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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number: 811-22099
Gateway Trust
(Exact name of Registrant as specified in charter)
399 Boylston Street, Boston, Massachusetts 02116
(Address of principal executive offices) (Zip code)
Coleen Downs Dinneen, Esq.
Natixis Distributors, L.P.
399 Boylston Street
Boston, Massachusetts 02116
(Name and address of agent for service)
Registrant’s telephone number, including area code: (617) 449-2810
Date of fiscal year end: December 31
Date of reporting period: December 31, 2008
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Item 1. | Reports to Stockholders. |
The Registrant’s annual report transmitted to shareholders pursuant to Rule 30e-1 under the Investment Company Act of 1940 is as follows:
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ANNUAL REPORT
December 31, 2008
Gateway Fund
Gateway Investment Advisers, LLC
Management Discussion and Performance page 1
Portfolio of Investments page 5
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GATEWAY FUND
PORTFOLIO PROFILE
Objective:
The fund seeks to capture the majority of returns associated with equity market investments, while exposing investors to less risk than other equity investments.
Strategy:
Invests in a broadly diversified portfolio of common stocks, while also selling index call options and purchasing index put options.
Inception Date:
December 7, 1977*
Managers:
Michael T. Buckius, CFA
J. Patrick Rogers, CFA
Paul R. Stewart, CPA, CFA
Gateway Investment Advisers, LLC
Symbols:
Class A | GATEX | |
Class C | GTECX | |
Class Y | GTEYX |
What You Should Know:
The fund may invest in foreign securities traded in U.S. markets, including American Depositary Receipts. Foreign securities are subject to foreign currency fluctuations, higher volatility than U.S. securities and limited liquidity. Political, economic and information risks are also associated with foreign securities.
The fund may invest in real estate investment trusts (REITs). REITs are subject to certain risks, particularly fluctuating property values, changes in interest rates, property taxes and mortgage-related risks.
Unusual market conditions or the lack of a ready market for any particular option at a specific time may reduce the effectiveness of the fund’s option strategies, and for these and other reasons the fund’s option strategies may not reduce the fund’s volatility to the extent desired. From time to time, the fund may not own any put options, resulting in an increased exposure to a market decline. Accordingly, the purchase of fund shares should be viewed as a long-term investment.
As 2008 passed into history, investors looked back reluctantly on what proved to be the worst year for the S&P 500 Index since 1937. The seeds of economic malaise may have been planted early in the decade, during an era of easy credit, but the bitter harvest of those years has spread around the world. Subprime issues that surfaced late in 2007 led to frozen credit markets in 2008 and, in the absence of the necessary lubricant, the leverage machinery in the financial services industry stalled. Prices of commodities, housing, stocks and lower-quality bonds fell at an accelerating rate. One illustration of this volatility was the price of oil, which peaked at $147 a barrel in July and plummeted to $44 by year end.
2008 PERFORMANCE IN REVIEW
These extraordinary market conditions tested the risk-management techniques of the Gateway Fund. Extreme volatility translated into higher levels of cash flow from selling call options and produced unusual (but welcome) profits from put options. As a result, for the fiscal year ended December 31, 2008, the fund provided a total return of -13.92% (including performance of the “Predecessor Fund”), based on the net asset value of Class A shares and $0.53 in reinvested dividends. The fund’s ordinary income dividends are considered “qualified dividend income,” subject to a federal tax rate of not more than 15%; no capital gains were distributed during the period.
The fund’s option strategy was particularly effective during the second half of the year when stock prices plunged. While negative, the fund’s performance for the fiscal year compared favorably to the -37.00% return on the S&P 500 Index. Barclays Capital Aggregate Bond Index (formerly the Lehman Aggregate Bond Index) returned 5.24% for the period. This index includes U.S. Treasury issues that benefited from flight-to-quality buying in the course of the year, which helped offset some of the price declines in higher-yielding corporate bonds.
VOLATILITY TESTED THE FUND’S OPTIONS STRATEGY
Profits from index options allowed the fund to mitigate some of the declines sustained by unhedged portfolios. As the economy spiraled downward, widening swings in daily stock prices led to extremely volatile market conditions. After beginning 2008 at 22.50, the Chicago Board Options Exchange Volatility Index (the “VIX”) peaked at an all-time closing high of 80.86 on November 20 and then closed the year at 40.00. Spikes in the VIX coincided with a number of headline events in 2008, including the government’s bailout of Bear Stearns in March, the bailout of Fannie Mae and Freddie Mac in July, and the failure of Lehman Brothers in September. Late into the fourth quarter, higher VIX levels were reinforced by news of further economic deterioration and massive global government intervention on behalf of a host of financial services firms.
2009 PERSPECTIVES
The value of an index option-based risk management strategy comes into focus when looking at longer periods of time. Although past performance does not assure future results, the chart on the following page illustrates the results of an assumed investment of $10,000 over the past ten years. A number of market observers predict that higher volatility levels will persist. High volatility can be a possible advantage to the fund’s cash-flow-based strategy. Regardless of changing markets, our objective remains to capture the majority of the returns associated with stock market investments while exposing investors to less risk than other equity investments.
* As of the close of business on February 15, 2008, the fund acquired the assets and liabilities of the “Predecessor Fund” (see Note 1 of the Notes to Financial Statements) in exchange for Class A shares of the fund, pursuant to a plan of reorganization. Prior to the reorganization, 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.
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GATEWAY FUND
Investment Results through December 31, 2008
PERFORMANCE IN PERSPECTIVE
The charts comparing the fund’s performance to an index provide a general sense of how it performed. The fund’s total return for the period shown below appears with and without sales charges and includes fund expenses and fees. An index measures the performance of a theoretical portfolio. Unlike a fund, the index is unmanaged and does not have expenses that affect the results. It is not possible to invest directly in an index. Investors would incur transaction costs and other expenses if they purchased the securities necessary to match the index.
Growth of a $10,000 Investment in Class A Shares1,8
Average Annual Returns — December 31, 20088
1 YEAR | 5 YEARS | 10 YEARS | |||||||
CLASS A (Inception 12/7/1977)1 | |||||||||
Net Asset Value2 | -13.92 | % | 2.75 | % | 3.52 | % | |||
With Maximum Sales Charge3 | -18.88 | 1.55 | 2.91 | ||||||
CLASS C (Inception 2/19/2008)1 | |||||||||
Net Asset Value2 | -14.54 | 1.97 | 2.68 | ||||||
With CDSC4 | -15.38 | 1.97 | 2.68 | ||||||
CLASS Y (Inception 2/19/2008)1 | |||||||||
Net Asset Value2 | -13.77 | 2.79 | 3.54 | ||||||
COMPARATIVE PERFORMANCE | 1 YEAR | 5 YEARS | 10 YEARS | ||||||
S&P 500 Index5 | -37.00 | % | -2.19 | % | -1.38 | % | |||
Barclays Capital Aggregate Bond Index6 | 5.24 | 4.65 | 5.63 | ||||||
Morningstar Long-Short Fund Avg.7 | -15.40 | 1.35 | 3.35 |
All returns represent past performance and do not guarantee future results. Periods of less than one year are not annualized. Share price and return will vary and you may have a gain or loss when you sell your shares. Current returns may be higher or lower than those shown. For performance current to the most recent month-end, visit www.funds.natixis.com. All results include reinvestment of dividends and capital gains. The graph represents past performance of Class A shares. Class Y shares are only available to certain investors, as outlined in the prospectus.
The table and graph do not reflect taxes shareholders might owe on any fund distributions or when they redeem their shares.
PORTFOLIO FACTS
% of Net Assets as of | ||||
FUND COMPOSITION | 12/31/08 | 12/31/07 | ||
Common Stocks | 95.8 | 96.7 | ||
Put Options | 0.3 | 0.6 | ||
Call Options Written | -3.3 | -2.2 | ||
Short-Term Investments and Other | 7.2 | 4.9 | ||
% of Net Assets as of | ||||
TEN LARGEST HOLDINGS | 12/31/08 | 12/31/07 | ||
Exxon Mobil Corp. | 6.0 | 4.2 | ||
Chevron Corp. | 3.0 | 1.6 | ||
AT&T, Inc. | 2.5 | 2.1 | ||
General Electric Co. | 2.3 | 2.9 | ||
Procter & Gamble Co. | 2.3 | 1.7 | ||
Johnson & Johnson | 2.0 | 2.0 | ||
Microsoft Corp. | 1.9 | 2.2 | ||
Wal-Mart Stores, Inc. | 1.7 | 0.8 | ||
Wells Fargo & Co. | 1.7 | 1.6 | ||
Verizon Communications, Inc. | 1.6 | 1.2 | ||
% of Net Assets as of | ||||
FIVE LARGEST INDUSTRIES | 12/31/08 | |||
Oil, Gas & Consumable Fuels | 11.2 | |||
Pharmaceuticals | 7.9 | |||
Diversified Telecommunication Services | 4.3 | |||
Computers & Peripherals | 3.4 | |||
Software | 3.4 |
Portfolio holdings and asset allocations will vary.
EXPENSE RATIOS AS STATED IN THE MOST RECENT PROSPECTUS
Share Class | Gross Expense Ratio9 | Net Expense Ratio10 | ||
A | 1.01% | 0.94% | ||
C | 1.76 | 1.70 | ||
Y | 0.76 | 0.70 |
NOTES TO CHARTS
1 | The returns shown include performance from the Predecessor Fund, which was reorganized to Class A shares as of the close of business on 2/15/08. The Predecessor Fund’s performance has been adjusted to reflect the sales loads of Class A shares. For the periods prior to the inception of Class C shares (2/19/08), performance shown for Class C shares is based upon the Predecessor Fund’s returns restated to reflect the higher fees and expenses of Class C shares. For the periods prior to the inception of Class Y shares (2/19/08), performance shown for Class Y shares is based upon the Predecessor Fund’s returns and has not been restated to reflect the lower expenses of Class Y shares. |
2 | Does not include a sales charge. |
3 | Includes the maximum sales charge of 5.75%. |
4 | Performance for Class C shares assumes a 1% contingent deferred sales charge (“CDSC”) applied when you sell shares within one year of purchase. |
5 | Standard & Poor’s 500 Index (“S&P 500”) is an unmanaged index of U.S. common stock performance. |
6 | Barclays Capital Aggregate Bond Index is an unmanaged index of domestic debt issued by the U.S. Government, its agencies, and U.S. corporations. Effective 11/3/08 the Lehman Aggregate Bond Index was rebranded to the Barclays Capital Aggregate Bond Index. There has been no change in the calculation or definition of the index data. |
7 | Morningstar Long-Short Fund Average is the average performance without sales charges of funds with similar investment objectives, as calculated by Morningstar, Inc. |
8 | Fund performance has been increased by expense reductions and reimbursements, if any, without which performance would have been lower. |
9 | Before reductions and reimbursements. |
10 | After reductions and reimbursements. Expense reductions are contractual and are set to expire on 4/30/10. |
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ADDITIONAL INFORMATION
The views expressed in this report reflect those of the managers as of the dates indicated. The managers’ views are subject to change at any time without notice based on changes in market or other conditions. References to specific securities or industries should not be regarded as investment advice. Because the fund is actively managed, there is no assurance that it will continue to invest in the securities or industries mentioned.
For more complete information on any Natixis Fund, contact your financial professional or call Natixis Funds and ask for a free prospectus, which contains more complete information including charges and other ongoing expenses. Investors should consider a fund’s objective, risks and expenses carefully before investing. This and other fund information can be found in the prospectus. Please read the prospectus carefully before investing.
