-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, BB9ZysaEuIBoHH0gm5umep2WrpkT8Am4PZs7jFi806I/Dzz0YGktgOXCBkTQaXGY vJ/bTZoE0Roa/Hrnr1VCwA== 0001082416-00-000161.txt : 20001206 0001082416-00-000161.hdr.sgml : 20001206 ACCESSION NUMBER: 0001082416-00-000161 CONFORMED SUBMISSION TYPE: N-30D PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20000930 FILED AS OF DATE: 20001205 FILER: COMPANY DATA: COMPANY CONFORMED NAME: TIP FUNDS CENTRAL INDEX KEY: 0001006783 STANDARD INDUSTRIAL CLASSIFICATION: UNKNOWN SIC - 0000 [0000] STATE OF INCORPORATION: MA FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: N-30D SEC ACT: SEC FILE NUMBER: 811-07527 FILM NUMBER: 783617 BUSINESS ADDRESS: STREET 1: CT CORP STREET 2: 2 OLIVER STREET CITY: BOSTON STATE: MA ZIP: 02109 MAIL ADDRESS: STREET 1: 530 E SWEDESFORD ROAD CITY: WAYNE STATE: PA ZIP: 19087-1693 N-30D 1 0001.txt TURNER GROWTH FUNDS [TURNER GROWTH LOGO OMITTED] ANNUAL REPORT SEPTEMBER 30, 2000 - -------------------------------------------------------------------------------- Turner Midcap Growth Fund - -------------------------------------------------------------------------------- Turner Small Cap Growth Fund - -------------------------------------------------------------------------------- Turner Micro Cap Growth Fund - -------------------------------------------------------------------------------- Turner Top 20 Fund - -------------------------------------------------------------------------------- Turner Technology Fund - -------------------------------------------------------------------------------- Turner B2B E-Commerce Fund - -------------------------------------------------------------------------------- Turner Wireless & Communications Fund - -------------------------------------------------------------------------------- Turner Global Top 40 Fund - -------------------------------------------------------------------------------- Turner Select Growth Equity Fund - -------------------------------------------------------------------------------- Turner Short Duration Government Funds - One Year Portfolio - -------------------------------------------------------------------------------- Turner Short Duration Government Funds - Three Year Portfolio - -------------------------------------------------------------------------------- Turner Core High Quality Fixed Income Fund - -------------------------------------------------------------------------------- [LOGO OMITTED] CONTENTS 1 Total returns of Turner Funds 2 Letter to Shareholders 4 Investment review: Turner Midcap Growth Fund 6 Investment review: Turner Small Cap Growth Fund 8 Investment review: Turner Micro Cap Growth Fund 10 Investment review: Turner Top 20 Fund 12 Investment review: Turner Technology Fund 14 Investment review: Turner B2B E-Commerce Fund 16 Investment review: Turner Wireless & Communications Fund 18 Investment review: Turner Global Top 40 Fund 20 Investment review: Turner Select Growth Equity Fund 22 Investment review: Turner Short Duration Government Funds-One Year Portfolio 24 Investment review: Turner Short Duration Government Funds-Three Year Portfolio 26 Investment review: Turner Core High Quality Fixed Income Fund 28 Financial Statements 66 Notes to Financial Statements 71 Report of Independent Auditors 72 Notice to Shareholders TURNER FUNDS The Turner Funds, Portfolios of the TIP Funds offer a series of twelve no-load mutual funds to individual and institutional investors. The minimum initial investment in a Turner Fund, with the exception of the Turner Select Growth Equity Fund, for regular accounts is $2,500 and $2,000 for individual retirement accounts. The minimum amount for subsequent investments is $50. The minimum initial investment in the Turner Select Growth Equity Fund is $1 million and the minimum subsequent investment is $10,000. Turner Investment Partners, Inc., based in Berwyn, Pennsylvania, serves as the investment adviser to the Turner Funds. The firm, founded in 1990, invests more than $12 billion in equity, fixed-income, and balanced portfolios on behalf of individuals and institutions. SHAREHOLDER SERVICES Turner Funds shareholders receive annual and semiannual reports and monthly account statements. Shareholders who have questions about their accounts may call a toll-free telephone number, 1-800-224-6312. Or they may write to Turner Funds, Box 219805, Kansas City, Missouri 64121-9805.
PERFORMANCE - --------------------------------------------------------------------------------------------------------------------------- TOTAL RETURNS OF TURNER FUNDS* Through September 30, 2000 (Annualized) Total Three Year One Three Five Since Assets Month To Date Year Year Year inception ($mil) EQUITY - --------------------------------------------------------------------------------------------------------------------------- TURNER MIDCAP GROWTH FUND 13.63% 27.63% 97.35% 54.35% n/a 51.64% $1,204 Russell Midcap Growth Index 2.52% 14.98% 60.37% 25.87% n/a 26.80% INCEPTION DATE: 10/1/96 - --------------------------------------------------------------------------------------------------------------------------- TURNER SMALL CAP GROWTH FUND -2.78% 7.95% 56.07% 27.32% 29.69% 30.66% $529 Russell 2000 Growth Index -3.97% -2.80% 29.66% 8.93% 12.42% 12.61% INCEPTION DATE: 2/7/94 - --------------------------------------------------------------------------------------------------------------------------- TURNER MICRO CAP GROWTH FUND 7.19% 42.39% 129.02% n/a n/a 83.61% $187 Russell 2000 Growth Index -3.97% -2.80% 29.66% n/a n/a 11.04% INCEPTION DATE: 3/1/98 - --------------------------------------------------------------------------------------------------------------------------- TURNER TOP 20 FUND -5.75% 24.57% 98.58% n/a n/a 126.27% $247 S&P 500 Index -0.97% -1.39% 13.29% n/a n/a 4.93% INCEPTION DATE: 6/30/99 - --------------------------------------------------------------------------------------------------------------------------- TURNER TECHNOLOGY FUND 0.49% 35.76% 149.35% n/a n/a 172.50% $169 Pacific Stock Exchange Technology 100 Index -5.67% 6.89% 65.57% n/a n/a 55.08% INCEPTION DATE: 6/30/99 - --------------------------------------------------------------------------------------------------------------------------- TURNER B2B E-COMMERCE FUND 25.20% n/a n/a n/a n/a 25.20%** $14 Pacific Stock Exchange Technology 100 Index -5.67% n/a n/a n/a n/a -5.67%** INCEPTION DATE: 6/30/00 - --------------------------------------------------------------------------------------------------------------------------- TURNER WIRELESS & COMMUNICATIONS FUND 18.20% n/a n/a n/a n/a 18.20%** $24 Pacific Stock Exchange Technology 100 Index -5.67% n/a n/a n/a n/a -5.67%** INCEPTION DATE: 6/30/00 - --------------------------------------------------------------------------------------------------------------------------- TURNER GLOBAL TOP 40 FUND -6.30% n/a n/a n/a n/a -6.30%** $12 MSCI World Index -5.26% n/a n/a n/a n/a -5.26%** INCEPTION DATE: 6/30/00 - --------------------------------------------------------------------------------------------------------------------------- TURNER SELECT GROWTH EQUITY FUND -1.90% n/a n/a n/a n/a -1.90%** $5 Russell Top 200 Growth Index -6.96% n/a n/a n/a n/a -6.96%** Inception Date: 6/14/00 - --------------------------------------------------------------------------------------------------------------------------- FIXED INCOME - --------------------------------------------------------------------------------------------------------------------------- TURNER SHORT DURATION GOVERNMENT FUNDS-ONE YEAR PORTFOLIO (CLASS I) 1.72% 5.01% 6.34% 5.96% 6.22% 6.12% $30 Merrill Lynch 3 Month US T-Bill Index 1.51% 4.48% 5.78% 5.28% 5.34% 5.31% INCEPTION DATE: 3/1/94 - --------------------------------------------------------------------------------------------------------------------------- TURNER SHORT DURATION GOVERNMENT Funds-Three Year Portfolio (Class I) 2.07% 5.43% 6.00% 5.63% 6.00% 6.01% $42 Lehman Brothers 1-3 Yr. US Gov. Bond Index 2.20% 5.26% 5.84% 5.64% 5.89% 5.77% INCEPTION DATE: 3/1/94 - --------------------------------------------------------------------------------------------------------------------------- TURNER CORE HIGH QUALITY FIXED INCOME FUND 2.69% 7.37% 6.97% n/a n/a 5.93% $14 Lehman Brothers Aggregate Bond Index 3.02% 7.12% 6.99% n/a n/a 6.12% Inception Date: 6/30/99 - --------------------------------------------------------------------------------------------------------------------------- **Past performance is no guarantee of future results. ** Returns are cumulative. For the one year ended 9/30/00 Lipper Inc. ranked the Turner Short Duration Government Funds-Three Year Portfolio 16 out of 91 Short-Intermediate U.S. Government Funds, the Turner Midcap Growth Fund 28 out of 414 Multi Cap Growth Funds and the Turner Core High Quality Fixed Income Fund 32 out of 176 Corporate Debt Funds A Rated Funds. SOURCE: LIPPER ANALYTICAL SERVICES. SEI Investments Distribution Co., Oaks, PA acts as distributor of the Turner Funds. The performance data quoted represents past performance and the principal value and investment return will fluctuate so that an investors' shares, when redeemed, may be worth more or less than their original cost. Investing in technology and science stocks and small capitalization companies may subject the Funds to specific inherent risks, including above-average price fluctuations, the risk of investing in a concentrated portfolio, and a limited number of securities. The Funds may invest in Initial Public Offerings (IPOs). IPOs and other investments may magnify the performance impact on a fund with a small asset base. The Fund may not experience similar performance as the assets grow. There is no guarantee any of the Funds will have the same access to the type of IPOs that contributed to it's performance last year, nor that any IPO will perform as well as last year's IPO. In addition to the normal risks associated with equity investing, investments that are narrowly focused or that are in small companies typically exhibit higher volatility due to severe competition and rapid obsolescence. International investments may involve risk of capital loss from unfavorable fluctuations in currency values, from differences in generally accepted accounting principles or from economic or political instability in other nations. Due to market volatility performance may be lower. This information must be preceded or accompanied by a current prospectus for the Turner Funds. Investors should read the prospectus carefully before investing.
TURNER FUNDS 2000 ANNUAL REPORT | 1 LETTER TO SHAREHOLDERS TO OUR SHAREHOLDERS Another fiscal year has passed, and as we try to tell the story of the Turner Funds' performance, we draw both comfort and perspective from an observation by Oliver Wendell Holmes, Sr. in 1891: "What if one does say the same things -- of course in a little different form each time -- over and over? If he has anything to say worth saying, that is just what he ought to do." For our part, we think we do have something worth saying: once again the Turner Funds by and large generated strong investment performance for you, our shareholders, in the 12-month period ending September 30, 2000. Specifically, seven of our eight stock and bond funds that have been in existence for more than one year outperformed their benchmarks (see table, page 1). And three of our four new stock funds that were introduced in June of this year got off to strong starts as well, outperforming their benchmarks since inception. In short, ours is becoming a familiar story, but an exceedingly satisfying one to tell -- satisfying because we take pains to do our best for shareholders. And be assured that we are not in the least tired of repeating it. Our consistently good investment performance is reflected in the Lipper Inc. rankings of our funds versus their peers. Six of the Turner Funds with track records of at least one year ranked no lower than the top 18th percentile in the Lipper ratings for the past 12 months (see table, page 1); the Lipper rankings are based on total-return data. In fact, three of our funds -- the Turner Top 20 Fund in the Multi-Cap Core Funds category, the Turner Micro Cap Growth Fund in the Small-Cap Growth Funds category, and the Turner Technology Fund in the Science & Technology Funds category -- ranked in the first percentile, a remarkable showing for any single fund family in a business as fiercely competitive and crowded as ours. Turner Top 20 ranked second out of 372 peers, Turner Micro Cap Growth was first among 242 competitors, and Turner Technology placed second in a field of 135. In general our stock funds benefited from a favorable market for growth stocks and, in our estimation, on good stock selection and adroit trading. Except for our four new funds, a large chunk of their gains came early in the period. In the fourth quarter of 1999, the stock market rebounded like a golf ball off a cart path. For instance, after an especially bleak stretch in early October, the S&P 500 Index bounced back dramatically to finish the quarter with a 14.88% gain. Growth stocks, as represented by the Russell 1000 Growth Index, benefited handsomely from that year-end surge, soaring 25.14%. Altogether, over the entire 12 months, the Russell 1000 Growth Index rose 23.43%, while the Russell 1000 Value Index climbed just 8.91%. In comparison, the returns of our stock funds in existence during that entire time ranged from 149.35% (the Turner Technology Fund) to 56.07% (the Turner Small Cap Growth Fund). Technology stocks (which represented the largest weightings in our stock funds) contributed the most to our performance. Why were we so heavily weighted in tech stocks? The reason is simple: tech stocks are becoming a bigger part of the target indexes of our funds. For instance, the tech sector now accounts for more than 30% of the market capitalization of the S&P 500 Index, up from 8% in 1989. (A brief explanation: our holdings in each of the 10 market sectors are either "sector neutral" or "sector diversified," meaning that their sector weightings closely resemble those of the indexes. It's been our experience that such a strategy makes sense because the performance advantage in the market can shift swiftly from sector to sector: today's mutt of a sector can be tomorrow's purebred.) Since we keep the sector weightings of our stock funds close to those of the indexes, when a sector like technology grows, we follow suit. In our judgment, our active trading practices -- trading in all of our funds exceeded an annualized 200% rate over the past 12 months -- helped us to nail down extra return in a market in which some stocks gained or lost half their value in a matter of days. Market volatility was unprecedented. For instance, in the past 12 months, the S&P 500 moved up or down at least 2% on more than 20% of its trading days. In contrast, before the 1990s, the S&P 500 moved that sharply just 3% of the time. To cope with such volatility, we found that it paid to be able to build or eliminate a position quickly. We think that, despite recent weakness, the tech sector is poised to once again lead the market in coming months. In our analysis, many tech stocks' valuations have become more reasonable and the fears that capital spending on technology will decline next year are largely unwarranted. Our funds remain deeply invested in tech stocks, so they are well-positioned to exploit any such rally, in our estimation. We expect no letup in market volatility over the next 12 months. And we look forward to potentially rewarding trading opportunities resulting from that volatility and to a continuation of the bull market. 2 | TURNER FUNDS 2000 ANNUAL REPORT During the past 12 months, our bond funds enhanced their admirable long-term record. A particularly worthy performer has been the Turner Short Duration Government Funds-Three Year Portfolio, which in Lipper's Short-Intermediate U.S. Government Funds classification ranked in the 17th percentile for the past one year, or 16th out of 91 peers. Also, in August both that fund and the Turner Short Duration Government Funds-One Year Portfolio were awarded AAAf credit-quality and S1 volatility ratings by Standard & Poor's. The AAAf rating reflects that both funds' holdings provide the highest protection against losses from credit defaults, and the S1 rating recognizes that they have demonstrated sensitivity to changing market conditions. All of our bond funds profited from substantial holdings in Treasury and mortgage-backed securities, which outperformed (the result of a reduced Treasury supply and an investor flight to the safety of government and quasi-government bonds); an underweighting in corporate securities, which underperformed (due to a growing concern that a slowing economy will foster a deterioration in corporate credit quality); and a high average credit quality (high quality did better than low). Altogether, signs of moderating economic growth were a tonic for the bond market and our bond funds. For the 12-month period, all three of our bond funds returned 6% or more -- returns competitive with those of large-cap value stocks. Going forward, our bond funds continue to emphasize Treasuries, inflation-indexed Treasuries, and mortgages, which have good return potential, in our analysis. We are avoiding corporate securities, in the belief that corporate credit quality will indeed worsen and lead to a depreciation in corporate-bond prices. We are keeping the average credit quality of our funds high; in our judgment, most lower-quality bonds don't offer enough extra yield as compensation for their extra risk. In closing, we thank you for keeping faith with us, and we thank the members of our investment team whose individual and collective efforts have contributed so much to our performance record. As always, we remain committed to our mission of delivering superior investment returns and service to you. And as always, we welcome your questions or comments. /s/BOB TURNER Bob Turner CHAIRMAN AND CHIEF INVESTMENT OFFICER TURNER INVESTMENT PARTNERS, INC. [PHOTO OMITTED] BOB TURNER TURNER FUNDS 2000 ANNUAL REPORT | 3 INVESTMENT REVIEW TURNER MIDCAP GROWTH FUND TOTAL RETURN YEAR ENDING SEPTEMBER 30, 2000 - -------------------------------------------------------------------------------- TURNER MIDCAP GROWTH FUND 97.35% Lipper Multi-Cap Growth Funds Average 53.43 Russell Midcap Growth Index 60.37 - -------------------------------------------------------------------------------- During the 12 months ended September 30, 2000, the Turner Midcap Growth Fund continued to deliver outstanding performance, with a total return of 97.35%. Once again, it significantly outpaced its benchmark, the Russell Midcap Growth Index, which produced a total return of 60.37%. At fiscal year end, the portfolio's price-earnings ratio remained at a relatively conservative level of 79.1, indicating that this performance was not achieved through excessive risk. Technology, which represents the largest portion of the portfolio, continued to account for much of the Fund's gains. Healthcare issues, particularly in the emerging biotechnology sector, were also excellent performers. The energy sector, where we owned a number of key service providers, benefited from rising oil prices. The only weak member of the group was utilities and communications, where increased competition and declining investor enthusiasm dampened results. The Midcap Growth Fund continues to invest in well-capitalized companies that enjoy dominant market positions and strong track records for innovation. Among the best-performing issues in the portfolio during the past year were e-commerce facilitator Commerce One; financial services leader Providian Financial; biotechnology innovators Medimmune, Millennium Pharmaceuticals, and PE Biosystems; and technology leaders Applied Micro Circuits, Ariba Incorporated, Brocade Communications Systems, and Extreme Networks. Looking ahead, we must again caution investors that the near-doubling of a Fund's value cannot be expected on a perennial basis. However, we believe that the Midcap Growth Fund remains in a "sweet spot" of the overall economy, where strong, agile, and innovative companies are taking the steps required to become even stronger. GROWTH OF A $10,000 INVESTMENT IN THE TURNER MIDCAP GROWTH FUND: OCTOBER 31, 1996-SEPTEMBER 30, 2000 * [LINE CHART OMITTED] PLOT POINTS FOLLOWS: TURNER MID CAP GROWTH RUSSELL MID CAP GROWTH INDEX 10/31/96 10,000 10,000 sep 97 14,248 13,117 sep 98 14,425 11,887 sep 99 26,552 16,309 sep 00 52,401 26,155 * 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 their original cost. The inception date of the Turner Midcap Growth Fund is October 1, 1996. - ----------------------------------------------------- ANNUALIZED TOTAL RETURNS Periods ending September 30, 2000 - ----------------------------------------------------- PAST ONE YEAR PAST THREE YEARS SINCE INCEPTION 97.35% 54.35% 51.64% - ----------------------------------------------------- 4 | TURNER FUNDS 2000 ANNUAL REPORT TURNER MIDCAP GROWTH FUND - -------------------------------------------------------------------------------- FUND OBJECTIVE The Turner Midcap Growth Fund seeks capital appreciation. It invests primarily in a diversified portfolio of common stocks with market capitalizations between $1 billion and $10 billion at the time of purchase that Turner believes offer strong earnings growth potential. The Fund's economic-sector weightings approximate the sector weightings of the Russell Midcap Growth Index. - -------------------------------------------------------------------------------- FUND PROFILE SEPTEMBER 30, 2000 [] Ticker symbol TMGFX [] CUSIP #900297409 [] Top 10 holdings (1) Palm (2) Applied Micro Circuits (3) Brocade Communications System (4) Ariba (5) Extreme Networks (6) PE Biosystems Group (7) Redback Networks (8) Medimmune (9) Vitesse Semiconductor (10) Commerce One [] % in 10 largest holdings 20.6% [] Number of holdings 113 [] Price/earnings ratio 79.1 [] Weighted average market capitalization $10.8 billion [] % of holdings with positive earnings surprises 74.1% [] % of holdings with negative earnings surprises 5.3% [] Net assets $1,204 billion [FUND PROFILE BOX OMITTED] - -------------------------------------------------------------------------------- Sector weightings: resemble Russell Midcap Growth Index [BAR CHART OMITTED] PLOT POINTS FOLLOWS: 3.0% Utilities/communication 2.0% Autos/transportation 5.5% Energy 0.7% Materials/processing 4.9% Producer durables 6.9% Financial services 1.6% Consumer staples 11.1% Consumer discretionary/services 17.7% Health care 43.0% Technology - -------------------------------------------------------------------------------- PORTFOLIO MANAGERS [PHOTO OMITTED] CHRISTOPHER K. MCHUGH has served as the lead product manager of the Midcap Growth Fund since its inception in 1996. Chris joined Turner when it was founded in 1990 and previously held a position as performance specialist at Provident Capital Management. He earned a bachelor's degree at the Philadelphia College of Textiles and Science and an MBA degree at St. Joseph's University. [PHOTO OMITTED] WILLIAM C. MCVAIL serves as a comanager of the Midcap Growth Fund. Before joining Turner in 1998, Bill was a portfolio manager at PNC Equity Advisors. A Chartered Financial Analyst, Bill received a bachelor's degree from Vassar College. [PHOTO OMITTED] ROBERT E. TURNER, founder, chairman, and chief investment officer of Turner Investment Partners, serves as a comanager of the Midcap Growth Fund. A Chartered Financial Analyst, Bob previously was senior investment manager with Meridian Investment Company. He earned bachelor's and MBA degrees at Bradley University. Turner funds 2000 annual Report | 5 INVESTMENT REVIEW - -------------------------------------------------------------------------------- TURNER SMALL CAP GROWTH FUND YEAR ENDING SEPTEMBER 30, 2000 - -------------------------------------------------------------------------------- TURNER SMALL CAP GROWTH FUND 56.07% Lipper Mid-Cap Growth Funds Average 63.89 Russell 2000 Growth Index 29.66 - -------------------------------------------------------------------------------- During the year ended September 30, 2000, the Turner Small Cap Growth Fund once again performed extremely well, delivering a total return of 56.07%. This performance was nearly double that of the Fund's benchmark, the Russell 2000 Growth Index, which returned 29.66%. The small cap sector remained an area of both promise and volatility during fiscal 2000. For the first two quarters of the year, small cap stocks produced spectacular results, riding the crest of Internet-related euphoria. During the rest of the year, however, a strong dose of reality took hold, and investors moved into sectors that offered greater certainty -- and real profits. Prudent stock selection and broad diversification helped the Turner Small Cap Growth Fund avoid the worst of the mid-year declines, and allowed the portfolio to hold on to a large portion of its earlier gains. Top performers in the portfolio for the year included financial services providers Henry & Associates and Metris Companies; healthcare providers AmeriSource, Caremark Rx, Techne Corporation, and Titan Pharmaceuticals; and technology leaders Anaren Microwave, Manugistics, MMC Networks, Nuance Communications, and Tollgrade Communications. The weakest sectors were consumer discretionary, materials processing, producer durables, and utilities and communications. Looking ahead, we believe that the small-cap arena remains ripe with opportunity, as emerging companies continue to develop exciting new products and services at a rapid pace. And with the Internet "bubble" now a thing of the past, the market appears to have returned to a climate of more rational expectations. We will continue to employ a rigorous, hands-on approach to identifying companies that have disciplined business models, in the conviction that innovative ideas are only half of the formula for small-cap success. GROWTH OF A $10,000 INVESTMENT IN THE TURNER SMALL CAP GROWTH FUND: FEBRUARY 28, 1994-SEPTEMBER 30, 2000 * [LINE GRAPH OMITTED] PLOT POINTS FOLLOWS:
TURNER SMALL CAP GROWTH RUSSELL 2000 GROWTH INDEX 2/28/94 10,000 10,000 sep 94 10,303 9,618 sep 95 15,812 12,328 sep 96 24,103 13,881 sep 97 28,114 17,123 sep 98 23,362 12,872 sep 99 37,179 17,072 Sep 00 58,025 22,135
