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 811-23091
GALLERY TRUST
(Exact name of registrant as specified in charter)
________
SEI Investments
One Freedom Valley Drive
Oaks, PA 19456
(Address of principal executive offices) (Zip code)
Michael Beattie
C/O SEI Investments
One Freedom Valley Drive
Oaks, PA 19456
(Name and address of agent for service)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: 1-888-832-4386
DATE OF FISCAL YEAR END: OCTOBER 31, 2016
DATE OF REPORTING PERIOD: OCTOBER 31, 2016
ITEM 1. REPORTS TO STOCKHOLDERS.
MONDRIAN (TM)
[LOGO OMITTED] INVESTMENT PARTNERS LIMITED
MONDRIAN INTERNATIONAL EQUITY FUND
(A Series of Gallery Trust)
ANNUAL REPORT
OCTOBER 31, 2016
Investment Adviser:
MONDRIAN INVESTMENT PARTNERS LIMITED
GALLERY TRUST MONDRIAN INTERNATIONAL EQUITY FUND
--------------------------------------------------------------------------------
TABLE OF CONTENTS
Shareholder Letter ........................................................ 1
Portfolio Performance Review .............................................. 2
Growth of a $1,000,000 Investment ......................................... 5
Schedule of Investments ................................................... 6
Statement of Assets and Liabilities ....................................... 10
Statement of Operations ................................................... 11
Statements of Changes in Net Assets ....................................... 12
Financial Highlights ...................................................... 13
Notes to Financial Statements ............................................. 14
Report of Independent Registered Public Accounting Firm ................... 29
Disclosure of Fund Expenses ............................................... 30
Trustees and Officers of the Gallery Trust ................................ 32
Notice to Shareholders .................................................... 35
Fund Information .......................................................... 36
The Fund files its complete schedule of investments of fund holdings with the
Securities and Exchange Commission (the "Commission") for the first and third
quarters of each fiscal year on Form N-Q within sixty days of the period end.
The Fund's N-Q forms are available on the Commission's website at
http://www.sec. gov, and may be reviewed and copied at the Commission's Public
Reference Room in Washington, DC. Information on the operation of the Public
Reference Room may be obtained by calling 1-800-SEC-0330.
A description of the policies and procedures that the Fund uses to determine
how to vote proxies relating to fund securities, as well as information
relating to how the Fund voted proxies relating to fund securities will be
available (i) without charge, upon request, by calling 1-888-832-4386; and (ii)
on the Commission's website at http://www.sec.gov.
THIS REPORT HAS BEEN PREPARED FOR SHAREHOLDERS AND MAY BE DISTRIBUTED TO OTHERS
ONLY IF PRECEDED OR ACCOMPANIED BY AN EFFECTIVE PROSPECTUS.
GALLERY TRUST MONDRIAN INTERNATIONAL EQUITY FUND
OCTOBER 31, 2016 (UNAUDITED)
--------------------------------------------------------------------------------
SHAREHOLDER LETTER
Dear Shareholder,
We are pleased to provide this annual report for the Mondrian International
Equity Fund (the "Fund"). The year ended October 31, 2016 brought many positive
developments.
In March 2016, we announced the successful reorganization of the former
Delaware Pooled Trust International Equity Fund into the Mondrian International
Equity Fund and its reopening to new investors. With the reorganization,
Mondrian transitioned from sub-adviser to adviser for this institutional mutual
fund and lowered the operating expense ratio.
Mondrian has managed this portfolio since inception in February 1992, offering
shareholders a long-term record of outperformance and lower volatility, as
compared to MSCI EAFE and the Morningstar Foreign Large Value peer group. The
Fund has an overall 4 Star Morningstar rating* as of October 31, 2016. The
Fund's investment team, led by CIO Elizabeth Desmond, has consistently applied
Mondrian's philosophy, methodology, and portfolio management process delivering
defensive, value-oriented characteristics to investors for over two decades.
For more information about the Mondrian International Equity Fund please
continue reviewing this report or visit www.mondrian.com/mutualfunds. We would
also be happy to speak with you at 888-832-4386.
THANK YOU,
MONDRIAN INVESTMENT PARTNERS
--------------
* OVERALL RATED 4 STARS FOR THE PERIOD ENDED OCTOBER 31, 2016 OUT OF 282
U.S. OE FOREIGN LARGE VALUE FUNDS. MORNINGSTAR RANKINGS ARE BASED ON RISK
ADJUSTED RETURNS, AND THE OVERALL MORNINGSTAR RATING FOR A FUND IS DERIVED
FROM A WEIGHTED AVERAGE OF THE PERFORMANCE FIGURES ASSOCIATED WITH ITS
THREE-YEAR, FIVE-YEAR AND TEN-YEAR (IF APPLICABLE) MORNINGSTAR RATINGS
METRICS.
FOR EACH FUND WITH AT LEAST A THREE YEAR HISTORY, MORNINGSTAR CALCULATES A
MORNINGSTAR RATING BASED ON A MORNINGSTAR RISK-ADJUSTED RETURN MEASURE THAT
ACCOUNTS FOR VARIATION IN A FUND'S MONTHLY PERFORMANCE (INCLUDING THE
EFFECTS OF SALES CHARGES, LOADS, AND REDEMPTION FEES), PLACING MORE
EMPHASIS ON DOWNWARD VARIATIONS AND REWARDING CONSISTENT PERFORMANCE. THE
TOP 10% OF FUNDS IN EACH CATEGORY RECEIVE 5 STARS, THE NEXT 22.5% RECEIVE 4
STARS, THE NEXT 35% RECEIVE 3 STARS, THE NEXT 22.5% RECEIVES 2 STARS AND
THE BOTTOM 10% RECEIVE 1 STAR. THE MONDRIAN INTERNATIONAL EQUITY FUND WAS
RATED AGAINST THE FOLLOWING NUMBERS OF U.S.-DOMICILED FOREIGN LARGE VALUE
FUNDS OVER THE FOLLOWING TIME PERIODS: 282 FUNDS IN THE LAST THREE YEARS,
233 FUNDS IN THE LAST FIVE YEARS AND 142 FUNDS IN THE LAST TEN YEARS. WITH
RESPECT TO THESE FOREIGN LARGE VALUE FUNDS, THE MONDRIAN INTERNATIONAL
EQUITY FUND RECEIVED A MORNINGSTAR RATING OF 4 STARS, 3 STARS AND 5 STARS
FOR THE THREE, FIVE AND TEN-YEAR PERIODS, RESPECTIVELY. PAST PERFORMANCE IS
NO GUARANTEE OF FUTURE RESULTS.
1
GALLERY TRUST MONDRIAN INTERNATIONAL EQUITY FUND
OCTOBER 31, 2016 (UNAUDITED)
--------------------------------------------------------------------------------
PORTFOLIO PERFORMANCE REVIEW
MONDRIAN INTERNATIONAL EQUITY FUND
(ALL RETURNS IN U.S. DOLLARS)
12 MONTHS ENDED OCTOBER 31, 2016
Over the last twelve months, international equity markets declined 3.23%, as
measured by the MSCI EAFE Index (EAFE) in U.S. dollar (USD) terms. During this
volatile period, the returns of the Mondrian International Equity Fund (the
"Fund") exceeded index returns falling just 2.83%, demonstrating defensive
characteristics against a weak equity market. This outperformance was driven
principally by stock selection and sector allocation.
Over the course of the past fiscal year, the markets in our asset class have
been strongly impacted by central bank policies and investor sentiment towards
the UK's Brexit referendum. After a partial recovery in non-commodity-linked
sectors in the fourth quarter of 2015, markets again weakened in the first
quarter of 2016 driven by further Chinese renminbi devaluation and the surprise
Bank of Japan (BoJ) decision to introduce negative interest rates. However, as
expectations for Federal Reserve (the "Fed") rate hikes were pushed out
further, the U.S. dollar weakened in March 2016 which supported a partial
rebound in commodity prices and emerging markets. In June 2016, the unexpected
UK referendum result in favor of leaving the EU triggered a fall in
international equities at the end of a volatile quarter. Eurozone markets and
the financials sector registered the most significant losses as investors
worried about the potential economic and political repercussions. However,
supportive central banks and rising hopes of additional stimulus helped
international equities to shrug off Brexit concerns to register strong gains in
the third quarter of 2016, led by cyclically-sensitive sectors.
Over the period, returns in Europe lagged Asia Pacific. The UK equity market
declined by 10.2% as strong local returns were not enough to offset the British
pound depreciation. The surprise referendum result particularly hit stocks in
the financials and consumer discretionary sectors, but the impact on the
broader UK equity market was mitigated by the large number of internationally
diversified companies in the UK index, and British pound depreciation aided
exporters. Most Asia Pacific markets in the index generated strong returns in
the period. The Australian equity market generated the highest return among
major markets, up 12.6%, supported by a recovery in commodity prices boosted by
Chinese stimulus. The Japanese market rose 3.2% as yen appreciation more than
offset significant local market declines. While the introduction of negative
interest rates in the first quarter hit the financials sector in particular,
during the period Prime Minister Abe's coalition won an increased majority in
the Upper House election and announced a new fiscal stimulus package and
further postponement of the planned consumption tax hike to October 2019, while
the BoJ expanded monetary
2
GALLERY TRUST MONDRIAN INTERNATIONAL EQUITY FUND
OCTOBER 31, 2016 (UNAUDITED)
--------------------------------------------------------------------------------
PORTFOLIO PERFORMANCE REVIEW (CONTINUED)
stimulus through increased ETF purchases and adopted a target for long-term
interest rates. Country allocation effects added to relative returns. The
positive impact of the underweight position in Japan and the overweight position
in the UK more than offset the impact of the underweight position in Australia.
Currency movements over the last twelve months held back U.S. dollar returns
for the EAFE Index. In particular, the British pound ended the period 21.0%
weaker after declining in response to the unexpected UK referendum result. The
euro also depreciated over the period, down 0.8% . Conversely, most Asia
Pacific currencies appreciated against the U.S. dollar despite the first Fed
interest rate hike since 2006 as expectations for further Fed rate hikes were
pushed out. In particular, the Japanese yen appreciated by 14.8% as investors
sought safe havens. In the portfolio, currency allocation held back relative
investment returns, driven by the overweight position in the British pound and
the underweight position in the Japanese yen.
In this environment, strong stock selection was driven by the returns of the
portfolio's holdings in Switzerland, Japan and the UK, which more than offset
the impact of the portfolio's holdings in Sweden and Germany. At the sector
level, allocation between sectors added to relative returns, driven by the
underweight position in the financials sector and the overweight position in
the energy sector. Strong stock selection within sectors also added to relative
returns, led by the returns of stocks in the utilities and consumer staples
sectors.
The portfolio's relative returns were held back by the position in Lloyds
Banking Group PLC, the UK retail bank, which fell by 35.5% over the twelve
month period, primarily due to concerns regarding the outlook for the UK
economy and housing market following the referendum result. We acquired the
position in Lloyds into the share price weakness, starting in late 2015.
Pearson PLC, the UK media and education company, decreased 25.7% after results
indicating continued weakness in U.S. higher education. Sanofi, the French
health care company, declined 20.2% as a result of continued competition and
pricing pressure on diabetes drug Lantus in the U.S.
Conversely, the portfolio benefited significantly from its holding in Syngenta,
the Swiss agri-chemicals company, which rose 23.3%, aided by the acquisition
bid from ChemChina. This acquisition is expected to complete in the first
quarter next year. Kirin Holdings, the Japanese brewer, gained 23.1%, supported
by the strong financial results indicating that their strategy to regain share
in the Japanese market is starting to be successful. Tokyo Electron, the
Japanese manufacturer of semiconductor production equipment, increased 53.0%,
supported by the strong order environment, improving margins and shareholder
returns, and rising semiconductor capital expenditure in China.
