EX-99(d)(4)(d)
SUBADVISORY AGREEMENT
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THIS AGREEMENT is made and entered into as of the 1st day of May, 2007,
by and among NATIONWIDE MUTUAL FUNDS (formerly, Gartmore Mutual Funds) (the
"Trust"), a Delaware statutory trust, NATIONWIDE FUND ADVISORS (formerly,
Gartmore Mutual Fund Capital Trust) (the "Adviser") a Delaware statutory trust
registered under the Investment Advisers Act of 1940, as amended (the "Advisers
Act"), and GARTMORE GLOBAL PARTNERS, a general partnership organized under the
laws of Delaware (the "Subadviser"), and also registered under the Advisers Act.
W I T N E S S E T H:
WHEREAS, the Trust is registered with the U.S. Securities and Exchange
Commission (the "SEC") as an open-end management investment company under the
Investment Company Act of 1940, as amended (the "1940 Act");
WHEREAS, the Adviser has, pursuant to an Investment Advisory Agreement
with the Trust dated as of the 1st day of May, 2007 (the "Advisory Agreement"),
been retained to act as investment adviser for certain of the series of the
Trust that are listed on Exhibit A to this Agreement (each, a "Fund");
WHEREAS, the Adviser represents that it is willing and possesses legal
authority to render such services subject to the terms and conditions set forth
in this Agreement;
WHEREAS, the Trust and the Adviser each represent that the Advisory
Agreement permits the Adviser to delegate certain of its duties under the
Advisory Agreement to other investment advisers, subject to the requirements of
the 1940 Act; and
WHEREAS, the Adviser desires to retain Subadviser to assist it in the
provision of a continuous investment program for that portion of the Fund's
assets that the Adviser will assign to the Subadviser, and Subadviser is willing
to render such services subject to the terms and conditions set forth in this
Agreement,
NOW, THEREFORE, the parties do mutually agree and promise as follows
with respect to each Fund:
1. APPOINTMENT AS SUBADVISER. The Adviser hereby appoints the
Subadviser to act as investment adviser for and to manage that portion or all of
the assets of the Fund that the Adviser from time to time upon reasonable prior
notice allocates to, and puts under the control of, the Subadviser (the
"Subadviser Assets") subject to the supervision of the Adviser and the Board of
Trustees of the Trust and subject to the terms of this Agreement; and the
Subadviser hereby accepts such appointment. In such capacity, the Subadviser
shall be responsible for the investment management of the Subadviser Assets. It
is recognized that the Subadviser and certain of its affiliates now act, and
that from time to time hereafter may act, as investment adviser to one or more
other investment companies and to fiduciary or other managed accounts and that
the Adviser and the Trust cannot object to such activities.
2. DUTIES OF SUBADVISER.
(a) INVESTMENTS. The Subadviser is hereby authorized and
directed and hereby agrees, subject to the stated investment policies and
restrictions of the Fund as set forth in the Fund's prospectus and statement of
additional information as currently in effect and, as soon as practical after
the Trust, the Fund or the Adviser notifies the Subadviser thereof, as
supplemented or amended from time to time (collectively referred to hereinafter
as the "Prospectus") and subject to the directions of the Adviser and the
Trust's Board of Trustees, to monitor on a continuous basis the performance of
the Subadviser Assets and to conduct a continuous program of investment,
evaluation and, if appropriate, sale and reinvestment of the Subadviser Assets.
The Adviser agrees to provide the Subadviser with such assistance as may be
reasonably requested by the Subadviser in connection with the Subadviser's
activities under this Agreement, including, without limitation, providing
information concerning the Fund, its funds available, or to become available,
for investment and generally as to the conditions of the Fund's or the Trust's
affairs.
(b) COMPLIANCE WITH APPLICABLE LAWS AND GOVERNING DOCUMENTS.
In the performance of its services under this Agreement, the Subadviser shall
act in conformity with the Prospectus and the Trust's Agreement and Declaration
of Trust and By-Laws as currently in effect and, as soon as practical after the
Trust, the Fund or the Adviser notifies the Subadviser thereof, as supplemented,
amended and/or restated from time to time (referred to hereinafter as the
"Declaration of Trust" and "By-Laws," respectively) and with the instructions
and directions received in writing from the Adviser or the Trustees of the Trust
and will conform to, and comply with, the requirements of the 1940 Act, the
Internal Revenue Code of 1986, as amended (the "Code"), and all other applicable
federal and state laws and regulations. Without limiting the preceding sentence,
the Adviser promptly shall notify the Subadviser as to any act or omission of
the Subadviser hereunder that the Adviser reasonably deems to constitute or to
be the basis of any noncompliance or nonconformance with any of the Trust's
Declaration of Trust and By-Laws and the Prospectus, the instructions and
directions received in writing from the Adviser or the Trustees of the Trust or
the 1940 Act, the Code, and all other applicable federal and state laws and
regulations. Notwithstanding the foregoing, the Adviser shall remain responsible
for ensuring the Fund's and the Trust's overall compliance with the 1940 Act,
the Code and all other applicable federal and state laws and regulations and the
Subadviser is only obligated to comply with this subsection (b) with respect to
the Subadviser Assets. The Adviser timely will provide the Subadviser with a
copy of the minutes of the meetings of the Board of Trustees of the Trust to the
extent they may affect a Fund or the services of the Subadviser, copies of any
financial statements or reports made by a Fund to its shareholders, and any
further materials or information which the Subadviser may reasonably request to
enable it to perform its functions under this Agreement.
The Adviser shall perform quarterly and annual tax compliance
tests to ensure that the Fund is in compliance with Subchapter M and Section
817(h) of the Code. In connection with such compliance tests, the Adviser shall
inform the Subadviser at least ten (10) business days prior to a calendar
quarter end if the Subadviser Assets are out of
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compliance with the diversification requirements under either Subchapter M or
Section 817(h). If the Adviser notifies the Subadviser that the Subadviser
Assets are not in compliance with such requirements noted above, the Subadviser
will take prompt action to bring the Subadviser Assets back into compliance
within the time permitted under the Code thereunder.
The Adviser will provide the Subadviser with reasonable
advance notice of any change in a Fund's investment objectives, policies and
restrictions as stated in the Prospectus, and the Subadviser shall, in the
performance of its duties and obligations under this Agreement, manage the
Subadviser Assets consistent with such changes, provided that the Subadviser has
received prompt notice of the effectiveness of such changes from the Trust or
the Adviser. In addition to such notice, the Adviser shall provide to the
Subadviser a copy of a modified Prospectus reflecting such changes. The Adviser
acknowledges and will ensure that the Prospectus will at all times be in
compliance with all disclosure requirements under all applicable federal and
state laws and regulations relating to the Trust or the Fund, including, without
limitation, the 1940 Act, and the rules and regulations thereunder, and that the
Subadviser shall have no liability in connection therewith, except as to the
accuracy of material information furnished in writing by the Subadviser to the
Trust or to the Adviser specifically for inclusion in the Prospectus. The
Subadviser hereby agrees to provide to the Adviser in a timely manner such
information relating to the Subadviser and its relationship to, and actions for,
the Trust as may be required to be contained in the Prospectus or in the Trust's
Registration Statement on Form N-1A.
