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EXHIBIT d.1
Contract extended to 6/30/2002
By board action on 4/11/2001
Amended by the board on 8/18/1999 and 4/11/2001
MANAGEMENT CONTRACT(1)
AGREEMENT, made this 26th day of May, 1994 as amended on this 4th day
of September, 1996 by and between Bridgeway Fund, Inc., a Maryland corporation
(hereinafter called the "Fund"), and Bridgeway Capital Management, Inc., a
Texas corporation (hereinafter sometimes called the "Adviser").
WITNESSETH:
WHEREAS the Fund and the Adviser wish to enter into an agreement
setting forth the terms on which the Adviser will perform certain services for
the Fund;
NOW THEREFORE, in consideration of the premises and the covenants
contained hereinafter, the Fund and the Adviser agree as follows:
1. The Fund hereby employs the Adviser to manage the investment and
reinvestment of the assets of the Fund and to administer its affairs, subject
to the supervision of the Board of Directors of the Fund, for the period and on
the terms in this agreement set forth. The Adviser hereby accepts such
employment and agrees during such period, at its own expense, to render the
services and to assume the obligations herein set forth, for the compensation
herein provided. The Adviser shall for all purposes herein be deemed to be an
independent contractor and shall, unless otherwise expressly provided or
authorized, have no authority to act for or represent the Fund in any way or
otherwise be deemed as agent of the Fund.
2. The Adviser, at its own expense, shall furnish to the Fund office
space in the offices of the Adviser or in such other place as may be agreed
upon from time to time, and all necessary office facilities, equipment and
personnel (with the exception of bookkeeping, auditing, and accounting
personnel) for managing the affairs and investments and keeping the Fund's
records and shall arrange, if desired by the Fund, for members of the Adviser's
organization or its affiliates to serve without salaries from the Fund as
officers or agents of the Fund. The Adviser assumes and shall pay or reimburse
the Fund for: (1) the compensation (if any) of the directors of the Fund who
are interested persons of the Adviser, and the compensation of the officers of
the Fund as such (with the exception of the Chief Financial Officer, Accounting
Officer or Treasurer), and (2) all expenses incurred by the Adviser or by the
Fund in connection with the management of the investment and reinvestment of
the assets of the Fund and the administration of the affairs of the Fund, other
than those specifically assumed by the Fund herein.
Except as otherwise expressly provided above, the Fund assumes and
shall pay all expenses of the Fund, including, without limitation: (1) the
charges and expenses of any custodian or depository appointed by the Fund for
the safekeeping of its cash, securities and other property, (2) the charges and
expenses of bookkeeping personnel, auditors, and accountants, computer services
and record keeping, (3) the charges and expenses of any transfer agents and
registrars appointed by the Fund, (4) brokers' commissions and issue and
transfer taxes chargeable to the Fund in connection with securities
transactions to which the Fund is a party, (5) all taxes and corporate fees
payable by the Fund to federal, state or other government agencies, (6) the
cost of stock certificates (if any) representing shares of the Fund, (7) fees
and expenses involved in registering and maintaining registrations of the Fund
and of its shares with the Securities and Exchange Commission and qualifying
its shares under state or other securities laws, including the preparation and
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printing of prospectuses used for these purposes and for shareholders of the
Fund, (8) all expenses of shareholders' and directors' meetings and of
preparing and printing reports to shareholders, (9) charges and expenses of
legal counsel for the Fund in connection with legal matters relating to the
Fund, including without limitation, legal services rendered in connection with
the Fund's corporate existence, corporate and financial structure and relations
with its shareholders, registrations and qualifications of securities under
federal, state and other laws, issues of securities and expenses which the Fund
has herein assumed, (10) compensation of directors who are not interested
persons of the Adviser, (11) interest expense, (12) insurance expense, and (13)
association membership dues.
The services of the Adviser to the Fund hereunder are not to be deemed
exclusive, and the Adviser shall be free to render similar services to others
so long as its services hereunder be not impaired thereby.