* 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 their original cost. The inception date of the Turner Small Cap Growth Fund is February 7, 1994. Returns are calculated from the first full month following the fund's inception date. - ------------------------------------------------- ANNUALIZED TOTAL RETURNS Periods ending September 30, 2000 - ------------------------------------------------- PAST ONE PAST THREE PAST FIVE SINCE YEAR YEARS YEARS INCEPTION 56.07% 27.32% 29.69% 30.66% - ------------------------------------------------- 6 | Turner funds 2000 annual Report - -------------------------------------------------------------------------------- Turner Small Cap Growth Fund - -------------------------------------------------------------------------------- FUND OBJECTIVE The Turner Small Cap Growth Fund seeks capital appreciation. It invests primarily in a diversified portfolio of common stocks with market capitalizations at the time of purchase not exceeding $2 billion that Turner believes offer strong earnings growth potential. The Fund's economic-sector weightings approximate the sector weightings of the Russell 2000 Growth Index. The Fund participates in the Initial Public Offering ("IPO") market, and a significant portion of the Fund's returns are attributable to its investment in IPOs, which have a magnified impact due to the Fund's relatively small asset base. There is no guarantee that as the Fund's assets grow, it will continue to experience substantially similar performance by investing in IPOs. - -------------------------------------------------------------------------------- FUND PROFILE SEPTEMBER 30, 2000 [] Ticker symbol TSCEX [] CUSIP #900297300 [] Top 10 holdings (1) Anaren Microwave (2) Alpharma, Cl A (3) NETIQ (4) Metris (5) Click Commerce (6) Natural Microsystems (7) Manugistics Group (8) Laboratory Corporation of America Holdings (9) Avocent (10) Tollgrade Communications [] % in 10 largest holdings 12.7% [] Number of holdings 153 [] Price/earnings ratio 41.1 [] Weighted average market capitalization $1.7 billion [] % of holdings with positive earnings surprises 66.0% [] % of holdings with negative earnings surprises 2.5% [] Net assets $529 million [FUND PROFILE BOX OMITTED] - -------------------------------------------------------------------------------- SECTOR WEIGHTINGS: resemble Russell 2000 Growth Index [BAR CHART OMITTED] PLOT POINTS FOLLOWS: 4.1% Utilities/communication 4.0% Materials/processing 6.2% Producer durables 7.2% Financial services 0.9% Autos/transportation 5.3% Energy 1.2% Consumer staples 15.6% Consumer discretionary/services 20.3% Health care 34.0% Technology - -------------------------------------------------------------------------------- PORTFOLIO MANAGERS [PHOTO OMITTED] William C. McVail serves as the lead product manager of the Small Cap Growth Fund. Before joining Turner in 1998, Bill was a portfolio manager at PNC Equity Advisors. A Chartered Financial Analyst, Bill received a bachelor's degree from Vassar College. [PHOTO OMITTED] Frank L. Sustersic serves as a comanager of the Small Cap Growth Fund. A Chartered Financial Analyst, Frank joined Turner in 1994. Previously he was an investment officer and fund manager with First Fidelity Bank Corporation. He holds a bachelor's degree from the University of Pennsylvania. [PHOTO OMITTED] Christopher K. McHugh serves as a comanager of the Small Cap Growth Fund. Chris joined Turner when it was founded in 1990 and previously held a position as performance specialist at Provident Capital Management. He earned a bachelor's degree at the Philadelphia College of Textiles and Science and an MBA degree at St. Joseph's University. Turner funds 2000 annual Report | 7 - -------------------------------------------------------------------------------- INVESTMENT REVIEW TURNER MICRO CAP GROWTH FUND TOTAL RETURN YEAR ENDING SEPTEMBER 30, 2000 - -------------------------------------------------------------------------------- TURNER MICRO CAP GROWTH FUND 129.02% Lipper Small-Cap Growth Funds Average 56.56 Russell 2000 Growth Index 29.66 - -------------------------------------------------------------------------------- If any investors could have viewed last year's returns of 113.46% as disappointing, perhaps they will find the results of fiscal year 2000 to be more palatable. For the 12-month period ended September 30, 2000, the Turner Micro Cap Growth Fund produced a total return of 129.02% -- again trouncing the Russell 2000 Growth Index, which reported an annual return of 29.66%. The lion's share of the Fund's gains occurred during the first six months of the fiscal year, when micro cap stocks benefited in part from the general lift of technology/ internet mania. However, the Fund's ability to produce positive results during an otherwise negative second half demonstrated the importance of effective stock selection. Positive results were achieved in all major sectors of the portfolio. Among the Fund's best performers were fashion retailer Christopher & Banks Corp and drug delivery specialist CIMA Labs -- both of which grew more than threefold over the course of the year; contract pharmacy specialist Accredo Health Inc.; medical laboratory operator Dianon Systems; hospital operator Province Healthcare; industrial component manufacturer Shaw Group; electronics wholesaler Jaco Electronics; instrument maker Measurement Specialties; electronics designer DDi Corporation; and networking specialist Floware Wireless Systems. Looking ahead, it is once again important to point out that triple-digit performance is unlikely to continue. That said, we continue to find micro-cap companies of exceptional promise in a wide range of sectors. And we believe that our approach and process in identifying the best of these companies will continue to offer outstanding opportunities to those investors with long-term time horizons. GROWTH OF A $10,000 INVESTMENT IN THE TURNER MICRO CAP GROWTH FUND: FEBRUARY 28, 1998-SEPTEMBER 30, 2000 * [LINE GRAPH OMITTED PLOT POINTS FOLLOWS: TURNER RUSSELL 2000 MICRO CAP GROWTH GROWTH INDEX 2/98 10,000 10,000 9/98 9,882 7,625 9/99 21,093 10,113 9/00 48,308 13,113 * 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 their original cost. The inception date of the Turner Micro Cap Growth Fund is March 1, 1998. - ------------------------------------------- ANNUALIZED TOTAL RETURNS Periods ending September 30, 2000 - ------------------------------------------- PAST ONE YEAR SINCE INCEPTION 129.02% 83.61% - ------------------------------------------- 8 | Turner funds 2000 annual Report - -------------------------------------------------------------------------------- TURNER MICRO CAP GROWTH FUND - -------------------------------------------------------------------------------- FUND OBJECTIVE The Turner Micro Cap Growth Fund seeks capital appreciation. It invests primarily in a diversified portfolio of common stocks that, in Turner's opinion, have strong earnings growth potential and market capitalizations not exceeding $500 million at the time of purchase. The Fund's economic-sector weightings stay within a range that's not more than 50% above or below the sector weightings of the Russell 2000 Growth Index. The Fund participates in the Initial Public Offering ("IPO") market, and a significant portion of the Fund's returns are attributable to its investment in IPOs, which have a magnified impact due to the Fund's relatively small asset base. There is no guarantee that as the Fund's assets grow, it will continue to experience substantially similar performance by investing in IPOs. - -------------------------------------------------------------------------------- FUND PROFILE September 30, 2000 [] Ticker symbol TMCGX [] CUSIP #872524301 [] Top 10 holdings (1) Advanced Paradigm (2) Shaw Group (3) Biosource International (4) Christopher & Banks (5) Accredo Health (6) Ultimate Electronics (7) InFocus (8) Maverick Tube (9) DDI (10) Matrix Pharmaceuticals [] % in 10 largest holdings 24.6% [] Number of holdings 106 [] Price/earnings ratio 27.2 [] Weighted average market capitalization $570 million [] % of holdings with positive earnings surprises 47.0% [] % of holdings with negative earnings surprises 4.1% [] Net assets $187 million [FUND PROFILE BOX OMITTED] - -------------------------------------------------------------------------------- SECTOR WEIGHTINGS: resemble Russell 2000 Growth Index [BAR CHART OMITTED] PLOT POINTS FOLLOWS: 1.9% Utilities/communication 7.6% Materials/processing 8.9% Producer durables 2.2% Financial services 2.0% Autos/transportation 3.6% Energy 18.6% Consumer discretionary/services 29.2% Health care 21.2% Technology - -------------------------------------------------------------------------------- PORTFOLIO MANAGERS [PHOTO OMITTED] Frank L. Sustersic has served as the lead product manager of the Micro Cap Growth Fund since its inception in 1998. A Chartered Financial Analyst, Frank joined Turner in 1994. Previously he was an investment officer and fund manager with First Fidelity Bank Corporation. He holds a bachelor's degree from the University of Pennsylvania. [PHOTO OMITTED] William C. McVail serves as the comanager of the Micro Cap Growth Fund. Before joining Turner in 1998, Bill was a portfolio manager at PNC Equity Advisors. A Chartered Financial Analyst, Bill received a bachelor's degree from Vassar College. [PHOTO OMITTED] Christopher J. Perry serves as the comanager of the Micro Cap Growth Fund. Chris joined Turner in 1998 after serving as a research analyst at the Pennsylvania Merchant Group. A Chartered Financial Analyst, he earned a bachelor's degree at Villanova University and an MBA degree at Drexel University. Turner funds 2000 annual Report | 9 INVESTMENT REVIEW - -------------------------------------------------------------------------------- TURNER TOP 20 FUND YEAR ENDING SEPTEMBER 30, 2000 - -------------------------------------------------------------------------------- TURNER TOP 20 FUND 98.58% Lipper Multi-Cap Core Funds Average 21.58 S&P 500 Index 13.29 - -------------------------------------------------------------------------------- The fiscal year ended September 30, 2000 was another outstanding one for the Turner Top 20 Fund. For the period, the Fund recorded a total return of 98.58%, more than quadrupling the performance of its benchmark, the S&P 500 Index, which produced a return of 13.29%. There is no way around it: this is a stock-picker's fund. And we are proud of the choices that resulted in our performance during the year just past. In particular, we benefited from strong returns from such key holdings as supply chain management software creator i2 Technologies and storage management specialist Veritas Software. In addition, our selections in the computer networking sector delivered excellent gains, most notably Applied Micro Circuits, Broadcom, Brocade Communications Systems, and Juniper Networks. Looking ahead, we believe that a highly focused strategy remains very attractive for those investors who seek the very best of the best in the technology area. And while we recognize that this strategy also entails an above-average level of risk, we seek to manage that risk through old-fashioned diligence in our all-important stock selection process. GROWTH OF A $10,000 INVESTMENT IN THE TURNER TOP 20 FUND: JUNE 30, 1999-SEPTEMBER 30, 2000 * [LINE CHART OMITTED] PLOT POINTS FOLLOWS: TURNER S&P 500 TOP 20 INDEX 6/30/99 10,000 10,000 9/99 13,990 9,375 9/00 27,728 10,620 * 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 their original cost. The inception date of the Turner Top 20 Fund is June 30, 1999. - -------------------------------------------- Annualized total returns Periods ending September 30, 2000 - -------------------------------------------- Past one year Since inception 98.58% 126.27% - -------------------------------------------- 10 | Turner funds 2000 annual Report - -------------------------------------------------------------------------------- TURNER TOP 20 FUND - -------------------------------------------------------------------------------- FUND OBJECTIVE The Turner Top 20 Fund seeks capital appreciation. It invests in common stock and other equity securities of companies, regardless of their market capitalization, that Turner believes have strong earnings potential. The Fund will contain a total of 15-25 stocks representing Turner's favorite investment ideas. - -------------------------------------------------------------------------------- FUND PROFILE September 30, 2000 [] Ticker symbol TTOPX [] CUSIP #87252R862 [] Top 10 holdings (1) Cisco Systems (2) Nortel Networks (3) Commerce One (4) Juniper Networks (5) Corning (6) Applied Micro Circuits (7) Sun Microsystems (8) CIENA (9) PMC-Sierra (10) Brocade Communications System [] % in 10 largest holdings 53.1% [] Number of holdings 23 [] Price/earnings ratio 157.7 [] Weighted average market capitalization $88.5 billion [] % of holdings with positive earnings surprises 88.2% [] % of holdings with negative earnings surprises 3.2% [] Net assets $247 million [FUND PROFILE BOX OMITTED] - -------------------------------------------------------------------------------- Sector weightings: [BAR CHART OMITTED] PLOT POINTS FOLLOWS: 5.2% Consumer discretionary/services 3.1% Health care 90.1% Technology - -------------------------------------------------------------------------------- PORTFOLIO MANAGERS [PHOTO OMITTED] Robert E. Turner, founder, chairman, and chief investment officer of Turner Investment Partners, has served as the lead product manager of the Top 20 Fund since its inception in 1999. A Chartered Financial Analyst, Bob previously was senior investment manager with Meridian Investment Company. He earned bachelor's and MBA degrees at Bradley University [PHOTO OMITTED] Christopher K. McHugh serves as a comanager on the Top 20 Fund. Chris joined Turner when it was founded in 1990 and previously held a position as performance specialist at Provident Capital Management. He earned a bachelor's degree at the Philadelphia College of Textiles and Science and an MBA degree at St. Joseph's University [PHOTO OMITTED] William C. McVail serves as a comanager of the Top 20 Fund. Before joining Turner in 1998, Bill was a portfolio manager at PNC Equity Advisors. A Chartered Financial Analyst, Bill received a bachelor's degree from Vassar College. Turner funds 2000 annual Report | 11 INVESTMENT REVIEW - -------------------------------------------------------------------------------- TURNER TECHNOLOGY FUND TOTAL RETURN YEAR ENDING SEPTEMBER 30, 2000 - -------------------------------------------------------------------------------- Turner Technology Fund 149.35% Lipper Science & Technology Funds Average 69.60 Pacific Stock Exchange Technology 100 Index 65.57 - -------------------------------------------------------------------------------- During the fiscal year ended September 30, 2000, the Turner Technology Fund continued to set a blistering pace, with a total return of 149.35%. In doing so, the Fund more than doubled the results of its benchmark, the Pacific Stock Exchange Technology 100 Index, which produced a total return of 65.57%. It is notable that this performance was achieved during a fiscal year that was actually rather challenging to technology investors. In fact, some of technologies best known stocks such as Intel, Microsoft, Lucent and Dell delivered negative returns during the period. Fortunately, these weaknesses were more than offset by strengths in other key issues. These included software provider BEA Systems; e-commerce leader Siebel Systems; Internet security specialist VeriSign; supply chain management software creator i2 Technologies; and networking specialists Juniper Networks and PMC-Sierra. Looking ahead, we believe that technology will remain the engine of today's global economy. The products and services of this sector are enabling companies of all sizes and types to improve efficiency, quality, and productivity. As a result, we foresee continued strong growth -- especially for the best-of-breed in the technology category. Our goal, therefore, is to identify the premier names among today's growth companies in the computer, semiconductor, electronics, communications, health care and biotechnology sectors. And while the past year's performance will be difficult to duplicate, we believe our record indicates strong prospects for achieving that goal over the long run. GROWTH OF A $10,000 INVESTMENT IN THE TURNER TECHNOLOGY FUND: JUNE 30, 1999-SEPTEMBER 30, 2000 * [LINE GRAPH OMITTED] PLOT POINTS FOLLOWS: TURNER PACIFIC STOCK EXCHANGE TECHNOLOGY TECHNOLOGY INDEX 6/30/99 10,000 10,000 9/99 14,060 10,467 9/00 35,059 17,345 * 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 their original cost. The inception date of the Turner Technology Fund is June 30, 1999. - -------------------------------------------- ANNUALIZED TOTAL RETURNS PERIODS ENDING SEPTEMBER 30, 2000 - -------------------------------------------- PAST ONE YEAR SINCE INCEPTION 149.35% 172.50% - -------------------------------------------- 12 | Turner funds 2000 annual Report - -------------------------------------------------------------------------------- TURNER TECHNOLOGY FUND - -------------------------------------------------------------------------------- FUND OBJECTIVE The Turner Technology Fund seeks capital appreciation. It invests in common stock of companies that develop new technologies and that may experience exceptional growth in sales and earnings driven technology related products and services. Stock selection will not be based on company size, but rather on an assessment of a company's fundamental prospects. The Fund participates in the Initial Public Offering ("IPO") market, and a significant portion of the Fund's returns are attributable to its investment in IPOs, which have a magnified impact due to the fund's relatively small asset base. There is no guarantee that as the fund's assets grow, it will continue to experience substantially similar performance by investing in IPOs. - -------------------------------------------------------------------------------- FUND PROFILE SEPTEMBER 30, 2000 [] Ticker symbol TTECX [] CUSIP #87252R870 [] Top 10 holdings (1) Cicso Systems (2) Nortel Networks (3) I2 Technologies (4) Corning (5) Sycamore Networks (6) Juniper Networks (7) Medimmune (8) Sun Microsystems (9) PMC-Sierra (10) Commerce One [] % in 10 largest holdings 35.0% [] Number of holdings 41 [] Price/earnings ratio 243 [] Weighted average market capitalization $64.5 billion [] % of holdings with positive earnings surprises 81.2% [] % of holdings with negative earnings surprises 7.0% [] Net assets $169 million FUND PROFILE BOX OMITTED] - -------------------------------------------------------------------------------- SECTOR WEIGHTINGS: [BAR CHART OMITTED] PLOT POINTS FOLLOWS: 2.3% Producer durables 2.9% Consumer discretionary/services 5.6% Health care 88.4% Technology - -------------------------------------------------------------------------------- PORTFOLIO MANAGERS [PHOTO OMITTED] Robert E. Turner, founder, chairman, and chief investment officer of Turner Investment Partners, has served as the lead product manager of the Technology Fund since its inception in 1999. A Chartered Financial Analyst, Bob previously was senior investment manager with Meridian Investment Company. He earned bachelor's and MBA degrees at Bradley University. [PHOTO OMITTED] Christopher K. McHugh serves as a comanager of the Technology Fund. Chris joined Turner when it was founded in 1990 and previously held a position as performance specialist at Provident Capital Management. He earned a bachelor's degree at the Philadelphia College of Textiles and Science and an MBA degree at St. Joseph's University. [PHOTO OMITTED] Robb J. Parlanti serves as a comanager of the Technology Fund. Robb joined Turner in 1993 as a senior portfolio manager/ security analyst. A Chartered Financial Analyst, he received a bachelor's degree at Wake Forest University. Robb formerly was an assistant vice president/portfolio manager at PNC Bank. Turner funds 2000 annual Report | 13 INVESTMENT REVIEW - -------------------------------------------------------------------------------- TURNER B2B E-COMMERCE FUND TOTAL RETURN PERIOD ENDING SEPTEMBER 30, 2000 - -------------------------------------------------------------------------------- TURNER B2B E-COMMERCE FUND 25.20% Lipper Science & Technology Funds Average (1.17) Pacific Stock Exchange Technology 100 Index (5.67) - -------------------------------------------------------------------------------- From its inception on June 30, 2000 to September 30, 2000, the Turner B2B E-Commerce Fund produced a total return of 25.20%, compared with a return of -5.67% for its benchmark, the Pacific Stock Exchange Technology 100 Index. This new fund invests primarily in common stocks of companies that develop new business-to-business electronic commerce technologies that may experience exceptional growth in sales and earnings driven by B2B e-commerce products and services. The Fund's outstanding performance in a negative environment is attributable to strong stock selection. Among the portfolio's best performers for the period were Commerce One, a leader in e-commerce solutions; Agile Software Corporation, a provider of data management software for e-commerce applications; BEA Systems Inc., which helps companies use mainframe computers in e-commerce environments; and Click Commerce, a provider of business-to-business software. The Fund also recorded gains in EMC Corporation, the leader in data storage devices; i2 Technologies Inc., a developer of supply chain management solutions; McData Corporation, a network switching and software specialist; Mercury Interactive, a provider of Web-related testing software; and Vastera, a provider of global trading support services. Looking ahead, we believe that the recent correction in the B2B e-commerce market may be overdone, dragging down quality issues along with those of less viable companies. Outstanding opportunities remain for the B2B market, particularly for those who facilitate more efficient and effective management of corporate supply chains. Therefore, we plan to continue seeking companies that have sound business models and real long-term earnings potential. GROWTH OF A $10,000 INVESTMENT IN THE TURNER B2B E-COMMERCE FUND: JUNE 30, 2000-SEPTEMBER 30, 2000 * [LINE CHART OMITTED] PLOT POINTS FOLLOWS: PACIFIC STOCK TURNER B2B EXCHANGE TECHNOLOGY E-COMMERCE 100 INDEX 6/30/00 10,000 10,000 9/00 12,520 9,433 * 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 their original cost. The inception date of the Turner B2B E-Commerce Fund is June 30, 2000. - ---------------------------------------- CUMULATIVE TOTAL RETURN Period ending September 30, 2000 - ---------------------------------------- SINCE INCEPTION 25.20% - ---------------------------------------- 14 | Turner funds 2000 annual Report - -------------------------------------------------------------------------------- TURNER B2B E-COMMERCE FUND - -------------------------------------------------------------------------------- FUND OBJECTIVE The Turner B2B E-Commerce Fund seeks long-term capital appreciation. It invests in common stocks of companies that develop new business-to-business electronic commerce technologies and that may experience exceptional growth in sales and earnings driven by b2b e-commerce products and services. Stock selection will not be based on company size, but rather on an assessment of a company's fundamental prospects. - -------------------------------------------------------------------------------- FUND PROFILE SEPTEMBER 30, 2000 [] Ticker symbol TBTBX [] CUSIP #87252R797 [] Top 10 holdings (1) Commerce One (2) Tibco Software (3) Intuit (4) Cicso Systems (5) I2 Technologies (6) Sun Microsystems (7) America Online (8) Mercury Interactive (9) BEA Systems (10) Jabil Circuit [] % in 10 largest holdings 26.6% [] Number of holdings 42 [] Price/earnings ratio 582.4 [] Weighted average market capitalization $41.4 billion [] % of holdings with positive earnings surprises 72.4% [] % of holdings with negative earnings surprises 2.2% [] Net assets $14 million [FUND PROFILE BOX OMITTED] - -------------------------------------------------------------------------------- SECTOR WEIGHTINGS: [BAR CHART OMITTED] PLOT POINTS FOLLOWS: 1.4% Autos/transportation 10.6% Consumer discretionary/services 1.7% Financial Services 82.8% Technology - -------------------------------------------------------------------------------- PORTFOLIO MANAGERS [PHOTO OMITTED] Christopher K. McHugh serves as the lead manager on the B2B E-Commerce Fund. Chris joined Turner when it was founded in 1990 and previously held a position as performance specialist at Provident Capital Management. He earned a bachelor's degree at the Philadelphia College of Textiles and Science and an MBA degree at St. Joseph's University. [PHOTO OMITTED] Robert E. Turner, founder, chairman, and chief investment officer of Turner Investment Partners, serves as a comanager on the B2B E-Commerce Fund. A Chartered Financial Analyst, Bob previously was senior investment manager with Meridian Investment Company. He earned bachelor's and MBA degrees at Bradley University. [PHOTO OMITTED] John Hammerschmidt serves as a comanager on the B2B E-Commerce Fund. John joined Turner in 1992. Previously he was vice president of government securities trading with S.G. Warburg. He holds a bachelor's degree from Lehigh University and an MBA degree from Duke University. Turner funds 2000 annual Report | 15 INVESTMENT REVIEW - -------------------------------------------------------------------------------- TURNER WIRELESS & COMMUNICATIONS FUND TOTAL RETURN PERIOD ENDING SEPTEMBER 30, 2000 - -------------------------------------------------------------------------------- TURNER WIRELESS & COMMUNICATIONS FUND 18.20% Lipper Telecommunications Funds Average (7.34) Pacific Stock Exchange Technology 100 Index (5.67) - -------------------------------------------------------------------------------- From its inception on June 30, 2000 to September 30, 2000, the Turner Wireless & Communications Fund produced a total return of 18.20%, compared with a -5.67% return for its benchmark, the Pacific Stock Exchange Technology 100 Index. This new Fund invests primarily in common stocks of communications companies. These may include networking companies, land-based, satellite, and wireless carriers, and communications equipment manufacturers. The Fund's strong start during this period is attributable to gains in a number of sectors and holdings. Among the best performers in the portfolio were Applied Micro Circuits, a provider of specialized chips used in computer networking; CoSine Communications; a maker of switches and related software; Extreme Networks Incorporated, a creator of advanced switching solutions; Juniper Networks, a manufacturer of routers and other networking systems; Micromuse Inc., a developer of network monitoring systems; personal digital assistant manufacturer Palm Inc., Phone.Com Incorporated, a developer of wireless communications software; Software.Com Incorporated, a developer of advanced e-mail and messaging solutions. Looking ahead, we believe that the rapidly-expanding global communications industry continues to offer outstanding opportunities, especially in such areas as data networking, broad band communications, fiber optic networks and wireless voice and data delivery. This is a dynamic and capital-intensive industry, requiring constant attention to shifts in technology and market leadership. Therefore, we will continue to monitor our stock selections closely with regard to both internal business fundamentals and external market forces. GROWTH OF A $10,000 INVESTMENT IN THE TURNER WIRELESS & COMMUNICATIONS FUND: JUNE 30, 2000-SEPTEMBER 30, 2000 * [LINE CHART OMITTED] PLOT POINTS FOLLOWS: PACIFIC TURNER STOCK EXCHANGE WIRELESS & TECHNOLOGY COMMUNICATIONS 100 INDEX 6/30/00 10,000 10,000 9/00 11,821 9,433 * 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 their original cost. The inception date of the Turner Wireless & Communications Fund is June 30, 2000. - ----------------------------------------- CUMULATIVE TOTAL RETURN Period ending September 30, 2000 - ----------------------------------------- SINCE INCEPTION 18.20% - ----------------------------------------- 16 | Turner funds 2000 annual Report - -------------------------------------------------------------------------------- TURNER WIRELESS & COMMUNICATIONS FUND - -------------------------------------------------------------------------------- FUND OBJECTIVE The Turner Wireless & Communications Fund seeks long-term capital appreciation. It invests primarily in common stocks of communications companies. Stock selection will not be based on company size, but rather on an assessment of a company's fundamental prospects. The Fund's holdings will be concentrated in the communications sector, and will range from small companies developing new communications technologies to large, established firms with a history of developing and marketing such communications technologies. - -------------------------------------------------------------------------------- FUND PROFILE SEPTEMBER 30, 2000 [] Ticker symbol TIWCX [] CUSIP #87252R789 [] Top 10 holdings (1) Transwitch (2) Palm (3) Aether Systems (4) Oni Systems (5) Intersil Holding (6) Comverse Technology (7) Juniper Networks (8) Vitesse Semiconductor (9) CIENA (10) Sycamore Networks [] % in 10 largest holdings 33.2% [] Number of holdings 40 [] Price/earnings ratio 203.4 [] Weighted average market capitalization $37.3 billion [] % of holdings with positive earnings surprises 79.9% [] % of holdings with negative earnings surprises 1.9% [] Net assets $24 million [FUND PROFILE BOX OMITTED] - -------------------------------------------------------------------------------- SECTOR WEIGHTINGS: [BAR CHART OMITTED] PLOT POINTS FOLLOWS: 2.7% Producer durable 96.1% Technology - -------------------------------------------------------------------------------- PORTFOLIO MANAGERS [PHOTO OMITTED] Christopher K. McHugh serves as the lead manager on the Wireless & Communications Fund. Chris joined Turner when it was founded in 1990 and previously held a position as performance specialist at Provident Capital Management. He earned a bachelor's degree at the Philadelphia College of Textiles and Science and an MBA degree at St. Joseph's University. [PHOTO OMITTED] Robert E. Turner, founder, chairman, and chief investment officer of Turner Investment Partners, serves as a comanager on the Wireless & Communications Fund. A Chartered Financial Analyst, Bob previously was senior investment manager with Meridian Investment Company. He earned bachelor's and MBA degrees at Bradley University. [PHOTO OMITTED] Robb J. Parlanti serves as a comanager of the Wireless & Communications Fund. Robb joined Turner in 1993 as a senior portfolio manager/security analyst. A Chartered Financial Analyst, he received a bachelor's degree at Wake Forest University. Robb formerly was an assistant vice president/portfolio manager at PNC Bank. TURNER FUNDS 2000 ANNUAL REPORT | 17 INVESTMENT REVIEW - -------------------------------------------------------------------------------- TURNER GLOBAL TOP 40 FUND TOTAL RETURN PERIOD ENDING SEPTEMBER 30, 2000 - -------------------------------------------------------------------------------- TURNER GLOBAL TOP 40 FUND (6.30)% Lipper Global Funds Average (3.11) MSCI World Index (5.26) - -------------------------------------------------------------------------------- From its inception on June 30, 2000 to September 30, 2000, the Turner Global Top 40 Fund produced a total return of -6.30%, compared with a return of -5.26% for its benchmark, the MSCI World Index. This new fund invests primarily in common stocks of companies located in the U.S. and developing foreign market. Its invests in a variety of industries and business sectors that the Fund expects to experience rising earnings growth and to benefit from global economic trends or promising technologies or products. The portfolio will typically consist of 30 to 50 stocks representing the adviser's best global investment ideas. While the Fund slightly underperformed its index during its initial months of existence, several portfolio holdings produced solid gains. Among them were Commerce One, a U.S.-based e-commerce facilitator; Biovail Corporation, a Canadian drug delivery specialist; Celestica Incorporated, a Canadian provider of contract manufacturing services; Check Point Software Technology, a Israel-based provider of security software; Veritas Software Corp., a U.S.