<PAGE> 1
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. ____)
Filed by the Registrant [ X ]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
[ ] Definitive Proxy Statement
[ X ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Sections 240.14a-11(c) or Sections
240.14a-12
THE GATEWAY TRUST
------------------------------------------------
(Name of Registrant as Specified in Its Charter)
-----------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (check the appropriate box):
[ X ] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.
1) Title of each class of securities to which transaction
applies:
-------------------------------------------------------------
2) Aggregate number of securities to which transaction applies:
-------------------------------------------------------------
3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (set forth the
amount on which the filing fee is calculated and state how it
was determined):
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4) Proposed maximum aggregate value of transaction:
-------------------------------------------------------------
5) Total fee paid:
-------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
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2) Form, Schedule or Registration Statement No.:
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3) Filing Party:
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4) Date Filed:
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<PAGE> 2
THE GATEWAY TRUST
400 TECHNECENTER DRIVE, SUITE 220
MILFORD, OHIO 45150
October 23, 1998
Dear Shareholder:
Enclosed you will find a notice, proxy statement, and proxy card
regarding a Special Meeting of Shareholders of The Gateway Trust to be held on
December 9, 1998.
This meeting has been called to address some important issues now
facing the Trust. Share-holders of the Gateway Fund, the Gateway Small Cap Index
Fund, and the Cincinnati Fund will consider the following proposals:
* ELECTION OF THE BOARD OF TRUSTEES: I am pleased to say that all
seven of the current Trustees have agreed to continue to serve and
will stand for re-election. Two additional Trustees, portfolio
manager J. Patrick Rogers, and James E. Schwab, CEO of a
Cincinnati area manufacturer, are also nominated.
* RATIFICATION OF INDEPENDENT ACCOUNTANTS: The Board of Trustees
requests that you ratify their selection of Arthur Andersen LLP as
independent accountants to the Trust. Arthur Andersen has served
the Trust in this capacity since 1990.
* AMENDMENTS TO THE DECLARATION OF TRUST: The Board of Trustees
recommends that the Declaration of Trust be changed to revise
shareholder voting procedures, and to give the Board greater
flexibility with respect to future amendments.
ONLY SHAREHOLDERS OF THE GATEWAY FUND will consider approval of a
Distribution Plan and a new Management Agreement with the Fund's current
investment adviser, Gateway Investment Advisers, L.P. The Board of Trustees
believes that the Fund's interests will be best served by continued asset
growth, and that the most effective way to pursue this goal is expanded
third-party distribution, which is the objective of these proposals. The Board
therefore recommends approval of these proposals. We urge you to read the
enclosed proxy statement carefully where these issues are addressed at length.
AT PRESENT LEVELS OF ASSETS, ADOPTION OF THESE PROPOSALS WILL NOT INCREASE THE
FUND'S TOTAL EXPENSES. SHAREHOLDERS SHOULD BE AWARE THAT THE FUND'S EXPENSE
RATIO COMPARES VERY FAVORABLY TO ITS PEERS UNDER PRESENT CIRCUMSTANCES AND IS
EXPECTED TO CONTINUE TO DO SO.
Please review this proxy statement carefully. Then, at your earliest
convenience, mark and return the proxy card in the addressed, postage-paid
envelope provided. We urge you to exercise your voting rights by marking and
returning the proxy card. EVERY VOTE IS IMPORTANT.
Sincerely,
/s/ WALTER G. SALL
----------------------------
Walter G. Sall
Chairman
<PAGE> 3
THE GATEWAY TRUST
400 TECHNECENTER DRIVE, SUITE 220
MILFORD, OHIO 45150
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS TO BE HELD ON DECEMBER 9, 1998
To the Shareholders:
A special meeting of shareholders of The Gateway Trust (the "Trust"),
consisting of the Gateway Fund, the Gateway Small Cap Index Fund, and the
Cincinnati Fund, will be held on December 9, 1998, at 9:00 A.M., Eastern Time,
at 400 TechneCenter Drive, Suite 220, Milford, Ohio 45150, for the purpose of
considering the following proposals, all as described in the accompanying proxy
statement:
1. To elect members of the Board of Trustees;
2. To ratify the selection of Arthur Andersen LLP as the independent
accountants for the Trust for each fund's fiscal year ending
December 31, 1998;
3. To approve amendments to the Trust's Declaration of Trust, which
include:
a) requiring the shareholders of all Funds to vote in the
aggregate except as otherwise required by the Investment
Company Act of 1940; and
b) allowing the Trustees to make future amendments to the
Declaration of Trust without shareholder authorization
provided that the amendment does not adversely affect the
rights of any shareholder; and
To transact such other business as may properly come before the meeting
or any adjournment thereof; and
THE FOLLOWING PROPOSAL APPLIES TO THE GATEWAY FUND SHAREHOLDERS ONLY
(This proposal does not apply to the Cincinnati Fund
or the Gateway Small Cap Index Fund)
4. To approve new distribution and investment advisory arrangements,
which include:
a) Approval of a Distribution Plan pursuant to Rule 12b-1 of the
Investment Company Act of 1940, as amended; and
b) Approval of a new Management Agreement with Gateway Investment
Advisers, L.P., the Gateway Fund's current investment adviser.
You are entitled to vote at the meeting and any adjournment thereof if
you owned shares of a fund at the close of business on October 12, 1998. Whether
or not you plan to attend the meeting in person, you may vote by marking,
signing, dating, and returning the enclosed proxy card in the enclosed
postage-paid envelope
By Order of the Board of Trustees
Donna M. Squeri, Secretary
October 23, 1998
YOUR VOTE IS IMPORTANT NO MATTER HOW MANY SHARES YOU OWN.
Please indicate your voting instructions on the enclosed proxy card,
date and sign the card, and return it by fax or in the envelope provided. IF YOU
SIGN, DATE, AND RETURN THE ENCLOSED PROXY CARD BUT GIVE NO VOTING INSTRUCTIONS,
YOUR SHARES WILL BE VOTED "FOR" THE PROPOSALS LISTED ABOVE. In order to avoid
the additional expense of further solicitation, we ask your cooperation in
mailing your proxy card promptly. Unless proxy cards submitted by corporations
and participants are signed by the appropriate persons as indicated in the
voting instructions on the proxy card, they will not be voted.
<PAGE> 4
THE GATEWAY TRUST
400 TECHNECENTER DRIVE, SUITE 220
MILFORD, OHIO 45150
PROXY STATEMENT
SPECIAL MEETING OF SHAREHOLDERS TO BE HELD ON DECEMBER 9, 1998
This proxy statement is being furnished to the shareholders of The
Gateway Trust (the "Trust"), consisting of the Gateway Fund, the Gateway Small
Cap Index Fund (the "Small Cap Fund"), and the Cincinnati Fund (each, a "Fund"
and collectively, the "Funds"), in connection with a solicitation of proxies by
and on behalf of the Trust's Board of Trustees for use at a special meeting of
the shareholders of the Trust, to be held on December 9, 1998, at 9:00 A.M.
Eastern Time, at 400 TechneCenter Drive, Suite 220, Milford, Ohio 45150, or any
adjournment or adjournments thereof (collectively, the "Meeting").
The persons named as proxies in the enclosed form of proxy will vote in
accordance with your direction when the form of proxy is returned properly
executed. If you sign, date, and return the form of proxy but give no voting
instructions, your shares will be voted:
1. FOR ALL FUNDS: For the election of members of the Board of
Trustees;
2. FOR ALL FUNDS: For the ratification of the selection of Arthur
Andersen LLP as the independent accountants for the Trust for each
Fund's fiscal year ending December 31, 1998;
3. FOR ALL FUNDS: For the approval of amendments to the Trust's
Declaration of Trust which include:
a) requiring the shareholders of all Funds to vote in the
aggregate except as otherwise required by the Investment
Company Act of 1940; and
b) allowing the Trustees to make future amendments to the
Declaration of Trust without shareholder authorization
provided that the amendment does not adversely affect the
rights of any shareholder; and
FOR ALL FUNDS, at the discretion of the holders of the proxy, on any other
business as may properly come before the Meeting or any adjournment thereof; and
4. FOR GATEWAY FUND SHAREHOLDERS ONLY: For the approval of new
distribution and investment advisory arrangements, which include:
a) Approval of a Distribution Plan pursuant to Rule 12b-1 of the
Investment Company Act of 1940, as amended; and
b) Approval of a new Management Agreement with Gateway Investment
Advisers, L.P., the Gateway Fund's current investment adviser
(the "Adviser").
You may revoke your form of proxy by giving another proxy or by letter
directed to the Trust showing your name and account number. To be effective,
such revocation must be received prior to the Meeting. If you wish, you may
cancel any proxy previously given by attending the Meeting and voting by ballot
at the Meeting. The proxy statement, along with the Notice of Meeting and proxy
card(s) will first be mailed to shareholders on or about October 23, 1998.
1
<PAGE> 5
As of September 28, 1998, there were 237,765.090 shares or 1.1% of
Gateway Fund, 506,283.673 shares or 44.6% of Gateway Small Cap Index Fund, and
93,200.877 shares or 7.3% of Cincinnati Fund held in a fiduciary capacity by the
Adviser, pursuant to agreements under which the Adviser has investment and
voting power. The Adviser will vote these shares in favor of all proposals.
Also as of September 28, 1998: BT Alex. Brown, Inc. Mutual Fund
Department of Baltimore, Maryland held 9,162,059.636 shares or 43.8%, Charles
Schwab and Company Inc. of San Francisco, California held 2,880,629.815 shares
or 13.8%, and the Trustees and officers of the Trust as a group held 238,284.259
shares or 1.1% of Gateway Fund's outstanding shares; BT Alex. Brown, Inc. Mutual
Fund Department of Baltimore, Maryland held 80,569.265 shares or 7.1%, and the
Trustees and officers of the Trust as a group held 27,259.467 shares or 2.4% of
Gateway Small Cap Index Fund's outstanding shares; and FirstCinco common trust
fund, Cincinnati, Ohio held 200,000 shares or 15.7%, and the Trustees and
officers of the Trust as a group held 37,108.570 shares or 2.9% of the
Cincinnati Fund's outstanding shares.
Management does not know of any other person who beneficially owned 5%
or more of a Fund's outstanding shares as of September 28, 1998.
As of the close of business on the record date of October 12, 1998,
there were 20,929,103.537 shares of the Gateway Fund outstanding, 1,134,346.442
shares of the Gateway Small Cap Index Fund outstanding, and 1,269,741.018 shares
of the Cincinnati Fund outstanding.
The presence in person or by proxy at the Meeting of the owners of
one-third of the shares entitled to vote is required for a quorum. If a quorum
is not present at the Meeting, or if a quorum is present at the Meeting but
sufficient votes to approve any of the proposals are not received, the persons
named as proxies may propose one or more adjournments of the Meeting to permit
further solicitation of proxies. Any such adjournment will require the
affirmative vote of a majority of those shares represented at the Meeting in
person or by proxy. The persons named as proxies will vote those proxies that
they are entitled to vote FOR any such proposal in favor of such adjournment,
and will vote those proxies required to be voted AGAINST any such proposal
against such adjournment. A shareholder vote may be taken on one or more of the
proposals in this proxy statement prior to any such adjournment if sufficient
votes have been received and it is otherwise appropriate.
