EX-99(d)(2)
INVESTMENT ADVISORY AGREEMENT
THIS AGREEMENT is made and entered into as of the 1st day of May, 2007 by
and between NATIONWIDE MUTUAL FUNDS (formerly Gartmore Mutual Funds) (the
"Trust"), a Delaware statutory trust, and 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").
WITNESSETH:
WHEREAS, the Trust is registered with the 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 Trust desires to retain the Adviser to furnish certain
investment advisory services, as described herein, with respect to certain of
the series of the Trust, all as now are or may be hereafter listed on Exhibit A
to this Agreement (each, a "Fund"); and
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,
NOW, THEREFORE, the Trust and the Adviser do mutually agree and promise as
follows:
1. APPOINTMENT AS ADVISER. The Trust hereby appoints the Adviser to act
as investment adviser to each Fund subject to the terms and conditions set forth
in this Agreement. The Adviser hereby accepts such appointment and agrees to
furnish the services hereinafter described for the compensation provided for in
this Agreement.
2. DUTIES OF ADVISER.
a. INVESTMENT MANAGEMENT SERVICES.
(i) Subject to the supervision of the Trust's Board of Trustees
(and except as otherwise permitted under the terms of any exemptive relief
obtained by the Adviser from the SEC, or by rule or regulation), the Adviser
will provide, or arrange for the provision of, a continuous investment program
and overall investment strategies for each Fund, including investment research
and management with respect to all securities and investments and cash
equivalents in each Fund. The Adviser will determine, or arrange for others to
determine, from time to time what securities and other investments will be
purchased, retained or sold by each Fund and will implement, or arrange for
others to implement, such determinations through the placement, in the name of a
Fund, of orders for the execution of portfolio transactions with or through such
brokers or dealers as may be so selected. The Adviser will provide, or arrange
for the provision of, the services under this Agreement in accordance with the
stated investment policies and restrictions of each Fund as set forth in that
Fund's current prospectus and statement of additional information as currently
in effect and as supplemented or amended from time to time (collectively
referred to hereinafter as the "Prospectus") and subject to the directions of
the Trust's Board of Trustees.
(ii) Subject to the provisions of this Agreement and the 1940 Act
and any exemptions thereto, the Adviser is authorized to appoint one or more
qualified subadvisers (each a "Subadviser") to provide each Fund with certain
services required by this Agreement. Each Subadviser shall have such investment
discretion and shall make all determinations with respect to the investment of a
Fund's assets as shall be assigned to that Subadviser by the Adviser and the
purchase and sale of portfolio securities with respect to those assets and shall
take such steps as may be necessary to implement its decisions. The Adviser
shall not be responsible or liable for the investment merits of any decision by
a Subadviser to purchase, hold, or sell a security for a Fund.
(iii) Subject to the supervision and direction of the Trustees,
the Adviser shall (i) have overall supervisory responsibility for the general
management and investment of a Fund's assets; (ii) determine the allocation of
assets among the Subadvisers, if any; and (iii) have full investment discretion
to make all determinations with respect to the investment of Fund assets not
otherwise assigned to a Subadviser.
(iv) The Adviser shall research and evaluate each Subadviser, if
any, including (i) performing initial due diligence on prospective Subadvisers
and monitoring each Subadviser's ongoing performance; (ii) communicating
performance expectations and evaluations to the Subadvisers; and (iii)
recommending to the Trust's Board of Trustees whether a Subadviser's contract
should be renewed, modified or terminated. The Adviser shall also recommend
changes or additions to the Subadvisers and shall compensate the Subadvisers.
(v) The Adviser shall provide to the Trust's Board of Trustees
such periodic reports concerning a Fund's business and investments as the Board
of Trustees shall reasonably request.
b. COMPLIANCE WITH APPLICABLE LAWS AND GOVERNING DOCUMENTS. In the
performance of its duties and obligations under this Agreement, the Adviser
shall act in conformity with the Trust's Agreement and Declaration of Trust, as
from time to time amended and/or restated, and By-Laws, as from time to time
amended and/or restated, and the Prospectus and with the instructions and
directions received from 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") (including the requirements for qualification as a
regulated investment company) and all other applicable federal and state laws
and regulations.
