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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file
Number: 811-08495
GARTMORE MUTUAL FUNDS
(Exact name of registrant as specified in charter)
1200 RIVER ROAD, CONSHOHOCKEN, PENNSYLVANIA 19428
(Address of principal executive offices) (Zip code)
ELIZABETH A. DAVIN, ESQ.
NATIONWIDE PLAZA
COLUMBUS, OHIO 43215
(Name and address of agent for service)
Registrant's telephone number, including area code: (484) 530-1300
Date of fiscal year end: 6/30/03
Date of reporting period: 6/30/03
Form N-CSR is to be used by management investment companies to file reports
with the Commission not later than 10 days after the transmission to
stockholders of any report that is required to be transmitted to stockholders
under Rule 30e-1 under the Investment Company Act of 1940 (17 CFR 270.30e-1).
The Commission may use the information provided on Form N-CSR in its regulatory,
disclosure review, inspection, and policymaking roles.
A registrant is required to disclose the information specified by Form
N-CSR, and the Commission will make this information public. A registrant is not
required to respond to the collection of information contained in Form N-CSR
unless the Form displays a currently valid Office of Management and Budget
("OMB") control number. Please direct comments concerning the accuracy of the
information collection burden estimate and any suggestions for reducing the
burden to Secretary, Securities and Exchange Commission, 450 Fifth Street, NW,
Washington, DC 20549-0609. The OMB has reviewed this collection of information
under the clearance requirements of 44 U.S.C. 3507.
ITEM 1. REPORTS TO STOCKHOLDERS.
Include a copy of the report transmitted to stockholders pursuant to Rule
30e-1 under the Act (17 CFR 270.30e-1).
GARTMORE FUNDS
ANNUAL REPORT
June 30, 2003
CONCEPT SERIES
Gartmore Long-Short Equity Plus Fund
- --------------------------------------------------------------------------------
GARTMORE GLOBAL INVESTMENTS
THE NEXT GENERATION OF ASSET MANAGEMENT
At Gartmore Global Investments, we look beyond traditional approaches, offering
sophisticated solutions designed not only to manage the heightened risks of
today's markets but also to capitalize on them, delivering new sources of
growth.
LEADING-EDGE SKILLS AND RESOURCES
We are a global asset manager with nearly $70 billion1 under management and a
professional staff on three continents. With our worldwide reach and deep
experience in both alternative and traditional investments, we are uniquely
positioned to pursue opportunities wherever they arise, in all market climates.
- - Alternative investment strategies:
Solutions for every need and market
We offer a broadly diversified range of mutual funds, separate accounts and
alternative investments, designed to help clients manage risk and make
money, no matter which way markets move.
- - Time-tested management disciplines
Helping to ensure that the best ideas rise to the top
Our disciplined investment process ensures that our clients benefit from
our best thinking-by putting ideas and people into creative conflict
through systematic checks and balances.
- - Progressive approaches:
Building portfolios for markets that don't stand still
Our investment offerings are engineered to serve as building blocks within
new asset allocation strategies adapted to today's market realities. We're
committed to providing guidance and tools to help our clients incorporate
these new approaches into their own investment strategies.
The following ten asset management affiliates of Nationwide do business under
the trade name "Gartmore Group":
Gartmore Capital Management Ltd3
Gartmore Fund Managers Ltd3
Gartmore Global Partners2,3
Gartmore Investment Ltd3
Gartmore Japan Ltd3
Gartmore Morley Capital Management, Inc.2
Gartmore Mutual Fund Capital Trust2,4
NorthPointe Capital LLC2
Gartmore SA Capital Trust2,4
Gartmore Separate Accounts, LLC
Additional information can be found online:
WWW.GARTMOREFUNDS.COM
1. As of June 30, 2003.
2. These are SEC-registered investment advisers based in the United States.
Collectively, these advisors manage $30.4 billion as of June 30, 2003.
3. These advisers are subsidiaries of Gartmore Investment Management plc,
which ultimately reports to Nationwide. 4. Together, these advisers do
business as Gartmore Global Investments.
Gartmore Global Investments is the investment adviser to Gartmore Funds. "Look
Beyond." and the Family of Funds Diagram are service marks of Gartmore Global
Investments, Inc. Nationwide is a registered service mark of Nationwide Mutual
Insurance Company.
Northpointe Capital LLC is a federally registered service mark of Gartmore
Global Investments, Inc.
Securities offered through GARTMORE DISTRIBUTION SERVICES, INC., Member NASD.
- --------------------------------------------------------------------------------
Look BEYOND with Gartmore Funds.
TAKING DIVERSIFICATION TO THE NEXT LEVEL
- - CORE Series
Broad market portfolios featuring growth, value and blend styles as well as
balanced and fixed income funds designed to form the foundation of an asset
allocation program.
- - INTERNATIONAL Series
International growth and emerging markets portfolios designed to capture
overseas investment opportunities.
- - SECTOR Series
Global sector portfolios focused on specific industries, including
financial services, health sciences, technology and utilities.
- - LEADERSHIP Series
Concentrated stock portfolios specializing in major world markets that
feature the best ideas of our global investment team.
- - CONCEPT Series
Opportunistic portfolios that can vary significantly in style, market cap,
risk and asset class.
CONTENTS
2 GARTMORE LONG-SHORT EQUITY PLUS FUND
4 STATEMENT OF INVESTMENTS
7 STATEMENT OF SECURITIES SOLD SHORT
10 STATEMENT OF ASSETS AND LIABILITIES
11 STATEMENT OF OPERATIONS
12 STATEMENT OF CHANGES IN NET ASSETS
13 FINANCIAL HIGHLIGHTS
14 NOTES TO FINANCIAL STATEMENTS
21 REPORT OF INDEPENDENT AUDITORS
22 SUPPLEMENTAL INFORMATION
23 MANAGEMENT INFORMATION
- --------------------------------------------------------------------------------
GARTMORE LONG-SHORT EQUITY PLUS FUND
Class A Shares symbol: MLSAX
Class B Shares symbol: MLSBX
Class C Shares symbol: MLSCX
HOW DID THE FUND PERFORM?
For the annual period ended June 30, 2003, the Fund's Class A shares returned
0.55% versus -0.26% for the Fund's benchmark, the S&P 500 Index. During this
time, the Fund had two benchmarks. From June 30, 2002, through February 28,
2003, the Fund's benchmark was a blend of 50% Citigroup U.S. Domestic
Three-Month Treasury Index and 50% MSCI All-Country World Free Index. Since
March of 2003, the Fund's benchmark has been the S&P 500 Index. See additional
information in the performance chart.
For broader comparison, the average return for this Fund's peer category
(Large-Cap Core) for the annual period registered -1.94%, according to Lipper,
an independent company that provides mutual fund data and analysis.
THIS FUND UNDERWENT SEVERAL CHANGES DURING THE ANNUAL PERIOD.
In the summer of 2002, the Board of Montgomery Fund Trustees approved the
following actions to the Montgomery Global Long-Short Fund: the selection of a
sub-adviser and changes to the Fund's objective, strategy and benchmark.
Shareholders approved SSI Investment Management Inc. (SSI) as the Fund's
sub-adviser in the fall of 2002. The implementation of these changes, however,
was delayed by the sale of Montgomery Asset Management LLC.
Montgomery Partners Inc. continued to manage the Fund using the global
long-short strategy until January 2003, when Gartmore Mutual Fund Capital Trust
(GMFCT) became the Fund's investment adviser. GMFCT is a member of Gartmore
Group, the global asset management arm of Nationwide . Gartmore Group
encompasses a unified investment platform with 175 portfolio managers, analysts
and traders supported by a professional staff of more than 700.
In March 2003, SSI assumed the daily investment management responsibilities of
the Fund (then known as Montgomery Partners Long-Short Equity Plus Fund) and
implemented the Fund's new strategy. The new process employs S&P 500 Index
instruments to replicate exposure to the S&P 500 Index, along with active
long-short positions to add excess return above the benchmark.
On June 23, 2003, the Fund was reorganized from the Montgomery Partners
Long-Short Equity Plus Fund of Montgomery Funds II to become the Gartmore
Long-Short Equity Plus Fund of Gartmore Mutual Funds.
WHAT MARKET/ECONOMIC AND PORTFOLIO-SPECIFIC FACTORS AFFECTED PERFORMANCE?
Given all the changes that have affected this Fund, we felt it would be
beneficial to discuss the Fund's performance on a quarter-by-quarter basis
rather than with an annual summation.
- --------------------------------------------------------------------------------
MSCI
ALL- CITIGROUP
S&P COUNTRY 3-MONTH
500 BLENDED WORLD TREASURY
Quarter FUND FUND INDEX BENCHMARK FREE BILL
Ended STRATEGY PERFORMANCE PERFORMANCE* PERFORMANCE* INDEX INDEX
- -----------------------------------------------------------------------------------------
Sept. 30, Global
2002. . . long-short -11.00% -17.28% -9.13% -18.23% 0.43%
- -----------------------------------------------------------------------------------------
Dec. 31,. Global
2002. . . long-short 2.58% 8.43% 4.17% 7.83% 0.39%
- -----------------------------------------------------------------------------------------
March 31, U.S.
2003. . . long-short
with
S&P 500
Index
swap overlay -3.80% -3.15% -2.36% -4.98% 0.30%
- -----------------------------------------------------------------------------------------
June 30,. U.S.
2003. . . long-short
with
S&P 500
Index
swap overlay 14.78% 15.39% 8.69% 17.48% 0.28%
- -----------------------------------------------------------------------------------------
MSCI
ALL- CITIGROUP
S&P COUNTRY 3-MONTH
1 500 BLENDED WORLD TREASURY
Year FUND FUND INDEX BENCHMARK FREE BILL
Ended STRATEGY PERFORMANCE PERFORMANCE* PERFORMANCE* INDEX INDEX
- -----------------------------------------------------------------------------------------
June 30,. U.S.
2003. . . long-short
with
S&P 500
Index
swap overlay 0.55% -0.26% 0.46% -1.57% 1.41%
- -----------------------------------------------------------------------------------------
* Note: Prior to March 2003, the Fund was formerly compared with a blend of
50% Morgan Stanley Capital International ("MSCI") All-Country World Free
Index and 50% Citigroup U.S. Domestic Three-Month Treasury Index
("Citigroup") ("blended benchmark"). Both of these indexes measure the
performance of a global portfolio. The new benchmark for the Fund is the
S&P 500 Index, which covers 500 industrial, utility, transportation and
financial companies of the U.S. markets. The Index does not incur expenses
and cannot be purchased directly by investors. The S&P 500 Index is a more
appropriate benchmark for the Fund, since the Fund will use equity swaps to
more closely track the S&P 500 Index. Also, the Fund's investment process
will maintain 80% of its assets inside the United States under normal
conditions, making a global benchmark a poor comparison for the Fund's
performance.
During the annual period's first quarter, which ended Sept. 30, 2002, the Fund
employed the global long-short strategy. The Fund registered -11.00% versus
- -9.13% for the Fund's blended benchmark. The S&P 500 Index registered -17.28%
during the same period. Short positions helped the Fund's performance on a
relative basis, particularly because of Broadcom Corp. and PMC-Sierra, Inc., two
semiconductor companies that fell sharply.
- --------------------------------------------------------------------------------
2 ANNUAL REPORT 2003
For the annual period's second quarter, which ended Dec. 31, 2002, using the
global long-short approach, the Fund returned 2.58%. This performance lagged the
blended benchmark return of 4.17%. Long positions in consumer-related stocks
hurt performance, since consumers curtailed their spending.
For the annual period's third quarter, which ended March 31, 2003, the Fund
registered -3.80% versus -3.15% for the S&P 500 Index, the Fund's new benchmark.
The Fund transitioned the portfolio to its new strategy during March. The S&P
500 Index swap overlay was put in place, as well as the market-neutral portion
of the portfolio. During the annual period's fourth quarter, which ended June
30, 2003, the Fund returned 14.78% versus 15.39% for the S&P 500 Index. The
quarter's post-war market rally, which began in April 2003, was driven by
lower-quality stocks, which typically are the Fund's short candidates. As the
rally continued through June, however, higher-quality stocks moved back into
focus. This shift was favorable to the Fund's performance, but it occurred too
late in June to have much impact on the quarterly return as a whole.
DESCRIBE THE FUND'S TOP HOLDINGS AND ANY SIGNIFICANT TRANSACTIONS MADE DURING
THE PERIOD.
The Fund's largest source of investment (market) exposure was and is the S&P 500
Index Total Return Swap.
The actively managed portion of the Fund was well-diversified and consisted of a
nearly equal number of both long and short positions (at quarter-end, the Fund
held 263 long positions and 264 short positions). The Fund was neutral in terms
of style, sector and capitalization size.
HOW IS THE FUND POSITIONED?
We anticipate the economic recovery to continue and corporate profits to
improve. In this environment, we believe market conditions will remain
favorable and Fund performance could appreciate because of its exposure to the
S&P 500 Index. We would also expect excess returns from our rising long
positions, which should more than compensate for the shortfall from our short
positions. "Past performance is no guarantee of future results. The investment
return and principal value of an investment will fluctuate so that an investor's
shares, when redeemed, may be worth more or less than their original cost.
Commentary provided by Gartmore Mutual Fund Capital Trust. All opinions and
estimates included in this report constitute Gartmore's judgment as of the date
of this report and are subject to change without notice."
PORTFOLIO MANAGER: SSI Investment Management, Inc. - Subadviser
AVERAGE ANNUAL TOTAL RETURN
(For Periods Ended June 30, 2003)
- 1 YR. 5 YR. INCEPTION
- ---------------------------------------------
Class A1 w/o SC2 0.55% 6.86% 12.96%
w/SC3 -5.19% 5.60% 11.75%
- ---------------------------------------------
Class B1 w/o SC2 -0.37% 6.69% 12.79%
w/SC4 -5.35% 6.45% 12.69%
- ---------------------------------------------
Class C. w/o SC2 -0.22% 5.96% 10.61%
w/SC5 -2.19% 5.75% 10.41%
- ---------------------------------------------
All figures showing the effect of a sales charge reflect the maximum charge
possible, because it has the most dramatic effect on performance data.
1 These returns through October 31, 2001, are based on the performance of the
Fund's predecessor's Class R shares which was achieved prior to the
creation of Class A and Class B shares. In addition, these returns from
November 1, 2001 through December 31, 2002, are based on the performance of
the Fund's predecessor's Class A and Class B shares, respectively.
Excluding the effects of any fee waivers or reimbursements, Class R shares'
average annual total returns are similar to what Class A and Class B shares
would have produced because Class A and Class B shares invest in the same
portfolio of securities as Class R shares and Class A shares had the same
expenses after waivers. For Class A and Class B shares, these returns have
been restated for sales charges, but Class B shares do not reflect the
additional fees applicable to such shares; if these fees were reflected,
the annual returns for Class B shares would have been lower.
2 These returns do not reflect the effects of sales charges (SC).
3 A 5.75% front-end sales charge was deducted.
4 A 5.00% contingent deferred sales charge (CDSC) was deducted. The CDSC
declines to 0% after 6 years.
5 A 1.00% front-end sales charge was deducted. A CDSC of 1.00% was also
deducted from the one year return because it is charged when you sell Class
C shares within the first year after purchase.
INVESTMENT RETURN AND PRINCIPAL VALUE WILL FLUCTUATE, AND WHEN REDEEMED, SHARES
MAY BE WORTH MORE OR LESS THAN ORIGINAL COST. PAST PERFORMANCE IS NO GUARANTEE
OF FUTURE RESULTS.
Gartmore Citigroup
Long-Short U.S.