(c) VOTING OF PROXIES. The Adviser hereby delegates to the
Subadviser the Adviser's discretionary authority to exercise voting rights with
respect to the securities and other investments in the Subadviser Assets and
authorizes the Subadviser to delegate further such discretionary authority to a
designee identified in a notice given to the Trust and the Adviser. The
Subadviser, including without limitation its designee, shall have the power to
vote, either in person or by proxy, all securities in which the Subadviser
Assets may be invested from time to time, and shall not be required to seek or
take instructions from, the Adviser, the Fund or the Trust or take any action
with respect thereto. If both the Subadviser and another entity managing assets
of the Fund have invested the Fund's assets in the same security, the Subadviser
and such other entity will each have the power to vote its pro rata share of the
Fund's security.
The Subadviser will establish a written procedure for proxy
voting in compliance with current applicable rules and regulations, including
but not limited to Rule 30b1-4 under the 1940 Act. The Subadviser will provide
the Adviser or its designee, a copy of such procedure and establish a process
for the timely distribution of the Subadviser's voting record with respect to
the Fund's securities and other information necessary for the Fund to complete
information required by Form N-1A under the 1940 Act and the Securities Act of
1933, as amended (the "Securities Act"), Form N-PX under the 1940 Act, and Form
N-CSR under the Xxxxxxxx-Xxxxx Act of 2002, as amended, respectively.
(d) AGENT. Subject to any other written instructions of the
Adviser or the Trust, the Subadviser is hereby appointed the Adviser's and the
Trust's agent and
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attorney-in-fact for the limited purposes of executing account documentation,
agreements, contracts and other documents as the Subadviser shall be requested
by brokers, dealers, counterparties and other persons in connection with its
management of the Subadviser Assets. The Subadviser agrees to provide the
Adviser and the Trust with copies of any such agreements executed on behalf of
the Adviser or the Trust.
(e) BROKERAGE. The Subadviser is authorized, subject to the
supervision of the Adviser and the plenary authority of the Trust's Board of
Trustees, to establish and maintain accounts on behalf of the Fund with, and
place orders for the investment and reinvestment, including without limitation
purchase and sale of the Subadviser Assets with or through, such persons,
brokers (including, to the extent permitted by applicable law, any broker
affiliated with the Subadviser) or dealers (collectively "Brokers") as
Subadviser may elect and negotiate commissions to be paid on such transactions.
The Subadviser, however, is not required to obtain the consent of the Adviser or
the Trust's Board of Trustees prior to establishing any such brokerage account.
The Subadviser shall place all orders for the purchase and sale of portfolio
investments for a Fund's account with Brokers selected by the Subadviser. In the
selection of such Brokers and the placing of such orders, the Subadviser shall
seek to obtain for the Fund the most favorable price and execution available,
except to the extent it may be permitted to pay higher brokerage commissions for
brokerage and research services, as provided below. In using its reasonable
efforts to obtain for a Fund the most favorable price and execution available,
the Subadviser, bearing in mind the best interests of each Fund at all times,
shall consider all factors it deems relevant, including price, the size of the
transaction, the breadth and nature of the market for the security, the
difficulty of the execution, the amount of the commission, if any, the timing of
the transaction, market prices and trends, the reputation, experience and
financial stability of the Broker involved, and the quality of service rendered
by the Broker in other transactions. Notwithstanding the foregoing, neither the
Trust, the Fund nor the Adviser shall instruct the Subadviser to place orders
with any particular Broker(s) with respect to the Subadviser Assets. Subject to
such policies as the Trustees may determine, or as may be mutually agreed to by
the Adviser and the Subadviser, the Subadviser is authorized but not obligated
to cause, and shall not be deemed to have acted unlawfully or to have breached
any duty created by this Agreement or otherwise solely by reason of its having
caused, the Fund to pay a Broker that provides brokerage and research services
(within the meaning of Section 28(e) of the Securities Exchange Act of 1934) to
the Subadviser an amount of commission for effecting a Subadviser Assets
investment transaction that is in excess of the amount of commission that
another Broker would have charged for effecting that transaction if, but only
if, the Subadviser determines in good faith that such commission was reasonable
in relation to the value of the brokerage and research services provided by such
Broker viewed in terms of either that particular transaction or the overall
responsibility of the Subadviser with respect to the accounts as to which it
exercises investment discretion.
It is recognized that the services provided by such Brokers
may be useful to the Subadviser in connection with the Subadviser's services to
other clients. On occasions when the Subadviser deems the purchase or sale of a
security to be in the best interests of the Fund with respect to the Subadviser
Assets as well as other clients of the Subadviser, the Subadviser, to the extent
permitted by applicable laws and regulations, may, but shall
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be under no obligation to, aggregate the securities to be sold or purchased in
order to obtain the most favorable price or lower brokerage commissions and
efficient execution. In such event, allocation of securities so sold or
purchased, as well as the expenses incurred in the transaction, will be made by
the Subadviser in the manner the Subadviser considers to be the most equitable
and consistent with its fiduciary obligations to each Fund and to such other
clients. It is recognized that in some cases, this procedure may adversely
affect the price paid or received by the Fund or the size of the position
obtainable for, or disposed of by, the Fund with respect to the Subadviser
Assets.
(f) SECURITIES TRANSACTIONS. The Subadviser and any affiliated
person of the Subadviser will not purchase securities or other instruments from
or sell securities or other instruments to the Fund; provided, however, the
Subadviser or any affiliated person of the Subadviser may purchase securities or
other instruments from or sell securities or other instruments to the Fund if
such transaction is permissible under applicable laws and regulations,
including, without limitation, the 1940 Act and the Advisers Act and the rules
and regulations promulgated thereunder.
The Subadviser, on its own behalf and with respect to its
Access Persons (as defined in subsection (e) of Rule 17j-1 under the 1940 Act),
agrees to observe and comply with Rule 17j-1 and its Code of Ethics (which shall
comply in all material respects with Rule 17j-1), as the same may be amended
from time to time. On at least an annual basis, the Subadviser will comply with
the reporting requirements of Rule 17j-1, which may include either (i)
certifying to the Adviser that the Subadviser and its Access Persons have
complied with the Subadviser's Code of Ethics with respect to the Subadviser
Assets or (ii) identifying any violations which have occurred with respect to
the Subadviser Assets. The Subadviser will have also submitted its Code of
Ethics for its initial approval by the Board of Trustees no later than the date
of execution of this agreement and subsequently within six months of any
material change thereto.