3
GALLERY TRUST MONDRIAN INTERNATIONAL EQUITY FUND
OCTOBER 31, 2016 (UNAUDITED)
--------------------------------------------------------------------------------
PORTFOLIO PERFORMANCE REVIEW (CONCLUDED)
The highlights of the Fund's investment strategy include a strong value stock
orientation; overweight positions in selected European markets; an overweight
position in the telecommunications and energy sectors; and underweight
positions in financials, materials and industrial sectors.
For the last few years, the markets have gyrated between fear and euphoria as
they struggle to understand an economic outlook characterized by too much
leverage and slow economic growth. Volatility is the inevitable result,
particularly as policy decisions cannot create real economic growth in and of
themselves. The Mondrian International Equity Fund remains positioned to
navigate this environment with the objective of achieving long-term, stable
real returns while protecting on the downside.
THIS MATERIAL REPRESENTS THE MANAGER'S ASSESSMENT OF THE FUND AND MARKET
ENVIRONMENT AT A SPECIFIC POINT IN TIME AND SHOULD NOT BE RELIED UPON BY THE
READER AS RESEARCH OR INVESTMENT ADVICE.
THE PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE AND DOES NOT GUARANTEE
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 AND CURRENT PERFORMANCE MAY BE LOWER OR HIGH THAN THE
PERFORMANCE QUOTED.
INVESTING INVOLVES RISK, INCLUDING THE POSSIBLE LOSS OF PRINCIPAL.
INTERNATIONAL INVESTMENTS ENTAIL RISKS NOT ORDINARILY ASSOCIATED WITH U.S.
INVESTMENTS INCLUDING FLUCTUATION IN CURRENCY VALUES, DIFFERENCES IN ACCOUNTING
PRINCIPLES, OR ECONOMIC OR POLITICAL INSTABILITY IN OTHER NATIONS. EMERGING
MARKETS INVOLVE HEIGHTENED RISKS RELATED TO THE SAME FACTORS, AS WELL AS
INCREASED VOLATILITY AND LOWER TRADING VOLUME. THE FUND MAY INVEST IN
DERIVATIVES, WHICH ARE OFTEN MORE VOLATILE THAN OTHER INVESTMENTS AND MAY
MAGNIFY THE FUND'S GAINS OR LOSSES.
DEFINITION OF COMPARATIVE INDEX
THE MSCI EAFE (EUROPE, AUSTRALASIA, FAR EAST) INDEX IS A FREE FLOAT-ADJUSTED
MARKET CAPITALIZATION INDEX THAT IS DESIGNED TO MEASURE THE EQUITY MARKET
PERFORMANCE OF DEVELOPED MARKETS, EXCLUDING THE U.S. & CANADA.
4
GALLERY TRUST MONDRIAN INTERNATIONAL EQUITY FUND
OCTOBER 31, 2016 (UNAUDITED)
--------------------------------------------------------------------------------
GROWTH OF A $1,000,000 INVESTMENT
--------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURN
FOR THE YEARS ENDED OCTOBER 31, 2016*
--------------------------------------------------------------------------------
1 Year 3 Years 5 Years 10 Years
--------------------------------------------------------------------------------
MONDRIAN INTERNATIONAL EQUITY FUND -2.83% -0.94% 4.37% 1.32%
--------------------------------------------------------------------------------
MSCI EAFE INDEX -3.23% -1.31% 4.99% 1.22%
--------------------------------------------------------------------------------
[LINE GRAPH OMITTED - PLOT POINTS AS FOLLOWS]
2006 2007 2008 2009 2010 2011
Mondrian
International
Equity Fund $1,000,000 $1,233,485 $735,365 $853,835 $928,750 $920,536
MSCI EAFE Index $1,000,000 $1,249,126 $666,739 $851,523 $922,671 $885,020
2012 2013 2014 2015 2016
Mondrian
International
Equity Fund $941,301 $1,172,817 $1,189,924 $1,173,401 $1,140,221
MSCI EAFE Index $925,857 $1,174,728 $1,167,626 $1,166,837 $1,129,188
* ON MARCH 14, 2016, THE INTERNATIONAL EQUITY PORTFOLIO, A SERIES OF
DELAWARE POOLED TRUST (THE "PREDECESSOR FUND") WAS REORGANIZED INTO THE
MONDRIAN INTERNATIONAL EQUITY FUND. INCEPTION DATE OF THE PREDECESSOR FUND
WAS FEBRUARY 4, 1992. INFORMATION PRESENTED FROM FEBRUARY 4, 1992 TO MARCH
14, 2016 IS THAT OF THE PREDECESSOR FUND.
THE PERFORMANCE DATA QUOTED HEREIN REPRESENTS PAST PERFORMANCE AND THE RETURN
AND VALUE OF AN INVESTMENT IN THE FUND WILL FLUCTUATE SO THAT, WHEN REDEEMED, IT
MAY BE WORTH LESS THAN ITS ORIGINAL COST. PAST PERFORMANCE IS NO GUARANTEE OF
FUTURE PERFORMANCE AND SHOULD NOT BE CONSIDERED AS A REPRESENTATION OF THE
FUTURE RESULTS OF THE FUND. THE FUND'S PERFORMANCE ASSUMES THE REINVESTMENT OF
DIVIDENDS AND CAPITAL GAINS. INDEX RETURNS ASSUME REINVESTMENT OF DIVIDENDS AND,
UNLIKE A FUND'S RETURNS, DO NOT REFLECT ANY FEES OR EXPENSES. IF SUCH FEES AND
EXPENSES WERE INCLUDED IN THE INDEX RETURNS, THE PERFORMANCE WOULD HAVE BEEN
LOWER. PLEASE NOTE THAT ONE CANNOT INVEST DIRECTLY IN AN UNMANAGED INDEX.
THERE ARE NO ASSURANCES THAT THE FUND WILL MEET ITS STATED OBJECTIVES. THE
FUND'S HOLDINGS AND ALLOCATIONS ARE SUBJECT TO CHANGE BECAUSE IT IS ACTIVELY
MANAGED AND SHOULD NOT BE CONSIDERED RECOMMENDATIONS TO BUY INDIVIDUAL
SECURITIES.
RETURNS SHOWN DO NOT REFLECT THE DEDUCTION OF TAXES THAT A SHAREHOLDER WOULD PAY
ON FUND DISTRIBUTIONS OR THE REDEMPTION OF FUND SHARES. IF THE ADVISER HAD NOT
LIMITED CERTAIN EXPENSES, THE FUND'S TOTAL RETURN WOULD HAVE BEEN LOWER.
SEE DEFINITION OF THE COMPARATIVE INDEX ON PAGE 4.
5
GALLERY TRUST MONDRIAN INTERNATIONAL EQUITY FUND
OCTOBER 31, 2016
--------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
Sector Weightings (unaudited)+:
15.1% Financials
12.3% Consumer Staples
12.1% Health Care
11.5% Industrials
10.8% Telecommunication Services
9.2% Consumer Discretionary
9.2% Energy
9.0% Information Technology
6.8% Utilities
3.1% Materials
0.9% Real Estate
+ PERCENTAGES ARE BASED ON TOTAL INVESTMENTS.
--------------------------------------------------------------------------------
COMMON STOCK -- 98.6%
--------------------------------------------------------------------------------
NUMBER OF VALUE
SHARES (U.S. $)
---------- -------------
AUSTRALIA -- 1.3%
QBE Insurance Group .............................. 744,123 $ 5,654,877
-------------
Total Australia 5,654,877
-------------
CHINA -- 1.6%
China Mobile ..................................... 571,500 6,547,282
-------------
Total China 6,547,282
-------------
DENMARK -- 0.9%
ISS .............................................. 99,788 3,923,304
-------------
Total Denmark 3,923,304
-------------
FRANCE -- 6.7%
Cie de Saint-Gobain .............................. 212,845 9,450,042
Engie VVPR Strip (A)* ............................ 162,519 --
Sanofi ........................................... 176,387 13,739,966
Societe Generale ................................. 129,756 5,065,177
-------------
Total France 28,255,185
-------------
GERMANY -- 8.9%
Allianz .......................................... 60,653 9,454,664
Bayerische Motoren Werke ......................... 4,585 399,486
Daimler .......................................... 110,335 7,861,951
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
6
GALLERY TRUST MONDRIAN INTERNATIONAL EQUITY FUND
OCTOBER 31, 2016
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
COMMON STOCK -- CONTINUED
--------------------------------------------------------------------------------
NUMBER OF VALUE
SHARES (U.S. $)
---------- -------------
GERMANY (CONTINUED)
Deutsche Telekom ................................ 587,664 $ 9,576,675
SAP ............................................. 114,543 10,089,391
-------------
Total Germany 37,382,167
-------------
ITALY -- 4.1%
Enel ............................................ 1,847,849 7,951,664
Eni ............................................. 644,940 9,352,497
-------------
Total Italy 17,304,161
-------------
JAPAN -- 18.4%
Canon ........................................... 364,100 10,474,775
Honda Motor ..................................... 440,000 13,191,189
Hoya ............................................ 97,200 4,064,289
Kirin Holdings .................................. 740,200 12,757,810
Kyushu Railway * ................................ 35,500 1,046,009
Mitsubishi Electric ............................. 505,000 6,850,029
NTT DOCOMO ...................................... 91,900 2,313,931
Sumitomo Electric Industries .................... 58,500 867,152
Takeda Pharmaceutical ........................... 265,500 11,899,018
Tokio Marine Holdings ........................... 233,452 9,236,124
Tokyo Electron .................................. 50,400 4,559,886
-------------
Total Japan 77,260,212
-------------
NETHERLANDS -- 2.4%
Koninklijke Ahold Delhaize ...................... 434,726 9,923,846
-------------
Total Netherlands 9,923,846
-------------
SINGAPORE -- 6.9%
Ascendas REIT ................................... 2,220,500 3,782,631
Jardine Matheson Holdings ....................... 72,615 4,422,980
Sembcorp Industries ............................. 1,349,700 2,454,441
Singapore Telecommunications .................... 2,822,902 7,872,675
United Overseas Bank ............................ 759,820 10,256,546
-------------
Total Singapore 28,789,273
-------------
SPAIN -- 5.4%
Banco Santander ................................. 505,559 2,484,645
Iberdrola ....................................... 1,695,302 11,555,113
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
7
GALLERY TRUST MONDRIAN INTERNATIONAL EQUITY FUND
OCTOBER 31, 2016
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
COMMON STOCK -- CONTINUED
--------------------------------------------------------------------------------
NUMBER OF VALUE
SHARES (U.S. $)
---------- -------------
SPAIN (CONTINUED)
Telefonica .................................. 870,808 $ 8,851,948
-------------
Total Spain 22,891,706
-------------
SWEDEN -- 3.4%
Telefonaktiebolaget LM Ericsson Class B ..... 934,025 4,521,135
Telia ....................................... 2,451,421 9,797,922
-------------
Total Sweden 14,319,057
-------------
SWITZERLAND -- 12.6%
ABB ......................................... 625,680 12,898,663
Nestle ...................................... 121,158 8,784,889
Novartis .................................... 105,224 7,485,998
Syngenta .................................... 31,629 12,644,568
Zurich Insurance Group ...................... 41,836 10,945,723
-------------
Total Switzerland 52,759,841
-------------
TAIWAN -- 1.8%
Taiwan Semiconductor Manufacturing .......... 397,000 2,371,370
Taiwan Semiconductor Manufacturing ADR ...... 173,032 5,381,295
-------------
Total Taiwan 7,752,665
-------------
UNITED KINGDOM -- 24.2%
Amec Foster Wheeler PLC ..................... 608,166 3,328,949
BP PLC ...................................... 1,856,416 10,990,935
G4S PLC ..................................... 2,486,444 6,695,525
GlaxoSmithKline PLC ......................... 649,560 12,868,124
Kingfisher PLC .............................. 2,311,368 10,221,634
Lloyds Banking Group PLC .................... 13,784,383 9,660,997
National Grid PLC ........................... 661,042 8,617,116
Pearson PLC ................................. 611,970 5,674,088
Royal Dutch Shell PLC Class A ............... 19,300 481,149
Royal Dutch Shell PLC Class B ............... 534,815 13,845,136
Tesco PLC ................................... 4,664,462 12,032,404
Unilever PLC ................................ 174,748 7,310,844
-------------
Total United Kingdom 101,726,901
-------------
Total Common Stock
(Cost $428,210,440) ....................... 414,490,477
-------------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
8
GALLERY TRUST MONDRIAN INTERNATIONAL EQUITY FUND
OCTOBER 31, 2016
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
PREFERRED STOCK -- 0.0%
--------------------------------------------------------------------------------
NUMBER OF VALUE
SHARES/RIGHTS (U.S. $)
------------- --------
GERMANY -- 0.0%
Bayerische Motoren Werke 4.39% .............. 1,081 $ 82,058
------------
Total Preferred Stock
(Cost $79,697) ............................ 82,058
------------
--------------------------------------------------------------------------------
RIGHTS -- 0.0%
--------------------------------------------------------------------------------
SPAIN -- 0.0%
Banco Santander exercise price EUR 0.045,
expiration date 11/02/16 * ................. 505,557 28,304
------------
Total Rights
(Cost $--) ................................ 28,304
------------
Total Value of Securities -- 98.6%
(Cost $428,290,137) ....................... $414,600,839
============
PERCENTAGES ARE BASED ON NET ASSETS OF $420,276,591.
