------------------------------------------------------
Sunrise Senior Living* 60,650 1,812
--------------
Total Community care facilities for the elderly 1,812
--------------
- --------------------------------------------------------------------------------
COMPUTER SYSTEMS DESIGN & RELATED SERVICES--5.3%
- --------------------------------------------------------------------------------
Digital Insight* 44,940 1,318
Digital River* # 62,480 3,194
Foundry Networks* 115,400 1,517
Kanbay International* 62,540 1,286
Micros Systems* # 37,760 1,847
Quality Systems # 43,380 1,683
Riverbed Technology* # 115,930 2,261
--------------
Total Computer systems design & related services 13,106
--------------
- --------------------------------------------------------------------------------
CONVERTED PAPER PRODUCT MANUFACTURING--0.7%
- --------------------------------------------------------------------------------
Cenveo* 86,820 1,634
--------------
Total Converted paper product manufacturing 1,634
--------------
46 | TURNER FUNDS 2006 ANNUAL REPORT
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
TURNER SMALL CAP GROWTH FUND
Value
Shares (000)
- --------------------------------------------------------------------------------
CUT & SEW APPAREL MANUFACTURING--1.9%
- --------------------------------------------------------------------------------
Guess?* # 45,530 $ 2,210
Under Armour, Cl A* # 61,280 2,452
--------------
Total Cut & sew apparel manufacturing 4,662
--------------
- --------------------------------------------------------------------------------
DATA PROCESSING SERVICES--0.4%
- --------------------------------------------------------------------------------
MoneyGram International 33,070 961
--------------
Total Data processing services 961
--------------
- --------------------------------------------------------------------------------
DEEP SEA, COASTAL & GREAT LAKES WATER
TRANSPORTATION--1.9%
- --------------------------------------------------------------------------------
American Commercial Lines* 43,630 2,594
Hornbeck Offshore Services* 66,570 2,230
--------------
Total Deep sea, coastal & great lakes water
transportation 4,824
--------------
- --------------------------------------------------------------------------------
DEPOSITORY CREDIT INTERMEDIATION--2.6%
- --------------------------------------------------------------------------------
East West Bancorp 37,062 1,468
Greater Bay Bancorp # 26,720 754
Hanmi Financial 84,690 1,660
PrivateBancorp # 21,630 989
United Community Banks 49,700 1,493
--------------
Total Depository credit intermediation 6,364
--------------
- --------------------------------------------------------------------------------
ELECTRIC LIGHTING EQUIPMENT MANUFACTURING--1.2%
- --------------------------------------------------------------------------------
Acuity Brands 49,240 2,235
Genlyte Group* 8,650 616
--------------
Total Electric lighting equipment manufacturing 2,851
--------------
- --------------------------------------------------------------------------------
ELECTRONIC INSTRUMENT MANUFACTURING--3.8%
- --------------------------------------------------------------------------------
Coherent* # 34,140 1,183
Hologic* # 49,600 2,158
Itron* # 45,460 2,537
Mentor # 70,090 3,532
--------------
Total Electronic instrument manufacturing 9,410
--------------
Value
Shares (000)
- --------------------------------------------------------------------------------
ELECTRONIC SHOPPING & MAIL-ORDER HOUSES--0.6%
- --------------------------------------------------------------------------------
Nutri/System* # 24,270 $ 1,512
--------------
Total Electronic shopping & mail-order houses 1,512
--------------
- --------------------------------------------------------------------------------
EMPLOYMENT SERVICES--1.6%
- --------------------------------------------------------------------------------
Administaff 75,360 2,540
AMN Healthcare Services* 62,920 1,494
--------------
Total Employment services 4,034
--------------
- --------------------------------------------------------------------------------
FOOTWEAR MANUFACTURING--1.4%
- --------------------------------------------------------------------------------
CROCS* 41,700 1,416
Iconix Brand Group* 132,440 2,132
--------------
Total Footwear manufacturing 3,548
--------------
- --------------------------------------------------------------------------------
FORGING & STAMPING--0.4%
- --------------------------------------------------------------------------------
Ladish* 37,010 1,069
--------------
Total Forging & stamping 1,069
--------------
- --------------------------------------------------------------------------------
FULL-SERVICE RESTAURANTS--1.3%
- --------------------------------------------------------------------------------
McCormick & Schmick's Seafood Restaurants* 77,790 1,749
Red Robin Gourmet Burgers* # 34,020 1,569
--------------
Total Full-service restaurants 3,318
--------------
- --------------------------------------------------------------------------------
GAMBLING INDUSTRIES--0.6%
- --------------------------------------------------------------------------------
Pinnacle Entertainment* 50,220 1,412
--------------
Total Gambling industries 1,412
--------------
- --------------------------------------------------------------------------------
GENERAL FREIGHT TRUCKING--0.4%
- --------------------------------------------------------------------------------
Saia* 30,048 980
--------------
Total General freight trucking 980
--------------
- --------------------------------------------------------------------------------
GENERAL MEDICAL & SURGICAL HOSPITALS--0.9%
- --------------------------------------------------------------------------------
Healthways* 50,030 2,231
--------------
Total General medical & surgical hospitals 2,231
--------------
TURNER FUNDS 2006 ANNUAL REPORT | 47
FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
TURNER SMALL CAP GROWTH FUND
Value
Shares (000)
- --------------------------------------------------------------------------------
GRAIN & OILSEED MILLING--0.4%
- --------------------------------------------------------------------------------
Ralcorp Holdings* 18,210 $ 878
--------------
Total Grain & oilseed milling 878
--------------
- --------------------------------------------------------------------------------
GROCERY & RELATED PRODUCT WHOLESALE--0.7%
- --------------------------------------------------------------------------------
United Natural Foods* 59,670 1,849
--------------
Total Grocery & related product wholesale 1,849
--------------
- --------------------------------------------------------------------------------
GROCERY STORES--0.4%
- --------------------------------------------------------------------------------
Pantry* 18,190 1,025
--------------
Total Grocery stores 1,025
--------------
- --------------------------------------------------------------------------------
INDUSTRIAL MACHINERY MANUFACTURING--3.4%
- --------------------------------------------------------------------------------
Cymer* 66,570 2,923
Tessera Technologies* # 75,050 2,610
Varian Semiconductor Equipment Associates* 82,440 3,026
--------------
Total Industrial machinery manufacturing 8,559
--------------
- --------------------------------------------------------------------------------
INFORMATION SERVICES--5.2%
- --------------------------------------------------------------------------------
24/7 Real Media* 232,420 1,985
Cogent Communications Group* 133,550 1,548
Ctrip.com International ADR # 18,260 821
Equinix* 38,670 2,324
Opsware* # 186,140 1,677
Sohu.com* 90,650 1,996
WebEx Communications* 65,910 2,572
--------------
Total Information services 12,923
--------------
- --------------------------------------------------------------------------------
INSURANCE CARRIERS--1.7%
- --------------------------------------------------------------------------------
Argonaut Group* 60,064 1,864
WellCare Health Plans* 43,080 2,440
--------------
Total Insurance carriers 4,304
--------------
- --------------------------------------------------------------------------------
MANAGEMENT & TECHNICAL CONSULTING SERVICES--0.7%
- --------------------------------------------------------------------------------
HUB Group, Cl A* 72,040 1,641
--------------
Total Management & technical consulting services 1,641
--------------
Value
Shares (000)
- --------------------------------------------------------------------------------
MEDICAL & DIAGNOSTIC LABORATORIES--0.5%
- --------------------------------------------------------------------------------
Icon ADR* 18,070 $ 1,275
--------------
Total Medical & diagnostic laboratories 1,275
--------------
- --------------------------------------------------------------------------------
MEDICAL EQUIPMENT & SUPPLIES MANUFACTURING--3.0%
- --------------------------------------------------------------------------------
Haemonetics* 56,150 2,628
Kyphon* 31,290 1,171
Ventana Medical Systems* # 21,110 862
West Pharmaceutical Services 72,860 2,861
--------------
Total Medical equipment & supplies manufacturing 7,522
--------------
- --------------------------------------------------------------------------------
METAL ORE MINING--0.7%
- --------------------------------------------------------------------------------
PAN American Silver* 87,920 1,718
--------------
Total Metal ore mining 1,718
--------------
- --------------------------------------------------------------------------------
MINING SUPPORT ACTIVITIES--1.4%
- --------------------------------------------------------------------------------
Basic Energy Services* 70,330 1,716
Core Laboratories* 27,090 1,728
--------------
Total Mining support activities 3,444
--------------
- --------------------------------------------------------------------------------
MISCELLANEOUS NONDURABLE GOODS WHOLESALE--0.7%
- --------------------------------------------------------------------------------
Central Garden and Pet* 36,900 1,781
--------------
Total Miscellaneous nondurable goods wholesale 1,781
--------------
- --------------------------------------------------------------------------------
NATURAL GAS TRANSMISSION & DISTRIBUTION--0.6%
- --------------------------------------------------------------------------------
Crosstex Energy 16,370 1,466
--------------
Total Natural gas transmission & distribution 1,466
--------------
- --------------------------------------------------------------------------------
OFFICE FURNITURE AND FIXTURES MANUFACTURING--0.2%
- --------------------------------------------------------------------------------
Knoll 19,270 389
--------------
Total Office furniture and fixtures manufacturing 389
--------------
48 | TURNER FUNDS 2006 ANNUAL REPORT
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
TURNER SMALL CAP GROWTH FUND
Value
Shares (000)
- --------------------------------------------------------------------------------
OIL & GAS EXTRACTION--2.5%
- --------------------------------------------------------------------------------
Arena Resources* 36,930 $ 1,186
Berry Petroleum, Cl A 44,680 1,258
Parallel Petroleum* 121,290 2,433
Penn Virginia 21,030 1,334
--------------
Total Oil & gas extraction 6,211
--------------
- --------------------------------------------------------------------------------
OTHER AMUSEMENT & RECREATION INDUSTRIES--1.1%
- --------------------------------------------------------------------------------
Life Time Fitness* # 59,050 2,734
--------------
Total Other amusement & recreation industries 2,734
--------------
- --------------------------------------------------------------------------------
OTHER ELECTRICAL EQUIPMENT & COMPONENT
MANUFACTURING--0.9%
- --------------------------------------------------------------------------------
General Cable* 57,610 2,201
--------------
Total Other electrical equipment & component
manufacturing 2,201
--------------
- --------------------------------------------------------------------------------
OTHER FOOD MANUFACTURING--0.7%
- --------------------------------------------------------------------------------
Hercules* 114,480 1,805
--------------
Total Other food manufacturing 1,805
--------------
- --------------------------------------------------------------------------------
OTHER GENERAL PURPOSE MACHINERY MANUFACTURING--1.7%
- --------------------------------------------------------------------------------
Dril-Quip* 29,340 1,986
Gardner Denver* 64,980 2,149
--------------
Total Other general purpose machinery
manufacturing 4,135
--------------
- --------------------------------------------------------------------------------