Equity Domestic Citi 3 mo
Plus S&P 500 MSCI AC 3 Mo 50%/MSCI
Fund TR World Free Tbill ACWFR 50%
Class C (Index) TR (Index) TR (Index) (Index) CPI
Dec-97 9900 10000 10000 10000 10000 10000
Jun-98 12901 11772 11477 10258 10859 10105
Dec-98 14058 12858 12197 10506 11380 10161
Jun-99 19440 14450 13394 10742 12070 10304
Dec-99 32774 15564 15467 11004 13143 10434
Jun-00 32147 15498 15052 11311 13163 10682
Dec-00 24565 14147 13312 11659 12586 10787
Jun-01 20976 13200 11989 11949 12122 11035
Dec-01 19010 12466 11193 12136 11829 10955
Jun-02 17274 10825 10284 12243 11399 11153
Dec-02 15689 9710 9069 12343 10791 11215
Jun-03 17235 10853 10124 12415 11452 11389
Comparative performance of $10,000 invested in Class C shares of the Gartmore
Long-Short Equity Plus Fund, the S&P 500 Index (S&P 500)(a), the Morgan Stanley
Capital International All Country World Free Index (MSCI AC World)(b), the
Citigroup U.S. Domestic 3-Month T Bill Index (c), the Composite (Composite)(d),
and the Consumer Price Index (CPI)(e) since inception. Unlike the Fund, the
returns for these indices do not reflect any fees, expenses, or sales charges.
(a) The S&P 500 is a capitalization-weighted index of 500 stocks designed to
measure performance of the broad domestic economy through changes in the
aggregate market value of these 500 stocks which represent all major
industries.
(b) The MSCI AC World Free is an index that contains companies that are
replicas of their local markets.
(c) The Citigroup U.S. Domestic 3-Month T Bill Index is an average of the last
3-month treasury bill issues (excluding the current month-end bill).
(d) The Composite is a combination of 50% MSCI AC World and 50% Citibank U.S.
Domestic 3-Month T-Bill Index.
(e) The CPI represents changes in prices of a basket of goods and services
purchased for consumption by urban households.
- --------------------------------------------------------------------------------
2003 ANNUAL REPORT 3
STATEMENT OF INVESTMENTS
June 30, 2003
GARTMORE LONG-SHORT EQUITY PLUS FUND
COMMON STOCKS - LONG POSITIONS (77.5%)
SHARES VALUE
- ------------------------------------------------------------
BASIC INDUSTRY/GOLD (4.2%)
Alcan Aluminum Ltd.. . . . . . . . . . . 2,200 $ 68,838
Ball Corp. . . . . . . . . . . . . . . . 3,700 168,387
Cabot Microelectronics Corp. (b) . . . . 3,100 156,457
Chesapeake Corp. . . . . . . . . . . . . 2,375 51,894
Delta Pine & Land Co.. . . . . . . . . . 2,900 63,742
Du Pont (E.I.) De Nemours. . . . . . . . 1,600 66,624
Eastman Chemical Co. . . . . . . . . . . 4,275 135,389
Inco Ltd. (b). . . . . . . . . . . . . . 5,200 109,928
International Paper Co.. . . . . . . . . 5,275 188,475
MeadWestvaco Corp. . . . . . . . . . . . 3,325 82,128
Quanex Corp. . . . . . . . . . . . . . . 3,325 98,819
Scotts Co. (The) (b) . . . . . . . . . . 2,050 101,475
---------
1,292,156
---------
- ------------------------------------------------------------
CAPITAL GOODS/DEFENSE (8.6%)
Amphenol Corp. Class A (b) . . . . . . . 1,650 77,253
AVX Corp.. . . . . . . . . . . . . . . . 3,925 43,136
Black & Decker Corp. . . . . . . . . . . 2,200 95,590
Boeing Co. . . . . . . . . . . . . . . . 4,000 137,279
Caterpillar, Inc.. . . . . . . . . . . . 3,150 175,328
Danaher Corp.. . . . . . . . . . . . . . 1,150 78,258
Dover Corp.. . . . . . . . . . . . . . . 3,600 107,856
Eaton Corp.. . . . . . . . . . . . . . . 1,275 100,228
FLIR Systems, Inc. (b) . . . . . . . . . 3,100 93,465
General Motors Corp. . . . . . . . . . . 3,200 115,200
Hubbell, Inc.. . . . . . . . . . . . . . 2,975 98,473
Illinois Tool Works, Inc.. . . . . . . . 2,200 144,869
Ingersoll-Rand Co. . . . . . . . . . . . 2,550 120,666
ITT Industries, Inc. . . . . . . . . . . 1,650 108,009
L-3 Communications Holdings, Inc. (b). . 1,800 78,282
Lear Corp. (b) . . . . . . . . . . . . . 2,325 106,997
Lockheed Martin Corp.. . . . . . . . . . 2,300 109,411
Nissan Motor Co. Ltd. ADR - JP . . . . . 3,825 72,484
Northrop Grumman Corp. . . . . . . . . . 1,400 120,805
Paxar Corp. (b). . . . . . . . . . . . . 2,825 31,075
Rockwell Collins, Inc. . . . . . . . . . 2,900 71,427
Sonic Automotive, Inc. (b) . . . . . . . 4,950 108,455
SPX Corp. (b). . . . . . . . . . . . . . 1,200 52,872
Terex Corp. (b). . . . . . . . . . . . . 3,950 77,104
Thermo Electron Corp. (b). . . . . . . . 2,975 62,535
Timken Co. . . . . . . . . . . . . . . . 4,450 77,920
Toro Co. . . . . . . . . . . . . . . . . 1,925 76,519
United Defense Industries, Inc. (b). . . 4,375 113,488
---------
2,654,984
---------
- ------------------------------------------------------------
CONSTRUCTION (1.4%)
D. R. Horton, Inc. . . . . . . . . . . . 2,300 64,630
Fluor Corp.. . . . . . . . . . . . . . . 2,600 87,464
Jacobs Engineering Group, Inc. (b) . . . 3,325 140,148
Post Properties, Inc.. . . . . . . . . . 1,625 43,063
Winnebago Industries, Inc. . . . . . . . 2,725 103,278
---------
438,583
---------
- ------------------------------------------------------------
CONSUMER CYCLICAL (7.3%)
A.O. Smith Corp. . . . . . . . . . . . . 2,725 76,709
Bed Bath & Beyond, Inc. (b). . . . . . . 2,100 81,501
Big Lots, Inc. (b) . . . . . . . . . . . 3,750 56,400
BJ's Wholesale Club, Inc. (b). . . . . . 3,925 59,111
BorgWarner, Inc. . . . . . . . . . . . . 2,175 140,069
Circuit City Stores, Inc.. . . . . . . . 7,200 63,360
Coach, Inc. (b). . . . . . . . . . . . . 1,700 84,558
Cole (Kenneth) Productions, Inc. (b) . . 2,475 48,238
Costco Wholesale Corp. (b) . . . . . . . 2,300 84,180
Dollar General Corp. . . . . . . . . . . 2,900 52,954
Federated Department Stores, Inc.. . . . 2,900 106,865
Fortune Brands, Inc. . . . . . . . . . . 2,375 123,975
Furniture Brands International, Inc. (b) 1,400 36,540
Gymboree (b) . . . . . . . . . . . . . . 3,975 66,701
Hot Topic, Inc. (b). . . . . . . . . . . 1,875 50,456
Hughes Supply, Inc.. . . . . . . . . . . 1,300 45,110
J.C. Penney Co.. . . . . . . . . . . . . 4,100 69,085
Limited, Inc.. . . . . . . . . . . . . . 4,625 71,688
Liz Claiborne, Inc.. . . . . . . . . . . 3,750 132,187
Michaels Stores, Inc. (b). . . . . . . . 2,200 83,732
Nordstrom, Inc.. . . . . . . . . . . . . 2,300 44,896
Pacific Sunwear of California (b). . . . 2,175 52,396
PETCO Animal Supplies, Inc. (b). . . . . 1,050 22,827
Petsmart, Inc. (b) . . . . . . . . . . . 2,975 49,593
Reebok International Ltd. (b). . . . . . 2,800 94,164
Regis Corp.. . . . . . . . . . . . . . . 4,600 133,629
Tiffany & Co.. . . . . . . . . . . . . . 1,725 56,373
Tommy Hilfiger Corp. (b) . . . . . . . . 3,450 31,878
Tractor Supply Co. (b) . . . . . . . . . 2,550 121,763
Wal-Mart Stores, Inc.. . . . . . . . . . 2,150 115,391
---------
2,256,329
---------
- ------------------------------------------------------------
CONSUMER STAPLE (4.2%)
Anheuser Busch Cos., Inc.. . . . . . . . 1,675 85,509
Central Garden & Pet Co. (b) . . . . . . 1,725 41,141
Clorox Co. . . . . . . . . . . . . . . . 2,450 104,493
Coca-Cola Co.. . . . . . . . . . . . . . 4,000 185,639
Coca-Cola Enterprises, Inc.. . . . . . . 4,650 84,398
Dial Corp. . . . . . . . . . . . . . . . 6,550 127,397
Duane Reade, Inc. (b). . . . . . . . . . 5,825 85,919
Harley-Davidson, Inc.. . . . . . . . . . 2,400 95,664
Kellogg Co.. . . . . . . . . . . . . . . 3,275 112,561
Kimberly-Clark Corp. . . . . . . . . . . 1,800 93,852
Procter & Gamble Co. . . . . . . . . . . 1,175 104,787
Smithfield Foods, Inc. (b) . . . . . . . 3,725 85,377
Tyson Foods, Inc. Class A. . . . . . . . 8,825 93,722
---------
1,300,459
---------
- --------------------------------------------------------------------------------
4 ANNUAL REPORT 2003
COMMON STOCKS - LONG POSITIONS (CONTINUED)
SHARES VALUE
- -----------------------------------------------------------------
ENERGY (6.4%)
Apache Corp.. . . . . . . . . . . . . . . . . 2,150 $ 139,879
Arch Coal, Inc. . . . . . . . . . . . . . . . 2,500 57,450
BJ Services Co. (b) . . . . . . . . . . . . . 3,100 115,816
BP Amoco PLC ADR - GB . . . . . . . . . . . . 2,775 116,606
Comstock Resources, Inc. (b). . . . . . . . . 5,650 77,292
ConocoPhillips. . . . . . . . . . . . . . . . 1,875 102,750
CONSOL Energy, Inc. . . . . . . . . . . . . . 1,750 39,795
Devon Energy Corp.. . . . . . . . . . . . . . 1,500 80,100
ENSCO International, Inc. . . . . . . . . . . 2,750 73,975
Evergreen Resources, Inc. (b) . . . . . . . . 2,000 108,620
Exxon Mobil Corp. . . . . . . . . . . . . . . 5,100 183,140
FMC Technologies, Inc. (b). . . . . . . . . . 2,550 53,678
Grey Wolf, Inc. (b) . . . . . . . . . . . . . 16,125 65,145
Key Energy Group (b). . . . . . . . . . . . . 4,150 44,488
Lone Star Technologies, Inc. (b). . . . . . . 3,025 64,070
Occidental Petroleum Corp.. . . . . . . . . . 4,275 143,425
Pioneer Natural Resources Co. (b) . . . . . . 2,600 67,860
Pride International, Inc. (b) . . . . . . . . 2,925 55,049
Rowan Cos., Inc. (b). . . . . . . . . . . . . 3,300 73,920
Smith International, Inc. (b) . . . . . . . . 3,200 117,568
Ultra Petroleum Corp. (b) . . . . . . . . . . 6,750 87,143
XTO Energy, Inc.. . . . . . . . . . . . . . . 6,600 132,726
----------
2,000,495
----------
- -----------------------------------------------------------------
FINANCE (10.8%)
Affiliated Managers Group, Inc. (b) . . . . . 1,350 82,283
Annaly Mortgage Management, Inc.. . . . . . . 3,425 68,192
Anworth Mortgage Asset Corp.. . . . . . . . . 4,650 71,703
Astoria Financial Corp. . . . . . . . . . . . 2,900 80,997
Bank of America Corp. . . . . . . . . . . . . 1,075 84,957
Banknorth Group, Inc. . . . . . . . . . . . . 2,900 74,008
Capital One Financial Corp. . . . . . . . . . 1,775 87,295
Countrywide Financial Corp. . . . . . . . . . 725 50,438
Everest Re Group, Ltd.. . . . . . . . . . . . 775 59,288
Fidelity National Financial, Inc. . . . . . . 2,218 68,226
First Niagara Financial Group, Inc. . . . . . 6,400 89,344
First Tennessee National Corp.. . . . . . . . 2,100 92,211
FleetBoston Financial Corp. . . . . . . . . . 2,700 80,217
General Growth Properties, Inc. . . . . . . . 900 56,196
Golden West Financial Corp. . . . . . . . . . 1,125 90,011
Goldman Sachs Group, Inc. . . . . . . . . . . 950 79,563
Greater Bay Bancorp.. . . . . . . . . . . . . 3,900 79,638
Hartford Financial Services Group, Inc. . . . 1,275 64,209
Infinity Property & Casualty Corp.. . . . . . 3,075 72,693
Investors Financial Services Corp.. . . . . . 3,000 87,030
John Hancock Financial Services, Inc. . . . . 2,375 72,984
KeyCorp . . . . . . . . . . . . . . . . . . . 2,625 66,334
Kimco Realty Corp.. . . . . . . . . . . . . . 2,200 83,380
Lincoln National Corp.. . . . . . . . . . . . 3,375 120,250
Macerich Co. (The). . . . . . . . . . . . . . 1,600 56,208
Marsh & McLennan Cos., Inc. . . . . . . . . . 725 37,026
MBNA Corp.. . . . . . . . . . . . . . . . . . 3,375 70,335
MetLife, Inc. . . . . . . . . . . . . . . . . 2,400 67,968
National Commerce Financial Corp. . . . . . . 1,650 36,614
New Century Financial Corp. . . . . . . . . . 1,125 49,106
North Fork Bancorporation, Inc. . . . . . . . 1,675 57,051
Novastar Financial, Inc.. . . . . . . . . . . 1,175 70,206
Old Republic International Corp.. . . . . . . 2,175 74,537
PNC Bank Corp.. . . . . . . . . . . . . . . . 1,525 74,435
ProAssurance Corp. (b). . . . . . . . . . . . 2,900 78,271
Provident Financial Services, Inc.. . . . . . 5,200 99,059
Providian Financial Corp. (b) . . . . . . . . 5,600 51,856
Prudential Financial, Inc.. . . . . . . . . . 2,550 85,808
RenaissanceRe Holdings Ltd. . . . . . . . . . 1,400 63,728
Saxon Capital, Inc. (b) . . . . . . . . . . . 3,600 62,568
T. Rowe Price Group, Inc. . . . . . . . . . . 2,900 109,474
Thornburg Mortgage Asset Corp.. . . . . . . . 2,475 61,133
Travelers Property Casualty Corp. Class A . . 7,025 111,697
U.S. Bancorp. . . . . . . . . . . . . . . . . 3,450 84,525
Wells Fargo & Co. . . . . . . . . . . . . . . 1,375 69,300
----------
3,332,352
----------
- -----------------------------------------------------------------