(g) BOOKS AND RECORDS. The Subadviser shall maintain separate
detailed records as are required by applicable laws and regulations of all
matters hereunder pertaining to the Subadviser Assets (the "Fund's Records"),
including, without limitation, brokerage and other records of all securities
transactions. The Subadviser acknowledges that the Fund's Records are property
of the Trust; except to the extent that the Subadviser is required to maintain
the Fund's Records under the Advisers Act or other applicable law and except
that the Subadviser, at its own expense, is entitled to make and keep a copy of
the Fund's Records for its internal files. The Fund's Records shall be available
to the Adviser or the Trust at any time upon reasonable request during normal
business hours and shall be available for telecopying promptly to the Adviser
during any day that the Fund is open for business as set forth in the
Prospectus.
(h) INFORMATION CONCERNING SUBADVISER ASSETS AND SUBADVISER.
From time to time as the Adviser or the Trust reasonably may request in good
faith, the Subadviser will furnish the requesting party reports on portfolio
transactions and reports on the Subadviser Assets, all in such reasonable detail
as the parties may reasonably agree in good faith. The Subadviser will also
inform the Adviser in a timely manner of material changes in portfolio managers
responsible for Subadviser Assets, any changes in the
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ownership or management of the Subadviser, or of material changes in the control
of the Subadviser. Upon the Trust's or the Adviser's reasonable request, the
Subadviser will make available its officers and employees to meet with the
Trust's Board of Trustees to review the Subadviser Assets via telephone on a
quarterly basis and on a less frequent basis as agreed upon by the parties in
person.
Subject to the other provisions of this Agreement, the
Subadviser will also provide such information or perform such additional acts
with respect to the Subadviser Assets as are reasonably required for the Trust
or the Adviser to comply with their respective obligations under applicable
laws, including without limitation, the Code, the 1940 Act, the Advisers Act,
and the Securities Act, and any rule or regulation thereunder.
(i) CUSTODY ARRANGEMENTS. The Trust or the Adviser shall
notify the Subadviser of the identities of its custodian banks and the custody
arrangements therewith with respect to the Subadviser Assets and shall give the
Subadviser written notice of any changes in such custodian banks or custody
arrangements. The Subadviser shall on each business day provide the Adviser and
the Trust's custodian such information as the Adviser and the Trust's custodian
may reasonably request in good faith relating to all transactions concerning the
Subadviser Assets. The Trust shall instruct its custodian banks to (A) carry out
all investment instructions as may be directed by the Subadviser with respect to
the Subadviser Assets (which instructions may be orally given if confirmed in
writing); and (B) provide the Subadviser with all operational information
necessary for the Subadviser to trade the Subadviser Assets on behalf of the
Fund. The Subadviser shall have no liability for the acts or omissions of the
authorized custodian(s), unless such act or omission is required by and taken in
reliance upon instructions given to the authorized custodian(s) by a
representative of the Subadviser properly authorized (pursuant to written
instruction by the Adviser) to give such instructions.
3. INDEPENDENT CONTRACTOR. In the performance of its services
hereunder, the Subadviser is and shall be an independent contractor and unless
otherwise expressly provided herein or otherwise authorized in writing, shall
have no authority to act for or represent the Fund, the Trust or the Adviser in
any way or otherwise be deemed an agent of the Fund, the Trust or the Adviser.
4. EXPENSES. During the term of this Agreement, Subadviser will pay all
expenses incurred by it in connection with its activities under this Agreement.
The Subadviser shall, at its sole expense, employ or associate itself with such
persons as it believes to be particularly fitted to assist it in the execution
of its duties under this Agreement. The Subadviser shall not be responsible for
the Trust's, the Fund's or Adviser's expenses, which shall include, but not be
limited to, the cost of securities, commodities and other investments (including
brokerage commissions and other transaction charges, if any) purchased for a
Fund and any losses incurred in connection therewith, expenses of holding or
carrying Subadviser Assets, including, without limitation, expenses of dividends
on stock borrowed to cover a short sale and interest, fees or other charges
incurred in connection with leverage and related borrowings with respect to the
Subadviser Assets, organizational and offering expenses (which include, but are
not limited to, out-of-pocket expenses, but not overhead or employee costs of
the Subadviser); expenses for legal, accounting and auditing services; taxes and
governmental fees; dues and expenses incurred
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in connection with membership in investment company organizations; costs of
printing and distributing shareholder reports, proxy materials, prospectuses,
stock certificates and distribution of dividends; charges of the Fund's
custodians and sub-custodians, administrators and sub-administrators,
registrars, transfer agents, dividend disbursing agents and dividend
reinvestment plan agents; payment for portfolio pricing services to a pricing
agent, if any; registration and filing fees of the SEC; expenses of registering
or qualifying securities of the Fund for sale in the various states; freight and
other charges in connection with the shipment of the Fund's portfolio
securities; fees and expenses of non-interested Trustees; salaries of
shareholder relations personnel; costs of shareholders meetings; insurance;
interest; brokerage costs; and litigation and other extraordinary or
non-recurring expenses. The Trust or the Adviser, as the case may be, shall
reimburse the Subadviser for any expenses of the Funds or the Adviser as may be
reasonably incurred by such Subadviser on behalf of the Fund or the Adviser. The
Subadviser shall keep and supply to the Trust and the Adviser reasonable records
of all such expenses.
5. COMPENSATION. For the services provided pursuant to this Agreement,
the Subadviser is entitled to the fee listed for the Fund on Exhibit A hereto.
Such fees will be computed daily and paid no later than the seventh (7th)
business day following the end of each month, from the Adviser or the Trust,
calculated at an annual rate based on the Subadviser Assets' average daily net
assets.
The method of determining the net asset value of the Subadviser Assets
for purposes hereof shall be the same as the method of determining net asset
value for purposes of establishing the offering and redemption price of the
shares of the Trust as described in the Fund's Prospectus. If this Agreement
shall be effective for only a portion of a month with respect to the Fund, the
aforesaid fee shall be prorated for the portion of such month during which this
Agreement is in effect for the Fund.