OTHER HEAVY CONSTRUCTION--0.5%
- --------------------------------------------------------------------------------
Granite Construction # 21,590 1,152
--------------
Total Other heavy construction 1,152
--------------
- --------------------------------------------------------------------------------
OTHER INVESTMENT POOLS & FUNDS--3.0%
- --------------------------------------------------------------------------------
Corporate Office Properties Trust 27,210 1,218
Digital Realty Trust # 61,420 1,924
Highland Hospitality 93,700 1,343
Home Properties # 21,610 1,235
Sunstone Hotel Investors 61,930 1,840
--------------
Total Other investment pools & funds 7,560
--------------
Value
Shares (000)
- --------------------------------------------------------------------------------
OTHER MISCELLANEOUS MANUFACTURING--1.1%
- --------------------------------------------------------------------------------
WMS Industries* 94,970 $ 2,774
--------------
Total Other miscellaneous manufacturing 2,774
--------------
- --------------------------------------------------------------------------------
OTHER TRANSPORTATION EQUIPMENT MANUFACTURING--1.1%
- --------------------------------------------------------------------------------
Comtech Group* 176,060 2,636
--------------
Total Other transportation equipment
manufacturing 2,636
--------------
- --------------------------------------------------------------------------------
OUTPATIENT CARE CENTERS--1.8%
- --------------------------------------------------------------------------------
Psychiatric Solutions* # 131,050 4,468
--------------
Total Outpatient care centers 4,468
--------------
- --------------------------------------------------------------------------------
PAINT, COATING & ADHESIVE MANUFACTURING--0.5%
- --------------------------------------------------------------------------------
H.B. Fuller 47,690 1,118
--------------
Total Paint, coating & adhesive manufacturing 1,118
--------------
- --------------------------------------------------------------------------------
PAPER & PAPER PRODUCT WHOLESALE--0.9%
- --------------------------------------------------------------------------------
VistaPrint* 88,090 2,285
--------------
Total Paper & paper product wholesale 2,285
--------------
- --------------------------------------------------------------------------------
PHARMACEUTICAL & MEDICINE MANUFACTURING--5.8%
- --------------------------------------------------------------------------------
Adams Respiratory Therapeutics* 43,960 1,608
Alexion Pharmaceuticals* 50,180 1,705
Array Biopharma* 112,390 958
Conor Medsystems* # 34,040 802
Cubist Pharmaceuticals* 48,350 1,051
KV Pharmaceutical, Cl A* 80,110 1,899
Myogen* # 83,190 2,918
New River Pharmaceuticals* # 70,916 1,825
Nuvelo* 94,830 1,730
--------------
Total Pharmaceutical & medicine manufacturing 14,496
--------------
- --------------------------------------------------------------------------------
SCHEDULED AIR TRANSPORTATION--0.7%
- --------------------------------------------------------------------------------
Skywest 71,420 1,751
--------------
Total Scheduled air transportation 1,751
--------------
TURNER FUNDS 2006 ANNUAL REPORT | 49
FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
TURNER SMALL CAP GROWTH FUND
Value
Shares (000)
- --------------------------------------------------------------------------------
SCIENTIFIC R&D SERVICES--2.0%
- --------------------------------------------------------------------------------
Illumina* 74,330 $ 2,456
Parexel International* 75,180 2,488
--------------
Total Scientific R&D services 4,944
--------------
- --------------------------------------------------------------------------------
SECURITIES & COMMODITY CONTRACTS BROKERAGE--2.5%
- --------------------------------------------------------------------------------
Greenhill # 30,940 2,074
Investment Technology Group* 40,770 1,824
optionsXpress Holdings 43,700 1,218
Penson Worldwide* 65,660 1,179
--------------
Total Securities & commodity contracts brokerage 6,295
--------------
- --------------------------------------------------------------------------------
SEMICONDUCTOR & ELECTRONIC COMPONENT MANUFACTURING--4.7%
- --------------------------------------------------------------------------------
Benchmark Electronics* 98,740 2,654
Diodes* 37,020 1,598
Emcore* 162,966 965
Energy Conversion Devices* 36,810 1,364
Finisar* 465,930 1,691
Formfactor* 56,820 2,394
Silicon Laboratories* 32,860 1,019
--------------
Total Semiconductor & electronic component
manufacturing 11,685
--------------
- --------------------------------------------------------------------------------
SOFTWARE PUBLISHERS--4.0%
- --------------------------------------------------------------------------------
Advent Software* 30,290 1,097
Altiris* 54,480 1,149
Blackbaud 67,470 1,484
Blackboard* # 51,420 1,362
THQ* 67,360 1,965
TIBCO Software* 203,000 1,823
Transaction Systems Architects* 27,330 938
--------------
Total Software publishers 9,818
--------------
- --------------------------------------------------------------------------------
SPECIALTY FOOD STORES--0.5%
- --------------------------------------------------------------------------------
Wild Oats Markets* # 74,360 1,202
--------------
Total Specialty food stores 1,202
--------------
Value
Shares (000)
- --------------------------------------------------------------------------------
SPRING & WIRE PRODUCT MANUFACTURING--0.5%
- --------------------------------------------------------------------------------
Barnes Group # 70,450 $ 1,237
--------------
Total Spring & wire product manufacturing 1,237
--------------
- --------------------------------------------------------------------------------
STEEL PRODUCT MANUFACTURING FROM PURCHASED STEEL--0.5%
- --------------------------------------------------------------------------------
Oregon Steel Mills* 25,360 1,239
--------------
Total Steel product manufacturing from purchased
steel 1,239
--------------
- --------------------------------------------------------------------------------
TELECOMMUNICATIONS--3.1%
- --------------------------------------------------------------------------------
Brightpoint* 98,900 1,406
SBA Communications, Cl A* 53,910 1,312
Sonus Networks* 313,924 1,651
Time Warner Telecom, Cl A* 169,420 3,221
--------------
Total Telecommunications 7,590
--------------
- --------------------------------------------------------------------------------
TRAVEL ARRANGEMENT & RESERVATION SERVICES--0.6%
- --------------------------------------------------------------------------------
Priceline.com* # 41,050 1,510
--------------
Total Travel arrangement & reservation services 1,510
--------------
- --------------------------------------------------------------------------------
WASTE COLLECTION--0.5%
- --------------------------------------------------------------------------------
Waste Connections* 34,800 1,319
--------------
Total Waste collection 1,319
--------------
- --------------------------------------------------------------------------------
TOTAL COMMON STOCK (COST $219,182) 243,851
================================================================================
- --------------------------------------------------------------------------------
SHORT-TERM INVESTMENT HELD AS COLLATERAL FOR LOANED SECURITIES--12.2%
- --------------------------------------------------------------------------------
Boston Global Investment Trust--Quality
Portfolio (1) 30,338,080 30,338
- --------------------------------------------------------------------------------
TOTAL SHORT-TERM INVESTMENT HELD AS COLLATERAL FOR LOANED SECURITIES
(COST $30,338) 30,338
================================================================================
50 | TURNER FUNDS 2006 ANNUAL REPORT
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
TURNER SMALL CAP GROWTH FUND
Value
Shares (000)
- --------------------------------------------------------------------------------
CASH EQUIVALENT--4.1%
- --------------------------------------------------------------------------------
BlackRock TempCash Fund, Institutional
Shares, 5.212%** 10,189,095 $ 10,189
- --------------------------------------------------------------------------------
TOTAL CASH EQUIVALENT
(COST $10,189) 10,189
================================================================================
- --------------------------------------------------------------------------------
TOTAL INVESTMENTS--114.5%
(COST $259,709) $ 284,378
================================================================================
Percentages are based on Net Assets of $248,271.***
* Non-income producing security
** Rate shown is the 7-day effective yield as of September 30, 2006.
*** This number has been rounded to the nearest thousands.
# Security fully or partially on loan at September 30, 2006. The total value
of securities on loan at September 30, 2006, was $29,193,821.
(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 2006 ANNUAL REPORT | 51
FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
STATEMENTS OF ASSETS AND LIABILITIES (000)
September 30, 2006
Turner Turner
Concentrated Core Turner
Growth Growth Emerging
Fund Fund Growth Fund
- -------------------------------------------------------------------------------------------------
Assets:
- -------------------------------------------------------------------------------------------------
Investment securities, at cost $ 40,663 $ 90,342 $ 733,198
=================================================================================================
Investment securities, at value $ 46,001* $ 98,776 $ 847,729*
Cash -- -- --
Receivable for capital shares sold 2 46 1,021
Receivable for investment securities sold -- 1,097 1,878
Receivable from investment adviser -- -- --
Receivable for dividend and interest income 19 76 431
- -------------------------------------------------------------------------------------------------
Total assets 46,022 99,995 851,059
=================================================================================================
Liabilities:
Obligation to return securities lending
collateral 7,798 -- 283,591
Payable due to investment adviser 13 17 479
Payable for capital shares redeemed 9 7 543
Payable due to administrator 5 5 69
Payable for investment securities purchased -- 4,568 924
Payable due to shareholder servicing -- 4 --
Other accrued expenses 17 41 226
- -------------------------------------------------------------------------------------------------
Total liabilities 7,842 4,642 285,832
- -------------------------------------------------------------------------------------------------
Net assets $ 38,180 $ 95,353 $ 565,227
=================================================================================================
*Includes market value of securities on loan $ 7,410 $ -- $ 269,788
=================================================================================================
Net assets consist of:
Portfolio capital of Class I Shares $ 189,338 $ 66,191 $ 401,593
Portfolio capital of Class II Shares -- 23,060 --
Undistributed net investment income -- 380 --
Accumulated net realized gain (loss) on
investments (156,496) (2,712) 49,103
Net unrealized appreciation on investments 5,338 8,434 114,531
- -------------------------------------------------------------------------------------------------
Net assets $ 38,180 $ 95,353 $ 565,227
=================================================================================================
Outstanding shares of beneficial interest(1)
Class I Shares(2) 5,025,030 6,174,164 10,099,351
- -------------------------------------------------------------------------------------------------
Outstanding shares of beneficial interest(1)
Class II Shares(2) n/a 2,017,400 n/a
- -------------------------------------------------------------------------------------------------
Net Assets -- Class I Shares(2) $ 38,179,599 $ 71,934,748 $ 565,226,936
- -------------------------------------------------------------------------------------------------
Net Assets -- Class II Shares(2) n/a $ 23,417,779 n/a
- -------------------------------------------------------------------------------------------------
Net asset value, offering and redemption price
per share -- Class I Shares $ 7.60 $ 11.65 $ 55.97
- -------------------------------------------------------------------------------------------------
Net asset value, offering and redemption price
per share -- Class II Shares n/a $ 11.61 n/a
=================================================================================================
(1) Unlimited authorization -- par value $0.00001.