Broker non-votes are shares held in street name for which the broker
indicates that instructions have not been received from the beneficial owners or
other persons entitled to vote, and the broker does not have discretionary
voting authority. Abstentions and broker non-votes will be counted as shares
present for purposes of determining whether a quorum is present but will not be
voted for or against any adjournment or proposal. Accordingly, abstentions and
broker non-votes effectively will be a vote against adjournment and against any
proposal, because the required vote is a percentage of the shares present or
outstanding.
A COPY OF EACH FUND'S ANNUAL REPORT FOR THE FISCAL YEAR ENDED DECEMBER
31, 1997, AND SEMI-ANNUAL REPORT FOR THE PERIOD ENDED JUNE 30, 1998, CONTAINING
FINANCIAL AND OTHER INFORMATION, WILL BE FURNISHED WITHOUT CHARGE, TO ANY
SHAREHOLDER UPON REQUEST, BY THE GATEWAY TRUST, 400 TECHNECENTER DRIVE, SUITE
220, MILFORD, OHIO 45150, TELEPHONE NUMBER (800) 354-6339.
A shareholder receiving this proxy statement may hold shares in one or
more of the Funds. A separate proxy card with respect to each Fund in which a
shareholder owns shares accompanies this proxy statement. A shareholder may
execute proxies or vote at the Meeting with respect to all shares owned in each
of the Funds.
2
<PAGE> 6
- -------------------------------------------------------------------------------
PROPOSAL 1.
FOR ALL FUNDS: ELECTION OF TRUSTEES
- -------------------------------------------------------------------------------
The Board of Trustees has decided to expand the size of the Board from
seven to nine and, accordingly, has nominated the nine individuals identified on
the following page for election to the Board. The nine Trustees elected will
constitute the entire Board of Trustees. Each trustee will hold office until his
or her successor is selected and qualified, or until he or she sooner reaches
the age of 75, dies, resigns, or is removed. Unless you give contrary
instructions in the form of proxy, your proxy will be voted for the election of
all nine nominees. Each of the nominees has indicated a willingness to serve if
elected. If any of the nominees should withdraw or otherwise become unavailable
for election due to events not now known or anticipated, unless the Board
reduces the number of trusteeships, or you have withheld authority as to the
election of the Trustees, your proxies will be voted for such other nominee or
nominees as the Board may recommend.
Seven of the nominees are currently Trustees of the Trust; J. Patrick
Rogers and James E. Schwab are not. Mr. Rogers is currently the President of the
Trust and of the Adviser. Mr. Schwab is not affiliated with the Trust or the
Adviser. The nominees for election, their ages, a description of their positions
with the Trust and its predecessor, Gateway Option Income Fund, Inc. (the
"Company"), and their principal occupations are listed in the following table.
3
<PAGE> 7
- -------------------------------------------------------------------------------
NOMINEE BUSINESS EXPERIENCE; OTHER DIRECTORSHIPS
- -------------------------------- -----------------------------------------------
Walter G. Sall* Chairman and Trustee of the Trust; Chairman of
Age: 53 the Adviser; various senior management
positions and offices held with the Trust, the
Company, and the Adviser since 1977.
- -------------------------------- -----------------------------------------------
J. Patrick Rogers* President of the Trust since 1997; President of
Age: 34 the Adviser since 1995; portfolio manager of
the Funds since 1997; co-portfolio manager of
the Funds from 1995 to 1997; various senior
management positions and offices held with the
Trust and the Adviser since 1989.
- -------------------------------- -----------------------------------------------
James M. Anderson Trustee of the Trust since April 1997;
Age: 56 Children's Hospital Medical Center, President
and Chief Executive Officer since November
1996, Chairman of the Board of Trustees from
1992 through 1996, and Trustee since 1979; Taft
Stettinius & Hollister (law firm), Partner from
1982 to November 1996; Access Corporation
(software distributor), Secretary from 1985 to
1996, Consultant from 1996 to 1997, and
Director 1997 to 1998; Cincinnati Stock
Exchange, Trustee since 1978; River City
Insurance Limited, Director since 1991.
- -------------------------------- -----------------------------------------------
Stefen F. Brueckner Trustee of the Trust since October 1992;
Age: 49 President, ProMutual Group (a professional
liability insurance company) since 1998;
Director, President, and Chief Executive
Officer, Anthem Companies, Inc. (health
insurer) 1995 to 1998; Director and President
of Community Mutual Insurance Company (health
insurer) from 1991 to 1998, and various
management positions from 1986 to 1998.
Director of Anthem Health and Life Insurance
Company, Anthem Life Insurance Company, and
various other affiliates and subsidiaries.
- -------------------------------- -----------------------------------------------
Kenneth A. Drucker Director of the Company from January 1984 to
Age: 53 May 1986; Trustee of the Trust since April
1986; Vice President and Treasurer, Sequa
Corporation (gas turbine and industrial
equipment) since November 1987.
- -------------------------------- -----------------------------------------------
Beverly J. Fertig Trustee of the Trust since September 1988;
Age: 68 arbitrator, National Association of Securities
Dealers, Inc., since January 1992; Vice
President, Marketing and Communications,
Coffee, Sugar and Cocoa Exchange from January
1989 to December 1991; Executive Director,
National Institutional Options and Futures
Society, March 1988 to December 1988; prior
thereto, Vice President, Institutional
Marketing, Chicago Board Options Exchange.
- -------------------------------- -----------------------------------------------
R.S. (Dick) Harrison Director of the Company from 1977 to 1982;
Age: 66 Trustee of the Trust since April 1996;
Director/Chairman of the Board, Baldwin Piano &
Organ Company from 1994 to 1997; Chairman of
the Board/CEO, Baldwin Piano & Organ Company
from 1983 to 1994. Prior thereto, various
management positions with Baldwin Piano & Organ
Company. Director of Sencorp and Anderson Bank
of Cincinnati, OH and Trustee of Kenyon
College.
- -------------------------------- -----------------------------------------------
William H. Schneebeck Director of the Company from September 1977 to
Age: 69 May 1986; Trustee of the Trust since April
1986; retired, formerly Chairman of Midwestern
Fidelity Corporation (a financial holding
company).
- -------------------------------- -----------------------------------------------
James E. Schwab President of XTEK, Inc. (a manufacturing
Age: 55 company), from November 1995 to present, Vice
President of XTEK, Inc. from October 1994 to
November 1995; various executive positions with
American Financial Corporation and its
affiliates from 1985 to 1994, including Senior
Vice President of General Cable Corporation
from 1992 to 1994 and Senior Vice President of
the Penn Central Corporation (now called the
American Financial Group) from 1989 to 1992.
- -------------------------------- -----------------------------------------------
* Messrs. Sall and Rogers are deemed to be "interested persons" of the Trust
as those terms are defined in the 1940 Act because of their respective
associations with the Trust and the Adviser.
4
<PAGE> 8
The shares of each Fund beneficially owned by each nominee, as of
September 28, 1998, is shown in the following table. For this purpose,
"beneficial ownership" is defined in the regulations under section 13(d) of the
Securities Exchange Act of 1934. The information is based on statements
furnished to the Trust by the nominees. Unless otherwise indicated, no trustee
or officer beneficially owned more than 1% of the shares outstanding of any
Fund.
================================================================================
GATEWAY FUND GATEWAY SMALL
CAP INDEX FUND CINCINNATI FUND
- --------------------------------------------------------------------------------
NOMINEE SHARES SHARES SHARES
- --------------------------------------------------------------------------------
Walter G. Sall 44,074.207 2,194.306 4,786.607
- --------------------------------------------------------------------------------
J. Patrick Rogers 6,505.141 934.368 1,877.069
- --------------------------------------------------------------------------------
James M. Anderson 0.000 0.000 0.000
- --------------------------------------------------------------------------------
Stefen F. Brueckner 2,073.692 0.000 72.818
- --------------------------------------------------------------------------------
Kenneth A. Drucker 5,234.301 6,799.907 0.000
- --------------------------------------------------------------------------------
Beverly J. Fertig 10,584.322 0.000 1,197.477
- --------------------------------------------------------------------------------
R. S. (Dick) Harrison 103,766.783 0.000 0.000
- --------------------------------------------------------------------------------
William H. Schneebeck* 59,003.271 15,613.252 24,196.511
- --------------------------------------------------------------------------------
James E. Schwab 0.000 0.000 0.000
================================================================================
* William H. Schneebeck owns 1.37% of the Gateway Small Cap Index Fund
and 1.90% of the Cincinnati Fund. All other individual nominee's
holdings are less than 1% of shares outstanding in each Fund.
COMMITTEES
The Board of Trustees has established three standing committees: an
Audit Committee, a Nominating Committee, and a Dividend Declaration Committee.
Messrs. Drucker (Chairman), Harrison, and Schneebeck serve on the Audit
Committee. The functions of the Audit Committee include: reviewing the annual
financial statements of the Funds; recommending the engagement of the Funds'
independent accountants; reviewing the arrangements for and scope of the annual
audit; reviewing comments made by the independent accountants with respect to
internal controls and the considerations given or the corrective action taken by
management; and reviewing non-audit services provided by the independent
accountants.
Messrs. Drucker and Schneebeck serve on the Nominating Committee. The
Nominating Committee has, as its principal role, the consideration and
recommendation of individuals for nomination as Trustees.
The Dividend Declaration Committee is comprised of the Trust's
Chairman, and one member of the Trust's Audit Committee and one additional
member of the Board of Trustees, selected for each meeting by the Chairman. The
Committee has as its principal role the review, approval, and authorization of
dividend payments.
For the fiscal year ended December 31, 1997, the Board of Trustees met
four times. During the same period, the Audit Committee met twice, the
Nominating Committee met once, and the Dividend Declaration Committee met four
times. No trustee attended fewer than 75% of the total number of Board meetings
or meetings of committees on which such trustee served.
5
<PAGE> 9
Those Trustees who are not affiliated with the Adviser are paid (a) an
annual fee of $3,000; (b) a $500 base fee plus $100 per fund for each regular or
special meeting of the Board attended; (c) $200 per fund ($1,000 per fund for
the Chairman) for each Audit Committee meeting attended; and (d) $100 per fund
for each Nominating Committee meeting attended. Trustees are not compensated for
attending Dividend Declaration Committee meetings. The Trust also reimburses
each Trustee for any reasonable and necessary travel expenses incurred in
connection with attendance at such meetings.
COMPENSATION TABLE
The following table provides certain information relating to the
compensation for each of the Trustees of the Trust for the fiscal year ended
December 31, 1997.
==============================================================
TOTAL COMPENSATION
NAME FROM TRUST
------------------------------- ------------------------------
James M. Anderson $ 3,300
------------------------------- ------------------------------
Stefen F. Brueckner 6,600
------------------------------- ------------------------------
Kenneth A. Drucker 12,200
------------------------------- ------------------------------
Beverly J. Fertig 6,600
------------------------------- ------------------------------
R. S. (Dick) Harrison 7,400
------------------------------- ------------------------------
Walter G. Sall 0
------------------------------- ------------------------------
William H. Schneebeck 8,100
==============================================================
OFFICERS
The principal occupations of the executive officers of the Trust who
are not also nominees for election as Trustees are as follows:
================================================================================
EXECUTIVE OFFICERS BUSINESS EXPERIENCE; OTHER DIRECTORSHIPS
- ---------------------------------- --------------------------------------------
Geoffrey Keenan Vice President of the Trust since April 1996;
Age: 40 Chief Operating Officer, Gateway Investment
Advisers, L.P. since December 1995; Executive
Vice President and Chief Operating Officer,
Gateway Investment Advisers, Inc. since 1995;
Vice President, Gateway Investment Advisers,
Inc. from 1991 to 1995.