-based developer of storage management software; and Global Crossing, and a Bermuda-based provider of telecommunications services. Looking ahead, we believe that our strategy of focusing on a relatively small number of high-potential stocks from around the world presents exciting possibilities for the future. And while any global strategy entails special risks, we feel confident that our approach and process in selecting stocks, industries, and global markets will enable us to balance those risks with equally uncommon reward potential over the long term. GROWTH OF A $10,000 INVESTMENT IN THE TURNER GLOBAL TOP 40 FUND: JUNE 30, 2000-SEPTEMBER 30, 2000 * [LINE CHART OMITTED] PLOT POINTS FOLLOWS: TURNER GLOBAL MSCI WORLD TOP 40 INDEX 6/30/00 10,000 10,000 9/00 9,370 9,497 * 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 their original cost. The inception date of the Turner Global Top 40 Fund is June 30, 2000. - ---------------------------------------- CUMULATIVE TOTAL RETURN Period ending September 30, 2000 - ---------------------------------------- SINCE INCEPTION - -6.30% - ---------------------------------------- 18 | Turner funds 2000 annual Report - -------------------------------------------------------------------------------- Turner Global Top 40 Fund - -------------------------------------------------------------------------------- Fund objective The Turner Global Top 40 Fund seeks long-term capital appreciation. It invests in ADRs and common stock of U.S. and foreign companies regardless of their market capitalization that Turner believes have strong earnings growth potential. The portfolio will typically consist of 30-50 stocks representing Turner's best global investment ideas. - -------------------------------------------------------------------------------- Fund profile September 30, 2000 [] Ticker symbol TGTFX [] CUSIP #87252R813 [] Top 10 holdings (1) Cisco Systems (2) Nortel Networks (3) Check Point Software Technologies (4) Corning (5) Flextronics International Ltd. (6) Juniper Networks (7) Celestica (8) Commerce One (9) Tycom Ltd. (10) Brocade Communications System [] % in 10 largest holdings 32.1% [] Number of holdings 45 [] Price/earnings ratio 80.8 [] Weighted average market capitalization $83.4 billion [] % of holdings with positive earnings surprises 58.8% [] % of holdings with negative earnings surprises 5.6% [] Net assets $12 million [FUND PROFILE BOX OMITTED] - -------------------------------------------------------------------------------- SECTOR WEIGHTINGS: [BAR CHART OMITTED] PLOT POINTS FOLLOWS: 57.0% Technology 14.9% Utilities/communication 5.6% Financial services 1.8% Autos/transportation 2.5% Energy 6.6% Consumer discretionary/services 7.9% Health care - -------------------------------------------------------------------------------- PORTFOLIO MANAGERS [PHOTO OMITTED] Mark Turner, founder and vice-chairman of Turner Investment Partners, serves as the lead manager on the Global Top 40 Fund. Mark previously was vice president and senior portfolio manager with First Maryland Asset Management. He earned a bachelor's degree at Bradley University and an MBA at the University of Illinois. [PHOTO OMITTED] Robert E. Turner, founder, chairman, and chief investment officer of Turner Investment Partners, serves as a comanager on the Global Top 40 Fund. A Chartered Financial Analyst, Bob previously was senior investment manager with Meridian Investment Company. He earned bachelor's and MBA degrees at Bradley University. [PHOTO OMITTED] Robb J. Parlanti serves as a comanager of the Global Top 40 Fund. Robb joined Turner in 1993 as a senior portfolio manager/security analyst. A Chartered Financial Analyst, he received a bachelor's degree at Wake Forest University. Robb formerly was an assistant vice president/portfolio manager at PNC Bank. [PHOTO OMITTED] Christopher J. Perry serves as a comanager of the Global Top 40 Fund. Chris joined Turner in 1998 after serving as a research analyst at the Pennsylvania Merchant Group. A Chartered Financial Analyst, he earned a bachelor's degree at Villanova University and an MBA degree at Drexel University. Turner funds 2000 annual Report | 19 INVESTMENT REVIEW - -------------------------------------------------------------------------------- TURNER SELECT GROWTH EQUITY FUND TOTAL RETURN PERIOD ENDING SEPTEMBER 30, 2000 - -------------------------------------------------------------------------------- TURNER SELECT GROWTH EQUITY FUND (1.90)% Lipper Large-Cap Growth Funds Average (0.48) Russell Top 200 Growth Index (6.96) - -------------------------------------------------------------------------------- From its inception on June 14, 2000 to September 30, 2000, the Turner Select Growth Equity Fund produced a total return of -1.90%, compared with a return of - -6.96% for its benchmark, the Russell Top 200 Growth Index. This new fund invests primarily in common stocks and other equity securities of U.S. companies that the adviser believes have strong earnings growth potential. While the focus is on companies with very large market capitalizations -- such as those over $10 billion -- the Fund may also purchase securities of smaller companies. During its first six months of operations, the management style of the Turner Select Growth Equity Fund helped the portfolio outperform its benchmark. In particular, the Fund benefited from gains in Enron Corporation, an innovative marketer of energy products and communications services; MedImmune, a biotechnology leader; networking leaders Applied Micro Circuits, Juniper Networks, and Ciena Corporation, i2 Technologies, a developer of supply chain management solutions; Siebel Systems, an e-commerce leader; and Sun Microsystems, a leading provider of computer hardware and software systems. Looking ahead, the environment remains favorable for large-cap growth companies, which have in recent years demonstrated by the agility to develop innovative products and services as well as the financial strength to bring their best ideas to market. We believe that by remaining attuned to shifting trends in overall business trends, we can continue to identify those companies that offer the best prospects for adding to their track records of success. GROWTH OF A $1,000,000 INVESTMENT IN THE TURNER SELECT GROWTH EQUITY FUND: JUNE 30, 2000-SEPTEMBER 30, 2000 * [LINE CHART OMITTED] PLOT POINTS FOLLOWS: TURNER SELECT RUSSELL TOP 200 S&P 500 GROWTH EQUITY GROWTH EQUITY INDEX 6/30/00 1,000,000 1,000,000 1,000,000 9/00 965,544 930,443 990,327 * 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 their original cost. The inception date of the Turner Select Growth Equity Fund is June 14, 2000. - ---------------------------------------- CUMULATIVE TOTAL RETURN Period ending September 30, 2000 - ---------------------------------------- SINCE INCEPTION - -1.90% - ---------------------------------------- 20 | Turner funds 2000 annual Report - -------------------------------------------------------------------------------- TURNER SELECT GROWTH EQUITY FUND - -------------------------------------------------------------------------------- FUND OBJECTIVE The Turner Select Growth Equity Fund seeks capital appreciation. It invests primarily in common stocks and equity securities of U.S. companies with market capitalization exceeding ten billion that Turner believes have strong earnings growth potential. - -------------------------------------------------------------------------------- FUND PROFILE September 30, 2000 [] Ticker symbol TSGEX [] CUSIP #87252R839 [] Top 10 holdings (1) Cisco Systems (2) General Electric (3) Pfizer (4) EMC-Mass (5) Sun Microsystems (6) Oracle (7) America Online (8) Corning (9) Amgen (10) Time Warner [] % in 10 largest holdings 47.6% [] Number of holdings 50 [] Price/earnings ratio 81.2 [] Weighted average market capitalization $170.8 billion [] % of holdings with positive earnings surprises 84.9% [] % of holdings with negative earnings surprises 4.4% [] Net assets $5 million [FUND PROFILE BOX OMITTED] - -------------------------------------------------------------------------------- SECTOR WEIGHTINGS: [BAR CHART OMITTED] PLOT POINTS FOLLOWS: 1.2% Producer durables 1.1% Financial services 2.4% Energy 16.1% Consumer discretionary/services 2.2% Consumer staples 15.8% Health care 60.1% Technology - -------------------------------------------------------------------------------- PORTFOLIO MANAGERS [PHOTO OMITTED] Robert E. Turner, founder, chairman, and chief investment officer of Turner Investment Partners, serves as the lead manager on the Select Growth Equity Fund. A Chartered Financial Analyst, Bob previously was senior investment manager with Meridian Investment Company. He earned bachelor's and MBA degrees at Bradley University. [PHOTO OMITTED] Mark Turner, founder and vice-chairman of Turner Investment Partners, serves as a comanager on the Select Growth Equity Fund. Mark previously was vice president and senior portfolio manager with First Maryland Asset Management. He earned a bachelor's degree at Bradley University and an MBA at the University of Illinois. [PHOTO OMITTED] John Hammerschmidt serves as a comanager on the Select Growth Equity Fund. John joined Turner in 1992. Previously he was vice president of government securities trading with S.G. Warburg. He holds a bachelor's degree from Lehigh University and an MBA degree from Duke University. Turner funds 2000 annual Report | 21 INVESTMENT REVIEW - -------------------------------------------------------------------------------- TURNER SHORT DURATION GOVERNMENT FUNDS- ONE YEAR PORTFOLIO TOTAL RETURN Year ending September 30, 2000 - -------------------------------------------------------------------------------- TURNER SHORT DURATION GOVERNMENT FUNDS- ONE YEAR PORTFOLIO (CLASS I) 6.34% Lipper Ultra-Short Obligation Funds Average 6.02 Merrill Lynch 3 Month U.S. Treasury Bill Index 5.78 - -------------------------------------------------------------------------------- For the 12 months ended September 30, 2000, Class I and Class II shares of the Turner Short Duration Government Funds-One Year Portfolio delivered strong total returns of 6.34% and 6.00%, respectively. By contrast, the Merrill Lynch Three-Month Treasury Bill Index reported a total return of 5.78%. The Fund benefited from three rate hikes by the Federal Reserve Board over the course of the fiscal year, each of which boosted short-term yields by 0.25%. In addition, a mildly aggressive average duration and a strong position in mortgage-backed securities provided the fund with increased octane during a relatively calm period. Investors in the fund can also feel gratified that during a good portion of the year, yields on short-term instruments actually exceeded those of longer-term securities. However, this so-called "inversion of the yield curve" is often considered to be a sign of a coming economic slowdown. Looking ahead, we believe that the Federal Reserve Board will hold rates relatively steady for the near future as it waits for clearer signs of the economy's direction. The picture at present is blurry, with strong overall growth mixed with rising oil prices and pockets of weakness in certain manufacturing sectors. Whatever the environment, we believe that the Fund remains well positioned to provide conservative investors with a balance of competitive yields and relative stability. GROWTH OF A $10,000 INVESTMENT IN THE TURNER SHORT DURATION GOVERNMENT-FUNDS ONE YEAR PORTFOLIO, CLASS I: MARCH 31, 1994-SEPTEMBER 30, 2000 * [LINE CHART OMITTED] PLOT POINTS FOLLOWS: TURNER SHORT DURATION, MERRILL LYNCH 1 YEAR PORTFOLIO 3 MONTH T.BILL INDEX 3/31/94 10,000 10,000 Sep.94 10,231 10,235 Sep 95 10,935 10,837 Sep 96 11,704 11,431 Sep 97 12,428 12,047 Sep 98 13,201 12,693 Sep 99 13,906 13,289 Sep 00 14,788 14,058 * 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 their original cost. The inception date of the Turner Short Duration Government Funds-One Year Portfolio (Class I) is March 1, 1994. - ---------------------------------------------------------------- ANNUALIZED TOTAL RETURNS Periods ending September 30, 2000 - ---------------------------------------------------------------- PAST ONE PAST THREE PAST FIVE SINCE YEAR YEARS YEARS INCEPTION Class I Shares 6.34% 5.96% 6.22% 6.12% Class II Shares 6.00% -- -- 5.51% - ---------------------------------------------------------------- 22 | Turner funds 2000 annual Report - -------------------------------------------------------------------------------- TURNER SHORT DURATION GOVERNMENT FUNDS- ONE YEAR PORTFOLIO - -------------------------------------------------------------------------------- FUND OBJECTIVE The Turner Short Duration Government Funds-One Year Portfolio seeks to produce maximum total return consistent with the preservation of capital and investment prudence. It invests primarily in high-grade securities issued or guaranteed by the U.S. government or its agencies. The Fund seeks to limit fluctuations in principal and reduce interest-rate risk by maintaining an average effective duration no greater than that of a one-year Treasury note. - -------------------------------------------------------------------------------- FUND PROFILE September 30, 2000 [] Ticker symbol TSDOX Class I Shares [] CUSIP #872524103, Class I Shares [] Top 10 holdings (1) FHLMC, 6.770%, 05/24/01 (2) U.S. Treasury Note, 3.625%, 07/15/02 (3) FHLMC CMO/REMIC, 7.000%, 04/15/08 (4) FNMA MTN, 6.290%, 09/11/01 (5) FNMA CMO/REMIC, 7.000%, 01/18/21 (6) WFS Financial Owner Trust, 7.010%, 08/20/03 (7) Prudential Home Mortgage Securities, 7.000%, 02/25/24 (8) U.S. Treasury Note, 8.000%, 05/15/01 (9) GNMA ARM, 6.750%, 08/20/17 (10) FNMA CMO/REMIC, 6.000%, 05/18/12 [] % in 10 largest holdings 50.7% [] Number of holdings 49 [] Average effective duration 0.6 years [] Average maturity 0.8 years [] Average yield to maturity 6.6% [] Average credit quality Agency [] Convexity (0.15) [] Net assets $39 million [FUND PROFILE BOX OMITTED] - -------------------------------------------------------------------------------- Sector weightings: [BAR CHART OMITTED] PLOT POINTS FOLLOWS: 6.7% Asset-backed securities 5.1% U.S. agency securities 22.1% Treasury securities 21.0% Other 45.1% Mortgage-backed securities - -------------------------------------------------------------------------------- PORTFOLIO MANAGERS [PHOTO OMITTED] James I. Midanek, fixed-income chief investment officer, has served as manager of the Short Duration Funds-One Year Portfolio since inception. Jim joined Turner in 1998, upon our acquisition of Solon Asset Management, which he cofounded. Previously he was chief investment officer, fixed income with Montgomery Asset Management. He holds a bachelor's degree from Queens College. [PHOTO OMITTED] John Pak joined the firm in 2000. He earned a bachelor of arts degree and a master of arts degree, both in economics, at the University of San Francisco. Previously he served as vice-president/ trade desk manager at Tuttle Decision Systems and assistant vice president at C. E. Childs and Company. Turner funds 2000 annual Report | 23 INVESTMENT REVIEW - -------------------------------------------------------------------------------- TURNER SHORT DURATION GOVERNMENT FUNDS- THREE YEAR PORTFOLIO TOTAL RETURN YEAR ENDING SEPTEMBER 30, 2000 - -------------------------------------------------------------------------------- TURNER SHORT DURATION GOVERNMENT FUNDS- THREE YEAR PORTFOLIO (CLASS I) 6.00% Lipper Short/Intermediate U.S. Government Funds Average 5.38 Lehman Brothers 1-3 Year U.S. Government Bond Index 5.84 - -------------------------------------------------------------------------------- For the 12 months ended September 30, 2000, Class I and Class II shares of the Turner Short Duration Government Funds-Three Year Portfolio delivered total returns of 6.00% and 5.92%, respectively. By comparison, the Lehman Brothers 1-3 Year U.S. Government Bond Index returned 5.84%. This outperformance is attributable to a strategy that emphasized mortgage-backed securities, which offered a strong yield advantage during much of the year. The Fund also maintained a relatively modest average duration and maturity structure, which proved to be beneficial during the last two fiscal quarters. In the face of strong economic growth and a skyrocketing stock market, the Federal Reserve Board implemented three quarter-point rate hikes during the first half of the fiscal year. However, a combination of slower economic growth, rising oil prices, declines in the equity markets, and an impending Presidential election put the Fed on hold for the rest of the period. This allowed the fixed income markets to stabilize, resulting in solid if unexciting results for the full year. Looking ahead, we believe that bond fund investors must face the reality that the long-term decline in interest rates has essentially run its course, and that any future action will be within a relatively narrow range. Therefore, any gains will need to come primarily from coupon yields, rather than capital appreciation, making sector strategies more important than ever. Our approach to this market is to move toward those sectors where yields are most attractive, while maintaining overall quality. At present, that means a continued emphasis on mortgage-backed instruments. GROWTH OF A $10,000 INVESTMENT IN THE TURNER SHORT DURATION GOVERNMENT FUNDS-THREE YEAR PORTFOLIO, CLASS I: MARCH 31, 1994-SEPTEMBER 30, 2000 * [LINE CHART OMITTED] PLOT POINTS FOLLOWS: TURNER SHORT DURATION LEHMAN 1-3 YR 3 YEAR PORTFOLIO GOVERNMENT BOND INDEX 3/31/94 10,000 10,000 sep 94 10,089 10,049 sep 95 10,976 10,871 sep 96 11,637 11,488 sep 97 12,463 12,279 sep 98 13,469 13,253 sep 99 13,858 13,676 sep 00 14,690 14,475 * 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 their original cost. The inception date of the Turner Short Duration Government Funds-Three Year Portfolio (Class I) is March 1, 1994. - ----------------------------------------------------------------- Annualized total returns Periods ending September 30, 2000 - ----------------------------------------------------------------- Past one Past three Past five Since year years years inception Class I Shares 6.00% 5.63% 6.00% 6.01% Class II Shares 5.92% -- -- 8.21% - ----------------------------------------------------------------- 24 | Turner funds 2000 annual Report - -------------------------------------------------------------------------------- TURNER SHORT DURATION GOVERNMENT FUNDS- THREE YEAR PORTFOLIO - -------------------------------------------------------------------------------- FUND OBJECTIVE The Turner Short Duration Government Funds-Three Year Portfolio seeks to produce maximum total return consistent with preservation of capital and investment prudence. It invests primarily in high-grade securities issued or guaranteed by the U.S. government or its agencies. The Fund seeks to limit fluctuations in principal and reduce interest-rate risk by maintaining an average effective duration no greater than that of a three-year Treasury bill. - -------------------------------------------------------------------------------- FUND PROFILE September 30, 2000 [] Ticker symbol TSDGX, Class I Shares [] CUSIP #872524202, Class I Shares [] Top 10 holdings (1) U.S. Treasury Note, 3.625%, 07/15/02 (2) U.S. Treasury Note, 8.000%, 05/15/01 (3) FNMA CMO/REMIC, 8.000%, 09/25/06 (4) U.S. Treasury Note, 6.000%, 08/15/09 (5) Securitized Assets Sales, 6.250%, 12/25/23 (6) FHLMC CMO/REMIC, 9.500%, 06/15/06 (7) Fleet Credit Card Master Trust, 6.661%, 07/15/03 (8) GNMA, 6.500%, 01/15/13 (9) GNMA, 7.375%, 03/20/16 (10) FNMA, 7.500%, 12/01/09 [] % in 10 largest holdings 46.2% [] Number of holdings 60 [] Average effective duration 1.5 years [] Average maturity 2.4 years [] Average yield to maturity 6.6% [] Average credit quality Agency [] Convexity (0.28) [] Net assets $49 million [FUND PROFILE BOX OMITTED] - -------------------------------------------------------------------------------- SECTOR WEIGHTINGS: PLOT POINTS FOLLOWS: 65.1% Mortgage-backed securities 26.4% Treasury securities 5.0% Asset-backed securities 2.8% Other 0.7% U.S. agency securities - -------------------------------------------------------------------------------- PORTFOLIO MANAGERS [PHOTO OMITTED] James I. Midanek, fixed-income chief investment officer, has served as manager of the Short Duration Funds-Three Year Portfolio since inception. Jim joined Turner in 1998, upon our acquisition of Solon Asset Management, which he cofounded. Previously he was chief investment officer, fixed income with Montgomery Asset Management. He holds a bachelor's degree from Queens College. [PHOTO OMITTED] John Pak joined the firm in 2000. He earned a bachelor of arts degree and a master of arts degree, both in economics, at the University of San Francisco. Previously he served as vice-president/ trade desk manager at Tuttle Decision Systems and assistant vice president at C. E. Childs and Company. Turner funds 2000 annual Report | 25 INVESTMENT REVIEW - -------------------------------------------------------------------------------- TURNER CORE HIGH QUALITY FIXED INCOME FUND TOTAL RETURN YEAR ENDING SEPTEMBER 30, 2000 - -------------------------------------------------------------------------------- TURNER CORE HIGH QUALITY FIXED INCOME FUND 6.97% Lipper General Bond Funds Average 6.58 Lehman Brothers Aggregate Bond Index 6.99 - -------------------------------------------------------------------------------- For the 12 months ended September 30, 2000, the Turner Core High Quality Fixed Income Fund delivered a total return of 6.97%. By comparison, the Lehman Aggregate Bond Index returned 6.99%. The Fund's strong performance was attributable to a strategy that emphasized mortgage-backed securities and shorter maturities. While this strategy sometimes hampered results during periods of declining rates, the net effect proved to be advantageous for the full fiscal year. For the government securities markets, the fiscal year was divided into two distinct halves. In the first, the Federal Reserve Board continued its aggressive inflation fighting, initiating three 0.25% hikes. In the second, conflicting economic data and election year tradition kept the Fed on the sidelines. Looking ahead, we believe the Federal Reserve Board will remain relatively passive as it waits for clearer data on the direction of the domestic economy. In addition, the government securities markets may be subject to post-election political activity, particularly any changes in plans for the projected budget surpluses. In light of this environment, we plan to retain our current focus on relatively short maturities, and will seek incremental yields through sector-based strategies. GROWTH OF A $10,000 INVESTMENT IN THE TURNER CORE HIGH QUALITY FIXED INCOME FUND: JUNE 30, 1999-SEPTEMBER 30, 2000 * [LINE CHART OMITTED] PLOT POINTS FOLLOWS: TURNER LEHMAN CORE HIGH QUALITY AGGREGATE FIXED INCOME BOND INDEX 6/30/99 10,000 10,000 9/99 10,047 10,068 9/00 10,748 10,772 * 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 their original cost. The inception date of the Turner Core High Quality Fixed Income Fund is June 30, 1999. - -------------------------------------------- ANNUALIZED TOTAL RETURNS PERIODS ENDING SEPTEMBER 30, 2000 - -------------------------------------------- PAST ONE YEAR SINCE INCEPTION 6.97% 5.93% - -------------------------------------------- 26 | Turner funds 2000 annual Report Turner Core High Quality Fixed Income Fund - -------------------------------------------------------------------------------- FUND OBJECTIVE The Turner Core High Quality Fixed Income Fund seeks current income and capital appreciation, an objective that emphasizes total return rather than just yield alone. It invests in investment-grade fixed-income securities, including U.S. government, corporate, mortgaged-backed and asset-backed securities. - -------------------------------------------------------------------------------- FUND PROFILE September 30, 2000 [] Ticker symbol THQFX [] CUSIP #87252R847 [] Top 10 holdings (1) U.S. Treasury Bond, 8.125%, 05/15/21 (2) U.S. Treasury Note, 7.000%, 07/15/06 (3) FNMA, 6.000%, 06/01/14 (4) FNMA TBA, 6.500%, 10/01/30 (5) FNMA CMO/REMIC, 6.000%, 12/25/22 (6) U.S. Treasury Note, 3.625%, 01/15/08 (7) FNMA, 8.000%, 07/01/30 (8) FNMA CMO/REMIC, 6.500%, 06/25/23 (9) FNMA, 8.000%, 08/01/08 (10) FHLMA, 6.000%, 06/01/29 [] % in 10 largest holdings 57.2% [] Number of holdings 39 [] Average effective duration 4.8 years [] Average maturity 8.5 years [] Average yield to maturity 6.8% [] Average credit quality Agency [] Convexity 0.06 [] Net assets $14 million [FUND PROFILE BOX OMITTED] - -------------------------------------------------------------------------------- SECTOR WEIGHTINGS: [BAR CHART OMITTED] PLOT POINTS FOLLOWS: 6.1% Asset-backed securities 1.7% Corporates 32.0% Treasury securities 61.5% Mortgage-backed securities - -------------------------------------------------------------------------------- PORTFOLIO MANAGERS [PHOTO OMITTED] James I. Midanek, fixed-income chief investment officer, has served as manager of the Core High Quality Fixed Income Fund since its inception in 1999. Jim joined Turner in 1998, upon our acquisition of Solon Asset Management, which he cofounded. Previously he was chief investment officer, fixed income with Montgomery Asset Management. He holds a bachelor's degree from Queens College. [PHOTO OMITTED] John Pak joined the firm in 2000. He earned a bachelor of arts degree and a master of arts degree, both in economics, at the University of San Francisco. Previously he served as vice-president/ trade desk manager at Tuttle Decision Systems and assistant vice president at C. E. Childs and Company. Turner funds 2000 annual Report | 27 FINANCIAL STATEMENTS STATEMENT OF NET ASSETS TURNER MIDCAP GROWTH FUND September 30, 2000 Value Shares (000) - -------------------------------------------------------------------------------- COMMON STOCKS--95.0% - -------------------------------------------------------------------------------- AUTOMOTIVE--1.5% - -------------------------------------------------------------------------------- Harley-Davidson 250,860 $ 12,010 Tidewater 122,980 5,596 ---------- Total Automotive 17,606 ---------- - -------------------------------------------------------------------------------- BROADCASTING, NEWSPAPERS & ADVERTISING--3.7% - -------------------------------------------------------------------------------- Cablevision Systems, Cl A* 79,200 5,252 Getty Images* 227,220 6,916 Polycom* 268,930 18,010 TMP Worldwide* 181,850 14,639 ---------- Total Broadcasting, newspapers & advertising 44,817 ---------- - -------------------------------------------------------------------------------- BUILDING & CONSTRUCTION--0.7% - -------------------------------------------------------------------------------- Ecolab 220,540 7,953 ---------- Total Building & construction 7,953 ---------- - -------------------------------------------------------------------------------- COMMERCIAL SERVICES--2.1% - -------------------------------------------------------------------------------- Concord EFS* 453,670 16,112 Quanta Services* 119,530 3,287 Wireless Facilities* 110,410 6,369 ---------- Total Commercial services 25,768 ---------- - -------------------------------------------------------------------------------- COMPUTERS & SERVICES--6.9% - -------------------------------------------------------------------------------- Brocade Communications System* 117,120 27,640 McData, Cl B* 83,560 10,269 Nuance Communications* 62,840 7,647 Redback Networks* 125,620 20,602 Sandisk* 135,340 9,034 StorageNetworks* 74,580 7,621 ---------- Total Computers & Services 82,813 ---------- - -------------------------------------------------------------------------------- DRUGS--6.3% - -------------------------------------------------------------------------------- Allergan 140,900 11,897 Biovail* 114,860 9,354 Celgene* 129,220 7,689 Forest Laboratories, Cl A* 66,940 7,677 King Pharmaceuticals* 259,205 8,667 Medimmune* 262,940 20,312 Watson Pharmaceutical* 151,930 9,857 ---------- Total Drugs 75,453 ---------- Value Shares (000) - -------------------------------------------------------------------------------- ELECTRICAL SERVICES--1.7% - -------------------------------------------------------------------------------- Calpine* 92,120 $ 9,615 Cinergy 152,300 5,035 Entergy 162,320 6,046 ---------- Total Electrical services 20,696 ---------- - -------------------------------------------------------------------------------- ELECTRONIC & OTHER ELECTRICAL EQUIPMENT--2.7% - -------------------------------------------------------------------------------- Celestica* 107,680 7,457 Jabil Circuit* 155,990 8,852 Sanmina* 167,430 15,676 ---------- Total Electronic & other electrical equipment 31,985 ---------- - -------------------------------------------------------------------------------- FIBER OPTICS--3.1% - -------------------------------------------------------------------------------- Avanex* 94,980 10,228 Exfo Electro Optical Engineering* 89,100 3,881 Finisar* 194,930 9,430 Newport 89,400 14,238 ---------- Total Fiber optics 37,777 ---------- - -------------------------------------------------------------------------------- FINANCIAL SERVICES--4.2% - -------------------------------------------------------------------------------- Capital One Financial 188,870 13,233 Homestore.com* 118,000 5,517 Portal Software* 179,100 7,164 Providian Financial 129,670 16,468 Sungard Data Systems* 200,850 8,599 ---------- Total Financial services 50,981 ---------- - -------------------------------------------------------------------------------- FOOD, BEVERAGE & TOBACCO--0.9% - -------------------------------------------------------------------------------- Ralston Purina Group 143,080 3,389 Suiza Foods* 150,070 7,607 ---------- Total Food, beverage & tobacco 10,996 ---------- - -------------------------------------------------------------------------------- HEALTHCARE--1.9% - -------------------------------------------------------------------------------- Tenet Healthcare* 378,290 13,760 UnitedHealth Group 91,020 8,988 ---------- Total Healthcare 22,748 ---------- - -------------------------------------------------------------------------------- HOTELS & AMUSEMENT SERVICES--0.5% - -------------------------------------------------------------------------------- MGM Mirage 171,210 6,538 ---------- Total Hotels & amusement services 6,538 ---------- 28 | TURNER FUNDS 2000 ANNUAL REPORt STATEMENT OF NET ASSETS TURNER MIDCAP GROWTH FUND Value Shares (000) - -------------------------------------------------------------------------------- INTERNET SERVICES--10.2% - -------------------------------------------------------------------------------- Agile Software* 118,200 $ 10,631 Ariba* 187,900 26,920 Art Technology Group* 83,260 7,889 Blue Martini Software* 114,430 3,876 Clarent* 205,080 8,075 Commerce One* 244,620 19,203 Infospace* 205,320 6,211 Lycos* 84,230 5,792 Phone.com* 79,190 8,998 Software.Com* 56,050 10,170 Tibco Software* 57,850 4,885 VerticalNet* 276,900 9,726 ---------- Total Internet services 122,376 ---------- - -------------------------------------------------------------------------------- INVESTMENT MANAGEMENT SERVICES--0.5% - -------------------------------------------------------------------------------- Federated Investors, Cl B 223,250 5,525 ---------- Total Investment management services 5,525 ---------- - -------------------------------------------------------------------------------- MACHINERY--0.5% - -------------------------------------------------------------------------------- SPX Corp* 43,490 6,173 ---------- Total Machinery 6,173 ---------- - -------------------------------------------------------------------------------- MEASURING DEVICES--4.1% - -------------------------------------------------------------------------------- PE Biosystems Group 212,660 24,775 PerkinElmer 86,310 9,009 Waters* 179,060 15,936 ---------- Total Measuring devices 49,720 ---------- - -------------------------------------------------------------------------------- MEDICAL LABS & TESTING SERVICES--0.7% - -------------------------------------------------------------------------------- Quest Diagnostics* 69,820 8,012 ---------- Total Medical labs & testing services 8,012 ---------- - -------------------------------------------------------------------------------- MEDICAL PRODUCTS & SERVICES--5.1% - -------------------------------------------------------------------------------- Express Scripts, Cl A* 78,840 5,696 Idec Pharmaceuticals* 78,950 13,845 Millennium Pharmaceuticals* 92,240 13,473 Minimed* 107,210 9,582 PE-Celera Genomics Group* 58,080 5,786 St. Jude Medical* 260,360 13,278 ---------- Total Medical products & services 61,660 ---------- Value Shares (000) - -------------------------------------------------------------------------------- MEDICAL SUPPLIES & EQUIPMENT--0.7% - -------------------------------------------------------------------------------- Sybron International* 377,360 $ 9,057 --------- Total Medical supplies & equipment 9,057 --------- - -------------------------------------------------------------------------------- MISCELLANEOUS BUSINESS SERVICES--1.6% - -------------------------------------------------------------------------------- Fiserv* 153,565 9,195 Robert Half International* 273,750 9,496 --------- Total Miscellaneous business services 18,691 --------- - -------------------------------------------------------------------------------- NETWORKING PRODUCTS & SERVICES--5.4% - -------------------------------------------------------------------------------- Avici Systems* 89,360 8,500 Extreme Networks* 234,930 26,900 Inrange Technologies, Cl B* 141,190 7,483 Micromuse* 74,600 14,990 Turnstone Systems* 153,040 7,097 --------- Total Networking products & services 64,970 --------- - -------------------------------------------------------------------------------- PETROLEUM/FUEL PRODUCTS & SERVICEs--3.3% - -------------------------------------------------------------------------------- BJ Services* 151,020 9,231 Cooper Cameron* 101,520 7,481 Kerr-McGee 76,790 5,087 Nabors Industries* 161,210 8,447 Weatherford International* 219,940 9,457 --------- Total Petroleum/fuel products & services 39,703 --------- - -------------------------------------------------------------------------------- PIPELINES--0.8% - -------------------------------------------------------------------------------- Dynegy, Cl A 169,110 9,639 --------- Total Pipelines 9,639 --------- - -------------------------------------------------------------------------------- PRODUCER DURABLE--1.3% - -------------------------------------------------------------------------------- Power-One* 96,740 5,854 Tektronix 121,380 9,324 --------- Total Producer durable 15,178 --------- - -------------------------------------------------------------------------------- RETAIL--4.1% - -------------------------------------------------------------------------------- American Eagle Outfitters* 176,970 5,575 Bed Bath & Beyond* 360,860 8,802 CDW Computer Centers* 95,750 6,607 Dollar Tree Stores* 270,150 10,958 RadioShack 167,120 10,800 Tiffany 177,410 6,841 --------- Total Retail 49,583 --------- TURNER FUNDS 2000 ANNUAL REPORT | 29 FINANCIAL STATEMENTS STATEMENT OF NET ASSETS TURNER MIDCAP GROWTH FUND Value Shares (000) - -------------------------------------------------------------------------------- SEMICONDUCTORS/INSTRUMENTS--8.8% - -------------------------------------------------------------------------------- Applied Micro Circuits* 136,700 $ 28,305 Globespan* 127,970 15,612 Integrated Circuit Systems* 237,370 4,391 Intersil Holding* 177,670 8,861 Marvell Technology Group Ltd.