6. REPRESENTATIONS AND WARRANTIES OF SUBADVISER. The Subadviser
represents and warrants to the Adviser and the Trust as follows:
(a) The Subadviser is registered as an investment adviser
under the Advisers Act;
(b) The Subadviser is registered as a Commodity Trading
Advisor under the Commodity Exchange Act, as amended (the "CEA"), with the
Commodity Futures Trading Commission (the "CFTC"), or is not required to file
such registration;
(c) The Subadviser is a partnership duly organized and
operating under the laws of the State of Delaware with the power to own and
possess its assets and carry on its business as it is now being conducted and as
proposed to be conducted hereunder;
(d) The execution, delivery and performance by the Subadviser
of this Agreement are within the Subadviser's powers and have been duly
authorized by all necessary actions of its directors or shareholders, and no
action by, or in respect of, or filing with, any governmental body, agency or
official is required on the part of the Subadviser for execution, delivery and
performance by the Subadviser of this Agreement, and the execution, delivery and
performance by the Subadviser of this Agreement do not
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contravene or constitute a violation of, or a material default under, (i) any
provision of applicable law, rule or regulation, (ii) the Subadviser's governing
instruments, or (iii) any agreement, judgment, injunction, order, decree or
other instrument binding upon the Subadviser; and
(e) The Form ADV of the Subadviser provided to the Adviser and
the Trust is a true and complete copy of the form, including that part or parts
of the Form ADV filed with the SEC, that part or parts maintained in the records
of the Adviser, and/or that part or parts provided or offered to clients, in
each case as required under the Advisers Act and rules thereunder, and the
information contained therein is accurate and complete in all material respects
and does not omit to state any material fact necessary in order to make the
statements made, in light of the circumstances under which they were made, not
misleading.
7. REPRESENTATIONS AND WARRANTIES OF ADVISER. The Adviser represents
and warrants to the Subadviser as follows:
(a) The Adviser is registered as an investment adviser under
the Advisers Act;
(b) The Adviser has filed a notice of exemption pursuant to
Rule 4.14 under the CEA with the CFTC and the National Futures Association or is
not required to file such exemption;
(c) The Adviser is a statutory trust duly organized and
validly existing under the laws of the State of Delaware with the power to own
and possess its assets and carry on its business as it is now being conducted
and as proposed to be conducted hereunder;
(d) The execution, delivery and performance by the Adviser of
this Agreement are within the Adviser's powers and have been duly authorized by
all necessary action on the part of its directors, shareholders or managing
unitholder, and no action by, or in respect of, or filing with, any governmental
body, agency or official is required on the part of the Adviser for the
execution, delivery and performance by the Adviser of this Agreement, and the
execution, delivery and performance by the Adviser of this Agreement do not
contravene or constitute a violation of, or a material default under, (i) any
provision of applicable law, rule or regulation, (ii) the Adviser's governing
instruments, or (iii) any agreement, judgment, injunction, order, decree or
other instrument binding upon the Adviser;
(e) The Form ADV of the Adviser provided to the Subadviser and
the Trust is a true and complete copy of the form, including that part or parts
of the Form ADV filed with the SEC, that part or parts maintained in the records
of the Adviser, and/or that part or parts provided or offered to clients, in
each case as required under the Advisers Act and rules thereunder, and the
information contained therein is accurate and complete in all material respects
and does not omit to state any material fact necessary in order to make the
statements made, in light of the circumstances under which they were made, not
misleading;
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(f) The Adviser acknowledges that it received a copy of the
Subadviser's Form ADV prior to the execution of this Agreement; and
(g) The Adviser and the Trust have duly entered into the
Advisory Agreement pursuant to which the Trust authorized the Adviser to
delegate certain of its duties under the Advisory Agreement to other investment
advisers, including without limitation, the appointment of a subadviser with
respect to assets of each of the Trust's mutual fund series, including without
limitation the Adviser's entering into and performing this Agreement.
8. REPRESENTATIONS AND WARRANTIES OF THE TRUST. The Trust represents
and warrants to the Adviser and the Subadviser as follows:
(a) The Trust is a statutory trust duly formed and validly
existing under the laws of the State of Delaware with the power to own and
possess its assets and carry on its business as it is now being conducted and as
proposed to be conducted hereunder;
(b) The Trust is registered as an investment company under the
1940 Act and has elected to qualify and has qualified, together with the Fund,
as a regulated investment company under the Code, and the Fund's shares are
registered under the Securities Act;
(c) The execution, delivery and performance by the Trust of
this Agreement are within the Trust's powers and have been duly authorized by
all necessary action on the part of the Trust and its Board of Trustees, and no
action by, or in respect of, or filing with, any governmental body, agency or
official is required on the part of the Trust for the execution, delivery and
performance by the Adviser of this Agreement, and the execution, delivery and
performance by the Trust of this Agreement do not contravene or constitute a
default under (i) any provision of applicable law, rule or regulation, (ii) the
Trust's governing instruments, or (iii) any agreement, judgment, injunction,
order, decree or other instrument binding upon the Trust; and
(d) The Trust acknowledges that it received a copy of the
Subadviser's Form ADV prior to the execution of this Agreement.
9. SURVIVAL OF REPRESENTATIONS AND WARRANTIES; DUTY TO UPDATE
INFORMATION. All representations and warranties made by the Subadviser, the
Adviser and the Trust pursuant to the recitals above and Sections 6, 7 and 8,
respectively, shall survive for the duration of this Agreement and the parties
hereto shall promptly notify each other in writing upon becoming aware that any
of the foregoing representations and warranties are no longer true or accurate
in all material effects.
10. LIABILITY AND INDEMNIFICATION.
(a) LIABILITY. The Subadviser shall exercise its best judgment
in rendering its services in accordance with the terms of this Agreement, but
otherwise, in the absence of willful misfeasance, bad faith or gross negligence
on the part of the Subadviser or a reckless disregard of its duties hereunder,
the Subadviser, each of its affiliates and all respective partners, officers,
directors and employees ("Affiliates") and each person, if
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any, who within the meaning of the Securities Act controls the Subadviser
("Controlling Persons"), if any, shall not be subject to any expenses or
liability to the Adviser, any other subadviser to a Fund, the Trust or a Fund or
any of a Fund's shareholders, in connection with the matters to which this
Agreement relates, including without limitation for any losses that may be
sustained in the purchase, holding or sale of Subadviser Assets. The Adviser
shall exercise its best judgment in rendering its obligations in accordance with
the terms of this Agreement, but otherwise (except as set forth in Section 10(c)
below), in the absence of willful misfeasance, bad faith or gross negligence on
the part of the Adviser or a reckless disregard of its duties hereunder, the
Adviser, any of its Affiliates and each of the Adviser's Controlling Persons, if
any, shall not be subject to any liability to the Subadviser, for any act or
omission in the case of, or connected with, rendering services hereunder or for
any losses that may be sustained in the purchase, holding or sale of Subadviser
Assets. Notwithstanding the foregoing, nothing herein shall relieve the Adviser
and the Subadviser from any of their obligations under applicable law,
including, without limitation, the federal and state securities laws and the
CEA.