- ---------------------------------- --------------------------------------------
Paul R. Stewart Treasurer of the Trust since October 1995;
Age: 33 Chief Financial Officer of the Adviser since
1996, Controller of the Adviser from October
1995 to December 1996; Audit Manager and
Senior, Price Waterhouse LLP from September
1992 to 1995 and from August 1988 to August
1991.
- ---------------------------------- --------------------------------------------
Donna M. Squeri Secretary of the Trust since October 1995;
Age: 39 Secretary and General Counsel of the Adviser
since September 1995; in-house counsel of
Bartlett & Co., a registered investment
adviser, from October 1984 to September 1993.
================================================================================
6
<PAGE> 10
The address of each of the previous-listed persons is 400 TechneCenter
Drive, Suite 220, Milford, Ohio 45150. No executive officer of the Trust
received compensation from the Trust for his or her service as officer.
Trustees may be elected by a vote of the holders of a plurality of the
shares present, in person or by proxy, at the Meeting. Shares of each Fund shall
be voted as a single class for purposes of PROPOSAL 1.
- -------------------------------------------------------------------------------
THE TRUSTEES RECOMMEND THAT SHAREHOLDERS VOTE "FOR" PROPOSAL 1.
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
PROPOSAL 2.
FOR ALL FUNDS: RATIFICATION OF SELECTION OF INDEPENDENT ACCOUNTANTS
- -------------------------------------------------------------------------------
Under this proposal, shareholders of the Trust are asked to ratify the
Board's selection of Arthur Andersen LLP as the Trust's independent accountants
("Auditors") for the fiscal year ending December 31, 1998. The Trust's Auditors
audit each Fund's financial statements for each year and review its federal and
state annual income tax returns. Arthur Andersen LLP has served as the Trust's
Auditors since 1990. The Board of Trustees selected Arthur Andersen LLP based
upon its industry experience, depth of expertise, and fees charged.
Representatives of Arthur Andersen LLP are not expected to be present
at the Meeting. If the selection is not ratified by the shareholders, the Board
will take such action as is necessary or appropriate in the best interests of
the Trust's shareholders, subject to legal requirements.
- -------------------------------------------------------------------------------
THE TRUSTEES RECOMMEND THAT SHAREHOLDERS VOTE "FOR" PROPOSAL 2.
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
PROPOSAL 3.
FOR ALL FUNDS: APPROVAL OF AMENDMENTS TO THE DECLARATION OF TRUST TO
REVISE SHAREHOLDER VOTING PROCEDURES (PROPOSAL 3A), AND TO
REVISE PROCEDURES FOR FUTURE AMENDMENTS (PROPOSAL 3B)
- -------------------------------------------------------------------------------
The Declaration of Trust is the document that governs the operations of
the Trust. The Board of Trustees has proposed that the Declaration of Trust be
amended to revise certain requirements related to shareholder voting and to
revise procedures for amending the Declaration of Trust. This summary is
qualified in its entirety by reference to the proposed text of the Amendments to
the Declaration of Trust which are attached hereto as EXHIBIT A.
7
<PAGE> 11
- -------------------------------------------------------------------------------
PROPOSAL 3A.
FOR ALL FUNDS: AMENDMENT OF SHAREHOLDER VOTING PROCEDURES
- -------------------------------------------------------------------------------
The Declaration of Trust currently requires that, in most cases,
shareholders of each Fund vote separately on matters submitted for their
approval. The Funds vote in the aggregate only if the Investment Company Act of
1940 (the "1940 Act") requires that all shareholders of the Trust vote in the
aggregate. In most cases, this means that a majority of each Fund must approve
each matter separately in order to approve it for the Trust as a whole. As a
result, the shareholders of one Fund could defeat a proposal for the entire
Trust, even though the share-holders of that Fund represent only a small
fraction of all shareholders.
The Trustees have determined that the voting requirements of the Trust
would be more equitable if the decisions affecting the Trust as a whole were
decided by the shareholders as a whole. The proposed amendment would require
that, in most cases, shareholders of the Trust vote in the aggregate on matters
submitted for their approval. Funds would only vote separately if required by
the 1940 Act.
Approval of PROPOSAL 3A requires the affirmative vote of the holders of
a majority of the shares of each Fund entitled to vote at the Meeting. Shares of
each Fund shall be voted as a separate class for purposes of PROPOSAL 3A. The
Amendment to the Declaration of Trust would become effective upon adoption by
the share-holders. If it is not approved by the Trust's shareholders, the
Trustees will take such action as they deem necessary or appropriate in the best
interests of the Trust's shareholders, subject to legal requirements.
- -------------------------------------------------------------------------------
THE TRUSTEES RECOMMEND THAT SHAREHOLDERS VOTE "FOR" PROPOSAL 3A.
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
PROPOSAL 3B.
FOR ALL FUNDS: AMENDMENT OF PROCEDURES FOR FUTURE AMENDMENTS
- -------------------------------------------------------------------------------
This Amendment to the Declaration of Trust would permit the Trustees to
further amend the Declaration of Trust without shareholder approval if the
amendment does not adversely affect the rights of any shareholder. There are
situations where changes in the mutual fund industry, the operations of the
Trust, the laws and regulations governing the Trust, or other changes in
circumstances make it necessary or desirable to amend the Declaration of Trust.
Allowing the Trustees to amend the Declaration of Trust would give the officers
and Trustees the ability to respond more effectively to such situations without
burdening the shareholders with the substantial costs of a special shareholder
meeting.
Approval of PROPOSAL 3B requires the affirmative vote of the holders of
a majority of the shares of each Fund entitled to vote at the Meeting. Shares of
each Fund shall be voted as a separate class for purposes of PROPOSAL 3B. The
Amendment to the Declaration of Trust would become effective upon adoption by
the shareholders. If it is not approved by the Trust's shareholders, the
Trustees will take such action as they deem necessary or appropriate in the best
interests of the Trust's shareholders, subject to legal requirements.
- -------------------------------------------------------------------------------
THE TRUSTEES RECOMMEND THAT SHAREHOLDERS VOTE "FOR" PROPOSAL 3B.
- -------------------------------------------------------------------------------
8
<PAGE> 12
- -------------------------------------------------------------------------------
PROPOSAL 4.
FOR GATEWAY FUND SHAREHOLDERS ONLY:
APPROVAL OF DISTRIBUTION PLAN (PROPOSAL 4A), AND
APPROVAL OF NEW MANAGEMENT AGREEMENT FOR THE GATEWAY FUND (PROPOSAL 4B)
- -------------------------------------------------------------------------------
Over the last three years, a substantial majority of the new
shareholders of the Gateway Fund have purchased the Fund through broker/dealers
and other third-party distribution channels. The Fund has been sold most
successfully through financial intermediaries who have been attracted to the
Fund's unique investment strategy, and who have been able to explain the
strategy and its benefits to their customers. As a result of the Fund's growth,
existing shareholders have benefited from a declining expense ratio, and the
Fund's expense ratio has compared very favorably to its peers.
The Board of Trustees believes that the Fund's interests will be best
served by continued asset growth, and that the most promising source of that
growth is expanded third-party distribution. Management of the Fund and the
Board of Trustees believe that, for the reasons discussed below, present
limitations on the Fund's ability to access third-party distribution channels
will not only limit future growth, but will cause reductions in the Fund's size
with accompanying increases in the Fund's expense ratio.
The Board of Trustees believes that it is important to adopt policies
that help the Fund avoid declining assets and instead promote continued asset
growth. The Board believes that this can best be accomplished by adopting a
distribution plan which will give the Fund the opportunity to expand third-party
distribution.
Under existing arrangements, third parties have been compensated for
their sales efforts by the Adviser, out of its own resources, and not by the
Fund. When such payments are made by the Adviser to third parties who actively
solicit investments in the Fund, the payments fall under provisions of the
Investment Advisers Act of 1940 which impose paperwork and disclosure
requirements in excess of common mutual fund industry sales practices. These
legal requirements have been a significant obstacle to the establishment of
additional distribution relationships for the Fund.
A mutual fund can pay its own distribution expenses under a
distribution plan which conforms to Rule 12b-1 of the Investment Company Act of
1940 (the "Distribution Plan"). Such plans have become common among mutual
funds. Distribution expenses paid under such plans do not require the additional
paperwork and disclosures to which Fund sales are subject under present
circumstances. The Trustees believe that a Distribution Plan would significantly
enhance the Fund's ability to expand distribution. Therefore, the Trustees are
strongly recommending that the Gateway Fund adopt the proposed Distribution
Plan, under which the Fund will pay its own distribution expenses.
In conjunction with the proposed Distribution Plan, the Trustees and
the Adviser have proposed that the Trust enter into a new investment advisory
contract with the Adviser (the "New Contract") for the Gateway Fund whereby the
Adviser will no longer pay the Fund's distribution expenses. To offset the shift
of distribution expenses from the Adviser to the Fund, the New Contract provides
that the Fund's expenses under the Distribution Plan will reduce the fees paid
to the Adviser dollar for dollar. Thus, adoption of the Distribution Plan will
not increase the Fund's expense ratio.
9
<PAGE> 13
Further, as part of the proposed New Contract the Adviser has proposed
to absorb expenses of Reporting to Shareholders and to forego separate
compensation for its administration, transfer agency, shareholder services, and
accounting services as to the Fund. Under the current arrangements, these
expenses are borne by the Fund. Effectively this will restructure the Adviser's
fee such that all of the services the Adviser provides to the Fund are included
in a single asset-based fee. That fee has been proposed at a level so that the
Fund's expense ratio at current asset levels will be nearly identical to the
Fund's expense ratio under the current investment advisory contract (see table
on page 14).
- -------------------------------------------------------------------------------
PROPOSAL 4A.
FOR GATEWAY FUND SHAREHOLDERS ONLY: APPROVAL OF DISTRIBUTION PLAN
- -------------------------------------------------------------------------------
On September 24, 1998, the Board of Trustees, by unanimous vote of all
Trustees present, as well as all Trustees present who have no financial interest
in the Distribution Plan or any agreement related thereto (the "Qualified
Trustees"), approved the Distribution Plan. The following is a summary of the
significant provisions of the Distribution Plan. This summary is qualified in
its entirety by reference to the Distribution Plan, which is attached hereto as
EXHIBIT B.
Under the Distribution Plan, the Trust may, directly or indirectly,
engage in any activities related to the distribution of shares of the Fund,
which activities may include, but are not limited to, the following: (a)
payments to securities dealers and others that are engaged in the sale of
shares, that may be advising share-holders of the Fund regarding the Fund, that
hold shares for shareholders in omnibus accounts or as shareholders of record,
or that provide shareholder support or administrative services to the Fund and
its shareholders; (b) expenses of maintaining personnel who engage in or support
distribution; (c) costs of preparing, printing, and distributing prospectuses
and statements of additional information and reports of the Fund for recipients
other than existing shareholders of the Fund; (d) costs of formulating and
implementing marketing and promotional activities; and (e) costs of preparing,
printing and distributing sales literature. The expenditures to be made by the
Trust pursuant to the Plan and the basis upon which payment of such expenditures
will be made is determined by the Trustees, but in no event may such
expenditures exceed in any fiscal year an amount calculated at the rate of 0.50%
of the average daily net asset value of the Fund.