PROXY VOTING INFORMATION
A description of the fund’s proxy voting policies and procedures is available without charge, upon request, by calling Natixis Funds at 800-225-5478; on the fund’s website at www.funds.natixis.com; and on the Securities and Exchange Commission’s (SEC) website at www.sec.gov. Information regarding how the fund voted proxies relating to portfolio securities during the 12-month period ended June 30, 2008 is available from the fund’s website and the SEC’s website.
QUARTERLY PORTFOLIO SCHEDULES
The fund files a complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. The fund’s Forms N-Q are available on the SEC’s website at www.sec.gov and may be reviewed and copied at the SEC’s Public Reference Room in Washington, DC. Information on the operation of the Public Reference Room may be obtained by calling 1-800-SEC-0330.
NOT FDIC INSURED | MAY LOSE VALUE | NO BANK GUARANTEE |
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UNDERSTANDING FUND EXPENSES
As a mutual fund shareholder, you incur different costs: transaction costs, including sales charges (loads) on purchases, contingent deferred sales charges on redemptions and certain exchange fees, and ongoing costs, including management fees, distribution and/or service fees (12b-1 fees), and other fund expenses. In addition, the fund assesses a minimum balance fee of $20 on an annual basis for accounts that fall below the required minimum to establish an account. Certain exemptions may apply. These costs are described in more detail in the fund’s prospectus. The examples below are intended to help you understand the ongoing costs of investing in the fund and help you compare these with the ongoing costs of investing in other mutual funds.
The first line in the table of each Class of fund shares shows the actual account values and actual fund expenses you would have paid on a $1,000 investment in the fund from July 1, 2008 through December 31, 2008. To estimate the expenses you paid over the period, simply divide your account value by $1,000 (for example $8,600 account value divided by $1,000 = 8.60) and multiply the result by the number in the Expenses Paid During Period column as shown below for your Class.
The second line in the table of each Class of fund shares provides information about hypothetical account values and hypothetical expenses based on the fund’s actual expense ratios and an assumed rate of return of 5% per year before expenses, which is not the fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid on your investment for the period. You may use this information to compare the ongoing costs of investing in the fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown reflect ongoing costs only, and do not include any transaction costs, such as sales charges or exchange fees. Therefore, the second line in the table is useful in comparing ongoing costs only, and will not help you determine the relative costs of owning different funds. If transaction costs were included, total costs would be higher.
GATEWAY FUND | BEGINNING ACCOUNT VALUE 7/1/2008 | ENDING ACCOUNT VALUE 12/31/2008 | EXPENSES PAID DURING PERIOD* 7/1/2008 – 12/31/2008 | |||
CLASS A | ||||||
Actual | $1,000.00 | $879.40 | $4.44 | |||
Hypothetical (5% return before expenses) | $1,000.00 | $1,020.41 | $4.77 | |||
CLASS C | ||||||
Actual | $1,000.00 | $876.10 | $8.02 | |||
Hypothetical (5% return before expenses) | $1,000.00 | $1,016.59 | $8.62 | |||
CLASS Y | ||||||
Actual | $1,000.00 | $880.50 | $3.31 | |||
Hypothetical (5% return before expenses) | $1,000.00 | $1,021.62 | $3.56 |
* | Expenses are equal to the Fund’s annualized expense ratio (after fee reduction/reimbursement): 0.94%, 1.70%, and 0.70%, for Class A, C, and Y, respectively, multiplied by the average account value over the period multiplied by the number of days in the most recent fiscal half-year, divided by 366 (to reflect the half-year period). |
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GATEWAY FUND — PORTFOLIOOF INVESTMENTS
Investments as of December 31, 2008
Shares | Description | Value (†) | |||
Common Stocks — 95.8% of Net Assets | |||||
Aerospace & Defense — 2.5% | |||||
15,016 | Alliant Techsystems, Inc.(b)(c) | $ | 1,287,772 | ||
381,227 | Boeing Co. (The)(b) | 16,266,956 | |||
280,589 | Goodrich Corp.(b) | 10,387,405 | |||
533,751 | Honeywell International, Inc.(b) | 17,523,045 | |||
482,437 | Raytheon Co.(b) | 24,623,585 | |||
894,565 | United Technologies Corp.(b) | 47,948,684 | |||
118,037,447 | |||||
Air Freight & Logistics — 1.0% | |||||
814,899 | United Parcel Service, Inc., Class B(b) | 44,949,829 | |||
Airlines — 0.2% | |||||
891,316 | AMR Corp.(b)(c) | 9,510,342 | |||
Auto Components — 0.0% | |||||
164,800 | Cooper Tire & Rubber Co.(b) | 1,015,168 | |||
Beverages — 2.3% | |||||
1,643,287 | Coca-Cola Co. (The)(b) | 74,391,602 | |||
613,531 | PepsiCo, Inc.(b) | 33,603,093 | |||
107,994,695 | |||||
Biotechnology — 1.9% | |||||
588,544 | Amgen, Inc.(b)(c) | 33,988,416 | |||
167,204 | Biogen Idec, Inc.(b)(c) | 7,963,927 | |||
23,700 | Cephalon, Inc.(b)(c) | 1,825,848 | |||
151,475 | Facet Biotech Corp.(b)(c) | 1,452,645 | |||
115,527 | Genentech, Inc.(b)(c) | 9,578,344 | |||
545,274 | Gilead Sciences, Inc.(b)(c) | 27,885,312 | |||
757,379 | PDL BioPharma, Inc.(b) | 4,680,602 | |||
87,375,094 | |||||
Capital Markets — 2.2% | |||||
897,936 | Charles Schwab Corp. (The)(b) | 14,519,625 | |||
383,669 | Eaton Vance Corp.(b) | 8,060,886 | |||
348,555 | Goldman Sachs Group, Inc. (The)(b) | 29,414,556 | |||
727,533 | Legg Mason, Inc.(b) | 15,940,248 | |||
797,551 | Merrill Lynch & Co., Inc.(b) | 9,283,494 | |||
1,473,744 | Morgan Stanley(b) | 23,638,854 | |||
221,798 | Waddell & Reed Financial, Inc., Class A(b) | 3,428,997 | |||
104,286,660 | |||||
Chemicals — 1.5% | |||||
1,120,144 | Dow Chemical Co. (The)(b) | 16,902,973 | |||
941,372 | E.I. Du Pont de Nemours & Co.(b) | 23,816,712 | |||
216,400 | Eastman Chemical Co.(b) | 6,862,044 | |||
188,362 | Lubrizol Corp.(b) | 6,854,493 | |||
550,250 | Olin Corp.(b) | 9,948,520 | |||
358,103 | RPM International, Inc.(b) | 4,759,189 | |||
69,143,931 | |||||
Commercial Banks — 2.7% | |||||
279,699 | Associated Banc-Corp(b) | 5,854,100 | |||
118,200 | FirstMerit Corp.(b) | 2,433,738 | |||
177,566 | Old National Bancorp(b) | 3,224,599 | |||
1,554,046 | U.S. Bancorp(b) | 38,866,690 | |||
2,677,520 | Wells Fargo & Co.(b) | 78,933,290 | |||
129,312,417 | |||||
Commercial Services & Supplies — 1.2% | |||||
266,030 | Avery Dennison Corp.(b) | 8,707,162 | |||
128,446 | Deluxe Corp.(b) | 1,921,552 | |||
70,400 | Dun & Bradstreet Corp.(b) | 5,434,880 |
Shares | Description | Value (†) | |||
Commercial Services & Supplies — continued | |||||
370,557 | R. R. Donnelley & Sons Co.(b) | $ | 5,032,164 | ||
279,337 | Resources Connection, Inc.(b)(c) | 4,575,540 | |||
879,271 | Waste Management, Inc.(b) | 29,139,041 | |||
54,810,339 | |||||
Communications Equipment — 2.3% | |||||
3,100,252 | Cisco Systems, Inc.(b)(c) | 50,534,108 | |||
1,047,869 | Corning, Inc.(b) | 9,986,191 | |||
1,390,900 | Motorola, Inc.(b) | 6,161,687 | |||
34,200 | Plantronics, Inc.(b) | 451,440 | |||
1,105,010 | QUALCOMM, Inc.(b) | 39,592,508 | |||
106,725,934 | |||||
Computers & Peripherals — 3.4% | |||||
531,740 | Apple, Inc.(b)(c) | 45,384,009 | |||
1,191,830 | Dell, Inc.(b)(c) | 12,204,339 | |||
1,018,505 | Hewlett-Packard Co.(b) | 36,961,547 | |||
789,163 | International Business Machines Corp.(b) | 66,415,958 | |||
160,965,853 | |||||
Consumer Finance — 0.1% | |||||
618,700 | Discover Financial Services(b) | 5,896,211 | |||
Containers & Packaging — 0.1% | |||||
223,167 | Sonoco Products Co.(b) | 5,168,548 | |||
Distributors — 0.2% | |||||
304,207 | Genuine Parts Co.(b) | 11,517,277 | |||
Diversified Financial Services — 2.7% | |||||
2,156,256 | Bank of America Corp.(b) | 30,360,085 | |||
951,402 | Citigroup, Inc.(b) | 6,383,907 | |||
81,192 | CME Group, Inc.(b) | 16,896,867 | |||
2,356,902 | JP Morgan Chase & Co.(b) | 74,313,120 | |||
127,953,979 | |||||
Diversified Telecommunication Services — 4.3% | |||||
4,118,600 | AT&T, Inc.(b) | 117,380,100 | |||
903,500 | Frontier Communications Corp.(b) | 7,896,590 | |||
2,259,488 | Verizon Communications, Inc.(b) | 76,596,643 | |||
201,873,333 | |||||
Electric Utilities — 1.5% | |||||
2,434,028 | Duke Energy Corp.(b) | 36,534,760 | |||
80,025 | Hawaiian Electric Industries, Inc.(b) | 1,771,754 | |||
418,725 | Pepco Holdings, Inc.(b) | 7,436,556 | |||
639,917 | Progress Energy, Inc.(b) | 25,500,692 | |||
71,243,762 | |||||
Electrical Equipment — 1.0% | |||||
1,052,016 | Emerson Electric Co.(b) | 38,514,306 | |||
37,800 | First Solar, Inc.(b)(c) | 5,214,888 | |||
169,979 | Hubbell, Inc., Class B(b) | 5,554,913 | |||
49,284,107 | |||||
Electronic Equipment & Instruments — 0.1% | |||||
316,042 | Tyco Electronics Ltd.(b) | 5,123,041 | |||
Energy Equipment & Services — 1.8% | |||||
641,872 | BJ Services Co.(b) | 7,490,646 | |||
66,354 | CARBO Ceramics, Inc.(b) | 2,357,558 | |||
96,200 | Diamond Offshore Drilling, Inc.(b) | 5,670,028 | |||
72,450 | ENSCO International, Inc.(b) | 2,056,856 | |||
852,300 | Halliburton Co.(b) | 15,494,814 | |||
551,550 | Patterson-UTI Energy, Inc.(b) | 6,348,340 |
See accompanying notes to financial statements.