(b) INDEMNIFICATION. The Subadviser shall indemnify the
Adviser, the Trust and the Fund, and their respective Affiliates and Controlling
Persons for any liability and expenses, including without limitation reasonable
attorneys' fees and expenses, which the Adviser, the Trust and/or the Fund and
their respective Affiliates and Controlling Persons may sustain as a result of
the Subadviser's willful misfeasance, bad faith, gross negligence, reckless
disregard of its duties hereunder or violation of applicable law, including,
without limitation, the federal and state securities laws or the CEA. The
Adviser shall indemnify the Subadviser, its Affiliates and its Controlling
Persons, for any liability and expenses, including without limitation reasonable
attorneys' fees and expenses, which may be sustained as a result of the
Adviser's willful misfeasance, bad faith, gross negligence, reckless disregard
of its duties hereunder or violation of applicable law, including, without
limitation, the federal and state securities laws or the CEA.
The Trust shall indemnify the Subadviser, its Affiliates and
its Controlling Persons, for any liability and expenses, including without
limitation reasonable attorneys' fees and expenses, which may be sustained as a
result of the Trust's willful misfeasance, bad faith, gross negligence, reckless
disregard of its duties hereunder or violation of applicable law, including,
without limitation, the federal and state securities laws or the CEA.
(c) The Subadviser shall not be liable to the Adviser for (i)
any acts of the Adviser or any other subadviser to a Fund with respect to the
portion of the assets of that Fund not managed by Subadviser, or (ii) acts of
the Subadviser which result from acts of the Adviser, including, but not limited
to, a failure of the Adviser to provide accurate and current information with
respect to any records maintained by the Adviser or any other subadviser to a
Fund, which records are not also maintained by or otherwise available to the
Subadviser upon reasonable request. The Adviser agrees that Subadviser shall
manage the Subadviser Assets as if they were a separate operating Fund as set
forth in Section 2(b) of this Agreement. The Adviser shall indemnify the
Subadviser, its Affiliates and Controlling Persons from any liability arising
from the conduct of the Adviser and
10
any other subadviser with respect to the portion of the Fund's assets not
allocated to the Subadviser.
11. DURATION AND TERMINATION.
(a) DURATION. Unless sooner terminated, this Agreement shall
continue until May 1, 2008, with respect to any Fund covered by this Agreement
initially and for any Fund subsequently added to this Agreement, an initial
period of no more than two years that terminates on the second May 1st that
occurs following the effective date of this Agreement with respect to such Fund,
and thereafter shall continue automatically for successive annual periods with
respect to each such Fund, provided such continuance is specifically approved at
least annually by the Trust's Board of Trustees or vote of the lesser of (a) 67%
of the shares of the Fund represented at a meeting if holders of more than 50%
of the outstanding shares of the Fund are present in person or by proxy or (b)
more than 50% of the outstanding shares of the Fund; provided that in either
event its continuance also is approved by a majority of the Trust's Trustees who
are not "interested persons" (as defined in the 0000 Xxx) of any party to this
Agreement, by vote cast in person at a meeting called for the purpose of voting
on such approval.
(b) TERMINATION. Notwithstanding whatever may be provided
herein to the contrary, this Agreement may be terminated at any time with
respect to the Fund, without payment of any penalty:
(i) By vote of a majority of the Trust's Board of
Trustees, or by "vote of a majority of the outstanding voting
securities" of the Fund (as defined in the 1940 Act), or by
the Adviser, in each case, upon not more than 60 days' written
notice to the Subadviser;
(ii) By any party hereto immediately upon written
notice to the other parties in the event of a breach of any
provision of this Agreement by either of the other parties; or
(iii) By the Subadviser upon not more than 60 days'
written notice to the Adviser and the Trust.
This Agreement shall not be assigned (as such term is defined in the 0000 Xxx)
and shall terminate automatically in the event of its assignment or upon the
termination of the Advisory Agreement.
12. DUTIES OF THE ADVISER. The Adviser shall continue to have
responsibility for all services to be provided to the Fund pursuant to the
Advisory Agreement and shall oversee and review the Subadviser's performance of
its duties under this Agreement. Nothing contained in this Agreement shall
obligate the Adviser to provide any funding or other support for the purpose of
directly or indirectly promoting investments in the Fund.
11
13. REFERENCE TO ADVISER AND SUBADVISER.
(a) Neither the Adviser nor any Affiliate or agent of the
Adviser shall make reference to or use the name of Subadviser or any of its
Affiliates, or any of their clients, except references concerning the identity
of and services provided by the Subadviser to a Fund, which references shall not
differ in substance from those included in the Prospectus and this Agreement, in
any advertising or promotional materials without the prior approval of
Subadviser, which approval shall not be unreasonably withheld or delayed. The
Adviser hereby agrees to make all reasonable efforts to cause the Fund and any
Affiliate thereof to satisfy the foregoing obligation.
(b) Neither the Subadviser nor any Affiliate or agent of the
Subadviser shall make reference to or use the name of the Adviser or any of its
Affiliates, or any of their clients, except references concerning the identity
of and services provided by the Adviser to a Fund or to the Subadviser, which
references shall not differ in substance from those included in the Prospectus
and this Agreement, in any advertising or promotional materials without the
prior approval of Adviser, which approval shall not be unreasonably withheld or
delayed. The Subadviser hereby agrees to make all reasonable efforts to cause
any Affiliate of the Subadviser to satisfy the foregoing obligation.
14. AMENDMENT. This Agreement may be amended by mutual consent of the
parties, provided that the terms of any material amendment shall be approved by:
(a) the Trust's Board of Trustees or by a vote of a majority of the outstanding
voting securities of the Funds (as required by the 1940 Act), and (b) the vote
of a majority of those Trustees of the Trust who are not "interested persons" of
any party to this Agreement cast in person at a meeting called for the purpose
of voting on such approval, if such approval is required by applicable law.
15. CONFIDENTIALITY. Subject to the duties of the Adviser, the Trust
and the Subadviser to comply with applicable law, including any demand of any
regulatory or taxing authority having jurisdiction, the parties hereto shall
treat as confidential and shall not disclose any and all information pertaining
to the Fund and the actions of the Subadviser, the Adviser and the Fund in
respect thereof; except to the extent:
(a) AUTHORIZED. The Adviser or the Trust has authorized such
disclosure;
(b) COURT OR REGULATORY AUTHORITY. Disclosure of such
information is expressly required or requested by a court or other tribunal of
competent jurisdiction or applicable federal or state regulatory authorities;
(c) PUBLICLY KNOWN WITHOUT BREACH. Such information becomes
known to the general public without a breach of this Agreement or a similar
confidential disclosure agreement regarding such information;
(d) ALREADY KNOWN. Such information already was known by the
party prior to the date hereof;
(e) RECEIVED FROM THIRD PARTY. Such information was or is
hereafter rightfully received by the party from a third party (expressly
excluding the Fund's
12
custodian, prime broker and administrator) without restriction on its disclosure
and without breach of this Agreement or of a similar confidential disclosure
agreement regarding them; or
(f) INDEPENDENTLY DEVELOPED. The party independently developed
such information.