FACTORS CONSIDERED BY THE BOARD OF TRUSTEES
Prior to approving the Distribution Plan, the Board of Trustees was
provided with detailed information relating thereto. Among other things, the
Trustees considered information relating to the merits of certain possible
alternatives to the Distribution Plan, the potential costs and benefits of the
Distribution Plan to shareholders, and the likelihood that the Distribution Plan
would succeed in producing its intended results.
In approving the Distribution Plan, the Trustees considered
management's analysis of the Fund's distribution system and discussed the
likelihood of retaining assets without a Distribution Plan, as well as the
likelihood of growth of the Fund without a Distribution Plan. The Trustees
discussed at length all the features of the distribution system of the Trust,
including (1) the current distribution expenses paid by the Adviser, (2)
management's belief that the Distribution Plan expenditures would be attractive
to the broker/dealers and other third-party distribution channels, resulting in
greater growth of the Fund than might otherwise be the case, (3) the advantages
to the shareholders of economies of scale resulting from growth in the Fund's
assets and potential continued growth, and (4) the Fund's estimated expenses and
costs under the Distribution Plan.
10
<PAGE> 14
In particular, the Trustees concluded that it was likely that the
Distribution Plan would enable the Fund to increase its assets and realize
reductions in the Fund's expense ratio, and that it was likely that the Fund's
assets would shrink without the Distribution Plan, with resultant increases in
the Fund's expense ratio. The Trustees also considered, as discussed above, that
the Fund's expenses under the Distribution Plan would reduce, dollar for dollar,
the fees paid to the Adviser under the proposed New Contract discussed below.
Following their consideration, the Trustees, including the Qualified
Trustees, concluded that the fees payable by the Fund under the Distribution
Plan were reasonable in view of the anticipated benefits of the Distribution
Plan. The Trustees, including a majority of the qualified Trustees, determined
that approval of the Distribution Plan would be in the best interests of the
Gateway Fund and would have a reasonable likelihood of benefiting the Fund and
its shareholders, once established. Accordingly, the Board of Trustees approved
the Distribution Plan.
ADDITIONAL INFORMATION REGARDING THE DISTRIBUTION PLAN
The Distribution Plan also provides that (a) at least quarterly, the
Treasurer of the Trust will submit to the Board of Trustees, and the Trustees
will review, reports regarding all amounts expended under the Distribution Plan
and the purposes for which such expenditures were made, (b) the Distribution
Plan will continue in effect only so long as it is approved at least annually,
and any material amendment thereto is approved, by the Board of Trustees, as
well as by the Qualified Trustees, acting in person at a meeting called for that
purpose, (c) the maximum amount of expenses payable by the Fund under the
Distribution Plan shall not be increased without the affirmative vote of the
holders of a majority of the Fund's shareholders, and (d) while the Distribution
Plan remains in effect, the selection and nomination of Trustees who are not
"interested persons" of the Trust shall be committed to the discretion of the
Qualified Trustees.
If the proposed Distribution Plan is approved by the Fund's
shareholders, the Distribution Plan will take effect January 1, 1999, and remain
in effect for one year unless terminated prior thereto in accordance with its
terms. Thereafter it will continue in effect from year to year, so long as its
continuance is approved annually by a vote of the Trustees of the Trust,
including a majority of the Qualified Trustees, cast in person at a meeting
called for the purpose of voting on such continuance.
An affirmative vote of the holders of a majority of the outstanding
shares of the Fund is required for approval of PROPOSAL 4A. As defined in the
1940 Act, a vote of the holders of a majority of the outstanding shares means
the vote of (i) 67% or more of the voting shares of the Fund present at the
Meeting, if the holders of more than 50% of the outstanding shares are present
in person or represented by proxy, or (ii) more than 50% of the outstanding
voting shares, whichever is less. Approval of PROPOSAL 4A is contingent upon
shareholder approval of PROPOSAL 4B. If the proposed Distribution Plan and
PROPOSAL 4B are not approved by the share-holders of the Gateway Fund, the Board
will take such action as is necessary or appropriate in the best interest of the
Fund's shareholders, subject to legal requirements.
- -------------------------------------------------------------------------------
THE TRUSTEES RECOMMEND THAT SHAREHOLDERS VOTE "FOR" PROPOSAL 4A.
- -------------------------------------------------------------------------------
11
<PAGE> 15
- -------------------------------------------------------------------------------
PROPOSAL 4B.
FOR GATEWAY FUND SHAREHOLDERS ONLY:
APPROVAL OF PROPOSED MANAGEMENT AGREEMENT
- -------------------------------------------------------------------------------
CURRENT INVESTMENT ADVISORY CONTRACT
The current investment advisory contract between the Adviser and the
Trust for the Gateway Fund (the "Current Contract") was approved by shareholders
on December 11, 1995, and has been in effect since December 15, 1995. It was
submitted to shareholders for approval because the previous investment advisory
contract was automatically terminated when the Adviser was reorganized from a
corporation to a limited partnership and, as a result, ownership of the Adviser
changed.
Under the terms of the Current Contract, the Adviser provides
investment advisory and management services to the Gateway Fund. In providing
these services, the Adviser supervises the investment and reinvestment of the
cash, securities, or other properties comprising the assets of the Fund, subject
at all times to the policies applicable to the Fund and to the control of the
Board of Trustees of the Trust. For these services, the Adviser receives a
monthly fee computed at an annual rate of: 0.90% of the first $50 million of the
average daily net asset value of the Fund; 0.70% of the average daily net asset
value of the Fund in excess of $50 million and up to $100 million; and 0.60% of
the average daily net asset value of the Fund in excess of $100 million.
The Adviser, at its sole expense, provides the Fund with (i) investment
recommendations regarding the Fund's investments, (ii) office space, including
secretarial, clerical, and other office help, telephones, securities valuations,
and other office equipment, and (iii) the services of all officers of the Trust
(the "Advisory Expenses"). The Adviser also pays all expenses incurred in
connection with (i) advertising and other marketing expenses in connection with
the sale of shares of the Gateway Fund and with the expense of printing and
distributing all the Trust's registration statements and related documents
regarding the Gateway Fund to prospective shareholders (the "Distribution
Expenses"), and (ii) association membership dues, except the annual dues of the
Trust for its membership in the Investment Company Institute. Except for those
expenses, the Gateway Fund pays all other operating expenses of the Fund. Under
the Current Contract, the Adviser has agreed to reimburse the Trust if the
Gateway Fund's operating expenses (including compensation paid to the Adviser
but excluding taxes, interest, brokerage commissions, and "extraordinary
expenses") exceed 1.50% of the average daily net asset value of the Gateway
Fund. Any expense reimbursement with respect to the Gateway Fund pursuant to
this expense limitation is limited on an annual basis to the compensation
received by the Adviser from the Gateway Fund pursuant to the Current Contract.
For the fiscal year ended December 31, 1997, the Adviser received fees
from the Gateway Fund totaling $2,021,607, including fees of $1,530,637 for its
investment advisory services to the Fund under the Current Contract, and
$490,970 for its services to the Fund as administrator, transfer agent, fund
accountant, and shareholder services agent under the Services Agreement with the
Trust (the "Services Agreement"). These services will continue to be provided if
the New Contract is approved, but the Adviser will receive no separate
compensation for its services to the Gateway Fund under the Services Agreement.
12
<PAGE> 16
NEW MANAGEMENT AGREEMENT
The Adviser will continue to provide the same services to the Fund
under the New Contract as it does under the Current Contract. The following is a
summary of the significant differences between the Current Contract and the New
Contract. This summary is qualified in its entirety by reference to the New
Contract, which is attached hereto as EXHIBIT C.
With respect to expenses:
* Under the New Contract the Adviser will no longer pay the
Distribution Expenses. However, the Fund's expenses under the
Distribution Plan will reduce, dollar for dollar, the total fees
paid to the Adviser.
* Under the New Contract the Adviser will continue to bear the cost
of all Advisory Under s, the New Contract the Adviser will also
pay expenses of printing and distributing all registration
statements, prospectuses, and reports to current shareholders,
cost of printing and transmitting reports to governmental
agencies, and printing and mailing costs. Under the Current
Contract, these expenses are borne by the Fund.
* Under the New Contract, the Adviser will forego compensation with
respect to the Fund under the Services Agreement, thereby
combining all fees paid to the Adviser by the Fund into a single
asset-based fee.
The fee under the New Contract is a daily fee computed at (a) the
annual rate of 0.925% of the average value of the daily net assets of the Fund,
minus (b) the amount of the Fund's expenses incurred pursuant to its
Distribution Plan. If the New Contract and the Distribution Plan had been in
effect for the fiscal year ended December 31, 1997, the Adviser would have
received $1,639,731, or 0.735% of the Fund's average daily net assets, for its
advisory, management, and other services. The Fee has been set at a level so
that, at current asset levels, the Fund's expense ratio (total operating
expenses, as a percentage of average daily net assets) will be nearly identical
to the Fund's expense ratio under the Current Contract. The following table
compares the actual fees and expenses that the Gateway Fund incurred under the
Current Contract for the fiscal year ended December 31, 1997, to the fees and
estimated expenses under the New Contract had it been in effect during 1997. The
table also compares the Fund's projected fees and expenses under the Current
Contract with estimated fees and expenses under the New Contract for the year
ending December 31, 1998. All fees and expenses are expressed as a percentage of
average net assets.
13
<PAGE> 17
<TABLE>
<CAPTION>
=============================================================================================
1997 1998
----------------------------- -----------------------------
GATEWAY FUND CURRENT NEW CURRENT NEW
CONTRACT CONTRACT CONTRACT CONTRACT
- --------------------------------- -------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
Management Fee 0.690% 0.735% 0.665% 0.675%
- --------------------------------- -------------- -------------- -------------- --------------
Fees under Services Agreement * 0.221% N/A 0.216% N/A
- --------------------------------- -------------- -------------- -------------- --------------
Reporting to Shareholders ** 0.046% N/A 0.045% N/A
- --------------------------------- -------------- -------------- -------------- --------------
Distribution Expenses *** N/A 0.190% N/A 0.250%
- --------------------------------- -------------- -------------- -------------- --------------
SUBTOTAL 0.957% 0.925% 0.926% 0.925%
- --------------------------------- -------------- -------------- -------------- --------------
Other Expenses 0.111% 0.111% 0.098% 0.098%
- --------------------------------- -------------- -------------- -------------- --------------
TOTAL OPERATING EXPENSES 1.068% 1.036% 1.024% 1.023%
=============================================================================================
</TABLE>
* Under the Current Contract, "Fees under Services Agreement" are paid by the
Fund. Under the New Contract the Adviser will forego compensation under the
Services Agreement with respect to the Gateway Fund.
** Under the Current Contract, expenses listed as "Reporting to Shareholders"
are paid by the Fund. Under the New Contract these expenses will be paid by
the Adviser.
*** Under the Current Contract, Distribution Expenses are paid by the Adviser,
out of its own resources. Under the New Contract, Distribution Expenses
will be paid by the Fund, however the sum of the Management Fee and the
Distribution Expenses will always equal 0.925%.
If the New Contract is approved by the Fund's shareholders, it will
take effect on January 1, 1999, and remain in effect for a period of two years.
Thereafter, it will continue in effect from year to year, if approved annually
by a vote of the Board and by a vote of the majority of the independent
Trustees.