* 68,980 5,320 MIPS Technologies, Cl A* 5,240 241 Novellus Systems* 137,180 6,387 Transwitch* 178,800 11,399 Triquint Semiconductor* 161,780 5,895 Vitesse Semiconductor* 222,380 19,778 --------- Total Semiconductors/instruments 106,189 --------- - -------------------------------------------------------------------------------- SOFTWARE & PROGRAMMING--4.7% - -------------------------------------------------------------------------------- Intuit* 261,230 14,890 Mercury Interactive* 91,580 14,355 Quest Software* 103,290 6,415 Rational Software* 193,630 13,433 Research In Motion Ltd.* 72,010 7,098 --------- Total Software & programming 56,191 --------- - -------------------------------------------------------------------------------- TELEPHONES & TELECOMMUNICATIONS--1.9% - -------------------------------------------------------------------------------- Cosine Communications* 81,430 4,525 Nextlink Communications, Cl A* 177,360 6,241 Sonus Networks* 35,700 4,512 Terayon* 221,300 7,510 --------- Total Telephones & telecommunications 22,788 --------- - -------------------------------------------------------------------------------- WIRELESS EQUIPMENT--5.1% - -------------------------------------------------------------------------------- Aether Systems* 138,370 14,598 Nextel Partners, Cl A* 208,230 6,065 Palm* 618,100 32,721 Powerwave Technologies* 223,060 8,469 --------- Total Wireless equipment 61,853 --------- - -------------------------------------------------------------------------------- Total Common stocks (Cost $937,079) 1,143,439 - -------------------------------------------------------------------------------- Face Amount Value (000) (000) - -------------------------------------------------------------------------------- REPURCHASE AGREEMENT--4.4% - -------------------------------------------------------------------------------- JP Morgan 6.650%-6.750%, dated 09/29/00, matures 10/02/00, repurchase price $53,659,448 (collateralized by Giro Multi Funding DCP and GNMA, total par value $56,049,408, 6.500%, 11/15/28, total maket value $54,722,391) $53,649 $53,649 - -------------------------------------------------------------------------------- TOTAL REPURCHASE AGREEMENT (COST $53,649) 53,649 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- TOTAL INVESTMENTS--99.4% (COST $990,728) 1,197,088 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- OTHER ASSETS & LIABILITIES, NET--0.6% 6,668 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- NET ASSETS: - -------------------------------------------------------------------------------- Portfolio capital (unlimited authorization-- no par value) based on 25,874,096 outstanding shares of beneficial interest 929,608 Accumulated net investment loss (2) Accumulated net realized gain on investments 67,790 Net unrealized appreciation on investments 206,360 - -------------------------------------------------------------------------------- TOTAL NET ASSETS--100% $1,203,756 - -------------------------------------------------------------------------------- NET ASSET VALUE, OFFERING AND REDEMPTION PRICE PER SHARE $46.52 *Non-income producing security Cl - Class DCP - Discount commercial paper GNMA - Government National Mortgage Association Ltd. - Limited The accompanying notes are an integral part of the financial statements. 30 | Turner funds 2000 annual Report SCHEDULE OF INVESTMENTS TURNER SMALL CAP GROWTH FUND SEPTEMBER 30, 2000 Value Shares (000) - -------------------------------------------------------------------------------- COMMON STOCKS--98.6% - -------------------------------------------------------------------------------- BANKS--1.1% - -------------------------------------------------------------------------------- Silicon Valley Bancshares* 66,500 $ 3,873 Webster Financial 62,740 1,690 --------- Total Banks 5,563 --------- - -------------------------------------------------------------------------------- BROADCASTING, NEWSPAPERS & ADVERTISING--2.8% - -------------------------------------------------------------------------------- Celeritek* 100,650 3,793 Getty Images* 166,450 5,066 Sirius Satellite Radio* 47,520 2,513 True North Communications 107,070 3,828 --------- Total Broadcasting, newspapers & advertising 15,200 --------- - -------------------------------------------------------------------------------- BUILDING & CONSTRUCTION--2.3% - -------------------------------------------------------------------------------- DR Horton 238,805 4,104 Dycom Industries* 103,345 4,302 Pulte 120,350 3,972 --------- Total Building & construction 12,378 --------- - -------------------------------------------------------------------------------- CHEMICALS--1.7% - -------------------------------------------------------------------------------- Millennium Chemicals 194,330 2,878 Olin 177,930 2,880 OM Group 69,030 3,011 ---------- Total Chemicals 8,769 --------- - -------------------------------------------------------------------------------- COMMERCIAL SERVICES--1.7% - -------------------------------------------------------------------------------- ACNielsen* 169,160 4,028 Plexus* 70,280 4,955 --------- Total Commercial services 8,983 --------- - -------------------------------------------------------------------------------- COMPUTERS & SERVICES--3.1% - -------------------------------------------------------------------------------- Jack Henry & Associates 105,720 4,586 M-Systems Flash Disk Pioneers* 90,660 3,462 Netegrity* 58,250 4,077 Nuance Communications* 33,480 4,074 --------- Total Computers & services 16,199 --------- - -------------------------------------------------------------------------------- CONSULTING SERVICES--1.1% - -------------------------------------------------------------------------------- Diamond Technology Partners* 76,680 5,693 --------- Total Consulting services 5,693 --------- Value Shares (000) - -------------------------------------------------------------------------------- DRUGS--2.9% - -------------------------------------------------------------------------------- Alpharma, Cl A 130,000 $ 7,946 Biovail* 20,370 1,659 Medicis Pharmaceutical, Cl A* 91,040 5,599 --------- Total Drugs 15,204 --------- - -------------------------------------------------------------------------------- ELECTRICAL SERVICES--0.9% - -------------------------------------------------------------------------------- Conectiv 109,940 1,965 Western Resources 126,730 2,741 --------- Total Electrical services 4,706 --------- - -------------------------------------------------------------------------------- ELECTRONIC & OTHER ELECTRICAL EQUIPMENT--4.1% - -------------------------------------------------------------------------------- ACT Manufacturing* 49,630 2,618 APW Limited* 93,090 4,538 Benchmark Electronics* 75,600 3,931 DSP Group* 148,820 5,562 Kent Electronics* 93,460 2,231 Merix* 40,710 2,638 --------- Total Electronic & other electrical equipment 21,518 --------- - -------------------------------------------------------------------------------- ENERGY--0.6% - -------------------------------------------------------------------------------- Advanced Energy Industries* 16,810 555 Proton Energy Systems* 95,520 2,734 --------- Total Energy 3,289 --------- - -------------------------------------------------------------------------------- ENGINEERING SERVICES--0.5% - -------------------------------------------------------------------------------- Tetra Tech* 93,220 2,663 --------- Total Engineering services 2,663 --------- - -------------------------------------------------------------------------------- FIBER OPTICS--1.3% - -------------------------------------------------------------------------------- C-COR.net* 133,660 2,047 MRV Communications* 110,070 4,988 --------- Total Fiber optics 7,035 --------- - -------------------------------------------------------------------------------- FINANCIAL SERVICES--4.0% - -------------------------------------------------------------------------------- Advent Software* 37,030 2,587 AmeriCredit* 131,730 3,795 Avis Group Holdings* 93,660 2,775 Bisys Group* 65,880 5,093 Metris 172,030 6,795 --------- Total Financial services 21,045 --------- Turner funds 2000 annual Report | 31 FINANCIAL STATEMENTS SCHEDULE OF INVESTMENTS TURNER SMALL CAP GROWTH FUND Value Shares (000) - -------------------------------------------------------------------------------- FOOD, BEVERAGE & TOBACCO--1.2% - -------------------------------------------------------------------------------- Beringer Wine Estates Holdings, Cl B* 54,590 $ 3,033 Whole Foods Market* 61,140 3,282 --------- Total Food, beverage & tobacco 6,315 --------- - -------------------------------------------------------------------------------- HEALTHCARE--3.8% - -------------------------------------------------------------------------------- Amerisource Health, Cl A* 94,780 4,455 Caremark Rx* 477,380 5,371 First Health Group* 145,840 4,703 Triad Hospitals* 184,890 5,431 --------- Total Healthcare 19,960 --------- - -------------------------------------------------------------------------------- HOTELS & AMUSEMENT SERVICES--0.6% - -------------------------------------------------------------------------------- Station Casinos* 218,700 3,116 --------- Total Hotels & amusement services 3,116 --------- - -------------------------------------------------------------------------------- INSURANCE--0.5% - -------------------------------------------------------------------------------- Arthur J. Gallagher 47,060 2,782 --------- Total Insurance 2,782 --------- - -------------------------------------------------------------------------------- INTERNET SERVICES--9.8% - -------------------------------------------------------------------------------- Avocent* 109,661 6,045 Centillium Communications* 44,810 4,302 Clarent* 99,210 3,906 Click Commerce* 157,630 6,739 Digitalthink* 39,320 1,656 Docent* 170,880 3,129 Interwoven* 45,440 5,138 LifeMinders* 117,940 2,705 Looksmart* 152,640 1,708 Matrixone* 85,090 3,404 Niku* 116,620 2,843 Saba Software* 104,750 2,933 Support.com* 134,420 4,117 Vastera* 152,800 3,362 --------- Total Internet services 51,987 --------- - -------------------------------------------------------------------------------- INVESTMENT MANAGEMENT SERVICES--0.7% - -------------------------------------------------------------------------------- Affiliated Managers Group* 32,790 1,867 BlackRock/New York* 60,980 1,951 --------- Total Investment management services 3,818 --------- Value Shares (000) - -------------------------------------------------------------------------------- MATERIAL & PROCESSING--0.8% - -------------------------------------------------------------------------------- American Superconductor* 86,980 $ 4,276 --------- Total Material & processing 4,276 --------- - -------------------------------------------------------------------------------- MEASURING DEVICES--2.2% - -------------------------------------------------------------------------------- Mettler Toledo International* 105,640 4,648 Photon Dynamics* 56,920 2,149 Varian* 115,800 4,987 --------- Total Measuring devices 11,784 --------- - -------------------------------------------------------------------------------- MEDICAL LABS & TESTING SERVICES--2.1% - -------------------------------------------------------------------------------- Aurora Biosciences* 71,120 4,836 Laboratory Corporation of America Holdings* 50,500 6,047 --------- Total Medical labs & testing services 10,883 --------- - -------------------------------------------------------------------------------- MEDICAL PRODUCTS & SERVICES--8.0% - -------------------------------------------------------------------------------- Aclara BioSciences* 52,870 1,606 Aviron* 24,810 1,447 Bruker Daltonics* 37,930 1,683 Cooper 18,920 669 Dendrite International* 147,100 3,944 Diversa* 45,890 1,239 Electro Scientific Industries* 61,250 2,151 Enzon* 84,940 5,606 Inamed* 77,400 2,177 Inhale Therapeutic Systems* 76,200 4,296 Invitrogen* 71,850 5,110 Maxim Pharmaceuticals* 50,770 3,084 Novoste* 92,040 3,912 Techne* 46,810 5,243 --------- Total Medical products & services 42,167 --------- - -------------------------------------------------------------------------------- MEDICAL SUPPLIES & EQUIPMENT--2.1% - -------------------------------------------------------------------------------- Alkermes* 90,720 3,504 Idexx Laboratories* 134,770 3,605 Patterson Dental* 176,540 3,972 --------- Total Medical supplies & equipment 11,081 --------- - -------------------------------------------------------------------------------- METAL & METAL INDUSTRIES--0.2% - -------------------------------------------------------------------------------- Shaw Group* 12,310 868 --------- Total Metal & metal industries 868 --------- 32 | Turner funds 2000 annual Report SCHEDULE OF INVESTMENTS TURNER SMALL CAP GROWTH FUND Value Shares (000) - -------------------------------------------------------------------------------- MISCELLANEOUS BUSINESS SERVICES--0.3% - -------------------------------------------------------------------------------- Hall Kinion & Associates* 52,540 $ 1,494 --------- Total Miscellaneous business services 1,494 --------- - -------------------------------------------------------------------------------- NETWORKING PRODUCTS & SERVICES--0.8% - -------------------------------------------------------------------------------- MMC Networks* 32,910 4,163 --------- Total Networking products & services 4,163 --------- - -------------------------------------------------------------------------------- PAPER & RELATED PRODUCTS--0.9% - -------------------------------------------------------------------------------- Bemis 79,360 2,549 Boise Cascade 83,670 2,222 --------- Total Paper & related products 4,771 --------- - -------------------------------------------------------------------------------- PETROLEUM/FUEL PRODUCTS & SERVICES--4.3% - -------------------------------------------------------------------------------- CAL Dive International* 59,910 3,426 Global Industries Ltd.* 155,680 1,946 Grant Prideco* 113,530 2,491 Grey Wolf* 567,310 3,262 Gulf Indonesia Resources Ltd.* 201,400 2,190 Hydril* 105,040 2,390 Key Energy Services* 258,740 2,539 Precision Drilling* 65,860 2,346 Stolt Offshore* 160,340 2,385 --------- Total Petroleum/fuel products & services 22,975 --------- - -------------------------------------------------------------------------------- RETAIL--8.0% - -------------------------------------------------------------------------------- American Eagle Outfitters* 119,520 3,765 Childrens Place* 95,810 2,467 Insight Enterprises* 164,040 4,470 Jack in the Box* 131,590 2,821 Men's Wearhouse* 134,450 3,807 Michaels Stores* 102,910 4,116 MSC Industrial Direct, Cl A* 133,370 2,034 PC Connection* 64,070 3,652 PF Chang's China Bistro* 77,160 2,667 Too* 80,190 1,905 Tweeter Home Entertainment Group* 130,770 4,749 Ultimate Electronics* 62,750 2,581 Zale* 101,590 3,295 --------- Total Retail 42,329 --------- Value Shares (000) - -------------------------------------------------------------------------------- SEMICONDUCTORS/INSTRUMENTS--5.7% - -------------------------------------------------------------------------------- Actel* 69,470 $ 2,497 Elantec Semiconductor* 58,930 5,871 Emcore* 77,500 3,222 Exar* 44,300 5,360 Integrated Circuit Systems* 169,320 3,132 Integrated Silicon Solutions* 23,930 340 MIPS Technologies, Cl A* 4,760 219 O2Micro International Ltd.* 141,020 2,426 Omnivision Technologies* 101,490 3,673 Silicon Image* 141,970 3,523 --------- Total Semiconductors/instruments 30,263 --------- - -------------------------------------------------------------------------------- SOFTWARE & PROGRAMMING--6.5% - -------------------------------------------------------------------------------- Actuate* 97,580 3,371 Aspen Technology* 61,470 2,774 Avantgo* 38,180 764 Descartes Systems Group* 81,630 4,041 Informatica* 49,790 4,643 Manugistics Group* 64,890 6,367 National Instruments* 67,370 2,973 NETIQ* 104,780 6,883 WebTrends* 70,440 2,633 --------- Total Software & programming 34,449 --------- - -------------------------------------------------------------------------------- TELEPHONES & TELECOMMUNICATIONS--7.2% - -------------------------------------------------------------------------------- Alamosa PCS Holdings* 5,940 96 Anaren Microwave* 66,080 8,962 Digital Lightwave* 28,850 2,095 ITC Deltacom* 123,250 1,417 Leap Wireless International* 51,580 3,227 Mastec* 69,550 2,173 Natural Microsystems* 123,980 6,670 Price Communications* 147,960 2,894 Tollgrade Communications* 42,360 5,880 Tut Systems* 54,980 4,745 --------- Total Telephones & telecommunications 38,159 --------- - -------------------------------------------------------------------------------- THERAPEUTICS--1.7% - -------------------------------------------------------------------------------- NPS Pharmaceuticals* 21,880 1,238 Titan Pharmaceuticals* 74,860 4,866 United Therapeutics* 34,170 2,986 --------- Total Therapeutics 9,090 --------- TURNER FUNDS 2000 ANNUAL REPORT | 33 FINANCIAL STATEMENTS SCHEDULE OF INVESTMENTS TURNER SMALL CAP GROWTH FUND Value Shares (000) - -------------------------------------------------------------------------------- TRANSPORTATION SERVICES--0.9% - -------------------------------------------------------------------------------- Atlas Air* 59,100 $ 2,497 EGL* 67,160 2,032 --------- Total Transportation services 4,529 --------- - -------------------------------------------------------------------------------- TECHNOLOGY--0.7% - -------------------------------------------------------------------------------- Artesyn Technologies* 127,840 3,723 --------- Total Technology 3,723 --------- - -------------------------------------------------------------------------------- WIRELESS EQUIPMENt--1.5% - -------------------------------------------------------------------------------- Proxim* 78,490 3,493 SBA Communications* 67,100 2,814 Triton Network Systems* 146,330 1,921 --------- Total Wireless equipment 8,228 --------- - -------------------------------------------------------------------------------- TOTAL COMMON STOCKS (COST $460,988) 521,455 - -------------------------------------------------------------------------------- Face Amount Value (000) (000) - -------------------------------------------------------------------------------- REPURCHASE AGREEMENT--3.5% - -------------------------------------------------------------------------------- JP Morgan 6.750%, dated 09/29/00, matures 10/02/00, repurchase price $18,568,149 (collateralized by Queens Health DCP and Giro Funding DCP, total par value $19,078,000, total maket value $18,936,505) $18,565 $ 18,565 - -------------------------------------------------------------------------------- TOTAL REPURCHASE AGREEMENT (COST $18,565) 18,565 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- TOTAL INVESTMENTS--102.1% (COST $479,553) 540,020 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- OTHER ASSETS & LIABILITIES, NET--(2.1%) (11,092) - -------------------------------------------------------------------------------- TOTAL NET ASSETS--100% $528,928 * Non-income producing security Cl - Class DCP - Discount commercial paper Ltd. - Limited The accompanying notes are an integral part of the financial statements. 34 | TURNER FUNDS 2000 ANNUAL REPORT STATEMENT OF NET ASSETS TURNER MICRO CAP GROWTH FUND SEPTEMBER 30, 2000 Value Shares (000) - -------------------------------------------------------------------------------- COMMON STOCKS--94.1% - -------------------------------------------------------------------------------- APPAREL/TEXTILES--0.8% - -------------------------------------------------------------------------------- Skechers U.S.A., Cl A* 92,990 $ 1,406 --------- Total Apparel/textiles 1,406 --------- - -------------------------------------------------------------------------------- AUTOMOTIVE--1.2% - -------------------------------------------------------------------------------- IMPCO Technologies* 38,470 1,106 Oshkosh Truck 27,655 1,072 --------- Total Automotive 2,178 --------- - -------------------------------------------------------------------------------- BANKS--1.5% - -------------------------------------------------------------------------------- Dime Community Bancshares 16,670 413 Independent Bank-Mich 15,000 260 PFF Bancorp 53,930 1,173 Sterling Bancshares 60,500 923 --------- Total Banks 2,769 --------- - -------------------------------------------------------------------------------- BUILDING & CONSTRUCTION--0.7% - -------------------------------------------------------------------------------- Del Webb* 49,000 1,360 --------- Total Building & construction 1,360 --------- - -------------------------------------------------------------------------------- COMPUTERS & SERVICES--3.8% - -------------------------------------------------------------------------------- InFocus* 65,050 3,448 Mobility Electronics* 94,360 861 Netscout Systems* 10,000 237 Read-Rite* 223,000 2,509 --------- Total Computers & services 7,055 --------- - -------------------------------------------------------------------------------- DIVERSIFIED MANUFACTURINg--0.9% - -------------------------------------------------------------------------------- ESCO Technologies* 97,000 1,698 --------- Total Diversified manufacturing 1,698 --------- - -------------------------------------------------------------------------------- DRUGS--5.3% - -------------------------------------------------------------------------------- Akorn* 133,460 1,476 Cima Labs* 57,200 2,978 Collagenex Pharmaceuticals* 70,970 577 Inkine Pharmaceutical* 168,520 1,812 Matrix Pharmaceuticals* 200,300 3,117 --------- Total Drugs 9,960 --------- Value Shares (000) - -------------------------------------------------------------------------------- ELECTRONIC & OTHER ELECTRICAL EQUIPMENT--8.2% - -------------------------------------------------------------------------------- DDI* 75,050 $ 3,321 Measurement Specialties* 50,600 2,441 Merix* 24,310 1,576 Nanometrics* 54,900 2,934 Park Electrochemical 41,000 2,281 SMTC* 55,820 1,200 Universal Electronics* 68,800 1,664 --------- Total Electronic & other electrical equipment 15,417 --------- - -------------------------------------------------------------------------------- HEALTHCARE--3.6% - -------------------------------------------------------------------------------- Molecular Devices* 14,100 1,385 Province Healthcare* 69,765 2,786 Stericycle* 102,730 2,517 --------- Total Healthcare 6,688 --------- - -------------------------------------------------------------------------------- HOTELS & AMUSEMENT SERVICES--4.2% - -------------------------------------------------------------------------------- Argosy Gaming* 157,100 2,847 Isle of Capri Casinos* 103,760 1,608 Shuffle Master* 81,550 1,585 WMS Industries* 81,220 1,827 --------- Total Hotels & amusement services 7,867 --------- - -------------------------------------------------------------------------------- INVESTMENT MANAGEMENT SERVICES--0.7% - -------------------------------------------------------------------------------- American Capital Strategies Ltd. 53,180 1,260 --------- Total Investment management services 1,260 --------- - -------------------------------------------------------------------------------- MATERIAL & PROCESSING--0.7% - -------------------------------------------------------------------------------- Hexcel* 97,120 1,299 --------- Total Material & processing 1,299 --------- - -------------------------------------------------------------------------------- MEASURING DEVICES--0.7% - -------------------------------------------------------------------------------- Photon Dynamics* 32,800 1,238 --------- Total Measuring devices 1,238 --------- - -------------------------------------------------------------------------------- MEDICAL LABS & TESTING SERVICES--1.0% - -------------------------------------------------------------------------------- Dianon Systems* 48,650 1,940 --------- Total Medical labs & testing services 1,940 --------- TURNER FUNDS 2000 ANNUAL REPORT | 35 FINANCIAL STATEMENTS STATEMENT OF NET ASSETS TURNER MICRO CAP GROWTH FUND Value Shares (000) - -------------------------------------------------------------------------------- MEDICAL PRODUCTS & SERVICEs--18.8% - -------------------------------------------------------------------------------- Accredo Health* 89,150 $ 4,357 Advance Paradigm* 170,620 7,198 American Medical Systems Holdings* 60,550 946 Applied Molecular Evolution* 25,000 1,003 Biosource International* 205,270 6,363 Cooper 51,770 1,831 Cyberonics* 104,290 2,236 Cyberoptics* 32,120 588 Deltagen* 36,630 1,133 Endocare* 26,220 518 Exactech* 31,230 543 Genaissance Pharmaceuticals* 49,740 1,029 Lynx Therapeutics* 30,000 939 Microcide Pharmaceutical* 82,410 1,113 Oratec Interventions* 24,500 300 Orthofix International* 46,470 1,150 PolyMedica* 25,330 1,086 Transgenomic* 12,020 273 TriPath Imaging* 77,690 544 Vascular Solutions* 58,970 1,107 Zoll Medical* 19,660 958 --------- Total Medical products & services 35,215 --------- - -------------------------------------------------------------------------------- MEDICAL SUPPLIES & EQUIPMENT--0.4% - -------------------------------------------------------------------------------- Biosite Diagnostics* 20,030 799 --------- Total Medical supplies & equipment 799 --------- - -------------------------------------------------------------------------------- METAL & METAL INDUSTRIES--5.2% - -------------------------------------------------------------------------------- Maverick Tube* 125,550 3,382 Shaw Group* 91,300 6,437 --------- Total Metal & metal industries 9,819 --------- - -------------------------------------------------------------------------------- METALS--0.6% - -------------------------------------------------------------------------------- Century Aluminum 89,500 1,119 --------- Total Metals 1,119 --------- - -------------------------------------------------------------------------------- MISCELLANEOUS BUSINESS SERVICES--0.5% - -------------------------------------------------------------------------------- Hall Kinion & Associates* 33,700 958 --------- Total Miscellaneous business services 958 --------- Value Shares (000) - -------------------------------------------------------------------------------- MISCELLANEOUS MANUFACTURING--1.0% - -------------------------------------------------------------------------------- Applied Films* 69,550 $ 1,887 --------- Total Miscellaneous manufacturing 1,887 --------- - -------------------------------------------------------------------------------- PETROLEUM/FUEL PRODUCTS & SERVICEs--3.6% - -------------------------------------------------------------------------------- HS Resources* 49,900 1,678 Key Energy Services* 116,080 1,139 Mallon Resources* 125,000 781 NATCO Group, Cl A* 107,010 930 Patina Oil & Gas 107,280 2,146 --------- Total Petroleum/fuel products & services 6,674 --------- - -------------------------------------------------------------------------------- PHOTOGRAPHIC EQUIPMENT--1.0% - -------------------------------------------------------------------------------- Concord Camera* 76,040 1,949 --------- Total Photographic equipment 1,949 --------- - -------------------------------------------------------------------------------- RETAIL--10.8% - -------------------------------------------------------------------------------- Buca* 97,640 1,037 California Pizza Kitchen* 62,810 1,759 Chico's FAS* 56,050 1,906 Christopher & Banks* 124,785 4,851 HOT Topic* 61,120 1,834 Pacific Sunwear of California* 88,930 1,667 Tweeter Home Entertainment Group* 50,210 1,823 Ugly Duckling* 94,500 549 Ultimate Electronics* 87,270 3,589 Wilsons Leather Experts* 69,540 1,256 --------- Total Retail 20,271 --------- - -------------------------------------------------------------------------------- SEMICONDUCTORS/INSTRUMENTS--7.1% - -------------------------------------------------------------------------------- AstroPower* 26,140 1,036 Cerprobe* 78,610 1,159 FSI International* 131,070 1,868 Icos Vision Systems* 51,150 1,550 Metalink Ltd.