* NON-INCOME PRODUCING SECURITY.
(A) SECURITY FAIR VALUED USING METHODS DETERMINED IN GOOD FAITH BY THE
VALUATION COMMITTEE OF THE BOARD OF TRUSTEES. THE TOTAL MARKET VALUE OF
SUCH SECURITIES AS OF OCTOBER 31, 2016 WAS $0 AND REPRESENTED 0.00% OF NET
ASSETS.
ADR -- AMERICAN DEPOSITARY RECEIPT
EUR -- EURO
PLC -- PUBLIC LIMITED COMPANY
REIT -- REAL ESTATE INVESTMENT TRUST
VVPR STRIP -- DIVIDEND COUPON
AMOUNTS DESIGNATED AS "--" ARE $0 OR HAVE BEEN ROUNDED TO $0.
AS OF OCTOBER 31, 2016, ALL OF THE FUND'S INVESTMENTS WERE CONSIDERED LEVEL 1,
EXCEPT FOR ENGIE VVPR STRIP, WHICH WAS CONSIDERED LEVEL 3 WHEN CONVERTED AND IS
VALUED AT $0 AT OCTOBER 31, 2016. A RECONCILIATION OF LEVEL 3 INVESTMENTS,
INCLUDING CERTAIN DISCLOSURES RELATED TO SIGNIFICANT INPUTS USED IN VALUING
LEVEL 3 INVESTMENTS IS ONLY PRESENTED WHEN THE FUND HAS OVER 1% OF LEVEL 3
INVESTMENTS AT THE BEGINNING AND/OR END OF THE PERIOD IN RELATION TO NET
ASSETS.
FOR THE YEAR ENDED OCTOBER 31, 2016, THERE HAVE BEEN NO TRANSFERS BETWEEN LEVEL
1, LEVEL 2 OR LEVEL 3 ASSETS AND LIABILITIES. THE FUND GENERALLY RECOGNIZES
TRANSFERS BETWEEN THE LEVELS AS OF THE END OF THE REPORTING PERIOD.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
9
GALLERY TRUST MONDRIAN INTERNATIONAL EQUITY FUND
OCTOBER 31, 2016
--------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
ASSETS:
Investments (Cost $428,290,137) ............................. $414,600,839
Foreign currency (Cost $510,286) ............................ 508,906
Cash ........................................................ 2,730,917
Receivable for investment securities sold ................... 1,820,249
Reclaims receivable ......................................... 1,239,158
Dividends receivable ........................................ 640,913
Receivable for capital shares sold .......................... 706
Unrealized appreciation on spot foreign currency contracts .. 515
Prepaid expenses ............................................ 13,603
------------
Total assets .............................................. 421,555,806
------------
LIABILITIES:
Payable for investment securities purchased ................. 819,782
Payable due to Investment Adviser ........................... 206,820
Payable for capital shares redeemed ......................... 75,960
Payable due to Administrator ................................ 39,485
Unrealized depreciation on spot foreign currency contracts .. 3,673
Chief Compliance Officer fees payable ....................... 1,920
Payable due to Trustees ..................................... 187
Other accrued expenses ...................................... 131,388
------------
Total liabilities ......................................... 1,279,215
------------
NET ASSETS .................................................. $420,276,591
============
NET ASSETS CONSIST OF:
Paid-in capital ............................................. $555,097,430
Undistributed net investment income ......................... 9,874,908
Accumulated net realized loss on investments and foreign
currency transactions ..................................... (130,908,969)
Net unrealized depreciation on investments .................. (13,689,298)
Net unrealized depreciation on foreign currency transactions
and translation of other assets and liabilities denominated
in foreign currency ....................................... (97,480)
------------
NET ASSETS .................................................. $420,276,591
============
NET ASSET VALUE, Offering and Redemption Price Per Share*
Shares of Beneficial Interest Outstanding
(unlimited authorization -- no par value)
($420,276,591 + 31,217,099 shares) ........................ $ 13.46
============
* REDEMPTION PRICE PER SHARE MAY VARY DEPENDING ON LENGTH OF TIME SHARES ARE
HELD. SEE NOTE 2 IN NOTES TO FINANCIAL STATEMENTS.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
10
GALLERY TRUST MONDRIAN INTERNATIONAL EQUITY FUND
FOR THE YEAR ENDED
OCTOBER 31, 2016+
--------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
INVESTMENT INCOME
Dividends .................................................... $ 14,875,217
Interest ..................................................... 1,199
Less: foreign taxes withheld ................................. (890,297)
------------
Total investment income .................................... 13,986,119
------------
EXPENSES
Investment advisory fees ..................................... 2,495,906
Accounting and administration fees ........................... 297,044
Custodian fees ............................................... 65,776
Registration fees ............................................ 61,986
Transfer agent fees and expenses ............................. 46,652
Legal fees ................................................... 43,050
Audit and tax ................................................ 38,793
Printing fees ................................................ 26,058
Other ........................................................ 17,321
Trustees' fees and expenses .................................. 14,798
Chief Compliance Officer fees ................................ 3,801
------------
TOTAL EXPENSES ............................................. 3,111,185
------------
LESS:
Investment advisory fees waived .............................. (269,874)
------------
NET EXPENSES ............................................... 2,841,311
------------
NET INVESTMENT INCOME ........................................ 11,144,808
------------
NET REALIZED LOSS ON:
Investments ................................................ (2,460,054)
Foreign currency transactions .............................. (114,049)
Foreign currency exchange contracts ........................ (70,657)
NET CHANGE IN UNREALIZED APPRECIATION/(DEPRECIATION) ON:
Investments ................................................ (20,486,851)
Foreign currency transactions and translation of other assets
and liabilities denominated in foreign currency ......... (40,563)
Foreign currency exchange contracts ........................ (828)
------------
NET REALIZED AND UNREALIZED LOSS ............................. (23,173,002)
------------
NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS ......... $(12,028,194)
============
+ ON MARCH 14, 2016, THE INTERNATIONAL EQUITY PORTFOLIO, A SERIES OF
DELAWARE POOLED TRUST (THE "PREDECESSOR FUND") WAS REORGANIZED INTO THE
MONDRIAN INTERNATIONAL EQUITY FUND. INFORMATION PRESENTED PRIOR TO MARCH
14, 2016 IS THAT OF THE PREDECESSOR FUND. SEE NOTE 1 IN NOTES TO FINANCIAL
STATEMENTS.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
11
GALLERY TRUST MONDRIAN INTERNATIONAL EQUITY FUND
--------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
YEAR ENDED YEAR ENDED
OCTOBER 31, OCTOBER 31,
2016+ 2015
------------ ------------
OPERATIONS:
Net investment income ..................... $ 11,144,808 $ 9,780,373
Net realized gain/(loss) on investments,
foreign currency transactions and
foreign currency exchange contracts ..... (2,644,760) 27,492,813
Net change in unrealized appreciation/
(depreciation) on investments, foreign
currency transactions and translation
of other assets and liabilities
denominated in foreign currency, and
foreign currency exchange contracts ..... (20,528,242) (36,807,874)
------------ ------------
Net increase/(decrease) in net assets
resulting from operations ............... (12,028,194) 465,312
------------ ------------
DIVIDENDS AND DISTRIBUTIONS FROM:
Net investment income ..................... (9,309,855) (19,976,817)
------------ ------------
Total dividends and distributions ......... (9,309,855) (19,976,817)
------------ ------------
CAPITAL SHARE TRANSACTIONS(1):
Issued .................................... 131,005,719 71,665,939
Reinvestment of dividends ................. 5,171,775 13,785,666
Redemption fees -- Note 2 ................. 542 --
Redeemed .................................. (52,944,333) (154,086,264)
------------ ------------
Net increase/(decrease) in net assets from
capital share transactions .............. 83,233,703 (68,634,659)
------------ ------------
Total increase/(decrease) in net assets .. 61,895,654 (88,146,164)
------------ ------------
NET ASSETS:
Beginning of year ......................... 358,380,937 446,527,101
------------ ------------
End of year ............................... $420,276,591 $358,380,937
============ ============
Undistributed net investment income ....... $ 9,874,908 $ 8,220,825
============ ============
+ ON MARCH 14, 2016, THE INTERNATIONAL EQUITY PORTFOLIO, A SERIES OF
DELAWARE POOLED TRUST (THE "PREDECESSOR FUND") WAS REORGANIZED INTO THE
MONDRIAN INTERNATIONAL EQUITY FUND. INFORMATION PRESENTED PRIOR TO MARCH
14, 2016 IS THAT OF THE PREDECESSOR FUND. SEE NOTE 1 IN NOTES TO FINANCIAL
STATEMENTS.
(1) SEE NOTE 8 -- SHARE TRANSACTIONS IN NOTES TO THE FINANCIAL STATEMENTS.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
12
GALLERY TRUST MONDRIAN INTERNATIONAL EQUITY FUND
--------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
Selected per share data & ratios
for a share outstanding throughout the year
-----------------------------------------------------------
YEAR ENDED(2)
10/31/16 10/31/15 10/31/14 10/31/13 10/31/12
-----------------------------------------------------------
Net asset value, beginning of year .................. $14.24 $15.12 $15.34 $12.84 $13.12
------ ------ ------ ------ ------
INCOME/(LOSS) FROM OPERATIONS:(1)
Net investment income .............................. 0.43 0.38 0.63 0.34 0.44
Net realized and unrealized gain/(loss)
on investments ................................... (0.84) (0.58) (0.43) 2.70 (0.18)
------ ------ ------ ------ ------
Total gain/(loss) from operations .................. (0.41) (0.20) 0.20 3.04 0.26
------ ------ ------ ------ ------
Redemption fees .................................... --(4) -- -- -- --
------ ------ ------ ------ ------
DIVIDENDS AND DISTRIBUTIONS FROM:
Net investment income .............................. (0.37) (0.68) (0.42) (0.54) (0.54)
------ ------ ------ ------ ------
Total dividends and distributions ................... (0.37) (0.68) (0.42) (0.54) (0.54)
------ ------ ------ ------ ------
Net asset value, end of year ........................ $13.46 $14.24 $15.12 $15.34 $12.84
====== ====== ====== ====== ======
TOTAL RETURN+ ....................................... (2.83)% (1.39)% 1.46% 24.59% 2.26%
====== ====== ====== ====== ======
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of year (Thousands) ................. $420,277 $358,381 $446,527 $491,683 $467,827
Ratio of expenses to average net assets
(including waivers and reimbursements) ........... 0.82% 0.88% 0.86% 0.88% 0.85%
Ratio of expenses to average net assets
(excluding waivers and reimbursements) ........... 0.89% 0.88% 0.86% 0.88% 0.85%
Ratio of net investment income to average
net assets ....................................... 3.20% 2.54% 4.04% 2.48% 3.56%
Portfolio turnover rate ............................ 20% 28%(3) 21% 20% 16%(3)
(1) PER SHARE CALCULATIONS WERE PERFORMED USING AVERAGE SHARES FOR THE PERIOD.