16. NOTICE. Any notice that is required to be given by the parties to
each other under the terms of this Agreement shall be in writing, delivered, or
mailed postpaid to the other parties, or transmitted by facsimile with
acknowledgment of receipt, to the parties at the following addresses or
facsimile numbers, which may from time to time be changed by the parties by
notice to the other party:
(a) If to the Subadviser:
Gartmore Global Partners
0 Xxxxxxxxx Xxxxx
Xxxxxx
Xxxxxx Xxxxxxx
XX0X 0XX
(b) If to the Adviser:
Nationwide Fund Advisors
0000 Xxxxx Xxxx, Xxxxx 0000
Xxxxxxxxxxxx, XX 00000
Attention: Legal Department
Facsimile: (000) 000-0000
(c) If to the Trust:
Nationwide Mutual Funds
0000 Xxxxx Xxxx, Xxxxx 0000
Xxxxxxxxxxxx, XX 00000
Attention: Legal Department
Facsimile: (000) 000-0000
17. JURISDICTION. This Agreement shall be governed by and construed in
accordance with substantive laws of the State of Delaware without reference to
choice of law principles thereof and in accordance with the 1940 Act. In the
case of any conflict, the 1940 Act shall control.
18. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, all of which shall
together constitute one and the same instrument.
13
19. CERTAIN DEFINITIONS. For the purposes of this Agreement and except
as otherwise provided herein, "interested person," "affiliated person," and
"assignment" shall have their respective meanings as set forth in the 1940 Act,
subject, however, to such exemptions as may be granted by the SEC.
20. CAPTIONS. The captions herein are included for convenience of
reference only and shall be ignored in the construction or interpretation
hereof.
21. SEVERABILITY. If any provision of this Agreement shall be held or
made invalid by a court decision or applicable law, the remainder of the
Agreement shall not be affected adversely and shall remain in full force and
effect.
22. ENTIRE AGREEMENT. This Agreement, together with all exhibits,
attachments and appendices, contains the entire understanding and agreement of
the parties with respect to the subject matter hereof.
23. NATIONWIDE MUTUAL FUNDS AND ITS TRUSTEES. The terms "Nationwide
Mutual Funds" and the "Trustees of Nationwide Mutual Funds" refer respectively
to the Trust created and the Trustees, as trustees but not individually or
personally, acting from time to time under the Declaration of Trust made and
dated as of September 30, 2004, as has been or may be amended and/or restated
from time to time, and to which reference is hereby made.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
the day and year first written above.
TRUST
NATIONWIDE MUTUAL FUNDS
By: /s/Xxxxxx X. Xxxxxxx
Name: Xxxxxx Xxxxxxx
Title: Chief Operating Officer
ADVISER
NATIONWIDE FUND ADVISORS
By: /s/Xxxxxx X. Xxxxxxx
Name: Xxxxxx Xxxxxxx
Title: Chief Operating Officer
SUBADVISER
GARTMORE GLOBAL PARTNERS
By: /s/Xxxxx Xxxxxxxx
Name: Xxxxx Xxxxxxxx
Title: Director
14
EXHIBIT A
SUBADVISORY AGREEMENT
AMONG NATIONWIDE FUND ADVISORS,
NATIONWIDE MUTUAL FUNDS
AND GARTMORE GLOBAL PARTNERS
EFFECTIVE MAY 1, 2007*
FUNDS OF THE TRUST ADVISORY FEES
------------------ -------------
Nationwide China Opportunities Fund1 0.625% on assets up to $500 million
0.600% on assets of $500 million but less than $2 billion
0.575% on assets of $2 billion and more
Nationwide Emerging Markets Fund1 0.525% on assets up to $500 million
0.50% on assets of $500 million but less than $2 billion
0.475% on assets of $2 billion or more
Nationwide International Growth Fund1 0.45% on assets up to $500 million
0.425% on assets of $500 million but less than $2 billion
0.40% on assets of $2 billion or more
Nationwide Worldwide Leaders Fund1 0.45% on assets up to $500 million
0.425% on assets of $500 million but less than $2 billion
0.40% on assets of $2 billion or more
Nationwide Global Utilities Fund1 0.35% on assets up to $500 million
0.325% on assets of $500 million but less than $2 billion
0.30% on assets of $2 billion or more
* As most recently approved at the January 11, 2007 Board Meeting.
1Performance Fees for the Funds.
The base subadvisory fee for each of these Funds, as set forth above,
is adjusted each quarter beginning one year after implementation of the
Performance Fee, depending upon a Fund's investment performance for the 12
months preceding the end of that month relative to the investment performance of
each respective Fund's benchmark as listed below. The base fee is either
increased or decreased proportionately by the following amounts at each
breakpoint, based upon whether a Fund has out-performed or under-performed its
respective benchmark (using the performance of each such Fund's Class A Shares
to measure), by more or less than a maximum of 500 basis points over the
preceding rolling 12 month period as follows:
+/- 100 bps under/outperformance 2bps
+/- 200 bps under/outperformance 4bps
+/- 300 bps under/outperformance 6bps
+/- 400 bps under/outperformance 8bps
+/- 500 bps or more under/outperformance 10bps
The investment performance of each Fund will be the sum of: (1) the
change in each Fund's value during such period; (2) the value of the Fund's cash
distributions (from net income and realized net gains) having an ex-dividend
date during such calculation period; and (3) the value of any capital gains
taxes paid or accrued during such calculation period for undistributed realized
long-term capital gains from the Fund. For this purpose, the value of
distributions per share of realized capital gains, of dividends per share paid
from investment income and of capital
gains taxes per share reinvested in the Fund will be the Fund's value in effect
at the close of business on the record date for the payment of such
distributions and the date on which provision is made for such taxes, after
giving effect to such distribution, dividends and taxes.
BENCHMARK INDEX PERFORMANCE: The performance of each respective benchmark Index
for a calculation period, expressed as a percentage of each Index, at the
beginning of such period will be the sum of: (1) the change in the level of the
Index during such period; and (2) the value, as calculated consistent with the
Index, of cash distributions having an ex-dividend date during such period made
by those companies whose securities comprise the Index. For this purpose, cash
distributions on the securities that comprise the Index will be treated as if
they were reinvested in the Index at least as frequently as the end of each
calendar quarter following payment of the dividend.
A description of the specific methodology for calculating, accruing and paying
the performance fees for the above-referenced Fund is set forth in Exhibit C to
this Agreement.
