Statement of Operations
For the Year Ended December 31, 2012
|
|
|
|
|
INVESTMENT INCOME
|
|
|
|
|
Dividends
|
|
$
|
168,685,284
|
|
Interest
|
|
|
13,368
|
|
Less net foreign taxes withheld
|
|
|
(197,033
|
)
|
|
|
|
|
|
|
|
|
168,501,619
|
|
|
|
|
|
|
Expenses
|
|
|
|
|
Management fees (Note 6)
|
|
|
39,133,340
|
|
Service and distribution fees (Note 6)
|
|
|
8,136,170
|
|
Administrative fees (Note 6)
|
|
|
2,750,096
|
|
Trustees fees and expenses (Note 6)
|
|
|
138,590
|
|
Transfer agent fees and expenses (Note 6)
|
|
|
4,421,447
|
|
Audit and tax services fees
|
|
|
66,607
|
|
Custodian fees and expenses
|
|
|
158,277
|
|
Legal fees
|
|
|
103,021
|
|
Registration fees
|
|
|
360,686
|
|
Shareholder reporting expenses
|
|
|
435,909
|
|
Miscellaneous expenses
|
|
|
157,346
|
|
|
|
|
|
|
Total expenses
|
|
|
55,861,489
|
|
Less waiver and/or expense reimbursement (Note 6)
|
|
|
(5,199,504
|
)
|
|
|
|
|
|
Net expenses
|
|
|
50,661,985
|
|
|
|
|
|
|
Net investment income
|
|
|
117,839,634
|
|
|
|
|
|
|
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS, OPTIONS WRITTEN AND FOREIGN CURRENCY TRANSACTIONS
|
|
|
|
|
Net realized loss on:
|
|
|
|
|
Investments
|
|
|
(52,589,102
|
)
|
Options written
|
|
|
(252,029,030
|
)
|
Foreign currency transactions
|
|
|
(1,904
|
)
|
Net change in unrealized appreciation (depreciation) on:
|
|
|
|
|
Investments
|
|
|
461,929,010
|
|
Options written
|
|
|
(14,668,544
|
)
|
|
|
|
|
|
Net realized and unrealized gain on investments, options written and foreign currency transactions
|
|
|
142,640,430
|
|
|
|
|
|
|
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS
|
|
$
|
260,480,064
|
|
|
|
|
|
|
See accompanying
notes to financial statements.
| 18
Statement of Changes in Net Assets
|
|
|
|
|
|
|
|
|
|
|
Year Ended
December 31,
2012
|
|
|
Year Ended
December 31,
2011
|
|
FROM OPERATIONS:
|
|
|
|
|
|
|
|
|
Net investment income
|
|
$
|
117,839,634
|
|
|
$
|
93,282,532
|
|
Net realized gain (loss) on investments, options written and foreign currency transactions
|
|
|
(304,620,036
|
)
|
|
|
61,140,173
|
|
Net change in unrealized appreciation (depreciation) on investments and options written
|
|
|
447,260,466
|
|
|
|
500,692
|
|
|
|
|
|
|
|
|
|
|
Net increase in net assets resulting from operations
|
|
|
260,480,064
|
|
|
|
154,923,397
|
|
|
|
|
|
|
|
|
|
|
FROM DISTRIBUTIONS TO SHAREHOLDERS:
|
|
|
|
|
|
|
|
|
Net investment income
|
|
|
|
|
|
|
|
|
Class A
|
|
|
(36,785,899
|
)
|
|
|
(36,924,214
|
)
|
Class C
|
|
|
(2,755,870
|
)
|
|
|
(2,308,396
|
)
|
Class Y
|
|
|
(77,262,794
|
)
|
|
|
(52,577,384
|
)
|
|
|
|
|
|
|
|
|
|
Total distributions
|
|
|
(116,804,563
|
)
|
|
|
(91,809,994
|
)
|
|
|
|
|
|
|
|
|
|
NET INCREASE IN NET ASSETS FROM CAPITAL SHARE TRANSACTIONS (NOTE 9)
|
|
|
1,481,678,768
|
|
|
|
121,415,183
|
|
|
|
|
|
|
|
|
|
|
Net increase in net assets
|
|
|
1,625,354,269
|
|
|
|
184,528,586
|
|
NET ASSETS
|
|
|
|
|
|
|
|
|
Beginning of the year
|
|
|
5,382,322,939
|
|
|
|
5,197,794,353
|
|
|
|
|
|
|
|
|
|
|
End of the year
|
|
$
|
7,007,677,208
|
|
|
$
|
5,382,322,939
|
|
|
|
|
|
|
|
|
|
|
DISTRIBUTIONS IN EXCESS OF NET INVESTMENT INCOME
|
|
$
|
(230,433
|
)
|
|
$
|
(170,240
|
)
|
|
|
|
|
|
|
|
|
|
See accompanying
notes to financial statements.