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GATEWAY FUND — PORTFOLIOOF INVESTMENTS (continued)
Investments as of December 31, 2008
Shares | Description | Value (†) | |||
Energy Equipment & Services — continued | |||||
714,186 | Schlumberger Ltd.(b) | $ | 30,231,493 | ||
301,200 | Smith International, Inc.(b) | 6,894,468 | |||
213,925 | Tidewater, Inc.(b) | 8,614,760 | |||
85,158,963 | |||||
Food & Staples Retailing — 2.7% | |||||
1,311,901 | CVS Caremark Corp.(b) | 37,704,035 | |||
660,350 | SUPERVALU, Inc.(b) | 9,641,110 | |||
1,442,680 | Wal-Mart Stores, Inc.(b) | 80,876,641 | |||
128,221,786 | |||||
Food Products — 1.6% | |||||
1,062,940 | ConAgra Foods, Inc.(b) | 17,538,510 | |||
1,890,976 | Kraft Foods, Inc., Class A(b) | 50,772,706 | |||
770,800 | Sara Lee Corp.(b) | 7,546,132 | |||
75,857,348 | |||||
Gas Utilities — 0.7% | |||||
277,713 | National Fuel Gas Co.(b) | 8,700,748 | |||
347,200 | Nicor, Inc.(b) | 12,061,728 | |||
332,646 | Oneok, Inc.(b) | 9,686,652 | |||
144,516 | WGL Holdings, Inc.(b) | 4,724,228 | |||
35,173,356 | |||||
Health Care Equipment & Supplies — 1.8% | |||||
564,206 | Baxter International, Inc.(b) | 30,235,800 | |||
1,283,104 | Boston Scientific Corp.(b)(c) | 9,931,225 | |||
270,675 | Covidien Ltd.(b) | 9,809,262 | |||
42,111 | Edwards Lifesciences Corp.(b)(c) | 2,313,999 | |||
27,800 | Intuitive Surgical, Inc.(b)(c) | 3,530,322 | |||
913,100 | Medtronic, Inc.(b) | 28,689,602 | |||
84,510,210 | |||||
Health Care Providers & Services — 1.4% | |||||
417,516 | Aetna, Inc.(b) | 11,899,206 | |||
223,452 | Coventry Health Care, Inc.(b)(c) | 3,324,966 | |||
287,839 | Medco Health Solutions, Inc.(b)(c) | 12,063,332 | |||
880,113 | UnitedHealth Group, Inc.(b) | 23,411,006 | |||
60,000 | Universal Health Services, Inc., Class B(b) | 2,254,200 | |||
261,753 | WellPoint, Inc.(b)(c) | 11,027,654 | |||
63,980,364 | |||||
Hotels, Restaurants & Leisure — 1.3% | |||||
691,600 | International Game Technology(b) | 8,223,124 | |||
797,020 | McDonald’s Corp.(b) | 49,566,674 | |||
58,233 | Tim Hortons, Inc.(b) | 1,679,440 | |||
279,650 | Wendy’s/Arby’s Group, Inc., Class A(b) | 1,381,471 | |||
60,850,709 | |||||
Household Durables — 1.0% | |||||
117,455 | Black & Decker Corp. (The)(b) | 4,910,794 | |||
708,471 | Leggett & Platt, Inc.(b) | 10,761,674 | |||
364,943 | Newell Rubbermaid, Inc.(b) | 3,569,142 | |||
113,923 | Snap-On, Inc.(b) | 4,486,288 | |||
204,960 | Stanley Works (The)(b) | 6,989,136 | |||
441,750 | Tupperware Brands Corp.(b) | 10,027,725 | |||
128,523 | Whirlpool Corp.(b) | 5,314,426 | |||
46,059,185 | |||||
Household Products — 3.0% | |||||
156,150 | Colgate-Palmolive Co.(b) | 10,702,521 | |||
407,902 | Kimberly-Clark Corp.(b) | 21,512,752 | |||
1,741,099 | Procter & Gamble Co.(b) | 107,634,740 | |||
139,850,013 | |||||
Shares | Description | Value (†) | |||
Industrial Conglomerates — 2.7% | |||||
225,900 | 3M Co.(b) | $ | 12,998,286 | ||
6,668,119 | General Electric Co.(b) | 108,023,528 | |||
273,027 | Tyco International Ltd.(b) | 5,897,383 | |||
126,919,197 | |||||
Insurance — 3.1% | |||||
81,170 | Aegon NV, Sponsored ADR(b) | 491,079 | |||
627,200 | Allstate Corp. (The)(b) | 20,547,072 | |||
6,766,156 | American International Group, Inc.(b) | 10,622,865 | |||
144,884 | AON Corp.(b) | 6,618,301 | |||
820,950 | Arthur J. Gallagher & Co.(b) | 21,270,814 | |||
813,587 | Fidelity National Financial, Inc., Class A(b) | 14,441,169 | |||
1,236,496 | Lincoln National Corp.(b) | 23,295,585 | |||
596,444 | Marsh & McLennan Cos., Inc.(b) | 14,475,696 | |||
131,940 | Mercury General Corp.(b) | 6,067,921 | |||
183,100 | Nationwide Financial Services, Class A(b) | 9,559,651 | |||
466,097 | Old Republic International Corp.(b) | 5,555,876 | |||
45,848 | Travelers Cos., Inc. (The)(b) | 2,072,330 | |||
152,680 | Unitrin, Inc.(b) | 2,433,719 | |||
1,623,040 | XL Capital Ltd., Class A(b) | 6,005,248 | |||
113,885 | Zenith National Insurance Corp.(b) | 3,595,349 | |||
147,052,675 | |||||
Internet & Catalog Retail — 0.2% | |||||
207,780 | Amazon.com, Inc.(b)(c) | 10,654,958 | |||
Internet Software & Services — 1.5% | |||||
363,645 | Akamai Technologies, Inc.(b)(c) | 5,487,403 | |||
779,700 | eBay, Inc.(b)(c) | 10,884,612 | |||
156,638 | Google, Inc., Class A(b)(c) | 48,189,681 | |||
313,846 | VeriSign, Inc.(b)(c) | 5,988,181 | |||
70,549,877 | |||||
IT Services — 1.7% | |||||
23,722 | Accenture Ltd., Class A(b) | 777,844 | |||
694,658 | Automatic Data Processing, Inc.(b) | 27,327,846 | |||
162,725 | Broadridge Financial Solutions, Inc.(b) | 2,040,571 | |||
403,344 | Cognizant Technology Solutions Corp., Class A(b)(c) | 7,284,392 | |||
367,655 | Fidelity National Information Services, Inc.(b) | 5,981,747 | |||
36,006 | Lender Processing Services, Inc.(b) | 1,060,377 | |||
1,109,949 | Paychex, Inc.(b) | 29,169,460 | |||
82,118 | Visa, Inc., Class A(b) | 4,307,089 | |||
242,029 | Western Union Co.(b) | 3,470,696 | |||
81,420,022 | |||||
Leisure Equipment & Products — 0.3% | |||||
414,371 | Eastman Kodak Co.(b) | 2,726,561 | |||
629,367 | Mattel, Inc.(b) | 10,069,872 | |||
12,796,433 | |||||
Machinery — 2.3% | |||||
757,000 | Caterpillar, Inc.(b) | 33,815,190 | |||
385,788 | Cummins, Inc.(b) | 10,312,113 | |||
354,100 | Deere & Co.(b) | 13,569,112 | |||
292,324 | Eaton Corp.(b) | 14,531,426 | |||
549,000 | Ingersoll-Rand Co. Ltd., Class A(b) | 9,525,150 | |||
240,228 | Parker Hannifin Corp.(b) | 10,219,299 | |||
121,000 | Pentair, Inc.(b) | 2,864,070 | |||
206,500 | SPX Corp.(b) | 8,373,575 | |||
297,911 | Timken Co. (The)(b) | 5,847,993 | |||
109,057,928 | |||||
See accompanying notes to financial statements.
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GATEWAY FUND — PORTFOLIOOF INVESTMENTS (continued)
Investments as of December 31, 2008
Shares | Description | Value (†) | |||
Media — 1.5% | |||||
425,650 | News Corp., Class B(b) | $ | 4,077,727 | ||
193,777 | Omnicom Group, Inc.(b) | 5,216,477 | |||
262,630 | Time Warner Cable, Inc., Class A(b)(c) | 5,633,414 | |||
2,625,685 | Time Warner, Inc.(b) | 26,414,391 | |||
1,385,364 | Walt Disney Co. (The)(b) | 31,433,909 | |||
72,775,918 | |||||
Metals & Mining — 1.2% | |||||
891,100 | Alcoa, Inc.(b) | 10,033,786 | |||
828,408 | Cia Siderurgica Nacional SA, Sponsored ADR(b) | 10,611,907 | |||
346,100 | Gerdau SA, Sponsored ADR(b) | 2,284,260 | |||
555,900 | Nucor Corp.(b) | 25,682,580 | |||
396,864 | Southern Copper Corp.(b) | 6,373,636 | |||
123,273 | Worthington Industries, Inc.(b) | 1,358,468 | |||
56,344,637 | |||||
Multi Utilities — 2.2% | |||||
721,261 | Ameren Corp.(b) | 23,989,141 | |||
971,071 | Consolidated Edison, Inc.(b) | 37,803,794 | |||
396,982 | Integrys Energy Group, Inc.(b) | 17,062,286 | |||
256,864 | OGE Energy Corp.(b) | 6,621,954 | |||
578,525 | Public Service Enterprise Group, Inc.(b) | 16,875,574 | |||
102,352,749 | |||||
Multiline Retail — 0.8% | |||||
488,100 | J.C. Penney Co., Inc.(b) | 9,615,570 | |||
1,798,724 | Macy’s, Inc.(b) | 18,616,793 | |||
603,423 | Nordstrom, Inc.(b) | 8,031,560 | |||
43,350 | Sears Holdings Corp.(b)(c) | 1,685,015 | |||
37,948,938 | |||||
Oil, Gas & Consumable Fuels — 11.2% | |||||
18,549 | BP PLC, Sponsored ADR(b) | 866,980 | |||
438,900 | Chesapeake Energy Corp.(b) | 7,097,013 | |||
1,901,804 | Chevron Corp.(b) | 140,676,442 | |||
651 | CNOOC Ltd., Sponsored ADR(b) | 62,001 | |||
697,862 | ConocoPhillips(b) | 36,149,252 | |||
254,425 | CONSOL Energy, Inc.(b) | 7,271,467 | |||
19,890 | Eni SpA, Sponsored ADR(b) | 951,140 | |||
3,525,940 | Exxon Mobil Corp.(b) | 281,475,790 | |||
383,270 | Occidental Petroleum Corp.(b) | 22,992,367 | |||
16,392 | Royal Dutch Shell PLC, Class A, Sponsored ADR(b) | 867,792 | |||
955,197 | Southwestern Energy Co.(b)(c) | 27,672,057 | |||
58,862 | StatoilHydro ASA, Sponsored ADR(b) | 980,641 | |||
527,062,942 | |||||
Paper & Forest Products — 0.2% | |||||
691,384 | MeadWestvaco Corp.(b) | 7,736,587 | |||
Personal Products — 0.1% | |||||
269,000 | Avon Products, Inc.(b) | 6,464,070 | |||
Pharmaceuticals — 7.9% | |||||
1,301,991 | Abbott Laboratories(b) | 69,487,260 | |||
423,889 | GlaxoSmithKline PLC, Sponsored ADR(b) | 15,798,343 | |||