* 60,070 1,111 Pericom Semiconductor* 50,620 1,901 Richardson Electronics Ltd. 126,120 2,113 Ultratech Stepper* 8,680 139 Zoran* 48,090 2,344 --------- Total Semiconductors/instruments 13,221 --------- 36 | TURNER FUNDS 2000 ANNUAL REPORT STATEMENT OF NET ASSETS TURNER MICRO CAP GROWTH FUND Value Shares (000) - -------------------------------------------------------------------------------- SOFTWARE & PROGRAMMING--3.1% - -------------------------------------------------------------------------------- AremisSoft* 28,630 $ 1,074 Caminus* 66,200 2,631 DSET* 48,800 1,007 SignalSoft* 27,270 1,108 --------- Total Software & programming 5,820 --------- - -------------------------------------------------------------------------------- STORAGE/WAREHOUSING--1.0% - -------------------------------------------------------------------------------- Mobile Mini* 98,630 1,899 --------- Total Storage/warehousing 1,899 --------- - -------------------------------------------------------------------------------- TECHNOLOGY--0.8% - -------------------------------------------------------------------------------- Celeritek* 38,000 1,432 --------- Total Technology 1,432 --------- - -------------------------------------------------------------------------------- TELEPHONES & TELECOMMUNICATIONS--1.9% - -------------------------------------------------------------------------------- Arguss Communications* 54,040 1,104 Lightbridge* 51,150 595 Symmetricom* 114,945 1,796 --------- Total Telephones & telecommunications 3,495 --------- - -------------------------------------------------------------------------------- TRANSPORTATION SERVICES--1.3% - -------------------------------------------------------------------------------- Navigant International* 85,550 898 OMI* 183,360 1,536 --------- Total Transportation services 2,434 --------- - -------------------------------------------------------------------------------- UTILITIES/COMMUNICATIONS--1.0% - -------------------------------------------------------------------------------- Artesian Resources, Cl A 9,500 222 NUI 52,020 1,570 --------- Total Utilities/communications 1,792 --------- - -------------------------------------------------------------------------------- WHOLESALE--2.3% - -------------------------------------------------------------------------------- Advanced Marketing Services 58,450 1,030 Bell Microproducts* 44,330 1,385 Jaco Electronics* 126,800 1,902 --------- Total Wholesale 4,317 --------- - -------------------------------------------------------------------------------- WIRELESS EQUIPMENT--0.4% - -------------------------------------------------------------------------------- Floware Wireless Systems Ltd.* 32,260 803 --------- Total Wireless equipment 803 --------- - -------------------------------------------------------------------------------- TOTAL COMMON STOCKS (Cost $131,248) 176,039 - -------------------------------------------------------------------------------- Face Amount Value (000) (000) - -------------------------------------------------------------------------------- REPURCHASE AGREEMENT--4.0% - -------------------------------------------------------------------------------- JP Morgan 6.650%, dated 09/29/00, matures 10/02/00, repurchase price $7,498,439 (collateralized by GNMA, total par value $8,873,996, 6.500%, matures 12/15/28, total maket value $7,646,996) $7,497 $ 7,497 - -------------------------------------------------------------------------------- TOTAL REPURCHASE AGREEMENT (COST $7,497) 7,497 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- TOTAL INVESTMENTS--98.1% (COST $138,745) 183,536 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- OTHER ASSETS & LIABILITIES, NET--1.9% 3,571 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- NET ASSETS: - -------------------------------------------------------------------------------- Portfolio capital (unlimited authorization-- no par value) based on 4,075,001 outstanding shares of beneficial interest 124,012 Accumulated net realized gain on investments 18,304 Net unrealized appreciation on investments 44,791 - -------------------------------------------------------------------------------- TOTAL NET ASSETS--100% $187,107 - -------------------------------------------------------------------------------- NET ASSET VALUE, OFFERING AND REDEMPTION PRICE PER SHARE $45.92 *Non-income producing security Cl - Class GNMA - Government National Mortgage Association Ltd. - Limited The accompanying notes are an integral part of the financial statements. TURNER FUNDS 2000 ANNUAL REPORT | 37 FINANCIAL STATEMENTS - -------------------------------------------------------------------------------- SCHEDULE OF INVESTMENTS TURNER TOP 20 FUND September 30, 2000 Value Shares (000) - -------------------------------------------------------------------------------- COMMON STOCKS--98.1% - -------------------------------------------------------------------------------- COMPUTERS & SERVICES--13.8% - -------------------------------------------------------------------------------- Brocade Communications System* 49,140 $ 11,597 Sun Microsystems* 105,260 12,289 Veritas Software* 71,560 10,161 --------- Total Computers & services 34,047 --------- - -------------------------------------------------------------------------------- DRUGS--3.1% - -------------------------------------------------------------------------------- Medimmune* 99,170 7,661 --------- Total Drugs 7,661 --------- - -------------------------------------------------------------------------------- ELECTRONIC & OTHER ELECTRICAL EQUIPMENT--4.4% - -------------------------------------------------------------------------------- Celestica* 156,040 10,806 --------- Total Electronic & other electrical equipment 10,806 --------- - -------------------------------------------------------------------------------- FIBER OPTICS--13.6% - -------------------------------------------------------------------------------- CIENA* 98,660 12,117 Corning 42,120 12,510 Sycamore Networks* 81,800 8,834 --------- Total Fiber optics 33,461 --------- - -------------------------------------------------------------------------------- INTERNET SERVICES--12.2% - -------------------------------------------------------------------------------- Ariba* 65,580 9,395 Commerce One* 163,680 12,849 VeriSign* 39,130 7,926 --------- Total Internet services 30,170 --------- - -------------------------------------------------------------------------------- NETWORKING PRODUCTS & SERVICES--14.9% - -------------------------------------------------------------------------------- Cisco Systems* 350,470 19,363 Juniper Networks* 58,070 12,714 Turnstone Systems* 101,300 4,698 --------- Total Networking products & services 36,775 --------- - -------------------------------------------------------------------------------- SEMICONDUCTORS/INSTRUMENTS--18.8% - -------------------------------------------------------------------------------- Applied Micro Circuits* 60,280 12,482 Broadcom, Cl A* 45,740 11,149 PMC-Sierra* 55,680 11,985 Xilinx* 127,240 10,895 --------- Total Semiconductors/instruments 46,511 --------- Shares/face Value amount (000) (000) - -------------------------------------------------------------------------------- SOFTWARE & PROGRAMMING--7.3% - -------------------------------------------------------------------------------- I2 Technologies* 54,130 $ 10,126 Siebel Systems* 70,860 7,888 --------- Total Software & programming 18,014 --------- - -------------------------------------------------------------------------------- TELEPHONES & TELECOMMUNICATIONS--10.0% - -------------------------------------------------------------------------------- Nokia ADR 254,090 10,116 Nortel Networks 243,730 14,517 --------- Total Telephones & telecommunications 24,633 --------- - -------------------------------------------------------------------------------- TOTAL COMMON STOCKS (COST $240,258) 242,078 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- REPURCHASE AGREEMENT--2.9% - -------------------------------------------------------------------------------- JP Morgan 6.650%, dated 09/29/00, matures 10/02/00, repurchase price $7,099,066 (collateralized by GNMA, total par value $8,363,432, 6.500%, matures 01/15/28-12/15/28, total maket value $7,239,710) $7,098 7,098 - -------------------------------------------------------------------------------- TOTAL REPURCHASE AGREEMENT (COST $7,098) 7,098 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- TOTAL INVESTMENTS--101.0% (COST $247,356) 249,176 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- OTHER ASSETS & LIABILITIES, NET--(1.0%) (2,555) - -------------------------------------------------------------------------------- TOTAL NET ASSETS--100% $246,621 * Non-income producing security ADR - American Depository Receipt Cl - Class GNMA - Government National Mortgage Association The accompanying notes are an integral part of the financial statements. 38 | TURNER FUNDS 2000 ANNUAL REPORT SCHEDULE OF INVESTMENTS TURNER TECHNOLOGY FUND September 30, 2000 Value Shares (000) - -------------------------------------------------------------------------------- COMMON STOCKS--99.5% - -------------------------------------------------------------------------------- COMPUTERS & SERVICES--14.5% - -------------------------------------------------------------------------------- Brocade Communications System* 16,330 $ 3,854 EMC-Mass* 41,630 4,127 Redback Networks* 21,510 3,528 StorageNetworks* 40,080 4,096 Sun Microsystems* 43,170 5,040 Veritas Software* 27,450 3,898 --------- Total Computers & services 24,543 --------- - -------------------------------------------------------------------------------- DRUGS--3.5% - -------------------------------------------------------------------------------- Medimmune* 66,120 5,108 Shire Pharmaceuticals ADR* 17,270 891 --------- Total Drugs 5,999 --------- - -------------------------------------------------------------------------------- ELECTRONIC & OTHER ELECTRICAL EQUIPMENT--6.4% - -------------------------------------------------------------------------------- Celestica* 56,290 3,898 Flextronics International Ltd.* 41,500 3,408 Jabil Circuit* 61,050 3,465 --------- Total Electronic & other electrical equipment 10,771 --------- - -------------------------------------------------------------------------------- FIBER OPTICS--10.9% - -------------------------------------------------------------------------------- CIENA* 39,170 4,810 Corning 19,330 5,741 Newport 15,350 2,445 Sycamore Networks* 50,260 5,428 --------- Total Fiber optics 18,424 --------- - -------------------------------------------------------------------------------- INTERNET SERVICES--9.7% - -------------------------------------------------------------------------------- @Road* 29,170 210 Ariba* 23,550 3,374 Clarent* 105,220 4,143 Commerce One* 61,900 4,859 VeriSign* 18,820 3,812 --------- Total Internet services 16,398 --------- - -------------------------------------------------------------------------------- MEDICAL PRODUCTS & SERVICES--2.1% - -------------------------------------------------------------------------------- Millennium Pharmaceuticals* 24,120 3,523 --------- Total Medical products & services 3,523 --------- - -------------------------------------------------------------------------------- NETWORKING PRODUCTS & SERVICES--14.9% - -------------------------------------------------------------------------------- Cisco Systems* 153,160 8,462 Corvis* 45,160 2,757 Extreme Networks* 41,090 4,705 Value Shares (000) - -------------------------------------------------------------------------------- Juniper Networks* 24,600 $ 5,386 Oni Systems* 46,340 4,000 --------- Total Networking products & services 25,310 --------- - -------------------------------------------------------------------------------- SEMICONDUCTORS/INSTRUMENTS--15.4% - -------------------------------------------------------------------------------- Applied Micro Circuits* 19,130 3,961 Broadcom, Cl A* 15,660 3,817 Cree* 28,700 3,336 Globespan* 38,070 4,644 Marvell Technology Group Ltd.* 20,780 1,603 PMC-Sierra* 23,070 4,966 Xilinx* 44,790 3,835 --------- Total Semiconductors/instruments 26,162 --------- - -------------------------------------------------------------------------------- SOFTWARE & PROGRAMMING--8.8% - -------------------------------------------------------------------------------- BEA Systems* 59,280 4,616 I2 Technologies* 35,960 6,727 Siebel Systems* 31,800 3,540 --------- Total Software & programming 14,883 --------- - -------------------------------------------------------------------------------- TELEPHONES & TELECOMMUNICATIONS--10.7% - -------------------------------------------------------------------------------- Nokia ADR 97,800 3,894 Nortel Networks 120,820 7,196 Sonus Networks* 24,430 3,087 Terayon* 114,010 3,869 --------- Total Telephones & telecommunications 18,046 --------- - -------------------------------------------------------------------------------- WIRELESS EQUIPMENT--2.6% - -------------------------------------------------------------------------------- Aether Systems* 41,640 4,393 --------- Total Wireless equipment 4,393 --------- - -------------------------------------------------------------------------------- TOTAL COMMON STOCKS (COST $165,461) 168,452 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- TOTAL INVESTMENTS--99.5% (COST $165,461) 168,452 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- OTHER ASSETS & LIABILITIES, NET--0.5% 901 - -------------------------------------------------------------------------------- TOTAL NET ASSETS--100% $169,353 - -------------------------------------------------------------------------------- * Non-income producing security ADR - American Depository Receipt Cl - Class Ltd. - Limited The accompanying notes are an integral part of the financial statements. Turner funds 2000 annual Report | 39 FINANCIAL STATEMENTS SCHEDULE OF INVESTMENTS TURNER B2B E-COMMERCE FUND September 30, 2000 Value Shares (000) - -------------------------------------------------------------------------------- COMMON STOCKS--82.5% - -------------------------------------------------------------------------------- BROADCASTING, NEWSPAPERS & ADVERTISING--1.6% - -------------------------------------------------------------------------------- Getty Images* 7,340 $ 223 -------- Total Broadcasting, newspapers & advertising 223 -------- - -------------------------------------------------------------------------------- COMPUTERS & SERVICES--10.3% - -------------------------------------------------------------------------------- EMC-Mass* 2,360 234 McData, Cl B* 2,080 256 StorageNetworks* 2,840 290 Sun Microsystems* 2,960 346 Veritas Software* 2,080 295 -------- Total Computers & services 1,421 -------- - -------------------------------------------------------------------------------- ELECTRONIC & OTHER ELECTRICAL EQUIPMENT--7.6% - -------------------------------------------------------------------------------- Celestica* 4,020 278 Flextronics International Ltd.* 2,500 205 Jabil Circuit* 5,690 323 Sanmina* 2,570 241 -------- Total Electronic & other electrical equipment 1,047 -------- - -------------------------------------------------------------------------------- FINANCIAL SERVICES--1.5% - -------------------------------------------------------------------------------- American Express 3,280 199 -------- Total Financial services 199 -------- - -------------------------------------------------------------------------------- INTERNET SERVICES--35.5% - -------------------------------------------------------------------------------- @Road* 20,000 144 Agile Software* 3,560 320 America Online* 6,360 342 Ariba* 2,090 299 Art Technology Group* 3,150 299 Click Commerce* 7,530 322 Commerce One* 6,100 479 Freemarkets* 3,630 207 Matrixone* 6,130 245 Niku* 12,890 314 PurchasePro.com* 3,300 290 Support.com* 7,650 234 Tibco Software* 4,630 391 Vastera* 13,670 301 VeriSign* 1,160 235 VerticalNet* 5,650 199 webMethods* 2,210 254 -------- Total Internet services 4,875 -------- Shares/face Value amount (000) (000) - -------------------------------------------------------------------------------- NETWORKING PRODUCTS & SERVICES--5.6% - -------------------------------------------------------------------------------- Cisco Systems* 6,770 $ 374 Inrange Technologies, Cl B* 3,660 194 Network Appliance* 1,630 208 -------- Total Networking products & services 776 -------- - -------------------------------------------------------------------------------- SOFTWARE & PROGRAMMING--19.2% - -------------------------------------------------------------------------------- BEA Systems* 4,190 326 Check Point Software Technologies* 1,560 246 Descartes Systems Group* 5,130 254 I2 Technologies* 1,850 346 Intuit* 6,780 387 Manugistics Group* 2,210 217 Mercury Interactive* 2,170 340 Rational Software* 4,560 316 Siebel Systems* 1,840 205 -------- Total Software & programming 2,637 -------- - -------------------------------------------------------------------------------- TRANSPORTATION SERVICES--1.2% - -------------------------------------------------------------------------------- United Parcel Service, Cl B 2,910 164 -------- Total Transportation services 164 -------- - -------------------------------------------------------------------------------- TOTAL COMMON STOCKS (COST $9,453) 11,342 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- REPURCHASE AGREEMENT--3.1% - -------------------------------------------------------------------------------- JP Morgan 6.650%, dated 09/29/00, matures 10/02/00, repurchase price $422,323 (collateralized by GNMA, total par value $500,889, 6.500%, matures 11/15/28, total maket value $430,690) $422 422 - -------------------------------------------------------------------------------- TOTAL REPURCHASE AGREEMENT (COST $422) 422 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- TOTAL INVESTMENTS--85.6% (COST $9,875) 11,764 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- OTHER ASSETS & LIABILITIES, NET--14.4% 1,986 - -------------------------------------------------------------------------------- TOTAL NET ASSETS--100% $13,750 - -------------------------------------------------------------------------------- *Non-income producing security Cl - Class GNMA - Government National Mortgage Association Ltd. - Limited The accompanying notes are an integral part of the financial statements. 40 | TURNER FUNDS 2000 ANNUAL REPORT SCHEDULE OF INVESTMENTS TURNER WIRELESS & COMMUNICATIONS FUND September 30, 2000 Value Shares (000) - -------------------------------------------------------------------------------- COMMON STOCKS--97.1% - -------------------------------------------------------------------------------- COMPUTERS & SERVICES--6.1% - -------------------------------------------------------------------------------- Brocade Communications System* 1,960 $ 463 Redback Networks* 3,400 558 StorageNetworks* 4,550 465 -------- Total Computers & services 1,486 -------- - -------------------------------------------------------------------------------- FIBER OPTICS--10.8% - -------------------------------------------------------------------------------- CIENA* 5,920 727 Corning 2,300 683 Exfo Electro Optical Engineering* 11,460 499 Sycamore Networks* 6,490 701 -------- Total Fiber optics 2,610 -------- - -------------------------------------------------------------------------------- INTERNET SERVICES--7.1% - -------------------------------------------------------------------------------- @Road* 40,000 288 Clarent* 10,790 425 Phone.com* 5,160 586 Software.Com* 2,360 428 -------- Total Internet services 1,727 -------- - -------------------------------------------------------------------------------- NETWORKING PRODUCTS & SERVICES--17.9% - -------------------------------------------------------------------------------- Cisco Systems* 11,910 658 Corvis* 7,640 466 Extreme Networks* 5,570 638 Juniper Networks* 3,460 758 Micromuse* 3,280 659 Oni Systems* 9,030 779 Turnstone Systems* 8,400 390 -------- Total Networking products & services 4,348 -------- - -------------------------------------------------------------------------------- SEMICONDUCTORS/INSTRUMENTS--27.9% - -------------------------------------------------------------------------------- Alpha Industries* 16,790 572 Applied Micro Circuits* 3,000 621 Broadcom, Cl A* 2,290 558 Cree* 5,370 624 Globespan* 3,860 471 Intersil Holding* 15,520 774 Marvell Technology Group Ltd.* 3,740 288 PMC-Sierra* 2,760 594 Transwitch* 15,290 975 Triquint Semiconductor* 15,600 568 Vitesse Semiconductor* 8,250 734 -------- Total Semiconductors/instruments 6,779 -------- Shares/face Value amount (000) (000) - -------------------------------------------------------------------------------- SOFTWARE & PROGRAMMING--2.8% - -------------------------------------------------------------------------------- Research In Motion Ltd.* 6,870 $ 677 -------- Total Software & programming 677 -------- - -------------------------------------------------------------------------------- TELEPHONES & TELECOMMUNICATIONS--14.2% - -------------------------------------------------------------------------------- Anaren Microwave* 4,810 652 Comverse Technology* 7,080 765 Cosine Communications* 5,070 282 Nokia ADR 14,930 594 Nortel Networks 11,710 698 Sonus Networks* 3,530 446 -------- Total Telephones & telecommunications 3,437 -------- - -------------------------------------------------------------------------------- Wireless equipment--10.3% - -------------------------------------------------------------------------------- Aether Systems* 8,580 905 Palm* 17,860 946 Powerwave Technologies* 17,130 650 -------- Total Wireless equipment 2,501 -------- - -------------------------------------------------------------------------------- TOTAL COMMON STOCKS (COST $22,030) 23,565 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- REPURCHASE AGREEMENT--4.3% - -------------------------------------------------------------------------------- JP Morgan 6.650%, dated 09/29/00, matures 10/02/00, repurchase price $1,051,752 (collateralized by GNMA, total par value $1,247,413, 6.500%, matures 11/15/28, total maket value $1,072,589) $1,051 1,051 - -------------------------------------------------------------------------------- TOTAL REPURCHASE AGREEMENT (COST $1,051) 1,051 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- TOTAL INVESTMENTS--101.4% (COST $23,081) 24,616 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- OTHER ASSETS & LIABILITIES, NET--(1.4%) (344) - -------------------------------------------------------------------------------- TOTAL NET ASSETS--100% $24,272 - -------------------------------------------------------------------------------- * Non-income producing security ADR - American Depository Receipt Cl - Class GNMA - Government National Mortgage Association Ltd. - Limited The accompanying notes are an integral part of the financial statements. TURNER FUNDS 2000 ANNUAL REPORT | 41 FINANCIAL STATEMENTS SCHEDULE OF INVESTMENTS TURNER GLOBAL TOP 40 FUND September 30, 2000 Value Shares (000) - -------------------------------------------------------------------------------- COMMON STOCKS--99.2% - -------------------------------------------------------------------------------- BANKS--1.6% - -------------------------------------------------------------------------------- Bank of Tokyo-Mitsubishi Ltd. ADR 16,820 $ 197 -------- Total Banks 197 -------- - -------------------------------------------------------------------------------- COMPUTERS & SERVICES--7.6% - -------------------------------------------------------------------------------- Brocade Communications System* 1,450 342 Sun Microsystems* 2,330 272 Veritas Software* 2,130 302 -------- Total Computers & services 916 -------- - -------------------------------------------------------------------------------- DRUGS--4.5% - -------------------------------------------------------------------------------- Biovail* 2,240 182 Medimmune* 2,470 191 Teva Pharmaceutical Industries ADR 2,340 171 -------- Total Drugs 544 -------- - -------------------------------------------------------------------------------- ELECTRICAL SERVICES--0.4% - -------------------------------------------------------------------------------- Independent Energy Holdings ADR* 20,530 51 -------- Total Electrical services 51 -------- - -------------------------------------------------------------------------------- ELECTRONIC & OTHER ELECTRICAL EQUIPMENT--5.9% - -------------------------------------------------------------------------------- Celestica* 5,060 350 Flextronics International Ltd.* 4,400 361 -------- Total Electronic & other electrical equipment 711 -------- - -------------------------------------------------------------------------------- ENERGY--1.3% - -------------------------------------------------------------------------------- Ballard Power Systems* 1,440 157 -------- Total Energy 157 -------- - -------------------------------------------------------------------------------- FIBER OPTICS--10.5% - -------------------------------------------------------------------------------- CIENA* 2,420 297 Corning 1,340 398 Sycamore Networks* 2,060 223 Tycom Ltd.* 8,970 344 -------- Total Fiber optics 1,262 -------- - -------------------------------------------------------------------------------- HOTELS & AMUSEMENT SERVICES--2.1% - -------------------------------------------------------------------------------- Four Seasons Hotels 3,400 249 -------- Total Hotels & amusement services 249 -------- Value Shares (000) - -------------------------------------------------------------------------------- INSURANCE--2.1% - -------------------------------------------------------------------------------- Manulife Financial 12,170 $ 253 -------- Total Insurance 253 -------- - -------------------------------------------------------------------------------- INTERNET SERVICES--6.9% - -------------------------------------------------------------------------------- Ariba* 1,760 252 Commerce One* 4,410 346 VeriSign* 1,190 241 -------- Total Internet services 839 -------- - -------------------------------------------------------------------------------- INVESTMENT MANAGEMENT SERVICES--2.1% - -------------------------------------------------------------------------------- Amvescap ADR 2,310 256 -------- Total Investment management services 256 -------- - -------------------------------------------------------------------------------- MEDICAL PRODUCTS & SERVICES--1.6% - -------------------------------------------------------------------------------- Qiagen* 4,160 196 -------- Total Medical products & services 196 -------- - -------------------------------------------------------------------------------- MULITMEDIA--1.9% - -------------------------------------------------------------------------------- Reuters Group ADR 2,080 234 -------- Total Mulitmedia 234 -------- - -------------------------------------------------------------------------------- NETWORKING PRODUCTS & SERVICES--8.5% - -------------------------------------------------------------------------------- Cisco Systems* 9,320 515 Corvis* 570 35 Juniper Networks* 1,640 359 Turnstone Systems* 2,560 119 -------- Total Networking products & services 1,028 -------- - -------------------------------------------------------------------------------- SEMICONDUCTORS/INSTRUMENTS--10.0% - -------------------------------------------------------------------------------- Applied Micro Circuits* 1,610 333 Broadcom, Cl A* 1,250 305 PMC-Sierra* 1,290 278 Xilinx* 3,380 289 -------- Total Semiconductors/instruments 1,205 -------- - -------------------------------------------------------------------------------- SOFTWARE & PROGRAMMING--9.9% - -------------------------------------------------------------------------------- Check Point Software Technologies* 2,690 424 Descartes Systems Group* 4,900 243 I2 Technologies* 1,580 296 Siebel Systems* 2,050 228 -------- Total Software & programming 1,191 -------- 42 | TURNER FUNDS 2000 ANNUAL REPORT SCHEDULE OF INVESTMENTS TURNER GLOBAL TOP 40 FUND Value Shares (000) - -------------------------------------------------------------------------------- TELEPHONES & TELECOMMUNICATIONS--16.1% - -------------------------------------------------------------------------------- China Mobile (Hong Kong) Ltd. ADR* 9,100 $ 295 Deutsche Telekom ADR* 7,340 251 Global Crossing Ltd.* 10,540 327 Microcell Telecommunications* 4,750 138 Nokia ADR 6,430 256 Nortel Networks 7,310 435 Telefonos de Mexico ADR 4,660 248 -------- Total Telephones & telecommunications 1,950 -------- - -------------------------------------------------------------------------------- THERAPEUTICS--2.1% - -------------------------------------------------------------------------------- Celltech Group ADR* 6,470 253 -------- Total Therapeutics 253 -------- - -------------------------------------------------------------------------------- TRANSPORTATION SERVICES--1.9% - -------------------------------------------------------------------------------- Canadian Pacific Ltd. 8,710 227 -------- Total Transportation services 227 -------- Value Shares (000) - -------------------------------------------------------------------------------- UTILITIES/COMMUNICATIONS--2.2% - -------------------------------------------------------------------------------- Teekay Shipping 5,530 $ 260 -------- Total Utilities/communications 260 -------- - -------------------------------------------------------------------------------- TOTAL COMMON STOCKS (COST $11,612) 11,979 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- TOTAL INVESTMENTS--99.2% (COST $11,612) 11,979 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- OTHER ASSETS & LIABILITIES, NET--0.8% 101 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- TOTAL NET ASSETS--100% $12,080 - -------------------------------------------------------------------------------- * Non-income producing security ADR - American Depository Receipt Cl - Class Ltd. - Limited The accompanying notes are an integral part of the financial statements. TURNER FUNDS 2000 ANNUAL REPORT | 43 FINANCIAL STATEMENTS STATEMENT OF NET ASSETS TURNER SELECT GROWTH EQUITY FUND September 30, 2000 Value Shares (000) - -------------------------------------------------------------------------------- COMMON STOCKS--99.9% - -------------------------------------------------------------------------------- AEROSPACE/DEFENSE EQUIPMENT--1.2% - -------------------------------------------------------------------------------- United Technologies 820 $ 57 -------- Total Aerospace/defense equipment 57 -------- - -------------------------------------------------------------------------------- COMPUTERS & SERVICES--12.8% - -------------------------------------------------------------------------------- Brocade Communications System* 300 71 EMC-Mass* 2,260 224 Redback Networks* 270 44 Sun Microsystems* 1,560 182 Veritas Software* 540 77 -------- Total Computers & services 598 -------- - -------------------------------------------------------------------------------- DIVERSIFIED MANUFACTURING--9.1% - -------------------------------------------------------------------------------- General Electric 7,360 425 -------- Total Diversified manufacturing 425 -------- - -------------------------------------------------------------------------------- DRUGS--10.4% - -------------------------------------------------------------------------------- Abbott Laboratories 970 46 American Home Products 1,620 92 Medimmune* 710 55 Pfizer 5,172 232 Pharmacia 1,010 61 -------- Total Drugs 486 -------- - -------------------------------------------------------------------------------- ELECTRICAL SERVICES--1.0% - -------------------------------------------------------------------------------- AES* 690 47 -------- Total Electrical services 47 -------- - -------------------------------------------------------------------------------- ELECTRONIC & OTHER ELECTRICAL EQUIPMENT--2.4% - -------------------------------------------------------------------------------- Celestica* 900 62 Flextronics International Ltd.