(2) Shares and Net Assets have not been rounded.
The accompanying notes are an integral part of the financial statements.
52 | TURNER FUNDS 2006 ANNUAL REPORT
- --------------------------------------------------------------------------------
Turner Turner Turner Turner
Large Cap Large Cap Midcap New Enterprise
Growth Fund Value Fund Growth Fund Fund
- -------------------------------------------------------------------------------------------------------------------
Assets:
- -------------------------------------------------------------------------------------------------------------------
Investment securities, at cost $ 17,168 $ 526 $ 1,094,571 $ 25,341
===================================================================================================================
Investment securities, at value $ 19,543 $ 581 $ 1,259,251* $ 29,510*
Cash -- -- -- 1
Receivable for capital shares sold 15 2 2,717 51
Receivable for investment securities sold 336 -- 29,740 1,861
Receivable from investment adviser -- 3 -- 5
Receivable for dividend and interest income 15 1 456 4
- -------------------------------------------------------------------------------------------------------------------
Total assets 19,909 587 1,292,164 31,432
===================================================================================================================
Liabilities:
Obligation to return securities lending
collateral -- -- 154,567 5,651
Payable due to investment adviser 21 -- 681 --
Payable for capital shares redeemed 7 -- 1,416 80
Payable due to administrator 2 -- 134 2
Payable for investment securities purchased 352 -- 19,302 1,627
Payable due to shareholder servicing -- -- -- --
Other accrued expenses 17 7 419 32
- -------------------------------------------------------------------------------------------------------------------
Total liabilities 399 7 176,519 7,392
- -------------------------------------------------------------------------------------------------------------------
Net assets $ 19,510 $ 580 $ 1,115,645 $ 24,040
===================================================================================================================
*Includes market value of securities on loan $ -- $ -- $ 149,114 $ 5,397
===================================================================================================================
Net assets consist of:
Portfolio capital of Class I Shares $ 33,382 $ 508 $ 1,367,153 $ 33,472
Portfolio capital of Class II Shares -- -- 2,065 --
Undistributed net investment income 54 5 -- --
Accumulated net realized gain (loss) on
investments (16,301) 12 (418,253) (13,601)
Net unrealized appreciation on investments 2,375 55 164,680 4,169
- -------------------------------------------------------------------------------------------------------------------
Net assets $ 19,510 $ 580 $ 1,115,645 $ 24,040
===================================================================================================================
Outstanding shares of beneficial interest(1)
Class I Shares(2) 3,496,139 50,728 40,292,735 3,841,376
- -------------------------------------------------------------------------------------------------------------------
Outstanding shares of beneficial interest(1)
Class II Shares(2) n/a n/a 90,643 n/a
- -------------------------------------------------------------------------------------------------------------------
Net Assets -- Class I Shares(2) $ 19,510,224 $ 580,090 $ 1,113,200,826 $ 24,040,394
- -------------------------------------------------------------------------------------------------------------------
Net Assets -- Class II Shares(2) n/a n/a $ 2,444,073 n/a
- -------------------------------------------------------------------------------------------------------------------
Net asset value, offering and redemption price
per share -- Class I Shares $ 5.58 $ 11.44 $ 27.63 $ 6.26
- -------------------------------------------------------------------------------------------------------------------
Net asset value, offering and redemption price
per share -- Class II Shares n/a n/a $ 26.96 n/a
===================================================================================================================
Turner Turner
Small Cap Small Cap
Equity Fund Growth Fund
- -----------------------------------------------------------------------------------
Assets:
- -----------------------------------------------------------------------------------
Investment securities, at cost $ 76,441 $ 259,709
===================================================================================
Investment securities, at value $ 83,475* $ 284,378*
Cash 3 --
Receivable for capital shares sold 182 718
Receivable for investment securities sold 1,991 7,645
Receivable from investment adviser -- --
Receivable for dividend and interest income 83 148
- -----------------------------------------------------------------------------------
Total assets 85,734 292,889
===================================================================================
Liabilities:
Obligation to return securities lending
collateral 2,839 30,338
Payable due to investment adviser 28 168
Payable for capital shares redeemed -- 290
Payable due to administrator 10 30
Payable for investment securities purchased 1,473 13,692
Payable due to shareholder servicing -- --
Other accrued expenses 44 100
- -----------------------------------------------------------------------------------
Total liabilities 4,394 44,618
- -----------------------------------------------------------------------------------
Net assets $ 81,340 $ 248,271
===================================================================================
*Includes market value of securities on loan $ 2,734 $ 29,194
===================================================================================
Net assets consist of:
Portfolio capital of Class I Shares $ -- $ 316,117
Portfolio capital of Class II Shares 69,402 --
Undistributed net investment income -- 10
Accumulated net realized gain (loss) on
investments 4,904 (92,525)
Net unrealized appreciation on investments 7,034 24,669
- -----------------------------------------------------------------------------------
Net assets $ 81,340 $ 248,271
===================================================================================
Outstanding shares of beneficial interest(1)
Class I Shares(2) n/a 9,485,172
- -----------------------------------------------------------------------------------
Outstanding shares of beneficial interest(1)
Class II Shares(2) 4,801,028 n/a
- -----------------------------------------------------------------------------------
Net Assets -- Class I Shares(2) n/a $ 248,271,467
- -----------------------------------------------------------------------------------
Net Assets -- Class II Shares(2) $ 81,339,814 n/a
- -----------------------------------------------------------------------------------
Net asset value, offering and redemption price
per share -- Class I Shares n/a $ 26.17
- -----------------------------------------------------------------------------------
Net asset value, offering and redemption price
per share -- Class II Shares $ 16.94 n/a
===================================================================================
TURNER FUNDS 2006 ANNUAL REPORT | 53
FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
STATEMENTS OF OPERATIONS (000)
Turner Turner
Concentrated Core Turner
Growth Growth Emerging
Fund Fund Growth Fund
------------------------------------------
year ended year ended year ended
9/30/06 9/30/06 9/30/06
- -----------------------------------------------------------------------------------------
Investment Income:
Dividend $ 190 $ 888 $ 4,157
Securities lending 21 8 544
Foreign taxes withheld (2) (2) (4)
- -----------------------------------------------------------------------------------------
Total Investment Income 209 894 4,697
- -----------------------------------------------------------------------------------------
Expenses:
Investment advisory fees 485 502 5,647
Administrator fees 53 99 832
Chief Compliance Officer fees 4 5 56
Distribution fees(1) -- -- --
Shareholder service fees(1) -- 16 --
Transfer agent fees 64 94 1,052
Custodian fees 15 54 133
Professional fees 8 17 123
Printing fees 8 18 121
Registration fees 5 7 70
Trustees' fees 3 4 40
Insurance and other fees 4 5 60
- -----------------------------------------------------------------------------------------
Total expenses 649 821 8,134
Less:
Investment advisory fee waiver (73) (344) (228)
Administrator fee waiver - Class I -- (61) --
Reimbursements of other operating
expenses -- -- --
Distribution fee waiver -- -- --
- -----------------------------------------------------------------------------------------
Net expenses 576 416 7,906
- -----------------------------------------------------------------------------------------
Net investment income (loss) (367) 478 (3,209)
- -----------------------------------------------------------------------------------------
Net realized gain (loss) from securities
sold 103 (1,095) 50,190
Net unrealized appreciation
(depreciation) of investment securities 1,947 4,497 (22,616)
- -----------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) on
investments 2,050 3,402 27,574
- -----------------------------------------------------------------------------------------
Net increase (decrease) in net assets
resulting from operations $ 1,683 $ 3,880 $ 24,365
=========================================================================================
(1) Attributable to Class II Shares only.
(2) Commencement of operations.
Amounts designated as "--" are either $0 or have been rounded to $0.
The accompanying notes are an integral part of the financial statements.