19 |
This Page Intentionally Left Blank
| 20
Financial Highlights
For a share outstanding throughout each period.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (Loss) from Investment
Operations:
|
|
|
Less Distributions:
|
|
|
|
Net asset
value,
beginning
of the
period
|
|
|
Net
investment
income (a)
|
|
|
Net
realized
and
unrealized
gain (loss)
|
|
|
Total from
investment
operations
|
|
|
Dividends
from net
investment
income
|
|
|
Distributions
from net
realized
capital
gains
|
|
|
Total
distributions
|
|
Class A
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12/31/2012
|
|
$
|
26.40
|
|
|
$
|
0.48
|
|
|
$
|
0.72
|
|
|
$
|
1.20
|
|
|
$
|
(0.47
|
)
|
|
$
|
|
|
|
$
|
(0.47
|
)
|
12/31/2011
|
|
|
26.06
|
|
|
|
0.44
|
|
|
|
0.33
|
|
|
|
0.77
|
|
|
|
(0.43
|
)
|
|
|
|
|
|
|
(0.43
|
)
|
12/31/2010
|
|
|
25.25
|
|
|
|
0.40
|
|
|
|
0.81
|
|
|
|
1.21
|
|
|
|
(0.40
|
)
|
|
|
|
|
|
|
(0.40
|
)
|
12/31/2009
|
|
|
24.17
|
|
|
|
0.49
|
|
|
|
1.06
|
|
|
|
1.55
|
|
|
|
(0.47
|
)
|
|
|
|
|
|
|
(0.47
|
)
|
12/31/2008*
|
|
|
28.64
|
|
|
|
0.55
|
|
|
|
(4.49
|
)
|
|
|
(3.94
|
)
|
|
|
(0.53
|
)
|
|
|
|
|
|
|
(0.53
|
)
|
Class C
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12/31/2012
|
|
|
26.32
|
|
|
|
0.28
|
|
|
|
0.71
|
|
|
|
0.99
|
|
|
|
(0.27
|
)
|
|
|
|
|
|
|
(0.27
|
)
|
12/31/2011
|
|
|
25.98
|
|
|
|
0.24
|
|
|
|
0.33
|
|
|
|
0.57
|
|
|
|
(0.23
|
)
|
|
|
|
|
|
|
(0.23
|
)
|
12/31/2010
|
|
|
25.18
|
|
|
|
0.21
|
|
|
|
0.80
|
|
|
|
1.01
|
|
|
|
(0.21
|
)
|
|
|
|
|
|
|
(0.21
|
)
|
12/31/2009
|
|
|
24.11
|
|
|
|
0.30
|
|
|
|
1.07
|
|
|
|
1.37
|
|
|
|
(0.30
|
)
|
|
|
|
|
|
|
(0.30
|
)
|
12/31/2008**
|
|
|
27.76
|
|
|
|
0.35
|
|
|
|
(3.57
|
)
|
|
|
(3.22
|
)
|
|
|
(0.43
|
)
|
|
|
|
|
|
|
(0.43
|
)
|
Class Y
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12/31/2012
|
|
|
26.39
|
|
|
|
0.56
|
|
|
|
0.70
|
|
|
|
1.26
|
|
|
|
(0.53
|
)
|
|
|
|
|
|
|
(0.53
|
)
|
12/31/2011
|
|
|
26.06
|
|
|
|
0.50
|
|
|
|
0.32
|
|
|
|
0.82
|
|
|
|
(0.49
|
)
|
|
|
|
|
|
|
(0.49
|
)
|
12/31/2010
|
|
|
25.24
|
|
|
|
0.47
|
|
|
|
0.81
|
|
|
|
1.28
|
|
|
|
(0.46
|
)
|
|
|
|
|
|
|
(0.46
|
)
|
12/31/2009
|
|
|
24.17
|
|
|
|
0.54
|
|
|
|
1.06
|
|
|
|
1.60
|
|
|
|
(0.53
|
)
|
|
|
|
|
|
|
(0.53
|
)
|
12/31/2008**
|
|
|
27.76
|
|
|
|
0.56
|
|
|
|
(3.56
|
)
|
|
|
(3.00
|
)
|
|
|
(0.59
|
)
|
|
|
|
|
|
|
(0.59
|
)
|
*
|
As of the close of business on February 15, 2008, the Fund acquired the assets and liabilities of Gateway Fund (the Predecessor Fund), a series of The Gateway
Trust, an Ohio business trust, in exchange for Class A shares of the Fund pursuant to a plan of reorganization approved by the Predecessor Fund shareholders on January 18, 2008 (the Acquisition). Prior to the Acquisition, the
Fund had no investment operations. The Fund is the successor to the Predecessor Fund and therefore information for the periods prior to and including February 15, 2008 relates to the Predecessor Fund.
|
**
|
From commencement of Class operations on February 19, 2008 through December 31, 2008.
|
(a)
|
Per share net investment income has been calculated using the average shares outstanding during the period.
|
(b)
|
Had certain expenses not been waived/reimbursed during the period, if applicable, total returns would have been lower.
|
(c)
|
A sales charge for Class A shares and a contingent deferred sales charge for Class C shares are not reflected in total return calculations. Periods less than one year, if
applicable, are not annualized.
|
(d)
|
The investment adviser and/or administrator agreed to waive its fees and/or reimburse a portion of the Funds expenses during the period. Without this waiver/reimbursement,
if applicable, expenses would have been higher.
|
(e)
|
Computed on an annualized basis for periods less than one year, if applicable.
|
See accompanying
notes to financial statements.
21 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ratios to Average Net Assets:
|
|
|
|
|
|
|
|
|
|
|
|
Net asset
value,
end of
the period
|
|
|
Total
return
(%) (b)(c)
|
|
|
Net assets,
end of
the period
(000s)
|
|
|
Net
expenses
(%) (d)(e)
|
|
|
Gross
expenses
(%) (e)
|
|
|
Net investment
income
(%) (e)
|
|
|
Portfolio
turnover
rate (%)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
27.13
|
|
|
|
4.51
|
|
|
$
|
2,066,522
|
|
|
|
0.94
|
|
|
|
1.03
|
|
|
|
1.79
|
|
|
|
8
|
|
|
26.40
|
|
|
|
2.99
|
|
|
|
2,208,167
|
|
|
|
0.94
|
|
|
|
1.04
|
|
|
|
1.67
|
|
|
|
3
|
|
|
26.06
|
|
|
|
4.83
|
|
|
|
2,403,629
|
|
|
|
0.94
|
|
|
|
1.05
|
|
|
|
1.59
|
|
|
|
7
|
|
|
25.25
|
|
|
|
6.57
|
|
|
|
2,784,865
|
|
|
|
0.94
|
|
|
|
1.05
|
|
|
|
2.05
|
|
|
|
11
|
|
|
24.17
|
|
|
|
(13.92
|
)
|
|
|
3,142,574
|
|
|
|
0.94
|
|
|
|
1.03
|
|
|
|
2.05
|
|
|
|
38
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
27.04
|
|
|
|
3.71
|
|
|
|
286,602
|
|
|
|
1.70
|
|
|
|
1.78
|
|
|
|
1.04
|
|
|
|
8
|
|
|
26.32
|
|
|
|
2.21
|
|
|
|
258,509
|
|
|
|
1.70
|
|
|
|
1.79
|
|
|
|
0.91
|
|
|
|
3
|
|
|
25.98
|
|
|
|
4.03
|
|
|
|
273,779
|
|
|
|
1.70
|
|
|
|
1.80
|
|
|
|
0.84
|
|
|
|
7
|
|
|
25.18
|
|
|
|
5.78
|
|
|
|
238,997
|
|
|
|
1.70
|
|
|
|
1.80
|
|
|
|
1.24
|
|
|
|
11
|
|
|
24.11
|
|
|
|
(11.74
|
)
|
|
|
173,869
|
|
|
|
1.70
|
|
|
|
1.83
|
|
|
|
1.57
|
|
|
|
38
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
27.12
|
|
|
|
4.76
|
|
|
|
4,654,553
|
|
|
|
0.70
|
|
|
|
0.78
|
|
|
|
2.08
|
|
|
|
8
|
|
|
26.39
|
|
|
|
3.20
|
|
|
|
2,915,647
|
|
|
|
0.70
|
|
|
|
0.79
|
|
|
|
1.92
|
|
|
|
3
|
|
|
26.06
|
|
|
|
5.13
|
|
|
|
2,520,386
|
|
|
|
0.70
|
|
|
|
0.80
|
|
|
|
1.86
|
|
|
|
7
|
|
|
25.24
|
|
|
|
6.83
|
|
|
|
1,659,385
|
|
|
|
0.70
|
|
|
|
0.78
|
|
|
|
2.25
|
|
|
|
11
|
|
|
24.17
|
|
|
|
(11.03
|
)
|
|
|
1,402,090
|
|
|
|
0.70
|
|
|
|
0.78
|
|
|
|
2.45
|
|
|
|
38
|
|
See accompanying
notes to financial statements.