1,540,192 | Johnson & Johnson(b) | 92,149,687 | |||
1,694,980 | Merck & Co., Inc.(b) | 51,527,392 | |||
4,293,936 | Pfizer, Inc.(b) | 76,045,607 | |||
1,420,902 | Schering-Plough Corp.(b) | 24,197,961 | |||
1,212,442 | Wyeth(b) | 45,478,699 | |||
374,684,949 | |||||
REITs — 1.6% | |||||
74,945 | Annaly Capital Management, Inc.(b) | 1,189,377 |
Shares | Description | Value (†) | |||
REITs — continued | |||||
1,554,406 | Duke Realty Corp.(b) | $ | 17,036,290 | ||
125,000 | Healthcare Realty Trust, Inc.(b) | 2,935,000 | |||
730,464 | Liberty Property Trust(b) | 16,676,493 | |||
496,970 | Mack-Cali Realty Corp.(b) | 12,175,765 | |||
567,650 | Nationwide Health Properties, Inc.(b) | 16,302,908 | |||
371,650 | Senior Housing Properties Trust(b) | 6,659,968 | |||
72,975,801 | |||||
Road & Rail — 0.4% | |||||
536,701 | CSX Corp.(b) | 17,426,681 | |||
Semiconductors & Semiconductor Equipment — 2.4% | |||||
917,823 | Advanced Micro Devices, Inc.(b)(c) | 1,982,498 | |||
110,200 | Altera Corp.(b) | 1,841,442 | |||
567,676 | Analog Devices, Inc.(b) | 10,797,198 | |||
4,600 | Applied Materials, Inc.(b) | 46,598 | |||
2,659,390 | Intel Corp.(b) | 38,986,657 | |||
610,309 | Linear Technology Corp.(b) | 13,500,035 | |||
709,350 | Microchip Technology, Inc.(b) | 13,853,606 | |||
676,629 | National Semiconductor Corp.(b) | 6,813,654 | |||
560,900 | NVIDIA Corp.(b)(c) | 4,526,463 | |||
186,237 | Taiwan Semiconductor Manufacturing Co. Ltd., Sponsored ADR(b) | 1,471,272 | |||
853,462 | Texas Instruments, Inc.(b) | 13,245,730 | |||
335,839 | Xilinx, Inc.(b) | 5,984,651 | |||
113,049,804 | |||||
Software — 3.4% | |||||
673,800 | Activision Blizzard, Inc.(b)(c) | 5,821,632 | |||
365,782 | Adobe Systems, Inc.(b)(c) | 7,787,499 | |||
255,164 | Autodesk, Inc.(b)(c) | 5,013,973 | |||
4,675,785 | Microsoft Corp.(b) | 90,897,260 | |||
2,157,179 | Oracle Corp.(b)(c) | 38,246,784 | |||
126,605 | Quality Systems, Inc.(b) | 5,522,510 | |||
525,830 | Symantec Corp.(b)(c) | 7,109,221 | |||
160,398,879 | |||||
Specialty Retail — 2.3% | |||||
223,904 | Abercrombie & Fitch Co., Class A(b) | 5,165,465 | |||
555,300 | American Eagle Outfitters, Inc.(b) | 5,197,608 | |||
399,175 | Best Buy Co., Inc.(b) | 11,220,809 | |||
210,000 | Foot Locker, Inc.(b) | 1,541,400 | |||
396,100 | Gap, Inc. (The)(b) | 5,303,779 | |||
1,734,742 | Home Depot, Inc.(b) | 39,933,761 | |||
554,600 | Limited Brands, Inc.(b) | 5,568,184 | |||
966,958 | Lowe’s Cos., Inc.(b) | 20,808,936 | |||
254,100 | RadioShack Corp.(b) | 3,033,954 | |||
304,204 | Tiffany & Co.(b) | 7,188,341 | |||
89,480 | TJX Cos., Inc.(b) | 1,840,604 | |||
40,694 | Urban Outfitters, Inc.(b)(c) | 609,596 | |||
107,412,437 | |||||
Thrifts & Mortgage Finance — 0.3% | |||||
98,238 | Capitol Federal Financial(b) | 4,479,653 | |||
924,756 | New York Community Bancorp, Inc.(b) | 11,060,082 | |||
15,539,735 | |||||
Tobacco — 1.8% | |||||
2,034,298 | Altria Group, Inc.(b) | 30,636,528 | |||
115,850 | Lorillard, Inc.(b) | 6,528,147 | |||
709,300 | Philip Morris International, Inc.(b) | 30,861,643 | |||
355,627 | Reynolds American, Inc.(b) | 14,335,324 | |||
292,296 | Vector Group Ltd.(b) | 3,981,072 | |||
86,342,714 | |||||
See accompanying notes to financial statements.
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GATEWAY FUND — PORTFOLIOOF INVESTMENTS (continued)
Investments as of December 31, 2008
Shares | Description | Value (†) | |||||
Trading Companies & Distributors — 0.1% | |||||||
198,731 | GATX Corp.(b) | $ | 6,154,699 | ||||
Wireless Telecommunication Services — 0.1% | |||||||
89,900 | China Mobile Ltd., Sponsored ADR(b) | 4,571,415 | |||||
202,444 | Clearwire Corp., Class A(b)(c) | 998,049 | |||||
5,569,464 | |||||||
Total Common Stocks (Identified Cost $4,537,758,407) | 4,520,541,995 | ||||||
Contracts | |||||||
Put Options — 0.3% | |||||||
6,842 | On S&P 500 Index expiring January 17, 2009 at 675 | 307,890 | |||||
5,028 | On S&P 500 Index expiring January 17, 2009 at 700 | 326,820 | |||||
8,114 | On S&P 500 Index expiring February 21, 2009 at 700 | 4,908,970 | |||||
192 | On S&P 500 Index expiring March 21, 2009 at 700 | 239,040 | |||||
5,450 | On S&P 500 Index expiring March 21, 2009 at 750 | 10,600,250 | |||||
Total Put Options (Identified Cost $148,131,745) | 16,382,970 | ||||||
Principal | |||||||
Short-Term Investments — 6.9% | |||||||
$ | 323,125,000 | Tri-Party Repurchase Agreement with Fixed Income Clearing Corp., dated 12/31/2008 at 0.000% to be repurchased at $323,125,000 on 1/02/2009, collateralized by $50,000,000 Federal Home Loan Mortgage Corp., 5.250% due 4/03/2012 valued at $51,250,000; $4,020,000 Federal National Mortgage Corp., 4.250% due 2/13/2013 valued at $4,095,375; $23,395,000 Federal National Mortgage Association, 4.600% due 11/10/2011 valued at $24,155,338; $145,795,000 Federal National Mortgage Association, 4.780% due 11/16/2012 valued at $151,444,556; $50,000,000 Federal National Mortgage Association, 5.360% due 8/28/2012 valued at $52,437,500; $18,040,000 Federal National Mortgage Association, 4.850% due 12/03/2012 valued at $18,242,950; $27,280,000 Federal National Mortgage Association, 5.125% due 1/03/2013 valued at $27,962,000 including accrued interest (Note 2g of Notes to Financial Statements) (Identified Cost $323,125,000) | 323,125,000 | ||||
Total Investments — 103.0% (Identified Cost $5,009,015,152)(a) | 4,860,049,965 | ||||||
Other assets less liabilities— (3.0%) | (141,517,290 | ) | |||||
Net Assets — 100.0% | $ | 4,718,532,675 | |||||
Contracts | |||||||
Call Options Written — (3.3%) | |||||||
4,703 | On S&P 500 Index expiring January 17, 2009 at 850 | (29,182,115 | ) | ||||
12,484 | On S&P 500 Index expiring January 17, 2009 at 900 | (33,769,220 | ) | ||||
5,298 | On S&P 500 Index expiring January 17, 2009 at 950 | (3,735,090 | ) | ||||
6,708 | On S&P 500 Index expiring February 21, 2009 at 900 | (32,835,660 | ) | ||||
6,708 | On S&P 500 Index expiring February 21, 2009 at 950 | (16,870,620 | ) | ||||
6,489 | On S&P 500 Index expiring March 21, 2009 at 950 | (24,820,425 | ) | ||||
7,136 | On S&P 500 Index expiring March 21, 2009 at 1000 | (14,593,120 | ) | ||||
Total Call Options Written (Premium Received $201,414,673) | $ | (155,806,250 | ) | ||||
(†) | See Note 2a of Notes to Financial Statements. | |||||
(a) | Federal Tax Information: At December 31, 2008, the net unrealized depreciation on investments based on a cost of $4,886,865,264 for federal income tax purposes was as follows: | |||||
Aggregate gross unrealized appreciation in which there is an excess of value over tax cost | $ | 435,565,828 | ||||
Aggregate gross unrealized depreciation in which there is an excess of tax cost over value | (462,381,127 | ) | ||||
Net unrealized depreciation | $ | (26,815,299 | ) | |||
(b) | All or a portion of this security is held as collateral for outstanding call options. | |||||
(c) | Non-income producing security. | |||||
ADR | An American Depositary Receipt is a certificate issued by a custodian bank representing the right to receive securities of the foreign issuer described. The values of ADRs are significantly influenced by trading on exchanges not located in the United States. | |||||
REITs | Real Estate Investment Trusts |
Net Asset Summary at December 31, 2008 (Unaudited)
Oil, Gas & Consumable Fuels | 11.2 | % | |
Pharmaceuticals | 7.9 | ||
Diversified Telecommunication Services | 4.3 | ||
Computers & Peripherals | 3.4 | ||
Software | 3.4 | ||
Insurance | 3.1 | ||
Household Products | 3.0 | ||
Commercial Banks | 2.7 | ||
Food & Staples Retailing | 2.7 | ||
Diversified Financial Services | 2.7 | ||
Industrial Conglomerates | 2.7 | ||
Aerospace & Defense | 2.5 | ||
Semiconductors & Semiconductor Equipment | 2.4 | ||
Machinery | 2.3 | ||
Beverages | 2.3 | ||
Specialty Retail | 2.3 | ||
Communications Equipment | 2.3 | ||
Capital Markets | 2.2 | ||
Multi Utilities | 2.2 | ||
Other Investments, less than 2% each | 30.5 | ||
Short-Term Investments | 6.9 | ||
Total Investments | 103.0 | ||
Other assets less liabilities (including Call Options Written) | (3.0 | ) | |
Net Assets | 100.0 | % | |
See accompanying notes to financial statements.