54 | TURNER FUNDS 2006 ANNUAL REPORT
- --------------------------------------------------------------------------------
Turner Turner Turner Turner
Large Cap Large Cap Midcap New Enterprise
Growth Fund Value Fund Growth Fund Fund
---------------------------------------------------------------
year ended 10/10/05(2) year ended year ended
9/30/06 thru 9/30/06 9/30/06 9/30/06
- --------------------------------------------------------------------------------------------------------------
Investment Income:
Dividend $ 312 $ 11 $ 9,446 $ 101
Securities lending 2 -- 198 6
Foreign taxes withheld (4) -- (2) --
- --------------------------------------------------------------------------------------------------------------
Total Investment Income 310 11 9,642 107
- --------------------------------------------------------------------------------------------------------------
Expenses:
Investment advisory fees 184 3 8,229 246
Administrator fees 45 1 1,617 27
Chief Compliance Officer fees 5 -- 114 2
Distribution fees(1) -- -- 6 --
Shareholder service fees(1) -- -- 6 --
Transfer agent fees 74 26 2,001 55
Custodian fees 23 10 148 30
Professional fees 5 -- 236 4
Printing fees 4 -- 232 4
Registration fees 7 -- 141 2
Trustees' fees 3 -- 78 1
Insurance and other fees 4 1 120 1
- --------------------------------------------------------------------------------------------------------------
Total expenses 354 41 12,928 372
Less:
Investment advisory fee waiver (124) (3) -- (81)
Administrator fee waiver - Class I -- -- -- --
Reimbursements of other operating
expenses -- (34) -- --
Distribution fee waiver -- -- -- --
- --------------------------------------------------------------------------------------------------------------
Net expenses 230 4 12,928 291
- --------------------------------------------------------------------------------------------------------------
Net investment income (loss) 80 7 (3,286) (184)
- --------------------------------------------------------------------------------------------------------------
Net realized gain (loss) from securities
sold 7,523 12 76,426 (1,292)
Net unrealized appreciation
(depreciation) of investment securities (5,052) 55 (35,031) 560
- --------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) on
investments 2,471 67 41,395 (732)
- --------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
resulting from operations $ 2,551 $ 74 $ 38,109 $ (916)
==============================================================================================================
Turner Turner
Small Cap Small Cap
Equity Fund Growth Fund
---------------------------
year ended year ended
9/30/06 9/30/06
- --------------------------------------------------------------------------------------
Investment Income:
Dividend $ 619 $ 971
Securities lending 21 237
Foreign taxes withheld -- --
- --------------------------------------------------------------------------------------
Total Investment Income 640 1,208
- --------------------------------------------------------------------------------------
Expenses:
Investment advisory fees 722 2,641
Administrator fees 112 389
Chief Compliance Officer fees 7 29
Distribution fees(1) 190 --
Shareholder service fees(1) -- --
Transfer agent fees 152 414
Custodian fees 50 100
Professional fees 17 55
Printing fees 16 51
Registration fees 10 35
Trustees' fees 5 19
Insurance and other fees 9 30
- --------------------------------------------------------------------------------------
Total expenses 1,290 3,763
Less:
Investment advisory fee waiver (188) (462)
Administrator fee waiver - Class I -- --
Reimbursements of other operating
expenses -- --
Distribution fee waiver (162) --
- --------------------------------------------------------------------------------------
Net expenses 940 3,301
- --------------------------------------------------------------------------------------
Net investment income (loss) (300) (2,093)
- --------------------------------------------------------------------------------------
Net realized gain (loss) from securities sold 5,261 39,786
Net unrealized appreciation
(depreciation) of investment securities (1,840) (21,999)
- --------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) on investments 3,421 17,787
- --------------------------------------------------------------------------------------
Net increase (decrease) in net assets
resulting from operations $ 3,121 $ 15,694
======================================================================================
TURNER FUNDS 2006 ANNUAL REPORT | 55
FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS (000)
Turner Concentrated
Growth Fund
------------------------
year ended year ended
9/30/06 9/30/05
- ---------------------------------------------------------------------------------------------------
Investment activities:
Net investment income (loss) $ (367) $ (195)
Net realized gain (loss) from securities sold 103 4,356
Net unrealized appreciation (depreciation) of investments 1,947 2,922
- ---------------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations 1,683 7,083
- ---------------------------------------------------------------------------------------------------
Dividends and distributions to shareholders:
Net investment income
Class I Shares -- --
Class II Shares -- --
Realized capital gains
Class I Shares -- --
Class II Shares -- --
- ---------------------------------------------------------------------------------------------------
Total dividends and distributions -- --
- ---------------------------------------------------------------------------------------------------
Capital share transactions:
Class I Shares
Proceeds from shares issued 17,480 7,012
Proceeds from shares issued in lieu of cash distributions -- --
Cost of shares redeemed (11,762) (22,425)
- ---------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets from Class I Shares transactions 5,718 (15,413)
- ---------------------------------------------------------------------------------------------------
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 5,718 (15,413)
- ---------------------------------------------------------------------------------------------------
Total increase (decrease) in net assets 7,401 (8,330)
- ---------------------------------------------------------------------------------------------------
Net assets:
Beginning of period 30,779 39,109
- ---------------------------------------------------------------------------------------------------
End of period $ 38,180 $ 30,779
===================================================================================================
Undistributed net investment income $ -- $ --
===================================================================================================
Shares issued and redeemed:
Class I Shares
Issued 2,225 1,085
Issued in lieu of cash distributions -- --
Redeemed (1,534) (3,468)
- ---------------------------------------------------------------------------------------------------
Net increase (decrease) in Class I Shares 691 (2,383)
- ---------------------------------------------------------------------------------------------------
Class II Shares
Issued -- --
Issued in lieu of cash distributions -- --
Redeemed -- --
- ---------------------------------------------------------------------------------------------------
Net increase in Class II Shares -- --
- ---------------------------------------------------------------------------------------------------
Net increase (decrease) in share transactions 691 (2,383)
===================================================================================================
(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.
(2) Commencement of operations.
Amounts designated as "--" are either $0 or have been rounded to $0
The accompanying notes are an integral part of the financial statements.
56 | TURNER FUNDS 2006 ANNUAL REPORT
- --------------------------------------------------------------------------------
Turner Core Turner Emerging
Growth Fund (1) Growth Fund
-----------------------------------------------------
year ended year ended year ended year ended
9/30/06 9/30/05 9/30/06 9/30/05
- -------------------------------------------------------------------------------------------------------------------------------
Investment activities:
Net investment income (loss) $ 478 $ 65 $ (3,209) $ (3,897)
Net realized gain (loss) from securities sold (1,095) 395 50,190 42,124
Net unrealized appreciation (depreciation) of investments 4,497 3,222 (22,616) 66,602
- -------------------------------------------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations 3,880 3,682 24,365 104,829
- -------------------------------------------------------------------------------------------------------------------------------
Dividends and distributions to shareholders:
Net investment income
Class I Shares (162) -- -- --
Class II Shares (1) -- -- --
Realized capital gains
Class I Shares -- -- (29,515) (48,588)
Class II Shares -- -- -- --
- -------------------------------------------------------------------------------------------------------------------------------
Total dividends and distributions (163) -- (29,515) (48,588)
- -------------------------------------------------------------------------------------------------------------------------------
Capital share transactions:
Class I Shares
Proceeds from shares issued 40,388 33,622 147,890 125,396
Proceeds from shares issued in lieu of cash distributions 109 -- 28,983 47,598
Cost of shares redeemed (12,778) (1,527) (108,604) (93,819)
- -------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets from Class I Shares transactions 27,719 32,095 68,269 79,175
- -------------------------------------------------------------------------------------------------------------------------------
Class II Shares
Proceeds from shares issued 24,928 1 -- --
Proceeds from shares issued in lieu of cash distributions 1 -- -- --
Cost of shares redeemed (1,870) -- -- --
- -------------------------------------------------------------------------------------------------------------------------------
Net increase in net assets from Class II Shares transactions 23,059 1 -- --
- -------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets from capital share transactions 50,778 32,096 68,269 79,175
- -------------------------------------------------------------------------------------------------------------------------------
Total increase (decrease) in net assets 54,495 35,778 63,119 135,416
- -------------------------------------------------------------------------------------------------------------------------------
Net assets:
Beginning of period 40,858 5,080 502,108 366,692
- -------------------------------------------------------------------------------------------------------------------------------
End of period $ 95,353 $ 40,858 $ 565,227 $ 502,108
===============================================================================================================================
Undistributed net investment income $ 380 $ 65 $ -- $ --
===============================================================================================================================
Shares issued and redeemed:
Class I Shares
Issued 3,530 5,458 2,589 2,435
Issued in lieu of cash distributions 10 -- 533 983
Redeemed (1,103) (2,296) (1,916) (1,857)
- -------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in Class I Shares 2,437 3,162 1,206 1,561
- -------------------------------------------------------------------------------------------------------------------------------
Class II Shares
Issued 2,182 -- -- --
Issued in lieu of cash distributions -- -- -- --
Redeemed (165) -- -- --
- -------------------------------------------------------------------------------------------------------------------------------
Net increase in Class II Shares 2,017 -- -- --
- -------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in share transactions 4,454 3,162 1,206 1,561
===============================================================================================================================
Turner Large Cap Turner Large Cap
Growth Fund Value Fund
--------------------------------------------
year ended year ended 10/10/05 (2) thru
9/30/06 9/30/05 9/30/06
- ----------------------------------------------------------------------------------------------------------------------
Investment activities:
Net investment income (loss) $ 80 $ 94 $ 7
Net realized gain (loss) from securities sold 7,523 7,141 12
Net unrealized appreciation (depreciation) of investments (5,052) (384) 55
- ----------------------------------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations 2,551 6,851 74
- ----------------------------------------------------------------------------------------------------------------------
Dividends and distributions to shareholders:
Net investment income
Class I Shares (109) (53) (2)
Class II Shares -- -- --
Realized capital gains
Class I Shares -- -- --
Class II Shares -- -- --
- ----------------------------------------------------------------------------------------------------------------------
Total dividends and distributions (109) (53) (2)
- ----------------------------------------------------------------------------------------------------------------------
Capital share transactions:
Class I Shares
Proceeds from shares issued 21,806 24,448 506
Proceeds from shares issued in lieu of cash distributions 106 53 2
Cost of shares redeemed (47,869) (56,265) --
- ----------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets from Class I Shares transactions (25,957) (31,764) 508
- ----------------------------------------------------------------------------------------------------------------------
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 (25,957) (31,764) 508
- ----------------------------------------------------------------------------------------------------------------------
Total increase (decrease) in net assets (23,515) (24,966) 580
- ----------------------------------------------------------------------------------------------------------------------
Net assets:
Beginning of period 43,025 67,991 --
- ----------------------------------------------------------------------------------------------------------------------
End of period $ 19,510 $ 43,025 $ 580
======================================================================================================================
Undistributed net investment income $ 54 $ 83 $ 5
======================================================================================================================
Shares issued and redeemed:
Class I Shares
Issued 3,911 4,787 51
Issued in lieu of cash distributions 19 10 --
Redeemed (8,386) (10,913) --
- ----------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in Class I Shares (4,456) (6,116) 51
- ----------------------------------------------------------------------------------------------------------------------
Class II Shares
Issued -- -- --
Issued in lieu of cash distributions -- -- --
Redeemed -- -- --
- ----------------------------------------------------------------------------------------------------------------------
Net increase in Class II Shares -- -- --
- ----------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in share transactions (4,456) (6,116) 51
======================================================================================================================
TURNER FUNDS 2006 ANNUAL REPORT | 57
FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS (000)
Turner Midcap
Growth Fund
--------------------------
year ended year ended
9/30/06 9/30/05
- ----------------------------------------------------------------------------------------------------
Investment activities:
Net investment loss $ (3,286) $ (7,313)
Net realized gain (loss) from securities sold 76,426 118,724
Net unrealized appreciation (depreciation) of investments (35,031) 100,398
- ----------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from operations 38,109 211,809
- ----------------------------------------------------------------------------------------------------
Capital share transactions:
Class I Shares
Proceeds from shares issued 405,746 259,069
Proceeds from shares issued upon reorganization of the
Technology Fund into the New Enterprise Fund -- --
Proceeds from shares issued in lieu of cash distributions -- --
Cost of shares redeemed (286,382) (372,696)
- ----------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets from Class I Shares transactions 119,364 (113,627)
- ----------------------------------------------------------------------------------------------------
Class II Shares
Proceeds from shares issued 1,595 446
Proceeds from shares issued in lieu of cash distributions -- --
Cost of shares redeemed (986) (359)
- ----------------------------------------------------------------------------------------------------
Net increase in net assets from Class II Shares transactions 609 87
- ----------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets from capital share transactions 119,973 (113,540)
- ----------------------------------------------------------------------------------------------------
Total increase (decrease) in net assets 158,082 98,269
- ----------------------------------------------------------------------------------------------------
Net assets:
Beginning of year 957,563 859,294
- ----------------------------------------------------------------------------------------------------
End of year $ 1,115,645 $ 957,563
====================================================================================================
Undistributed net investment income (accumulated net investment loss) $ -- $ (8)
====================================================================================================
Shares issued and redeemed:
Class I Shares
Issued 14,224 10,915
Issued upon reorganization of the Technology Fund into the New
Enterprise Fund -- --
Issued in lieu of cash distributions -- --
Redeemed (10,145) (15,573)
- ----------------------------------------------------------------------------------------------------
Net increase (decrease) in Class I Shares 4,079 (4,658)
- ----------------------------------------------------------------------------------------------------
Class II Shares
Issued 57 19
Issued in lieu of cash distributions -- --
Redeemed (37) (15)
- ----------------------------------------------------------------------------------------------------
Net increase in Class II Shares 20 4
- ----------------------------------------------------------------------------------------------------
Net increase (decrease) in share transactions 4,099 (4,654)
====================================================================================================
Amounts designated as "--" are either $0 or have been rounded to $0
The accompanying notes are an integral part of the financial statements.