The Adviser acknowledges and agrees that subject to the supervision and
directions of the Trust's Board of Trustees, it shall be solely responsible for
compliance with all disclosure requirements under all applicable federal and
state laws and regulations relating to the Trust or a Fund, including, without
limitation, the 1940 Act, and the rules and regulations thereunder, except that
each Subadviser shall have liability in connection with information furnished by
the Subadviser to a Fund or to the Adviser.
c. CONSISTENT STANDARDS. It is recognized that the Adviser will
perform various investment management and administrative services for entities
other than the Trust and the Funds; in connection with providing such services,
the Adviser agrees to exercise the same skill and care in performing its
services under this Agreement as the Adviser exercises in performing similar
services with respect to the other fiduciary accounts for which the Adviser has
investment responsibilities.
d. BROKERAGE. The Adviser is authorized, subject to the supervision
of the Trust's Board of Trustees, (1) to establish and maintain accounts on
behalf of each Fund with, and to place orders for the purchase and sale of
assets not allocated to a Subadviser, with or through, such persons, brokers or
dealers ("brokers") as the Adviser may select; and (2) to negotiate commissions
to be paid on such transactions. In the selection of such brokers and the
placing of such orders, the Adviser shall seek to obtain for a Fund the most
favorable price and execution available, except to the extent the Adviser 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 Adviser, bearing in
mind the Fund's best interests at all times, shall consider all factors it deems
relevant, including price, the size of the transaction, the nature of the market
for the security, 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. Subject to such policies as the Trustees may
determine, the Adviser 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 a 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, as amended) to the Adviser an amount of commission for effecting a Fund's
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 Adviser determines in good faith that such commission was reasonable in
relation to the value of the brokerage and research services provided by such
broker or dealer, viewed in terms of either that particular transaction or the
overall responsibilities of the Adviser 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 Adviser in connection with the Adviser's services to other clients. On
occasions when the Adviser deems the purchase or sale of a security to be in the
best interests of a Fund as well as other clients of the Adviser, the Adviser,
to the extent permitted by applicable laws and regulations, may, but shall 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 Adviser in the manner the Adviser considers to be the most equitable and
consistent with its fiduciary obligations to each Fund and to such other
clients.
e. SECURITIES TRANSACTIONS. The Adviser will not purchase securities
or other instruments from or sell securities or other instruments to a Fund;
PROVIDED, HOWEVER, the Adviser may purchase securities or other instruments from
or sell securities or other instruments to a Fund if such transaction is
permissible under applicable laws and regulations, including, without
limitation, the 1940 Act, the Advisers Act and the rules and regulations
promulgated thereunder or any exemption therefrom.
The Adviser agrees to observe and comply with Rule 17j-1 under the 1940
Act and the Trust's Code of Ethics, as the same may be amended from time to
time.
f. BOOKS AND RECORDS. In accordance with the 1940 Act and the rules
and regulations promulgated thereunder, the Adviser shall maintain separate
books and detailed records of all matters pertaining to the Funds and the Trust
(the "Fund's Books and Records"), including, without limitation, a daily ledger
of such assets and liabilities relating thereto and brokerage and other records
of all securities transactions. The Adviser acknowledges that the Fund's Books
and Records are property of the Trust. In addition, the Fund's Books and Records
shall be available to the Trust at any time upon request and shall be available
for telecopying without delay to the Trust during any day that the Funds are
open for business.
3. EXPENSES. During the term of this Agreement, the Adviser will pay
all expenses incurred by it in connection with its activities under this
Agreement other than the cost of securities, commodities and other investments
(including brokerage commissions and other transaction charges, if any)
purchased for a Fund. The Adviser 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 Adviser shall
be responsible for the expenses and costs for the officers of the Trust and the
Trustees of the Trust who are "interested persons" (as defined in the 0000 Xxx)
of the Adviser.
