Cost Basis Reporting

What You Need to Know About Cost Basis Reporting

Shareholders, please review this important information regarding Cost Basis Reporting Regulations and your account.

As part of the Emergency Economic Stabilization Act of 2008, Bridgeway Funds will be responsible for tracking and reporting cost basis information to the IRS on the sale or exchange of shares you acquire on or after January 1, 2012 (“covered shares”). Cost basis is the cost of the shares you purchased, including reinvested dividends and capital gains distributions. When you sell covered shares (shares acquired on or after January 1, 2012) in a taxable account, the cost basis accounting method you choose determines how your gain or loss is calculated. You are still responsible for calculating and reporting the cost basis for shares acquired before January 1, 2012.

The new tax regulations also require that mutual funds elect a default methodology to perform the required reporting. As a result, Bridgeway Funds has chosen the Average Cost Method as the default tax lot identification method for shareholders who do not choose a cost basis method. This is the method Bridgeway Funds will use to determine the cost basis for the shares sold and is the method in which ”covered” share sales will be reported on a shareholder’s Form 1099 if you do not choose a cost basis method.

You can choose the method used for your account, so please consult your tax professional to determine which method below should be considered for your individual tax situation. Information can also be obtained by visiting the IRS website at www.irs.gov. Bridgeway Funds and their affiliates and agents cannot provide tax advice.

If you do not designate the cost basis method to be used prior to or at the same time of a redemption of covered shares, your trade will be processed using our default method of Average Cost.