58 | TURNER FUNDS 2006 ANNUAL REPORT
- --------------------------------------------------------------------------------
Turner New Turner Small Cap
Enterprise Fund Equity Fund
-----------------------------------------------------
year ended year ended year ended year ended
9/30/06 9/30/05 9/30/06 9/30/05
- -------------------------------------------------------------------------------------------------------------------------------
Investment activities:
Net investment loss $ (184) $ (128) $ (300) $ (359)
Net realized gain (loss) from securities sold (1,292) 1,971 5,261 130
Net unrealized appreciation (depreciation) of investments 560 885 (1,840) 6,763
- -------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from operations (916) 2,728 3,121 6,534
- -------------------------------------------------------------------------------------------------------------------------------
Capital share transactions:
Class I Shares
Proceeds from shares issued 24,113 7,793 -- --
Proceeds from shares issued upon reorganization of the Technology
Fund into the New Enterprise Fund 10,445 -- -- --
Proceeds from shares issued in lieu of cash distributions -- -- -- --
Cost of shares redeemed (18,746) (12,182) -- --
- -------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets from Class I Shares transactions 15,812 (4,389) -- --
- -------------------------------------------------------------------------------------------------------------------------------
Class II Shares
Proceeds from shares issued -- -- 21,402 36,702
Proceeds from shares issued in lieu of cash distributions -- -- -- --
Cost of shares redeemed -- -- (10,896) (4,694)
- -------------------------------------------------------------------------------------------------------------------------------
Net increase in net assets from Class II Shares transactions -- -- 10,506 32,008
- -------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets from capital share transactions 15,812 (4,389) 10,506 32,008
- -------------------------------------------------------------------------------------------------------------------------------
Total increase (decrease) in net assets 14,896 (1,661) 13,627 38,542
- -------------------------------------------------------------------------------------------------------------------------------
Net assets:
Beginning of year 9,144 10,805 67,713 29,171
- -------------------------------------------------------------------------------------------------------------------------------
End of year $ 24,040 $ 9,144 $ 81,340 $ 67,713
===============================================================================================================================
Undistributed net investment income (accumulated net investment loss) $ -- $ -- $ -- $ (17)
===============================================================================================================================
Shares issued and redeemed:
Class I Shares
Issued 3,566 1,494 -- --
Issued upon reorganization of the Technology Fund into the New
Enterprise Fund 1,675 -- -- --
Issued in lieu of cash distributions -- -- -- --
Redeemed (2,960) (2,324) -- --
- -------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in Class I Shares 2,281 (830) -- --
- -------------------------------------------------------------------------------------------------------------------------------
Class II Shares
Issued -- -- 1,231 2,430
Issued in lieu of cash distributions -- -- -- --
Redeemed -- -- (647) (309)
- -------------------------------------------------------------------------------------------------------------------------------
Net increase in Class II Shares -- -- 584 2,121
- -------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in share transactions 2,281 (830) 584 2,121
===============================================================================================================================
Turner Small Cap
Growth Fund
-------------------------
year ended year ended
9/30/06 9/30/05
- ---------------------------------------------------------------------------------------------------
Investment activities:
Net investment loss $ (2,093) $ (2,248)
Net realized gain (loss) from securities sold 39,786 21,220
Net unrealized appreciation (depreciation) of investments (21,999) 17,030
- ---------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from operations 15,694 36,002
- ---------------------------------------------------------------------------------------------------
Capital share transactions:
Class I Shares
Proceeds from shares issued 114,978 77,920
Proceeds from shares issued upon reorganization of the Technology
Fund into the New Enterprise Fund -- --
Proceeds from shares issued in lieu of cash distributions -- --
Cost of shares redeemed (139,550) (93,986)
- ---------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets from Class I Shares transactions (24,572) (16,066)
- ---------------------------------------------------------------------------------------------------
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 (24,572) (16,066)
- ---------------------------------------------------------------------------------------------------
Total increase (decrease) in net assets (8,878) 19,936
- ---------------------------------------------------------------------------------------------------
Net assets:
Beginning of year 257,149 237,213
- ---------------------------------------------------------------------------------------------------
End of year $ 248,271 $ 257,149
===================================================================================================
Undistributed net investment income (accumulated net investment loss) $ 10 $ --
===================================================================================================
Shares issued and redeemed:
Class I Shares
Issued 4,244 3,390
Issued upon reorganization of the Technology Fund into the New
Enterprise Fund -- --
Issued in lieu of cash distributions -- --
Redeemed (5,180) (4,092)
- ---------------------------------------------------------------------------------------------------
Net increase (decrease) in Class I Shares (936) (702)
- ---------------------------------------------------------------------------------------------------
Class II Shares
Issued -- --
Issued in lieu of cash distributions -- --
Redeemed -- --
- ---------------------------------------------------------------------------------------------------
Net increase in Class II Shares -- --
- ---------------------------------------------------------------------------------------------------
Net increase (decrease) in share transactions (936) (702)
===================================================================================================
TURNER FUNDS 2006 ANNUAL REPORT | 59
FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
Realized and
Net asset Net unrealized Total Dividends Distributions Total
value, investment gains from from net from dividends
beginning income (losses) on investment investment capital and
of period (loss) investments operations income gains distributions
- ----------------------------------------------------------------------------------------------------------------
Turner Concentrated Growth Fund -- Class I Shares
- -------------------------------------------------
2006 $ 7.10 (0.08)(3) 0.58 0.50 -- -- --
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) -- -- --
- -----------------------------------------
Turner Core Growth Fund -- Class I Shares
- -----------------------------------------
2006 $ 10.93 0.06 0.69 0.75 (0.03) -- (0.03)
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) -- -- --
- ------------------------------------------
Turner Core Growth Fund -- Class II Shares
- ------------------------------------------
2006 $ 10.93 0.07 0.64 0.71 (0.03) -- (0.03)
2005 (2) $ 10.58 -- 0.35 0.35 -- -- --
- ---------------------------------------------
Turner Emerging Growth Fund -- Class I Shares
- ---------------------------------------------
2006 $ 56.46 (0.32)(3) 3.02 2.70 -- (3.19) (3.19)
2005 $ 50.02 (0.46)(3) 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 (5) (0.04) -- -- --
- ----------------------------------------------
Turner Large Cap Growth Fund -- Class I Shares
- ----------------------------------------------
2006 $ 5.41 0.01 (3) 0.17 0.18 (0.01) -- (0.01)
2005 $ 4.83 0.01 (3) 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) -- -- --
- ---------------------------------------------
Turner Large Cap Value Fund -- Class I Shares
- ---------------------------------------------
2006 (4) $ 10.00 0.16 (3) 1.33 1.49 (0.05) -- (0.05)
- --------------------------------------------------------------------------------
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 Concentrated Growth Fund -- Class I Shares
- -------------------------------------------------
2006 $ 7.60 7.04% $ 38,180 1.59% 1.79% (1.01)% 250.81%
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%
- -----------------------------------------
Turner Core Growth Fund -- Class I Shares
- -----------------------------------------
2006 $ 11.65 6.91% $ 71,935 0.59% 1.20% 0.77% 123.67%
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%
- ------------------------------------------
Turner Core Growth Fund -- Class II Shares
- ------------------------------------------
2006 $ 11.61 6.52% $ 23,418 0.94% 1.43% 0.23% 123.67%
2005 (2) $ 10.93 3.31%+ $ 1 0.83% 2.50% 0.33% 136.36%
- ---------------------------------------------
Turner Emerging Growth Fund -- Class I Shares
- ---------------------------------------------
2006 $ 55.97 4.95% $ 565,227 1.40% 1.44% (0.57)% 77.87%
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%
- ----------------------------------------------
Turner Large Cap Growth Fund -- Class I Shares
- ----------------------------------------------
2006 $ 5.58 3.40% $ 19,510 0.75% 1.16% 0.26% 194.17%
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%
- ---------------------------------------------
Turner Large Cap Value Fund -- Class I Shares
- ---------------------------------------------
2006 (4) $ 11.44 14.92%+ $ 580 0.59% 7.71% 1.52% 251.67%
* Amount represents less than $0.01 per share.
+ Total return is for the period indicated and has 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 August 1, 2005. All ratios for the period have
been annualized.
(3) Based on average shares outstanding.
(4) Commenced operations on October 10, 2005. All ratios for the period have
been annualized.
(5) The amount shown for a share outstanding throughout the period does not
accord with the aggregate net losses on investments for the period because
of the sales and repurchases of fund shares in relation to fluctuating
market value of the investments of the Fund.
Amounts designated as "--" are either $0 or have been rounded to $0.
The accompanying notes are an integral part of the financial statements.