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STATEMENTOF ASSETSAND LIABILITIES
December 31, 2008
ASSETS | ||||
Investments at cost | $ | 5,009,015,152 | ||
Net unrealized depreciation | (148,965,187 | ) | ||
Investments at value | 4,860,049,965 | |||
Cash | 689 | |||
Receivable for Fund shares sold | 36,512,689 | |||
Receivable from investment advisor (Note 5) | 813,023 | |||
Dividends and interest receivable | 11,664,799 | |||
Tax reclaims receivable | 105,092 | |||
Other assets | 837,203 | |||
TOTAL ASSETS | 4,909,983,460 | |||
LIABILITIES | ||||
Call options written, at value (premium received $201,414,673) (Note 2d) | 155,806,250 | |||
Payable for Fund shares redeemed | 26,583,717 | |||
Dividends payable | 5,717,982 | |||
Management fees payable (Note 5) | 2,515,388 | |||
Deferred Trustees’ fees (Note 5) | 37,080 | |||
Administrative fees payable (Note 5) | 47,158 | |||
Service and distribution fees payable (Note 5) | 207 | |||
Other accounts payable and accrued expenses | 743,003 | |||
TOTAL LIABILITIES | 191,450,785 | |||
NET ASSETS | $ | 4,718,532,675 | ||
NET ASSETS CONSIST OF: | ||||
Paid-in capital | $ | 4,890,654,099 | ||
Distributions in excess of net investment income | (46,984 | ) | ||
Accumulated net realized loss on investments, call options written and foreign currency transactions | (68,717,676 | ) | ||
Net unrealized depreciation on investments and call options written | (103,356,764 | ) | ||
NET ASSETS | $ | 4,718,532,675 | ||
COMPUTATION OF NET ASSET VALUE AND OFFERING PRICE: | ||||
Class A shares: | ||||
Net assets | $ | 3,142,573,799 | ||
Shares of beneficial interest | 130,018,782 | |||
Net asset value and redemption price per share | $ | 24.17 | ||
Offering price per share (100/94.25 of net asset value) (Note 1) | $ | 25.64 | ||
Class C shares: (redemption price per share is equal to net asset value less any applicable contingent deferred sales charge) (Note 1) | ||||
Net assets | $ | 173,868,529 | ||
Shares of beneficial interest | 7,210,067 | |||
Net asset value and offering price per share | $ | 24.11 | ||
Class Y shares: | ||||
Net assets | $ | 1,402,090,347 | ||
Shares of beneficial interest | 58,020,083 | |||
Net asset value, offering and redemption price per share | $ | 24.17 | ||
See accompanying notes to financial statements.
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STATEMENTOF OPERATIONS
For the Year Ended December 31, 2008*
INVESTMENT INCOME | ||||
Dividends | $ | 136,757,273 | ||
Interest | 3,273,611 | |||
Less net foreign taxes withheld | (336,743 | ) | ||
139,694,141 | ||||
Expenses | ||||
Management fees (Note 5) | 26,590,173 | |||
Investment advisory and management fees (Note 1 and Note 5) | 3,159,339 | |||
Service fees - Class A (Note 5) | 7,921,295 | |||
Service and distribution fees - Class C (Note 5) | 764,522 | |||
Distribution expenses (Note 1) | 1,711,400 | |||
Trustees’ fees and expenses (Note 5) | 125,602 | |||
Administrative fees (Note 5) | 2,091,581 | |||
Custodian fees and expenses | 136,237 | |||
Transfer agent fees and expenses - Class A (Note 5) | 2,001,782 | |||
Transfer agent fees and expenses - Class C (Note 5) | 64,705 | |||
Transfer agent fees and expenses - Class Y (Note 5) | 304,366 | |||
Audit and tax services fees | 65,402 | |||
Legal fees | 121,203 | |||
Shareholder reporting expenses | 265,122 | |||
Registration fees | 433,759 | |||
Miscellaneous expenses | 181,424 | |||
Total expenses | 45,937,912 | |||
Less fee reduction and/or expense reimbursement (Note 5) | (3,922,704 | ) | ||
Net expenses | 42,015,208 | |||
Net investment income | 97,678,933 | |||
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS, CALL OPTIONS WRITTEN AND FOREIGN CURRENCY TRANSACTIONS | ||||
Net realized gain (loss) on: | ||||
Investments | (539,560,449 | ) | ||
Call options written | 713,450,650 | |||
Foreign currency transactions | (123 | ) | ||
Net change in unrealized appreciation (depreciation) on: | ||||
Investments | (1,034,799,785 | ) | ||
Call options written | 7,015,118 | |||
Net realized and unrealized loss on investments, call options written and foreign currency transactions | (853,894,589 | ) | ||
NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS | $ | (756,215,656 | ) | |
* | Includes results of operations of the Predecessor Fund (see Note 1 of Notes to Financial Statements) for the period from January 1, 2008 to the close of business February 15, 2008. |
See accompanying notes to financial statements.
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STATEMENTOF CHANGESIN NET ASSETS
Year Ended December 31, 2008 * | Year Ended December 31, 2007 ** | |||||||
FROM OPERATIONS: | ||||||||
Net investment income | $ | 97,678,933 | $ | 73,795,718 | ||||
Net realized gain on investments, call options written and foreign currency transactions | 173,890,078 | 55,190,815 | ||||||
Net change in unrealized appreciation (depreciation) on investments and call options written | (1,027,784,667 | ) | 157,029,596 | |||||
Net increase (decrease) in net assets resulting from operations | (756,215,656 | ) | 286,016,129 | |||||
FROM DISTRIBUTIONS TO SHAREHOLDERS: | ||||||||
Net investment income | ||||||||
Class A | (69,859,388 | ) | (74,493,434 | ) | ||||
Class C | (1,598,023 | ) | — | |||||
Class Y | (24,140,546 | ) | — | |||||
Total distributions | (95,597,957 | ) | (74,493,434 | ) | ||||
NET INCREASE IN NET ASSETS FROM CAPITAL SHARE TRANSACTIONS (NOTE 7) | 1,291,647,394 | 737,236,407 | ||||||
Net increase in net assets | 439,833,781 | 948,759,102 | ||||||
NET ASSETS | ||||||||
Beginning of the year | 4,278,698,894 | 3,329,939,792 | ||||||
End of the year | $ | 4,718,532,675 | $ | 4,278,698,894 | ||||
DISTRIBUTIONS IN EXCESS OF NET INVESTMENT INCOME | $ | (46,984 | ) | $ | — | |||
* | Includes changes in net assets of the Predecessor Fund (see Note 1 of Notes to Financial Statements) for the period from January 1, 2008 to the close of business February 15, 2008. |
** | Represents changes in net assets of the Predecessor Fund (see Note 1 of Notes to Financial Statements) for the year ended December 31, 2007. |
See accompanying notes to financial statements.
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12
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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 | Total distributions | |||||||||||||||||
Class A * | ||||||||||||||||||||||
12/31/2008 | $ | 28.64 | $ | 0.55 | $ | (4.49 | ) | $ | (3.94 | ) | $ | (0.53 | ) | $ | (0.53 | ) | ||||||
12/31/2007 | 27.04 | 0.53 | 1.61 | 2.14 | (0.54 | ) | (0.54 | ) | ||||||||||||||
12/31/2006 | 25.00 | 0.48 | 2.04 | 2.52 | (0.48 | ) | (0.48 | ) | ||||||||||||||
12/31/2005 | 24.31 | 0.44 | 0.70 | 1.14 | (0.45 | ) | (0.45 | ) | ||||||||||||||
12/31/2004 | 23.00 | 0.29 | 1.31 | 1.60 | (0.29 | ) | (0.29 | ) | ||||||||||||||
Class C ** | ||||||||||||||||||||||
12/31/2008 | 27.76 | 0.35 | (3.57 | ) | (3.22 | ) | (0.43 | ) | (0.43 | ) | ||||||||||||
Class Y ** | ||||||||||||||||||||||
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 the Predecessor Fund (see Note 1 of Notes to Financial Statements) in exchange for Class A shares of the Fund pursuant to a plan of reorganization. Prior to the reorganization, 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 reduced during the period, if applicable, total returns would have been lower. |
See accompanying notes to financial statements.
13
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Ratios to Average Net Assets: | |||||||||||||||
Net asset value, end of the period | Total return (%) (b) (c) | Net assets, end of the period (000’s) | Net expenses (%) (d) (e) | Gross expenses (%) (e) | Net investment income (loss) (%) (e) | Portfolio turnover rate (%) | |||||||||
$ | 24.17 | (13.9 | ) | $ | 3,142,574 | 0.94 | 1.03 | 2.05 | 38 | ||||||
28.64 | 7.9 | 4,278,699 | 0.94 | 0.94 | 1.91 | 5 | |||||||||
27.04 | 10.1 | 3,329,940 | 0.95 | 0.95 | 1.92 | 9 | |||||||||
25.00 | 4.7 | 2,707,643 | 0.95 | 0.95 | 1.87 | 15 | |||||||||
24.31 | 7.0 | 2,103,935 | 0.97 | 0.97 | 1.42 | 71 | |||||||||
24.11 | (11.7 | ) | 173,869 | 1.70 | 1.83 | 1.57 | 38 | ||||||||
24.17 | (11.0 | ) | 1,402,090 | 0.70 | 0.78 | 2.45 | 38 |
(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 reimburse a portion of the Fund’s expenses and/or reduce its fee during the period. Without this reimbursement/fee reduction, if applicable, expenses would have been higher. |
(e) | Computed on an annualized basis for periods less than one year, if applicable. |
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NOTESTO FINANCIAL STATEMENTS
December 31, 2008
1. Organization. Gateway Fund (the “Fund”) is the sole series of Gateway Trust (the “Trust”), and is organized as a Massachusetts business trust. The Trust is registered under the Investment Company Act of 1940, as amended (“1940 Act”), as an open-end management 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 and pay higher 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. 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 Fund’s prospectus.
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 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.
Prior to the close of business February 15, 2008, the Predecessor Fund paid Gateway Investment Advisers, L.P. (“Predecessor Fund Adviser”) an investment advisory and management fee under the terms of a Management Agreement for which the Predecessor Fund Adviser received no separate fee for its transfer agency, fund accounting and other services to the Predecessor Fund. In addition, the Predecessor Fund Adviser paid the Predecessor Fund’s expenses of reporting to shareholders under the Management Agreement. The Predecessor Fund also had adopted a Distribution Plan pursuant to Rule 12b-1 of the 1940 Act that allowed for the payment of distribution expenses by the Predecessor Fund related to the sale and distribution of its shares. The aforementioned Predecessor Fund investment advisory and management fee and distribution expense have been stated separately on the Statement of Operations for financial statement purposes. All other Fund and Predecessor Fund expenses have been combined.
The Fund began offering Class C and Class Y shares effective February 19, 2008.
For the period from the close of business February 15, 2008 to December 31, 2008, 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 and transfer agent fees applicable to such class). 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 a fund if the fund were liquidated. The Trustees approve separate dividends 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 Fund’s 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.
a. Valuation. Equity securities, including closed-end investment companies and exchange-traded funds, for which market quotations are readily available are valued at market value, as reported by pricing services recommended by the investment adviser and approved by the Board of Trustees. Such pricing services generally use the security’s 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 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) are generally valued on the basis of evaluated bids furnished to the Fund by a 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 a pricing service does not price a security or where a pricing service does not provide a reliable price for the security. In instances where broker-dealer bid quotations are not available, certain securities held by the Fund may be valued on the basis of a price provided by a principal market maker. Exchange-traded index options are valued at the average of the closing bid and asked quotations. 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 Fund’s 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, 2008 the total amount of put options fair valued was $16,382,970 and call options written fair valued was $155,806,250. Investments in other open-end investment companies are valued at the net asset value each day.
The Fund may hold securities traded in foreign markets. Foreign securities are valued at the 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 NYSE) 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. Security Transactions and Related Investment Income. Security transactions are accounted for on trade date. 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
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NOTESTO FINANCIAL STATEMENTS (continued)
December 31, 2008
discount and decreased by the amortization of premium. Distributions received from investments in securities that represent a return of capital or capital gain are recorded as a reduction of cost of investments or as a realized gain, respectively. Investment income is recorded net of foreign taxes withheld when applicable. 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 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 value 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 the 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 Fund’s 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.