MANAGEMENT OF THE ADVISER
The Adviser, a Delaware limited partnership, has acted as the
investment adviser for each series of the Trust since December 15, 1995. Gateway
Investment Advisers, Inc. ("GIA") provided investment advisory services to the
Trust from its formation in 1986 until December 15, 1995. The Adviser is the
successor in interest to the assets, business, and personnel of GIA. The Adviser
is a limited partnership in which GIA is the general partner with a 76%
partnership interest. The sole limited partner of the Adviser is Alex. Brown
Investments Incorporated, an affiliate of BT Alex. Brown Incorporated, a
nationally known investment banking firm and registered broker/dealer located in
Baltimore, Maryland. The Fund paid a total of $1,750 of brokerage commissions to
BT Alex. Brown Incorporated for the year ended December 31, 1997, which was
0.30% of the entire amount of commissions paid to all brokers by the Fund. The
principal and controlling shareholders of GIA are Walter G. Sall (Chairman of
the Adviser) and J. Patrick Rogers (President of the Adviser). Geoffrey Keenan
is the Chief Operating Officer, Paul R. Stewart is the Chief Financial Officer,
and Donna M. Squeri is Secretary and General Counsel of the Adviser.
14
<PAGE> 18
FACTORS CONSIDERED BY THE BOARD OF TRUSTEES
At their meeting on September 24, 1998, all Trustees present, including
all of the independent Trustees present, considered and unanimously approved the
New Contract. Senior management of the Adviser presented detailed information
regarding the revised fee structure of the New Contract and its likely impact on
shareholders. In considering the New Contract, the Trustees reviewed the
services to be provided by the Adviser, analyzing factors they deemed relevant,
including (i) the nature, quality, and scope of the services to be provided,
(ii) the ability of the Adviser to provide such services, and (iii) the
reasonableness and fairness of the proposed fees in relation to the services to
the Gateway Fund. The Trustees also reviewed the fees to be paid to the Adviser
in light of (i) the expenses of the Fund that would be paid by the Adviser, (ii)
fees paid to other investment managers by comparable funds, and (iii) fees paid
by other funds of the Trust.
In evaluating the New Contract, there was considerable discussion by
the Trustees about the proposed fee structure. The Trustees placed importance on
the fact that the Fund's expense ratio under the New Contract would compare very
favorably to its peers, particularly in light of the special expertise and
significant time commitment required of the Adviser to implement the Fund's
unique investment strategy. Although the Trustees recognized that if Fund assets
increase, the Fund's expense ratio would decline more slowly under the New
Contract than under the Current Contract, they concluded, as discussed above,
that it was likely that the Fund assets would not increase unless the
Distribution Plan and New Contract were adopted. They also recognized that at
asset levels below current levels, the expense ratios under the New Contract
would be lower than under the Current Contract. After consideration of these and
other factors, the Trustees, including a majority of the independent Trustees,
approved the New Contract.
An affirmative vote of the holders of a majority of the outstanding
shares of the Fund is required for approval of PROPOSAL 4B. As defined in the
1940 Act , a vote of the holders of a majority of the outstanding shares means
the vote of (i) 67% or more of the voting shares of the Fund present at the
Meeting, if the holders of more than 50% of the outstanding shares are present
in person or represented by proxy, or (ii) more than 50% of the outstanding vote
shares, whichever is less. Approval of PROPOSAL 4B is contingent upon
shareholder approval of PROPOSAL 4A. If the New Contract and PROPOSAL 4A are not
approved by the shareholders of the Gateway Fund, the Current Contract will
remain in place with respect to the Fund and the Board of Trustees will consider
whether other action should be taken.
- -------------------------------------------------------------------------------
THE TRUSTEES RECOMMEND THAT SHAREHOLDERS VOTE "FOR" PROPOSAL 4B.
- -------------------------------------------------------------------------------
SHAREHOLDER PROPOSALS
The Trust has not received any shareholder proposals to be considered
for presentation at the Meeting.
Shareholders should be aware that annual meetings of shareholders of
the Trust are not required as long as there is no particular requirement under
the Investment Company Act which must be met by convening such a shareholder
meeting. If a shareholder meeting is called for any purpose, shareholder
proposals to be presented must be received by the Trust at its principal office
within a reasonable time before the proxy solicitation is made.
15
<PAGE> 19
COST OF SOLICITATION
The cost of preparing and mailing this Proxy Statement, the
accompanying Notice of Special Meeting, and Proxy and any additional material
relating to the meeting and the cost of soliciting proxies will be borne by the
Trust. In addition to solicitation by mail, the Trust will request banks,
brokers, and other custodial nominees and fiduciaries to supply proxy material
to the beneficial owners of shares of whom they have knowledge, and will
reimburse them for their expenses in so doing. Certain officers and employees of
the Trust and the Adviser may solicit proxies in person or by telephone,
facsimile transmission, or mail, for which they will not receive any special
compensation.
OTHER MATTERS
The Trust's Board of Trustees knows of no other matters to be presented
at the meeting other than as set forth above. However, if any other matters
properly come before the meeting, the persons named as proxies will vote the
shares represented by the proxy on such matters in accordance with their
judgment, and discretionary authority to do so is included in the proxy.
By Order of the Board of Trustees
Donna M. Squeri, Secretary
Dated: October 23, 1998
16
<PAGE> 20
PROXY
THE GATEWAY TRUST
GATEWAY SMALL CAP INDEX FUND
SPECIAL MEETING OF SHAREHOLDERS
DECEMBER 9, 1998
The undersigned shareholder of the Gateway Small Cap Index Fund (the
"Fund"), a portfolio of The Gateway Trust (the "Trust"), hereby nominates,
constitutes and appoints Geoffrey Keenan and Paul R. Stewart, and each of them,
the attorney, agent and proxy of the undersigned, with full powers of
substitution, to vote all the shares of the Fund which the undersigned is
entitled to vote at the Special Meeting of Shareholders of the Fund to be held
at 400 TechneCenter Drive, Suite 220, Milford, Ohio 45150 on December 9, 1998 at
9:00 a.m. Eastern Standard Time and at any and all adjournments thereof, as
fully and with the same force and effect as the undersigned might or could do if
personally present as follows:
PROPOSAL 1. ELECTION OF TRUSTEES
To elect the nine persons below to serve as trustees of the
Trust until their successors are elected and have been qualified:
Walter G. Sall
J. Patrick Rogers
James M. Anderson
Stefen F. Brueckner
Kenneth A. Drucker
Beverly J. Fertig
R.S. (Dick) Harrison
William H. Schneebeck
James E. Schwab
[ ] AUTHORITY GIVEN [ ] AUTHORITY WITHHELD
IF YOU WISH TO WITHHOLD AUTHORITY TO VOTE FOR SOME BUT NOT ALL
OF THE NOMINEES NAMED ABOVE, YOU SHOULD CHECK THE BOX MARKED "AUTHORITY GIVEN"
AND YOU SHOULD ENTER THE NAME(S) OF THE NOMINEE(S) WITH RESPECT TO WHOM YOU
WISH TO WITHHOLD AUTHORITY TO VOTE IN THE SPACE PROVIDED BELOW
- ----------------------------------------------------------------
PROPOSAL 2. RATIFICATION OF SELECTION OF INDEPENDENT ACCOUNTANTS.
Ratification of the selection of Arthur Andersen LLP as
independent accountants of the Trust for the fiscal year ending December 31,
1998.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
<PAGE> 21
PROPOSAL 3. APPROVAL OF AMENDMENTS TO THE TRUST'S DECLARATION OF
TRUST.
3a. Approval of Amendment to the Trust's Declaration of Trust
requiring the shareholders of all Funds to vote in the aggregate except as
otherwise required by the Investment Company Act of 1940.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3b. Approval of Amendment to the Trust's Declaration of Trust
allowing the Trustees to make future amendments to the Declaration of Trust
without shareholder authorization provided that the amendment does not adversely
affect the rights of any shareholder.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
THE BOARD OF TRUSTEES RECOMMENDS A VOTE OF "AUTHORITY GIVEN" ON
PROPOSAL 1 AND "FOR" ON PROPOSAL 2, 3a AND 3b. THE PROXY SHALL BE VOTED IN
ACCORDANCE WITH THE RECOMMENDATIONS OF THE BOARD OF TRUSTEES UNLESS A CONTRARY
INSTRUCTION IS INDICATED, IN WHICH CASE THE PROXY SHALL BE VOTED IN ACCORDANCE
WITH SUCH INSTRUCTIONS. IN ALL OTHER MATTERS, IF ANY, PRESENTED AT THE MEETING,
THIS PROXY SHALL BE VOTED IN THE DISCRETION OF THE PROXY HOLDERS, IN ACCORDANCE
WITH THE RECOMMENDATIONS OF THE BOARD OF TRUSTEES, IF ANY.
__________________ DATED:_____________________________________________
(Number of Shares) (Please Print Your Name)
________________________________
(Signature of Shareholder)
________________________________
(Please Print Your Name)
________________________________
(Signature of Shareholder)
(Please date this proxy and sign
your name as it appears on the
label. Executors, administrators,
trustees, etc. should give their
full titles. All joint owners
should sign.)
THIS PROXY IS SOLICITED ON BEHALF OF THE TRUST'S BOARD OF TRUSTEES, AND MAY BE
REVOKED PRIOR TO ITS EXERCISE BY FILING WITH THE PRESIDENT OF THE TRUST AN
INSTRUMENT REVOKING THIS PROXY OR A DULY EXECUTED PROXY BEARING A LATER DATE, OR
BY APPEARING IN PERSON AND VOTING AT THE MEETING.
PLEASE MARK, SIGN, DATE AND MAIL THIS PROXY PROMPTLY.
<PAGE> 22
PROXY
THE GATEWAY TRUST
CINCINNATI FUND
SPECIAL MEETING OF SHAREHOLDERS
DECEMBER 9, 1998
The undersigned shareholder of the Cincinnati Fund (the "Fund"), a
portfolio of The Gateway Trust (the "Trust"), hereby nominates, constitutes and
appoints Geoffrey Keenan and Paul R. Stewart, and each of them, the attorney,
agent and proxy of the undersigned, with full powers of substitution, to vote
all the shares of the Fund which the undersigned is entitled to vote at the
Special Meeting of Shareholders of the Fund to be held at 400 TechneCenter
Drive, Suite 220, Milford, Ohio 45150 on December 9, 1998 at 9:00 a.m. Eastern
Standard Time and at any and all adjournments thereof, as fully and with the
same force and effect as the undersigned might or could do if personally present
as follows:
PROPOSAL 1. ELECTION OF TRUSTEES
To elect the nine persons below to serve as trustees of the
Trust until their successors are elected and have been qualified:
Walter G. Sall
J. Patrick Rogers
James M. Anderson
Stefen F. Brueckner
Kenneth A. Drucker
Beverly J. Fertig
R.S. (Dick) Harrison
William H. Schneebeck
James E. Schwab
[ ] AUTHORITY GIVEN [ ] AUTHORITY WITHHELD
IF YOU WISH TO WITHHOLD AUTHORITY TO VOTE FOR SOME BUT NOT ALL
OF THE NOMINEES NAMED ABOVE, YOU SHOULD CHECK THE BOX MARKED "AUTHORITY GIVEN"
AND YOU SHOULD ENTER THE NAME(S) OF THE NOMINEE(S) WITH RESPECT TO WHOM YOU
WISH TO WITHHOLD AUTHORITY TO VOTE IN THE SPACE PROVIDED BELOW
- --------------------------------------------------------
PROPOSAL 2. RATIFICATION OF SELECTION OF INDEPENDENT ACCOUNTANTS.