TURNER FUNDS 2006 ANNUAL REPORT | 60 & 61
FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
Realized and
Net asset unrealized Total Dividends Distributions Tax Total
value, Net gains from from net from Return dividends
beginning investment (losses) on investment investment capital of and
of period loss investments operations income gains capital distributions
- ----------------------------------------------------------------------------------------------------------------------------
Turner Midcap Growth Fund -- Class I Shares
- -------------------------------------------
2006 $ 26.39 (0.08) (1) 1.32 1.24 -- -- -- --
2005 $ 20.99 (0.19) (1) 5.59 5.40 -- -- -- --
2004 $ 19.54 (0.18) (1) 1.63 1.45 -- -- -- --
2003 $ 13.78 (0.14) (1) 5.90 5.76 -- -- -- --
2002 $ 17.40 (0.14) (3.48) (3.62) -- -- -- --
- --------------------------------------------
Turner Midcap Growth Fund -- Class II Shares
- --------------------------------------------
2006 $ 25.89 (0.23) (1) 1.30 1.07 -- -- -- --
2005 $ 20.69 (0.30) (1) 5.50 5.20 -- -- -- --
2004 $ 19.36 (0.28) (1) 1.61 1.33 -- -- -- --
2003 $ 13.72 (0.23) (1) 5.87 5.64 -- -- -- --
2002 $ 17.41 (0.22) (1) (3.47) (3.69) -- -- -- --
- --------------------------------------------
Turner New Enterprise Fund -- Class I Shares
- --------------------------------------------
2006 $ 5.86 (0.07) (1) 0.47 (2) 0.40 -- -- -- --
2005 $ 4.52 (0.03) 1.37 1.34 -- -- -- --
2004 $ 4.34 (0.06) 0.24 (2) 0.18 -- -- -- --
2003 $ 2.27 (0.02) 2.09 2.07 -- -- -- --
2002 $ 3.29 (0.04) (0.98) (1.02) -- -- -- --
- -----------------------------------------------
Turner Small Cap Equity Fund -- Class II Shares
- -----------------------------------------------
2006 $ 16.06 (0.07) (1) 0.95 0.88 -- -- -- --
2005 $ 13.92 (0.11) (1) 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 (3) $ 10.00 -- (0.70) (0.70) -- -- -- --
- ----------------------------------------------
Turner Small Cap Growth Fund -- Class I Shares
- ----------------------------------------------
2006 $ 24.68 (0.21) (1) 1.70 1.49 -- -- -- --
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) -- -- -- --
- --------------------------------------------------------------------------------
Ratio of net
Net Ratio of Ratio of total investment
Net asset assets end net expenses expenses loss to Portfolio
value, end Total of period to average to average average turnover
of period return (000) net assets++ net assets net assets++ rate+++
- ------------------------------------------------------------------------------------------------------------------
Turner Midcap Growth Fund -- Class I Shares
- -------------------------------------------
2006 $ 27.63 4.70% $1,113,201 1.18% 1.18% (0.30)% 134.55%
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%
- --------------------------------------------
Turner Midcap Growth Fund -- Class II Shares
- --------------------------------------------
2006 $ 26.96 4.13% $ 2,444 1.68% 1.68% (0.83)% 134.55%
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%
- --------------------------------------------
Turner New Enterprise Fund -- Class I Shares
- --------------------------------------------
2006 $ 6.26 6.83% $ 24,040 1.61% 2.06% (1.02)% 234.62%
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%
- -----------------------------------------------
Turner Small Cap Equity Fund -- Class II Shares
- -----------------------------------------------
2006 $ 16.94 5.48% $ 81,340 1.24% 1.70% (0.39)% 143.43%
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 (3) $ 9.30 (7.00)%+ $ 7,260 1.35% 3.02% (0.07)% 86.94%
- ----------------------------------------------
Turner Small Cap Growth Fund -- Class I Shares
- ----------------------------------------------
2006 $ 26.17 6.04% $ 248,271 1.25% 1.42% (0.79)% 154.27%
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%
+ Total return is for the period indicated and has not been annualized.
++ Inclusive of fees paid indirectly, waivers and/or reimbursements.
+++ Excludes effect of in-kind transfers and mergers.
(1) Based on average shares outstanding.
(2) 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.
(3) Commenced operations on March 4, 2002. 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.
TURNER FUNDS 2006 ANNUAL REPORT | 62 & 63
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
September 30, 2006
1. ORGANIZATION:
Turner Funds (the "Trust"), a Massachusetts business trust, is registered under
the Investment Company Act of 1940, as amended, as an open-end management
investment company with nine active portfolios as of September 30, 2006. The
financial statements included herein are those of the Turner Concentrated Growth
Fund (the "Concentrated Growth Fund"), the Turner Core Growth Fund (the "Core
Growth Fund"), the Turner Emerging Growth Fund (the "Emerging Growth Fund")
(formerly the Turner Micro Cap Growth Fund), the Turner Large Cap Growth Fund
(the "Large Cap Growth Fund"), the Turner Large Cap Value Fund (the "Large Cap
Value Fund"), the Turner Midcap Growth Fund (the "Midcap Growth Fund"), the
Turner New Enterprise Fund (the "New Enterprise Fund"), the Turner Small Cap
Equity Fund (the "Small Cap Equity Fund") and the Turner Small Cap Growth Fund
(the "Small Cap Growth Fund"), each a "Fund" and collectively the "Funds." The
Large Cap Value Fund commenced operations on October 10, 2005.
Each Fund is registered as a diversified portfolio of the Trust with the
exception of the Large Cap 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 Changes includes activity of the
Constellation TIP Core Growth Fund prior to the reorganization on February 25,
2005.
On September 27, 2006, the assets of the Turner Technology Fund (the "Technology
Fund") were reorganized into the New Enterprise Fund. Under the Agreement and
Plan of Reorganization, 1,589,625 shares of the Technology Fund were exchanged
for 1,674,572 shares of the New Enterprise Fund in a tax-free exchange.
Upon the business combination of such Funds on September 27, 2006, the net
assets of the Technology Fund, which included paid-in-capital of $137,747,073,
accumulated realized losses of $129,088,165 and unrealized gains of $1,786,570,
combined with the New Enterprise Fund were $24,141,573. The aggregate net assets
of the Technology and New Enterprise Funds immediately before the reorganization
were $10,445,478 and $13,696,095, respectively.
The Emerging Growth, Small Cap Equity and Small Cap Growth Funds were closed to
new investors on March 7, 2000, May 1, 2005 and July 31, 2004, respectively.
2. SIGNIFICANT ACCOUNTING POLICIES:
The following is a summary of the significant accounting policies followed by
the Funds.
USE OF ESTIMATES--The preparation of financial statements in conformity
with 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
of Trustees (the "Board"). The Funds' Fair Value Procedures are
implemented through a Fair Value Committee (the "Committee") designated by
the Board. Some of the more common reasons that may necessitate that a
security be valued using Fair Value Procedures include: the security's
trading has been halted or suspended; the security has been delisted from
a national exchange; the security's primary trading market is temporarily
closed at a time when under normal conditions it would be open; or the
security's primary pricing source is not able or willing to provide a
price. When a security is valued in accordance with the Fair
64 | TURNER FUNDS 2006 ANNUAL REPORT
- --------------------------------------------------------------------------------
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.
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 or employees of
Turner Investment Partners, Inc. ("Turner") or SEI Global Mutual Funds Services
("SEI"), the Trust's sub-administrator. 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.
SEI Investments Distribution Company (the "Distributor") provides distribution
services to the Funds under a Distribution Agreement. Prior to January 1, 2006,
Constellation Investment Distribution Company, Inc. provided distribution
services to the Funds.
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. Turner has contractually agreed to limit its administrator fee in the
Core Growth Fund, Class I Shares to 0.05% through January 31, 2007. Under a
separate Sub-Administration Agreement between Turner and SEI, SEI provides
sub-administrative services to the Trust. For the year ended September 30, 2006,
SEI was paid $926,011 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 non 12b-1 shareholder
services. Effective December 1, 2005 the Small Cap Equity Fund has voluntarily
agreed to waive its distribution fee.
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, 2006:
AMOUNT
-----------
Concentrated Growth Fund $ 29,174
Core Growth Fund 30,944
Emerging Growth Fund 940,846
Large Cap Growth Fund 45,254
Large Cap Value Fund --
Midcap Growth Fund 1,697,825
New Enterprise Fund 27,851
Small Cap Equity Fund 118,031
Small Cap Growth Fund 350,152
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
TURNER FUNDS 2006 ANNUAL REPORT | 65
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
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
------------- -----------------
Core Growth Fund 0.75% 0.59%(1),(3)
Emerging Growth Fund 1.00 1.40
Large Cap Growth Fund 0.60 0.75
Large Cap Value Fund 0.60 0.59(4)
Midcap Growth Fund 0.75 1.25(1)
Small Cap Equity Fund(2) 0.95 1.20(5)
Small Cap Growth Fund 1.00 1.25
(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 HAS CONTRACTUALLY AGREED TO KEEP "OTHER"
EXPENSES FROM EXCEEDING 0.25% THROUGH JANUARY 31, 2007.
(3) 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%.
(4) TURNER INVESTMENT PARTNERS, INC. HAS VOLUNTARILY AGREED TO WAIVE FUND
EXPENSES TO KEEP THE FUND'S NET TOTAL OPERATING EXPENSES FROM EXCEEDING
0.59% THROUGH JANUARY 31, 2007.
(5) PRIOR TO DECEMBER 1, 2005, THE MAXIMUM EXPENSE CAP FOR THE FUND WAS 1.45%.
For the remaining Funds, the advisory fee is comprised of a base fee and a
performance adjustment that increases or decreases the total fee depending upon
the performance of the Fund relative to the Fund's performance benchmark. The
Fund's base fee (1.10% for all Funds) is accrued daily and paid monthly, based
on the Fund's average net assets during the current month.
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
--------- -------- ------------ --------
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, 2006, the Funds' advisory fees, before
waivers, were adjusted in accordance with the policy described above:
TOTAL
BASE ADVISER
ADVISER PERFORMANCE FEE BEFORE
FEE ADJUSTMENT WAIVERS
--------- ----------- ----------
Concentrated Growth Fund $ 399,045 $ 86,332 $ 485,377
New Enterprise Fund 198,702 47,248 245,950
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, 2006, were as follows
(000):
PURCHASES SALES
(000) (000)
----------- -----------
Concentrated Growth Fund $ 95,205 $ 89,472
Core Growth Fund 132,753 81,830
Emerging Growth Fund 424,122 386,280
Large Cap Growth Fund 55,752 81,566
Large Cap Value Fund 1,859 1,355
Midcap Growth Fund 1,548,338 1,445,388
New Enterprise Fund 56,786 42,961
Small Cap Equity Fund 116,605 106,591
Small Cap Growth Fund 402,670 427,297
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 dif-
66 | TURNER FUNDS 2006 ANNUAL REPORT
- --------------------------------------------------------------------------------
ferences are primarily due to wash sales, REIT adjustments 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.
Accordingly, the following permanent differences have been reclassified to/from
the following accounts during the fiscal year ended September 30, 2006 (000):
UNDISTRIBUTED ACCUMULATED
NET INVESTMENT NET REALIZED PAID-IN-
FUND INCOME GAIN/(LOSS) CAPITAL
- ---- -------------- ------------ -----------
Concentrated Growth Fund $ 367 $ -- $ (367)
Emerging Growth Fund 3,209 (15) (3,194)
Midcap Growth Fund 3,294 (8) (3,286)
New Enterprise Fund 184 125,409 (125,593)
Small Cap Equity Fund 317 (19) (298)
Small Cap Growth Fund 2,103 (40) (2,063)
These reclassifications have no effect on net assets or net asset value per
share.