BENCHMARK INDICES:
------------------
1. Nationwide China Opportunities Fund MSCI Xxxxx Xxx Index
2. Nationwide Global Utilities Fund 60% MSCI World Telecom Index/40% MSCI
World Utilities Index
3. Nationwide International Growth Fund MSCI All Country World Free X U.S.
Index
4. Nationwide Emerging Markets Fund MSCI Emerging Markets Index
5. Nationwide Worldwide Leaders Fund MSCI World Index
TRUST
NATIONWIDE MUTUAL FUNDS
By: /s/Xxxxxx X. Xxxxxxx
Name: Xxxxxx Xxxxxxx
Title: Chief Operating Officer
ADVISER
NATIONWIDE FUND ADVISORS
By: /s/Xxxxxx X. Xxxxxxx
Name: Xxxxxx Xxxxxxx
Title: Chief Operating Officer
SUBADVISER
GARTMORE GLOBAL PARTNERS
By: /s/Xxxxx Xxxxxxxx
Name: Xxxxx Xxxxxxxx
Title: Director
EXHIBIT B
SUBADVISORY AGREEMENT
AMONG NATIONWIDE MUTUAL FUNDS,
NATIONWIDE FUND ADVISORS AND
GARTMORE GLOBAL PARTNERS
EFFECTIVE MAY 1, 2007
In connection with securities transactions for a Fund, the Subadviser that is
(or whose affiliated person is) entering into the transaction, and any other
investment manager that is advising an affiliate of the Fund (or portion of the
Fund) (collectively, the "Managers" for the purposes of this Exhibit) entering
into the transaction are prohibited from consulting with each other concerning
transactions for the Fund in securities or other assets and, if both Managers
are responsible for providing investment advice to the Fund, the Manager's
responsibility in providing advice is expressly limited to a discrete portion of
the Fund's portfolio that it manages.
This prohibition does not apply to communications by the Adviser in connection
with the Adviser's (i) overall supervisory responsibility for the general
management and investment of the Fund's assets; (ii) determination of the
allocation of assets among the Manager(s), if any; and (iii) investment
discretion with respect to the investment of Fund assets not otherwise assigned
to a Manager.
TRUST
NATIONWIDE MUTUAL FUNDS
By: /s/Xxxxxx X. Xxxxxxx
Name: Xxxxxx Xxxxxxx
Title: Chief Operating Officer
ADVISER
NATIONWIDE FUND ADVISORS
By: /s/Xxxxxx X. Xxxxxxx
Name: Xxxxxx Xxxxxxx
Title: Chief Operating Officer
SUBADVISER
GARTMORE GLOBAL PARTNERS
By: /s/Xxxxx Xxxxxxxx
Name: Xxxxx Xxxxxxxx
Title: Director
EXHIBIT C
PERFORMANCE BASED FEE CALCULATION PROCEDURES1
I. OVERVIEW
These procedures describe with specificity how Nationwide Fund
Management, LLC, the Trust's administrator ("NFM") and BISYS
Fund Services - Ohio, Inc., the Trust's sub-administrator
("BISYS") will calculate, accrue and pay performance fees for
those series of the Nationwide Mutual Funds ("NMF") and
Nationwide Variable Insurance Funds ("NVIT" and, collectively
with NMF, the "Trusts") listed in footnote 1 below which have
implemented a performance fee structure.
These procedures are intended to comply with Rule 205-2(c)
under the Investment Advisers Act of 1940, as amended ("Rule
205-2(c)"). Accordingly, while the base fee component and
performance fee component of each Fund's advisory fees will be
(1) estimated and accrued daily throughout each quarterly
subperiod; and (2) these daily estimates will be "trued up" at
the end of each month during each quarterly subperiod in order
to reduce, as fully as practicable, over-or under-estimating
and accruing of the base fee component and performance
component of the advisory fees, the total fee (sum of the base
and performance components of the fee) will be computed and
paid at the end of each quarterly subperiod as follows:
(a) The performance related component of the fee will
be computed by comparing the performance of each Fund
over the twelve month period to the performance of
the Fund's benchmark over the same period to
determine the percentage rate of the performance
adjustment. That performance percentage rate will
then be multiplied by the Fund's average net assets
over that twelve month rolling performance period to
determine the actual amount of performance bonus (or
penalty) earned by the adviser and the total fee
(base component plus performance component) will be
paid at the end of each quarterly subperiod of the
rolling period; and
----------
1 For the following Nationwide Mutual Funds: Nationwide Global Natural Resources
Fund, Nationwide Global Technology and Communications Fund, Nationwide Global
Health Sciences Fund, Nationwide Leaders Fund, Nationwide China Opportunities
Fund, Nationwide Emerging Markets Fund, Nationwide International Growth Fund;
Nationwide Worldwide Leaders Fund; Nationwide Global Financial Services Fund and
Nationwide Global Utilities Fund; and, for the following Nationwide Variable
Trust Funds: Nationwide NVIT Global Technology and Communications Fund;
Nationwide NVIT Global Health Sciences Fund; NVIT Nationwide Leaders Fund;
Gartmore NVIT Emerging Markets Fund; Gartmore NVIT Developing Markets Fund;
Gartmore NVIT International Growth Fund; Gartmore NVIT Worldwide Leaders Fund;
Nationwide NVIT Global Financial Services Fund; and Gartmore NVIT Global
Utilities Fund.
(b) The fulcrum fee component will be computed by
taking the base advisory fee rate and multiplying it
by the Fund's average net assets over most recently
completed calendar quarter.
Using this criteria, the Administrator and Sub-administrator will employ
the following procedures each day in order to effectuate above-referenced
performance fee structure in compliance with Rule 205-2(c).
II. COMPUTATION OF PERFORMANCE COMPONENT OF THE PERFORMANCE-BASED
FEE [RULE 205-2(C)(1)]
A. CALCULATION OF EACH FUND'S AVERAGE NET ASSETS:
Each business day BISYS will estimate the rolling
twelve month average net assets for each Fund which
has implemented a performance-based fee structure
using the most recent rolling twelve month period.
BISYS will compute this estimate by taking the sum of
the Fund's average daily net assets for the previous
twelve month rolling performance period as of that
date. Thus, on July 15, 2005, the "previous twelve
month rolling performance period" was July 15, 2004
through July 14, 2005, inclusive. On July 16, 2005,
the "previous twelve month rolling performance
period" was July 16, 2004 through July 15, 2005
inclusive. This will result in computation of a new
estimated twelve month rolling average net asset
value for each successive business day for each Fund.
B. CALCULATION OF THE PERFORMANCE OF EACH FUND'S
BENCHMARK INDEX:
BISYS will retrieve the benchmark return for each
Fund at the beginning of each business day, as of the
closing of the prior business day. Additionally, in
order to do an intra-quarter "true up" estimate at
the end of each month in that quarter, BISYS will
also retrieve the rolling twelve month return for
each Fund's benchmark at each month end.