(2) ON MARCH 14, 2016, THE INTERNATIONAL EQUITY PORTFOLIO, A SERIES OF
DELAWARE POOLED TRUST (THE "PREDECESSOR FUND") WAS REORGANIZED INTO THE
MONDRIAN INTERNATIONAL EQUITY FUND. INFORMATION PRESENTED PRIOR TO MARCH
14, 2016 IS THAT OF THE PREDECESSOR FUND. SEE NOTE 1 IN NOTES TO FINANCIAL
STATEMENTS.
(3) EXCLUDES THE VALUE OF PORTFOLIO SECURITIES RECEIVED OR DELIVERED AS A
RESULT OF IN-KIND PURCHASES OR REDEMPTIONS OF THE PORTFOLIO'S CAPITAL
SHARES.
(4) VALUE IS LESS THAN $0.01 PER SHARE.
+ RETURN SHOWN DOES NOT REFLECT THE DEDUCTIONS OF TAXES THAT A SHAREHOLDER
WOULD PAY ON FUND DISTRIBUTIONS OR THE REDEMPTION OF FUND SHARES. TOTAL
RETURN MAY HAVE BEEN LOWER HAD THE ADVISER NOT WAIVED ITS FEE AND/OR
REIMBURSED OTHER EXPENSES.
AMOUNTS DESIGNATED AS "--" ARE $0 OR HAVE BEEN ROUNDED TO $0.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
13
GALLERY TRUST MONDRIAN INTERNATIONAL EQUITY FUND
OCTOBER 31, 2016
--------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
1. ORGANIZATION
Gallery Trust (the "Trust"), is organized as a Delaware statutory trust under
an Agreement and Declaration of Trust dated August 25, 2015. The Trust is
registered under the Investment Company Act of 1940 (the "1940 Act"), as
amended, as an open-end investment management company with one fund. The
financial statements herein are those of the Mondrian International Equity Fund
(the "Fund"). The Fund is classified as a diversified investment company under
the 1940 Act. The investment objective of the Fund is to seek long-term total
return by investing at least 80% of its net assets, plus any borrowings for
investment purposes, in equity securities. Mondrian Investment Partners
Limited, a limited company organized under the laws of England and Wales in
1990, serves as the Fund's investment adviser ("Mondrian" or the "Adviser").
The Adviser makes investment decisions for the Fund and continuously reviews,
supervises and administers the investment program of the Fund, subject to the
supervision of, and policies established by, the Trustees of the Trust.
The Fund operated as The International Equity Portfolio, a series of Delaware
Pooled Trust (the "Predecessor Fund"), prior to the Fund's acquisition of the
assets and assumption of the liabilities of the Predecessor Fund (the
"Reorganization") on March 14, 2016 in a tax-free transaction. The Fund had no
operations prior to the Reorganization. The Predecessor Fund was managed by
Delaware Management Company, a series of Delaware Management Business Trust
(the "Predecessor Adviser"), and sub-advised by Mondrian Investment Partners
Limited. The Predecessor Fund had substantially similar investment objectives
and strategies as those of the Fund. The financial statements and financial
highlights reflect the financial information of the Predecessor Fund for
periods prior to March 14, 2016.
2. SIGNIFICANT ACCOUNTING POLICIES
The following are significant accounting policies, which are consistently
followed in the preparation of the financial statements of the Fund. The Fund
is an investment company that applies the accounting and reporting guidance
issued in Topic 946 by the U.S. Financial Accounting Standards Board ("FASB").
USE OF ESTIMATES -- The preparation of financial statements in conformity
with U.S. generally accepted accounting principles ("U.S. GAAP") requires
management to make estimates and assumptions that affect
14
GALLERY TRUST MONDRIAN INTERNATIONAL EQUITY FUND
OCTOBER 31, 2016
--------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
the fair value of assets, the reported amounts of assets and liabilities
and disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amount of increases and decreases in
net assets from operations during the reporting period. Actual results
could differ from those estimates and such differences could be material.
VALUATION OF INVESTMENTS -- Securities listed on a securities exchange,
market or automated quotation system for which quotations are readily
available (except for securities traded on NASDAQ ), including securities
traded over the counter, are valued at the last quoted sale price on an
exchange or market (foreign or domestic) on which they are traded on
valuation date (or at approximately 4:00 pm ET if a security's primary
exchange is normally open at that time), or, if there is no such reported
sale on the valuation date, at the most recent quoted bid price. For
securities traded on NASDAQ , the NASDAQ Official Closing Price will be
used. The prices for foreign securities will be reported in local currency
and converted to U.S. dollars using currency exchange rates.
Securities for which market prices are not "readily available" are valued
in accordance with fair value procedures established by the Fund's Board of
Trustees (the "Board"). The Fund's fair value procedures are implemented
through a fair value pricing committee (the "Committee") designated by the
Board. Some of the more common reasons that may necessitate that a security
be valued using fair value procedures include: the security's trading has
been halted or suspended; the security has been de-listed from a national
exchange; the security's primary trading market is temporarily closed at a
time when under normal conditions it would be open; or the security's
primary pricing source is not able or willing to provide a price. When a
security is valued in accordance with the fair value procedures, the
Committee will determine the value after taking into consideration relevant
information reasonably available to the Committee.
For securities that principally trade on a foreign market or exchange, a
significant gap in time can exist between the time of a particular
security's last trade and the time at which the Fund calculates its net
asset value. The closing prices of such securities may no longer reflect
their market value at the time the Fund calculates net asset value if an
event that could materially affect the value of those securities (a
"Significant
15
GALLERY TRUST MONDRIAN INTERNATIONAL EQUITY FUND
OCTOBER 31, 2016
--------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
Event") has occurred between the time of the security's last close and the
time that the Fund calculates net asset value. A Significant Event may
relate to a single issuer or to an entire market sector. If the Fund's
Adviser becomes aware of a Significant Event that has occurred with respect
to a security or group of securities after the closing of the exchange or
market on which the security or securities principally trade, but before
the time at which the Fund calculates net asset value, it may request that
a Committee meeting be called.
The Fund uses MarkIt Fair Value ("MarkIt") as a third party fair valuation
vendor. MarkIt provides a fair value for foreign securities held by the
Fund based on certain factors and methodologies (involving, generally,
tracking valuation correlations between the U.S. market and each non-U.S.
security) applied by MarkIt in the event that there is a movement in the
U.S. market that exceeds a specific threshold that has been established by
the Committee. The Committee has also established a "confidence interval"
which is used to determine the level of correlation between the value of a
foreign security and movements in the U.S. market before a particular
security is fair valued when the threshold is exceeded. In the event that
the threshold established by the Committee is exceeded on a specific day,
the Fund values the non-U.S. securities in their portfolios that exceed the
applicable "confidence interval" based upon the fair values provided by
MarkIt. In such event, it is not necessary to hold a Committee meeting. In
the event that the Adviser believes that the fair values provided by MarkIt
are not reliable, the Adviser contacts the Fund's Administrator and
requests that a meeting of the Committee be held.
If a local market in which the Fund owns securities is closed for one or
more days, the Fund shall value all securities held in the corresponding
currency based on the fair value prices provided by MarkIt using the
predetermined confidence interval discussed above.
In accordance with the authoritative guidance on fair value measurements
and disclosure under U.S. GAAP, the Fund discloses the fair value of its
investments in a hierarchy that prioritizes the inputs to valuation
techniques used to measure the fair value. The objective of a fair value
measurement is to determine the price that would be received to sell an
asset or paid to transfer a liability in an orderly transaction between
16
GALLERY TRUST MONDRIAN INTERNATIONAL EQUITY FUND
OCTOBER 31, 2016
--------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
market participants at the measurement date (an exit price). Accordingly,
the fair value hierarchy gives the highest priority to quoted prices
(unadjusted) in active markets for identical assets or liabilities (Level
1) and the lowest priority to unobservable inputs (Level 3). The three
levels of the fair value hierarchy are described below:
Level 1 -- Inputs are unadjusted, quoted prices in active markets for
identical assets or liabilities at the measurement date.
Level 2 -- Inputs other than quoted prices included in Level 1 that are
observable for the asset or liability, either directly or indirectly. Level
2 inputs include quoted prices for similar instruments in active markets,
and inputs other than quoted prices that are observable for the asset or
liability.
Level 3 -- Inputs are unobservable inputs for the asset or liability, and
include situations where there is little, if any, market activity for the
asset or liability.
Investments are classified within the level of the lowest significant input
considered in determining fair value. Investments classified within Level 3
whose fair value measurement considers several inputs may include Level 1
or Level 2 inputs as components of the overall fair value measurement.
Fair value measurement classifications are summarized in the Fund's
Schedule of Investments.
For the year ended October 31, 2016, there have been no significant changes
to the Fund's fair valuation methodology.
FEDERAL INCOME TAXES -- It is the Fund's intention to continue to qualify
as a regulated investment company for Federal income tax purposes by
complying with the appropriate provisions of Subchapter M of the Internal
Revenue Code of 1986. Accordingly, no provision for Federal income taxes
has been made in the financial statements.
The Fund evaluates tax positions taken or expected to be taken in the
course of preparing the Fund's tax returns to determine whether it is
"more-likely-than-not" (i.e., greater than 50-percent) that each tax
position will be sustained upon examination by a taxing authority based
17
GALLERY TRUST MONDRIAN INTERNATIONAL EQUITY FUND
OCTOBER 31, 2016
--------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
on the technical merits of the position. Tax positions not deemed to meet
the more-likely-than-not threshold are recorded as a tax benefit or expense
in the current year. The Fund did not record any tax provision in the
current period. However, management's conclusions regarding tax positions
taken may be subject to review and adjustment at a later date based on
factors including, but not limited to, examination by tax authorities
(i.e., the last three tax year ends, as applicable), on-going analysis of
and changes to tax laws, regulations and interpretations thereof.
As of and during the year ended October 31, 2016, the Fund did not have a
liability for any unrecognized tax benefits. The Fund recognizes interest
and penalties, if any, related to unrecognized tax benefits as income tax
expense in the Statement of Operations. During the year ended October 31,
2016, the Fund did not incur any interest or penalties.
SECURITY TRANSACTIONS, DIVIDEND AND INVESTMENT INCOME -- Security
transactions are accounted for on trade date basis for financial reporting
purposes. Costs used in determining realized gains and losses on the sale
of investment securities are based on the specific identification method.
Dividend income is recognized on the ex-dividend date. Certain dividends
from foreign securities will be recorded as soon as the Fund is informed of
the dividend, net of withholding taxes, if such information is obtained
subsequent to the ex-dividend date. Interest income is recognized on an
accrual basis and includes the amortization of premiums and the accretion
of discount. Amortization and accretion are calculated using the effective
interest method over the holding period of the investment.
FOREIGN CURRENCY TRANSLATION -- The books and records of the Fund are
maintained in U.S. dollars. Investment securities and other assets and
liabilities denominated in a foreign currency are translated into U.S.
dollars on the date of valuation. The Fund does not isolate that portion of
realized or unrealized gains and losses resulting from changes in the
foreign exchange rate from fluctuations arising from changes in the market
prices of the securities. These gains and losses are included in net
realized and unrealized gains and losses on investments on the Statement of
Operations.