| 22
Notes to Financial Statements
December 31, 2012
1. Organization.
Gateway Trust (the Trust) is
organized as a Massachusetts business trust. The Trust is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company. The Declaration of Trust permits the Board of
Trustees to authorize the issuance of an unlimited number of shares of the Trust in multiple series. The financial statements for certain funds of the Trust are presented in separate reports. Information presented in these financial statements
pertains to Gateway Fund (the Fund).
The Fund is a diversified investment company.
The Fund offers Class A, Class C and Class Y shares. Class A shares are sold with a maximum front-end sales charge of 5.75%. Class C shares do not pay a front-end sales charge, pay higher ongoing Rule
12b-1 fees than Class A shares and may be subject to a contingent deferred sales charge (CDSC) of 1.00% if those shares are redeemed within one year of acquisition, except for reinvested distributions. Class Y shares do not pay a
front-end sales charge, a CDSC or Rule 12b-1 fees. Class Y shares are generally intended for institutional investors with a minimum initial investment of $100,000, though some categories of investors are exempted from the minimum investment amount
as outlined in the Funds prospectus.
Expenses of the Fund are borne
pro rata
by the holders of each class of shares, except that each class
bears expenses unique to that class (including the Rule 12b-1 service and distribution fees). In addition, each class votes as a class only with respect to its own Rule 12b-1 Plan. Shares of each class would receive their
pro rata
share of
the net assets of the Fund if the Fund were liquidated. The Trustees approve separate distributions from net investment income on each class of shares.
2. Significant Accounting Policies.
The following is a summary of significant accounting policies consistently followed by the Fund in
the preparation of its financial statements. The Funds financial statements are prepared in accordance with accounting principles generally accepted in the United States of America which require the use of management estimates that affect the
reported amounts and disclosures in the financial statements. Actual results could differ from those estimates. Management has evaluated the events and transactions subsequent to year-end through the date the financial statements were issued and has
determined that there were no material events that would require disclosure in the Funds financial statements.
a. Valuation.
Equity securities, including shares of closed-end investment companies and exchange-traded funds, for which market
quotations are readily available are valued at market value, as reported by independent pricing services recommended by the investment adviser and approved by the Board of Trustees. Such independent pricing services generally use the securitys
last sale price on the exchange or market where the security is primarily traded or, if there is no reported sale during the day, the closing bid price. Securities traded on the NASDAQ Global Select Market, NASDAQ
Global Market and NASDAQ Capital Market are valued at the NASDAQ Official Closing
23 |
Notes to Financial Statements (continued)
December 31, 2012
Price (NOCP), or if lacking a NOCP, at the most recent bid quotation on the applicable NASDAQ Market. Debt securities (other than short-term obligations purchased with an original or
remaining maturity of sixty days or less) and unlisted equity securities are generally valued on the basis of evaluated bids furnished to the Fund by an independent pricing service recommended by the investment adviser and approved by the Board of
Trustees, which service determines valuations for normal, institutional-size trading units of such securities using market information, transactions for comparable securities and various relationships between securities which are generally
recognized by institutional traders. Broker-dealer bid quotations may also be used to value debt and equity securities where an independent pricing service is unable to price a security or where an independent pricing service does not provide a
reliable price for the security. Exchange-traded index options are valued at the average of the closing bid and ask quotations. Investments in other open-end investment companies are valued at their net asset value each day. Short-term obligations
purchased with an original or remaining maturity of sixty days or less are valued at amortized cost, which approximates market value. Securities for which market quotations are not readily available are valued at fair value as determined in good
faith by the Funds investment adviser using consistently applied procedures under the general supervision of the Board of Trustees. Option contracts for which the average of the closing bid and ask quotations are not considered to reflect
option contract values as of the close of the New York Stock Exchange (NYSE) are valued at fair value as determined in good faith under procedures adopted by the Board of Trustees. As of December 31, 2012, purchased options were
fair valued at $22,879,092 and written options were fair valued at $179,557,615.
The Fund may hold securities traded in foreign markets. Foreign
securities are valued at the closing market price in the foreign market. However, if events occurring after the close of the foreign market (but before the close of regular trading on the New York Stock Exchange) are believed to materially affect
the value of those securities, such securities are fair valued pursuant to procedures approved by the Board of Trustees. When fair valuing securities, the Fund may, among other things, use modeling tools or other processes that may take into account
factors such as securities market activity and/or significant events that occur after the close of the foreign market and before the Fund calculates its net asset value.
b. Investment Transactions and Related Investment Income.