Ratification of the selection of Arthur Andersen LLP as
independent accountants of the Trust for the fiscal year ending December 31,
1998.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
<PAGE> 23
PROPOSAL 3. APPROVAL OF AMENDMENTS TO THE TRUST'S DECLARATION OF
TRUST.
3a. Approval of Amendment to the Trust's Declaration of Trust
requiring the shareholders of all Funds to vote in the aggregate except as
otherwise required by the Investment Company Act of 1940.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3b. Approval of Amendment to the Trust's Declaration of Trust
allowing the Trustees to make future amendments to the Declaration of Trust
without shareholder authorization provided that the amendment does not adversely
affect the rights of any shareholder.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
THE BOARD OF TRUSTEES RECOMMENDS A VOTE OF "AUTHORITY GIVEN" ON
PROPOSAL 1 AND "FOR" ON PROPOSAL 2, 3a AND 3b. THE PROXY SHALL BE VOTED IN
ACCORDANCE WITH THE RECOMMENDATIONS OF THE BOARD OF TRUSTEES UNLESS A CONTRARY
INSTRUCTION IS INDICATED, IN WHICH CASE THE PROXY SHALL BE VOTED IN ACCORDANCE
WITH SUCH INSTRUCTIONS. IN ALL OTHER MATTERS, IF ANY, PRESENTED AT THE MEETING,
THIS PROXY SHALL BE VOTED IN THE DISCRETION OF THE PROXY HOLDERS, IN ACCORDANCE
WITH THE RECOMMENDATIONS OF THE BOARD OF TRUSTEES, IF ANY.
_________________ DATED:______________ _______________________________
(Number of Shares) (Please Print Your Name)
-----------------------------
(Signature of Shareholder)
-----------------------------
(Please Print Your Name)
-----------------------------
(Signature of Shareholder)
(Please date this proxy and
sign your name as it appears
on the label. Executors,
administrators, trustees, etc.
should give their full titles.
All joint owners should sign.)
THIS PROXY IS SOLICITED ON BEHALF OF THE TRUST'S BOARD OF TRUSTEES, AND MAY BE
REVOKED PRIOR TO ITS EXERCISE BY FILING WITH THE PRESIDENT OF THE TRUST AN
INSTRUMENT REVOKING THIS PROXY OR A DULY EXECUTED PROXY BEARING A LATER DATE, OR
BY APPEARING IN PERSON AND VOTING AT THE MEETING.
PLEASE MARK, SIGN, DATE AND MAIL THIS PROXY PROMPTLY.
<PAGE> 24
PROXY
THE GATEWAY TRUST
GATEWAY FUND
SPECIAL MEETING OF SHAREHOLDERS
DECEMBER 9, 1998
The undersigned shareholder of the Gateway Fund (the "Fund"), a
portfolio of The Gateway Trust (the "Trust"), hereby nominates, constitutes and
appoints Geoffrey Keenan and Paul R. Stewart, and each of them, the attorney,
agent and proxy of the undersigned, with full powers of substitution, to vote
all the shares of the Fund which the undersigned is entitled to vote at the
Special Meeting of Shareholders of the Fund to be held at 400 TechneCenter
Drive, Suite 220, Milford, Ohio 45150 on December 9, 1998 at 9:00 a.m. Eastern
Standard Time and at any and all adjournments thereof, as fully and with the
same force and effect as the undersigned might or could do if personally present
as follows:
PROPOSAL 1. ELECTION OF TRUSTEES
To elect the nine persons below to serve as trustees of the
Trust until their successors are elected and have been qualified:
Walter G. Sall
J. Patrick Rogers
James M. Anderson
Stefen F. Brueckner
Kenneth A. Drucker
Beverly J. Fertig
R.S. (Dick) Harrison
William H. Schneebeck
James E. Schwab
[ ] AUTHORITY GIVEN [ ] AUTHORITY WITHHELD
IF YOU WISH TO WITHHOLD AUTHORITY TO VOTE FOR SOME BUT NOT ALL
OF THE NOMINEES NAMED ABOVE, YOU SHOULD CHECK THE BOX MARKED "AUTHORITY GIVEN"
AND YOU SHOULD ENTER THE NAME(S) OF THE NOMINEE(S) WITH RESPECT TO WHOM YOU
WISH TO WITHHOLD AUTHORITY TO VOTE IN THE SPACE PROVIDED BELOW
- ----------------------------------------------------------------
PROPOSAL 2. RATIFICATION OF SELECTION OF INDEPENDENT ACCOUNTANTS.
Ratification of the selection of Arthur Andersen LLP as
independent accountants of the Trust for the fiscal year ending December 31,
1998.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
<PAGE> 25
PROPOSAL 3. APPROVAL OF AMENDMENTS TO THE TRUST'S DECLARATION OF
TRUST.
3a. Approval of Amendment to the Trust's Declaration of Trust
requiring the shareholders of all Funds to vote in the aggregate except as
otherwise required by the Investment Company Act of 1940.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3b. Approval of Amendment to the Trust's Declaration of Trust
allowing the Trustees to make future amendments to the Declaration of Trust
without shareholder authorization provided that the amendment does not adversely
affect the rights of any shareholder.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
PROPOSAL 4. APPROVAL OF THE DISTRIBUTION AND INVESTMENT ADVISORY
ARRANGEMENTS.
4a. Approval of a Distribution Plan pursuant to Rule 12b-1 of
the Investment Company Act of 1940, as amended (contingent upon approval of
Proposal 4b).
[ ] FOR [ ] AGAINST [ ] ABSTAIN
4b. Approval of a new Management Agreement with Gateway
Investment Advisers, L.P., the Gateway Fund's current investment adviser
(contingent upon approval of Proposal 4a).
[ ] FOR [ ] AGAINST [ ] ABSTAIN
THE BOARD OF TRUSTEES RECOMMENDS A VOTE OF "AUTHORITY GIVEN" ON
PROPOSAL 1 AND "FOR" ON PROPOSALS 2, 3a, 3b, 4a AND 4b. THE PROXY SHALL BE VOTED
IN ACCORDANCE WITH THE RECOMMENDATIONS OF THE BOARD OF TRUSTEES UNLESS A
CONTRARY INSTRUCTION IS INDICATED, IN WHICH CASE THE PROXY SHALL BE VOTED IN
ACCORDANCE WITH SUCH INSTRUCTIONS. IN ALL OTHER MATTERS, IF ANY, PRESENTED AT
THE MEETING, THIS PROXY SHALL BE VOTED IN THE DISCRETION OF THE PROXY HOLDERS,
IN ACCORDANCE WITH THE RECOMMENDATIONS OF THE BOARD OF TRUSTEES, IF ANY.
__________________ DATED:____________ _________________________________
(Number of Shares) (Please Print Your Name)
------------------------------
(Signature of Shareholder)
-----------------------------
(Please Print Your Name)
-----------------------------
(Signature of Shareholder)
(Please date this proxy and
sign your name as it appears
on the label. Executors,
administrators, trustees, etc.
should give their full titles.
All joint owners should sign.)
THIS PROXY IS SOLICITED ON BEHALF OF THE TRUST'S BOARD OF TRUSTEES, AND MAY BE
REVOKED PRIOR TO ITS EXERCISE BY FILING WITH THE PRESIDENT OF THE TRUST AN
INSTRUMENT REVOKING THIS PROXY OR A DULY EXECUTED PROXY BEARING A LATER DATE, OR
BY APPEARING IN PERSON AND VOTING AT THE MEETING.
PLEASE MARK, SIGN, DATE AND MAIL THIS PROXY PROMPTLY.
<PAGE> 26
EXHIBIT A
AMENDMENT NO. 8
THE GATEWAY TRUST
SECOND AMENDED AGREEMENT AND
DECLARATION OF TRUST
1. Pursuant to Section 9.7 of the Second Amended Agreement and Declaration
of Trust of The Gateway Trust, and effective upon shareholder approval, the
undersigned, being a majority of the Trustees of The Gateway Trust, hereby
replace Section 5.1 in its entirety with the following:
5.1 VOTING POWERS. The Shareholders shall have power to vote only (i) for
the election or removal of Trustees as provided in Section 4.1, (ii) with
respect to any Adviser as provided in Section 4.6, (iii) with respect to
any termination of this Trust or any series to the extent and as provided
in Section 9.4, (iv) with respect to any amendment of this Declaration of
Trust to the extent and as provided in Section 9.7, (v) to the same
extent as the shareholders of an Ohio business corporation as to whether
or not a court action, proceeding or claim should or should not be
brought or maintained derivatively or as a class action on behalf of the
Trust or the Shareholders, and (vi) with respect to the additional
matters relating to the Trust as may be required by the Trust Act or
other law, this Declaration of Trust, the By-Laws, or any registration of
the Trust with the Securities and Exchange Commission (or any successor
agency) or any state, or as the Trustees may consider necessary or
desirable. Each whole Share shall be entitled to one vote as to any
matter on which it is entitled to vote and each fractional Share shall be
entitled to a proportionate fractional vote. Notwithstanding any other
provision of this Declaration of Trust, on any matter submitted to a vote
of Shareholders, all Shares of the Trust then entitled to vote shall be
voted in the aggregate; except (1) when required by the 1940 Act, Shares
shall be voted by individual series and not in the aggregate; and (2)
when the Trustees have determined that the matter affects only the
interests of one or more series, then only Shareholders of such series
shall be entitled to vote thereon. There shall be no cumulative voting in
the election of Trustees. Shares may be voted in person or by proxy. A
proxy with respect to Shares held in the name of two or more persons
shall be valid if executed by any one of them unless at or prior to
exercise of the proxy the Trust receives a specific written notice to the
contrary from any one of them. A proxy purporting to be executed by or on
behalf of a Shareholder shall be deemed valid unless challenged at or
prior to its exercise and the burden of proving invalidity shall rest on
the challenger. Until Shares are issued, the Trustees may exercise all
rights of Shareholders and may take any action required by the Trust Act
or other law, this Declaration of Trust, or the By-Laws to be taken by
Shareholders.
2. Pursuant to Section 9.7 of the Second Amended Agreement and Declaration
of Trust of The Gateway Trust, and effective upon shareholder approval, the
undersigned, being a majority of the Trustees of The Gateway Trust, hereby
replace Section 9.7 in its entirety with the following:
9.7 AMENDMENTS. All rights granted to the Shareholders under this
Declaration of Trust are granted subject to the reservation of the right
to amend this Declaration of Trust as herein provided, except that no
amendment shall repeal the limitations on personal liability of any
Shareholder or Trustee or repeal the prohibition of assessment upon the
Shareholders without the express consent
17
<PAGE> 27
of each Shareholder or Trustee involved. Subject to the foregoing, the
provisions of this Declaration of Trust (whether or not related to the
rights of Shareholders) may be amended at any time so long as such
amendment does not adversely affect the rights of any Shareholder with
respect to which such amendment is or purports to be applicable and so
long as such amendment is not in contravention of applicable law,
including the 1940 Act, by an instrument in writing signed by a majority
of the then Trustees (or by an officer of the Trust pursuant to the vote
of a majority of such Trustees). Any amendment to this Declaration of
Trust that adversely affects the rights of Shareholders may be adopted at
any time by an instrument in writing signed by a majority of the then
Trustees when authorized to do so by a vote of Shareholders holding a
majority of the Shares of each series entitled to vote, except that an
amendment which shall affect the holders of one or more series of Shares
but not the holders of all outstanding series shall be authorized by vote
of the Shareholders holding a majority of the Shares entitled to vote of
each series affected and no vote of Shareholders of a series not affected
shall be required.