As of September 30, 2006, the New Enterprise Fund credited accumulated net
realized loss $129,088 (000) and charged paid-in-capital $127,302 (000) and
unrealized appreciation $1,786 (000) due to the Technology Fund merger with the
New Enterprise Fund. Internal Revenue Code 382 limits the amount of annual
capital loss carryover available for use and also requires the Fund to
permanently forfeit $125,409 (000) in capital loss carryovers from prior years.
The tax character of dividends and distributions declared during the years ended
September 30, 2006 and September 30, 2005 were as follows (000):
ORDINARY LONG-TERM
INCOME CAPITAL GAIN TOTAL
-------- ------------ --------
Core Growth Fund
2006 $ 163 $ -- $ 163
2005 -- -- --
Emerging Growth Fund
2006 $ 8,774 $ 20,741 $ 29,515
2005 7,955 40,633 48,588
Large Cap Growth Fund
2006 $ 109 $ -- $ 109
2005 53 -- 53
Large Cap Value Fund
2006* $ 2 $ -- $ 2
* Period from inception October 10, 2005 through September 30, 2006.
As of September 30, 2006, 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)
------------- ------------- ------------ -------- -------------- -------------
Concentrated Growth Fund $ -- $ -- $ (156,432) $ -- $ 5,274 $ (151,158)
Core Growth Fund 380 -- (1,778) (630) 8,130 6,102
Emerging Growth Fund -- 49,569 -- -- 114,065 163,634
Large Cap Growth Fund 54 -- (16,253) -- 2,327 (13,872)
Large Cap Value Fund 17 -- -- -- 55 72
Midcap Growth Fund -- -- (417,047) -- 163,474 (253,573)
New Enterprise Fund -- -- (12,084) (1,421) 4,073 (9,432)
Small Cap Equity Fund -- 5,139 -- -- 6,799 11,938
Small Cap Growth Fund -- -- (92,222) -- 24,376 (67,846)
TURNER FUNDS 2006 ANNUAL REPORT | 67
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
Post-October losses represent losses realized on investment transactions from
November 1, 2005 through September 30, 2006 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.
At September 30, 2006, 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 2014 TOTAL
-------- -------- -------- -------- -------- --------
Concentrated Growth Fund $ 11,053 $132,529 $ 12,850 $ -- $ -- $156,432
Core Growth Fund -- -- 1,578 -- 200 1,778
Large Cap Growth Fund -- 1,115 15,138 -- -- 16,253
Midcap Growth Fund -- 287,548 129,499 -- -- 417,047
New Enterprise Fund 674 10,777 385 248 -- 12,084
Small Cap Growth Fund -- 66,228 25,994 -- -- 92,222
During the year ended September 30, 2006, the Concentrated Growth Fund, Large
Cap Growth Fund, Midcap Growth Fund, New Enterprise Fund, Small Cap Equity Fund,
and the Small Cap Growth Fund utilized capital loss carryfor-wards of $19,327,
$7,503,703, $77,515,658, $140,979, $210,551 and $39,832,013, respectively, to
offset capital gains.
At September 30, 2006, the total cost of secuities for Federal income tax
purposes and the aggregate gross unrealized appreciation and depreciation for
the securities held by the Funds were as follows (000):
NET
FEDERAL UNREALIZED UNREALIZED UNREALIZED
FUND TAX COST APPRECIATION DEPRECIATION APPRECIATION
- ---- ---------- ------------ ------------ -------------
Concentrated Growth Fund $ 40,727 $ 5,740 $ (466) $ 5,274
Core Growth Fund 90,646 9,525 (1,395) 8,130
Emerging Growth Fund 733,664 130,064 (15,999) 114,065
Large Cap Growth Fund 17,216 2,569 (242) 2,327
Large Cap Value Fund 526 59 (4) 55
Midcap Growth Fund 1,095,777 183,456 (19,982) 163,474
New Enterprise Fund 25,437 4,602 (529) 4,073
Small Cap Equity Fund 76,676 7,966 (1,167) 6,799
Small Cap Growth Fund 260,002 32,355 (7,979) 24,376
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.
68 | TURNER FUNDS 2006 ANNUAL REPORT
- --------------------------------------------------------------------------------
10. NEW ACCOUNTING PRONOUNCEMENTS:
In June 2006, the Financial Accounting Standards Board ("FASB") issued FASB
interpretation 48 ("FIN 48"), "Accounting for Uncertainty in Income Taxes". This
standard defines the threshold for recognizing the benefits of tax-return
positions in the financial statements as "more-likely-than-not" to be sustained
by the taxing authority and requires measurement of a tax position meeting the
more-likely-than-not criterion, based on the largest benefit that is more than
50 percent likely to be realized. FIN 48 is effective as of the beginning of the
first fiscal year beginning after December 15, 2006. At adoption, companies must
adjust their financial statements to reflect only those tax positions that are
more-likely-than-not to be sustained as of the adoption date. As of September
30, 2006, the Fund has not evaluated the impact that will result from adopting
FIN 48.
In September 2006, the FASB issued Statement on Financial Accounting Standards
("SFAS") No. 157, "Fair Value Measurements." This standard establishes a single
authoritative definition of fair value, sets out a framework for measuring fair
value and requires additional disclosures about fair value measurements. SFAS
No. 157 applies to fair value measurements already required or permitted by
existing standards. SFAS No. 157 is effective for financial statements issued
for fiscal years beginning after November 15, 2007 and interim periods within
those fiscal years. The changes to current generally accepted accounting
principles from the application of this Statement relate to the definition of
fair value, the methods used to measure fair value, and the expanded disclosures
about fair value measurements. As of September 30, 2006, the Funds do not
believe the adoption of SFAS No. 157 will impact the financial statement
amounts, however, additional disclosures may be required about the inputs used
to develop the measurements and the effect of certain of the measurements on
changes in net assets for the period.
TURNER FUNDS 2006 ANNUAL REPORT | 69
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
- --------------------------------------------------------------------------------
THE BOARD OF TRUSTEES AND SHAREHOLDERS
TURNER FUNDS:
We have audited the accompanying statements of assets and liabilities of the
Turner Concentrated Growth Fund, Turner Core Growth Fund, Turner Emerging Growth
Fund (formerly the Turner Micro Cap Growth Fund), Turner Large Cap Growth Fund,
Turner Large Cap Value Fund, Turner Midcap Growth Fund, Turner New Enterprise
Fund, Turner Small Cap Equity Fund, Turner Small Cap Growth Fund, (collectively,
the Funds), including the schedules of investments, as of September 30, 2006,
and the related statements of operations for the year then ended, the statements
of changes in net assets and the financial highlights for each of the years or
periods in the two-year period then ended and the financial highlights for each
of the years in the three-year period then ended for the Turner Core Growth
Fund. These financial statements and financial highlights are the responsibility
of the Funds' management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audits. The financial
highlights of the Turner Small Cap Equity Fund, Turner New Enterprise Fund,
Turner Concentrated Growth Fund, Turner Large Cap Growth Fund, Turner Midcap
Growth Fund, Turner Small Cap Growth Fund, Turner Emerging 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 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, 2006, 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, 2006, and
the results of their operations for the year then ended, the changes in their
net assets in each of the years in the two-year period then ended, and their
financial highlights for the periods indicated in the paragraph above, in
conformity with U.S. generally accepted accounting principles.
[KPMG LLP LOGO]
Philadelphia, Pennsylvania
November 17, 2006
70 | TURNER FUNDS 2006 ANNUAL REPORT
NOTICE TO SHAREHOLDERS (Unaudited)
- --------------------------------------------------------------------------------
For shareholders that do not have a September 30th, 2006 tax year end, this
notice is for informational purposes only. For shareholders with a September
30th, 2006 year end, please consult your tax advisor as to the pertinance of
this notice. For the fiscal year ended September 30th, 2006, 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 QUALIFIED
GAIN INCOME TOTAL RECEIVABLE DIVIDENDS INTEREST
DISTRIBUTION DISTRIBUTIONS DISTRIBUTIONS DEDUCTION(1) INCOME(2) INCOME(3)
------------ ------------- ------------- ------------ ---------- ---------
Turner Concentrated Growth Fund .. 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
Turner Core Growth Fund .......... 0.00% 100.00% 100.00% 100.00% 100.00% 0.00%
Turner Emerging Growth Fund ...... 70.27% 29.73% 100.00% 4.19% 3.83% 0.00%
Turner Large Cap Growth Fund ..... 0.00% 100.00% 100.00% 100.00% 100.00% 0.00%
Turner Large Cap Value Fund ...... 0.00% 100.00% 100.00% 42.10% 41.39% 0.00%
Turner MidCap Growth Fund ........ 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
Turner New Enterprise Fund ....... 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
Turner Small Cap Growth Fund ..... 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
Turner Small Cap Equity Fund ..... 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
(1) Qualifying dividends represent dividends which qualify for the corporate
dividends received deduction and is reflected as a percentage of "Ordinary
Income Distributions".
(2) The percentage in this column represents the amount of "Qualifying
Dividend Income" as created by the Jobs and Growth Tax Relief
Reconciliation Act of 2003 and is reflected as a percentage of "Ordinary
Income Distribuions". It is the intention of each of the aforementioned
funds to designate the maximum amount permitted by law.
(3) The percentage in this column represents the amount of "Qualifying
Interest Income" as created by the American Jobs Creation Act of 2004 and
is reflected as a percentage of net investment income distributions that
is exempt from U.S. withholding tax when paid to foreign investors.
The information reported herein may differ from the information and
distributions taxable to the Shareholders for the calendar year ending December
31, 2006. Complete information will be computed and reported in conjunction with
your 2006 Form 1099-DIV.
TURNER FUNDS 2006 ANNUAL REPORT | 71
TRUSTEES AND OFFICERS OF THE TRUST
- --------------------------------------------------------------------------------
TERM OF
OFFICE NUMBER OF
AND PORTFOLIOS IN
POSITION LENGTH COMPLEX OTHER
HELD WITH OF TIME PRINCIPAL OCCUPATION(S) OVERSEEN DIRECTORSHIPS
NAME, ADDRESS, AND AGE THE FUND SERVED (2) DURING PAST 5 YEARS BY TRUSTEE HELD
- ---------------------------------------------------------------------------------------------------------------------------------
INTERESTED TRUSTEE*
- ---------------------------------------------------------------------------------------------------------------------------------
Robert E. Turner Trustee Trustee Chairman and Chief Investment Officer of 9 Bradley
1205 Westlakes Drive since 1996 Turner since 1990. University,
Suite 100 The Crossroads
Berwyn, PA 19312 School, City
(50) Team Ministries
- ---------------------------------------------------------------------------------------------------------------------------------
*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 Treasurer, 9 N/A
(48) since 1996 Thomas Jefferson University since 2003,
Treasurer since 1995.