Investment transactions are accounted for on a trade date basis for daily net asset value calculation. Dividend income is
recorded on ex-dividend date, or in the case of certain foreign securities, as soon as the Fund is notified, and interest income is recorded on an accrual basis. Interest income is increased by the accretion of discount and decreased by the
amortization of premium. In determining net gain or loss on securities sold, the cost of securities has been determined on an identified cost basis. Investment income, non-class specific expenses and realized and unrealized gains and losses are
allocated on a
| 24
Notes to Financial Statements (continued)
December 31, 2012
pro rata
basis to each class based on the relative net assets of each class to the total net assets of the Fund.
c. Foreign Currency Translation.
The books and records of the Fund are maintained in U.S. dollars. The values of securities, currencies and other assets and liabilities denominated in
currencies other than U.S. dollars are translated into U.S. dollars based upon foreign exchange rates prevailing at the end of the period. Purchases and sales of investment securities, income and expenses are translated on the respective dates of
such transactions.
Since the values of investment securities are presented at the foreign exchange rates prevailing at the end of the period, it is not
practical to isolate that portion of the results of operations arising from changes in exchange rates from fluctuations which arise due to changes in market prices of investment securities. Such changes are included with the net realized and
unrealized gain or loss on investments.
Net realized foreign exchange gains or losses arise from sales of foreign currency, currency gains or losses
realized between the trade and settlement dates on securities transactions and the difference between the amounts of dividends, interest and foreign withholding taxes recorded on the Funds books and the U.S. dollar equivalent of the amounts
actually received or paid. Net unrealized foreign exchange gains and losses arise from changes in the value of assets and liabilities, other than investment securities, at the end of the fiscal period, resulting from changes in exchange rates.
The Fund may use foreign currency exchange contracts to facilitate transactions in foreign-denominated investments. Losses may arise from changes in the
value of the foreign currency or if the counterparties do not perform under the contracts terms.
d. Option
Contracts.
The Funds investment strategy makes use of exchange-traded options. Exchange-traded options are standardized contracts and are settled through a clearing house with fulfillment supported by the credit of the exchange.
Therefore, counterparty credit risks to the Fund are reduced. The Fund writes (sells) index call options and purchases index put options.
When the Fund
writes an index call option, an amount equal to the net premium received (the premium less commission) is recorded as a liability and is subsequently adjusted to the current value until the option expires or the Fund enters into a closing purchase
transaction. When an index call option expires or the Fund enters into a closing purchase transaction, the difference between the net premium received and any amount paid at expiration or on effecting a closing purchase transaction, including
commission, is treated as a realized gain or, if the net premium received is less than the amount paid, as a realized loss. The Fund, as writer of an index call option, bears the risk of an unfavorable change in the market value of the index
underlying the written option.
25 |
Notes to Financial Statements (continued)
December 31, 2012
When the Fund purchases an index put option, it pays a premium and the index put option is subsequently
marked-to-market to reflect current value until the option expires or the Fund enters into a closing sale transaction. Premiums paid for purchasing index put options which expire are treated as realized losses. When the Fund enters into a closing
sale transaction, the difference between the premium paid and the proceeds of the closing sale transaction is treated as a realized gain or loss. The risk associated with purchasing index put options is limited to the premium paid.
e. Federal and Foreign Income Taxes.
The Fund intends to meet the requirements of the Internal Revenue Code of 1986, as amended,
applicable to regulated investment companies, and to distribute to its shareholders substantially all of its net investment income and any net realized capital gains at least annually. Management has performed an analysis of the Funds tax
positions for the open tax years as of December 31, 2012 and has concluded that no provisions for income tax are required. The Funds federal tax returns for the prior three fiscal years remain subject to examination by the Internal
Revenue Service. Management is not aware of any events that are reasonably possible to occur in the next twelve months that would result in the amounts of any unrecognized tax benefits significantly increasing or decreasing for the Fund. However,
managements conclusions regarding tax positions taken may be subject to review and adjustment at a later date based on factors including, but not limited to, new tax laws and accounting regulations and interpretations thereof.
The Fund may be subject to foreign withholding taxes on investment income and taxes on capital gains on investments that are accrued and paid based upon the
Funds understanding of the tax rules and regulations that exist in the countries in which the Fund invests. Foreign withholding taxes on dividend and interest income are reflected on the Statement of Operations as a reduction of investment
income, net of amounts eligible to be reclaimed. Dividends and interest receivable on the Statement of Assets and Liabilities are net of foreign withholding taxes. Foreign withholding taxes eligible to be reclaimed are reflected on the Statement of
Assets and Liabilities as tax reclaims receivable. Capital gains taxes paid are included in net realized gain (loss) on investments in the Statement of Operations. Accrued but unpaid capital gains taxes are reflected as foreign taxes payable on the
Statement of Assets and Liabilities, if applicable, and reduce unrealized gains on investments. In the event that realized gains on investments are subsequently offset by realized losses, taxes paid on realized gains may be returned to the Fund.
Such amounts, if applicable, are reflected as foreign tax rebates receivable on the Statement of Assets and Liabilities and are recorded as a realized gain when received.
f. Dividends and Distributions to Shareholders.
Dividends and distributions are recorded on ex-dividend date. The timing and characterization of certain income and capital gain
distributions are determined annually in accordance with federal tax regulations, which may differ from accounting principles generally accepted in the United States of America. Permanent differences are primarily due to differing
| 26
Notes to Financial Statements (continued)
December 31, 2012
treatments for book and tax purposes of items such as foreign currency transactions, distributions in excess of current earnings and return of capital and capital gain distributions from REITs.
Permanent book and tax basis differences relating to shareholder distributions, net investment income and net realized gains will result in reclassifications to capital accounts. Temporary differences between book and tax distributable earnings are
primarily due to wash sales, deferred Trustees fees, return of capital distributions received and option contracts mark to market. Distributions from net investment income and short-term capital gains are considered to be distributed from
ordinary income for tax purposes.