The Fund may purchase investments of foreign issuers. Investing in securities of foreign issuers involves special risks and considerations not typically associated with investing in U.S. companies and securities of the U.S. government. These risks include revaluation of currencies and the risk of expropriation. Moreover, the markets for securities of many foreign issuers may be less liquid and the prices of such securities may be more volatile than those of comparable U.S. companies and the U.S. government.
d. Option Contracts. The Fund purchases index put options and writes (sells) index call 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 on its stipulated expiration date 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.
When the Fund purchases an option, it pays a premium and the option is subsequently marked to market to reflect current value. Premiums paid for purchasing options which expire are treated as realized losses. Premiums paid for purchasing options which are exercised or closed are added to the cost or deducted from the proceeds on the underlying instrument to determine the realized gain or loss. The risk associated with purchasing options is limited to the premium paid.
The following is a summary of Gateway Fund’s written option activity:
Number of | Premiums | ||||||
Outstanding at 12/31/2007 | 27,928 | $ | 131,929,240 | ||||
Options written | 290,975 | 1,007,504,610 | |||||
Options terminated in closing purchase transactions | (225,869 | ) | (751,401,900 | ) | |||
Options expired unexercised | (43,508 | ) | (186,617,277 | ) | |||
Outstanding at 12/31/2008 | 49,526 | $ | 201,414,673 | ||||
e. Federal and Foreign Income Taxes. The Fund intends to meet the requirements of the Internal Revenue Code 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 Fund’s and the Predecessor Fund’s tax positions taken on federal and state tax returns that remain subject to examination (tax years ended December 31, 2005 – 2008) and has concluded that no provisions for income tax are required. Fund management is not aware of any events that are reasonably possible to occur in the next twelve months that
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NOTESTO FINANCIAL STATEMENTS (continued)
December 31, 2008
would result in the amounts of any unrecognized tax benefits significantly increasing or decreasing for the Fund. However, management’s conclusions regarding tax positions taken may be subject to review and adjustment at a later date based on factors including, but not limited to, new tax laws and accounting regulations and interpretations thereof.
The Fund may be subject to foreign taxes on income and gains on investments that are accrued based upon the Fund’s understanding of the tax rules and regulations that exist in the countries in which the Fund invests. Foreign governments may also impose taxes or other payments on investments with respect to foreign securities. Such taxes are accrued as applicable.
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 treatments for book and tax purposes for items such as foreign currency transactions, return of capital and capital gains 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, dividends payable, REIT basis adjustments, deferred Trustees’ fees, capital loss carryforwards and unrealized depreciation on open option contracts. 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, including Predecessor Fund shareholders, during the years ended December 31, 2008 and 2007, respectively, was as follows:
2008 Distributions Paid From: | 2007 Distributions Paid From: | |||||||||||||||
Ordinary Income | Long-Term Capital Gains | Total | Ordinary Income | Long-Term | Total | |||||||||||
$ | 95,597,957 | $ | — | $ | 95,597,957 | $ | 74,493,434 | $ | — | $ | 74,493,434 |
Differences between these amounts and those reported in the Statement of Changes in Net Assets, if any, are primarily attributable to different book and tax treatment for short-term capital gains.
As of December 31, 2008, 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: | ||||
Expires December 31, 2014* | (145,259,142 | ) | ||
Unrealized depreciation | (26,815,299 | ) | ||
Total accumulated losses | $ | (172,074,441 | ) | |
Capital loss carryforward utilized in the current year | $ | 81,716,851 | ||
* | The capital loss carryforward amounts are from the Predecessor Fund. |
g. Repurchase Agreements. It is the Fund’s policy that the market value of the collateral for repurchase agreements be at least equal to 102% of the repurchase price, including interest. The repurchase agreements are tri-party arrangements whereby the collateral is held in a segregated account for the benefit of the Fund and on behalf 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 a Fund’s ability to dispose of the underlying securities.
h. Indemnifications. Under the Trust’s 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 Fund’s 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 March 2008, Statement of Financial Accounting Standards No. 161, Disclosures about Derivative Instruments and Hedging Activities (“FAS 161”), was issued and will be effective for fiscal years and interim periods beginning after November 15, 2008. FAS 161 requires enhanced disclosures about funds’ derivative and hedging activities. Management is currently evaluating the impact the adoption of FAS 161 may have on the Fund’s financial statement disclosures.
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NOTESTO FINANCIAL STATEMENTS (continued)
December 31, 2008
3. Fair Value Measurements. The Predecessor Fund adopted Financial Accounting Standards Board Statement of Financial Accounting Standards No. 157 (“FAS 157”), Fair Value Measurements, effective January 1, 2008. FAS 157 establishes a hierarchy for net asset value determination purposes in which various inputs are used in determining the value of the Fund’s investments. These inputs are summarized in the three broad levels listed below:
• | Level 1 — quoted prices in active markets for identical investments; |
• | Level 2 — prices determined using other significant observable inputs that are observable either directly, or indirectly through corroboration with observable market data (which could include quoted prices for similar investments, interest rates, credit risk, etc.); |
• | Level 3 — prices determined using significant unobservable inputs for situations where quoted prices or observable inputs are unavailable such as when there is little or no market activity for an investment (unobservable inputs reflect the Fund’s own assumptions in determining the fair value of investments 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.
Other financial instruments are derivative instruments not reflected in investments carried at value.
The following is a summary of the inputs used to value the Fund’s investments as of December 31, 2008:
Securities Purchased Valuation Inputs | Investments in | ||
Level 1 – Quoted Prices | $ | 4,843,666,995 | |
Level 2 – Other Significant Observable Inputs | 16,382,970 | ||
Level 3 – Significant Unobservable Inputs | — | ||
Total | $ | 4,860,049,965 | |
Call Options Written Valuation Inputs | Other Financial | ||
Level 1 – Quoted Prices | $ | — | |
Level 2 – Other Significant Observable Inputs | 155,806,250 | ||
Level 3 – Significant Unobservable Inputs | — | ||
Total | $ | 155,806,250 | |
4. Purchases and Sales of Securities. For the period from January 1, 2008 to the close of business February 15, 2008 for the Predecessor Fund and for the period from close of business February 15, 2008 to December 31, 2008 for the Fund, combined purchases and sales of securities (excluding short-term investments) were $4,038,458,263 and $1,675,170,412, respectively.
5. 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 Fund’s average daily net assets and 0.60% of the Fund’s 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 reduce management fees and/or reimburse certain expenses associated with the Fund to limit its operating expenses. This undertaking is in effect until April 30, 2010 and will be reevaluated on an annual basis. For the period from the close of business February 15, 2008 to December 31, 2008, 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 | % |
For the period from the close of business February 15, 2008 to December 31, 2008, the management fees and reduction of management fees for the Fund were as follows:
Gross Management Fee | Reduction of Management Fee | Net Management Fee | Percentage of Average | |||||||||
Gross | Net | |||||||||||
$26,590,173 | $ | 241,468 | $ | 26,348,705 | 0.65 | % | 0.64 | % |
For the period from the close of business February 15, 2008 to December 31, 2008, class specific expenses have been reimbursed in the amount of $2,077,684.
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NOTESTO FINANCIAL STATEMENTS (continued)
December 31, 2008
Prior to the close of business February 15, 2008, the Predecessor Fund, under the terms of the management agreement, paid the Predecessor Fund Adviser an investment advisory and management fee at an annual rate of 0.925% of average daily net assets minus all distribution expenses. The Predecessor Fund Adviser received no separate fee for its transfer agency, fund accounting and other services to the Predecessor Fund and paid the Predecessor Fund’s expenses of reporting to shareholders. If total annual operating expenses (excluding taxes, interest, brokerage commissions and expenses of an extraordinary nature) exceeded 1.50% of the Predecessor Fund’s average net assets, the Predecessor Fund Adviser had agreed to reduce its fee as necessary to limit the Predecessor Fund’s expenses to this level. As of the close of business on February 15, 2008, Gateway Advisers acquired substantially all the assets of the Predecessor Fund Adviser.
For the period from January 1, 2008 to the close of business February 15, 2008, the investment advisory and management fee paid to the Predecessor Fund Adviser was $3,159,339 (0.60% of average daily net assets).
Gateway Advisers shall be permitted to recover expenses it has borne under the expense limitation agreement (whether through reduction of its management fee or otherwise) on a class by class basis in later periods to the extent the expenses of a class fall below a class’ expense limits, provided, however, that a class is not obligated to pay such reduced fees/expenses more than one year after the end of the fiscal year in which the fee/expense was reduced. The amounts subject to possible recovery under the expense limitation agreements at December 31, 2008 were as follows:
Expenses Subject to Possible Recovery until December 31, 2009 | |||||||||
Class A | Class C | Class Y | Total | ||||||
$1,938,437 | $ | 69,216 | $ | 311,499 | $ | 2,319,152 |
b. Administrative Fees. Effective as of the close business on February 15, 2008, Natixis Asset Management Advisors, L.P. (“Natixis Advisors”) provides certain administrative services for the Fund and subcontracts with State Street Bank to serve as sub-administrator. Natixis 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 III, Natixis Funds Trust IV, Natixis Cash Management Trust, Gateway Trust (“Natixis Funds Trusts”), Loomis Sayles Funds I, Loomis Sayles Funds II (“Loomis Sayles Funds Trusts”), Hansberger International Series and Natixis Advisors, the Fund pays Natixis 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 the Hansberger International Series, 0.0500% of the next $15 billion, 0.0425% of the next $30 billion and 0.0375% 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 the Hansberger International Series of $10 million, which is reevaluated on an annual basis. New funds are subject to an annual fee of $75,000 plus $12,500 per class and an additional $75,000 if managed by multiple subadvisors in their first twelve months of operations.
From the close of business on February 15, 2008 to June 30, 2008, the Fund paid Natixis Advisors monthly its pro rata portion of fees equal to an annual rate of 0.0675% of the first $5 billion of the average daily net assets of the Natixis Funds Trusts, Loomis Sayles Funds Trusts and the Hansberger International Series, 0.0625% of the next $5 billion, 0.0500% of the next $20 billion and 0.0450% of such assets in excess of $30 billion, subject to an annual aggregate minimum fee for the Natixis Funds Trusts, Loomis Sayles Funds Trusts and the Hansberger International Series of $5 million, which was reevaluated on an annual basis. New funds were subject to an annual fee of $50,000 plus $12,500 per class and an additional $50,000 if managed by multiple subadvisors in their first twelve months of operations.
Natixis Advisors has contractually agreed to limit its administrative services fees attributable to the Fund for two years after the Acquisition through February 18, 2010 to an amount not to exceed on an annual basis $300,000 plus the sub-administration expenses attributable to the Fund.
For the period from the close of business February 15, 2008 to December 31, 2008, the Fund paid the following for administrative fees to Natixis Advisors:
Gross Administrative Fees | Waiver of Administrative Fees | Net Administrative Fees | |||||
$ | 2,091,581 | $ | 1,603,552 | $ | 488,029 |
c. Service and Distribution Fees. Effective as of the close of business on February 15, 2008, Natixis Distributors, L.P. (“Natixis Distributors”), a wholly-owned subsidiary of Natixis US, has entered into a distribution agreement with the Trust. Pursuant to this agreement, Natixis Distributors 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 Fund’s Class A shares (the “Class A Plan”) and Distribution and Service Plan relating to the Fund’s Class C shares (the “Class C Plan”).
Under the Class A Plan, the Fund pays Natixis Distributors a monthly service fee at an annual rate not to exceed 0.25% of the average daily net assets attributable to the Fund’s Class A shares, as reimbursement for expenses incurred by Natixis Distributors in providing personal services to investors in Class A shares and/or the maintenance of shareholder accounts. For the period from the close of business February 15, 2008 to December 31, 2008, the Fund paid Natixis Distributors $7,921,295 in service fees under the Class A Plan.