HEALTH CARE (7.6%)
Abbott Laboratories . . . . . . . . . . . . . 1,725 75,486
Airgas, Inc.. . . . . . . . . . . . . . . . . 4,475 74,956
Alexion Pharmaceuticals, Inc. (b) . . . . . . 5,500 93,775
Alkermes, Inc. (b). . . . . . . . . . . . . . 10,075 108,306
Amgen, Inc. (b) . . . . . . . . . . . . . . . 2,950 195,997
Becton, Dickinson & Co. . . . . . . . . . . . 5,325 206,875
Bristol-Myers Squibb Co.. . . . . . . . . . . 4,825 130,999
Coventry Health Care, Inc. (b). . . . . . . . 2,900 133,864
Fisher Scientific International, Inc. (b) . . 4,625 161,413
Human Genome Sciences, Inc. (b) . . . . . . . 8,600 109,392
IVAX Corp. (b). . . . . . . . . . . . . . . . 7,025 125,396
Medimmune, Inc. (b) . . . . . . . . . . . . . 2,700 98,199
Myriad Genetics, Inc. (b) . . . . . . . . . . 7,000 95,270
NPS Pharmaceuticals (b) . . . . . . . . . . . 5,550 135,087
Patterson Dental Co. (b). . . . . . . . . . . 2,275 103,240
STERIS Corp. (b). . . . . . . . . . . . . . . 3,350 77,352
Teva Pharmaceutical Industries Ltd. ADR - IL. 1,700 96,781
UnitedHealth Group, Inc.. . . . . . . . . . . 2,450 123,113
WellPoint Health Networks, Inc. (b) . . . . . 1,275 107,483
Wright Medical Group, Inc. (b). . . . . . . . 6,050 114,950
----------
2,367,934
----------
- -----------------------------------------------------------------
MEDIA/SERVICES (8.1%)
Aftermarket Technology Corp. (b). . . . . . . 7,800 81,978
Allied Waste Industries, Inc. (b) . . . . . . 9,925 99,746
AOL Time Warner (b) . . . . . . . . . . . . . 8,775 141,190
AT&T Wireless Services, Inc. (b). . . . . . . 15,750 129,308
Cendant Corp. (b) . . . . . . . . . . . . . . 8,050 147,476
Clear Channel Communications, Inc. (b). . . . 2,025 85,840
Cracker Barrel Group, Inc.. . . . . . . . . . 2,275 88,407
Gemstar-TV Guide International, Inc. (b). . . 11,600 59,044
Hilton Hotels Corp. . . . . . . . . . . . . . 11,800 150,921
Hollywood Entertainment Corp. (b) . . . . . . 4,700 80,840
- --------------------------------------------------------------------------------
2003 ANNUAL REPORT 5
STATEMENT OF INVESTMENTS (Continued)
June 30, 2003
GARTMORE LONG-SHORT EQUITY PLUS FUND (Continued)
COMMON STOCKS - LONG POSITIONS (CONTINUED)
SHARES VALUE
- ---------------------------------------------------------------------
MEDIA/SERVICES (continued)
Interpublic Group of Cos., Inc.. . . . . . . . . 15,075 $ 201,703
ITT Educational Services, Inc. (b) . . . . . . . 3,400 99,450
Manpower, Inc. . . . . . . . . . . . . . . . . . 3,300 122,397
McDonald's Corp. . . . . . . . . . . . . . . . . 6,200 136,772
Metro-Goldwyn-Mayer, Inc. (b). . . . . . . . . . 5,300 65,826
Pactiv Corp. (b) . . . . . . . . . . . . . . . . 3,825 75,391
Rent-A-Center, Inc. (b). . . . . . . . . . . . . 1,700 128,877
Sabre Holdings Corp. . . . . . . . . . . . . . . 2,650 65,323
Six Flags, Inc. (b). . . . . . . . . . . . . . . 11,725 79,496
Triarc Cos., Inc. (b). . . . . . . . . . . . . . 2,275 68,227
Viacom, Inc. Class B (b) . . . . . . . . . . . . 2,550 111,333
Walt Disney Co. (The). . . . . . . . . . . . . . 8,425 166,393
Wendy's International, Inc.. . . . . . . . . . . 2,800 81,116
Western Wireless Corp. Class A (b) . . . . . . . 4,900 56,497
----------
2,523,551
----------
- ---------------------------------------------------------------------
TECHNOLOGY (14.6%)
Abgenix, Inc. (b). . . . . . . . . . . . . . . . 8,800 92,312
Accenture Ltd. (b) . . . . . . . . . . . . . . . 8,025 145,172
Adobe Systems, Inc.. . . . . . . . . . . . . . . 2,800 89,796
Advent Software, Inc. (b). . . . . . . . . . . . 4,700 79,477
Altera Corp. (b) . . . . . . . . . . . . . . . . 8,500 139,400
American Power Conversion Corp. (b). . . . . . . 6,625 103,284
Applied Materials, Inc. (b). . . . . . . . . . . 5,200 82,472
AsiaInfo Holdings, Inc. (b). . . . . . . . . . . 7,675 62,935
ASM Lithography Holding N.V. (b) . . . . . . . . 9,300 88,908
Aspen Technologies, Inc. (b) . . . . . . . . . . 9,300 44,640
ATI Technologies, Inc. (b) . . . . . . . . . . . 9,700 98,940
Avocent Corp. (b). . . . . . . . . . . . . . . . 3,375 101,013
BEA Systems, Inc. (b). . . . . . . . . . . . . . 7,700 83,622
Cadence Design Systems, Inc. (b) . . . . . . . . 9,995 120,540
Cognos, Inc. (b) . . . . . . . . . . . . . . . . 4,325 116,775
Conexant Systems, Inc. (b) . . . . . . . . . . . 11,650 47,765
Cymer, Inc. (b). . . . . . . . . . . . . . . . . 3,500 110,460
DST Systems, Inc. (b). . . . . . . . . . . . . . 3,675 139,650
Factset Research Systems, Inc. . . . . . . . . . 800 35,240
First Data Corp. . . . . . . . . . . . . . . . . 3,550 147,112
Fiserv, Inc. (b) . . . . . . . . . . . . . . . . 4,375 155,793
Foundry Networks, Inc. (b) . . . . . . . . . . . 5,600 80,640
Helix Technology Corp. . . . . . . . . . . . . . 5,750 76,073
Integrated Device Technology, Inc. (b) . . . . . 7,200 79,560
J.D. Edwards & Co. (b) . . . . . . . . . . . . . 6,800 97,444
Jack Henry & Associates, Inc.. . . . . . . . . . 6,100 108,519
LSI Logic Corp. (b). . . . . . . . . . . . . . . 20,300 143,724
Manhattan Associates, Inc. (b) . . . . . . . . . 3,675 95,440
MEMC Electronic Materials, Inc. (b). . . . . . . 7,650 74,970
Mindspeed Technologies, Inc. (b) . . . . . . . . 3,883 10,485
Monsanto Co. . . . . . . . . . . . . . . . . . . 3,150 68,166
NETIQ Corp. (b). . . . . . . . . . . . . . . . . 7,300 112,858
NetScreen Technologies, Inc. (b) . . . . . . . . 4,550 102,603
Oracle Corp. (b) . . . . . . . . . . . . . . . . 8,150 97,963
PC-Tel, Inc. (b) . . . . . . . . . . . . . . . . 7,400 87,764
PEC Solutions, Inc. (b). . . . . . . . . . . . . 5,355 86,216
Peoplesoft, Inc. (b) . . . . . . . . . . . . . . 6,800 119,612
Photon Dynamics, Inc. (b). . . . . . . . . . . . 2,340 64,654
QLogic Corp. (b) . . . . . . . . . . . . . . . . 3,450 166,738
Siebel Systems, Inc. (b) . . . . . . . . . . . . 17,550 167,426
Skyworks Solutions, Inc. (b) . . . . . . . . . . 14,700 99,519
Symantec Corp. (b) . . . . . . . . . . . . . . . 4,475 196,273
Tetra Technology, Inc. (b) . . . . . . . . . . . 4,825 82,652
Texas Instruments, Inc.. . . . . . . . . . . . . 5,925 104,280
Tivo, Inc. (b) . . . . . . . . . . . . . . . . . 3,500 42,630
Vishay Intertechnology, Inc. (b) . . . . . . . . 6,475 85,470
----------
4,536,985
----------
- ---------------------------------------------------------------------
TRANSPORTATION (1.5%)
The Brinks Co. . . . . . . . . . . . . . . . . . 4,175 60,830
C.H. Robinson Worldwide, Inc.. . . . . . . . . . 2,650 94,234
Delta Air Lines, Inc.. . . . . . . . . . . . . . 4,500 66,060
Forward Air Corp. (b). . . . . . . . . . . . . . 3,200 81,184
Roadway Corp.. . . . . . . . . . . . . . . . . . 2,050 58,487
Southwest Airlines Co. . . . . . . . . . . . . . 3,250 55,900
Yellow Corp. (b) . . . . . . . . . . . . . . . . 1,950 45,143
----------
461,838
----------
- ---------------------------------------------------------------------
UTILITY (2.8%)
AES Corp. (b). . . . . . . . . . . . . . . . . . 6,000 38,100
Dominion Resources, Inc. . . . . . . . . . . . . 2,900 186,382
Exelon Corp. . . . . . . . . . . . . . . . . . . 2,550 152,516
FirstEnergy Corp.. . . . . . . . . . . . . . . . 2,900 111,505
Florida Power & Light, Inc.. . . . . . . . . . . 650 43,453
PPL Corp.. . . . . . . . . . . . . . . . . . . . 1,000 43,000
Progressive Energy, Inc. . . . . . . . . . . . . 1,500 65,850
TXU Corp.. . . . . . . . . . . . . . . . . . . . 2,525 56,686
UGI Corp.. . . . . . . . . . . . . . . . . . . . 2,225 70,533
Wisconsin Energy Corp. . . . . . . . . . . . . . 3,475 100,775
----------
868,800
----------
TOTAL COMMON STOCKS (C) 24,034,466
----------
TOTAL INVESTMENTS (COST $21,680,481) (A) - 77.5% 24,034,466
----------
OTHER ASSETS IN EXCESS OF LIABILITIES - 22.5% 6,990,712
----------
NET ASSETS - 100.0% $31,025,178
-----------
-----------
(a) See notes to financial statements for unrealized appreciation
(depreciation) of securities.
(b) Denotes a non-income producing security.
(c) All long positions held as collateral for securities sold short.
ADR American Depositary Receipt
GB United Kingdom
IL Israel
JP Japan
SEE NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
6 ANNUAL REPORT 2003
STATEMENT OF SECURITIES SOLD SHORT
June 30, 2003
GARTMORE LONG-SHORT EQUITY PLUS FUND
COMMON STOCKS - SHORT POSITIONS (76.5%)
SHARES VALUE
- ----------------------------------------------------------
BASIC INDUSTRY/GOLD (4.6%)
Albemarle Corp. 2,500 $69,925
Alcoa, Inc. 2,575 65,663
Apex Silver Mines Ltd. (b) 2,075 30,606
Barrick Gold Corp. 2,500 44,750
Cabot Corp. 2,675 76,773
Dow Chemical Co. 2,925 90,558
Engelhard Corp. 2,500 61,925
Georgia-Pacific Corp. 2,675 50,691
Minerals Technologies, Inc. 1,675 81,506
Newmont Mining Corp. 4,400 142,823
Nucor Corp. 3,075 150,213
Phelps Dodge Corp. (b) 3,425 131,315
Potash Corp. of Saskatchewan, Inc. 1,250 80,000
Premcor, Inc. (b) 2,500 53,875
Sigma-Aldrich Corp. 2,425 131,387
Valspar Corp. 1,850 78,107
Weyerhaeuser Co. 1,750 94,500
----------
1,434,617
----------
- ----------------------------------------------------------
CAPITAL GOODS/DEFENSE (9.3%)
Albany International Corp. Class A 2,500 68,500
American Standard Cos., Inc. (b) 1,400 103,502
AMETEK, Inc. 1,850 67,803
ArvinMeritor, Inc. 2,175 43,892
Baldor Electric Co. 6,075 125,145
Cooper Tire & Rubber Co. 2,575 45,294
Dionex Corp. (b) 1,615 64,196
Donaldson Company, Inc. 1,375 61,119
Electro Scientific Industries, Inc. (b) 3,075 46,617
Emerson Electric Co. 2,100 107,310
Energizer Holdings, Inc. (b) 4,500 141,300
Esterline Technologies Corp. (b) 3,675 63,982
General Electric Co. 7,650 219,401
Gentex Corp. (b) 6,425 196,669
Genuine Parts Co. 3,075 98,431
Graco, Inc. 2,675 85,600
Harsco Corp. 2,500 90,125
Johnson Controls, Inc. 2,250 192,600
Kennametal, Inc. 1,550 52,452
Oshkosh Truck Corp. 2,000 118,640
Parker Hannifin Corp. 2,725 114,423
Raytheon Co. 3,300 108,372
Roper Industries, Inc. 4,325 160,890
Snap-On, Inc. 3,175 92,170
SPS Technologies, Inc. (b) 1,500 40,560
Superior Industries International, Inc. 1,700 70,890
Trinity Industries, Inc. 2,325 43,036
United Technologies Corp. 1,800 127,494
W.W. Grainger, Inc. 1,750 81,830
Waters Corp. (b) 2,325 67,727
----------
2,899,970
----------
- ----------------------------------------------------------
CONSTRUCTION (2.9%)
Beazer Homes USA, Inc. (b) 1,250 104,375
Engineered Support Systems, Inc. 2,600 108,810
Hanson PLC ADR - GB 900 25,434
Insituform Technologies, Inc. (b) 2,925 51,714
Lennar Corp. 1,250 89,375
Martin Marietta Materials, Inc. 2,075 69,741
Masco Corp. 3,925 93,611
Palm Harbor Homes, Inc. (b) 1,850 35,039
St. Joe Co. (The) 1,850 57,720
Trex Co., Inc. (b) 3,750 147,187
Vulcan Materials Co. 2,750 101,943
----------
884,949
----------
- ----------------------------------------------------------
CONSUMER CYCLICAL (5.9%)
99 Cents Only Stores (b) 1,850 63,492
Action Performance Co., Inc. 1,450 27,550
American Eagle Outfitters (b) 4,175 76,570
Borders Group, Inc. (b) 4,125 72,641
Chico's FAS, Inc. (b) 4,650 97,883
Children's Place (b) 2,400 47,664
Dillards Department Stores, Inc. 3,100 41,757
Ethan Allen Interiors, Inc. 1,975 69,441
Family Dollar Stores, Inc. 3,325 126,848
Home Depot, Inc. 2,500 82,800
HON Industries, Inc. 3,500 106,750
Jones Apparel Group, Inc. (b) 2,300 67,298
Kohl's Corp. (b) 1,600 82,208
Krispy Kreme Doughnuts, Inc. (b) 3,075 126,629
Mattel, Inc. 3,200 60,544
May Department Stores Co. 3,925 87,371
Nike, Inc. Class B 3,000 160,469
Pier 1 Imports, Inc. 3,825 78,030
Sherwin-Williams Co. (The) 3,500 94,080
Talbots, Inc. 3,500 103,075
Too, Inc. (b) 2,100 42,525
Toys "R" Us, Inc. (b) 3,300 39,996
Williams-Sonoma, Inc. (b) 2,425 70,810
----------
1,826,431
----------
- ----------------------------------------------------------
CONSUMER STAPLE (3.2%)
Adolph Coors Co. 2,100 102,858
Albertson's, Inc. 5,675 108,960
Constellation Brands, Inc. (b) 4,675 146,795
CVS Corp. 3,175 88,995
Kroger Co. (b) 5,700 95,076