The tax characterization of distributions is determined on an annual basis. The tax character of distributions paid to
shareholders during the years ended December 31, 2012 and 2011 was as follows:
|
|
|
|
|
|
|
|
|
|
|
2012 Distributions Paid From:
|
|
2011 Distributions Paid From:
|
Ordinary
Income
|
|
Long-Term
Capital Gains
|
|
Total
|
|
Ordinary
Income
|
|
Long-Term
Capital Gains
|
|
Total
|
$116,804,563
|
|
$
|
|
$116,804,563
|
|
$91,809,994
|
|
$
|
|
$91,809,994
|
As of December 31, 2012, the components of distributable earnings on a tax basis were as follows:
|
|
|
|
|
Undistributed ordinary income
|
|
$
|
|
|
Undistributed long-term capital gains
|
|
|
|
|
|
|
|
|
|
Total undistributed earnings
|
|
|
|
|
|
|
|
|
|
Capital loss carryforward:
|
|
|
|
|
Short-term:
|
|
|
|
|
Expires
|
|
|
|
|
December 31, 2014
|
|
|
(75,883,641
|
)
|
December 31, 2017
|
|
|
(1,005,056,628
|
)
|
December 31, 2018
|
|
|
(393,591,402
|
)
|
No expiration date
|
|
|
(199,277,068
|
)
|
Long-term:
|
|
|
|
|
No expiration date
|
|
|
(88,308,430
|
)
|
|
|
|
|
|
Total capital loss carryforward
|
|
|
(1,762,117,169
|
)
|
Unrealized appreciation
|
|
|
2,158,153,398
|
|
|
|
|
|
|
Total accumulated earnings
|
|
$
|
396,036,229
|
|
|
|
|
|
|
g. Repurchase Agreements.
It is the Funds policy that the market value of the collateral for
repurchase agreements be at least equal to 102% of the repurchase price, including interest. Certain repurchase agreements are tri-party arrangements whereby the collateral is held in a segregated account for the benefit of the Fund and on behalf
27 |
Notes to Financial Statements (continued)
December 31, 2012
of the counterparty. Repurchase agreements could involve certain risks in the event of default or insolvency of the counterparty including possible delays or restrictions upon the Funds
ability to dispose of the underlying securities.
h. Indemnifications.
Under the Trusts organizational documents, its
officers and Trustees are indemnified against certain liabilities arising out of the performance of their duties to the Fund. Additionally, in the normal course of business, the Fund enters into contracts with service providers that contain general
indemnification clauses. The Funds maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Fund that have not yet occurred. However, based on experience, the Fund expects the risk
of loss to be remote.
i. New Accounting Pronouncement.
In December 2011, Accounting Standards Update (ASU)
No. 2011-11, Disclosures about Offsetting Assets and Liabilities, was issued and is effective for interim and annual periods beginning after January 1, 2013. The ASU enhances disclosure requirements with respect to an
entitys rights of setoff and related arrangements associated with its financial and derivative instruments. Management is currently evaluating the impact the adoption of ASU 2011-11 may have on the Funds financial statement disclosures.
3. Fair Value Measurements.
In accordance with accounting standards related to fair value measurements and disclosures, the
Fund has categorized the inputs utilized in determining the value of the Funds assets or liabilities. These inputs are summarized in the three broad levels listed below:
|
|
|
Level 1 quoted prices in active markets for identical assets or liabilities;
|
|
|
|
Level 2 prices determined using other significant inputs that are observable either directly, or indirectly through corroboration with observable market
data (which could include quoted prices for similar assets or liabilities, interest rates, credit risk, etc.); and
|
|
|
|
Level 3 prices determined using significant unobservable inputs when quoted prices or observable inputs are unavailable such as when there is little or no
market activity for an asset or liability (unobservable inputs reflect the Funds own assumptions in determining the fair value of assets or liabilities and would be based on the best information available).
|
The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities.
| 28
Notes to Financial Statements (continued)
December 31, 2012
The following is a summary of the inputs used to value the Funds investments as of December 31, 2012,
at value:
Asset Valuation Inputs
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Description
|
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
|
Total
|
|
Common Stocks(a)
|
|
$
|
6,861,349,822
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
6,861,349,822
|
|
Purchased Options(a)
|
|
|
|
|
|
|
22,879,092
|
|
|
|
|
|
|
|
22,879,092
|
|
Short-Term Investments
|
|
|
|
|
|
|
267,115,308
|
|
|
|
|
|
|
|
267,115,308
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
6,861,349,822
|
|
|
$
|
289,994,400
|
|
|
$
|
|
|
|
$
|
7,151,344,222
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liability Valuation Inputs
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Description
|
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
|
Total
|
|
Written Options(a)
|
|
$
|
|
|
|
$
|
(179,557,615
|
)
|
|
$
|
|
|
|
$
|
(179,557,615
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a)
|
Details of the major categories of the Funds investments are reflected within the Portfolio of Investments.
|
For the year ended December 31, 2012, there were no transfers between Levels 1, 2 and 3.
4. Derivatives.
Derivative instruments are defined as financial instruments whose value and performance are based on the value and performance of another security or financial
instrument. Derivative instruments that the Fund used during the period include written index call options and purchased index put options.
The Fund
seeks to capture the majority of the returns associated with equity market investments, while exposing investors to less risk than other equity investments. To meet this investment goal, the Fund invests in a broadly diversified portfolio of common
stocks, while also writing index call options and purchasing index put options. Writing index call options can reduce the Funds volatility, provide a steady cash flow and be an important source of the Funds return, although it also may
reduce the Funds ability to profit from increases in the value of its equity portfolio. The Fund also buys index put options, which can protect the Fund from a significant market decline that may occur over a short period of time. The value of
an index put option generally increases as the prices of stocks constituting the index decrease and decreases as those stocks increase in price. The combination of the diversified stock portfolio, the steady cash flow from writing of index call
options and the downside protection from purchased index put options is intended to provide the Fund with the majority of the returns associated with equity market investments while exposing investors to less risk than other equity investments.
During the year ended December 31, 2012, written index call options and purchased index put options were used in accordance with this objective.