3. As compensation for its services rendered and the charges and
expenses assumed and to be paid by the Adviser as described above, pays the
Adviser a base fee computed and payable on or promptly after the last market
day of each month at the following annual rate:
.9% of the value of the Portfolio's average daily net assets during
such month up to $250,000,000;
.875% of the next $250,000,000 of such assets; and
.85% of such assets over $500,000,000,
except that the fee for the Ultra-Small Company Portfolio during the period
that the Portfolio's net assets range from $27,500,000 to $55,000,000 will be
paid as if the Portfolio had $55,000,000 under management (that is, $55 million
times .009 equals $495,000), subject to a maximum 1.49% annual rate.
For purposes of calculating such fee, average daily net assets shall
be computed by adding the total asset values less liabilities of each Portfolio
as computed by the Adviser each day (during the month and dividing the
resulting total by the number of days in the month). Expenses and fees of each
Portfolio, including the advisory fee, will be accrued daily and taken into
account in determining net asset value. For any period less than a full month
during which this agreement is in effect, the fee shall be prorated according
to the proportion which such period bears to a full month.
The base fee for the Ultra-Small Company Portfolio will not be
adjusted for performance. The Aggressive Growth and Social Responsibility
Portfolio base fee described above will be adjusted each Quarterly Period (as
defined below) by adding to or subtracting from such rate, when appropriate,
the applicable performance adjustment rate percentage as described below. The
resulting advisory fee rate will then be applied to the average daily net asset
value of the Fund for the succeeding quarterly period. The advisory fee will be
paid monthly and will be one-twelfth (1/12th) of the resulting dollar figure.
The performance adjustment rate shall vary with the Fund's performance
as compared to the performance of the Standard & Poor's 500 Composite Stock
Price Index with dividends reinvested (hereinafter "Index" or "S & P 500
Index") and will range from -.7% to +.7%; the performance rate adjustment will
be calculated at 4.67% of the difference between the performance of the Fund
and that of the Index, except that there will be no performance adjustment if
the difference between the Fund performance and the Index performance is less
than or equal to 2%. The graph and table in the Prospectus (see "Management of
the Fund") illustrate the relationship between the advisory fee and the fund
performance relative to the Index.
The performance period shall consist of the most recent five year
period ending on the last day of the quarter (March, June, September, and
December) that the New York Stock Exchange was open for trading. For example,
on February 15, 2000, the relevant five year period would be from Friday,
December 30, 1994 through Friday, December 31, 1999.
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The performance of the Index will be the five year percentage increase
(or decrease) in the capitalization weighted S & P 500 Index with dividends
reinvested. The Fund performance will be the percentage increase (or decrease)
of the portfolio net asset value per share over the performance period and will
be calculated as the sum of: 1) the change in the portfolio unit value during
such period, 2) the unit value of portfolio distributions from income or
capital gains (long or short term) having an ex-dividend date occurring within
the performance period and assumed to have been reinvested at the net asset
value on ex-date, and 3) the unit value of capital gains taxes paid or accrued
during the performance period of undistributed realized capital gains, if any.
Thus, the Fund performance will be in accordance with SEC standardized total
return formula.
The adjustment to the Basic Advisory Fee will not be cumulative. An
increased fee will result even though the performance of the Fund over some
period of time shorter than the Performance Period has been behind that of the
Index and, conversely, a reduction in the Basic Advisory Fee will be made for a
month even though the performance of the Fund over some period of time shorter
than the performance Period has been ahead of that of the Index.
As indicated above, the Fund's expenses (including the monthly Basic
Advisory fee) will be accrued daily. The performance adjustment for each
performance fee period will be computed monthly and accrued daily in the
subsequent monthly period and taken into account in computing the daily net
asset value of a Fund Portfolio's share. However, the expenses in excess of any
maximum expense limitation that is assumed by the Fund's Adviser or
Distributor, if any, shall not be accrued for the purpose of computing the
daily net asset value of a Fund share.