McCormick & Co., Inc. 3,500 95,200
PepsiCo, Inc. 2,075 92,338
Ralcorp Holdings, Inc. (b) 3,750 93,600
Sysco Corp. 2,900 87,116
Winn-Dixie Stores, Inc. 5,775 71,090
----------
982,028
----------
- --------------------------------------------------------------------------------
2003 ANNUAL REPORT 7
STATEMENT OF SECURITIES SOLD SHORT (Continued)
June 30, 2003
GARTMORE LONG-SHORT EQUITY PLUS FUND (Continued)
COMMON STOCKS - SHORT POSITIONS (CONTINUED)
SHARES VALUE
- ---------------------------------------------------------------
ENERGY (6.2%)
Amerada Hess Corp.. . . . . . . . . . . . . 950 $ 46,721
Baker Hughes, Inc.. . . . . . . . . . . . . 1,250 41,963
Chevrontexaco Corp. . . . . . . . . . . . . 2,175 157,035
Diamond Offshore Drilling, Inc. . . . . . . 4,550 95,505
Equitable Resources, Inc. . . . . . . . . . 1,825 74,351
GlobalSantaFe Corp. . . . . . . . . . . . . 4,200 98,028
Idacorp, Inc. . . . . . . . . . . . . . . . 3,300 86,625
Lyondell Chemical Co. . . . . . . . . . . . 12,400 167,771
National-Oilwell, Inc. (b). . . . . . . . . 1,850 40,700
Noble Corp. (b) . . . . . . . . . . . . . . 2,400 82,320
Noble Energy, Inc.. . . . . . . . . . . . . 1,850 69,930
Royal Dutch Petroleum Co. ADR - NL. . . . . 4,450 207,458
Schlumberger Ltd. . . . . . . . . . . . . . 2,600 123,682
SEACOR SMIT, Inc. (b) . . . . . . . . . . . 1,400 51,086
Shell Transport & Trading Co. PLC ADR - GB. 2,225 88,666
Stone Energy Corp. (b). . . . . . . . . . . 1,925 80,696
Tidewater, Inc. . . . . . . . . . . . . . . 2,700 79,299
Total SA ADR - FR . . . . . . . . . . . . . 1,700 128,860
Transocean, Inc.. . . . . . . . . . . . . . 2,650 58,221
Trico Marine Services, Inc. (b) . . . . . . 4,750 18,620
Unocal Corp.. . . . . . . . . . . . . . . . 2,500 71,725
Valero Energy Corp. . . . . . . . . . . . . 1,800 65,394
----------
1,934,656
----------
- ---------------------------------------------------------------
FINANCE (10.7%)
ACE Ltd.. . . . . . . . . . . . . . . . . . 3,700 126,873
Amli Residential Properties Trust . . . . . 3,175 74,771
AmSouth Bancorporation. . . . . . . . . . . 3,600 78,624
Archstone-Smith Trust . . . . . . . . . . . 3,300 79,200
Arthur J. Gallagher & Co. . . . . . . . . . 2,825 76,840
Bank of New York Company, Inc.. . . . . . . 1,950 56,063
Bank One Corp.. . . . . . . . . . . . . . . 2,900 107,822
BB&T Corp.. . . . . . . . . . . . . . . . . 2,700 92,610
Boston Properties, Inc. . . . . . . . . . . 1,350 59,130
BRE Properties, Inc. Class A. . . . . . . . 1,700 56,440
Cincinnati Financial Corp.. . . . . . . . . 2,000 74,180
Commerce Bancorp, Inc.. . . . . . . . . . . 1,450 53,795
Cousins Properties, Inc.. . . . . . . . . . 2,425 67,658
Downey Financial Corp.. . . . . . . . . . . 1,600 66,080
Equity Office Properties Trust. . . . . . . 5,425 146,528
Equity Residential. . . . . . . . . . . . . 6,525 169,323
Fannie Mae. . . . . . . . . . . . . . . . . 1,225 82,614
Federated Investors, Inc. . . . . . . . . . 3,450 94,599
First American Financial Corp.. . . . . . . 1,300 34,255
Gabelli Asset Management, Inc. (b). . . . . 1,000 36,100
Hospitality Properties Trust. . . . . . . . 1,800 56,250
Marshall & Ilsley Corp. . . . . . . . . . . 2,425 74,157
MGIC Investment Corp. . . . . . . . . . . . 875 40,810
Northern Trust Corp.. . . . . . . . . . . . 1,750 73,133
People's Bank . . . . . . . . . . . . . . . 1,675 48,558
Phoenix Cos., Inc. (The). . . . . . . . . . 4,750 42,893
Principal Financial Group, Inc. . . . . . . 3,700 119,325
Regions Financial Corp. . . . . . . . . . . 3,250 109,785
Simon Property Group, Inc.. . . . . . . . . 3,075 120,017
South Financial Group, Inc. (The) . . . . . 1,750 40,828
SouthTrust Corp.. . . . . . . . . . . . . . 3,200 87,040
Southwest Bancorp. of Texas, Inc. (b) . . . 2,675 86,964
State Street Corp.. . . . . . . . . . . . . 1,725 67,965
SunTrust Banks, Inc.. . . . . . . . . . . . 900 53,406
UCBH Holdings, Inc. . . . . . . . . . . . . 4,000 114,720
United Dominion Realty Trust, Inc.. . . . . 5,600 96,432
Wachovia Corp.. . . . . . . . . . . . . . . 2,850 113,886
Washington Federal, Inc.. . . . . . . . . . 3,000 69,390
Washington Mutual, Inc. . . . . . . . . . . 2,500 103,250
Waypoint Financial Corp.. . . . . . . . . . 2,925 52,767
Webster Financial Corp. . . . . . . . . . . 2,950 111,510
----------
3,316,591
----------
- ---------------------------------------------------------------
HEALTH CARE (7.5%)
AdvancePCS (b). . . . . . . . . . . . . . . 2,800 107,044
Alberto-Culver Co. Class B. . . . . . . . . 1,275 65,153
American Healthways, Inc. (b) . . . . . . . 2,175 78,561
Aventis SA ADR - FR . . . . . . . . . . . . 3,175 173,672
Biogen, Inc. (b). . . . . . . . . . . . . . 3,075 116,850
Cardinal Health, Inc. . . . . . . . . . . . 975 62,693
CIGNA Corp. . . . . . . . . . . . . . . . . 1,450 68,063
Eclipsys Corp. (b). . . . . . . . . . . . . 9,600 100,224
Eli Lilly & Co. . . . . . . . . . . . . . . 2,000 137,939
Enzon Pharmaceuticals, Inc. (b) . . . . . . 5,950 74,494
King Pharmaceuticals, Inc. (b). . . . . . . 5,525 81,549
Laboratory Corp. of America Holdings (b). . 4,525 136,428
LifePoint Hospitals, Inc. (b) . . . . . . . 4,000 83,760
Lincare Holdings, Inc. (b). . . . . . . . . 2,825 89,016
Merck & Co., Inc. . . . . . . . . . . . . . 2,000 121,100
NeoPharm, Inc. (b). . . . . . . . . . . . . 75 1,039
Neurocrine Biosciences, Inc. (b). . . . . . 2,225 111,117
Novartis AG ADR - CH. . . . . . . . . . . . 1,925 76,634
Orthodontic Centers Of America, Inc. (b). . 4,675 37,447
Oxford Health Plans (b) . . . . . . . . . . 2,725 114,532
Perrigo Co. . . . . . . . . . . . . . . . . 2,675 41,837
Province Healthcare Co. (b) . . . . . . . . 7,000 77,490
Sunrise Assisted Living, Inc. (b) . . . . . 4,725 105,746
Triad Hospitals, Inc. (b) . . . . . . . . . 4,000 99,280
US Oncology, Inc. (b) . . . . . . . . . . . 6,950 51,361
Varian Medical Systems, Inc. (b). . . . . . 1,925 110,822
----------
2,323,851
----------
- ---------------------------------------------------------------
MEDIA/SERVICES (9.1%)
Aramark Corp. (b) . . . . . . . . . . . . . 4,300 96,406
AT&T Corp.. . . . . . . . . . . . . . . . . 6,275 120,794
Boston Communications Group (b) . . . . . . 7,025 120,338
Carnival Corp.. . . . . . . . . . . . . . . 3,100 100,781
Coinstar, Inc. (b). . . . . . . . . . . . . 3,850 72,611
Comcast Corp. Class A (b) . . . . . . . . . 4,100 118,203
Convergys Corp. (b) . . . . . . . . . . . . 4,500 72,000
Cox Communications, Inc. Class A (b). . . . 3,500 111,650
- --------------------------------------------------------------------------------
8 ANNUAL REPORT 2003
COMMON STOCKS - SHORT POSITIONS (CONTINUED)
SHARES VALUE
- -----------------------------------------------------------------
MEDIA/SERVICES (continued)
Cumulus Media, Inc. (b). . . . . . . . . . . 7,025 $ 132,983
DeVry, Inc. (b). . . . . . . . . . . . . . . 4,075 94,907
Gannett Co., Inc.. . . . . . . . . . . . . . 2,300 176,663
H & R Block, Inc.. . . . . . . . . . . . . . 2,825 122,181
Martha Stewart Living Omnimedia, Inc. (b). . 10,100 94,839
McGraw-Hill Companies, Inc. (The). . . . . . 2,200 136,400
Movie Gallery, Inc. (b). . . . . . . . . . . 3,500 64,575
NCO Group, Inc. (b). . . . . . . . . . . . . 4,100 73,431
Nextel Communications, Inc. Class A (b). . . 5,150 93,112
Outback Steakhouse . . . . . . . . . . . . . 2,575 100,425
Polaris Industries, Inc. . . . . . . . . . . 1,650 101,310
PRG-Schultz International, Inc. (b). . . . . 2,100 12,390
Research In Motion Ltd. (b). . . . . . . . . 3,675 79,417
SBC Communications, Inc. . . . . . . . . . . 6,300 160,965
Sinclair Broadcast Group, Inc. Class A (b) . 4,100 47,601
Sprint Corp. . . . . . . . . . . . . . . . . 9,750 140,400
Starwood Hotels & Resorts Worldwide, Inc.. . 3,775 107,927
US Cellular Corp. (b). . . . . . . . . . . . 1,725 43,901
Valassis Communications, Inc. (b). . . . . . 2,550 65,586
Viad Corp. . . . . . . . . . . . . . . . . . 3,750 83,963
West Corp. (b) . . . . . . . . . . . . . . . 2,375 63,294
----------
2,809,053
----------
- -----------------------------------------------------------------
TECHNOLOGY (13.1%)
Analog Devices, Inc. (b) . . . . . . . . . . 3,125 108,813
Anixter International, Inc. (b). . . . . . . 2,850 66,776
Apple Computer, Inc. (b) . . . . . . . . . . 5,700 108,984
AutoDesk, Inc. . . . . . . . . . . . . . . . 8,600 138,975
Benchmark Electronics, Inc. (b). . . . . . . 3,950 121,502
Biosite Diagnostics (b). . . . . . . . . . . 1,650 79,365
Black Box Corp.. . . . . . . . . . . . . . . 3,805 137,740
Centillium Communications, Inc. (b). . . . . 5,200 51,532
Check Point Software Technologies Ltd. (b) . 5,600 109,480
Cisco Systems, Inc. (b). . . . . . . . . . . 10,750 179,417
Cognizant Technology Solutions Corp. (b) . . 4,175 101,703
CommScope, Inc. (b). . . . . . . . . . . . . 3,425 32,538
Computer Sciences Corp. (b). . . . . . . . . 2,325 88,629
Electronic Arts, Inc. (b). . . . . . . . . . 1,800 133,182
Genesis Microchip, Inc. (b). . . . . . . . . 5,650 76,501
Hewlett Packard Co.. . . . . . . . . . . . . 7,375 157,087
International Business Machines Corp.. . . . 2,625 216,562
International Rectifier Corp. (b). . . . . . 5,575 149,521
Intuit, Inc. (b) . . . . . . . . . . . . . . 2,400 106,872
McDATA Corp. (b) . . . . . . . . . . . . . . 9,100 133,497
Metro One Telecommunications, Inc. (b) . . . 13,075 67,467
NCR Corp. (b). . . . . . . . . . . . . . . . 3,225 82,625
Novellus Systems, Inc. (b) . . . . . . . . . 4,500 164,794
Paychex, Inc.. . . . . . . . . . . . . . . . 2,525 74,008
ProQuest Co. (b) . . . . . . . . . . . . . . 1,600 41,280
Qualcomm, Inc. . . . . . . . . . . . . . . . 3,725 133,169
Radioshack Corp. . . . . . . . . . . . . . . 2,150 56,567
Rudolph Technologies, Inc. (b) . . . . . . . 4,875 77,805
Seagate Technology (b) . . . . . . . . . . . 4,600 81,190
Sensient Technologies Corp.. . . . . . . . . 2,825 64,947
Sun Microsystems, Inc. (b) . . . . . . . . . 19,800 91,080
Synopsys, Inc. (b) . . . . . . . . . . . . . 1,700 105,145
Take-Two Interactive Software (b). . . . . . 3,750 106,275
Tech Data Corp. (b). . . . . . . . . . . . . 5,600 149,575
Telefonaktiebolaget LM Ericsson ADR - SE (b) 8,450 89,824
THQ, Inc. (b). . . . . . . . . . . . . . . . 5,450 98,100
United Online, Inc. (b). . . . . . . . . . . 4,200 106,428
Veritas Software Corp. (b) . . . . . . . . . 4,425 126,865
Webmethods, Inc. (b) . . . . . . . . . . . . 8,100 65,853
----------
4,081,673
----------
- -----------------------------------------------------------------
TRANSPORTATION (1.7%)
Burlington Northern Santa Fe Corp. . . . . . 2,175 61,857
Canadian National Railway Co.. . . . . . . . 1,400 67,564
J.B. Hunt Transport Services, Inc. (b) . . . 1,850 69,838
Landstar System, Inc. (b). . . . . . . . . . 2,000 125,700
Norfolk Southern Corp. . . . . . . . . . . . 3,825 73,440
Swift Transportation Co., Inc. (b) . . . . . 2,000 37,240
United Parcel Service Class B. . . . . . . . 1,450 92,365
----------
528,004
----------
- -----------------------------------------------------------------
UTILITY (2.3%)
Ameren Corp. . . . . . . . . . . . . . . . . 1,400 61,740
American Electric Power Co.. . . . . . . . . 1,825 54,440
Cleco Corp.. . . . . . . . . . . . . . . . . 2,100 36,372
Consolidated Edison, Inc.. . . . . . . . . . 1,675 72,494
Northeast Utilities. . . . . . . . . . . . . 6,825 114,250
NSTAR. . . . . . . . . . . . . . . . . . . . 1,800 81,990
ONEOK, Inc.. . . . . . . . . . . . . . . . . 3,100 60,853
Southern Co. (The) . . . . . . . . . . . . . 3,050 95,038
TECO Energy, Inc.. . . . . . . . . . . . . . 5,500 65,945
Unisource Energy Corp. . . . . . . . . . . . 3,175 59,690
----------
702,812
----------
TOTAL SECURITIES SOLD SHORT
(PROCEEDS $21,278,049) (A) - 76.5% $23,724,635
-----------
-----------
(a) See notes to financial statements for unrealized appreciation
(depreciation) of securities.
(b) Denotes a non-income producing security.