29 |
Notes to Financial Statements (continued)
December 31, 2012
The following is a summary of derivative instruments for the Fund as of December 31, 2012:
|
|
|
|
|
Statement of Assets and Liabilities Caption
|
|
Equity
Contracts
|
|
Assets
|
|
|
|
|
Investments at value*
|
|
$
|
22,879,092
|
|
Liabilities
|
|
|
|
|
Options written, at value
|
|
|
(179,557,615
|
)
|
*
|
Represents purchased options, at value.
|
Transactions in derivative
instruments for the Fund during the year ended December 31, 2012 were as follows:
|
|
|
|
|
Statement of Operations Caption
|
|
Equity
Contracts
|
|
Net Realized Loss on:
|
|
|
|
|
Investments*
|
|
$
|
(276,383,411
|
)
|
Options written
|
|
|
(252,029,030
|
)
|
Net Change in Unrealized Appreciation (Depreciation) on:
|
|
|
|
|
Investments*
|
|
$
|
30,851,595
|
|
Options written
|
|
|
(14,668,544
|
)
|
*
|
Represents realized loss and change in unrealized appreciation (depreciation), respectively, for purchased options during the period.
|
As the Fund values its derivatives at fair value and recognizes changes in fair value through the Statement of Operations, it does not qualify for hedge accounting
under authoritative guidance for derivative instruments. The Funds investments in derivatives may represent an economic hedge; however, they are considered to be non-hedge transactions for the purpose of these disclosures.
The volume of option contract activity for the Fund, as a percentage of investments in common stocks, based on month-end notional amounts outstanding during the
period, at absolute value, was as follows for the year ended December 31, 2012:
|
|
|
|
|
|
|
|
|
Gateway Fund*
|
|
Call Options
Written
|
|
|
Put Options
Purchased
|
|
Average Notional Amount Outstanding
|
|
|
99.06
|
%
|
|
|
98.00
|
%
|
Highest Notional Amount Outstanding
|
|
|
99.39
|
%
|
|
|
99.39
|
%
|
Lowest Notional Amount Outstanding
|
|
|
98.82
|
%
|
|
|
91.63
|
%
|
Notional Amount Outstanding as of December 31, 2012
|
|
|
99.39
|
%
|
|
|
99.39
|
%
|
*
|
Notional amounts outstanding are determined by multiplying option contracts by the contract multiplier by the price of the options underlying index, the
S&P 500
®
Index.
|
| 30
Notes to Financial Statements (continued)
December 31, 2012
Notional amounts outstanding at the end of the prior period are included in the averages above.
The following is a summary of the Funds written option activity:
|
|
|
|
|
|
|
|
|
|
|
Number of
Contracts
|
|
|
Premiums
|
|
Outstanding at 12/31/2011
|
|
|
41,865
|
|
|
$
|
259,474,558
|
|
Options written
|
|
|
356,172
|
|
|
|
1,246,158,673
|
|
Options terminated in closing purchase transactions
|
|
|
(350,219
|
)
|
|
|
(1,338,656,307
|
)
|
|
|
|
|
|
|
|
|
|
Outstanding at 12/31/2012
|
|
|
47,818
|
|
|
$
|
166,976,924
|
|
|
|
|
|
|
|
|
|
|
5. Purchases and Sales of Securities.
For the year ended December 31, 2012, purchases and sales of
securities (excluding short-term investments) were $1,381,140,403 and $504,765,211, respectively.
6. Management Fees and Other
Transactions with Affiliates.
a. Management Fees.
Gateway Investment Advisers, LLC (Gateway Advisers)
serves as investment adviser to the Fund. Gateway Advisers is a subsidiary of Natixis Global Asset Management, L.P. (Natixis US), which is part of Natixis Global Asset Management, an international asset management group based in Paris,
France. Under the terms of the management agreement, the Fund pays a management fee at the annual rate of 0.65% of the first $5 billion of the Funds average daily net assets and 0.60% of the Funds average daily net assets in excess of $5
billion, calculated daily and payable monthly.
Gateway Advisers has given a binding undertaking to the Fund to waive management fees and/or reimburse
certain expenses to limit the Funds operating expenses, exclusive of acquired fund fees and expenses, brokerage expenses, interest expense, taxes and extraordinary expenses. This undertaking is in effect until April 30, 2013 and is
reevaluated on an annual basis. Management fees payable, as reflected on the Statement of Assets and Liabilities, is net of waivers and/or expense reimbursements, if any, pursuant to these undertakings.
For the year ended December 31, 2012, the expense limits as a percentage of average daily net assets under the expense limitation agreement were as follows:
|
|
|
|
|
Expense Limit as a
Percentage of Average
Daily Net Assets
|
Class A
|
|
Class C
|
|
Class Y
|
0.94%
|
|
1.70%
|
|
0.70%
|
Gateway Advisers shall be permitted to recover expenses it has borne under the expense limitation agreement (whether through waiver
of its management fee or
31 |
Notes to Financial Statements (continued)
December 31, 2012
otherwise) on a class by class basis in later periods to the extent the annual operating expenses of a class fall below a class expense limits, provided, however, that a class is not
obligated to pay such waived/reimbursed fees or expenses more than one year after the end of the fiscal year in which the fees or expenses were waived/reimbursed.
For the year ended December 31, 2012, the management fees and waiver of management fees for the Fund were as follows:
|
|
|
|
|
|
|
|
|
Gross
Management
Fees
|
|
Waiver of
Management
Fees
1
|
|
Net
Management
Fees
|
|
Percentage of Average
Daily Net Assets
|
|
|
|
Gross
|
|
Net
|
$ 39,133,340
|
|
$4,984,935
|
|
$34,148,405
|
|
0.64%
|
|
0.56%
|
1
|
Management fee waiver is subject to
possible recovery until December 31, 2013.
|
For the year ended December 31, 2012, Class A expenses have been reimbursed
in the amount of $214,569. This expense reimbursement is subject to possible recovery until December 31, 2013.
No expenses were recovered during
the year ended December 31, 2012 under the terms of the expense limitation agreement.
b. Service and Distribution
Fees.
NGAM Distribution, L.P. (NGAM Distribution), which is a wholly-owned subsidiary of Natixis US, has entered into a distribution agreement with the Trust. Pursuant to this agreement, NGAM Distribution serves as
principal underwriter of the Fund.
Pursuant to Rule 12b-1 under the 1940 Act, the Trust has adopted a Service Plan relating to the Funds
Class A shares (the Class A Plan) and a Distribution and Service Plan relating to the Funds Class C shares (the Class C Plan).