18
GALLERY TRUST MONDRIAN INTERNATIONAL EQUITY FUND
OCTOBER 31, 2016
--------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
Net realized and unrealized gains and losses on foreign currency
transactions represent net foreign exchange gains or losses from foreign
currency exchange contracts, disposition of foreign currencies, currency
gains or losses realized between trade and settlement dates on securities
transactions and the difference between the amount of the investment income
and foreign withholding taxes recorded on the Fund's books and the U.S.
dollar equivalent of the amounts actually received or paid.
FORWARD FOREIGN CURRENCY CONTRACTS -- The Fund may enter into forward
foreign currency contracts as hedges against either specific transactions,
fund positions or anticipated fund positions. The Fund may also engage in
currency transactions to enhance the Fund's returns. All commitments are
"marked-to-market" daily at the applicable foreign exchange rate, and any
resulting unrealized gains or losses are recorded currently. The Fund
realizes gains and losses at the time forward contracts are extinguished.
Unrealized gains or losses on outstanding positions in forward foreign
currency contracts held at the close of the period are recognized as
ordinary income or loss for Federal income tax purposes. The Fund could be
exposed to risk if the counterparties to the contracts are unable to meet
the terms of the contract and from unanticipated movements in the value of
a foreign currency relative to the U.S. dollar. Finally, the risk exists
that losses could exceed amounts disclosed on the Statements of Assets and
Liabilities. There were no open forward foreign currency contracts as of
October 31, 2016.
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS -- The Fund distributes its net
investment income, and makes distributions from its net realized capital
gains, if any, at least annually. All distributions are recorded on
ex-dividend date.
REDEMPTION FEES -- The Fund retains a redemption fee of 2.00% on
redemptions of capital shares held for less than thirty days. For the years
ended October 31, 2016, and October 31, 2015, the Fund retained redemption
fees of $542 and $0, respectively. Such fees are retained by the Fund for
the benefit of the remaining shareholders and will be recorded as additions
to fund capital.
19
GALLERY TRUST MONDRIAN INTERNATIONAL EQUITY FUND
OCTOBER 31, 2016
--------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
EXPENSES -- Expenses that are directly related to the Fund are charged to
the Fund. Other operating expenses of the Trust are prorated to the funds
based on the number of funds and/or relative daily net assets.
3. TRANSACTIONS WITH AFFILIATES
Effective March 14, 2016, certain officers of the Trust are also employees of
SEI Investments Global Funds Services (the "Administrator"), a wholly owned
subsidiary of SEI Investments Company, and/or SEI Investments Distribution Co.
(the "Distributor"). Such officers are paid no fees by the Trust, other than
the Chief Compliance Officer ("CCO") as described below, for serving as
officers of the Trust.
A portion of the services provided by the CCO and his staff, who are employees
of the Administrator, are paid for by the Trust as incurred. The services
include regulatory oversight of the Trust's advisors and service providers, as
required by SEC regulations. The CCO's services and fees have been approved by
and are reviewed by the Board.
4. ADMINISTRATION, CUSTODIAN, TRANSFER AGENT AND DISTRIBUTION AGREEMENTS
Effective March 14, 2016, the Fund and the Administrator are parties to an
Administration Agreement under which the Administrator provides administrative
services to the Fund. For these services, the Administrator is paid an asset
based fee, which will vary depending on the number of share classes and the
average daily net assets of the Fund. For the period from March 14, 2016 to
October 31, 2016, the Fund paid $256,740 for these services. Prior to March 14,
2016, the Predecessor Fund entered into an administrative services agreement
with Delaware Investments Fund Services Company ("DIFSC"), pursuant to which
the Predecessor Fund agreed to pay DIFSC for certain administrative costs
incurred in providing accounting services to the Predecessor Fund. For the
period from November 1, 2015 to March 13, 2016, the Predecessor Fund paid DIFSC
$40,304 for these services. Expenses incurred under the agreements are shown in
the Statement of Operations as "Accounting and administration fees".
Brown Brothers Harriman & Co., (the "Custodian") serves as the Fund's Custodian
pursuant to a custody agreement. Atlantic Shareholder Services, LLC (the
"Transfer Agent") serves as the Fund's Transfer Agent pursuant to a transfer
agency agreement.
20
GALLERY TRUST MONDRIAN INTERNATIONAL EQUITY FUND
OCTOBER 31, 2016
--------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
5. INVESTMENT ADVISORY AGREEMENT
Effective March 14, 2016, under the terms of an investment advisory agreement,
the Adviser provides investment advisory services to the Fund. The Adviser is
entitled to a fee, which is calculated daily and paid monthly, at an annual
rate of 0.70% of the Fund's average daily net assets. Prior to March 14, 2016,
Delaware Management Company ("DMC") was paid an Advisory fee at an annual rate
of 0.75% of the Fund's average daily net assets, and DMC paid Mondrian a
sub-advisory fee at an annual rate of 0.36% of the Fund's average daily net
assets.
Effective March 14, 2016, the Adviser has contractually agreed to reduce its
fees and/or reimburse expenses to the extent necessary to keep total annual
Fund operating expenses (excluding interest, taxes, brokerage commissions,
acquired fund fees and expenses, and extraordinary expenses, collectively
"excluded expenses") from exceeding 0.79% of the Fund's average daily net
assets until February 28, 2019 (the "Expense Limitation"). This agreement may
be terminated: (i) by the Board of Trustees of the Fund for any reason at any
time, or (ii) by the Adviser, upon ninety (90) days' prior written notice to
the Trust, effective as of the close of business on February 28, 2019.
6. INVESTMENT TRANSACTIONS
For the period ended October 31, 2016, the Fund made purchases of $149,609,752
and sales of $68,469,536 in investment securities other than long-term U.S.
Government and short-term securities. There were no purchases or sales of
long-term U.S. Government securities.
7. FEDERAL TAX INFORMATION
The amount and character of income and capital gain distributions to be paid,
if any, are determined in accordance with Federal income tax regulations, which
may differ from U.S. GAAP. As a result, net investment income/(loss) and net
realized gain/(loss) on investment transactions for a reporting period may
differ significantly from distributions during such period. These book/tax
differences may be temporary or permanent. To the extent these differences are
permanent in nature, they are charged or credited to undistributed net
investment income/(loss), accumulated net realized gain/(loss) or paid-in
capital, as appropriate, in the period that the differences arise.
21
GALLERY TRUST MONDRIAN INTERNATIONAL EQUITY FUND
OCTOBER 31, 2016
--------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
The following permanent differences primarily attributable to REIT adjustments
and foreign exchange gain/loss have been reclassified to/from the following
accounts:
UNDISTRIBUTED NET ACCUMULATED NET
INVESTMENT LOSS REALIZED GAIN
----------------- ---------------
$(180,870) $180,870
These reclassifications have no impact on net assets or net asset value per
share.
The character of distributions made during the year from net investment income
or net realized gains may differ from their ultimate characterization for
federal income tax purposes. Also, due to the timing of dividend distributions,
the fiscal year in which amounts are distributed may differ from the year that
the income or realized gains (losses) were recorded by the Funds. Income
dividends and capital gain distributions are determined in accordance with
federal income tax regulations, which may differ from U.S. GAAP. These
differences are primarily due to differing treatments for forwards, foreign
currency transactions, wash sale loss deferrals on investments in REIT's and
investments in Passive Foreign Investment Companies. Distributions during the
years ended October 31, 2016 and October 31, 2015 were as follows:
ORDINARY LONG-TERM
INCOME CAPITAL GAIN TOTAL
-------- ------------ -----------
2016 $ 9,309,855 $ -- $ 9,309,855
2015 19,976,817 -- 19,976,817
As of October 31, 2016, the components of Accumulated Losses on a tax basis
were as follows:
Undistributed Ordinary Income $ 9,887,284
Capital loss carryforwards (127,380,598)
Unrealized Depreciation (17,330,681)
Other temporary differences 3,156
-------------
Total Accumulated Losses $(134,820,839)
=============
22
GALLERY TRUST MONDRIAN INTERNATIONAL EQUITY FUND
OCTOBER 31, 2016
--------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
For Federal income tax purposes, capital losses incurred in taxable years
beginning before December 22, 2010 may be carried forward for a maximum period
of eight years and applied against future net capital gains. Under the
Regulated Investment Company Modernization Act of 2010, the Fund is permitted
to carry forward capital losses incurred in taxable years beginning after
December 22, 2010 for an unlimited period. However, any losses incurred during
those future taxable years will be required to be utilized prior to the losses
incurred in pre-enactment taxable years. As a result of this ordering rule,
pre-enactment capital loss carryforwards may be more likely to expire unused.
Additionally, post-enactment capital losses that are carried forward will
retain their character as either short-term or long-term capital losses rather
than being considered all short-term as under previous law. The capital loss
carryforwards are noted below:
PRE-ENACTMENT POST ENACTMENT
------------- --------------
TOTAL CAPITAL LOSS
EXPIRING 2017 EXPIRING 2018 LONG-TERM LOSS CARRYFORWARDS
------------- ------------- -------------- ------------------
$111,280,174 $13,859,481 $2,240,943 $127,380,598
During the year ended October 31, 2016, the Fund did not utilize capital loss
carryforwards to offset capital gains.
The Federal tax cost and aggregate gross unrealized appreciation and
depreciation for the investments held by the Fund at October 31, 2016, were as
follows:
AGGREGATE AGGREGATE
GROSS GROSS
FEDERAL TAX UNREALIZED UNREALIZED NET UNREALIZED
COST APPRECIATION DEPRECIATION DEPRECIATION
------------ ------------ ------------- --------------
$431,834,040 $33,549,389 $(50,782,590) $(17,233,201)
23
GALLERY TRUST MONDRIAN INTERNATIONAL EQUITY FUND
OCTOBER 31, 2016
--------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
8. SHARE TRANSACTIONS
The share transactions are shown below:
YEAR ENDED YEAR ENDED
OCTOBER 31, OCTOBER 31,
2016+ 2015
------------ ----------
Shares transactions:
Issued ................................... 9,650,180 5,191,868
Reinvestment of dividends ................ 397,218 970,821
Redeemed ................................. (3,997,919) (10,517,899)
----------- ------------
Net increase/(decrease) in shares
outstanding ............................ 6,049,479 (4,355,210)
========== ============
+ ON MARCH 14, 2016, THE INTERNATIONAL EQUITY PORTFOLIO, A SERIES OF
DELAWARE POOLED TRUST (THE "PREDECESSOR FUND") WAS REORGANIZED INTO THE
MONDRIAN INTERNATIONAL EQUITY FUND. INFORMATION PRESENTED PRIOR TO MARCH
14, 2016 IS THAT OF THE PREDECESSOR FUND. SEE NOTE 1 IN NOTES TO FINANCIAL
STATEMENTS.
9. RISKS ASSOCIATED WITH FINANCIAL INSTRUMENTS
As with all mutual funds, a shareholder of the Fund is subject to the risk that
his or her investment could lose money. The Fund is subject to the principal
risks noted below, any of which may adversely affect the Fund's net asset value
and ability to meet its investment objective.
EQUITY RISK
Since it purchases equity securities, the Fund is subject to the risk that
stock prices will fall over short or extended periods of time. Historically,
the equity markets have moved in cycles, and the value of the Fund's equity
securities may fluctuate drastically from day to day. Individual companies may
report poor results or be negatively affected by industry and/or economic
trends and developments. The prices of securities issued by such companies may
suffer a decline in response. These factors contribute to price volatility,
which is the principal risk of investing in the Fund.