ADR American Depositary Receipt
CH Switzerland
GB United Kingdom
FR France
NL Netherlands
SE Sweden
SEE NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
2003 ANNUAL REPORT 9
STATEMENT OF ASSETS AND LIABILITIES
June 30, 2003
GARTMORE
LONG-SHORT
EQUITY PLUS FUND
- --------------------------------------------------------------------------------------
ASSETS:
Investments, at value (cost $21,680,481) . . . . . . . . . . . . . $ 24,034,466
Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,476,142
Deposits with broker for securities sold short . . . . . . . . . . 18,435,367
Unrealized appreciation on open swap contracts . . . . . . . . . . 4,459,088
Interest and dividends receivable. . . . . . . . . . . . . . . . . 48,438
Receivable for investments sold. . . . . . . . . . . . . . . . . . 2,773,943
Reclaims receivable. . . . . . . . . . . . . . . . . . . . . . . . 1,293
- --------------------------------------------------------------------------------------
Total Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . 57,228,737
- --------------------------------------------------------------------------------------
LIABILITIES:
Securities sold short (proceeds $21,278,049) . . . . . . . . . . . 23,724,635
Payable for investments purchased. . . . . . . . . . . . . . . . . 1,013,091
Payable to cover securities sold short . . . . . . . . . . . . . . 945,113
Payable for dividends on securities sold short . . . . . . . . . . 26,387
Payable to investment adviser. . . . . . . . . . . . . . . . . . . 82,878
Accrued expenses and other payables
Investment advisory fees . . . . . . . . . . . . . . . . . . . . . 212,312
Administration fees. . . . . . . . . . . . . . . . . . . . . . . . 11,241
Distribution fees. . . . . . . . . . . . . . . . . . . . . . . . . 7,382
Other. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 180,520
- --------------------------------------------------------------------------------------
Total Liabilities. . . . . . . . . . . . . . . . . . . . . . . . . 26,203,559
- --------------------------------------------------------------------------------------
NET ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 31,025,178
- --------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------
REPRESENTED BY:
Capital. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 47,970,729
Accumulated net investment income (loss) . . . . . . . . . . . . . (5,815)
Accumulated net realized gains (losses) from investment, futures,
swap and foreign currency transactions . . . . . . . . . . . . . . (21,306,223)
Net unrealized appreciation (depreciation) on investments,
futures, swaps and translation of assets and liabilities
denominated in foreign currencies. . . . . . . . . . . . . . . . . 4,366,487
- --------------------------------------------------------------------------------------
NET ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 31,025,178
- --------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------
NET ASSETS:
Class A Shares . . . . . . . . . . . . . . . . . . . . . . . . . . $ 29,560,676
Class B Shares . . . . . . . . . . . . . . . . . . . . . . . . . . 141,414
Class C Shares . . . . . . . . . . . . . . . . . . . . . . . . . . 1,323,088
- --------------------------------------------------------------------------------------
Total. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 31,025,178
- --------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------
SHARES OUTSTANDING (unlimited number of shares authorized):
Class A Shares . . . . . . . . . . . . . . . . . . . . . . . . . . 2,700,734
Class B Shares . . . . . . . . . . . . . . . . . . . . . . . . . . 13,018
Class C Shares . . . . . . . . . . . . . . . . . . . . . . . . . . 146,532
- --------------------------------------------------------------------------------------
Total. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,860,284
- --------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------
NET ASSET VALUE:
Class A Shares . . . . . . . . . . . . . . . . . . . . . . . . . . $ 10.95
Class B Shares (a) . . . . . . . . . . . . . . . . . . . . . . . . $ 10.86
Class C Shares (b) . . . . . . . . . . . . . . . . . . . . . . . . $ 9.03
MAXIMUM OFFERING PRICE PER SHARE (100%/(100%-maximum sales charge)
of net asset value adjusted to the nearest cent):
Class A Shares . . . . . . . . . . . . . . . . . . . . . . . . . . $ 11.62
Class C Shares . . . . . . . . . . . . . . . . . . . . . . . . . . $ 9.12
- --------------------------------------------------------------------------------------
Maximum Sales Charge - Class A Shares. . . . . . . . . . . . . . . 5.75%
- --------------------------------------------------------------------------------------
Maximum Sales Charge - Class C Shares. . . . . . . . . . . . . . . 1.00%
- --------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------
(a) For Class B shares, the redemption price per share varies by length of time
shares are held.
(b) For Class C shares, the redemption price per share is reduced by 1.00% for
shares held less than one year.
See notes to financial statements.
- --------------------------------------------------------------------------------
10 ANNUAL REPORT 2003
STATEMENT OF OPERATIONS
For the Year Ended June 30, 2003
GARTMORE
LONG-SHORT
EQUITY PLUS FUND
- -----------------------------------------------------------------------------------------------------
INVESTMENT INCOME:
Interest. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 170,799
Dividend. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 327,255
- -----------------------------------------------------------------------------------------------------
Total Income. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 498,054
- -----------------------------------------------------------------------------------------------------
EXPENSES:
Investment advisory fees. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 533,805
Fund administration and transfer agent fees . . . . . . . . . . . . . . . . . . . 188,541
Distribution fees Class A . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,606
Distribution fees Class B . . . . . . . . . . . . . . . . . . . . . . . . . . . . 829
Distribution fees Class C . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,874
Administrative servicing fees Class B . . . . . . . . . . . . . . . . . . . . . . 264
Administrative servicing fees Class C . . . . . . . . . . . . . . . . . . . . . . 3,507
Administrative servicing fees Class R (a) . . . . . . . . . . . . . . . . . . . . 79,065
Administrative servicing fees Class ML (b). . . . . . . . . . . . . . . . . . . . 10,011
Dividend expense for securities sold short. . . . . . . . . . . . . . . . . . . . 124,390
Custody fees. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73,103
Legal fees. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 123,810
Registration and filing fees. . . . . . . . . . . . . . . . . . . . . . . . . . . 72,646
Other fees. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26,748
- -----------------------------------------------------------------------------------------------------
Total expenses before reimbursed expenses . . . . . . . . . . . . . . . . . . . . 1,250,199
Expenses reimbursed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (258,501)
- -----------------------------------------------------------------------------------------------------
Total Expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 991,698
- -----------------------------------------------------------------------------------------------------
NET INVESTMENT INCOME (LOSS). . . . . . . . . . . . . . . . . . . . . . . . . . . (493,644)
- -----------------------------------------------------------------------------------------------------
REALIZED/UNREALIZED GAINS (LOSSES) FROM INVESTMENTS:
Net realized gains (losses) on investment,
future and foreign currency transactions. . . . . . . . . . . . . . . . . . . . . (7,318,213)
Net realized gains (losses) on short sale transactions. . . . . . . . . . . . . . (1,177,396)
Net realized gains (losses) on swap transactions. . . . . . . . . . . . . . . . . 468,304
- -----------------------------------------------------------------------------------------------------
Net realized gains (losses) on investment, future,
foreign currency, short sale and swap transactions. . . . . . . . . . . . . . . . (8,027,305)
Net change in unrealized appreciation/depreciation on investments,
futures, translation of assets and liabilites denominated in foreign currencies,
short sales and swaps. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,620,932
- -----------------------------------------------------------------------------------------------------
Net realized/unrealized gains and losses on investments, futures,
foreign currencies, short sales and swaps . . . . . . . . . . . . . . . . . . . . (406,373)
- -----------------------------------------------------------------------------------------------------
CHANGE IN NET ASSETS RESULTING FROM OPERATIONS. . . . . . . . . . . . . . . . . . $ (900,017)
- -----------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------
(a) Class A shares were issued in exchange for Class R shares effective June
23, 2003.
(b) Class R shares were issued in exchange for Class ML shares effective
October 31, 2002.
See notes to financial statements.
- --------------------------------------------------------------------------------
2003 ANNUAL REPORT 11
STATEMENT OF CHANGES IN NET ASSETS
GARTMORE LONG-SHORT
EQUITY PLUS FUND
- -------------------------------------------------------------------------------------------------------
YEAR ENDED YEAR ENDED
JUNE 30, 2003 JUNE 30, 2002
- -------------------------------------------------------------------------------------------------------
FROM INVESTMENT ACTIVITIES:
OPERATIONS:
Net investment income (loss). . . . . . . . . . . . . . . . . . . . . $ (493,644) $ (609,531)
Net realized gains (losses) on investment, future, foreign currency,
short sale and swap transactions. . . . . . . . . . . . . . . . . . . (8,027,305) (10,840,267)
Net change in unrealized appreciation/depreciation on investments,
futures, translation of assets and liabilites denominated in foreign
currencies, short sales and swaps . . . . . . . . . . . . . . . . . . 7,620,932 (3,232,104)
- -------------------------------------------------------------------------------------------------------
Change in net assets resulting from operations. . . . . . . . . . . . (900,017) (14,681,902)
- -------------------------------------------------------------------------------------------------------
Change in net assets from capital transactions. . . . . . . . . . . . (14,651,576) (42,119,873)
- -------------------------------------------------------------------------------------------------------
Change in net assets. . . . . . . . . . . . . . . . . . . . . . . . . (15,551,593) (56,801,775)
NET ASSETS:
Beginning of period . . . . . . . . . . . . . . . . . . . . . . . . . 46,576,771 103,378,546
- -------------------------------------------------------------------------------------------------------
End of period . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 31,025,178 $ 46,576,771
- -------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------
See notes to financial statements.
- --------------------------------------------------------------------------------
12 ANNUAL REPORT 2003
FINANCIAL HIGHLIGHTS
Selected Data for Each Share of Capital Outstanding
GARTMORE LONG-SHORT EQUITY PLUS FUND
INVESTMENT ACTIVITIES DISTRIBUTIONS
- ----------------------------------------------------------------------------------------------------------------------------
NET
REALIZED
NET AND NET
ASSET NET UNREALIZED TOTAL ASSET
VALUE, INVESTMENT GAINS FROM NET NET VALUE,
BEGINNING INCOME (LOSSES) ON INVESTMENT INVESTMENT REALIZED TOTAL END OF
OF PERIOD (LOSS) INVESTMENTS ACTIVITIES INCOME GAINS DISTRIBUTIONS PERIOD
- ----------------------------------------------------------------------------------------------------------------------------
CLASS A SHARES
Period Ended
June 30, 2002 (d). . . . $ 11.14 6.65 (6.90) (0.25) - - - $ 10.89
Year Ended
June 30, 2003. . . . . . $ 10.89 (0.08) (e) 0.14 0.06 - - - $ 10.95
CLASS B SHARES
Period Ended
June 30, 2002 (d). . . . $ 11.14 (0.07) (0.17) (0.24) - - - $ 10.90
Year Ended
June 30, 2003. . . . . . $ 10.90 (0.23) (e) 0.19 (0.04) - - - $ 10.86
CLASS C SHARES
Year Ended
March 31, 1999 . . . . . $ 11.83 (0.15) (e) 4.55 4.40 - (1.10) (1.10) $ 15.13
Period Ended
June 30, 1999. . . . . . $ 15.13 (0.13) 3.01 2.88 - - - $ 18.01
Year Ended
June 30, 2000. . . . . . $ 18.01 (0.71) 12.41 11.70 - (1.99) (1.99) $ 27.72
Year Ended
June 30, 2001. . . . . . $ 27.72 (0.15) (e) (8.43) (8.58) - (9.12) (9.12) $ 10.02
Year Ended
June 30, 2002. . . . . . $ 10.02 (0.66) (0.31) (0.97) - - - $ 9.05
Year EndedJune 30, 2003. $ 9.05 (0.19) (e) 0.17 (0.02) - - - $ 9.03
RATIOS / SUPPLEMENTAL DATA
- -----------------------------------------------------------------------------------------------------------------------------
RATIO RATIO RATIO OF NET
NET RATIO OF NET OF INVESTMENT
ASSETS OF INVESTMENT EXPENSES INCOME
AT END EXPENSES INCOME (LOSS) (PRIOR TO (LOSS) (PRIOR TO
OF TO AVERAGE TO AVERAGE REIMBURSEMENTS) REIMBURSEMENTS)
TOTAL PERIOD NET NET TO AVERAGE TO AVERAGE PORTFOLIO
RETURN (A) (000S) ASSETS ASSETS NET ASSETS (B) NET ASSETS (B) TURNOVER (C)
- -----------------------------------------------------------------------------------------------------------------------------
CLASS A SHARES
Period Ended
June 30, 2002 (d). . . . (2.24%) (f) $ 144 1.95% (g) 122.95% (g) 2.26% (g) 122.64% (g) 425%
Year Ended
June 30, 2003. . . . . . 0.55% $ 29,561 3.47% (2.04%) 3.66% (2.23%) 424%
CLASS B SHARES
Period Ended
June 30, 2002 (d). . . . (2.15%) (f) $ 121 2.74% (g) (1.45%) (g) 2.86% (g) (1.57%) (g) 425%
Year Ended
June 30, 2003. . . . . . (0.37%) $ 141 3.73% (2.31%) 4.54% (3.12%) 424%
CLASS C SHARES
Year Ended
March 31, 1999 . . . . . 38.81% $ 6,425 3.10% (1.10%) 4.54% (2.54%) 226%
Period Ended
June 30, 1999. . . . . . 19.37% (f) $ 7,209 3.10% (g) (3.07%) (g) 5.36% (g) (5.33%) (g) 43%
Year Ended
June 30, 2000. . . . . . 65.61% $ 9,927 2.82% (2.65%) 4.67% (4.50%) 204%
Year Ended
June 30, 2001. . . . . . (40.62%) $ 3,102 3.04% (1.51%) 3.82% (2.29%) 143%
Year Ended
June 30, 2002. . . . . . (17.65%) $ 1,819 3.28% (5.41%) 3.71% (5.84%) 425%
Year EndedJune 30, 2003. (0.22%) $ 1,323 3.72% (2.31%) 4.54% (3.13%) 424%
(a) Excludes sales charge.
(b) During the period certain fees were waived and/or reimbursed. If such
waivers/reimbursements had not occurred, the ratios would have been as
indicated.
(c) Portfolio turnover is calculated on the basis of the Fund as whole without
distinguishing among the classes of shares.
(d) For the period from October 31, 2001 (commencement of operations) through
June 30, 2002.
(e) Net investment income (loss) is based on average shares outstanding during
the period.
(f) Not annualized.
(g) Annualized.
See notes to financial statements.
- --------------------------------------------------------------------------------
2003 ANNUAL REPORT 13
NOTES TO FINANCIAL STATEMENTS
June 30, 2003
1. ORGANIZATION
Gartmore Mutual Funds (the "Trust") is an open-end management investment
company. Prior to January 25, 2002 the Trust was named Nationwide Mutual Funds.
The Trust was created under the laws of Ohio as an Ohio business trust pursuant
to a Declaration of Trust dated as of October 30, 1997, as subsequently amended,
and is registered under the Investment Company Act of 1940, as amended (the
"1940 Act"). The Trust operates thirty-eight (38) separate series, or mutual
funds, each with its own investment objectives and strategies. This report
contains the financial statements and financial highlights of the Gartmore
Long-Short Equity Plus Fund, the "Fund".
2. REORGANIZATION
In the third quarter of 2002, the Board of Trustees of the Montgomery Global
Long-Short Fund (the "Fund") approved the following changes, which became
effective March 4, 2003:
- The Fund was renamed the "Montgomery Partners Long-Short Equity Plus
Fund." - The Fund's investment universe was narrowed from global to
U.S. only.
- The Fund's new benchmark became the S&P 500 Index.
- The Fund implemented a new investment process which combines positions
in S&P 500 Index instruments such as index swaps and futures with a
primarily market neutral exposure in individual long and short
positions in U.S. equity securities.
- The Fund became sub-advised by SSI Investment Management, Inc.
The Trust entered into an agreement and plan of reorganization ("the Montgomery
Funds II Reorganization") with the Montgomery Funds II pursuant to which all of
the assets and all of the stated liabilities of Montgomery Partners Long-Short
Equity Plus Fund was transferred to Gartmore Long-Short Equity Plus Fund
(hereinafter, the "Fund") in exchange for a corresponding Class of shares of
that series. At June 30, 2003, the Fund had a payable of $82,878 to the Fund's
former administrator, Montgomery Asset Management, LLC for expenses previously
reimbursed. The Montgomery Funds II Reorganization, which qualified as a
tax-free exchange for Federal income tax purposes, was completed on June 23,
2003, following approval by shareholders of the Montgomery Funds II at a special
shareholder meeting on June 13, 2003. The following is a summary of shares
outstanding, net assets and net asset value per share issued immediately before
and after the Montgomery Funds II Reorganization:
BEFORE AFTER
REORGANIZATION REORGANIZATION
- -----------------------------------------------------------------------------
MONTGOMERY PARTNERS GARTMORE GARTMORE
LONG-SHORT LONG-SHORT LONG-SHORT
EQUITY PLUS FUND EQUITY PLUS FUND EQUITY PLUS FUND
- -----------------------------------------------------------------------------
Shares. . . . . . 2,873,992 - 2,881,747
- -----------------------------------------------------------------------------
Net Assets. . . . $ 31,945,596 $ - $ 31,945,596
- -----------------------------------------------------------------------------
Net Asset Value:
- -----------------------------------------------------------------------------
Class A . . . . . $ 11.19 - $ 11.19
- -----------------------------------------------------------------------------
Class B . . . . . $ 11.11 - $ 11.11
- -----------------------------------------------------------------------------
Class C . . . . . $ 9.23 - $ 9.23
- -----------------------------------------------------------------------------
Class R (a) . . . $ 11.22 -
- -----------------------------------------------------------------------------
(a) Class A shares were issued in exchange for Class R shares in conjuction
with the Montgomery Funds II Reorganization.