* 590 49 -------- Total Electronic & other electrical equipment 111 -------- - -------------------------------------------------------------------------------- FIBER OPTICS--10.4% - -------------------------------------------------------------------------------- CIENA* 780 96 Corning 470 140 JDS Uniphase* 960 91 SDL* 150 46 Sycamore Networks* 580 63 Tycom Ltd.* 1,250 48 -------- Total Fiber optics 484 -------- Value Shares (000) - -------------------------------------------------------------------------------- FOOD, BEVERAGE & TOBACCO--2.2% - -------------------------------------------------------------------------------- Anheuser-Busch 1,150 $ 49 Pepsico 1,140 52 -------- Total Food, beverage & tobacco 101 -------- - -------------------------------------------------------------------------------- INSURANCE--1.1% - -------------------------------------------------------------------------------- American International Group 540 52 -------- Total Insurance 52 -------- - -------------------------------------------------------------------------------- INTERNET SERVICES--7.6% - -------------------------------------------------------------------------------- America Online* 3,310 178 Ariba* 440 63 Commerce One* 620 49 VeriSign* 310 63 -------- Total Internet services 353 -------- - -------------------------------------------------------------------------------- MEDICAL PRODUCTS & SERVICES--5.4% - -------------------------------------------------------------------------------- Amgen* 1,650 115 Genentech* 410 76 Millennium Pharmaceuticals* 400 58 -------- Total Medical products & services 249 -------- - -------------------------------------------------------------------------------- MULITMEDIA--2.1% - -------------------------------------------------------------------------------- Time Warner 1,250 98 -------- Total Mulitmedia 98 -------- - -------------------------------------------------------------------------------- NETWORKING PRODUCTS & SERVICES--13.1% - -------------------------------------------------------------------------------- Cisco Systems* 8,130 449 Corvis* 330 20 Juniper Networks* 440 96 Network Appliance* 370 47 -------- Total Networking products & services 612 -------- - -------------------------------------------------------------------------------- PIPELINEs--1.4% - -------------------------------------------------------------------------------- Enron 720 63 -------- Total Pipelines 63 -------- - -------------------------------------------------------------------------------- SEMICONDUCTORS/INSTRUMENTS--5.4% - -------------------------------------------------------------------------------- Applied Micro Circuits* 300 62 Broadcom, Cl A* 300 73 PMC-Sierra* 290 62 Xilinx* 630 54 -------- Total Semiconductors/instruments 251 -------- 44 | TURNER FUNDS 2000 ANNUAL REPORT STATEMENT OF NET ASSETS TURNER SELECT GROWTH EQUITY FUND Shares/face Value amount (000) (000) - -------------------------------------------------------------------------------- SOFTWARE & PROGRAMMING--9.5% - -------------------------------------------------------------------------------- BEA Systems* 760 $ 59 Check Point Software Technologies* 310 49 I2 Technologies* 400 75 Oracle* 2,300 181 Siebel Systems* 690 77 -------- Total Software & programming 441 -------- - -------------------------------------------------------------------------------- TELEPHONES & TELECOMMUNICATIONS--3.9% - -------------------------------------------------------------------------------- Nokia ADR 2,360 94 Nortel Networks 1,430 85 -------- Total Telephones & telecommunications 179 -------- - -------------------------------------------------------------------------------- WIRELESS EQUIPMENT--0.9% - -------------------------------------------------------------------------------- Palm* 800 42 -------- Total Wireless equipment 42 -------- - -------------------------------------------------------------------------------- TOTAL COMMON STOCKS (COST $4,597) 4,649 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- REPURCHASE AGREEMENT--0.5% - -------------------------------------------------------------------------------- Morgan Stanley Dean Witter 6.300%, dated 09/29/00, matures 10/02/00, repurchase price $25,420 (collateralized by U.S. Treasury Bond, total par value $25,369, 9.875%, matures 11/15/15, total maket value $26,052) $25 25 - -------------------------------------------------------------------------------- TOTAL REPURCHASE AGREEMENT (COST $25) 25 - -------------------------------------------------------------------------------- VALUE (000) - -------------------------------------------------------------------------------- TOTAL INVESTMENTS--100.4% (COST $4,622) $4,674 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- OTHER ASSETS & LIABILITIES, NET--(0.4%) - -------------------------------------------------------------------------------- Investment securities purchased (246) Other assets & liabilities, net 228 - -------------------------------------------------------------------------------- TOTAL OTHER ASSETS & LIABILITIES, NET (18) - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- NET ASSETS: - -------------------------------------------------------------------------------- Portfolio capital (unlimited authorization-- no par value) based on 474,403 outstanding shares of beneficial interest 4,997 Accumulated net realized loss on investments (393) Net unrealized appreciation on investments 52 - -------------------------------------------------------------------------------- TOTAL NET ASSETS--100% $4,656 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- NET ASSET VALUE, OFFERING AND REDEMPTION PRICE PER SHARE $9.81 - -------------------------------------------------------------------------------- * Non-income producing security ADR - American Depository Receipt Cl-- Class Ltd. - Limited The accompanying notes are an integral part of the financial statements. TURNER FUNDS 2000 ANNUAL REPORT | 45 FINANCIAL STATEMENTS STATEMENT OF NET ASSETS TURNER SHORT DURATION GOVERNMENT FUNDS- ONE YEAR PORTFOLIO September 30, 2000 Face amount Value (000) (000) - -------------------------------------------------------------------------------- U.S. TREASURY OBLIGATIONS--12.2% - -------------------------------------------------------------------------------- U.S. Treasury Note 8.000%, 05/15/01 $1,000 $ 1,010 U.S. Treasury Note (A) 3.625%, 07/15/02 3,788 3,785 - -------------------------------------------------------------------------------- TOTAL U.S. TREASURY OBLIGATIONS (COST $4,729) 4,795 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- U.S. GOVERNMENT AGENCY OBLIGATIONS--14.8% - -------------------------------------------------------------------------------- FHLMC (C) 6.770%, 05/24/01 4,000 3,840 FNMA, MTN 6.290%, 09/11/01 2,000 1,993 - -------------------------------------------------------------------------------- Total U.S. Government agency obligations (Cost $5,808) 5,833 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- U.S. GOVERNMENT MORTGAGE-BACKED SECURITIES--37.9% - -------------------------------------------------------------------------------- FHLMC Pool #184967 7.750%, 08/01/08 278 281 FHLMC CMO/REMIC Ser 1106, Cl E 7.500%, 07/15/06 88 88 Ser 1361, Cl D 6.000%, 11/15/05 68 68 Ser 1416, Cl PG 6.500%, 07/15/18 143 142 Ser 1430, Cl G 7.000%, 10/15/18 35 35 Ser 1434, Cl G 6.750%, 03/15/19 310 309 Ser 1457, Cl PH 7.000%, 06/15/06 74 74 Ser 1465, Cl E 6.500%, 09/15/06 588 586 Ser 1501, Cl G 6.400%, 05/15/18 802 798 Ser 161, Cl F 9.500%, 06/15/06 62 63 Ser 1880, Cl PA 7.000%, 04/15/08 3,039 3,034 - -------------------------------------------------------------------------------- Face amount Value (000) (000) - -------------------------------------------------------------------------------- FHLMC CMO/REMIC (B) Ser 1862, Cl FD 7.735%, 12/15/22 $ 65 $ 65 Ser 1900, Cl FA 7.175%, 03/15/09 60 60 FNMA Pool #77593 8.000%, 09/01/13 342 350 FNMA CMO/REMIC Ser 1997-5, Cl A 7.000%, 01/18/21 1,852 1,846 Ser 1998-44, Cl TB 6.000%, 01/18/08 448 445 Ser 1998-45, Cl PB 6.000%, 05/18/12 821 815 FNMA CMO/REMIC (B) Ser 1993-76, Cl F 7.156%, 06/25/08 558 561 GNMA Pool #8108 7.375%, 03/20/16 259 261 GNMA ARM (B) Pool #8111 7.375%, 03/20/16 731 737 Pool #8254 6.750%, 08/20/17 844 852 Pool #8266 6.750%, 09/20/17 472 476 Pool #8287 7.125%, 11/20/17 266 269 Pool #8297 7.125%, 12/20/17 266 268 Pool #8321 7.375%, 02/20/18 720 726 Pool #8333 7.375%, 03/20/18 246 249 Pool #8345 7.375%, 04/20/18 310 313 Pool #8366 7.375%, 06/20/18 387 390 Pool #8392 6.750%, 08/20/18 240 242 Pool #8404 6.750%, 09/20/18 30 30 46 | TURNER FUNDS 2000 ANNUAL REPORt STATEMENT OF NET ASSETS TURNER SHORT DURATION GOVERNMENT FUNDS- ONE YEAR PORTFOLIO Face amount Value (000) (000) - -------------------------------------------------------------------------------- Pool #8405 6.750%, 09/20/18 $ 68 $ 68 Pool #8462 7.375%, 02/20/19 35 35 Pool #8489 7.375%, 04/20/19 344 347 - -------------------------------------------------------------------------------- TOTAL U.S. GOVERNMENT MORTGAGE- BACKED SECURITIES (COST $14,849) 14,883 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- ASSET-BACKED SECURITIES--13.7% - -------------------------------------------------------------------------------- CREDIT CARDS--1.1% - -------------------------------------------------------------------------------- Dayton Hudson Credit Card Master Trust, Ser 1, Cl A 6.250%, 08/25/05 390 387 Fleet Credit Card Master Trust, Ser 1998-A, Cl A 6.661%, 07/15/03 40 40 -------- Total Credit cards 427 -------- - -------------------------------------------------------------------------------- MORTGAGE RELATED--12.6% - -------------------------------------------------------------------------------- BA Mortgage Securities, CMO, Ser 2, Cl 2A1 7.250%, 10/25/27 478 477 Countrywide Funding, Ser 13, Cl A4 6.500%, 06/25/09 108 107 GE Capital Mortgage Services, Ser 11, Cl A2 6.000%, 07/25/29 500 491 Hyundai Auto Receivables Trust, Ser A, Cl A2 6.050%, 07/15/04 632 628 Morgan Stanley Capital I, Ser C1, Cl A1A 6.850%, 02/15/20 5 5 PeopleFirst.Com Auto Receivables Owner Trust, Ser 1, Cl A1 6.415%, 05/15/02 45 45 Face amount Value (000) (000) - -------------------------------------------------------------------------------- Prudential Home Mortgage Securities, CMO, Ser 5, Cl A3 7.000%, 02/25/24 $1,200 $ 1,194 Residential Funding Mortgage Securitization I, Ser S39, Cl A8 7.500%, 11/25/07 484 485 WFS Financial Owner Trust, Ser 2000-C, Cl A2 7.010%, 08/20/03 1,525 1,527 -------- Total Mortgage related 4,959 -------- - -------------------------------------------------------------------------------- TOTAL ASSET-BACKED SECURITIES (COST $5,377) 5,386 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- REPURCHASE AGREEMENT--21.3% - -------------------------------------------------------------------------------- JP Morgan 6.650%, dated 09/29/00, matures 10/02/00, repurchase price $8,374,409 (collateralized by GNMA, total par value $8,898,860, 6.500%-8.000%, matures 10/15/28-09/15/30, total maket value $8,540,320) 8,373 8,373 - -------------------------------------------------------------------------------- TOTAL REPURCHASE AGREEMENT (COST $8,373) 8,373 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- TOTAL INVESTMENTS--99.9% (COST $39,136) 39,270 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- OTHER ASSETS & LIABILITIES, NET--0.1% 29 - -------------------------------------------------------------------------------- TURNER FUNDS 2000 ANNUAL REPORT | 47 FINANCIAL STATEMENTS STATEMENT OF NET ASSETS TURNER SHORT DURATION GOVERNMENT FUNDS- ONE YEAR PORTFOLIO Value (000) - -------------------------------------------------------------------------------- NET ASSETS: - -------------------------------------------------------------------------------- Portfolio capital of class I shares (unlimited authorization--no par value) based on 3,021,247 outstanding shares of beneficial interest $ 30,283 Portfolio capital of class II shares (unlimited authorization--no par value) based on 885,163 outstanding shares of beneficial interest 8,935 Distributions in excess of net investment income (47) Accumulated net realized loss on investments (6) Net unrealized appreciation on investments 134 - -------------------------------------------------------------------------------- TOTAL NET ASSETS--100% $39,299 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- NET ASSET VALUE, OFFERING AND REDEMPTION PRICE PER SHARE--CLASS I $10.05 - -------------------------------------------------------------------------------- NET ASSET VALUE, OFFERING AND REDEMPTION PRICE PER SHARE--CLASS II $10.09 - -------------------------------------------------------------------------------- (A) TIP - Treasury inflation protection note (B) Floating Rate Security - The rate reflected on the statement of net assets is the rate in effect on September 30, 2000. (C) Discount Note - The rate reflected on the statement of net assets is the discount rate of the security at time of purchase. ARM - Adjustable Rate Mortgage Cl - Class CMO - Collateralized Mortgage Obligation FHLMC - Federal Home Loan Mortgage Association F NMA - Federal National Mortgage Association GNMA - Government National Mortgage Association MTN - Medium Term Note REMIC - Real Estate Mortgage Investment Conduit Ser - Series The accompanying notes are an integral part of the financial statements. 48 | TURNER FUNDS 2000 ANNUAL REPORT STATEMENT OF NET ASSETS TURNER SHORT DURATION GOVERNMENT FUNDS- THREE YEAR PORTFOLIO September 30, 2000 Face amount Value (000) (000) - -------------------------------------------------------------------------------- U.S. TREASURY OBLIGATIONS--25.9% - -------------------------------------------------------------------------------- U.S. Treasury Notes 8.000%, 05/15/01 $4,311 $ 4,354 6.000%, 08/15/09 1,696 1,705 U.S. Treasury Notes (A) 3.625%, 07/15/02 6,523 6,519 - -------------------------------------------------------------------------------- TOTAL U.S. TREASURY OBLIGATIONS (COST $12,427) 12,578 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- U.S. GOVERNMENT AGENCY OBLIGATIONS--0.7% - -------------------------------------------------------------------------------- FNMA, MTN 6.710%, 03/13/02 360 359 - -------------------------------------------------------------------------------- TOTAL U.S. GOVERNMENT AGENCY OBLIGATIONS (COST $361) 359 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- U.S. GOVERNMENT MORTGAGE-BACKED SECURITIES--53.4% - -------------------------------------------------------------------------------- FHLMC Pool #C34889 7.500%, 12/01/29 391 391 Pool #G10288 6.000%, 09/01/09 330 321 Pool #G10446 6.500%, 02/01/11 690 677 FHLMC CMO/REMIC Ser 1093, Cl F 7.500%, 06/15/06 299 301 Ser 1361, Cl D 6.000%, 11/15/05 89 88 Ser 1380, Cl K 6.750%, 10/15/07 648 646 Ser 1411, Cl G 6.500%, 07/15/18 203 202 Ser 1430, Cl G 7.000%, 10/15/18 91 91 Ser 1434, Cl G 6.750%, 03/15/19 310 309 Ser 1457, Cl PH 7.000%, 06/15/06 465 465 Ser 1465, Cl E 6.500%, 09/15/06 245 244 Ser 1501, Cl G 6.400%, 05/15/18 283 282 Face amount Value (000) (000) - -------------------------------------------------------------------------------- Ser 161, Cl F 9.500%, 06/15/06 $ 1,405 $ 1,439 Ser 2043, Cl CD 6.000%, 09/15/16 570 562 FHLMC CMO/REMIC (B) Ser 1862, Cl FD 7.735%, 12/15/22 351 351 Ser 1900, Cl FA 7.175%, 03/15/09 547 548 FNMA Pool #250477 6.000%, 01/01/11 249 240 Pool #252209 6.000%, 02/01/19 1,147 1,088 Pool #303096 7.500%, 12/01/09 1,086 1,098 Pool #547823 8.000%, 07/01/30 802 812 Pool #551394 8.000%, 09/01/30 850 861 Pool #6222 9.000%, 04/01/16 231 242 Pool #7239 8.000%, 08/01/08 765 782 Pool #8245 8.000%, 12/01/08 466 476 FNMA CMO/REMIC Ser 1991-133, Cl Z 8.000%, 09/25/06 2,030 2,063 Ser 1991-72, Cl G 8.000%, 07/25/06 247 252 Ser 1993-106, Cl D 6.650%, 12/25/11 1,000 995 Ser 1993-194, Cl PH 6.000%, 11/25/05 386 384 Ser 1998-36, Cl PA 6.250%, 07/18/13 831 825 Ser 1998-44, Cl TB 6.000%, 01/18/08 448 445 Ser 1998-45, Cl PB 6.000%, 05/18/12 821 815 GNMA Pool #2707 5.500%, 01/20/14 68 64 TURNER FUNDS 2000 ANNUAL REPORT | 49 FINANCIAL STATEMENTS STATEMENT OF NET ASSETS TURNER SHORT DURATION GOVERNMENT FUNDS- THREE YEAR PORTFOLIO Face amount Value (000) (000) - -------------------------------------------------------------------------------- Pool #2802 5.500%, 07/20/14 $ 64 $ 59 Pool #2843 5.500%, 11/20/14 848 794 Pool #351122 6.500%, 07/15/08 478 472 Pool #357343 6.500%, 10/15/08 191 188 Pool #462486 6.500%, 01/15/13 1,306 1,264 Pool #68224 8.000%, 06/15/12 906 926 Pool #8108 7.375%, 03/20/16 1,146 1,156 GNMA ARM (B) Pool #8254 6.750%, 08/20/17 794 800 Pool #8264 6.750%, 09/20/17 563 568 Pool #8266 6.750%, 09/20/17 606 611 Pool #8320 7.375%, 02/20/18 561 566 Pool #8426 7.125%, 11/20/18 167 169 - -------------------------------------------------------------------------------- TOTAL U.S. GOVERNMENT MORTGAGE- BACKED SECURITIES (COST $25,857) 25,932 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- ASSET-BACKED SECURITIES--17.8% - -------------------------------------------------------------------------------- CREDIT CARDS--2.9% - -------------------------------------------------------------------------------- Fleet Credit Card Master Trust, Ser 1998-A, Cl A 6.661%, 07/15/03 1,400 1,400 -------- Total Credit cards 1,400 -------- - -------------------------------------------------------------------------------- MORTGAGE RELATEd--14.9% - -------------------------------------------------------------------------------- BA Mortgage Securities, CMO, Ser 2, Cl 2A1 7.250%, 10/25/27 478 477 GE Capital Mortgage Services, Ser 11, Cl A2 6.000%, 07/25/29 1,000 983 Face amount Value (000) (000) - -------------------------------------------------------------------------------- Goldman Sachs Mortgage Securities, Ser C1, Cl A1 6.060%, 10/18/30 $ 897 $ 868 Hyundai Auto Receivables Trust, Ser A, Cl A2 6.050%, 07/15/04 694 690 PeopleFirst.Com Auto Receivables Owner Trust, Ser 1, Cl A1 6.415%, 05/15/02 314 314 Prudential Home Mortgage Securities, CMO, Ser 5, Cl A3 7.000%, 02/25/24 950 945 Residential Funding Mortgage Securitization I, Ser S23, Cl A7 6.500%, 06/25/08 69 68 Residential Funding Mortgage Securitization I, Ser S39, Cl A8 7.500%, 11/25/07 484 485 Securitized Asset Sales, Ser 7, Cl TA2 6.250%, 12/25/23 1,461 1,448 Structured Asset Securities, CMO, Ser 2, Cl 1A 7.183%, 10/30/07 981 979 -------- Total Mortgage related 7,257 -------- - -------------------------------------------------------------------------------- TOTAL ASSET-BACKED SECURITIES (COST $8,666) 8,657 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- REPURCHASE AGREEMENT--1.0% - -------------------------------------------------------------------------------- Morgan Stanley Dean Witter 6.300%, dated 09/29/00, matures 10/02/00, repurchase price $457,494 (collateralized by U.S. Treasury Note, total par value $456,576, 9.875%, matures 11/15/15, total maket value $468,871) 457 457 - -------------------------------------------------------------------------------- TOTAL REPURCHASE AGREEMENT (Cost $457) 457 - -------------------------------------------------------------------------------- 50 | TURNER FUNDS 2000 ANNUAL REPORT STATEMENT OF NET ASSETS TURNER SHORT DURATION GOVERNMENT FUNDS- THREE YEAR PORTFOLIO Value (000) - -------------------------------------------------------------------------------- TOTAL INVESTMENTS--98.8% (COST $47,768) $47,983 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- OTHER ASSETS & LIABILITIES, NET--1.2% 588 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- NET ASSETS: - -------------------------------------------------------------------------------- Portfolio capital of class I shares (unlimited authorization--no par value) based on 4,286,271 outstanding shares of beneficial interest 42,404 Portfolio capital of class II shares (unlimited authorization--no par value) based on 662,198 outstanding shares of beneficial interest 6,422 Distributions in excess of net investment income (62) Accumulated net realized loss on investments (408) Net unrealized appreciation on investments 215 - -------------------------------------------------------------------------------- Total net assets--100% $48,571 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- NET ASSET VALUE, OFFERING AND REDEMPTION PRICE PER SHARE--CLASS I $9.82 - -------------------------------------------------------------------------------- NET ASSET VALUE, OFFERING AND REDEMPTION PRICE PER SHARE--CLASS II $9.78 - -------------------------------------------------------------------------------- (A) TIP - Treasury inflation protection note (B) Floating Rate Security - The rate reflected on the statement of net assets is the rate in effect on September 30, 2000. ARM - Adjustable Rate Mortgage Cl - Class CMO - Collateralized Mortgage Obligation FHLMC - Federal Home Loan Mortgage Association FNMA - Federal National Mortgage Association GNMA - Government National Mortgage Association MTN - Medium Term Note REMIC - Real Estate Mortgage Investment Conduit Ser - Series The accompanying notes are an integral part of the financial statements. TURNER FUNDS 2000 ANNUAL REPORT | 51 FINANCIAL STATEMENTS STATEMENT OF NET ASSETS TURNER CORE HIGH QUALITY FIXED INCOME FUND September 30, 2000 Face amount Value (000) (000) - -------------------------------------------------------------------------------- U.S. TREASURY OBLIGATIONS--31.5% - -------------------------------------------------------------------------------- U.S. Treasury Bonds (C) 8.125%, 05/15/21 $ 950 $ 1,171 8.125%, 08/15/19 420 513 7.500%, 11/15/16 345 393 5.250%, 11/15/28 140 125 U.S. Treasury Notes (C) 7.000%, 07/15/06 1,083 1,139 U.S. Treasury Notes (A) 3.625%, 01/15/08 764 746 3.375%, 01/15/07 327 316 - -------------------------------------------------------------------------------- TOTAL U.S. TREASURY OBLIGATIONS (COST $4,348) 4,403 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- U.S. GOVERNMENT MORTGAGE-BACKED SECURITIES--57.5% - -------------------------------------------------------------------------------- FHLMC Pool #C00784 6.000%, 06/01/29 581 544 Pool #C16814 7.500%, 10/01/28 339 338 FHLMC CMO/REMIC Ser 1380, Cl K 6.750%, 10/15/07 168 168 Ser 1465, Cl E 6.500%, 09/15/06 195 194 Ser 1538, Cl J 6.500%, 06/15/08 160 156 Ser 161, Cl F 9.500%, 06/15/06 261 268 Ser 2097, Cl PX 6.000%, 10/15/27 258 239 FNMA Pool #250477 6.000%, 01/01/11 70 67 Pool #323715 6.000%, 05/01/29 573 535 Pool #489836 6.000%, 06/01/14 861 828 Pool #514768 7.000%, 12/01/29 98 96 Pool #540607 7.500%, 06/01/30 110 110 Face amount Value (000) (000) - -------------------------------------------------------------------------------- Pool #547015 8.000%, 07/01/30 $ 699 $ 708 Pool #551394 8.000%, 09/01/30 90 91 Pool #7239 8.000%, 08/01/08 619 632 Ser 53069, Cl 69 7.000%, 09/01/30 110 108 FNMA CMO/REMIC Ser 1993-198, Cl K 6.000%, 12/25/22 834 781 Ser 1994-27, Cl PJ 6.500%, 06/25/23 680 657 Ser 1998-63, Cl PG 6.000%, 03/25/27 100 93 FNMA TBA 6.500%, 10/01/30 822 788 GNMA Pool #505830 7.500%, 09/15/29 50 50 Pool #521378 6.745%, 10/15/39 100 95 GNMA ARM (B) Pool #8103 7.375%, 02/20/16 209 211 Pool #8266 6.750%, 09/20/17 176 178 GNMA CMO/REMIC Ser 2000-18, Cl PB 7.500%, 06/20/29 100 101 - -------------------------------------------------------------------------------- TOTAL U.S. GOVERNMENT MORTGAGE- BACKED SECURITIES (COST $7,978) 8,036 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- ASSET-BACKED SECURITIES--9.9% - -------------------------------------------------------------------------------- CREDIT CARDS--3.2% - -------------------------------------------------------------------------------- Dayton Hudson Credit Card Master Trust, Ser 1, Cl A 6.250%, 08/25/05 450 446 -------- 446 -------- 52 | TURNER FUNDS 2000 ANNUAL REPORT STATEMENT OF NET ASSETS TURNER CORE HIGH QUALITY FIXED INCOME FUND Face amount Value (000) (000) - -------------------------------------------------------------------------------- MORTGAGE RELATED--6.7% - -------------------------------------------------------------------------------- Goldman Sachs Mortgage Securities, Ser C1, Cl A1 6.060%, 10/18/30 $ 38 $ 37 PeopleFirst.Com Auto Receivables Owner Trust, Ser 1, Cl A1 6.415%, 05/15/02 90 90 Prudential Home Mortgage Securities, CMO, Ser 5, Cl A3 7.000%, 02/25/24 500 497 WFS Financial Owner Trust, Ser 2000-C, Cl A2 7.010%, 08/20/03 310 310 -------- Total Mortgage related 934 -------- - -------------------------------------------------------------------------------- TOTAL ASSET-BACKED SECURITIES (COST $1,379) 1,380 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- CORPORATE OBLIGATION--1.6% - -------------------------------------------------------------------------------- Sprint Capital 6.125%, 11/15/08 250 227 - -------------------------------------------------------------------------------- TOTAL CORPORATE OBLIGATION (COST $231) 227 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- REPURCHASE AGREEMENT--4.1% - -------------------------------------------------------------------------------- Morgan Stanley Dean Witter 6.300%, dated 09/29/00, matures 10/02/00, repurchase price $579,373 (collateralized by U.S. Treasury Note, total par value $578,211, 9.875%, matures 11/15/15, total market value $593,781) 579 579 - -------------------------------------------------------------------------------- TOTAL REPURCHASE AGREEMENT (COST $579) 579 - -------------------------------------------------------------------------------- Value (000) - -------------------------------------------------------------------------------- TOTAL INVESTMENTS--104.6% (COST $14,515) $14,625 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- OTHER ASSETS & LIABILITIES, NET--(4.6%) (650) - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- NET ASSETS: - -------------------------------------------------------------------------------- Portfolio capital (unlimited authorization-- no par value) based on 1,399,658 outstanding shares of beneficial interest 14,173 Accumulated net realized loss on investments (308) Net unrealized appreciation on investments 110 - -------------------------------------------------------------------------------- Total net assets--100% $13,975 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- NET ASSET VALUE, OFFERING AND REDEMPTION PRICE PER SHARE $9.98 - -------------------------------------------------------------------------------- (A) TIP - Treasury inflation protection note (B) Floating Rate Security - The rate reflected on the statement of net assets is the rate in effect on September 30, 2000. (C) Securities, or portion thereof, are pledged as collateral for TBA securities. ARM - Adjustable Rate Mortgage Cl - Class CMO - Collateralized Mortgage Obligation FHLMC - Federal Home Loan Mortgage Association FNMA - Federal National Mortgage Association GNMA - Government National Mortgage Association REMIC - Real Estate Mortgage Investment Conduit Ser - Series TBA - To Be Announced The accompanying notes are an integral part of the financial statements. TURNER FUNDS 2000 ANNUAL REPORT | 53 FINANCIAL STATEMENTS STATEMENT OF ASSETS AND LIABILITIES (000)
Turner Small Cap Turner Growth Fund Top 20 Fund ------------------------------------------- 9/30/00 9/30/00 - --------------------------------------------------------------------------------------------------------------------------- Assets: - --------------------------------------------------------------------------------------------------------------------------- Investment securities at cost $ 479,553 $ 247,356 - --------------------------------------------------------------------------------------------------------------------------- Investment securities at value 540,020 249,176 Receivable for investment securities sold 28,564 24,063 Receivable for capital shares sold 1,382 1,182 Dividend and interest receivable 80 28 Receivable due from adviser -- -- Other assets 31 12 - --------------------------------------------------------------------------------------------------------------------------- Total assets 570,077 274,461 - --------------------------------------------------------------------------------------------------------------------------- Liabilities: Payable for investment securities purchased 40,487 27,381 Capital shares redeemed payable 171 68 Accrued expenses 52 134 Advisory fees payable 439 257 Cash overdraft -- -- - --------------------------------------------------------------------------------------------------------------------------- Total liabilities 41,149 27,840 - --------------------------------------------------------------------------------------------------------------------------- Net assets: Portfolio capital 357,484 212,420 Accumulated net investment loss (4) -- Accumulated net realized gain (loss) on investments 110,981 32,381 Net unrealized appreciation on investments 60,467 1,820 - --------------------------------------------------------------------------------------------------------------------------- Total net assets $ 528,928 $ 246,621 - --------------------------------------------------------------------------------------------------------------------------- Outstanding shares of beneficial interest: 11,810,022 9,967,286 - --------------------------------------------------------------------------------------------------------------------------- Net asset value, offering and redemption price per share $ 44.79 $ 24.74 - ---------------------------------------------------------------------------------------------------------------------------
Amounts designated as "--" are either $0 or have been rounded to $0 54 | TURNER FUNDS 2000 ANNUAL REPORT