FOREIGN COMPANY RISK
Investing in foreign companies, including direct investments and investments
through depositary receipts, poses additional risks since political and
economic events unique to a country or region will affect those markets and
their issuers. These risks will not necessarily affect the U.S. economy or
similar issuers located in the U.S. Securities of foreign companies
24
GALLERY TRUST MONDRIAN INTERNATIONAL EQUITY FUND
OCTOBER 31, 2016
--------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
may not be registered with the SEC and foreign companies are generally not
subject to the regulatory controls imposed on U.S. issuers and, as a
consequence, there is generally less publically available information about
foreign securities than is available about domestic securities. Income from
foreign securities owned by the Fund may be reduced by a withholding tax at the
source, which tax would reduce income received from the securities comprising
the portfolio. Foreign securities may also be more difficult to value than
securities of U.S. issuers. While depositary receipts provide an alternative to
directly purchasing the underlying foreign securities in their respective
national markets and currencies, investments in depositary receipts continue to
be subject to many of the risks associated with investing directly in foreign
securities.
EMERGING MARKETS SECURITIES RISK
The Fund's investments in emerging markets securities are considered
speculative and subject to heightened risks in addition to the general risks of
investing in foreign securities. Unlike more established markets, emerging
markets may have governments that are less stable, markets that are less liquid
and economies that are less developed. In addition, the securities markets of
emerging market countries may consist of companies with smaller market
capitalizations and may suffer periods of relative illiquidity; significant
price volatility; restrictions on foreign investment; and possible restrictions
on repatriation of investment income and capital. Furthermore, foreign
investors may be required to register the proceeds of sales, and future
economic or political crises could lead to price controls, forced mergers,
expropriation or confiscatory taxation, seizure, nationalization or creation of
government monopolies.
SUPRANATIONAL ENTITIES RISK
Government members, or "stockholders," usually make initial capital
contributions to a supranational entity and in many cases are committed to make
additional capital contributions if the supranational entity is unable to repay
its borrowings. There is no guarantee, however, that one or more stockholders
of the supranational entity will continue to make any necessary additional
capital contributions. If such contributions are not made, the entity may be
unable to pay interest or repay principal on its debt securities, and the Fund
may lose money on such investments.
25
GALLERY TRUST MONDRIAN INTERNATIONAL EQUITY FUND
OCTOBER 31, 2016
--------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
FOREIGN CURRENCY RISK
As a result of the Fund's investments in securities denominated in, and/ or
receiving revenues in, foreign currencies, the Fund will be subject to currency
risk. Currency risk is the risk that foreign currencies will decline in value
relative to the U.S. dollar or, in the case of hedging positions, that the U.S.
dollar will decline in value relative to the currency hedged. In either event,
the dollar value of an investment in the Fund would be adversely affected.
DERIVATIVES RISK
The Fund's use of forward contracts is subject to market risk, correlation
risk, credit risk, valuation risk and liquidity risk. Market risk is the risk
that the market value of an investment may move up and down, sometimes rapidly
and unpredictably. Correlation risk is the risk that changes in the value of
the derivative may not correlate perfectly or at all with the underlying asset,
rate or index. Credit risk is the risk that the counterparty to a derivative
contract will default or otherwise become unable to honor a financial
obligation. Valuation risk is the risk that the derivative may be difficult to
value. Liquidity risk is described below. The Fund's use of forwards is also
subject to leverage risk and hedging risk. Leverage risk is the risk that the
use of leverage may amplify the effects of market volatility on the Fund's
share price and may also cause the Fund to liquidate portfolio positions when
it would not be advantageous to do so in order to satisfy its obligations.
Hedging risk is the risk that derivatives instruments used for hedging purposes
may also limit any potential gain that may result from the increase in value of
the hedged asset. To the extent that the Fund engages in hedging strategies,
there can be no assurance that such strategy will be effective or that there
will be a hedge in place at any given time. Each of these risks could cause the
Fund to lose more than the principal amount invested in a derivative
instrument.
LIQUIDITY RISK
Certain securities may be difficult or impossible to sell at the time and the
price that the Fund would like. The Fund may have to lower the price, sell
other securities instead or forgo an investment opportunity, any of which could
have a negative effect on Fund management or performance.
26
GALLERY TRUST MONDRIAN INTERNATIONAL EQUITY FUND
OCTOBER 31, 2016
--------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
LARGE PURCHASE AND REDEMPTION RISK
Large purchases or redemptions of the Fund's shares may force the Fund to
purchase or sell securities at times when it would not otherwise do so, and may
cause the Fund's portfolio turnover rate and transaction costs to rise, which
may negatively affect the Fund's performance and have adverse tax consequences
for Fund shareholders.
10. INDEMNIFICATIONS
In the normal course of business, the Fund enters into contracts that provide
general indemnifications. The Fund's maximum exposure under these arrangements
is dependent on future claims that may be made against the Fund and, therefore,
cannot be established; however, based on experience, the risk of loss from such
claims is considered remote.
11. IN-KIND REDEMPTION
During the year ended October 31, 2016, the Fund had no in-kind redemptions.
During the year ended October 31, 2015, the Predecessor Fund satisfied
withdrawal requests with transfers of securities of $67,371,660, resulting in
net realized gains of $5,334,630.
12. OTHER
At October 31, 2016, 55% of total shares outstanding were held by three record
shareholders each owning 10% or greater of the aggregate total shares
outstanding. Some of these shareholders were comprised of omnibus accounts that
were held on behalf of various shareholders.
13. REGULATORY MATTERS
In October 2016, the Securities and Exchange Commission (the "SEC") released
its Final Rule on Investment Company Reporting Modernization (the "Rule"). The
Rule which introduces two new regulatory reporting forms for investment
companies -- Form N-PORT and Form N-CEN -- also contains amendments to
Regulation S-X which impact financial statement presentation, particularly the
presentation of derivative investments. Although still evaluating the impact of
the Rule, management believes that many of the Regulation S-X amendments are
consistent with the Fund's
27
GALLERY TRUST MONDRIAN INTERNATIONAL EQUITY FUND
OCTOBER 31, 2016
--------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONCLUDED)
current financial statement presentation and expects that the Fund will be able
to comply with the Rule's Regulation S-X amendments by the August 1, 2017
compliance date.
14. SUBSEQUENT EVENTS
The Fund has evaluated the need for disclosures and/or adjustments resulting
from subsequent events through the date the financials were issued. Based on
this evaluation, no disclosures and/or adjustments were required to the
financial statements as of October 31, 2016.
28
GALLERY TRUST MONDRIAN INTERNATIONAL EQUITY FUND
OCTOBER 31, 2016
--------------------------------------------------------------------------------
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Trustees of
Gallery Trust and the Shareholders of
Mondrian International Equity Fund:
In our opinion, the accompanying statement of assets and liabilities, including
the schedule of investments, 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 Mondrian International Equity Fund
(formerly The International Equity Portfolio, a series of Delaware Pooled Trust)
(constituting Gallery Trust, hereafter referred to as the "Fund") at October 31,
2016, the results of its operations for the year then ended, the changes in its
net assets for each of the two years in the period then ended and the financial
highlights for each of the five years in the period then ended, 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 the standards of the Public Company Accounting Oversight Board (United
States). Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements 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 as of October 31, 2016 by
correspondence with the custodian and brokers, provide a reasonable basis for
our opinion.
PricewaterhouseCoopers LLP
Philadelphia, Pennsylvania
December 22, 2016
29
GALLERY TRUST MONDRIAN INTERNATIONAL EQUITY FUND
OCTOBER 31, 2016 (UNAUDITED)
--------------------------------------------------------------------------------
DISCLOSURE OF FUND EXPENSES
All mutual funds have operating expenses. As a shareholder of a mutual fund,
your investment is affected by these ongoing costs, which include (among
others) costs for fund management, administrative services, and shareholder
reports like this one. It is important for you to understand the impact of
these costs on your investment returns.
Operating expenses such as these are deducted from the mutual fund's gross
income and directly reduce its final investment return. These expenses are
expressed as a percentage of the mutual fund's average net assets; this
percentage is known as the mutual fund's expense ratio.
The following examples use the expense ratio and are intended to help you
understand the ongoing costs (in dollars) of investing in your Fund and to
compare these costs with those of other mutual funds. The examples are based on
an investment of $1,000 made at the beginning of the period shown and held for
the entire period from May 1, 2016 to October 31, 2016.
The table on the next page illustrates your Fund's costs in two ways:
ACTUAL FUND RETURN. This section helps you to estimate the actual expenses
after fee waivers that your Fund incurred over the period. The "Expenses Paid
During Period" column shows the actual dollar expense cost incurred by a $1,000
investment in the Fund, and the "Ending Account Value" number is derived from
deducting that expense cost from the Fund's gross investment return.
You can use this information, together with the actual amount you invested in
the Fund, to estimate the expenses you paid over that period. Simply divide
your ending starting account value by $1,000 to arrive at a ratio (for example,
an $8,600 account value divided by $1,000 = 8.6), then multiply that ratio by
the number shown for your Fund under "Expenses Paid During Period."
HYPOTHETICAL 5% RETURN. This section helps you compare your Fund's costs with
those of other mutual funds. It assumes that the Fund had an annual 5% return
before expenses during the year, but that the expense ratio (Column 3) for the
period is unchanged. This example is useful in making comparisons because the
Securities and Exchange Commission requires all mutual funds to make this 5%
calculation. You can assess your Fund's comparative cost by comparing the
hypothetical result for your Fund in the "Expenses Paid During Period" column
with those that appear in the same charts in the shareholder reports for other
mutual funds.
30
GALLERY TRUST MONDRIAN INTERNATIONAL EQUITY FUND
OCTOBER 31, 2016 (UNAUDITED)
--------------------------------------------------------------------------------
DISCLOSURE OF FUND EXPENSES (CONCLUDED)
NOTE: Because the return is set at 5% for comparison purposes -- NOT your
Fund's actual return -- the account values shown may not apply to your specific
investment.
BEGINNING ENDING
ACCOUNT ACCOUNT ANNUALIZED EXPENSES
VALUE VALUE EXPENSE PAID DURING
5/1/16 10/31/16 RATIOS PERIOD*
--------------------------------------------------------------------------------
ACTUAL FUND RETURN $1,000.00 $ 999.30 0.79% $3.97
HYPOTHETICAL 5% RETURN $1,000.00 $1,021.17 0.79% $4.01
* EXPENSES ARE EQUAL TO THE FUND'S ANNUALIZED EXPENSE RATIO MULTIPLIED BY
THE AVERAGE ACCOUNT VALUE OVER THE PERIOD, MULTIPLIED BY 184/366 (TO
REFLECT THE ONE-HALF YEAR PERIOD.)
31
GALLERY TRUST MONDRIAN INTERNATIONAL EQUITY FUND
OCTOBER 31, 2016 (UNAUDITED)
--------------------------------------------------------------------------------
TRUSTEES AND OFFICERS OF GALLERY TRUST
Set forth below are the names, years of birth, positions with the Trust, length
of term of office, and the principal occupations for the last five years of
each of the persons currently serving as Trustees and Officers of the Trust.
Unless otherwise noted, the business address of each Trustee is SEI Investments
Company, 1 Freedom Valley Drive, Oaks, Pennsylvania 19456. Trustees who are
deemed not to be "interested persons" of the Trust are referred to as
"Independent Trustees." Mr. Doran is a Trustee who may be deemed to be
"interested" persons of the Trust as that term is defined in the 1940 Act by
virtue of their affiliation with the Trust's Distributor. The Trust's Statement
of Additional Information ("SAI") includes additional information about the
Trustees and Officers. The SAI may be obtained without charge by calling
1-888-832-4386.
The following chart lists Trustees and Officers as of October 31, 2016.