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies followed by the
Fund in the preparation of its financial statements. The policies are in
conformity with accounting principles generally accepted in the United States of
America ("GAAP"). The preparation of financial statements requires management to
make estimates and assumptions that affect the reported amounts of assets,
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of income and expenses for the
period. Actual results could differ from those estimates.
- --------------------------------------------------------------------------------
14 ANNUAL REPORT 2003
(A) SECURITY VALUATION
Securities for which market quotations are readily available are valued at
current market value as of Valuation Time. Valuation Time is as of the
close of regular trading on the New York Stock Exchange (usually 4 p.m.
Eastern time). Equity securities are valued at the last quoted sale price
or, if there is no sale price, the last quoted bid price provided by an
independent pricing service approved by the Board of Trustees. Prices are
taken from the primary market or exchange in which each security trades.
Securities for which market quotations are not readily available, or for
which an independent pricing service does not provide a value or provides a
value that does not represent fair value in the judgement of the Fund's
investment adviser or designee, are valued at fair value under procedures
approved by the Fund's Board of Trustees.
(B) REPURCHASE AGREEMENTS
The Fund may enter into repurchase agreements with an entity which is a
member of the Federal Reserve System or which is a "primary dealer'' (as
designated by the Federal Reserve Bank of New York) in U.S. Government
obligations. The repurchase price generally equals the price paid by the
Fund plus interest negotiated on the basis of current short-term rates,
which may be more or less than the rate on the underlying portfolio
securities. The seller under a repurchase agreement is required to maintain
the value of the collateral held pursuant to the agreement at a market
value equal to or greater than the repurchase price (including accrued
interest). Collateral subject to repurchase agreements is held by the
Fund's custodian or another qualified sub-custodian or in the Federal
Reserve/Treasury book-entry system. If the counterparty defaults, and the
fair value of the collateral declines, realization of the collateral by the
Fund may be delayed or limited.
(C) FOREIGN CURRENCY TRANSACTIONS
The accounting records of the Fund are maintained in U.S. dollars. Foreign
currency amounts are translated into U.S. dollars at the current rate of
exchange to determine the value of investments, assets and liabilities.
Purchases and sales of securities, and income and expenses are translated
at the prevailing rate of exchange on the respective date of such
transactions. The Fund does not isolate that portion of the results of
operations resulting from changes in foreign exchange rates on investments
from fluctuations arising from changes in market prices of securities held.
Such fluctuations are included with the net realized and unrealized gain or
loss from investments and foreign currencies.
(D) RISKS ASSOCIATED WITH FOREIGN SECURITIES AND CURRENCIES
Investments in securities of foreign issuers carry certain risks not
ordinarily associated with investments in securities of U.S. issuers. Such
risks include future political and economic developments, and the possible
imposition of exchange controls or other foreign governmental laws and
restrictions. In addition, with respect to certain countries, there is the
possibility of expropriation of assets, confiscatory taxation, political or
social instability or diplomatic developments, which could adversely affect
investments in those countries.
Certain countries may also impose substantial restrictions on investments
in their capital markets by foreign entities, including restrictions on
investments in issuers of industries deemed sensitive to relevant national
interests. These factors may limit the investment opportunities available
and result in a lack of liquidity and high price volatility with respect to
securities of issuers from developing countries. Effective March 4, 2003,
the Fund changed its investment policies to disallow the investing in
securities of foreign issues.
(E) FORWARD FOREIGN CURRENCY CONTRACTS
Prior to March 4, 2003, the Fund could have entered into forward foreign
currency contracts in connection with planned purchases or sales of
securities or to hedge the U.S. dollar value of portfolio securities
denominated in a particular currency. The Fund could be exposed to risks if
the counterparties to the contracts are unable to meet the terms of their
contracts and from unanticipated movements in the value of a foreign
currency relative to the U.S. dollar. The forward foreign currency
contracts are adjusted by the daily exchange rate of the underlying
currency and any gains or losses are recorded for financial statement
purposes as unrealized gains or losses until the contract settlement date.
- --------------------------------------------------------------------------------
2003 ANNUAL REPORT 15
NOTES TO FINANCIAL STATEMENTS (Continued)
June 30, 2003
(F) FUTURES CONTRACTS
The Fund may invest in financial futures contracts ("futures contracts")
for the purpose of hedging its existing portfolio securities or securities
they intend to purchase against fluctuations in value caused by changes in
prevailing market interest rates or prices. Futures contracts may also be
entered into for non-hedging purposes. Upon entering into a futures
contract, the Fund is required to pledge to the broker an amount of cash
and/or other assets equal to a certain percentage of the contract amount
(initial margin deposit). Subsequent payments, known as "variation
margin,'' are made each day, depending on the daily fluctuations in the
fair value of the underlying security. A gain or loss equal to the daily
variation margin is recognized on a daily basis.
A "sale'' of a futures contract means a contractual obligation to deliver
the securities called for by the contract at a fixed price at a specified
time in the future. A "purchase'' of a futures contract means a contractual
obligation to acquire the securities at a fixed price at a specified time
in the future.
Should market conditions change unexpectedly, the Fund may not achieve the
anticipated benefits of the futures contracts and may realize a loss. The
use of futures transactions for hedging purposes involves the risk of
imperfect correlation in movements in the price of futures contracts,
interest rates and the value/market value of the underlying hedged assets.
(G) SWAP CONTRACTS
The Fund may engage in swap contracts in order to obtain a desired return
at a lower cost than if the Fund had invested directly in the asset that
yielded the desired return. Unrealized gains are reported as an asset and
unrealized losses are reported as a liability on the Statement of Assets
and Liabilities. The change in unrealized gains or losses on swap contracts
is reported as unrealized gains or losses in the Statement of Operations. A
realized gain or loss is recorded upon termination of swap contracts. Swap
contracts are stated at fair value. Notional principal amounts are used to
express the extent of involvement in these contracts, but the amounts
potentially subject to credit risk are much smaller.
At June 30, 2003, the Fund's open swap contracts were as follows:
UNDERLYING UNREALIZED
EXPIRATION NOTIONAL APPRECIATION
DESCRIPTION DATE VALUE (DEPRECIATION)
- --------------------------------------------------------------------------------------------------
Index Swap with Morgan Stanley Capital Services Inc.,
Pays net of the total return of the S&P 500 Total Return
Index minus the three month LIBOR plus 0.09% Long-Short
Equity Plus Fund pays negative and receives positive.. . 3/31/2004 $26,000,000 $ 4,459,088
- --------------------------------------------------------------------------------------------------
(H) SHORT SALES
The Fund is authorized to engage in short-selling which obligates the Fund
to replace the security borrowed by purchasing the security at current
market value sometime in the future. The Fund will incur a loss if the
price of the security increases between the date of the short sale and the
date on which the Fund replaces the borrowed security. The Fund will
realize a gain if the price of the security declines between these dates.
Until the Fund replaces the borrowed security, the Fund will maintain a
segregated account with cash, U.S. government securities and/or securities
held long to sufficiently cover its short position on a daily basis.
Dividends declared on securities sold short are recorded as an expense on
the ex-dividend date and paid to the counterparty on pay date. The
collateral for securities sold short includes the deposits with brokers and
securities held long as shown in the Statement of Investments.
(I) SECURITY TRANSACTIONS AND INVESTMENT INCOME
Security transactions are accounted for on the date the security is
purchased or sold ("trade date''). Securities gains and losses are
calculated on the identified cost basis. Interest income is recognized on
the accrual basis and includes, where applicable, the amortization or
accretion of premium or discount. Dividend income is recorded on the
ex-dividend date.
- --------------------------------------------------------------------------------
16 ANNUAL REPORT 2003
(J) FEDERAL INCOME TAXES
It is the policy of the Fund to continue to qualify as a regulated
investment company by complying with the provisions available to certain
investment companies, as defined in applicable sections of the Internal
Revenue Code, and to make distributions of net investment income and net
realized capital gains sufficient to relieve the Fund from all, or
substantially all, federal income taxes.
As of June 30, 2003, the components of accumulated earnings (deficit) on a
tax basis was as follows:
TOTAL
UNDISTRIBUTED ACCUMULATED UNREALIZED ACCUMULATED
ORDINARY CAPITAL AND APPRECIATION EARNINGS
INCOME (LOSS) OTHER LOSSES (DEPRECIATION)* (DEFICIT)
- ----------------------------------------------------------------
(5,815). . . . $ (21,306,223) $ (139,861) $(21,451,899)
- ----------------------------------------------------------------
* The differences between the book-basis and tax-basis unrealized
appreciation (depreciation) is attributable primarily to: tax deferral
of losses on wash sales.
As of June 30, 2003, the tax cost of securities, including short sales, and the
breakdown of unrealized appreciation (depreciation) for the Fund was as follows:
NET UNREALIZED
TAX COST OF UNREALIZED UNREALIZED APPRECIATION
SECURITIES APPRECIATION DEPRECIATION (DEPRECIATION)
- ------------------------------------------------------------
$45,452,376 $ 2,823,236 $ (2,963,097) $ (139,861)
- ------------------------------------------------------------
As of June 30, 2003, for Federal income tax purposes, the Fund had capital loss
carryforwards available to offset future capital gains if any, to the extent
provided by the Treasury regulations:
AMOUNT EXPIRES
- -------------------
$7,268,670 2010
- -------------------
8,923,711 2011
- -------------------
Net capital losses incurred after October 31, and within the taxable year are
deemed to arise on the first business day of the Fund's next taxable year. For
the year ended June 30, 2003, the Fund deferred to July 1, 2003, post October
capital losses of $5,066,582.
(K) DISTRIBUTIONS TO SHAREHOLDERS
Net investment income, if any, is declared and paid quarterly.
Distributable net realized capital gains, if any, are declared and
distributed at least annually.
Dividends and distributions to shareholders are determined in accordance
with federal income tax regulations, which may differ from GAAP. These
"book/tax" differences are considered either permanent or temporary in
nature. In accordance with AICPA (American Institute of Certified Public
Accountants) Statement of Position 93-2, permanent differences (i.e.,
reclassification of gain/loss, due to derivative instruments and passive
foreign investment companies) are reclassified within the capital accounts
based on their nature for federal income tax purposes; temporary
differences do not require reclassification. These reclassifications have
no effect upon the net asset value of the Fund. To the extent distributions
exceed current and accumulated earnings and profits for federal income tax
purposes, these distributions are reported as distributions of
paid-in-capital.
(L) EXPENSES
Expenses directly attributable to a Fund are charged to that Fund. Expenses
not directly attributable to a Fund are allocated proportionately among
various or all funds within the Trust in relation to the net assets of each
fund or on another reasonable basis. Once expenses are charged to the Fund,
these expenses are allocated to the classes based on relative net assets of
each class. Expenses specific to a class (such as 12b-1 and administrative
services fees) are charged to that class.
- --------------------------------------------------------------------------------
2003 ANNUAL REPORT 17
NOTES TO FINANCIAL STATEMENTS (Continued)
June 30, 2003
(M) CAPITAL SHARE TRANSACTIONS
Transactions in capital shares of the Fund were as follows:
YEAR ENDED JUNE 30, 2003 YEAR ENDED JUNE 30, 2002
- -------------------------------------------------------------------------------------------------
CAPITAL SHARE CAPITAL SHARE
TRANSACTIONS TRANSACTIONS TRANSACTIONS TRANSACTIONS
- -------------------------------------------------------------------------------------------------
CLASS A SHARES
Shares issued . . . . . . . . . . . $ 732,628 69,841 $ 151,867 (a) 13,243 (a)
Shares issued in connection with
Class R Shares merger . . . . . . . 29,933,725 2,675,377 - -
Shares redeemed . . . . . . . . . . (617,921) (57,727) - -
- -------------------------------------------------------------------------------------------------
30,048,432 2,687,491 151,867 13,243
- -------------------------------------------------------------------------------------------------
CLASS B SHARES
Shares issued . . . . . . . . . . . 64,983 5,911 145,103 (a) 12,504 (a)
Shares redeemed . . . . . . . . . . (42,167) (4,003) (15,754) (a) (1,394) (a)
- -------------------------------------------------------------------------------------------------
22,816 1,908 129,349 11,110
- -------------------------------------------------------------------------------------------------
CLASS C SHARES
Shares issued . . . . . . . . . . . 7,161 794 167,355 14,770
Shares redeemed . . . . . . . . . . (475,697) (55,239) (1,198,577) (123,304)
- -------------------------------------------------------------------------------------------------
(468,536) (54,445) (1,031,222) (108,534)
- -------------------------------------------------------------------------------------------------
CLASS R SHARES (B)
Shares issued . . . . . . . . . . . 4,709,596 468,242 2,784,346 237,975
Shares redeemed . . . . . . . . . . (14,736,279) (1,455,328) (40,892,994) (3,495,312)
Shares redeemed in connection with
Class R Shares merger . . . . . . . (29,933,725) (2,667,622) - -
- -------------------------------------------------------------------------------------------------
(39,960,408) (3,654,708) (38,108,648) (3,257,337)
- -------------------------------------------------------------------------------------------------
CLASS ML SHARES (C)
Shares issued . . . . . . . . . . . - - 33,941 2,836
Shares redeemed . . . . . . . . . . (4,293,880) (455,374) (3,295,160) (300,283)
- -------------------------------------------------------------------------------------------------
(4,293,880) (455,374) (3,261,219) (297,447)
- -------------------------------------------------------------------------------------------------
Change in net assets from
capital transactions. . . . . . . . $ (14,651,576) (1,475,128) $ (42,119,873) (3,638,965)
- -------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------
(a) For the period from October 31, 2001 (commencement of operations) through
June 30, 2002.
(b) In conjunction with the Fund reorganization, R Shares merged into Class A
shares.
(c) Class R shares were issued in exchange for Class ML shares on October 31,
2002.
- --------------------------------------------------------------------------------
18 ANNUAL REPORT 2003
4. TRANSACTIONS WITH AFFILIATES
Under the terms of the Investment Advisory Agreement, Gartmore Mutual Fund
Capital Trust ("GMF") manages the investment of the assets and supervises the
daily business affairs of the Fund. Prior to January 18, 2003, Montgomery Asset
Management, LLC ("MAM") provided these services. GMF is a wholly-owned
subsidiary of Gartmore Global Investments, Inc. ("GGI"), a holding company. GGI
is a wholly-owned subsidiary of Gartmore Global Asset Management Trust
("GGAMT"). GGAMT is a majority-owned subsidiary of Nationwide Corporation. All
of the common stock of Nationwide Corporation is held by Nationwide Mutual
Insurance Company (95.3%) and Nationwide Mutual Fire Insurance Company (4.7%),
each of which is a mutual company owned by its policyholders. GMF and GGAMT also
provides investment management evaluation services, monitoring on an ongoing
basis the performance of SSI Investment Management, Inc., the Fund's subadviser
(the "subadviser"). The subadviser manages the Fund's investments and has the
responsibility for making all investment decisions for the Fund.