3. This document shall have the status of an amendment to said Second
Amended Agreement and Declaration of Trust, and may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
Dated: December 9, 1998 ___________________________
Walter G. Sall
________________________________ ___________________________
James M. Anderson Beverly J. Fertig
________________________________ ___________________________
Stefen F. Brueckner R. S. Harrison
________________________________ ___________________________
Kenneth A. Drucker William H. Schneebeck
18
<PAGE> 28
EXHIBIT B
GATEWAY FUND
DISTRIBUTION PLAN
WHEREAS, The Gateway Trust, an Ohio business trust (the "Trust"),
engages in business as an open-end management investment company and is
registered as such under the Investment Company Act of 1940, as amended (the
"1940 Act"); and
WHEREAS, the Trust is authorized to issue an unlimited number of shares
of beneficial interest without par value (the "Shares"), which may be divided
into one or more series of Shares ("Series"); and
WHEREAS, the Trust currently offers several Series, one of which is the
Gateway Fund (the "Fund"); and
WHEREAS, the Trustees of the Trust as a whole, and the Trustees who are
not interested persons of the Trust (as defined in the 1940 Act) and who have no
direct or indirect financial interest in the operation of this Distribution Plan
(the "Plan") or in any agreement relating hereto (the "Qualified Trustees"),
having determined, in the exercise of reasonable business judgment and in light
of their fiduciary duties under state law and under Section 36(a) and (b) of the
1940 Act, that there is a reasonable likelihood that this Plan will benefit the
Fund and its shareholders, have approved this Plan by votes cast in person at a
meeting called for the purpose of voting hereon and on any agreements related
hereto;
NOW THEREFORE, the Trust hereby adopts this Plan for the Fund, subject
to shareholder approval, in accordance with Rule 12b-1 under the 1940 Act, on
the following terms and conditions:
1. DISTRIBUTION ACTIVITIES. Subject to the supervision of the
Trustees of the Trust, the Trust may, directly or indirectly,
engage in any activities related to the distribution of Shares of
the Fund, which activities may include, but are not limited to,
the following: (a) payments, including incentive compensation, to
securities dealers or other financial intermediaries, financial
institutions, investment advisors, and others that are engaged in
the sale of Shares, or that may be advising shareholders of the
Trust regarding the purchase, sale, or retention of Shares; (b)
payments, including incentive compensation, to securities dealers
or other financial intermediaries, financial institutions,
investment advisors, and others that hold Shares for shareholders
in omnibus accounts or as shareholders of record or provide
shareholder support or administrative services to the Fund and its
shareholders; (c) expenses of maintaining personnel (including
personnel of organizations with which the Trust has entered into
agreements related to this Plan) who engage in or support
distribution of Shares or who render shareholder support services,
including, but not limited to, allocated overhead, office space
and equipment, telephone facilities and expenses, answering
routine inquiries regarding the Trust, processing shareholder
transactions, and providing such other shareholder services as the
Trust may reasonably request; (d) costs of preparing, printing,
and distributing prospectuses, statements of additional
information, and reports of the Fund for recipients other than
existing shareholders of the Fund; (e) costs of formulating and
implementing marketing and promotional activities, including, but
not limited to, sales seminars, direct mail promotions, and
television, radio, newspaper, magazine, and other mass media
advertising; (f) costs of preparing, printing, and distributing
sales literature; (g) costs of obtaining such information,
analyses, and reports with respect to marketing and promotional
activities as the Trust may, from time to time, deem
19
<PAGE> 29
advisable; and (h) costs of implementing and operating this Plan.
The Trust is authorized to engage in the activities listed above,
and in any other activities related to the distribution of Shares,
either directly or through other persons with which the Trust has
entered into agreements related to this Plan.
2. MAXIMUM EXPENDITURES. The expenditures to be made by the Trust
pursuant to this Plan and the basis upon which payment of such
expenditures will be made shall be determined by the Trustees of
the Trust, but in no event may such expenditures exceed in any
fiscal year an amount calculated at the rate of 0.50% of the
average daily net asset value of the Fund. Such payments for
distribution activities may be made directly by the Trust, or the
Trust's investment adviser may pay such expenses and obtain
reimbursement from the Trust.
3. TERM AND TERMINATION.
(a) This Plan shall become effective on January 1, 1999, subject
to approval by a majority of the outstanding voting securities
(as defined in the 1940 Act) of the Fund.
(b) Unless terminated as herein provided, this Plan shall continue
in effect for one year from the effective date and shall
continue in effect for successive periods of one year
thereafter, but only so long as each such continuance is
specifically approved by votes of a majority of both (i) the
Trustees of the Trust and (ii) the Qualified Trustees, cast in
person at a meeting called for the purpose of voting on such
approval.
(c) This Plan may be terminated at any time by the vote of a
majority of the Qualified Trustees or by vote of a majority of
the outstanding voting securities (as defined in the 1940 Act)
of the Fund. If this Plan is terminated, the Fund will not be
required to make any payments for expenses incurred after the
date of termination.
4. AMENDMENTS. All material amendments to this Plan must be approved
in the manner provided for annual renewal of this Plan in Section
3(b) hereof. In addition, this Plan may not be amended to increase
the amount of expenditures provided for in Section 2 hereof unless
such amendment is approved by a vote of the majority of the
outstanding voting securities of the Fund (as defined in the 1940
Act).
5. SELECTION AND NOMINATION OF TRUSTEES. While this Plan is in
effect, the selection and nomination of Trustees who are not
interested persons (as defined in the 1940 Act) of the Trust shall
be committed to the discretion of the Trustees who are not
interested persons of the Trust.
6. QUARTERLY REPORTS. The Treasurer of the Trust shall provide to the
Trustees and the Trustees shall review, at least quarterly, a
written report of the amounts expended pursuant to this Plan and
any related agreement and the purposes for which such expenditures
were made.
7. RECORDKEEPING. The Trust shall preserve copies of this Plan and
any related agreements and all reports made pursuant to Section 6
hereof, for a period of not less than six years from the date of
this Plan, the agreements or such reports, as the case may be, the
first two years in an easily accessible place.
8. LIMITATION OF LIABILITY. A copy of the Agreement and Declaration
of Trust of the Trust, as amended, is on file with the Secretary
of the State of Ohio and notice is hereby given that this Plan is
executed on behalf of the Trustees of the Trust as trustees and
not individually and that the obligations of this instrument are
not binding upon the Trustees, the shareholders of the Trust
individually, or the assets or property of any other series of the
Trust, but are binding only upon the assets and property of the
Fund.
20
<PAGE> 30
EXHIBIT C
GATEWAY FUND
MANAGEMENT AGREEMENT
THIS AGREEMENT made as of the ____ day of ____________, 1998, by and
between THE GATEWAY TRUST, an Ohio business trust (the "Trust"), and GATEWAY
INVESTMENT ADVISERS, L.P., a Delaware limited partnership (the "Adviser").
WITNESSETH:
WHEREAS, the Trust is an open-end, diversified management investment
company registered under the Investment Company Act of 1940, as amended (the
"Act"), the shares of beneficial interest (the "Shares") of which are registered
under the Securities Act of 1933; and
WHEREAS, the Trust is authorized to issue Shares in separate series
with each such series representing the interests in a separate portfolio of
securities and other assets; and
WHEREAS, the Trust offers Shares in a series known as the Gateway Fund
(the "Fund"); and
WHEREAS, the Adviser is currently providing investment advisory and
management services to the Fund pursuant to an investment advisory contract
dated December 15, 1995; and
WHEREAS, the Trust and the Adviser desire to revise the compensation
and allocation of expenses with respect to the Adviser's provision of investment
advisory and management services to the Fund.
NOW THEREFORE, in consideration of the mutual covenants herein
contained and other good and valuable consideration, the receipt of which is
hereby acknowledged, the parties hereto agree as follows:
1. The Adviser shall act as investment manager for the Fund and
shall, in such capacity, supervise the investment and reinvestment
of the cash, securities, or other properties comprising the assets
of the Fund, subject at all times to the policies applicable to
the Fund and to the control of the Board of Trustees of the Trust.
The Adviser shall give the Trust the benefit of its best judgment,
efforts, and facilities in rendering its services as investment
manager.
2. In carrying out its obligations under paragraph 1 hereof, the
Adviser shall:
(a) obtain and evaluate pertinent information about significant
developments and economic, statistical, and financial data,
domestic, foreign, or otherwise, whether affecting the Fund or
the economy generally, and whether concerning the individual
companies whose securities or options therefore are included
in the Fund or the industries in which they engage, or with
respect to other securities or options therefore which the
Adviser considers desirable for inclusion in the Fund;
(b) determine what industries and companies shall be represented
in the Fund and regularly report them to the Board of Trustees
of the Trust;
(c) formulate and implement programs for the purchases and sales
of any securities or options and regularly report thereon to
the Board of Trustees of the Trust;
(d) place all orders for the purchase and sale of investments for
the Fund, including the purchase and/or sale of options and
the effecting of closing purchase transactions, for the Fund's
account
21
<PAGE> 31
with brokers or dealers selected by the Adviser. In the
selection of such brokers or dealers and the placing of such
orders, the Adviser shall always seek best execution, which is
to execute the Fund's transactions where the most favorable
combination of price and execution services in particular
transactions can be obtained or provided on a continuing basis
or with respect to individual transactions by a broker or
dealer, and to deal directly with a principal market maker in
connection with over-the-counter transactions, except when it
is believed that best execution is obtainable elsewhere.
Subject to such policies as the Board of Trustees may
determine, the Adviser shall not be deemed to have acted
unlawfully or to have breached any duty created by this
Agreement, or otherwise, solely by reason of its having either
(i) dealt with an affiliate of the Adviser, or (ii) caused the
Fund to pay a broker or dealer that provides brokerage,
research, and statistical services to the Adviser an amount of
commission for effecting a portfolio investment transaction,
including the sale of an option or a closing purchase
transaction, in excess of the amount of commission another
broker or dealer would have charged for effecting that
transaction, if the Adviser determines in good faith and in
the best interest of the Fund that (x) the commission and
other expenses of any such affiliate are comparable to the
commission and other expenses charged by unaffiliated brokers
and dealers, and (y) such amount of commission was reasonable
in relation to the value of the brokerage and research
services provided by such broker or dealer, viewed in terms of
either that particular transaction or its overall
responsibilities with respect to the Fund and to any other of
its clients as to which it exercises investment discretion;
(e) present a written report to the Board of Trustees of the Trust
at least quarterly indicating total brokerage expenses, actual
or imputed, as well as the services obtained in consideration
for such expenses; and
(f) take, on behalf of the Fund, all actions which appear to the
Adviser necessary to carry into effect such purchase and sale
programs and supervisory functions as aforesaid.
3. Any investment program undertaken by the Adviser pursuant to this
Agreement, as well as any other activities undertaken by the
Adviser on behalf of the Fund pursuant thereto, shall at all times
be subject to any directives of the Board of Trustees of the
Trust.
4. In carrying out its obligations under this Agreement, the Adviser
shall at all times conform to:
(a) all applicable provisions of the Act and any rules and
regulations adopted thereunder;
(b) the provisions of the Agreement and Declaration of Trust of
the Trust, as amended from time to time;
(c) the provisions of the By-Laws of the Trust, as amended from
time to time;
(d) the provisions of the Registration Statements of the Trust
under the Securities Act of 1933 and the Act, as amended from
time to time; and
(e) any other applicable provision of state or federal law.