Under the Class C Plan, the Fund pays Natixis Distributors a monthly service fee at an annual rate not to exceed 0.25% of the average daily net assets attributable to the Fund’s Class C shares, as compensation for services provided and expenses incurred by Natixis Distributors in providing personal services to investors in Class C shares and/or the maintenance of shareholder accounts. For the period from February 19, 2008 to December 31, 2008, the Fund paid Natixis Distributors $191,130 in service fees under the Class C Plan.
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NOTESTO FINANCIAL STATEMENTS (continued)
December 31, 2008
Also under the Class C Plan, the Fund pays Natixis Distributors a monthly distribution fee at an annual rate of 0.75% of the average daily net assets attributable to the Fund’s Class C shares, as compensation for services provided and expenses incurred by Natixis Distributors in connection with the marketing or sale of Class C shares. For the period from February 19, 2008 to December 31, 2008, the Fund paid Natixis Distributors $573,392 in distribution fees under the Class C Plan.
Prior to the close of business February 15, 2008, the Predecessor Fund had adopted a Distribution Plan (the “Plan”) pursuant to Rule 12b-1 of the 1940 Act that allowed for the payment of distribution expenses by the Predecessor Fund related to the sale and distribution of its shares. Under the Plan the Predecessor Fund paid a distribution expense at an annual rate not to exceed 0.50% of the average daily net assets. For the period from January 1, 2008 to the close of business February 15, 2008, the Predecessor Fund paid $1,711,400 in distribution expenses.
d. Sub-Transfer Agent Fees and Expenses. Effective as of the close of business on February 15, 2008, Natixis Distributors has entered into agreements with financial intermediaries to provide certain recordkeeping, processing, shareholder communications and other services to customers of the intermediaries and has agreed to compensate the intermediaries for providing those services. Certain services would be provided by the Fund if the shares of those customers were registered directly with the Fund’s transfer agent. Accordingly, the Fund agreed to pay a portion of the intermediary fees attributable to shares of the Fund held by the intermediaries (which generally are a percentage of the value of shares held) not exceeding what the Fund would have paid its transfer agent had each customers’ shares been registered directly with the transfer agent instead of held through the intermediaries. Natixis Distributors pays the remainder of the fees. Listed below are the fees incurred by the Fund which are included in the transfer agent fees and expenses in the Statement of Operations.
Sub-Transfer Agent Fees | ||||||
Class A | Class C | Class Y | ||||
$ 1,188,489 | $ | 26,392 | $ | 248,302 |
e. Commissions. The Fund has been informed that commissions (including CDSCs) on Fund shares paid to Natixis Distributors by investors in shares of the Fund during the period from the close of business February 15, 2008 to December 31, 2008 amounted to $2,139,707.
f. Trustees Fees and Expenses. The Fund does not pay any compensation directly to its officers or Trustees who are directors, officers or employees of Natixis Advisors, Natixis Distributors, Natixis US, or their affiliates. The Chairperson of the Board receives a retainer fee at the annual rate of $200,000. 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 $65,000. Each Independent Trustee also receives a meeting attendance fee of $7,500 for each meeting of the Board of Trustees that he or she attends in person and $3,750 for each meeting of the Board of Trustees that he or she attends telephonically. In addition, each committee chair receives an additional retainer fee at the annual rate of $10,000. Each Contract Review and Governance Committee member is compensated $5,000 for each Committee meeting that he or she attends in person and $2,500 for each meeting that he or she attends telephonically. Each Audit Committee member is compensated $6,250 for each Committee meeting that he or she attends in person and $3,125 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 the 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.
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 Trustee’s 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 reflected as Trustees’ fees and expenses in the Statement of Operations. The portion of the accrued obligations allocated to the Fund under the Plan are reflected as Deferred Trustees’ fees in the Statement of Assets and Liabilities.
Prior to the close of business February 15, 2008, the Predecessor Fund was governed by a different Board of Trustees. Each Trustee who was not also an employee of Gateway Investment Advisers, L.P. received fees as follows: (a) an annual fee of $20,000, payable in equal quarterly installments for services during each fiscal quarter; (b) a $4,000 fee for each regular or special meeting of the Board of Trustees attended in person; (c) a $2,000 fee for each regular or special meeting of the Board attended via teleconference; and (d) $2,000 ($3,000 for the Chairman) for each Audit Committee meeting attended. The Lead Independent Trustee and the Chairperson of the Audit Committee also received an annual fee of $6,000 in each capacity. The Trust also reimbursed each Trustee for any reasonable and necessary travel expenses incurred in connection with attendance at such meetings. In addition, Trustees may have received attendance fees for service on other committees.
6. Line of Credit. The Fund, together with certain other funds of Natixis Funds Trusts, Loomis Sayles Funds Trusts and the Hansberger International Series, participates in a $200,000,000 committed 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 Federal Funds rate plus 0.50%. In addition, a commitment fee of 0.09% 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.
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NOTESTO FINANCIAL STATEMENTS (continued)
December 31, 2008
Prior to March 12, 2008, the Fund (effective close of business February 15, 2008) and the Predecessor Fund (for the period from February 5, 2008 through February 15, 2008), together with certain other funds of Natixis Funds Trusts, Loomis Sayles Funds Trusts and Hansberger International Series, participated in a $75,000,000 committed line of credit provided by State Street Bank.
For the period from January 1, 2008 through February 4, 2008, the Predecessor Fund had an uncommitted $100 million bank line of credit used as a temporary liquidity source for meeting redemption requests. Borrowings under this arrangement were subject to interest at the bank’s prime rate minus 0.50%. There were no fees associated with maintaining this facility.
The Fund and the Predecessor Fund had no borrowings under these agreements.
On February 6, 2009, the Trustees approved the renewal of the committed line of credit provided by State Street Bank. Effective March 12, 2009, interest will be 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 0.75%. In addition, a commitment fee of 0.125% per annum, payable at the end of each calendar quarter, will be accrued and apportioned among the participating funds based on their average daily unused portion of the line of credit.
7. 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, 2008 | Year Ended December 31, 2007 *** | |||||||||||||
Shares | Amount | Shares | Amount | |||||||||||
Class A * | ||||||||||||||
Issued from the sale of shares | 69,795,618 | $ | 1,882,061,102 | 55,273,004 | $ | 1,556,149,685 | ||||||||
Issued in connection with the reinvestment of distributions | 2,201,921 | 58,642,918 | 2,327,970 | 65,812,103 | ||||||||||
Redeemed | (91,362,102 | ) | (2,445,916,501 | ) | (31,368,375 | ) | (884,725,381 | ) | ||||||
Net change | (19,364,563 | ) | $ | (505,212,481 | ) | 26,232,599 | $ | 737,236,407 | ||||||
Class C ** | ||||||||||||||
Issued from the sale of shares | 7,755,618 | $ | 208,871,298 | — | $ | — | ||||||||
Issued in connection with the reinvestment of distributions | 33,599 | 864,793 | — | — | ||||||||||
Redeemed | (579,150 | ) | (14,237,085 | ) | — | — | ||||||||
Net change | 7,210,067 | $ | 195,499,006 | — | $ | — | ||||||||
Class Y ** | ||||||||||||||
Issued from the sale of shares | 72,884,707 | $ | 1,981,145,009 | — | $ | — | ||||||||
Issued in connection with the reinvestment of distributions | 766,406 | 20,099,641 | — | — | ||||||||||
Redeemed | (15,631,030 | ) | (399,883,781 | ) | — | — | ||||||||
Net change | 58,020,083 | $ | 1,601,360,869 | — | $ | — | ||||||||
Increase (decrease) from capital share transactions | 45,865,587 | $ | 1,291,647,394 | 26,232,599 | $ | 737,236,407 | ||||||||
* | Includes transactions of the Predecessor Fund for the period from January 1, 2008 to the close of business February 15, 2008. |
** | From commencement of operations on February 19, 2008 through December 31, 2008. |
*** | Represent transactions in capital shares of the Predecessor Fund only. |
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REPORTOF 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 Gateway Fund (the “Fund”), a series of Gateway Trust, at December 31, 2008, and the results of its operations, the changes in its net assets for and the financial highlights for the year then ended, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as “financial statements”) are the responsibility of the Fund’s management; our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit 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 audit, which included confirmation of securities at December 31, 2008 by correspondence with the custodian and brokers, provides a reasonable basis for our opinion. The statement of changes in net assets of the Fund for the year ended December 31, 2007 and the financial highlights for the four years in the period then ended were audited by another independent registered public accounting firm whose report dated February 11, 2008 expressed an unqualified opinion on those statements.
PricewaterhouseCoopers LLP
Boston, MA
February 24, 2009
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2008 U.S. TAX DISTRIBUTION INFORMATIONTO SHAREHOLDERS (Unaudited)
Qualified Dividend Income. 100% of the dividends distributed by the Fund during the fiscal year ended December 31, 2008 are considered qualified dividend income, and are eligible for reduced tax rates. These lower rates range from 0% to 15% depending on an individual’s tax bracket.
Corporate Dividends Received Deduction. For the fiscal year ended December 31, 2008, 100% of dividends distributed by the Gateway Fund qualify for the dividends received deduction for corporate shareholders.
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TRUSTEEAND OFFICER INFORMATION
Name and Year of Birth | Position(s) Held with the | Principal Occupation(s) | Number of Portfolios in Fund Complex Overseen*** and Other Directorships Held | |||
INDEPENDENT TRUSTEES | ||||||
Graham T. Allison, Jr. (1940) | Trustee Since 2007 Contract Review and Governance Committee Member | Douglas Dillon Professor and Director of the Belfer Center for Science and International Affairs, John F. Kennedy School of Government, Harvard University | 40 Director, Taubman Centers, Inc. (real estate investment trust) | |||
Charles D. Baker (1956) | Trustee Since 2007 Contract Review and Governance Committee Member | President and Chief Executive Officer, Harvard Pilgrim Health Care (health plan) | 40 None | |||
Edward A. Benjamin (1938) | Trustee Since 2007 Chairman of the Contract Review and Governance Committee | Retired | 40 None | |||
Daniel M. Cain (1945) | Trustee Since 2007 Chairman of the Audit Committee | President and Chief Executive Officer, Cain Brothers & Company, Incorporated (investment banking) | 40 Director, Sheridan Healthcare Inc. (physician practice management) | |||
Kenneth A. Drucker**** (1945) | Trustee Since 2008 Contract Review and Governance Committee Member | Formerly, Treasurer, Sequa Corp. (manufacturing) | 40 None | |||
Jonathan P. Mason (1958) | Trustee Since 2007 Audit Committee Member | Chief Financial Officer, Cabot Corp. (specialty chemicals); formerly, Vice President and Treasurer, International Paper Company; formerly, Chief Financial Officer, Carter Holt Harvey (forest products) | 40 None | |||
Sandra O. Moose (1942) | Chairperson of the Board of Trustees since November 2005 Since 2007 Ex officio member of the Audit Committee and Contract Review and Governance Committee | President, Strategic Advisory Services (management consulting); formerly, Senior Vice President and Director, The Boston Consulting Group, Inc. (management consulting) | 40 Director, Verizon Communications; Director, Rohm and Haas Company (specialty chemicals); Director, AES Corporation (international power company) |
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TRUSTEEAND OFFICER INFORMATION
The tables below provide certain information regarding the Trustees and officers of Gateway Trust (the “Trust”). Unless otherwise indicated, the address of all persons below is 399 Boylston Street, Boston, MA 02116. The Trust’s Statement of Additional Information includes additional information about the Trustees of the Trust and is available by calling Natixis Funds at 800-225-5478.