Under the Class A Plan, the Fund pays NGAM Distribution a monthly service fee at an annual rate not to exceed 0.25% of the average daily net assets attributable to the Funds Class A shares, as
reimbursement for expenses incurred by NGAM Distribution in providing personal services to investors in Class A shares and/or the maintenance of shareholder accounts.
Under the Class C Plan, the Fund pays NGAM Distribution a monthly service fee at an annual rate not to exceed 0.25% of the average daily net assets attributable to the Funds Class C shares, as compensation
for services provided by NGAM Distribution in providing personal services to investors in Class C shares and/or the maintenance of shareholder accounts.
Also under the Class C Plan, the Fund pays NGAM Distribution a monthly distribution fee at an annual rate of 0.75% of the average daily net assets attributable to
the Funds Class C shares, as compensation for services provided by NGAM Distribution in connection with the marketing or sale of Class C shares.
| 32
Notes to Financial Statements (continued)
December 31, 2012
For the year ended December 31, 2012, the service and distribution fees for the Fund were as follows:
|
|
|
|
|
Service Fees
|
|
Distribution Fees
|
Class A
|
|
Class C
|
|
Class C
|
$ 5,364,222
|
|
$692,987
|
|
$2,078,961
|
c.
Administrative Fees.
NGAM Advisors, L.P. (NGAM Advisors), provides certain
administrative services for the Fund and contracts with State Street Bank and Trust Company (State Street Bank) to serve as sub-administrator. NGAM Advisors is a wholly-owned subsidiary of Natixis US. Pursuant to an agreement among
Natixis Funds Trust I, Natixis Funds Trust II, Natixis Funds Trust IV, Gateway Trust (Natixis Funds Trusts), Loomis Sayles Funds I, Loomis Sayles Funds II (Loomis Sayles Funds Trusts), Hansberger International Series and NGAM
Advisors, the Fund pays NGAM Advisors monthly its
pro rata
portion of fees equal to an annual rate of 0.0575% of the first $15 billion of the average daily net assets of the Natixis Funds Trusts, Loomis Sayles Funds Trusts and Hansberger
International Series, 0.0500% of the next $15 billion, 0.0400% of the next $30 billion and 0.0350% of such assets in excess of $60 billion, subject to an annual aggregate minimum fee for the Natixis Funds Trusts, Loomis Sayles Funds Trusts and
Hansberger International Series of $10 million, which is reevaluated on an annual basis.
For the year ended December 31, 2012, the administrative
fees for the Fund were $2,750,096.
d. Sub-Transfer Agent Fees.
NGAM Distribution has entered into agreements, which include
servicing agreements, with financial intermediaries that provide recordkeeping, processing, shareholder communications and other services to customers of the intermediaries that hold positions in the Fund and has agreed to compensate the
intermediaries for providing those services. Intermediaries transact with the Fund primarily through the use of omnibus accounts on behalf of their customers who hold positions in the Fund. These services would have been provided by the Funds
transfer agent and other service providers if the shareholders accounts were maintained directly at the Funds transfer agent. Accordingly, the Fund has agreed to reimburse NGAM Distribution for all or a portion of the servicing fees paid
to these intermediaries. The reimbursement amounts (sub-transfer agent fees) paid to NGAM Distribution are subject to a current per-account equivalent fee limit approved by the Funds Board, which is based on fees for similar services paid to
the Funds transfer agent and other service providers.
For the year ended December 31, 2012, the sub-transfer agent fees (which are reflected
in transfer agent fees and expenses in the Statement of Operations) for the Fund were $2,920,244. As of December 31, 2012, the Fund owes NGAM Distribution $38,116 in reimbursements for sub-transfer agent fees.
33 |
Notes to Financial Statements (continued)
December 31, 2012
e. Commissions.
Commissions (including CDSCs) on Fund shares retained by NGAM
Distribution during the year ended December 31, 2012 amounted to $795,326.
f. Trustees Fees and Expenses.
The Trust
does not pay any compensation directly to its officers or Trustees who are directors, officers or employees of NGAM Advisors, NGAM Distribution, Natixis US or their affiliates. The Chairperson of the Board receives a retainer fee at the annual rate
of $265,000. The Chairperson does not receive any meeting attendance fees for Board of Trustees meetings or committee meetings that she attends. Each Independent Trustee (other than the Chairperson) receives, in the aggregate, a retainer fee at the
annual rate of $95,000. Each Independent Trustee also receives a meeting attendance fee of $10,000 for each meeting of the Board of Trustees that he or she attends in person and $5,000 for each meeting of the Board of Trustees that he or she attends
telephonically. In addition, each committee chairman receives an additional retainer fee at an annual rate of $15,000. Each Contract Review and Governance Committee member is compensated $6,000 for each Committee meeting that he or she attends in
person and $3,000 for each meeting that he or she attends telephonically. Each Audit Committee member is compensated $7,500 for each Committee meeting that he or she attends in person and $3,750 for each meeting that he or she attends
telephonically. These fees are allocated among the funds in the Natixis Funds Trusts, Loomis Sayles Funds Trusts and Hansberger International Series based on a formula that takes into account, among other factors, the relative net assets of each
fund. Trustees are reimbursed for travel expenses in connection with attendance at meetings.
Effective January 1, 2013, the Chairperson of the
Board will receive a retainer fee at the annual rate of $285,000 and each Independent Trustee (other than the Chairperson) will receive, in the aggregate, a retainer fee at the annual rate of $115,000. In addition, each committee chairman will
receive an additional retainer fee at an annual rate of $17,500, and each Audit Committee member will be compensated $6,000 for each Committee meeting that he or she will attend in person and $3,000 for each meeting that he or she will attend
telephonically. All other Trustee fees will remain unchanged.