5. (a) The Adviser, at its sole expense, shall provide the Trust
with (i) investment recommendations regarding the Fund's
investments; (ii) office space, secretarial, clerical, and
other office help, telephones, securities valuations, and
other office equipment; and (iii) the services of all officers
of the Trust.
(b) The Adviser shall bear all (i) expenses incurred in connection
with association membership dues, except the annual dues of
the Trust for its membership in the Investment Company
Institute, which shall be paid by the Trust; (ii) expenses of
printing and distributing all Fund registration statements,
prospectuses and reports to current Fund shareholders; (iii)
costs of printing and transmitting reports to governmental
agencies; and (iv) printing and mailing costs.
22
<PAGE> 32
(c) Except as set forth above, the Trust has agreed to pay all its
operating expenses, including without limitation the expenses
of continuing the Trust's existence; the expenses of trustees
not employed by the Adviser; expenses incurred by the Fund
pursuant to the Fund's Distribution Plan; expenses of
registering or qualifying the Trust or its shares under
federal and various state laws and maintaining and updating
such registrations and qualifications on a current basis;
interest expenses, taxes, fees, and commissions of every kind;
expenses of issue, including cost of share certificates;
repurchases and redemption of shares; charges and expenses of
custodians, transfer agents, fund accountants, shareholder
servicing agents, dividend disbursing agents, and registrars;
expenses of valuing shares of each Fund; auditing, accounting,
and legal expenses; expenses of shareholder meetings and proxy
solicitations therefore; insurance expenses; membership fees
of the Investment Company Institute; and all "extraordinary
expenses" as may arise, including all losses and liabilities
in administrating the Trust; expenses incurred in connection
with litigation proceedings and claims and the legal
obligations of the Trust to indemnify its officers, trustees,
and agents with respect thereto. A majority of the Board of
Trustees of the Trust and a majority of the trustees who are
not parties to this agreement (except as a trustee of the
Trust), voting separately, shall determine which expenses
shall be characterized as "extraordinary expenses." The
expenses to be borne by the Trust under this subparagraph
shall be determined by the Board of Trustees of the Trust.
(d) All ordinary business expenses of the Trust shall be borne by
the Trust unless subparagraph 5(a) or 5(b) hereof specifically
provides otherwise.
6. The Trust will pay the Adviser, as full compensation for services
rendered hereunder, a daily fee computed at (a) the annual rate of
0.925% of the average value of the daily net assets of the Fund;
minus (b) the amount of the Fund's expenses incurred pursuant to
its Distribution Plan. If the Adviser is providing transfer
agency, fund accounting, and other services pursuant to the
Services Agreement with the Trust dated January 1, 1998, the
Adviser shall receive no compensation for such services during the
term of this Agreement.
7. If, for any fiscal year, the total of all expenses of the Fund
(including compensation paid to the Adviser but excluding taxes,
interest, brokerage commissions, and "extraordinary expenses" as
determined in accordance with subparagraph 5(c) hereof) would
exceed 1.50% of the average daily net asset value of the Fund, the
Adviser will bear any such excess expenses. Every month the
investment advisory fee with respect to the Fund will be
determined and the Fund's expenses projected. If the Fund's
projected expenses are in excess of the expense limitation set
forth above, the investment advisory fee with respect to the Fund
paid to the Adviser will be reduced by the amount of the excess
expenses, subject to an annual adjustment at the end of the Fund's
fiscal year; provided, however, that if such amount of reduction
should exceed such monthly investment advisory fee, the Adviser
will repay to the Fund such portion of its investment advisory fee
previously received with respect to such fiscal year as may be
required to make up the deficiency.
Any reimbursement with respect to the Fund pursuant to the expense
limitations set forth in this paragraph 7 will be limited on an
annual basis to compensation received by the Adviser from the Fund
pursuant to this Agreement.
8. The Trust shall at all times keep the Adviser fully informed with
regard to the securities owned by the Fund, the funds available or
to become available to the Fund for investment, and generally as
to the condition of the Fund's affairs. It shall furnish the
Adviser with a copy of all financial statements certified by its
financial officer, and a signed copy of each financial statement
audited by certified public accountants with respect to it.
9. This contract shall become effective on January 1, 1999. It shall
remain in effect, subject to para-graph 10(a) hereof, for a period
of two years, and thereafter, provided that its continuance for
the
23
<PAGE> 33
Fund for each renewal year is specifically approved, in advance,
(i) by the Board of Trustees of the Trust or by vote of a majority
of the outstanding voting securities (as defined in Section
2(a)(42) of the Act) of the Fund, and (ii) by vote of a majority
of the trustees who are not parties to this Agreement or
interested persons of a party to this Agreement (other than as
trustees of the Trust), by votes cast in person at a meeting
specifically called for such purpose; provided, however, that if
the continuation of this Agreement is not approved for the Fund,
the Adviser may continue to serve in such capacity for the Fund in
the manner and to the extent permitted by the Act and the rules
and regulations thereunder.
10. (a) This Agreement may be terminated at any time, without the
payment of any penalty, by vote of the Board of Trustees of
the Trust or by vote of the holders of a majority of the
outstanding voting securities of the Fund, or by the Adviser,
on sixty days' written notice to the other party. The notice
provided for herein may be waived by either party.
(b) In the absence of willful misfeasance, bad faith, gross
negligence, or reckless disregard of obligations or duties
hereunder on the part of the Adviser, the Adviser shall not be
subject to liability to the Trust or to any shareholder of the
Fund for any act or omission in the course of, or connected
with, rendering services hereunder or for any losses that may
be sustained in the purchase, holding, or sale of any security
or other investment, except that nothing under this paragraph
shall be deemed to be a waiver of any rights of the Trust or
of any shareholder of the Fund that may exist under the
federal securities laws.
11. It is understood that the Adviser may perform investment advisory
services for various other clients, including investment
companies. The Adviser agrees to report to the Board of Trustees
(at regular quarterly meetings and at such other times as the
Board of Trustees reasonably shall request) (i) the financial
condition and prospects of the Adviser, (ii) the nature and amount
of transactions affecting the Fund that involve the Adviser and
affiliates of the Adviser, (iii) information regarding any
potential conflicts of interest arising by reason of its
continuing provision of advisory services to the Fund and to its
other accounts, and (iv) such other information as the Board of
Trustees shall reasonably request regarding the Fund, the Fund's
performance, the services provided by the Adviser to the Fund as
compared to its other accounts, and the plans and capability of
the Adviser with respect to providing future services to the Fund
and its other accounts. At least annually, the Adviser shall
report to the Trustees the total number and type of such other
accounts and the approximate total asset value thereof (but not
the identities of the beneficial owners of such accounts). The
Trust agrees that the Adviser may give advice and take action with
respect to any of its clients which may differ from advice given
or the timing or nature of the action taken with respect to the
Fund, so long as it is the Adviser's policy, to the extent
practicable, to allocate investment transactions among the Fund
and its other accounts, over a period of time, on a fair and
equitable basis. The Adviser agrees to submit to the Trust a
statement defining its policies with respect to the allocation of
business among the Fund and its other clients.
Broker/dealer affiliates of the Adviser may effect orders on
national securities exchanges for the Fund and may retain
compensation in connection with effecting such transactions, so
long as the Adviser furnishes the Board of Trustees, at least
annually, with a statement setting forth the total amount of all
compensation retained by such broker/dealer affiliates in
connection with effecting such transactions within the preceding
year for the Trust.
12. This Agreement may be amended from time to time by agreement of
the parties hereto provided that such amendment shall be approved
by the vote of a majority of trustees of the Trust, including a
majority of trustees who are not parties to this Agreement or
interested persons of any such party to this Agreement (other than
as trustees of the Trust), cast in person at a meeting called for
that purpose, and (if required under current interpretations of
the Act by the Securities and Exchange Commission) by vote of the
shareholders of the Fund.
24
<PAGE> 34
13. This Agreement shall automatically terminate in the event of its
assignment, the term "assignment" for this purpose having the
meaning defined in Section 2(a)(4) of the Act.
14. All parties hereto are expressly put on notice of (i) The Gateway
Trust Agreement and Declaration of Trust, as amended, which is on
file with the Secretary of the State of Ohio, and (ii) the
limitation of shareholder and trustee liability contained therein
and in Chapter 1746 of the Ohio Revised Code. Notice is hereby
given that the obligations of this Agreement are not binding upon
any of the trustees, officers, or shareholders of the Trust
individually but are binding upon only the assets and property of
the Trust. With respect to any claim by the Adviser for recovery
of any portion of the investment management fee (or any other
liability of the Trust arising hereunder), whether in accordance
with the express terms hereof or otherwise, the Adviser shall have
recourse solely against the assets of the Fund to satisfy such
claim and shall have no recourse against the assets of any other
funds of the Trust for such purpose.
15. (a) This contract shall be construed in accordance with and
governed by applicable federal law and the laws of the State
of Ohio.
(b) Any question of interpretation of any term or provision of
this Agreement having a counterpart in or otherwise derived
from a term or provision of the Act shall be resolved by
reference to such term or provision of the Act and to
interpretation thereof, if any, by the United States courts or
in the absence of any controlling decision of any such court,
by the Securities and Exchange Commission or its staff. In
addition, where the effect of a requirement of the Act,
reflected in any provision of this Agreement is revised by
rule, regulation, order, or interpretation of the Securities
and Exchange Commission, such provision shall be deemed to
incorporate the effect of such rule, regulation, order, or
interpretation.
16. Any notices under this Agreement shall be in writing addressed and
delivered or mailed postage paid to the other party at such
address as such other party may designate for the receipt of such
notice. Until further notice to the other party, it is agreed that
the address of the Trust and that of the Adviser for this purpose
shall be 400 TechneCenter Drive, Suite 220, Milford, Ohio, 45150.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed in duplicate as of the day and year first above written.
THE GATEWAY TRUST
By:
--------------------------------
Walter G. Sall
Chairman
ATTEST:
By:
--------------------------
Secretary
GATEWAY INVESTMENT ADVISERS, L.P.
BY: GATEWAY INVESTMENT ADVISERS, INC.
By:
--------------------------------
President
ATTEST:
By:
--------------------------
Secretary
25
<PAGE> 35
[THE GATEWAY TRUST LETTERHEAD]
October 30, 1998
Dear Shareholder:
The proxy card(s) you previously received with the Proxy Statement did not show
your Gateway account number, but rather a counter number that was assigned by
the fulfillment company that processed the proxy cards. To eliminate any
confusion caused by the omitted Gateway account number, the fulfillment company
agreed to reprint and mail corrected proxy cards showing Gateway account
numbers. The reprinted proxy card(s) are enclosed for your signature(s). Please
refer to the Proxy Statement for discussion of the issues on which you are
voting.
We encourage you to sign, date, and return the enclosed proxy card(s) at your
very earliest convenience. Please note that if this is a joint account, all
owners must sign. If you correctly signed and returned the original proxy
card(s), it is not necessary to return the enclosed card(s).
We apologize for any inconvenience or confusion this may have caused. Should
you have any questions regarding this enclosed proxy material or if you would
like another Proxy Statement, please don't hesitate to contact us at
(800)354-6339.
Sincerely,
/s/ Walter G. Sall
Walter G. Sall
Chairman
/s/ J. Patrick Rogers
J. Patrick Rogers, CFA
President