Name and Year of Birth | Position(s) Held with the | Principal Occupation(s) | Number of Portfolios in Fund Complex Overseen*** and Other Directorships Held | |||
INDEPENDENT TRUSTEES continued | ||||||
Cynthia L. Walker (1956) | Trustee Since 2007 Audit Committee Member | Deputy Dean for Finance and Administration, Yale University School of Medicine; formerly, Executive Dean for Administration, Harvard Medical School; and formerly, Dean for Finance & Chief Financial Officer, Harvard Medical School | 40 None | |||
INTERESTED TRUSTEES | ||||||
Robert J. Blanding1 (1947) 555 California Street San Francisco, CA 94104 | Trustee Since 2007 | President, Chairman, Director and Chief Executive Officer, Loomis, Sayles & Company, L.P. | 40 None | |||
John T. Hailer2 (1960) | Trustee Since 2007 | President and Chief Executive Officer-U.S. and Asia, Natixis Global Asset Management, L.P.; formerly, President and Chief Executive Officer, Natixis Distribution Corporation, Natixis Asset Management Advisors, L.P., Natixis Distributors, L.P. and Natixis Global Associates, Inc. | 40 None |
* | Each Trustee serves until retirement, resignation or removal from the Board of Trustees. The current retirement age is 72. The position of Chairperson of the Board is appointed for a two-year term. Ms. Moose was appointed to serve an additional two-year term as the Chairperson of the Board of Trustees on September 14, 2007. |
** | Each person listed above, except as noted, holds the same position(s) with the Natixis Funds Trust I, Natixis Funds Trust II, Natixis Funds Trust III, Natixis Funds Trust IV, Gateway Trust and the Natixis Cash Management Trust (collectively, the “Natixis Funds Trusts”), Loomis Sayles Funds I and Loomis Sayles Funds II (collectively, the “Loomis Sayles Funds Trusts”), and Hansberger International Series. Previous positions during the past five years with Natixis Distributors, L.P. (the “Distributor”), Natixis Asset Management Advisors, L.P. (“Natixis Advisors”), or Loomis, Sayles & Company, L.P. are omitted if not materially different from a Trustee’s or officer’s current position with such entity. |
*** | The Trustees of the Trusts serve as trustees of a fund complex that includes all series of the Natixis Funds Trusts, the Loomis Sayles Funds Trusts and Hansberger International Series (collectively, the “Fund Complex”). |
**** | Mr. Drucker was appointed as trustee effective July 1, 2008. |
1 | Mr. Blanding is deemed an “interested person” of the Trusts because he holds the following positions with an affiliated person of the Trusts: President, Chairman, Director and Chief Executive Officer of Loomis, Sayles & Company, L.P. |
2 | Mr. Hailer is deemed an “interested person” of the Trusts because he holds the following positions with an affiliated person of the Trusts: President and Chief Executive Officer-U.S. and Asia, Natixis Global Asset Management, L.P. |
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TRUSTEEAND OFFICER INFORMATION
Name and Year of Birth | Position(s) Held with the | Term of Office* and Length of Time Served | Principal Occupation During Past 5 Years** | |||
OFFICERS OF THE TRUST | ||||||
Coleen Downs Dinneen (1960) | Secretary, Clerk and Chief Legal Officer | Since September 2004 | Executive Vice President, General Counsel, Secretary and Clerk (formerly, Senior Vice President, Deputy General Counsel, Assistant Secretary and Assistant Clerk), Natixis Distribution Corporation, Natixis Asset Management Advisors, L.P. and Natixis Distributors, L.P. | |||
David Giunta (1965) | President and Chief Executive Officer | Since March 2008 | President and Chief Executive Officer, Natixis Distribution Corporation, Natixis Asset Management Advisors, L.P. and Natixis Distributors, L.P.; formerly, President, Fidelity Charitable Gift Fund; and formerly, Senior Vice President, Fidelity Brokerage Company | |||
Russell L. Kane (1969) | Chief Compliance Officer, Assistant Secretary and Anti-Money Laundering Officer | Chief Compliance Officer since May 2006; Assistant Secretary since June 2004; and Anti-Money Laundering Officer since April 2007 | Chief Compliance Officer for Mutual Funds, Senior Vice President, Deputy General Counsel, Assistant Secretary and Assistant Clerk, Natixis Distribution Corporation, Natixis Asset Management Advisors, L.P. and Natixis Distributors, L.P.; and formerly, Senior Counsel, Columbia Management Group | |||
Michael C. Kardok (1959) | Treasurer, Principal Financial and Accounting Officer | Since October 2004 | Senior Vice President, Natixis Asset Management Advisors, L.P. and Natixis Distributors, L.P.; and formerly, Senior Director, PFPC Inc. | |||
Robert Krantz (1964) | Executive Vice President | Since September 2007 | Executive Vice President, Natixis Asset Management Advisors, L.P. and Natixis Distributors, L.P. |
* | Each officer of the Trusts serves for an indefinite term in accordance with the Trusts’ current By-laws until the date his or her successor is elected and qualified, or until he or she sooner dies, retires, is removed or becomes disqualified. |
** | Each person listed above, except as noted, holds the same position(s) with the Natixis Funds Trusts, Loomis Sayles Funds Trusts and Hansberger International Series. Previous positions during the past five years with the Distributor, Natixis Advisors or Loomis Sayles are omitted if not materially different from a Trustee’s or officer’s current position with such entity. |
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Item 2. | Code of Ethics. |
The Registrant has adopted a code of ethics that applies to the Registrant’s principal executive officer, principal financial officer and persons performing similar functions.
Item 3. | Audit Committee Financial Expert. |
The Board of Trustees of the Registrant has established an audit committee. Ms. Cynthia L. Walker, Mr. Daniel M. Cain and Mr. Jonathan P. Mason are members of the audit committee and have been designated as “audit committee financial experts” by the Board of Trustees. Each of these individuals is also an Independent Trustee of the Registrant.
Item 4. | Principal Accountant Fees and Services. |
Fees billed by the Principal Accountant for services rendered to the Registrant.
The table below sets forth fees billed by the principal accountant, PricewaterhouseCoopers LLP, for the past two fiscal years for professional services rendered in connection with a) the audit of the Registrant’s annual financial statements and services provided in connection with regulatory filings; b) audit-related services (including services that are reasonably related to the performance of the audit of the Registrant’s financial statements but not reported under “Audit Fees”); c) tax compliance, tax advice and tax planning and d) all other fees billed for professional services rendered by the principal accountant to the Registrant, other than the services provided as reported as a part of (a) through (c) of this Item.
Audit fees | Audit-related fees | Tax fees1 | All other fees | |||||||||||||||||||
2007 | 2008 | 2007 | 2008 | 2007 | 2008 | 2007 | 2008 | |||||||||||||||
Gateway Trust | $— | $56,000 | $— | $— | $— | $8,000 | $— | $— |
1. | Tax fees consist of: | |
2008—review of the Registrant’s tax returns. |
Aggregate fees billed to the Registrant for non-audit services during 2007 and 2008 were $0 and $8,000, respectively.
Fees billed by the Principal Accountant for services rendered to the Adviser and Control Affiliates.
The following table sets forth the non-audit services provided by the Trust’s principal accountant to Gateway Investment Advisers, LLC and entities controlling, controlled by or under common control with Gateway Investment Advisers, LLC that provide ongoing services to the Trust (“Control Affiliates”) for the last two fiscal years.
Audit-related fees | Tax fees | All other fees | ||||||||||||||||||||
2007 | 2008 | 2007 | 2008 | 2007 | 2008 | |||||||||||||||||
Control Affiliates | $ | — | $ | 12,000 | $ | — | $ | — | $ | — | $ | — |
Aggregate fees billed to Control Affiliates for non-audit services during 2007 and 2008 were $0 and $12,000, respectively.
None of the audit-related, tax and other services provided by the Registrant’s principal accountant were approved by the Audit Committee pursuant to (c)(7)(i)(C) of Regulation S-X.
Audit Committee Pre Approval Policies.
Annually, the Registrant’s Audit Committee reviews the audit, audit-related, tax and other non-audit services together with the projected fees, for services proposed to be rendered to the Trust and/or other entities for which pre-approval is required during the upcoming year. Any subsequent revisions to
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already pre-approved services or fees (including fee increases) and requests for pre-approval of new services would be presented for consideration quarterly as needed.
If, in the opinion of management, a proposed engagement by the Registrant’s independent accountants needs to commence before the next regularly scheduled Audit Committee meeting, any member of the Audit Committee who is an independent Board member is authorized to pre-approve the engagement, but only for engagements to provide audit, audit related and tax services. This approval is subject to review of the full Audit Committee at its next quarterly meeting. All other engagements require the approval of all the members of the Audit Committee.
Item 5. | Audit Committee of Listed Registrants. |
Not applicable.
Item 6. | Schedule of Investments. |
Included as part of the Report to Shareholders filed as Item 1 herewith.
Item 7. | Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies. |
Not applicable.
Item 8. | Portfolio Managers of Closed-End Management Investment Companies. |
Not applicable.
Item 9. | Purchases of Equity Securities by Closed-End Management Investment Companies and Affiliated Purchasers. |
Not applicable.
Item 10. | Submission of Matters to a Vote of Securities Holders. |
There were no material changes to the procedures by which shareholders may recommend nominees to the Registrant’s Board of Trustees.
Item 11. | Controls and Procedures. |
The Registrant’s principal executive officer and principal financial officer have concluded that the Registrant’s disclosure controls and procedures are sufficient to ensure that information required to be disclosed by the Registrant in this Form N-CSR was recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms, based upon such officers’ evaluation of these controls and procedures as of a date within 90 days of the filing date of the report.
There were no changes in the Registrant’s internal control over financial reporting that occurred during the Registrant’s last fiscal quarter of the period covered by this report that has materially affected, or is reasonably likely to materially affect, the Registrant’s internal control over financial reporting.
Item 12. | Exhibits. |
(a) | (1 | ) | Code of Ethics required by Item 2 hereof, filed herewith as Exhibit (a)(1). | ||
(a) | (2 | ) | Certifications of Principal Executive Officer and Principal Financial Officer pursuant to Rule 30a-2(a) under the Investment Company Act of 1940 [17 CFR 270.30a-2(a)], filed herewith as Exhibits (a)(2)(1) and (a)(2)(2), respectively. | ||
(a) | (3 | ) | Not applicable. | ||
(b) | Certifications of Principal Executive Officer and Principal Financial Officer pursuant to Section 906 of Sarbanes-Oxley Act of 2002 are filed herewith as Exhibit (b). |
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Gateway Trust | ||
By: | /s/ David L. Giunta | |
Name: | David L. Giunta | |
Title: | President and Chief Executive Officer | |
Date: | February 26, 2009 |
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.
By: | /s/ David L. Giunta | |
Name: | David L. Giunta | |
Title: | President and Chief Executive Officer | |
Date: | February 26, 2009 |
By: | /s/ Michael C. Kardok | |
Name: | Michael C. Kardok | |
Title: | Treasurer | |
Date: | February 26, 2009 |