Turner Turner B2B Wireless & Turner Turner E-Commerce Communications Global Technology Fund Fund Fund Top 40 Fund - ----------------------------------------------------------------------------------------------------------------------------------- 9/30/00 09/30/00 09/30/00 09/30/00 - ----------------------------------------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------------------- $ 165,461 $ 9,875 $ 23,081 $ 11,612 - ----------------------------------------------------------------------------------------------------------------------------------- 168,452 11,764 24,616 11,979 39,553 382 1,492 2,579 2,473 1,986 428 39 27 -- 1 14 -- 4 -- -- 13 13 13 3 - ----------------------------------------------------------------------------------------------------------------------------------- 210,518 14,149 26,550 14,614 - ----------------------------------------------------------------------------------------------------------------------------------- 36,759 390 2,259 1,606 2,799 -- -- 401 41 9 9 13 168 -- 10 1 1,398 -- -- 513 - ----------------------------------------------------------------------------------------------------------------------------------- 41,165 399 2,278 2,534 - ----------------------------------------------------------------------------------------------------------------------------------- 147,108 12,243 23,056 13,149 -- -- -- -- 19,254 (382) (319) (1,436) 2,991 1,889 1,535 367 - ----------------------------------------------------------------------------------------------------------------------------------- $ 169,353 $ 13,750 $ 24,272 $ 12,080 5,180,251 1,098,435 2,052,747 1,288,823 - ----------------------------------------------------------------------------------------------------------------------------------- $ 32.69 $ 12.52 $ 11.82 $ 9.37 - -----------------------------------------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of the financial statements. TURNER FUNDS 2000 ANNUAL REPORT | 55
FINANCIAL STATEMENTS - ---------------------------------------------------------------------------------------------------------------------------------- STATEMENT OF OPERATIONS (000) Turner Turner Turner Turner Midcap Small Cap Micro Cap Turner Technology Growth Fund Growth Fund Growth Fund Top 20 Fund Fund - ---------------------------------------------------------------------------------------------------------------------------------- year ended year ended year ended year ended year ended 9/30/00 9/30/00 9/30/00 9/30/00 9/30/00 - ---------------------------------------------------------------------------------------------------------------------------------- Investment income: Interest $ 1,560 $ 851 $ 436 $ 308 $ 175 Dividend 609 584 144 178 31 Foreign taxes withheld -- (9) -- (1) (2) - ---------------------------------------------------------------------------------------------------------------------------------- Total Investment Income 2,169 1,426 580 485 204 Expenses: Investment advisory fees 4,660 4,470 1,252 1,714 1,037 Investment advisory fee waiver -- (13) (102) (135) (134) Administrator fees 365 268 85 80 60 Administrator fee waiver -- -- -- -- -- Transfer agent fees 1,118 659 228 219 150 Registration fees 231 63 28 62 37 Professional fees 138 74 21 49 26 Printing fees 74 63 15 22 10 Custodian fees 53 34 50 19 21 Trustee fees 6 5 2 3 3 Amortization of deferred organizational costs 5 4 3 -- -- Pricing fees 3 3 1 -- 1 Shareholder service fees -- -- -- -- -- Insurance and other fees 10 11 4 4 1 - ---------------------------------------------------------------------------------------------------------------------------------- Total expenses 6,663 5,641 1,587 2,037 1,212 Less: Reimbursement from adviser -- -- -- -- -- Directed brokerage (260) (56) (23) (345) (125) - ---------------------------------------------------------------------------------------------------------------------------------- Net expenses 6,403 5,585 1,564 1,692 1,087 - ---------------------------------------------------------------------------------------------------------------------------------- Net investment income (loss) (4,234) (4,159) (984) (1,207) (883) Net realized gain (loss) from securities sold 73,899 117,610 19,298 36,086 20,737 Net unrealized appreciation on investments 195,101 25,386 42,196 1,014 2,679 - ---------------------------------------------------------------------------------------------------------------------------------- Net realized and unrealized gain (loss) on investments 269,000 142,996 61,494 37,100 23,416 Net increase (decrease) in net assets resulting from operations $264,766 $138,837 $60,510 $35,893 $22,533 - ----------------------------------------------------------------------------------------------------------------------------------
(1) Commenced operations on June 30, 2000. (2) Commenced operations on June 14, 2000. 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 2000 ANNUAL REPORT
Turner Turner Core Turner B2B Wireless & Turner Turner High Quality E-Commerce Communications Global Top 40 Select Growth One Year Three Year Fixed Income Fund Fund Fund Equity Fund Portfolio Portfolio Fund - -------------------------------------------------------------------------------------------------------------------------- 6/30/00 thru 6/30/00 thru 6/30/00 thru 6/14/00 thru year ended year ended year ended 9/30/00(1) 9/30/00(1) 9/30/00(1) 9/30/00(2) 9/30/00 9/30/00 9/30/00 - -------------------------------------------------------------------------------------------------------------------------- $ 9 $ 21 $ 11 $ 3 $1,322 $2,820 $ 764 1 -- 18 3 -- -- -- -- -- -- -- -- -- -- - -------------------------------------------------------------------------------------------------------------------------- 10 21 29 6 1,322 2,820 764 21 40 31 6 51 112 59 (21) (25) (19) (6) (51) (112) (59) 6 6 6 8 80 80 55 -- -- -- -- (15) (15) -- 6 6 6 4 61 68 28 6 7 4 3 27 19 2 12 12 12 12 24 22 20 -- -- 1 -- 2 14 2 2 2 2 2 7 7 2 -- -- -- -- 2 2 2 -- -- -- -- -- -- -- -- -- -- -- 1 1 2 -- -- -- -- 19 12 -- -- 1 1 -- -- 2 -- - -------------------------------------------------------------------------------------------------------------------------- 32 49 44 29 208 212 113 (7) -- -- (21) (115) (40) (60) -- -- -- -- -- -- -- - -------------------------------------------------------------------------------------------------------------------------- 25 49 44 8 93 172 53 - -------------------------------------------------------------------------------------------------------------------------- (15) (28) (15) (2) 1,229 2,648 711 (382) (291) (1,436) (393) (5) (179) (202) 1,889 1,535 367 52 133 243 352 - -------------------------------------------------------------------------------------------------------------------------- 1,507 1,244 (1,069) (341) 128 64 150 $1,492 $1,216 $(1,084) $(343) $1,357 $2,712 $ 861 - --------------------------------------------------------------------------------------------------------------------------
Turner funds 2000 annual Report | 57
FINANCIAL STATEMENTS - ----------------------------------------------------------------------------------------------------------------------------------- STATEMENT OF CHANGES IN NET ASSETS (000) Turner Midcap Turner Small Cap Turner Micro Cap Growth Fund Growth Fund Growth Fund - ----------------------------------------------------------------------------------------------------------------------------------- year year year year year year ended ended ended ended ended ended 9/30/00 9/30/99 9/30/00 9/30/99 9/30/00 9/30/99 - ----------------------------------------------------------------------------------------------------------------------------------- Investment activities: Net investment loss $ (4,234) $ (376) $ (4,159) $ (1,960) $ (984) $ (30) Net realized gain (loss) from securities sold 73,899 20,948 117,610 61,638 19,298 2,292 Net unrealized appreciation on investments 195,101 10,401 25,386 30,895 42,196 2,652 - ----------------------------------------------------------------------------------------------------------------------------------- Net increase (decrease) in net assets resulting from operations 264,766 30,973 138,837 90,573 60,510 4,914 - ----------------------------------------------------------------------------------------------------------------------------------- Distributions to shareholders: Net investment income -- -- -- -- -- -- Realized capital gains (20,897) -- (53,790) -- (2,225) -- - ----------------------------------------------------------------------------------------------------------------------------------- Total distributions (20,897) -- (53,790) -- (2,225) -- - ----------------------------------------------------------------------------------------------------------------------------------- Capital share transactions:(5) Proceeds from shares issued 1,109,065 127,616 295,246 87,818 334,443 6,101 Proceeds from shares issued in lieu of cash distributions 19,905 -- 51,918 -- 1,957 -- Cost of shares redeemed (317,913) (34,341) (157,360) (71,848) (220,541) (895) - ----------------------------------------------------------------------------------------------------------------------------------- Net increase in net assets from capital share transactions 811,057 93,275 189,804 15,970 115,859 5,206 Total increase in net assets 1,054,926 124,248 274,851 106,543 174,144 10,120 Net assets: Beginning of year 148,830 24,582 254,077 147,534 12,963 2,843 - ----------------------------------------------------------------------------------------------------------------------------------- End of year (4) $1,203,756 $148,830 $528,928 $254,077 $187,107 $12,963 - ----------------------------------------------------------------------------------------------------------------------------------- (5) Shares issued and redeemed: Issued 27,387 5,625 6,551 3,160 9,214 380 Issued in lieu of cash distributions 613 -- 1,386 -- 67 -- Redeemed (7,956) (1,567) (3,556) (2,596) (5,821) (53) - ----------------------------------------------------------------------------------------------------------------------------------- Net increase in capital shares 20,044 4,058 4,381 564 3,460 327 - ----------------------------------------------------------------------------------------------------------------------------------- (1) Commenced operations on June 30, 1999. (2) Commenced operations on June 30, 2000. (3) Commenced operations on June 14, 2000. (4) Includes undistributed net investment income (loss) and/or distributions in excess of net investment income (000) of $(2) and $(6) for the Midcap Growth Fund and $(4) and $(0) for the Small Cap Growth Fund as of September 30, 2000 and September 30, 1999, respectively.
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 2000 ANNUAL REPORT
Turner Turner B2B Wireless & Turner Turner Turner Turner E-Commerce Communications Global Select Growth Top 20 Fund Technology Fund Fund Fund Top 40 Fund Equity Fund - ----------------------------------------------------------------------------------------------------------------------------- year 6/30/99 year 6/30/99 6/30/00 6/30/00 6/30/00 6/14/00 ended thru ended thru thru thru thru thru 9/30/00 9/30/99 (1) 9/30/00 9/30/99 (1) 9/30/00 (2) 9/30/00 (2) 9/30/00 (2) 9/30/00 (3) - ----------------------------------------------------------------------------------------------------------------------------- $ (1,207) $ (21) $ (883) $ (10) $ (15) $ (28) $ (15) $ (2) 36,086 2,562 20,737 1,278 (382) (291) (1,436) (393) 1,014 806 2,679 312 1,889 1,535 367 52 - ----------------------------------------------------------------------------------------------------------------------------- 35,893 3,347 22,533 1,580 1,492 1,216 (1,084) (343) - ----------------------------------------------------------------------------------------------------------------------------- -- -- -- -- -- -- -- -- (5,039) -- (1,868) -- -- -- -- -- - ----------------------------------------------------------------------------------------------------------------------------- (5,039) -- (1,868) -- -- -- -- -- - ----------------------------------------------------------------------------------------------------------------------------- 286,659 13,557 260,904 7,914 15,745 26,061 17,221 5,144 4,896 -- 1,800 -- -- -- -- -- (91,900) (792) (122,312) (1,198) (3,487) (3,005) (4,057) (145) - ----------------------------------------------------------------------------------------------------------------------------- 199,655 12,765 140,392 6,716 12,258 23,056 13,164 4,999 230,509 16,112 161,057 8,296 13,750 24,272 12,080 4,656 16,112 -- 8,296 -- -- -- -- -- - ----------------------------------------------------------------------------------------------------------------------------- $246,621 $16,112 $169,353 $8,296 $13,750 $24,272 $12,080 $4,656 - ----------------------------------------------------------------------------------------------------------------------------- 12,448 1,223 8,552 696 1,431 2,307 1,712 489 274 -- 84 -- -- -- -- -- (3,907) (71) (4,046) (106) (333) (254) (423) (15) - ----------------------------------------------------------------------------------------------------------------------------- 8,815 1,152 4,590 590 1,098 2,053 1,289 474 - -----------------------------------------------------------------------------------------------------------------------------
TURNER FUNDS 2000 ANNUAL REPORT | 59
FINANCIAL STATEMENTS STATEMENT OF CHANGES IN NET ASSETS (000) Turner Short Duration Government Funds- One Year Portfolio - ----------------------------------------------------------------------------------------------------------------------------------- year ended year ended 9/30/00 9/30/99 - ----------------------------------------------------------------------------------------------------------------------------------- Investment activities: Net investment income $ 1,229 $ 100 Net realized gain (loss) from securities sold (5) -- Net unrealized appreciation (depreciation) on investments 133 (1) - ----------------------------------------------------------------------------------------------------------------------------------- Net increase in net assets resulting from operations 1,357 99 Distributions to shareholders: Net investment income Class I(2) (822) (77) Class II(3) (458) (25) Realized capital gains Class I(2) -- -- Class II(3) -- -- - ----------------------------------------------------------------------------------------------------------------------------------- Total distributions (1,280) (102) Capital share transactions: (5) Class I(2) Proceeds from shares issued 68,584 3,414 Proceeds from shares issued in lieu of cash distributions 771 76 Increase from in-kind transfers -- -- Cost of shares redeemed (42,274) (1,272) - ----------------------------------------------------------------------------------------------------------------------------------- Net increase in net assets from Class I transactions 27,081 2,218 - ----------------------------------------------------------------------------------------------------------------------------------- Class II(3) Proceeds from shares issued 9,813 3,642 Proceeds from shares issued in lieu of cash distributions 417 23 Cost of shares redeemed (4,451) (509) - ----------------------------------------------------------------------------------------------------------------------------------- Net increase in net assets from Class II transactions 5,779 3,156 - ----------------------------------------------------------------------------------------------------------------------------------- Net increase in net assets from capital share transactions 32,860 5,374 - ----------------------------------------------------------------------------------------------------------------------------------- Total increase in net assets 32,937 5,371 - ----------------------------------------------------------------------------------------------------------------------------------- Net assets: Beginning of year 6,362 991 - ----------------------------------------------------------------------------------------------------------------------------------- End of year (4) $39,299 $6,362 - ----------------------------------------------------------------------------------------------------------------------------------- (5) Shares issued and redeemed: Class I(2) Issued 6,838 340 Issued in lieu of cash distributions 77 8 Issued in connection with in-kind transfers -- -- Redeemed (4,213) (127) (954) - ----------------------------------------------------------------------------------------------------------------------------------- Increase in net assets from Class I transactions 2,702 221 Class II(3) Issued 973 360 Issued in lieu of cash distributions 41 2 Redeemed (441) (50) (302) - ----------------------------------------------------------------------------------------------------------------------------------- Increase in net assets from Class II transactions 573 312 - ----------------------------------------------------------------------------------------------------------------------------------- Net increase in capital shares 3,275 533 - ----------------------------------------------------------------------------------------------------------------------------------- (1) Commenced operations on June 30, 1999. (2) Formerly Institutional Class Shares. (3) Formerly Adviser Class Shares. (4) Includes undistributed net investment income (loss) and/or distributions in excess of net investment income (000) of $(47) and $(0) for the One Year Portfolio and $(62) and $(34) for the Three Year Portfolio as of September 30, 2000, and September 30, 1999, respectively. Amounts designated as "--" are either $0 or have been rounded to $0 The accompanying notes are an integral part of the financial statements.
60 | TURNER FUNDS 2000 ANNUAL REPORT
Turner Short Duration Government Funds- Turner Core High Quality Three Year Portfolio Fixed Income Fund - ---------------------------------------------------------------------------------------------------------------- year ended year ended year ended 6/30/99 thru 9/30/00 9/30/99 9/30/00 9/30/99 (1) - ---------------------------------------------------------------------------------------------------------------- $ 2,648 $ 1,255 $ 711 $ 140 (179) (177) (202) (106) 243 (264) 352 18 - ---------------------------------------------------------------------------------------------------------------- 2,712 814 861 52 (2,398) (1,258) (711) (140) (290) (1) -- -- -- (156) -- -- -- -- -- -- - ---------------------------------------------------------------------------------------------------------------- (2,688) (1,415) (711) (140) 10,364 10,962 3,507 18 2,392 1,276 710 139 -- 18,947 -- 10,120 (9,318) (3,912) (401) (180) - ---------------------------------------------------------------------------------------------------------------- 3,438 27,273 3,816 10,097 - ---------------------------------------------------------------------------------------------------------------- 9,004 192 -- -- 265 1 -- -- (2,934) (106) -- -- - ---------------------------------------------------------------------------------------------------------------- 6,335 87 -- -- - ---------------------------------------------------------------------------------------------------------------- 9,773 27,360 3,816 10,097 - ---------------------------------------------------------------------------------------------------------------- 9,797 26,759 3,966 10,009 - ---------------------------------------------------------------------------------------------------------------- 38,774 12,015 10,009 -- - ---------------------------------------------------------------------------------------------------------------- $48,571 $ 38,774 $13,975 $10,009 - ---------------------------------------------------------------------------------------------------------------- 1,062 1,100 358 2 245 128 72 14 -- 1,926 -- 1,012 (393) (40) (18) - ---------------------------------------------------------------------------------------------------------------- 353 2,761 390 1,010 928 20 -- -- 27 -- -- -- (11) -- -- - ---------------------------------------------------------------------------------------------------------------- 653 9 -- -- - ---------------------------------------------------------------------------------------------------------------- 1,006 2,770 390 1,010 - ----------------------------------------------------------------------------------------------------------------
TURNER FUNDS 2000 ANNUAL REPORT | 61
FINANCIAL STATEMENTS - -------------------------------------------------------------------------------------------------------------------------------- FINANCIAL HIGHLIGHTS FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD Realized and Net asset Net unrealized Distributions Distributions value, investment gains from net from beginning income (losses) on investment capital Return of period (loss) investments income gains of capital - -------------------------------------------------------------------------------------------------------------------------------- - ------------------------- Turner Midcap Growth Fund - ------------------------- 2000 $25.53 (0.10) 23.79 -- (2.70) -- 1999 $13.87 (0.06) 11.72 -- -- -- 1998 $14.22 (0.07) 0.22 -- (0.50) -- 1997 (1) $10.00 (0.03) 4.36 -- (0.11) -- - ---------------------------- Turner Small Cap Growth Fund - ---------------------------- 2000 $34.20 (0.12) 17.89 -- (7.18) -- 1999 $21.49 (0.26) 12.97 -- -- -- 1998 $26.35 (0.23) (4.19) -- (0.25) (0.19) 1997 $23.13 (0.07) 3.80 -- (0.51) -- 1996 (2) $16.08 (0.08) 8.17 -- (1.04) -- 1995 $10.90 (0.06) 5.24 -- -- -- - ---------------------------- Turner Micro Cap Growth Fund - ---------------------------- 2000 $21.09 (0.18) 26.52 -- (1.51) -- 1999 (3) $ 9.88 (0.05) 11.26 -- -- -- 1998 (4) $10.00 (0.04) (0.08) -- -- -- - ------------------ Turner Top 20 Fund - ------------------ 2000 $13.99 (0.11) 13.06 -- (2.20) -- 1999 (5) $10.00 (0.02) 4.01 -- -- -- - ---------------------- Turner Technology Fund - ---------------------- 2000 $14.06 (0.16) 20.33 -- (1.54) -- 1999 (5) $10.00 (0.02) 4.08 -- -- -- - -------------------------- Turner B2B E-Commerce Fund - -------------------------- 2000 (6) $10.00 (0.01) 2.53 -- -- -- - ------------------------------------- Turner Wireless & Communications Fund - ------------------------------------- 2000 (6) $10.00 (0.01) 1.83 -- -- -- - ------------------------- Turner Global Top 40 Fund - ------------------------- 2000 (6) $10.00 (0.01) (0.62) -- -- -- - -------------------------------- Turner Select Growth Equity Fund - -------------------------------- 2000 (7) $10.00 -- (0.19) -- -- -- * Inclusive of directed brokerage arrangements, waivers and reimbursements. + Returns are for the period indicated and have not been annualized. (1) Commenced operations on October 1, 1996. All ratios for the period have been annualized. (2) On April 19, 1996, the Board of Trustees of the Adviser Inner Circle Funds voted to approve a tax-free reorganization of the Turner Funds. In connection with the reorganization, the Funds changed their fiscal year end from October 31 to September 30, effective September 30, 1996. All ratios for the period have been annualized. (3) On January 25, 1999 shareholders of the Alpha Select Turner Micro Cap Growth Fund (the "Fund") approved a tax-free reorganization under which all assets and liabilities of the Fund were transferred to the TIP Turner Micro Cap Growth Fund.
Amounts designated as "--" are either $0 or have been rounded to $0. The accompanying notes are an integral part of the financial statements. 62 | Turner funds 2000 annual Report
- ------------------------------------------------------------------------------------------------------------------------------------ Ratio of net Ratio of Ratio of investment net expenses expenses income (loss) to average to average Ratio of net to average Net Ratio of net assets net assets investment net assets Net asset assets end net expenses (including (excluding income (loss) (excluding Portfolio value, end Total of period to average waivers and waivers and to average waivers and turnover of period return+ (000) net assets* reimbursements) reimbursements) net assets reimbursements) rate - ------------------------------------------------------------------------------------------------------------------------------------ - ------------------------- Turner Midcap Growth Fund - ------------------------- 2000 $46.52 97.35% $1,203,756 1.03% 1.07% 1.07% (0.72)% (0.72)% 306.97% 1999 $25.53 84.07% $ 148,830 1.03% 1.08% 1.08% (0.58)% (0.58)% 290.79% 1998 $13.87 1.24% $ 24,582 1.23% 1.34% 1.73% (0.79)% (1.18)% 304.29% 1997 (1) $14.22 43.77% $ 5,145 1.25% 1.25% 7.96% (0.62)% (7.33)% 348.29% - ---------------------------- Turner Small Cap Growth Fund - ---------------------------- 2000 $44.79 56.07% $ 528,928 1.25% 1.26% 1.27% (0.94)% (0.95)% 203.01% 1999 $34.20 59.14% $ 254,077 1.25% 1.27% 1.31% (1.00)% (1.04)% 223.61% 1998 $21.49 (16.90)% $ 147,534 1.25% 1.28% 1.41% (0.99)% (1.12)% 167.73% 1997 $26.35 16.64% $ 153,462 1.24% 1.24% 1.33% (0.84)% (0.93)% 130.68% 1996 (2) $23.13 52.90% $ 67,425 1.25% 1.25% 1.54% (0.88)% (1.17)% 149.00% 1995 $16.08 47.52% $ 13,072 1.25% 1.25% 2.39% (0.68)% (1.82)% 183.49% - ---------------------------- Turner Micro Cap Growth Fund - ---------------------------- 2000 $45.92 129.02% $ 187,107 1.25% 1.27% 1.35% (0.81)% (0.89)% 179.08% 1999 (3) $21.09 113.46% $ 12,963 0.90% 0.90% 2.86% (0.47)% (2.43)% 239.32% 1998 (4) $ 9.88 (1.20)% $ 2,843 1.25% 1.25% 8.18% (0.64)% (7.57)% 128.53% - ------------------ Turner Top 20 Fund - ------------------ 2000 $24.74 98.58% $ 246,621 1.26% 1.52% 1.62% (1.16)% (1.26)% 1,590.94% 1999 (5) $13.99 39.90% $ 16,112 1.35% 1.35% 2.55% (0.87)% (2.07)% 369.11% - ---------------------- Turner Technology Fund - ---------------------- 2000 $32.69 149.35% $ 169,353 1.35% 1.50% 1.67% (1.25)% (1.42)% 1,340.92% 1999 (5) $14.06 40.60% $ 8,296 1.35% 1.35% 3.89% (0.87)% (3.41)% 317.32% - -------------------------- Turner B2B E-Commerce Fund - -------------------------- 2000 (6) $12.52 25.20% $ 13,750 1.35% 1.35% 2.87% (0.83)% (2.35)% 83.02% - ------------------------------------- Turner Wireless & Communications Fund - ------------------------------------- 2000 (6) $11.82 18.20% $ 24,272 1.35% 1.35% 2.04% (0.76)% (1.45)% 89.66% - ------------------------- Turner Global Top 40 Fund - ------------------------- 2000 (6) $ 9.37 (6.30)% $ 12,080 1.40% 1.40% 2.02% (0.48)% (1.10)% 285.98% - -------------------------------- Turner Select Growth Equity Fund - -------------------------------- 2000 (7) $ 9.81 (1.90)% $ 4,656 0.75% 0.75% 3.35% (0.14)% (2.74)% 128.14% (4) Commenced operations on March 1, 1998. All ratios for the period have been annualized. (5) Commenced operations on June 30, 1999. All ratios for the period have been annualized. (6) Commenced operations on June 30, 2000. All ratios for the period have been annualized. (7) Commenced operations on June 14, 2000. All ratios for the period have been annualized.
| Turner funds 2000 annual Report | 63
FINANCIAL STATEMENTS - --------------------------------------------------------------------------------------------------------------------------------- FINANCIAL HIGHLIGHTS FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD Realized and Net asset unrealized Distributions Distributions value, Net gains from net from Net asset beginning investment (losses) on investment capital value, end Total of period income investments income gains of period return+ - --------------------------------------------------------------------------------------------------------------------------------- - --------------------------------------------------------------------- Turner Short Duration Government Funds-One Year Portfolio--Class I(1) - --------------------------------------------------------------------- 2000 $10.05 0.61 0.01 (0.62) -- $10.05 6.34% 1999(3) $10.09 0.54 (0.02) (0.56) -- $10.05 5.34% 1998 (4) $10.08 0.35 -- (0.33) (0.01) $10.09 3.50% 1998 (5) $10.06 0.60 0.02 (0.60) -- $10.08 6.34% 1997 $10.03 0.60 0.03 (0.60) -- $10.06 6.32% 1996 $ 9.99 0.64 0.05 (0.65) -- $10.03 7.09% - --------------------------------------------------------------------- Turner Short Duration Government Funds-One Year Portfolio--Class II(2) - ---------------------------------------------------------------------- 2000 $10.10 0.57 0.02 (0.60) -- $10.09 6.00% 1999 (3) $10.11 0.47 0.02 (0.50) -- $10.10 5.00% 1998 (6) $10.08 0.30 0.03 (0.30) -- $10.11 3.26% - ----------------------------------------------------------------------- Turner Short Duration Government Funds-Three Year Portfolio--Class I(1) - ----------------------------------------------------------------------- 2000 $ 9.84 0.58 (0.01) (0.59) -- $ 9.82 6.00% 1999 (7) $10.25 0.55 (0.27) (0.55) (0.14) $ 9.84 2.89% 1998 (4) $10.10 0.35 0.15 (0.34) (0.01) $10.25 5.09% 1998 (5) $10.00 0.59 0.10 (0.59) -- $10.10 7.07% 1997 $10.04 0.58 (0.01) (0.59) (0.02) $10.00 5.45% 1996 $ 9.80 0.60 0.23 (0.59) -- $10.04 8.73% - ------------------------------------------------------------------------ Turner Short Duration Government Funds-Three Year Portfolio--Class II(2) - ------------------------------------------------------------------------ 2000 $ 9.80 0.58 (0.02) (0.58) -- $ 9.78 5.92% 1999 (8) $ 9.95 0.68 (0.13) (0.70) -- $ 9.80 5.64% - ------------------------------------------ Turner Core High Quality Fixed Income Fund - ------------------------------------------ 2000 $ 9.91 0.59 0.07 (0.59) -- $ 9.98 6.97% 1999 (9) $10.00 0.14 (0.09) (0.14) -- $ 9.91 0.48% + Returns are for the period indicated and have not been annualized. (1) Formerly Institutional Class Shares. (2) Formerly Adviser Class Shares. (3) On May 24, 1999 shareholders of the Alpha Select Turner Short Duration Government Funds-One Year Portfolio (the "Fund") approved a tax-free reorganization under which all assets and liabilities of the Fund were transferred to the TIP Turner Short Duration Government Funds-One Year Portfolio. (4) On November 10, 1997 the Board of Trustees of TIP Institutional Funds (formerly, The Solon Funds) approved a change in the Turner Short Duration Government Funds Three Year and One Year Portfolios' year end from February 28 to September 30, effective March 1, 1998. All ratios for the period have been annualized. (5) On January 22, 1998, shareholders of both the Three Year and One Year Funds approved a change in the advisor from Solon Asset Management, L.P. to Turner Investment Partners, Inc. (6) Commenced operations on February 27, 1998. All ratios for the period have been annualized. (7) On January 25, 1999 shareholders of the Alpha Select Turner Short Duration Government Funds-Three Year Portfolio (the "Fund") approved a tax-free reorganization under which all assets and liabilities of the Fund were transferred to the TIPTurner Short Duration Government Funds-Three Year Portfolio. (8) Commenced operations on April 28, 1999. All ratios for the period have been annualized. (9) Commenced operations on June 30, 1999. All ratios for the period have been annualized. (10) Average based upon amounts outstanding at each month end. (11) There was no debt outstanding at the end of any period presented.