Under the terms of the Investment Advisory Agreement, the Fund pays GMF, and
paid MAM prior to February 10, 2003, an investment advisory fee based on the
Fund's average daily net assets of 1.50% on the first $250 million of net
assets; and 1.25% of net assets over $250 million. From such fees, pursuant to
the subadvisory agreement, GMF pays a fee based on the Fund's average daily net
assets of 1.00% on the first $50 million of net assets; and 0.75% of net assets
over $50 million to the subadviser.
Effective January 18, 2003, GMF and the Fund have entered into a written
contract ("Expense Limitation Agreement") limiting operating expenses (excluding
any taxes, interest, brokerage fees, extraordinary expenses, Rule 12b-1 fees,
dividend expense and administrative services fees) from exceeding 1.95% until at
least February 28, 2005:
Prior to January 18, 2003, the Fund had entered into Expense Limitation
Agreement with Montgomery Asset Management, LLC limiting operating expenses
(excluding any taxes, interest, brokerage fees, extraordinary expenses and Rule
12b-1 fees) from exceeding 2.35% for Class A and Class R shares and 2.60% for
Class B and Class C shares.
GMF may request and receive reimbursement from the Fund of the advisory fees
waived and other expenses reimbursed by GMF pursuant to the Expense Limitation
Agreement at a later date not to exceed three fiscal years after the fiscal year
when such fees were waived or reimbursed if the Fund has reached a sufficient
asset size to permit reimbursement to be made without causing the total annual
operating expense ratio of the Fund to exceed the limits set forth above. No
reimbursement will be made unless: (i) the Fund's assets exceed $100 million;
(ii) the total annual expense ratio of the Class making such reimbursement is
less than the limit set forth above; and (iii) the payment of such reimbursement
is approved by the Board of Trustees on a quarterly basis. Except as provided
for in the Expense Limitation Agreements, reimbursement of amounts previously
waived or assumed by GMF is not permitted. As of and for the fiscal year ended
June 30, 2003, the Fund had no potential obligations to GMF for reimbursements
made by GMF.
Under the terms of a Distribution Plan under Rule 12b-1 of the 1940 Act,
Gartmore Distribution Services, Inc. ("GDSI"), the Fund's Distributor, is
compensated by the Fund for expenses associated with the distribution of Class
A, Class B and Class C shares of the Fund. These fees are based on average daily
net assets of the respective class of the Funds at an annual rate not to exceed
0.25% for Class A shares and 1.00% for Class B and Class C shares. Prior to June
23, 2003, Funds Distributor, Inc. served as the Funds' Distributor. Under the
terms of the previous Distribution Plan, Funds Distributor, Inc. was compensated
at an annual rate not to exceed 0.25% for Class A Shares and 0.75% for Class B
and Class C shares.
Pursuant to an Underwriting Agreement, GDSI (Funds Distributor, Inc. prior to
June 23, 2003) serves as principal underwriter of the Funds in the continuous
distribution of their shares and receives commissions in the form of a front-end
sales charge on the Class A and Class C. Such fees are deducted from and are not
included in proceeds from sales of Class A and Class C shares. From such fees,
GDSI pays sales commissions, salaries, and other expenses in connection with
generating new sales of Class A and Class C shares of the Fund. GDSI also
receives fees for services as principal underwriter for Class B shares of the
Fund. Such fees are contingent deferred sales charges ("CDSCs") ranging from 1%
to 5% imposed on redemptions of Class B shares which may cause the current value
of a shareholder's account to fall below the total purchase payments. The CDSC,
if applicable, will be imposed on redemptions made within 6 years of the
purchase. In addition, Class C shares also have a CDSC of 1% imposed on
redemptions of Class C shares made within one year of purchase. For the fiscal
year ended June 30, 2003, there was no commissions reallowed to affiliated
broker-dealers of the Fund.
- --------------------------------------------------------------------------------
2003 ANNUAL REPORT 19
NOTES TO FINANCIAL STATEMENTS (Continued)
June 30, 2003
The Fund will assess a 2.00% redemption fee on all classes of shares that are
purchased and are sold or exchanged within 90 days of purchase. The redemption
fee is paid directly to the Fund and is designed to offset brokerage
commissions, market impact and other costs associated with short-term trading of
Fund shares. For purposes of determining whether the redemption fee applies, the
shares that were held the longest will be redeemed first. This redemption fee is
in addition to any CDSCs that may be applicable at the time of sale. The
redemption fee may not apply in certain circumstances, such as redemptions or
exchanges of shares held in certain omnibus accounts or retirement plans that
cannot implement the redemption fee. The fee does not apply to shares purchased
through reinvested dividends or capital gains.
Under the terms of a Fund Administration Agreement, Gartmore SA Capital Trust
("GSA") provides for various administrative and accounting services. Gartmore
Investors Services, Inc. ("GISI"), an indirect subsidiary of GSA, serves as
Transfer Agent and Dividend Disbursing Agent for the Fund. The fees for the
services provided under both agreements are combined and calculated based on the
Trust's average daily net assets according to the fee schedule below. The fees
are then allocated proportionately among all Funds within the Trust in relation
to the average daily net assets of each Fund and are paid to GSA. GSA pays GISI
from these fees for GISI's services.
COMBINED FEE SCHEDULE*
- ---------------------------------------------
Up to $1 billion . . . . . . . . . . . 0.25%
- ---------------------------------------------
1 billion and more up to $3 billion . 0.18%
- ---------------------------------------------
3 billion and more up to $4 billion . 0.14%
- ---------------------------------------------
4 billion and more up to $5 billion . 0.07%
- ---------------------------------------------
5 billion and more up to $10 billion. 0.04%
- ---------------------------------------------
10 billion and more up to $12 billion 0.02%
- ---------------------------------------------
12 billion or more. . . . . . . . . . 0.01%
- ---------------------------------------------
* The assets of the Gartmore Investor Destinations Aggressive, Gartmore
Investor Destinations Moderately Aggressive, Gartmore Investor Destinations
Moderate, Gartmore Investor Destinations Moderately Conservative and
Gartmore Investor Destinations Conservative Funds ("Investor Destinations
Funds") are excluded from the Trust asset level amount in order to
calculate this asset based fee. The Investor Destinations Funds do not pay
any part of this fee.
Prior to June 23, 2003, the fee for the Fund Administration Agreement was
calculated at an annual rate of 0.07% based on the Fund's average daily net
assets.
Prior to February 10, 2003, MAM was compensated at an annual rate of 0.07% based
on the Fund's average daily net assets for fund administration services.
GSA and GISI have entered into agreements with BISYS Fund Services Ohio, Inc. to
provide sub-administration and sub-transfer agency services, respectively, to
the Funds.
Under the terms of an Administrative Services Plan, the Fund may pay fees to
servicing organizations, such as broker-dealers, including Nationwide Financial
Services, and financial institutions, which agree to provide administrative
support services to the shareholders of certain classes. These services include,
but are not limited, to the following: establishing and maintaining shareholder
accounts; processing purchase and redemption transactions; arranging bank wires;
performing shareholder sub-accounting; answering inquiries regarding the Funds
and other such services. These fees are based on an annual rate of up to 0.25%
of the average daily net assets of Class A shares.
Prior to June 23, 2003, Class B shares, Class C shares, Class R shares and Class
ML shares were charged 0.25% of the average daily net assets for these
Administrative Services.
5. INVESTMENT TRANSACTIONS
Purchases and sales of securities (excluding short-term securities) for the
fiscal year ended June 30, 2003, are summarized as follows:
PURCHASES SALES
- --------------------------
$126,178,192 $133,864,830
- --------------------------
- --------------------------------------------------------------------------------
20 ANNUAL REPORT 2003
REPORT OF INDEPENDENT AUDITORS
To the Trustees and Shareholders of Gartmore Long-Short Equity Plus Fund
In our opinion, the accompanying statement of assets and liabilities, including
the statement of investments and statement of securities sold short, and the
related statements of operations and of changes in net assets and the financial
highlights present fairly, in all material respects, the financial position of
the Gartmore Long-Short Equity Plus Fund (the "Fund") at June 30, 2003 the
results of its operations for the year then ended, the changes in its net assets
for each of the two years then ended and financial highlights for each of the
periods presented, in conformity with accounting principles generally accepted
in the United States of America. These financial statements and financial
highlights (hereafter referred to as "financial statements") are the
responsibility of the Fund's management; our responsibility is to express an
opinion on these financial statements based on our audits. We conducted our
audits of these financial statements in accordance with auditing standards
generally accepted in the United States of America, which require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement presentation.
We believe that our audits, which included confirmation of securities at June
30, 2003 by correspondence with the custodian and brokers, provide a reasonable
basis for our opinion.
PricewaterhouseCoopers LLP
Philadelphia, Pennsylvania
August 22, 2003
- --------------------------------------------------------------------------------
2003 ANNUAL REPORT 21
SUPPLEMENTAL INFORMATION (Unaudited)
June 30, 2003
SHAREHOLDER MEETINGS
On September 30, 2002, a Special Meeting of the shareholders of the Montgomery
Partners Long-Short Fund (formerly, the "Global Long-Short Fund") was held. The
matters considered at the meeting, together with the actual vote tabulations
relating to such matters are as follows:
PROPOSAL 1:
To approve the recommendation to appoint SSI Investment Management, Inc. as
sub-adviser to the Montgomery Partners Long-Short Fund:
FOR AGAINST ABSTAIN
- --------------------------------------------------------------------------------
2,573,117 81,683 31,642
- --------------------------------------------------------------------------------
PROPOSAL 2:
To approve the proposal to permit Montgomery Asset Management, LLC to hire and
terminate sub-advisers or modify sub-advisory agreements without shareholder
approval
FOR AGAINST ABSTAIN
- --------------------------------------------------------------------------------
1,825,577 189,240 671,625
- --------------------------------------------------------------------------------
On June 13, 2003, a Special Meeting of the shareholders of the Montgomery
Partners Long-Short Equity Plus Fund was held. The matters considered at the
meeting, together with the actual vote tabulations relating to such matters are
as follows:
PROPOSAL 1:
To approve an Agreement and Plan of Reorganization between the Montgomery
Partners Long-Short Equity Plus Fund, the acquired fund, and the Gartmore
Long-Short Equity Plus Fund, the acquiring fund.
FOR AGAINST ABSTAIN
- --------------------------------------------------------------------------------
1,575,843 77,756 126,435
- --------------------------------------------------------------------------------
PROPOSAL 2:
To approve a new investment advisory agreement between The Montgomery Funds II
and Gartmore Mutual Fund Capital Trust:
FOR AGAINST ABSTAIN
- --------------------------------------------------------------------------------
1,573,879 78,994 127,161
- --------------------------------------------------------------------------------
PROPOSAL 3:
To approve a new subadvisory agreement between Gartmore Mutual Fund Capital
Trust and SSI Investment Management, Inc.:
FOR AGAINST ABSTAIN
- --------------------------------------------------------------------------------
1,562,874 84,018 133,142
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
22 ANNUAL REPORT 2003
MANAGEMENT INFORMATION(Unaudited)
TRUSTEES WHO ARE NOT INTERESTED PERSONS (AS DEFINED IN THE 1940 ACT) OF THE
FUNDS
- -------------------------------------------------------------------------------------------------------------------
TERM OF PRINCIPAL NUMBER OF OTHER
NAME, POSITION(S) OFFICE OCCUPATION(S) PORTFOLIOS IN DIRECTORSHIPS
ADDRESS, HELD WITH TRUST - DURING FUND COMPLEX HELD
AND WITH LENGTH OF PAST OVERSEEN BY
AGE FUND TIME SERVED1 5 YEARS BY TRUSTEE TRUSTEE2
- -------------------------------------------------------------------------------------------------------------------
Charles E. Allen Trustee Since Mr. Allen is Chairman, 82 None
July Chief Executive Office
8162 E. Jefferson Ave., 2000 and President of Graimark
#15B Realty Advisors, Inc. (real
Detroit, MI 48214 estate development,
investment and asset
Age 55 management).
- -------------------------------------------------------------------------------------------------------------------
Paula H.J. Trustee Since Ms. Cholmondeley is Vice 82 None
Cholmondeley July President and General
2000 Manager of Special Products
c/o Sappi Fine Paper at Sappi Fine Paper North
225 Franklin Street America. Prior to 1998, she
Boston, MA 02110 held various positions with
Owens Corning, including
Age 56 Vice President and General
Manager of the Residential
Insulation Division (1997 to
1998).
- -------------------------------------------------------------------------------------------------------------------
C. Brent DeVore Trustee Since Dr. DeVore is President of 82 None
May Otterbein College.
111 N. West Street 1998
Westerville, OH 43081
Age 63
- -------------------------------------------------------------------------------------------------------------------
Robert M. Duncan Trustee Since Since 1999, Mr. Duncan has 82 None
April worked as an arbitration and
1397 Haddon Road 1987 mediation consultant. From
Columbus, OH 43209 1996 to 1999, he was
Commissioner of the Ohio
Age 76 Elections Commission.
- -------------------------------------------------------------------------------------------------------------------
Barbara L. Hennigar Trustee Since Retired; Ms. Hennigar is the 82 None
July former Chairman of
6363 So. Sicily Way 2000 Oppenheimer Funds
Aurora, CO 80016 Services and Shareholder
Services Inc. Ms. Hennigar
Age 67 held this position from
October 1999 to June, 2000.
Prior to that, she served as
President and Chief Executive
Officer of Oppenheimer Funds
Services.
- -------------------------------------------------------------------------------------------------------------------
Thomas J. Kerr, IV Trustee Since Dr. Kerr is President Emeritus 82 None
June of Kendall College.
4890 Smoketalk Lane 1981
Westerville, OH 43081
Age 69
- -------------------------------------------------------------------------------------------------------------------
Douglas F. Kridler Trustee Since Mr. Kridler is the President and 82 None
September Chief Executive Officer of the
2355 Brixton Road 1997 Columbus Foundation. Prior to
Columbus, OH 43221 January 31, 2002, Mr. Kridler
was the President of the
Age 48 Columbus Association for the
Performing Arts and Chairman
of the Greater Columbus
Convention and Visitors Bureau.
- --------------------------------------------------------------------------------
2003 ANNUAL REPORT 23
MANAGEMENT INFORMATION(Unaudited)
(Continued)
TRUSTEES WHO ARE NOT INTERESTED PERSONS (AS DEFINED IN THE 1940 ACT) OF THE
FUNDS (continued)
- -------------------------------------------------------------------------------------------------------------
TERM OF PRINCIPAL NUMBER OF OTHER
NAME, POSITION(S) OFFICE OCCUPATION(S) PORTFOLIOS IN DIRECTORSHIPS
ADDRESS, HELD WITH TRUST - DURING FUND COMPLEX HELD
AND WITH LENGTH OF PAST OVERSEEN BY
AGE FUND TIME SERVED1 5 YEARS BY TRUSTEE TRUSTEE2
- -------------------------------------------------------------------------------------------------------------
Mark L. Lipson Trustee Since Since July 2000, 82 None
March Mr. Lipson is the
1620 26th Street 2003 Chairman of LGVI, LLC
Suite 300 (a private equity firm that
Santa Monica, CA 90272 develops technology
based solutions for the
Age 54 investment advisory/asset
management industry).
Prior to this, Mr. Lispon
was the former Chairman
and Chief Executive Officer
of Northstar Holdings, Inc.
from November 1993 to
December 1999, a former
Trustee of the Northstar
Funds from November 1993
to July 2000, and a Senior
Vice President of Reliastar
Financial Corporation from
November 1993 to
December 1999.