As a practical matter, BISYS accrues its performance
component estimate daily over the current quarter and
will "true up" its estimated accrual at the end of
each month during that quarter. However, BISYS will
only calculate and pay the actual total fee
(including the twelve month rolling performance fee
component and base fee component) at the end of each
quarterly subperiod.
C. DETERMINATION OF EACH FUND'S TWELVE MONTH ROLLING
PERFORMANCE PERIOD:
Each business day, BISYS will estimate each Fund's
total return (using Class A shares for GMF; Class III
shares for GVIT) for the previous twelve month
rolling performance period. The Board of the Trust
has considered and approved Gartmore's use of such
Class A/III shares' return and each Fund has
disclosed in its registration statement the use of
the return of Class A/III shares for this purpose.
Thus, the twelve month rolling performance period
return on July 15, 2005 was based on the Fund's
performance from July 15, 2004 through July 14, 2005.
Each day the Fund's twelve month rolling performance
period return will be re-estimated. For example, on
July 16, 2005, the twelve month rolling performance
period return was based on the Fund's performance
from July 16, 2004 through July 15, 2005.
At the end of the quarter (subperiod), i.e., July 1,
2005 to September 30, 2005, the twelve month average
net assets will be computed by taking the sum of the
assets over the last twelve month rolling period
ending September 30, 2005. The twelve month average
net assets as of this period will be multiplied by
the performance fee rate and divided by the number of
days in the quarter (subperiod).
D. COMPUTATION OF ROLLING TWELVE MONTH PERFORMANCE FEE
RATE AND PERFORMANCE COMPONENT OF THE FEE:
Each business day, BISYS will calculate the
difference between the rolling twelve month
performance estimate of the Fund and the rolling
twelve month performance estimate of the Fund's
benchmark to determine whether the Fund would be
entitled to a performance fee adjustment.
The estimated adjustment rate will be accrued (either
positive, negative or no adjustment) for each day
using the estimated performance adjustment rate for
that Fund as set forth in each Fund's respective
investment advisory agreement(s) and prospectus. This
rate will be applied to the Fund's then-current
rolling twelve month average net assets to estimate
the daily performance fee adjustment accrual for the
Fund on that day. For example: If the rate adjustment
is 10 basis points and the twelve month average net
assets are $10,000,000, BISYS will accrue (.10 x
1/365 x $10,000,000) or $27.40 a day as the
performance component of the fee.
III. COMPUTATION OF BASE FEE RATE [RULE 205-2(C)(2)]:
On each day within a quarterly subperiod, BISYS will accrue
the estimated base advisory fee for each Fund using each
Fund's respective advisory fee rate. The appropriate base fee
rate will be multiplied by the previous day's net asset value
to determine the amount of estimated fees to accrue for that
day. On each successive day, the pervious day's net assets
will be used to accrue the daily estimated base advisory fee.
For example: If the base fee rate is 80 basis points
and the previous days ending net assets are $20,000,000, BISYS
will accrue (.80 x 1/365 x $20,000,000) or $438.36 in
estimated base advisory fees for that day. At the end of each
quarter, BISYS will compute the actual base advisory fee by
multiplying the Fund's base advisory fee rate by the Fund's
average net assets over that most recently completed quarterly
subperiod.
IV. CALCULATION OF TOTAL ADVISORY FEE BY COMBINING THE BASE FEE
AND PERFORMANCE FEE COMPONENTS:
The estimated performance adjustment amount as determined
above in the Section II. will be added to or subtracted from
the amount of base fee as determined above in Section III. to
determine the total advisory fee that must be accrued for that
day. Based on the examples in Sections II. and III., above,
BISYS would have accrued $465.76 for the sample day, which
represents the total of the estimated performance fee for the
day plus the estimated base advisory fee for the day.
V. MONTH END "TRUE UP" OF QUARTERLY FEE:
As soon as practicable after the end of each month (as soon as
the actual benchmark return for each Fund is available) BISYS
will recompute the accrual for that month using the actual
month-end benchmark returns to determine whether the
performance fee adjustment has been over- or under-accrued for
that month.
VI. ADJUSTMENTS TO ESTIMATED CALCULATIONS ABOVE:
If, for example, during any month ("interim period") of a
quarterly subperiod, the estimated calculations need to be
adjusted, BISYS will adjust the Fund's accrual on the day that
re-adjustment is computed. For example: If, on the last day
before the end of a month during the quarterly subperiod, it
is determined that no performance fee adjustment will likely
be earned, the estimates accrued to that point will be
reversed in their entirety on that day. Conversely, if at an
interim period, the estimated calculations above did not
result in the appropriate amount of performance fee adjustment
(based on each daily comparison of the rolling twelve month
return of the Fund to the rolling twelve month return of its
benchmark) BISYS will compute a revised fee performance fee
estimate and accrual on that day. For example: if during the
interim period the estimated calculations of the Fund's return
have not resulted in accrual of an estimated fee adjustment,
but when compared to the rolling twelve month benchmark
return, a performance fee adjustment would now likely result,
BISYS will immediately accrue for this updated estimated
adjustment on that day. Thus, if the Fund's return fluctuates
during the period such that on some days (based on the
estimates) the adviser would be entitled to performance fee
adjustment at the end of the current quarter, then this amount
(the amount to be accrued to date in the quarter) will be
adjusted on that day. Conversely, if and when it appears
(based on the estimates) that the adviser will not be entitled
to any performance fee
adjustment at the end of the current quarter, the amount
accrued to date will be reversed in its entirety.
VII. "TRUE-UP":
1. If it is determined that, based on the estimated
Fund benchmark returns, the adviser would be due a
performance fee on any given day (based on the
comparison of the daily, rolling twelve month
benchmark return to that of the Fund), the
performance fee adjustment (based on the rolling
twelve months' average daily net assets) will be
accrued in its entirety (measured from the beginning
of the current quarter until the current day).
2. Conversely, if it is determined based on the
estimated returns of the Fund and its benchmark, that
the Fund will not earn a performance fee (has
underperformed the Fund's benchmark) on any given
day, the performance fee adjustment (based on the
rolling twelve months average daily net assets) would
either:
i. be reversed in its entirety (assuming the
Fund had accrued for a performance fee
during the period);
ii. not accrue any performance fee if none
was earned during the period;
iii. accrue for a negative performance fee
if it is determined that the Fund has
underperformed the benchmark to date in the
current quarter.
3. BISYS will make a one day, true-up entry as soon
as practical after each month end in each quarterly
subperiod (upon receipt of the month-end benchmark
return information).
4. The base fee will be estimated and accrued daily
based upon the prior night's closing net assets. At
the end of the current quarterly subperiod, the sum
of the daily net assets will equal the quarterly
average net assets for computation of the base fee.
The total fee (base fee plus performance payment or
penalty amount) will be paid out as soon as
practicable after the quarter end.