-----------------------------------------------------------------------------------------------------------------
POSITION
WITH TRUST PRINCIPAL
NAME AND LENGTH OCCUPATIONS
AND YEAR OF TIME IN THE PAST OTHER DIRECTORSHIPS
OF BIRTH SERVED(1) FIVE YEARS HELD IN THE PAST FIVE YEARS(2)
-----------------------------------------------------------------------------------------------------------------
INTERESTED TRUSTEE (3,4)
-----------------------------------------------------------------------------------------------------------------
WILLIAM M. Chairman of Self-Employed Current Directorships: Trustee of The Advisors'
DORAN the Board of Consultant since Inner Circle Fund, The Advisors' Inner Circle Fund
(Born: 1940) Trustees 2003. Partner at II, The Advisors' Inner Circle Fund III, Bishop Street
(Since 2015) Morgan, Lewis & Funds, The KP Funds, Winton Series Trust, Winton
Bockius LLP (law Diversified Opportunities Fund (closed-end
firm) from 1976 investment company), SEI Daily Income Trust, SEI
to 2003. Counsel Institutional International Trust, SEI Institutional
to the Trust, SEI Investments Trust, SEI Institutional Managed
Investments, Trust, SEI Asset Allocation Trust, SEI Tax Exempt
SIMC, the Trust, Adviser Managed Trust, New Covenant
Administrator Funds, SEI Insurance Products Trust and SEI
and the Catholic Values Trust. Director of SEI Invest-
Distributor. ments (Europe), Limited, SEI Investments--Global
Funds Services, Limited, SEI Investments Global,
Limited, SEI Investments (Asia), Limited, SEI
Global Nominee Ltd., SEI Investments -- Unit Trust
Management (UK) Limited and SEI Investments
Co. Director of the Distributor since 2003.
Former Directorships: Director of SEI Alpha Strat-
egy Portfolios, LP to 2013. Trustee of O'Connor
EQUUS (closed-end investment company) to
2016. Trustee of SEI Liquid Asset Trust to 2016.
-----------------------------------------------------------------------------------------------------------------
(1) EACH TRUSTEE SHALL HOLD OFFICE DURING THE LIFETIME OF THIS TRUST UNTIL THE
ELECTION AND QUALIFICATION OF HIS OR HER SUCCESSOR, OR UNTIL HE OR SHE
DIES, RESIGNS, OR IS REMOVED IN ACCORDANCE WITH THE DECLARATION OF TRUST.
(2) DIRECTORSHIPS OF COMPANIES REQUIRED TO REPORT TO THE SECURITIES AND
EXCHANGE COMMISSION UNDER THE SECURITIES EXCHANGE ACT OF1934 (I.E., "PUBLIC
COMPANIES") OR OTHER INVESTMENT COMPANIES UNDER THE 1940 ACT.
(3) TRUSTEES OVERSEE 1 FUND IN THE TRUST.
(4) MR. DORAN MAY BE DEEMED TO BE AN "INTERESTED" PERSON OF THE FUND AS THAT
TERM IS DEFINED IN THE 1940 ACT BY VIRTUE OF HIS AFFILIATION WITH THE
DISTRIBUTOR AND/OR ITS AFFILIATES.
32
GALLERY TRUST MONDRIAN INTERNATIONAL EQUITY FUND
OCTOBER 31, 2016 (UNAUDITED)
-----------------------------------------------------------------------------------------------------------------
TRUSTEES AND OFFICERS OF GALLERY TRUST (CONTINUED)
-----------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------
POSITION
WITH TRUST PRINCIPAL
NAME AND LENGTH OCCUPATIONS
AND YEAR OF TIME IN THE PAST OTHER DIRECTORSHIPS
OF BIRTH SERVED(1) FIVE YEARS HELD IN THE PAST FIVE YEARS(2)
-----------------------------------------------------------------------------------------------------------------
INDEPENDENT TRUSTEES(3)
-----------------------------------------------------------------------------------------------------------------
JON C. Trustee Retired since Current Directorships: Trustee of City
HUNT (Since 2015) 2013. Consultant National Rochdale Funds, The Advisors'
(Born: 1951) to Management, Inner Circle Fund III, Winton Series Trust
Convergent Capital and Winton Diversified Opportunities Fund
Management, LLC (closed-end investment company). Member
("CCM") from 2012 of Independent Committee of Nuveen Com-
to 2013. Managing modities Asset Management.
Director and Chief
Operating Officer, Former Directorship: Trustee of O'Connor
CCM from 1998 to EQUUS (closed-end investment company)
2012. to 2016.
-----------------------------------------------------------------------------------------------------------------
THOMAS P. Trustee Retired since 2013. Current Directorships: Trustee of AXA
LEMKE (Since 2015) Executive Vice Premier VIP Trust, The Advisors' Inner
(Born: 1954) President and Circle Fund III, JP Morgan Active ETFs,
General Counsel, Winton Series Trust and Winton Diversified
Legg Mason, Inc. Opportunities Fund (closed-end investment
from 2005 to 2013. company).
Former Directorships: Director of Victory
Funds to 2015. Trustee of O'Connor EQUUS
(closed-end investment company) to 2016.
-----------------------------------------------------------------------------------------------------------------
RANDALL S. Trustee Co-Founder and Current Directorships: Trustee of The
YANKER (Since 2015) Senior Partner, Advisors' Inner Circle Fund III, Winton Series
(Born: 1960) Alternative Asset Trust and Winton Diversified Opportunities
Managers, L.P. since Fund (closed-end investment company).
2004. Independent Non-Executive Director of HFA
Holdings Limited.
Former Directorship: Trustee of O'Connor
EQUUS (closed-end investment company)
to 2016.
-----------------------------------------------------------------------------------------------------------------
JAY C. Trustee Self-Employed Current Directorships: Trustee of City
NADEL (Since 2016) Consultant since National Rochdale Funds, Winton Series
(Born: 1958) 2004. Trust, Winton Diversified Opportunities Trust
(closed-end investment company). Director
of Lapolla Industries, Inc.
Former Directorships: Trustee of Roachdale
Investment Trust to 2013.
-----------------------------------------------------------------------------------------------------------------
(1) EACH TRUSTEE SHALL HOLD OFFICE DURING THE LIFETIME OF THIS TRUST UNTIL THE
ELECTION AND QUALIFICATION OF HIS OR HER SUCCESSOR, OR UNTIL HE OR SHE
DIES, RESIGNS, OR IS REMOVED IN ACCORDANCE WITH THE DECLARATION OF TRUST.
(2) DIRECTORSHIPS OF COMPANIES REQUIRED TO REPORT TO THE SECURITIES AND
EXCHANGE COMMISSION UNDER THE SECURITIES EXCHANGE ACT OF 1934 (I.E.,
"PUBLIC COMPANIES") OR OTHER INVESTMENT COMPANIES UNDER THE 1940 ACT.
(3) TRUSTEES OVERSEE 1 FUND IN THE TRUST.
33
GALLERY TRUST MONDRIAN INTERNATIONAL EQUITY FUND
OCTOBER 31, 2016 (UNAUDITED)
-----------------------------------------------------------------------------------------------------------
TRUSTEES AND OFFICERS OF GALLERY TRUST (CONCLUDED)
-----------------------------------------------------------------------------------------------------------
POSITION(S) HELD WITH
NAME AND THE TRUST AND LENGTH
YEAR OF BIRTH OF TIME SERVED PRINCIPAL OCCUPATION IN THE PAST FIVE YEARS
-----------------------------------------------------------------------------------------------------------
OFFICERS
-----------------------------------------------------------------------------------------------------------
MICHAEL President Director of Client Service, SEI Investments Company, since
BEATTIE (since 2015) 2004.
(Born: 1965)
-----------------------------------------------------------------------------------------------------------
ROBERT A. Vice Chairman SEI employee 1974 to present; currently performs various
NESHER (since 2015) services on behalf of SEI Investments for which Mr. Nesher
(Born: 1946) is compensated.
-----------------------------------------------------------------------------------------------------------
STEPHEN Treasurer, Controller Director, SEI Investments, Fund Accounting since December
CONNORS and Chief Financial 2014. Audit Manager, Deloitte & Touche LLP, from
(Born: 1984) Officer 2011 to 2014. Audit Supervisor, BBD, LLP (formerly Briggs,
(since 2015) Bunting & Dougherty, LLP), from 2007 to 2011.
-----------------------------------------------------------------------------------------------------------
DIANNE M. Vice President Counsel at SEI Investments since 2010. Associate at Morgan,
DESCOTEAUX and Secretary Lewis & Bockius LLP from 2006 to 2010.
(Born: 1977) (since 2015)
-----------------------------------------------------------------------------------------------------------
RUSSELL Chief Compliance Chief Compliance Officer of SEI Institutional Managed
EMERY Officer Trust, SEI Asset Allocation Trust, SEI Institutional International
(Born: 1962) (since 2015) Trust, SEI Institutional Investments Trust, SEI Daily
Income Trust, SEI Tax Exempt Trust, The Advisors' Inner
Circle Fund, The Advisors' Inner Circle Fund II and Bishop
Street Funds since 2006; SEI Structured Credit Fund, LP
since 2007; SEI Adviser Managed Trust since 2010; SEI
Insurance Products Trust and The KP Funds since 2013;
The Advisors' Inner Circle Fund III, Winton Series Trust and
Winton Diversified Opportunities Fund since 2014; SEI
Catholic Values Trust since 2015. Chief Compliance Officer
of SEI Alpha Strategy Portfolios, LP from 2007 to 2013; SEI
Liquid Asset Trust from 2006 to 2016 and O'Connor EQUUS
(closed-end investment company) from 2014 to 2016.
-----------------------------------------------------------------------------------------------------------
LISA Vice President and Counsel at SEI Investments since 2012. Associate Counsel
WHITTAKER Assistant Secretary and Compliance Officer at The Glenmede Trust Company,
(Born: 1978) (since 2015) N.A. from 2011 to 2012. Associate at Drinker Biddle & Reath
LLP from 2006 to 2011.
-----------------------------------------------------------------------------------------------------------
JOHN Y. KIM Vice President and Attorney, SEI Investment Company (2014-present). Associate,
(Born: 1981) Assistant Secretary Stradley Ronon Stevens & Young, LLP (2009-2014).
(since 2015)
-----------------------------------------------------------------------------------------------------------
BRIDGET E. Anti-Money Anti-Money Laundering Compliance Officer and Privacy
SUDALL Laundering Officer (since 2015), Senior Associate and AML Officer,
(Born: 1980) Compliance Officer Morgan Stanley Alternative Investment Partners, April
and Privacy Officer 2011 to March 2015. Investor Services Team Lead, Morgan
(since 2015) Stanley Alternative Investment Partners, July 2007 to
April 2011.
-----------------------------------------------------------------------------------------------------------
34
GALLERY TRUST MONDRIAN INTERNATIONAL EQUITY FUND
OCTOBER 31, 2016 (UNAUDITED)
--------------------------------------------------------------------------------
NOTICE TO SHAREHOLDERS
For shareholders that do not have an October 31, 2016 tax year end, this notice
is for informational purposes only. For shareholders with an October 31, 2016
tax year end, please consult your tax advisor as to the pertinence of this
notice. For the fiscal year ended October 31, 2016, the Fund is designating the
following items with regard to distributions paid during the year.
FOREIGN INVESTORS
QUALIFYING -----------------------------
FOR
LONG-TERM CORPORATE SHORT-TERM
ORDINARY CAPITAL DIVIDENDS QUALIFYING U.S. INTEREST CAPITAL FOREIGN
INCOME GAIN TOTAL RECEIVED DIVIDEND GOVERNMENT RELATED GAIN TAX
DISTRIBUTIONS DISTRIBUTIONS DISTRIBUTIONS DEDUCTION(1) INCOME(2) INTEREST(3) DIVIDENDS(4) DIVIDENDS(5) CREDIT
------------------------------------------------------------------------------------------------------------------------------------
100.00% 0.00% 100.00% 0.00% 100.00% 0.00% 0.00% 0.00% 6.72%
(1) QUALIFYING DIVIDENDS REPRESENT DIVIDENDS WHICH QUALIFY FOR THE CORPORATE
DIVIDENDS RECEIVED DEDUCTION AND IS REFLECTED AS A PERCENTAGE OF ORDINARY
INCOME DISTRIBUTIONS (THE TOTAL OF SHORT-TERM CAPITAL GAIN AND NET
INVESTMENT INCOME DISTRIBUTIONS).