- -------------------------------------------------------------------------------------------------------------
David C. Wetmore Trustee Since Mr. Wetmore is the 82[3] None
May Managing Director of
26 Turnbridge Drive 1998 Updata Capital, Inc., a
Long Cove Plantation venture capital firm.
Hilton Head, SC 29928
Age 54
- -------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
24 ANNUAL REPORT 2003
TRUSTEES WHO ARE INTERESTED PERSONS (AS DEFINED IN THE 1940 ACT) AND OFFICERS OF
THE FUNDS
- ---------------------------------------------------------------------------------------------------------------------
TERM OF PRINCIPAL NUMBER OF OTHER
NAME, POSITION(S) OFFICE OCCUPATION(S) PORTFOLIOS IN DIRECTORSHIPS
ADDRESS, HELD WITH TRUST - DURING FUND COMPLEX HELD
AND WITH LENGTH OF PAST OVERSEEN BY
AGE FUND TIME SERVED1 5 YEARS BY TRUSTEE TRUSTEE2
- ---------------------------------------------------------------------------------------------------------------------
Paul J. Hondros Trustee Since Mr. Hondros is President 82[3] None
and July and Chief Executive Office
Gartmore Global Chairman 2000 of Gartmore Distribution
Investments, Inc. Services, Inc.*, Gartmore
1200 River Road Investors Services, Inc.*,
Conshohocken, Gartmore Morley Capital
PA 19428 Management, Inc.*,
Gartmore Morley Financial
Age 54 Services, Inc.*, NorthPointe
Capital, LLC*, GGAMT*,
GGI*, GMF* and GSA*
and a Director of Nationwide
Securities, Inc.* as well as
several entities within
Nationwide Financial
Services, Inc.* Prior to that,
Mr. Hondros served as
President and Chief Operations
Officer of Pilgrim Baxter
and Associates, Ltd., an
investment management
firm, and its affiliated investment
management arm, Pilgrim
Baxter Value Investors, Inc.
and as Executive Vice
President to the PBHG Funds,
PBHG Insurance Series Funds
and PBHG Adviser Funds.
- ---------------------------------------------------------------------------------------------------------------------
Arden L. Shisler Trustee Since Mr. Shisler is President and 82 None
February Chief Executive Officer of
1356 North Wenger Rd. 2000 K&B Transport, Inc., a trucking
Dalton, OH 44618 firm, Chairman of the Board
for Nationwide Mutual Insurance
Age 61 Company* and a Director
of Nationwide Financial
Services, Inc.*
- ---------------------------------------------------------------------------------------------------------------------
Gerald J. Holland Treasurer Since Mr. Holland is Senior Vice 82 None
March President - Chief Administrative
Gartmore Global 2001 Officer for GGI*, GMF*, GSA
Investments, Inc. and GDSI*. From July 2000
1200 River Road to March 2002 he was Senior
Conshohocken, Vice President - Operations
PA 19428 for GGI, GMF and GSA. Prior
to July 2000, he was Vice
Age 52 President for First Data
Investor Services, an
investment company
service provider.
- ---------------------------------------------------------------------------------------------------------------------
Eric E. Miller Secretary Since Mr. Miller is Senior Vice 82 None
December President, Chief Counsel for
Gartmore Global 2002 GGI*, GMF* and GSA*.
Investments, Inc. From July 2000 to August
1200 River Road 2002, he was a Partner with
Conshohocken, PA 19428 Stradley Ronon Stevens &
Young, LLP. Prior to July
Age 49 2000, he was Senior Vice
President and Deputy
General Counsel of
Delaware Investments.
- ---------------------------------------------------------------------------------------------------------------------
1 The term of office length is until a director resigns or reaches a
mandatory retirement age of 70. The Trust adopted a five-year
implementation period for any Trustee 65 or older as of the adoption of
this policy.
2 Directorships held in (1) any other investment companies registered under
the 1940 Act, (2) any company with a class of securities registered
pursuant to Section 12 of the Securities Exchange Act of 1934, as amended
(the "Exchange Act") or (3) any company subject to the requirements of
Section 15(d) of the Exchange Act.
3 Mr. Wetmore serves as an independent member, and Mr. Hondros serves as a
member, of the Administrative Committee for various hedge funds managed by
GSA.
* This position is held with an affiliated person or principal underwriter of
the Funds.
- --------------------------------------------------------------------------------
2003 ANNUAL REPORT 25
OFFICERS
Paul J. Hondros, Chairman, Chief Principal Officer
Eric E. Miller, Secretary
James Bernstein, Assistant Secretary
Elizabeth A. Davin, Assistant Secretary Michael A. Krulikowski, Assistant
Secretary
Angela R. Jett, Assistant Secretary Alaina V. Metz, Assistant Secretary
Zita A. Resurreccion, Assistant Secretary
Scott Zoltowski, Assistant Secretary
Gerald J. Holland, Treasurer and Chief Principal Officer
William J. Baltrus, Assistant Treasurer
Joseph A. Finelli, Assistant Treasurer Bryan C. Haft, Assistant Treasurer
Michael D. Leonard, Assistant Treasurer
Brian J. O'Neill, Assistant Treasurer Mary L. Vitale, Assistant Treasurer
INVESTMENT ADVISERS
GARTMORE MUTUAL FUND CAPITAL TRUST
1200 River Road, Suite 1000 Conshohocken, Pennsylvania 19428
TRANSFER AGENT
GARTMORE INVESTORS SERVICES, INC.
P.O. Box 1492
Columbus, Ohio 43216-1492
CUSTODIAN
J.P. MORGAN CHASE BANK
270 Park Avenue New York, NY 10017
LEGAL COUNSEL
STRADLEY RONON STEVENS & YOUNG, LLP
2600 One Commerce Square
Philadelphia, Pennsylvania 19103-7098
INDEPENDENT AUDITOR
PRICEWATERHOUSECOOPERS LLP
Two Commerce Square
2001 Market Street, Suite 1700 Philadelphia, PA 19103
DISTRIBUTOR
GARTMORE DISTRIBUTION SERVICES, INC.
1200 River Road, Suite 1000 Conshohocken, PA 19428
Gartmore Global Investments is the investment adviser to Gartmore Funds. "Look
Beyond." is a service mark of Gartmore Global Investments, Inc. Nationwide is a
registered service mark of Nationwide Mutual Insurance Company. Securities
offered through GARTMORE DISTRIBUTION SERVICES, INC., Member NASD.
This report is provided for the general information of our shareholders. The
report is not authorized for distribution to prospective investors unless
preceded or accompanied by an effective prospectus.
1200 River Road, Suite 1000
Conshohocken, PA 19428
888-223-2116
WWW.GARTMOREFUNDS.COM
Gartmore Funds Shareholder Services:
800-848-0920
GG-0198 8/03
ITEM 2. CODE OF ETHICS.
Disclose whether, as of the end of the period covered by the report, the
registrant has adopted a code of ethics that applies to the registrant's
principal executive officer, principal financial officer, principal accounting
officer or controller, or persons performing similar functions, regardless of
whether these individuals are employed by the registrant or a third party. If
the registrant has not adopted such a code of ethics, explain why it has not
done so. ONLY EFFECTIVE FOR ANNUAL REPORTS WITH PERIODS ENDING ON OR AFTER JULY
15, 2003.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
(a) (1) Disclose that the registrant's board of directors has determined that
the registrant either:
(i) Has at least one audit committee financial expert serving on its
audit committee; or
(ii) Does not have an audit committee financial expert serving on its
audit committee.
(2) If the registrant provides the disclosure required by paragraph
(a)(1)(i) of this Item, it must disclose the name of the audit
committee financial expert and whether that person is "independent."
In order to be considered "independent" for purposes of this Item, a
member of an audit committee may not, other than in his or her
capacity as a member of the audit committee, the board of directors,
or any other board committee:
(i) Accept directly or indirectly any consulting, advisory, or other
compensatory fee from the issuer; or
(ii) Be an "interested person" of the investment company as defined in
Section 2(a)(19) of the Act (15 U.S.C. 80a- 2(a)(19)).
(3) If the registrant provides the disclosure required by paragraph
(a)(1)(ii) of this Item, it must explain why it does not have an audit
committee financial expert.
ONLY EFFECTIVE FOR ANNUAL REPORTS WITH PERIODS ENDING ON OR AFTER JULY 15, 2003.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
(a) Disclose, under the caption Audit Fees, the aggregate fees billed for each
of the last two fiscal years for professional services rendered by the
principal accountant for the audit of the registrant's annual financial
statements or services that are normally provided by the accountant in
connection with statutory and regulatory filings or engagements for those
fiscal years.
(b) Disclose, under the caption Audit-Related Fees, the aggregate fees billed
in each of the last two fiscal years for assurance and related services by
the principal accountant that are reasonably related to the performance of
the audit of the registrant's financial statements and are not reported
under paragraph (a) of this Item. Registrants shall describe the nature of
the services comprising the fees disclosed under this category.
(c) Disclose, under the caption Tax Fees, the aggregate fees billed in each of
the last two fiscal years for professional services rendered by the
principal accountant for tax compliance, tax advice, and tax planning.
Registrants shall describe the nature of the services comprising the fees
disclosed under this category.
(d) Disclose, under the caption All Other Fees, the aggregate fees billed in
each of the last two fiscal years for products and services provided by the
principal accountant, other than the services reported in paragraphs (a)
through (c) of this Item. Registrants shall describe the nature of the
services comprising the fees disclosed under this category.
(e) (1) Disclose the audit committee's pre-approval policies and procedures
described in paragraph (c)(7) of Rule 2-01 of Regulation S-X.
(2) Disclose the percentage of services described in each of paragraphs
(b) through (d) of this Item that were approved by the audit committee
pursuant to paragraph (c)(7)(i)(C) of Rule 2-01 of Regulation S-X.
(f) If greater than 50 percent, disclose the percentage of hours expended on
the principal accountant's engagement to audit the registrant's financial
statements for the most recent fiscal year that were attributed to work
performed by persons other than the principal accountant's full-time,
permanent employees.
(g) Disclose the aggregate non-audit fees billed by the registrant's accountant
for services rendered to the registrant, and rendered to the registrant's
investment adviser (not including any sub-adviser whose role is primarily
portfolio management and is subcontracted with or overseen by another
investment adviser), and any entity controlling, controlled by, or under
common control with the adviser that provides ongoing services to the
registrant for each of the last two fiscal years of the registrant.
(h) Disclose whether the registrant's audit committee of the board of directors
has considered whether the provision of nonaudit services that were
rendered to the registrant's investment adviser (not including any
subadviser whose role is primarily portfolio management and is
subcontracted with or overseen by another investment adviser), and any
entity controlling, controlled by, or under common control with the
investment adviser that provides ongoing services to the registrant that
were not pre-approved pursuant to paragraph (c)(7)(ii) of Rule 2-01 of
Regulation S-X is compatible with maintaining the principal accountant's
independence.
ONLY EFFECTIVE FOR ANNUAL REPORTS WITH PERIODS ENDING ON OR AFTER DECEMBER 15,
2003.
ITEMS 5-6. [RESERVED]
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES.
A closed-end management investment company that is filing an annual report
on this Form N-CSR must, unless it invests exclusively in non-voting securities,
describe the policies and procedures that it uses to determine how to vote
proxies relating to portfolio securities, including the procedures that the
company uses when a vote presents a conflict between the interests of its
shareholders, on the one hand, and those of the company's investment adviser;
principal underwriter; or any affiliated person (as defined in Section 2(a)(3)
of the Investment Company Act of 1940 (15 U.S.C. 80a-2(a)(3)) and the rules
thereunder) of the company, its investment adviser, or its principal
underwriter, on the other. Include any policies and procedures of the company's
investment adviser, or any other third party, that the company uses, or that are
used on the company's behalf, to determine how to vote proxies relating to
portfolio securities. NOT APPLICABLE.
ITEM 8. [RESERVED]
ITEM 9. CONTROLS AND PROCEDURES.
(a) Disclose the conclusions of the registrant's principal executive officer or
officers and principal financial officer or officers, or persons performing
similar functions, about the effectiveness of the registrant's disclosure
controls and procedures (as defined in Rule 30a-2(c) under the Act (17 CFR
270.30a-2(c))) based on their evaluation of these controls and procedures
as of a date within 90 days of the filing date of the report that includes
the disclosure required by this paragraph.
IN THE OPINION OF THE PRINCIPAL EXECUTIVE OFFICER AND PRINCIPAL FINANCIAL
OFFICER, BASED ON THEIR EVALUATION, THE REGISTRANT'S DISCLOSURE CONTROLS
AND PROCEDURES ARE ADEQUATELY DESIGNED AND ARE OPERATING EFFECTIVELY TO
ENSURE (I) THAT MATERIAL INFORMATION RELATING TO THE REGISTRANT, INCLUDING
ITS CONSOLIDATED SUBSIDIARIES, IS MADE KNOWN TO THEM BY OTHERS WITHIN THOSE
ENTITIES, PARTICULARLY DURING THE PERIOD IN WHICH THIS REPORT IS BEING
PREPARED; AND (II) THAT INFORMATION REQUIRED TO BE DISCLOSED BY THE
REGISTRANT ON FORM N-CSR IS RECORDED, PROCESSED, SUMMARIZED AND REPORTED
WITHIN THE TIME PERIODS SPECIFIED IN THE SECURITIES AND EXCHANGE
COMMISSION'S RULES AND FORMS.
(b) Disclose any change in the registrant's internal control over financial
reporting (as defined in Rule 30a-3(d) under the Act (17 CFR 270.30a-3(d))
that occurred during the registrant's last fiscal half-year (the
registrant's second fiscal half-year in the case of an annual report) that
has materially affected, or is reasonably likely to materially affect, the
registrant's internal control over financial reporting.
THERE WAS NO CHANGE IN THE REGISTRANT'S INTERNAL CONTROL OVER FINANCIAL
REPORTING THAT OCCURRED DURING THE REGISTRANT'S MOST RECENT FISCAL
HALF-YEAR (THE REGISTRANT'S SECOND FISCAL HALF-YEAR IN THE CASE OF AN
ANNUAL REPORT) THAT HAS MATERIALLY AFFECTED OR IS REASONABLY LIKELY TO
MATERIALLY AFFECT, THE REGISTRANT'S INTERNAL CONTROL OVER FINANCIAL
REPORTING.
ITEM 10. EXHIBITS.
(a) File the exhibits listed below as part of this Form. Letter or number the
exhibits in the sequence indicated.
(a)(1) Any code of ethics, or amendment thereto, that is the subject of the
disclosure required by Item 2, to the extent that the registrant
intends to satisfy the Item 2 requirements through filing of an
exhibit. NOT APPLICABLE - ONLY EFFECTIVE FOR ANNUAL REPORTS WITH
PERIODS ENDING ON OR AFTER JULY 15, 2003.
(a)(2) A separate certification for each principal executive officer and
principal financial officer of the registrant as required by Rule
30a-2 under the Act (17 CFR 270.30a-2). CERTIFICATIONS PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002 ARE ATTACHED HERETO.
(b) A separate or combined certification for each principal executive officer
and principal officer of the registrant as required by Rule 30a-2(b) under
the Act of 1940. CERTIFICATIONS PURSUANT TO SECTION 906 OF THE
SARBANES-OXLEY ACT OF 2002 ARE ATTACHED HERETO.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant
has duly caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
Registrant: GARTMORE MUTUAL FUNDS
By /s/ GERALD J. HOLLAND
Name: Gerald J. Holland
Title: Treasurer
Date: 9/8/03
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By /s/ PAUL J. HONDROS
Name: Paul J. Hondros
Title: President & Chairman of the Board
Date: 9/8/03
By /s/ GERALD J. HOLLAND
Name: Gerald J. Holland
Title: Treasurer
Date: 9/8/03