A deferred compensation plan (the Plan) is available to the Trustees on a
voluntary basis. Deferred amounts remain in the Fund until distributed in accordance with the provisions of the Plan. The value of a participating Trustees deferral account is based on theoretical investments of deferred amounts, on the normal
payment dates, in certain funds of the Natixis Funds Trusts, Loomis Sayles Funds Trusts and Hansberger International Series as designated by the participating Trustees. Changes in the value of participants deferral accounts are allocated
pro rata
among the funds in the Natixis Funds Trusts, Loomis Sayles Funds Trusts, and Hansberger International Series, and are normally reflected as Trustees fees and expenses in the Statement of Operations. The portions of the accrued
obligations allocated to the Fund under the Plan are reflected as Deferred Trustees fees in the Statement of Assets and Liabilities.
| 34
Notes to Financial Statements (continued)
December 31, 2012
7. Line of Credit.
The Fund, together with certain other funds of Natixis Funds
Trusts, Loomis Sayles Funds Trusts and Hansberger International Series, participates in a $200,000,000 committed unsecured line of credit provided by State Street Bank, with an individual limit of $125,000,000 for each fund that participates in the
line of credit. Interest is charged to each participating fund based on its borrowings at a rate per annum equal to the greater of the Federal Funds rate or overnight LIBOR, plus 1.25%. In addition, a commitment fee of 0.10% per annum, payable
at the end of each calendar quarter, is accrued and apportioned among the participating funds based on their average daily unused portion of the line of credit. Prior to April 19, 2012, the commitment fee was 0.125% per annum.
For the year ended December 31, 2012, the Fund had no borrowings under these agreements.
8. Broker Commission Recapture.
The Fund has entered into agreements with certain brokers whereby the brokers will rebate a portion of brokerage commissions. All amounts rebated by the
brokers are returned to the Fund under such agreements and are included in realized gains in the Statement of Operations.
For the year ended
December 31, 2012, the Fund had no amounts rebated under these agreements.
35 |
Notes to Financial Statements (continued)
December 31, 2012
9. Capital Shares.
The Fund may issue an unlimited number of shares of beneficial
interest, without par value. Transactions in capital shares were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended
December 31, 2012
|
|
|
|
Year Ended
December 31, 2011
|
|
|
|
|
Shares
|
|
|
|
Amount
|
|
|
|
Shares
|
|
|
|
Amount
|
|
Class A
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issued from the sale of shares
|
|
|
24,680,209
|
|
|
$
|
668,289,665
|
|
|
|
22,895,031
|
|
|
$
|
600,002,451
|
|
Issued in connection with the reinvestment of distributions
|
|
|
1,242,472
|
|
|
|
33,658,784
|
|
|
|
1,297,048
|
|
|
|
33,720,514
|
|
Redeemed
|
|
|
(33,380,977
|
)
|
|
|
(902,876,950
|
)
|
|
|
(32,778,036
|
)
|
|
|
(857,266,915
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net change
|
|
|
(7,458,296
|
)
|
|
$
|
(200,928,501
|
)
|
|
|
(8,585,957
|
)
|
|
$
|
(223,543,950
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Class C
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issued from the sale of shares
|
|
|
2,955,609
|
|
|
$
|
79,652,717
|
|
|
|
2,196,254
|
|
|
$
|
57,428,598
|
|
Issued in connection with the reinvestment of distributions
|
|
|
70,936
|
|
|
|
1,916,281
|
|
|
|
59,368
|
|
|
|
1,539,062
|
|
Redeemed
|
|
|
(2,248,403
|
)
|
|
|
(60,561,409
|
)
|
|
|
(2,971,180
|
)
|
|
|
(77,574,562
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net change
|
|
|
778,142
|
|
|
$
|
21,007,589
|
|
|
|
(715,558
|
)
|
|
$
|
(18,606,902
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Class Y
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issued from the sale of shares
|
|
|
99,173,102
|
|
|
$
|
2,691,432,956
|
|
|
|
54,213,182
|
|
|
$
|
1,423,629,302
|
|
Issued in connection with the reinvestment of distributions
|
|
|
1,433,054
|
|
|
|
38,841,346
|
|
|
|
1,092,042
|
|
|
|
28,378,464
|
|
Redeemed
|
|
|
(39,439,629
|
)
|
|
|
(1,068,674,622
|
)
|
|
|
(41,568,470
|
)
|
|
|
(1,088,441,731
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net change
|
|
|
61,166,527
|
|
|
$
|
1,661,599,680
|
|
|
|
13,736,754
|
|
|
$
|
363,566,035
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Increase (decrease) from capital share transactions
|
|
|
54,486,373
|
|
|
$
|
1,481,678,768
|
|
|
|
4,435,239
|
|
|
$
|
121,415,183
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10. Potential Loss Contingency.
The Fund has been named as a defendant, along with other financial
institutions and individuals, in two separate actions (related to the same company) brought by a bankruptcy trustee seeking to recover as fraudulent transfers amounts the Fund, and others, received in connection with a merger involving a company
formerly held in the Funds portfolio of investments. The Fund received $9,525,600 in connection with the merger. It is reasonably possible that an outcome unfavorable to the Fund could result from either or both of these cases; however, a
reasonable estimate of the amount of potential loss to the Fund cannot be made at this time.
| 36
Report of Independent Registered Public Accounting Firm
To the Trustees of Gateway Trust and Shareholders of Gateway Fund:
In our opinion, the accompanying statement of assets and liabilities, including the portfolio of investments, and the related statements of operations and of changes in net assets and the financial highlights
present fairly, in all material respects, the financial position of the Gateway Fund, a series of Gateway Trust (the Fund), at December 31, 2012, and the results of its operations, the changes in its net assets and the financial
highlights for each of the periods indicated, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as financial
statements) are the responsibility of the Funds management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with the
standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement
presentation. We believe that our audits, which included confirmation of securities at December 31, 2012 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion.
PricewaterhouseCoopers LLP
Boston, Massachusetts
February 22, 2013
37 |
2012 U.S. Tax Distribution Information to Shareholders (Unaudited)
Qualified Dividend Income.
100% of the dividends distributed by the
Fund during the fiscal year ended December 31, 2012 are considered qualified dividend income, and are eligible for reduced tax rates. These lower rates range from 0% to 15% depending on an individuals tax bracket.
Corporate Dividends Received Deduction.
For the fiscal year ended December 31, 2012, 100% of dividends distributed by the Gateway Fund
qualify for the dividends received deduction for corporate shareholders.
| 38