(2) THE PERCENTAGE IN THIS COLUMN REPRESENTS THE AMOUNT OF "QUALIFYING
DIVIDEND INCOME" AS CREATED BY THE JOBS AND GROWTH TAX RELIEF
RECONCILIATION ACT OF 2003 AND IS REFLECTED AS A PERCENTAGE OF ORDINARY
INCOME DISTRIBUTIONS (THE TOTAL OF SHORT-TERM CAPITAL GAIN AND NET
INVESTMENT INCOME DISTRIBUTIONS). IT IS THE INTENTION OF THE FUND TO
DESIGNATE THE MAXIMUM AMOUNT PERMITTED BY LAW.
(3) "U.S. GOVERNMENT INTEREST" REPRESENTS THE AMOUNT OF INTEREST THAT WAS
DERIVED FROM DIRECT U.S. GOVERNMENT OBLIGATIONS AND DISTRIBUTED DURING THE
FISCAL YEAR. THIS AMOUNT IS REFLECTED AS A PERCENTAGE OF ORDINARY INCOME.
GENERALLY, INTEREST FROM DIRECT U.S. GOVERNMENT OBLIGATIONS IS EXEMPT FROM
STATE INCOME TAX. HOWEVER, FOR SHAREHOLDERS OF THE FUND WHO ARE RESIDENTS
OF CAL-IFORNIA, CONNECTICUT AND NEW YORK, THE STATUTORY THRESHOLD
REQUIREMENTS WERE NOT SATISFIED TO PERMIT EXEMPTION OF THESE AMOUNTS FROM
STATE INCOME.
(4) THE PERCENTAGE IN THIS COLUMN REPRESENTS THE AMOUNT OF "INTEREST RELATED
DIVIDENDS" AND IS REFLECTED AS A PERCENTAGE OF ORDINARY INCOME
DISTRIBUTIONS. INTEREST RELATED DIVIDENDS ARE EXEMPTED FROM U.S.
WITHHOLDING TAX WHEN PAID TO FOREIGN INVESTORS.
(5) THE PERCENTAGE OF THIS COLUMN REPRESENTS THE AMOUNT OF "SHORT TERM CAPITAL
GAIN DIVIDENDS" AND IS REFLECTED AS A PERCENTAGE OF SHORT TERM CAPITAL GAIN
DISTRIBUTIONS THAT IS EXEMPTED FROM U.S. WITHHOLDING TAX WHEN PAID TO
FOREIGN INVESTORS.
THE INFORMATION REPORTED HEREIN MAY DIFFER FROM THE INFORMATION AND
DISTRIBUTIONS TAXABLE TO THE SHAREHOLDERS FOR THE CALENDAR YEAR ENDING
DECEMBER 31, 2016. COMPLETE INFORMATION WILL BE COMPUTED AND REPORTED IN
CONJUNCTION WITH YOUR 2016 FORM 1099-DIV.
35
GALLERY TRUST MONDRIAN INTERNATIONAL EQUITY FUND
--------------------------------------------------------------------------------
FUND INFORMATION
REGISTERED OFFICE P.O. Box 588
Portland, ME 04112
ADVISER Mondrian Investment Partners Limited
10 Gresham Street, 5th Floor
London, England EC2V 7JD
DISTRIBUTOR SEI Investments Distribution Co.
One Freedom Valley Drive
Oaks, PA 19456
ADMINISTRATOR SEI Investments Global Funds Services
One Freedom Valley Drive
Oaks, PA 19456
LEGAL COUNSEL Morgan, Lewis & Bockius LLP
1701 Market Street
Philadelphia, PA 19103
CUSTODIAN Brown Brothers Harriman & Co
40 Water Street
Boston, Massachusetts 02109
TRANSFER AGENT Atlantic Fund Services, LLC
Three Canal Plaza
Portland, ME 04101
INDEPENDENT REGISTERED PricewaterhouseCoopers LLP
PUBLIC ACCOUNTING FIRM 2001 Market Street
Philadelphia, PA 19103
36
[This Page Intentionally Left Blank]
MON-AR-001-0100
Item 2. CODE OF ETHICS.
The Registrant has adopted a code of ethics that applies to the Registrant's
principal executive officer, principal financial officer, controller or
principal accounting officer, and any person who performs a similar function.
There have been no amendments to or waivers granted to this code of ethics.
Item 3. AUDIT COMMITTEE FINANCIAL EXPERT.
(a)(1) The Registrant's board of trustees has determined that the Registrant has
at least one audit committee financial expert serving on the audit committee.
(a) (2) The audit committee financial experts are Thomas Lemke and Jay Nadel,
and they are independent as defined in Form N-CSR Item 3 (a)(2).
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
Fees billed by PricewaterhouseCoopers LLP ("PwC") related to the Gallery Trust
(the "Trust").
PwC billed the Trust aggregate fees for services rendered to the Trust for the
last fiscal year as follows:
--------------------------------------------------------------------------------------------------------------------
2016
--------------------------------------------------------------------------------------------------------------------
All fees and All fees and All other fees
services to the services to service and services to
Trust that were affiliates that service affiliates
pre-approved were pre-approved that did not
require pre-approval
--------------------------------------------------------------------------------------------------------------------
(a) Audit Fees (1) $23,400 N/A N/A
--------------------------------------------------------------------------------------------------------------------
(b) Audit-Related Fees N/A N/A $117,141
--------------------------------------------------------------------------------------------------------------------
(c) Tax Fees N/A N/A N/A
--------------------------------------------------------------------------------------------------------------------
(d) All Other Fees N/A N/A N/A
--------------------------------------------------------------------------------------------------------------------
Notes:
(1) Audit fees include amounts related to the audit of the Trust's annual
financial statements and services normally provided by the accountant in
connection with statutory and regulatory filings.
(e)(1) The Trust's Audit Committee has adopted and the Board of Trustees has
ratified an Audit and Non-Audit Services Pre-Approval Policy (the "Policy"),
which sets forth the procedures and the conditions pursuant to which services
proposed to be performed by the independent auditor of the Funds may be
pre-approved.
The Policy provides that all requests or applications for proposed services to
be provided by the independent auditor must be submitted to the Registrant's
Chief Financial Officer ("CFO") and must include a detailed description of the
services proposed to be rendered. The CFO will determine whether such services:
(1) require specific pre-approval; (2) are included within the list of services
that have received the general pre-approval of the Audit Committee pursuant to
the Policy; or (3) have been previously pre-approved in connection with the
independent auditor's annual engagement letter for the applicable year or
otherwise. In any instance where services require pre-approval, the Audit
Committee will consider whether such services are consistent with SEC's rules
and whether the provision of such services would impair the auditor's
independence.
Requests or applications to provide services that require specific pre-approval
by the Audit Committee will be submitted to the Audit Committee by the CFO. The
Audit Committee will be informed by the CFO on a quarterly basis of all services
rendered by the independent auditor. The Audit Committee has delegated specific
pre-approval authority to either the Audit Committee Chair or financial expert,
provided that the estimated fee for any such proposed pre-approved service does
not exceed $100,000 and any pre-approval decisions are reported to the Audit
Committee at its next regularly scheduled meeting.
Services that have received the general pre-approval of the Audit Committee are
identified and described in the Policy. In addition, the Policy sets forth a
maximum fee per engagement with respect to each identified service that has
received general pre-approval.
All services to be provided by the independent auditor shall be provided
pursuant to a signed written engagement letter with the Registrant, the
investment advisor or applicable control affiliate (except that matters as to
which an engagement letter would be impractical because of timing issues or
because the matter is small may not be the subject of an engagement letter) that
sets forth both the services to be provided by the independent auditor and the
total fees to be paid to the independent auditor for those services.
In addition, the Audit Committee has determined to take additional measures on
an annual basis to meet its responsibility to oversee the work of the
independent auditor and to assure the auditor's independence from the
Registrant, such as reviewing a formal written statement from the independent
auditor delineating all relationships between the independent auditor and the
Registrant, and discussing with the independent auditor its methods and
procedures for ensuring independence.
(e)(2) Percentage of fees billed by PwC applicable to non-audit services
pursuant to the "de minimis" exception of Rule 2-01(c)(7)(i)(C) were as follows:
----------------------------------------
2016
----------------------------------------
Audit-Related Fees N/A
----------------------------------------
Tax Fees N/A
----------------------------------------
All Other Fees
N/A
----------------------------------------
(f) Not applicable.
(g) The aggregate non-audit fees and services billed by PwC 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 the last fiscal year was
$117,141 for 2016.
(h) During the past fiscal year, all non-audit services provided by Registrant's
principal accountant to either Registrant's investment adviser or to any entity
controlling, controlled by, or under common control with Registrant's investment
adviser that provides ongoing services to Registrant were pre-approved by the
audit committee of Registrant's Board of Trustees. Included in the audit
committee's pre-approval was the review and consideration as to whether the
provision of these non-audit services is compatible with maintaining the
principal accountant's independence.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.
Not applicable to open-end management investment companies.
ITEM 6. SCHEDULE OF INVESTMENTS
Schedule of Investments is included as part of the Report to Shareholders filed
under Item 1 of this form.
Item 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES.
Not applicable to open-end management investment companies.
ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES
Not applicable. Effective for closed-end management investment companies for
fiscal years ending on or after December 31, 2005
ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT COMPANY AND
AFFILIATED PURCHASERS.
Not applicable to open-end management investment companies.
ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
There have been no changes to the procedures by which shareholders may
recommend nominees to the Registrant's Board of Trustees during the period
covered by this report.
ITEM 11. CONTROLS AND PROCEDURES.
(a) The Registrant's principal executive and principal financial officers, or
persons performing similar functions have concluded that the Registrant's
disclosure controls and procedures, as defined in Rule 30a-3(c) under the Act
(17 CFR 270.30a-3(c)) as of a date within 90 days of the filing date of the
report, are effective based on the evaluation of these controls and procedures
required by Rule 30a-3(b) under the Act (17 CFR 270.30a-3(b)) and Rules
13a-15(b) or 15d-15(b) under the Exchange Act (17 CFR 270.30a-15(b) or
240.15d-15(b)).
(b) There has been no change in the Registrant's internal control over financial
reporting (as defined in Rule 30a-3(d) under the Act (17CFR 270.3a-3(d)) that
occurred during the second fiscal quarter of the period covered by this report
that has materially affected, or is reasonably likely to materially affect, the
Registrant's internal control over financial reporting.
ITEMS 12. EXHIBITS.
(a)(1) Code of Ethics attached hereto.
(a)(2) A separate certification for the principal executive officer and the
principal financial officer of the Registrant as required by Rule 30a-2(a) under
the Investment Company Act of 1940, as amended (17 CFR 270.30a-2(a)), is filed
herewith.
(b) Officer certifications as required by Rule 30a-2(b) under the Investment
Company Act of 1940, as amended (17 CFR 270.30a-2(b)) also accompany this filing
as an exhibit.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the Registrant has duly caused this report to
be signed on its behalf by the undersigned, thereunto duly authorized.
(Registrant) Gallery Trust
By (Signature and Title) /s/ Michael Beattie
----------------------------
Michael Beattie
President
Date: January 6, 2017
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the Registrant and in the capacities and on the
dates indicated.
By (Signature and Title) /s/ Michael Beattie
----------------------------
Michael Beattie
President
Date: January 6, 2017
By (Signature and Title) /s/ Stephen Connors
----------------------------
Stephen Connors
Treasurer, Controller and
Chief Financial Officer
Date: January 6, 2017