Amounts designated as "--"are either $0 or have been rounded to $0. 64 | TURNER FUNDS 2000 ANNUAL REPORT
Ratio of net Ratio of investment expenses income (loss) Ratio of net to average to average Ratio of investment net assets net assets Net assets net expenses income (loss) (excluding (excluding end of to average to average waivers and waivers and period (000) net assets net assets reimbursements) reimbursements) - ------------------------------------------------------------------------------------------------------------------------ - --------------------------------------------------------------------- Turner Short Duration Government Funds-One Year Portfolio--Class I(1) - --------------------------------------------------------------------- 2000 $30,365 0.36% 6.15% 1.25% 5.26% 1999(3) $ 3,207 0.00% 5.50% 6.53% (1.03)% 1998 (4) $ 991 0.00% 5.88% 10.83% (4.95)% 1998 (5) $ 1,195 0.00% 5.97% 8.83% (2.86)% 1997 $ 864 0.00% 5.91% 10.25% (4.34)% 1996 $ 398 0.00% 6.46% 16.47% (10.01)% - --------------------------------------------------------------------- Turner Short Duration Government Funds-One Year Portfolio--Class II(2) - ---------------------------------------------------------------------- 2000 $ 8,934 0.61% 5.72% 1.48% 4.85% 1999 (3) $ 3,155 0.23% 5.13% 6.76% (1.40)% 1998 (6) -- 0.25% 5.63% 11.08% (5.20)% - ----------------------------------------------------------------------- Turner Short Duration Government Funds-Three Year Portfolio--Class I(1) - ----------------------------------------------------------------------- 2000 $42,092 0.36% 5.94% 0.74% 5.56% 1999 (7) $38,687 0.24% 6.21% 1.31% 5.14% 1998 (4) $12,015 0.24% 5.84% 1.49% 4.59% 1998 (5) $15,544 0.24% 5.85% 1.21% 4.88% 1997 $17,809 0.24% 5.80% 1.21% 4.83% 1996 $11,027 0.24% 6.18% 1.45% 4.97% - ------------------------------------------------------------------------ Turner Short Duration Government Funds-Three Year Portfolio--Class II(2) - ------------------------------------------------------------------------ 2000 $ 6,479 0.61% 5.90% 0.95% 5.56% 1999 (8) $ 87 0.48% 5.71% 0.95% 5.24% - ------------------------------------------ Turner Core High Quality Fixed Income Fund - ------------------------------------------ 2000 $13,975 0.45% 6.07% 1.46% 5.06% 1999 (9) $10,009 0.45% 5.67% 1.99% 4.13%
Average Average Average debt debt shares per share outstanding outstanding Portfolio Interest during during during turnover expense the period (10) the period (10) (11) the period rate - -------------------------------------------------------------------------------------------------------------------- - --------------------------------------------------------------------- Turner Short Duration Government Funds-One Year Portfolio--Class I(1) - --------------------------------------------------------------------- 2000 -- -- -- -- 294.54% 1999(3) -- -- -- -- 154.33% 1998 (4) -- -- -- -- 96.56% 1998 (5) -- -- -- -- 68.80% 1997 -- -- -- -- 81.82% 1996 -- -- -- -- -- - --------------------------------------------------------------------- Turner Short Duration Government Funds-One Year Portfolio--Class II(2) - ---------------------------------------------------------------------- 2000 -- -- -- -- 294.54% 1999 (3) -- -- -- 154.33% 1998 (6) -- -- -- -- 96.56% - ----------------------------------------------------------------------- Turner Short Duration Government Funds-Three Year Portfolio--Class I(1) - ----------------------------------------------------------------------- 2000 -- -- -- -- 223.73% 1999 (7) -- -- -- -- 257.98% 1998 (4) -- -- -- -- 121.63% 1998 (5) -- -- -- -- 197.03% 1997 0.02% $0.04 $ 56,238 1,320,830 279.00% 1996 0.12% $0.28 $256,115 901,238 251.00% - ------------------------------------------------------------------------ Turner Short Duration Government Funds-Three Year Portfolio--Class II(2) - ------------------------------------------------------------------------ 2000 -- -- -- -- 223.73% 1999 (8) -- -- -- -- 257.98% - ------------------------------------------ Turner Core High Quality Fixed Income Fund - ------------------------------------------ 2000 -- -- -- -- 183.50% 1999 (9) -- -- -- -- 39.70% (6) Commenced operations on February 27, 1998. All ratios for the period have been annualized. (7) On January 25, 1999 shareholders of the Alpha Select Turner Short Duration Government Funds-Three Year Portfolio (the "Fund") approved a tax-free reorganization under which all assets and liabilities of the Fund were transferred to the TIPTurner Short Duration Government Funds-Three Year Portfolio. (8) Commenced operations on April 28, 1999. All ratios for the period have been annualized. (9) Commenced operations on June 30, 1999. All ratios for the period have been annualized. (10) Average based upon amounts outstanding at each month end. (11) There was no debt outstanding at the end of any period presented.
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 2000 ANNUAL REPORT | 65 NOTES TO FINANCIAL STATEMENTS - -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS September 30, 2000 1. ORGANIZATION: TIP Funds (the "Trust"), a Massachusetts business trust, is registered under the Investment Company Act of 1940, as amended, as a diversified open-end management investment company with 19 portfolios. The financial statements included herein are those of the Turner Midcap Growth Fund (the "Midcap Growth Fund"), the Turner Small Cap Growth Fund (the "Small Cap Growth Fund"), the Turner Micro Cap Growth Fund (the "Micro Cap Growth Fund"), the Turner Top 20 Fund (the "Top 20 Fund"), the Turner Technology Fund (the "Technology Fund"), the Turner B2B E-Commerce Fund (the "B2B E-Commerce Fund"), the Turner Wireless & Communications Fund (the "Wireless & Communications Fund"), the Turner Global Top 40 Fund (the "Global Top 40 Fund"), the Turner Select Growth Equity Fund (the "Select Growth Equity Fund"), the Turner Short Duration Government Funds-One Year Portfolio (the "One Year Portfolio"), the Turner Short Duration Government Funds-Three Year Portfolio (the "Three Year Portfolio"), and the Turner Core High Quality Fixed Income Fund (the "Core High Quality Fixed Income Fund") (each a "fund" and collectively the "Funds"). The Turner Select Growth Equity Fund and the Turner Short Duration Government Funds-One Year and Three Year Portfolios are registered to offer two classes of shares, Class I Shares and Class II Shares. As of September 30, 2000, Class II Shares of the Turner Select Growth Equity Fund had not yet commenced operations. The financial statements of the remaining portfolios are presented separately. 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. As of September 30, 2000, the Turner International Opportunities Fund and the Turner International Discovery Fund had not yet commenced operations. The Turner Small Cap Growth Fund and the Turner Micro Cap Growth Fund were closed to new investors as of August 30, 1997, and March 7, 2000, respectively. 2. SIGNIFICANT ACCOUNTING POLICIES: The following is a summary of the significant accounting policies followed by the Funds. SECURITY VALUATION--Investments in equity securities which are traded on a national exchange (or reported on the NASDAQ national market system) are stated at the last quoted sales price if readily available for such equity securities on each business day; other equity securities traded in the over-the-counter market and listed equity securities for which no sale was reported on that date are stated at the last quoted bid price. Market value for debt obligations is determined on the basis of last reported sales price, or if no sales are reported, as is the case with most securities traded over the counter, the mean between representative bid and asked quotations. Short-term securities with maturities of 60 days or less may be carried at amortized cost, which approximates market value. Fixed income securities for which market quotations are not readily available may be valued, pursuant to guidelines established by the Board of Trustees, with reference to fixed income securities whose prices are more readily obtainable and whose durations are comparable to the securities being valued. Subject to the foregoing, other securities for which market quotations are not readily available are valued at fair value as determined in good faith by the Board of Trustees. At September 30, 2000, the Global Top 40 Fund held Independent Energy ADR under this valuation method. FEDERAL INCOME TAXES--It is each Fund's intention to qualify as a regulated investment company by complying with the appropriate provisions of the Internal Revenue Code of 1986, as amended. Accordingly, no provision for Federal income taxes is required. 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, and interest income is recognized on the accrual basis. 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. Securities purchased on a when-issued or delayed delivery basis may be settled a month or more after the trade date. Such securities are included in the portfolio and are subject to market fluctuations during this period. On the date of the commitment to purchase or sell, the Funds designate specific assets with a current value at least equal to the amount of the commitment to be used for settling the commitment. NET ASSET VALUE PER SHARE--The net asset value per share of each Fund is calculated on each business day, by dividing the total value of the fund's assets, less liabilities, by the number of shares outstanding. REPURCHASE AGREEMENTS--Securities pledged as collateral for repurchase agreements are held by the custodian 66 | Turner funds 2000 annual Report - -------------------------------------------------------------------------------- bank until the respective agreements mature. Provisions of the repurchase agreements ensure that the market value of the collateral, including accrued interest thereon, is sufficient in the event of default of the counterparty. If the counterparty defaults and the value of the collateral declines or if the counterparty enters an insolvency proceeding, realization of the collateral by the Funds may be delayed or limited. EXPENSES--Expenses that are directly related to one of the funds are charged to that fund. Other operating expenses of the Trust are prorated to the Funds on the basis of relative daily net assets. DISTRIBUTIONS TO SHAREHOLDERS--Distributions from net investment income are declared and paid to shareholders at least annually for the Midcap Growth Fund, the Small Cap Growth Fund, the Micro Cap Growth Fund, the Top 20 Fund, the Technology Fund, the B2B E-Commerce Fund, the Wireless & Communications Fund, the Global Top 40 Fund, and the Select Growth Equity Fund; and declared daily and paid monthly for the Three Year Portfolio, One Year Portfolio and the Core High Quality Fixed Income Fund. Any net realized capital gains on sales of securities for all Funds are distributed to Shareholders at least annually. Distributions from net investment income and distributions from net realized capital gains are determined in accordance with U.S. Federal income tax regulations. Certain book/tax differences are either temporary or permanent in nature. To the extent these differences are permanent, they are charged or credited to paid-in-capital or accumulated net realized gain, as appropriate, in the period that the differences arise. Accordingly, the following permanent differences, primarily attributable to net operating losses and the classification of short-term capital gains and ordinary income for tax purposes, have been reclassified to/from the following accounts during the fiscal year ended September 30, 2000. Undistributed Accumulated Portfolio net investment realized gain capital income (000) (000) (000) ---------------- -------------- ------------ Midcap Growth Fund $4,238 $(4,238) $ -- Small Cap Growth Fund 4,155 (4,155) -- Micro Cap Growth Fund 984 (984) -- Top 20 Fund 1,207 (1,207) -- Technology Fund 883 (883) -- Undistributed Accumulated Portfolio net investment realized gain capital income (000) (000) (000) ---------------- -------------- ------------ B2B E-Commerce Fund 15 -- (15) Wireless & Communications Fund 28 (28) -- Global Top 40 Fund 15 -- (15) Select Growth Equity Fund 2 -- (2) One Year Portfolio 4 (4) -- Three Year Portfolio 12 (12) -- These reclassifications have no effect on net assets or net asset values per share. 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. USE OF ESTIMATES--The preparation of financial statements in conformity with generally accepted accounting principles 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 income and expenses during the reported period. Actual results could differ from those estimates. 3. ORGANIZATION COSTS AND TRANSACTIONS WITH AFFILIATES: Any capitalized organization costs for the Funds are being amortized over a period of sixty months. In the event any of the initial shares of a fund are redeemed by any holder thereof during the period that such fund is amortizing its organizational costs, the redemption proceeds payable to the holder thereof by a Fund will be reduced by the unamortized organizational costs in the same ratio as the number of shares outstanding at the time of redemption. Certain officers of the Trust are also officers of SEI Investments Mutual Funds Services (the "Administrator") and/or SEI Investments Distribution Co. (the "Distributor"). Such officers are paid no fees by the Trust for serving as officers and trustees of the Trust. 4. ADMINISTRATION, SHAREHOLDER SERVICING, AND DISTRIBUTION AGREEMENTS: The Trust and the Administrator are parties to an agreement under which the Administrator provides manage- TURNER FUNDS 2000 ANNUAL REPORT x 67 NOTES TO FINANCIAL STATEMENTS - -------------------------------------------------------------------------------- ment and administrative services for an annual fee. For these administrative services, the Administrator is entitled to a fee from the Trust, which is calculated daily and paid monthly, at an annual rate of .09% of the Trust's average daily net assets up to $250 million, .07% on the next $250 million, .06% on the next $250 million, .05% on the next $1.25 billion and .04% of such assets in excess of $2 billion. Each Fund is subject to a minimum annual fee of $65,000 for the first class of shares and $15,000 for each additional class of shares, which may be reduced at the sole discretion of the Administrator. The Midcap Growth Fund, the Small Cap Growth Fund, the Micro Cap Growth Fund, the Top 20 Fund, and the Technology Fund have directed certain portfolio trades to brokers who paid a portion of its expenses. For the period ended September 30, 2000, the Funds' expenses were reduced by $259,806, $56,417, $23,361, $344,704, and $125,327, respectively, under this arrangement. DST Systems, Inc., (the "Transfer Agent"), serves as the transfer agent and dividend disbursing agent for the Funds under a transfer agency agreement with the Trust. The Trust and the Distributor are parties to a Distribution Agreement dated April 28, 1996. The Distributor receives no fees for its distribution services under this agreement. The Select Growth Equity Fund and the One Year and Three Year Portfolios have adopted a shareholder service plan and agreement for their Class II Shares. Under the shareholder service plan and agreement both funds pay the Distributor a shareholder servicing fee at an annual rate of 0.25% of the average daily net assets of the Class II Shares of each fund. 5. INVESTMENT ADVISORY AGREEMENT: The Trust and Turner Investment Partners, Inc. (the "Adviser") are parties to an Investment Advisory Agreement dated April 28, 1996 under which the Adviser receives an annual fee equal to .75% of the average daily net assets of the Midcap Growth Equity Fund, 1.00% of the Small Cap Growth, Micro Cap Growth and Global Top 40 Funds, 1.10% of the Top 20, Technology, B2B E-Commerce, and Wireless & Communications Funds, .60% of the Select Growth Equity Fund, .25% of the One Year and Three Year Portfolios and .50% of the Core High Quality Fixed Income Fund. The adviser has voluntarily agreed to waive all or a portion of its fees and to reimburse expenses in order to limit their total operating expenses (as a percentage of daily net assets on an annualized basis) to not more than 1.25% of the Small Cap Growth, Midcap Growth Equity and Micro Cap Growth Funds, 1.35% of the Top 20, Technology, B2B E-Commerce, and Wireless & Communications Funds, 1.40% of the Global Top 40 Fund, .75% and 1.00% of the Select Growth Equity Fund, Class I shares and Class II shares, respectively, .36% and .61% of the One Year and Three Year Portfolios, Class I shares and Class II shares, respectively, and .45% of the Core High Quality Fixed Income Fund. Fee waivers and expense reimbursements are voluntary and may exceed the amount necessary to maintain the stated contractual caps. These waivers and reimbursements may be terminated at any time. The Advisory Fee for the Top 20 Fund, Technology Fund, B2B E-Commerce Fund, Wireless and Communications Fund, and the Global Top 40 Fund are subject to a performance adjustment based on each Fund's performance relative to the performance of it's benchmark. These performance-based fees will begin once a Fund has been in operations for at least one year. During the period ended September 30, 2000, the Top 20 Fund and the Technology Fund outperformed their respective benchmarks by more than 2.5%, therefore Turner's advisory fees increased from 1.10% to 1.50% of the average daily net assets on an annualized basis for these Funds. If, however, either Fund underperforms its benchmark by 2.5%, Turner's advisory fees would be reduced from 1.10% to .70% for such Fund. 6. INVESTMENT TRANSACTIONS: The cost of security purchases and the proceeds from security sales, other than short-term investments, for the period ended September 30, 2000, are as follows (000): PURCHASES SALES (000) (000) ---------- ---------- Midcap Growth Fund $2,574,494 $1,842,289 Small Cap Growth Fund 998,681 866,873 Micro Cap Growth Fund 310,648 208,527 Top 20 Fund 2,275,446 2,086,175 Technology Fund 1,215,638 1,078,052 B2B E-Commerce Fund 17,140 7,304 Wireless & Communications Fund 38,214 15,893 Global Top 40 Fund 50,198 37,150 Select Growth Equity Fund 9,781 4,790 68 | TURNER FUNDS 2000 ANNUAL REPORT Purchases (000) Sales (000) Gov't Other Gov't Other ------ ------ ------ ----- One Year Portfolio $31,684 $4,580 $21,499 $1,183 Three Year Portfolio 78,080 4,329 68,431 6,029 Core High Quality Fixed Income Fund 21,630 1,368 17,461 1,660 At September 30, 2000, the total cost of securities for Federal income tax purposes for the Funds was as follows: Tax cost (000) ----------- Midcap Growth Fund $1,006,771 Small Cap Growth Fund 479,741 Micro Cap Growth Fund 139,428 Top 20 Fund 248,635 Technology Fund 166,864 B2B E-Commerce Fund 10,087 Wireless & Communications Fund 23,480 Global Top 40 Fund 11,862 Select Growth Equity Fund 4,665 One Year-Portfolio 39,150 Three Year Portfolio 47,797 Core High Quality Fixed Income 14,536 The aggregate gross unrealized appreciation and depreciation for securities held by the Funds at September 30, 2000, are as follows (000): Less: Aggregate gross Net tax Tax unrealized unrealized basis net apprec. deprec. apprec. adjustment apprec. --------- ------- ---------- ---------- -------- Midcap Growth $250,544 $(44,184) $206,360 $16,043 $190,317 Small Cap Growth 99,008 (38,541) 60,467 188 60,279 Micro Cap Growth 54,084 (9,293) 44,791 683 44,108 Top 20 11,690 (9,870) 1,820 1,279 541 Technology 13,023 (10,032) 2,991 1,403 1,588 B2B E-Commerce 2,180 (291) 1,889 212 1,677 Wireless & Communications 3,118 (1,583) 1,535 399 1,136 Global Top 40 735 (368) 367 250 117 Select Growth Equity 296 (244) 52 33 19 One Year 141 (7) 134 14 120 Three Year 320 (105) 215 29 186 Core High Quality Fixed Income 180 (70) 110 21 89 Subsequent to October 31, 1999, the following Funds had recognized net capital losses that have been deferred to 2000 for tax purposes and can be used to offset future capital gains at September 30, 2001. The Funds also had capital loss carryforwards at September 30, 2000, that can be used to offset future capital gains. Post Capital loss 10/31/99 carryovers capital expiring loss deferral 2001-2008 ------------ ------------ B2B E-Commerce Fund $ 170,406 $ -- Global Top 40 Fund 1,186,119 -- Select Growth Equity Fund 360,587 -- Three Year Portfolio 176,040 202,228 Core High Quality Fixed Income Fund 182,337 104,565 7. IN-KIND TRANSFERS OF SECURITIES: During the period ended September 30, 1999, the Three Year Portfolio issued 1,925,533 shares of beneficial interest in exchange for portfolio assets from certain accounts managed by Turner Investment Partners, Inc., at their then current value of $18,947,249. During the period ended September 30, 1999, the Core High Quality Fixed Income Fund issued 1,012,284 shares of beneficial interest in exchange for portfolio assets from certain accounts managed by Turner Investment Partners, Inc., at their then current value of $10,120,317 which includes $260,485 of net unrealized loss. 8. LINE OF CREDIT: Pursuant to a credit agreement dated May 21, 1997, First Union National Bank provides an uncommitted line of credit to the Midcap Growth Fund, the Small Cap Growth Fund, the Micro Cap Growth Fund, the Top 20 Fund, the Technology Fund, the One Year Portfolio, the Three Year Portfolio and the Core High Quality Fixed Income Fund, Portfolios of the TIP Funds, for short-term or emergency purposes, such as funding shareholder redemptions. These loans are for the respective benefit of and repayable from the respective assets of each Fund. The aggregate principal amount of all borrowings may not exceed 10% of each Fund, net assets and the maximum principal amount that the Bank will loan is $10,000,000. Borrowings under the line of credit are charged interest based on the federal funds rate determined at the date of borrowing and are secured by investment securities of the borrowing portfolio. Each Fund is individually, and not jointly, liable for its particular advances under the line. There is no commitment fee on the unused portion of the line of credit. There were no borrowings under the line of credit during the period ended September 30, 2000. TURNER FUNDS 2000 ANNUAL REPORT | 69 NOTES TO FINANCIAL STATEMENTS - -------------------------------------------------------------------------------- 9. REORGANIZATIONS (UNAUDITED): On May 22, 2000, the shareholders of the Turner Growth Equity Fund (the "Portfolio") approved a tax-free reorganization under which all of the assets and liabilities of the Portfolio were transferred to the Vanguard Growth Equity Fund. The results of the voting were as follows: TURNER GROWTH EQUITY FUND FOR 8,421,045 98.43% of 53.50% of shares shares voted outstanding AGAINST 104,802 1.22% of 0.66% of shares shares voted outstanding ABSTAIN 29,298 0.34% of 0.18% of shares shares voted outstanding On June 9, 2000, the shareholders of the Turner Large Cap Growth Equity Fund (the "Portfolio") approved the reorganization of the Portfolio into the Mercury Select Growth Fund. The Reorganization includes the transfer of substantially all of the assets and liabilities of the Portfolio to Mercury Select Growth Fund in exchange for a number of Class I shares of Mercury Select Growth Fund equal to the number of shares of the Portfolio issued and outstanding immediately prior to the completion of the Reorganization. Because Mercury Select Growth Fund invests all of its assets in another fund in a "master/feeder" structure, the Reorganization also includes the transfer of those assets and certain liabilities to the master fund to implement this structure. The results of the voting were as follows: TURNER LARGE CAP GROWTH EQUITY FUND FOR 832,842 95.56% of 51.36% of shares shares voted outstanding AGAINST 34,684 3.97% of 2.13% of shares shares voted outstanding ABSTAIN 3,961 0.45% of 0.24% of shares shares voted outstanding 70 | TURNER FUNDS 2000 ANNUAL REPORT REPORT OF INDEPENDENT AUDITORS - -------------------------------------------------------------------------------- TO THE SHAREHOLDERS AND BOARD OF TRUSTEES OF THE TIP FUNDS: We have audited the accompanying statements of net assets of the Turner Midcap Growth Fund, the Turner Micro Cap Growth Fund, the Turner Select Growth Equity Fund, the Turner Short Duration Government Funds - One Year Portfolio, the Turner Short Duration Government Funds - Three Year Portfolio and the Turner Core High Quality Fixed Income Fund and the statements of assets and liabilities, including the schedules of investments, of the Turner Small Cap Growth Fund, the Turner Top 20 Fund, the Turner Technology Fund, the Turner B2B E-Commerce Fund, the Turner Wireless & Communications Fund and the Turner Global Top 40 Fund (collectively, the "TIP Funds") as of September 30, 2000, and the related statements of operations and the statements of changes in net assets for the periods presented therein, and the financial highlights for the periods ended February 28, 1996 through September 30, 2000 presented therein. These financial statements and financial highlights are the responsibility of the Funds' management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits. The financial highlights for the year ended October 31, 1995 for the Turner Small Cap Growth Fund were audited by other auditors whose report dated December 5, 1995 expressed an unqualified opinion on those financial highlights. We conducted our audits in accordance with auditing standards generally accepted in the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of September 30, 2000, by correspondence with the custodian and brokers. 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 the TIP Funds at September 30, 2000, the results of their operations and the changes in their net assets for each of the periods presented therein, and their financial highlights for the periods ended February 28, 1996 through September 30, 2000 presented therein, in conformity with accounting principles generally accepted in the United States. /s/ERNST & YOUNG LLP Philadelphia, Pennsylvania November 10, 2000 TURNER FUNDS 2000 ANNUAL REPORT | 71 - -------------------------------------------------------------------------------- NOTICE TO SHAREHOLDERS OF TURNER FUNDS (UNAUDITED) For shareholders that do not have a September 30, 2000 tax year end, this notice is for informational purposes only. For shareholders with a September 30, 2000, please consult your tax advisor as to the pertinence of this notice. For the fiscal year ended September 30, 2000, each portfolio is designating the following items with regard to distributions paid during the year.
LONG TERM (20% RATE) ORDINARY CAPITAL GAIN INCOME TAX EXEMPT TOTAL QUALIFYING FUND DISTRIBUTIONS DISTRIBUTIONS INTEREST DISTRIBUTIONS DIVIDENDS (1) ------ ------------- ------------- ---------- ------------- ------------- Turner Midcap Growth Fund ...................... 3.04% 96.96% 0.00% 100.00% 1.01% Turner Small Cap Growth Fund ................... 34.15% 65.85% 0.00% 100.00% 0.81% Turner Micro Cap Growth Fund ................... 0.00% 100.00% 0.00% 100.00% 0.70% Turner Top 20 Fund ............................. 0.00% 100.00% 0.00% 100.00% 0.18% Turner Technology Fund ......................... 0.00% 100.00% 0.00% 100.00% 0.04% Turner B2B E-Commerce Fund ..................... 0.00% 0.00% 0.00% 0.00% 0.00% Turner Wireless & Communications Fund .......... 0.00% 0.00% 0.00% 0.00% 0.00% Turner Global Top 40 Fund ...................... 0.00% 0.00% 0.00% 0.00% 0.00% Turner Select Growth Equity Fund ............... 0.00% 0.00% 0.00% 0.00% 0.00% Turner Short Duration Government Funds-One Year Portfolio .................... 0.00% 100.00% 0.00% 100.00% 0.00% Turner Short Duration Government Funds-Three Year Portfolio .................. 0.00% 100.00% 0.00% 0.00% 0.00% Turner Core High Quality Fixed Income Fund ........................... 0.00% 100.00% 0.00% 100.00% 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".
72 | TURNER FUNDS 2000 ANNUAL REPORT NOTES - -------------------------------------------------------------------------------- TURNER FUNDS 2000 ANNUAL REPORT | 73 NOTES - -------------------------------------------------------------------------------- 74 | TURNER FUNDS 2000 ANNUAL REPORT NOTES - -------------------------------------------------------------------------------- TURNER FUNDS 2000 ANNUAL REPORT | 75 - -------------------------------------------------------------------------------- Turner Funds, Portfolios of the TIP Funds TIP FUNDS TRUSTEES RICHARD A. HOCKER Chief Investment Officer and Senior Vice President Penn Capital Management Co., Inc. MICHAEL E. JONES Senior Vice President, Investment Adviser, and Portfolio Manager Clover Capital Management, Inc. ALFRED C. SALVATO Treasurer Thomas Jefferson University Health Care Pension Fund JANET F. SANSONE Retired, Corporate Vice President, Human Resources Frontier Corporation 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 ADVISER TURNER INVESTMENT PARTNERS, INC. Berwyn, Pennsylvania DISTRIBUTOR SEI INVESTMENTS DISTRIBUTION CO. Oaks, Pennsylvania ADMINISTRATOR SEI INVESTMENTS MUTUAL FUNDS SERVICES Oaks, Pennsylvania LEGAL COUNSEL MORGAN, LEWIS & BOCKIUS LLP Philadelphia, Pennsylvania INDEPENDENT AUDITORS ERNST & YOUNG LLP Philadelphia, Pennsylvania THIS REPORT WAS PREPARED FOR SHAREHOLDERS OF THE TURNER FUNDS, PORTFOLIOS OF THE TIP 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. [BLANK PAGE] [TURNER LOGO OMITTED] ------------------------------------ TURNER FUNDS 1235 Westlakes Drive Berwyn, Pennsylvania 19312 Telephone: 1-800-224-6312 Email:#mutualfunds@turner-invest.com Web Site:www.turner-invest.com TUR-F-026-05 -----END PRIVACY-ENHANCED MESSAGE-----