- ---------------------------------------------------------------------------------------------------------------------------------
Janet F. Sansone Trustee Trustee Self-employed. Consultant since 1999. 9 N/A
(61) since 1997 Senior Vice President of Human Resources
of Frontier Corporation (telecommunica-
tions company), (1993-1999).
- ---------------------------------------------------------------------------------------------------------------------------------
Dr. John T. Wholihan Trustee Trustee Professor and Dean, Loyola Marymount 9 AACSB
(68) since 1996 University, since 1984. International
- ---------------------------------------------------------------------------------------------------------------------------------
EXECUTIVE OFFICERS
- ---------------------------------------------------------------------------------------------------------------------------------
Thomas R. Trala, Jr. President President Chief Operating Officer of Turner since N/A N/A
1205 Westlakes Drive since 2004 2004 and Chief Financial Officer since
Suite 100 1995.
Berwyn, PA 19312
(39)
- ---------------------------------------------------------------------------------------------------------------------------------
Michael Lawson Controller Controller Director, SEI Investments since July 2005. N/A N/A
SEI Investments, and Chief and Chief Manager, SEI Investments from April 1995
One Freedom Financial Financial to February 1998 and November 1998 to
Valley Drive Officer Officer July 2005.
Oaks, PA 19456 since 2005
(45)
- ---------------------------------------------------------------------------------------------------------------------------------
Brian McNally Vice Vice General Counsel and Chief Compliance N/A N/A
1205 Westlakes Drive President, President Officer of Turner Investment Partners, Inc.
Suite 100 Chief since 2002 Previously Assistant General Counsel with
Berwyn, PA 19312 Compliance Chief Bank of America (September 1997-July 2002);
(48) Officer and Compliance Associate at Kirkpatrick & Lockhart LLP
Secretary Officer and (1995-1997); Senior Litigation Counsel,
Secretary U.S. Securities & Exchange Commission
since 2004 (1990-1995).
- ---------------------------------------------------------------------------------------------------------------------------------
Timothy D. Barto Vice Vice Vice President and Assistant Secretary of
SEI Investments, President President SEI Investments since December 1999. N/A N/A
One Freedom and and Associate at Dechert Price & Rhoads (1997-
Valley Drive Assistant Assistant 1999). Associate at Richter, Miller & Finn
Oaks, PA 19456 Secretary Secretary (1994-1997).
(38) since 2000
- ---------------------------------------------------------------------------------------------------------------------------------
Calvin Fisher Vice Vice Director, Mutual Fund Administration N/A N/A
1205 Westlakes Drive President President (since 2005); Manager, Mutual Fund
Suite 100 and and Administration (2001-2005).
Berwyn, PA 19312 Assistant Assistant
(33) Secretary Secretary
since 2006
- ---------------------------------------------------------------------------------------------------------------------------------
(1) Each non interested trustee may be contacted by writing to 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.
72 | TURNER FUNDS 2006 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 a mutual fund's gross income and directly reduce its final investment
return. These expenses are expressed as a percentage of a mutual fund's average
net assets; this percentage is known as a mutual 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 the 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
4/1/06 9/30/06 RATIOS PERIOD*
- -------------------------------------------------------------------------------------------
Turner Concentrated Growth Fund
- -------------------------------------------------------------------------------------------
Actual Fund Return $1,000.00 $ 911.30 1.46% $7.00
Hypothetical 5% Return 1,000.00 1,017.75 1.46 7.38
- -------------------------------------------------------------------------------------------
Turner Core Growth Fund - Class I Shares
- -------------------------------------------------------------------------------------------
Actual Fund Return $1,000.00 $ 978.20 0.59% $2.93
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 $ 977.30 0.94% $4.66
Hypothetical 5% Return 1,000.00 1,020.36 0.94 4.76
- -------------------------------------------------------------------------------------------
Turner Emerging Growth Fund
- -------------------------------------------------------------------------------------------
Actual Fund Return $1,000.00 $ 926.20 1.40% $6.76
Hypothetical 5% Return 1,000.00 1,018.05 1.40 7.08
- -------------------------------------------------------------------------------------------
Turner Large Cap Growth Fund
- -------------------------------------------------------------------------------------------
Actual Fund Return $1,000.00 $ 970.40 0.75% $3.70
Hypothetical 5% Return 1,000.00 1,021.31 0.75 3.80
- -------------------------------------------------------------------------------------------
Turner Large Cap Value Fund
- -------------------------------------------------------------------------------------------
Actual Fund Return $1,000.00 $1,040.90 0.59% $3.02
Hypothetical 5% Return 1,000.00 1,022.11 0.59 2.99
- -------------------------------------------------------------------------------------------
BEGINNING ENDING EXPENSES
ACCOUNT ACCOUNT ANNUALIZED PAID
VALUE VALUE EXPENSE DURING
4/1/06 9/30/06 RATIOS PERIOD*
- -------------------------------------------------------------------------------------------
Turner Midcap Growth Fund - Class I Shares
- -------------------------------------------------------------------------------------------
Actual Fund Return $1,000.00 $ 903.20 1.18% $5.63
Hypothetical 5% Return 1,000.00 1,019.15 1.18 5.97
- -------------------------------------------------------------------------------------------
Turner Midcap Growth Fund - Class II Shares
- -------------------------------------------------------------------------------------------
Actual Fund Return $1,000.00 $ 900.80 1.68% $8.01
Hypothetical 5% Return 1,000.00 1,016.65 1.68 8.49
- -------------------------------------------------------------------------------------------
Turner New Enterprise Fund
- -------------------------------------------------------------------------------------------
Actual Fund Return $1,000.00 $ 862.30 1.61% $7.52
Hypothetical 5% Return 1,000.00 1,017.00 1.61 8.14
- -------------------------------------------------------------------------------------------
Turner Small Cap Equity Fund
- -------------------------------------------------------------------------------------------
Actual Fund Return $1,000.00 $ 912.20 1.20% $5.75
Hypothetical 5% Return 1,000.00 1,019.05 1.20 6.07
- -------------------------------------------------------------------------------------------
Turner Small Cap Growth Fund
- -------------------------------------------------------------------------------------------
Actual Fund Return $1,000.00 $ 880.80 1.25% $5.89
Hypothetical 5% Return 1,000.00 1,018.80 1.25 6.33
- -------------------------------------------------------------------------------------------
* 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 4/1/06 - 9/30/06).
TURNER FUNDS 2006 ANNUAL REPORT | 73
SHARE HOLDER VOTING RESULTS (Unaudited)
- --------------------------------------------------------------------------------
At a special meeting held on June 8, 2006, the shareholders of the Turner Funds
voted to approve an Agreement and Plan of Reorganization by and between the
Turner Funds, on behalf of the Turner Strategic Growth Fund (the "Strategic
Growth Fund"), and Phoenix Opportunities Trust (the "Phoenix Trust"), on behalf
of the Phoenix Growth Opportunities Fund (the "Phoenix Fund"), which provided
for and contemplated: (1) the transfer of all of the assets and liabilities of
the Strategic Growth Fund to the Phoenix Fund, a corresponding series of the
Phoenix Trust, in exchange for Class A shares of the Phoenix Fund; and (2) the
distribution of the shares of the Phoenix Fund to shareholders of the Strategic
Growth Fund in liquidation of the Fund.
NUMBER OF % OF SHARES % OF SHARES
SHARES OUTSTANDING VOTED
----------- ----------- -----------
Affirmative ..... 513,007.123 57.795% 97.923%
Against ......... 4,949.760 .558% .945%
Abstain ......... 5,932.635 .668% 1.132%
Total ........ 523,889.518 59.021% 100.000%
At a special meeting held on September 21, 2006, the shareholders of the Turner
Funds voted to approve an Agreement and Plan of Reorganization which provided
for and contemplated: (1) the transfer of all of the assets and liabilities of
the Turner Technology Fund (the "Technology Fund") to the Turner New Enterprise
Fund (the "New Enterprise Fund"); and (2) the distribution of the shares of the
New Enterprise Fund to the shareholders of the Technology Fund in liquidation of
the Technology Fund.
NUMBER OF % OF SHARES % OF SHARES
SHARES OUTSTANDING VOTED
----------- ----------- -----------
Affirmative ..... 861,296.900 48.190% 93.230%
Against ......... 49,743.100 2.780% 5.390%
Abstain ......... 12,794.020 0.710% 1.380%
Total ........ 923,834.020 51.680% 100.000%
74 | TURNER FUNDS 2006 ANNUAL REPORT
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TURNER FUNDS 2006 ANNUAL REPORT | 75
- --------------------------------------------------------------------------------
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
SEI INVESTMENTS DISTRIBUTION COMPANY
Oaks, 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 schedules 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.
76 | TURNER FUNDS 2006 ANNUAL REPORT
[TURNER FUNDS LOGO]
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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-002-0303
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") Related to the Trust
KPMG billed the Trust aggregate fees for services rendered to the Trust for the
last two fiscal years as follows:
- ------------------ ----------------------------------------------------- -----------------------------------------------------
2006 2005
- ------------------ ----------------------------------------------------- -----------------------------------------------------
- ------- ---------- ----------------- ----------------- ----------------- ----------------- ----------------- -----------------
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 $186,000 N/A N/A $178,500 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
- ------- ---------- ----------------- ----------------- ----------------- ----------------- ----------------- -----------------
Notes:
(1) Audit fees include fees related to the audit of the registrant's annual
financial statements and services normally provided by the accountant
in connection with statutory and regulatory filings.
(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 applicable to non-audit services pursuant to
waiver of pre-approval requirement were as follows:
---------------------------- ----------------- ----------------
2006 2005
---------------------------- ----------------- ----------------
---------------------------- ----------------- ----------------
Audit-Related Fees 0.00% 0.00%
---------------------------- ----------------- ----------------
---------------------------- ----------------- ----------------
Tax Fees 0.00% 0.00%
---------------------------- ----------------- ----------------
---------------------------- ----------------- ----------------
All Other Fees 0.00% 0.00%
---------------------------- ----------------- ----------------
(f) Not applicable.
(g) The aggregate non-audit fees and services billed by KPMG for the last two
fiscal years were $0 and $0 for 2006 and 2005, respectively.
(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 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 registrant's 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 4, 2006
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 4, 2006
By (Signature and Title)* /s/ Michael Lawson
---------------------------------------
Michael Lawson, Controller and CFO
Date: December 4, 2006
* Print the name and title of each signing officer under his or her signature.