Since the Fund does not have a five year operating history, the
performance rate adjustment will be calculated as follows during the initial
five year period.
(a) From Fund inception through April 30, 1995, the performance rate
adjustment will not be operative. The advisory fee payable will be the
base fee only.
(b) From April 30, 1995 through September 30, 1999, the performance
rate adjustment fee will be calculated based upon a comparison of the
investment performance of each Portfolio and the Index over the number
of quarters that have elapsed since the Fund began operations (August 5,
1994). Each time the performance adjustment fee is calculated, it will
cover a longer time span, until it can cover a running five year period
as intended. In the meantime, the early months of the transition period
will have a disproportionate effect on the performance adjustment of the
fee.
4. The Fund shall cause its books and accounts to be audited at least
once each year by a reputable, independent public accountant or organization of
public accountants who shall render a report to the Fund.
5. Subject to and in accordance with the Articles of Incorporation of
the Fund and of the Certificate of Incorporation of the Adviser, respectively,
it is understood that directors, officers, agents and stockholders of the Fund
are or may be interested in the Adviser (or any successor thereof) as
directors, officers or stockholders, or otherwise, that directors, officers,
agents and stockholders of the Adviser are or may be interested in the Fund as
directors, officers, stockholders or otherwise, that the Adviser (or any such
successor) is or may be interested in the Fund as stockholder or otherwise and
that the effect of any such adverse interests shall be governed by said
Articles of Incorporation and Certificate of Incorporation, respectively.
6. This agreement shall continue in effect until June 30, 1997 and
thereafter from year to year if its continuance after said date is specifically
approved on or before said date and at least annually thereafter by vote of a
majority of the outstanding voting securities of the Fund or by the Board or
Directors of the Fund, and in addition thereto by a majority of the Directors
of the Fund who are not
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parties to the agreement or interested persons of the Adviser or affiliated
with any such party except as directors of the Fund, provided, however, that:
(1) this agreement may at any time be terminated without the payment of any
penalty either by vote of the Board of Directors of the Fund or by vote of a
majority of the outstanding voting securities of the Fund, on sixty days'
written notice to the Adviser, (2) this agreement shall immediately terminate
in the event of its assignment (within the meaning of the federal Investment
Company Act of 1940), and (3) this agreement may be terminated by the Adviser
on ninety days' written notice to the Fund. Any notice under this agreement
shall be given in writing, addressed and delivered, or mailed postpaid, to the
other party at any office of such party.
7. This agreement may be amended at any time by mutual consent of the
parties, provided that such consent on the part of the Fund shall have been
approved by vote of a majority of the outstanding voting securities of the
Fund.
The contract was amended by the Board of Directors on August 18, 1999 without a
shareholder vote, relying on no-action positions cited by the SEC staff in
reply to the Adviser's no-action request to read :
The Adviser will reimburse expenses, if necessary, to ensure expense ratios do
not exceed the following fiscal year expense ratios:
Ultra-Small Company 2.0%
Aggressive Growth 2.0%
Social Responsibility* 1.5%
*For the Social Responsibility only, if the performance adjustment
portion of the management fee is positive, then the expense ratio will be
reimbursed to the level of 1.5% plus the performance adjustment up to a maximum
expense ratio of 2.0%.
IN WITNESS WHEREOF the parties have hereto executed this agreement on
the day and year first above written.
BRIDGEWAY FUND, INC.
By: _______________________
President
BRIDGEWAY CAPITAL MANAGEMENT, INC.
By: _______________________
President
(1) Amended April 11, 2001
The portion of this contract applying to the Social Responsibility Portfolio
was no longer applicable after 10/31/2000 as the assets of that Portfolio were
exchanged for shares of the Xxxxxxx Large Cap Growth Fund, and the Xxxxxxx fund
shares received were distributed to shareholders of the Portfolio as part of
the liquidation plan they had previously approved.