It is understood that the Trust will pay all of its own expenses,
including, without limitation, (1) all charges and expenses of any custodian or
depository appointed by the Trust for the safekeeping of its cash, securities
and other assets, (2) all charges and expenses paid to an administrator
appointed by the Trust to provide administrative or compliance services, (3) the
charges and expenses of any transfer agents and registrars appointed by the
Trust, (4) the charges and expenses of independent certified public accountants
and of general ledger accounting and internal reporting services for the Trust,
(5) the charges and expenses of dividend and capital gain distributions, (6) the
compensation and expenses of Trustees of the Trust who are not "interested
persons" of the Adviser, (7) brokerage commissions and issue and transfer taxes
chargeable to the Trust in connection with securities transactions to which the
Trust is a party, (8) all taxes and fees payable by the Trust to Federal, State
or other governmental agencies, (9) the cost of stock certificates representing
shares of the Trust, (10) all expenses of shareholders' and Trustees' meetings
and of preparing, printing and distributing prospectuses and reports to
shareholders, (11) charges and expenses of legal counsel for the Trust in
connection with legal matters relating to the Trust, including without
limitation, legal services rendered in connection with the Trust's existence,
financial structure and relations with its shareholders, (12) insurance and
bonding premiums, (13) association membership dues, (14) bookkeeping and the
costs of calculating the net asset value of shares of the Trust's Funds, and
(15) expenses relating to the issuance, registration and qualification of the
Trust's shares.
4. COMPENSATION. For the services provided and the expenses assumed
with respect to a Fund pursuant to this Agreement, the Adviser will be entitled
to the fee listed for each Fund on Exhibit A. Such fees will be computed daily
and payable monthly at an annual rate based on a Fund's average daily net
assets.
The method of determining net assets of a Fund for purposes hereof
shall be the same as the method of determining net assets for purposes of
establishing the offering and redemption price of the Shares as described in
each Fund's Prospectus. If this Agreement shall be effective for only a portion
of a month, the aforesaid fee shall be prorated for the portion of such month
during which this Agreement is in effect.
Notwithstanding any other provision of this Agreement, the Adviser may
from time to time agree not to impose all or a portion of its fee otherwise
payable hereunder (in advance of the time such fee or portion thereof would
otherwise accrue). Any such fee reduction may be discontinued or modified by the
Adviser at any time.
5. REPRESENTATIONS AND WARRANTIES OF ADVISER. The Adviser represents
and warrants to the Trust as follows:
The Adviser is registered as an investment adviser under the
Advisers Act;
The Adviser is a statutory trust duly organized, validly existing
and in good standing 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;
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 shareholders and/or 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 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
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;
The Form ADV of the Adviser provided to 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 in such Form ADV 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.
6. SURVIVAL OF REPRESENTATIONS AND WARRANTIES; DUTY TO UPDATE
INFORMATION. All representations and warranties made by the Adviser pursuant to
Section 5 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.
7. LIABILITY AND INDEMNIFICATION.
a. LIABILITY. 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 shall not be subject to any liability to a Fund or
the Trust, 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 Fund assets; PROVIDED, HOWEVER, that nothing herein shall
relieve the Adviser from any of its obligations under applicable law, including,
without limitation, the federal and state securities laws.
b. INDEMNIFICATION. The Adviser shall indemnify the Trust and its
officers and trustees, for any liability and expenses, including attorneys'
fees, 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.
8. 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
of the Funds; PROVIDED that such continuance is specifically approved at least
annually by the Trust's Board of Trustees or the vote of the lesser of (a) 67%
of the shares of a 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 FURTHER 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, without payment of
any penalty by vote of a majority of the Trust's Board of Trustees, or, with
respect to a Fund, by "vote of a majority of the outstanding voting securities"
(as defined in the 0000 Xxx) of that Fund, or by the Adviser, in each case, upon
not less than sixty (60) days' written notice to the other party.
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.
9. SERVICES NOT EXCLUSIVE. The services furnished by the Adviser
hereunder are not to be deemed exclusive, and the Adviser shall be free to
furnish similar services to others so long as its services under this Agreement
are not impaired thereby. It is understood that the action taken by the Adviser
under this Agreement may differ from the advice given or the timing or nature of
action taken with respect to other clients of the Adviser, and that a
transaction in a specific security may not be accomplished for all clients of
the Adviser at the same time or at the same price.
10. AMENDMENT. This Agreement may be amended by mutual consent of the
parties, provided that the terms of each such amendment shall be in writing and
approved by the Trust's Board of Trustees or by a vote of a majority of the
outstanding voting securities of a Fund (as required by the 1940 Act).
11. CONFIDENTIALITY. Subject to the duties of the Adviser and the Trust
to comply with applicable law, including any demand of any regulatory or taxing
authority having jurisdiction, the parties hereto shall treat as confidential
all information pertaining to a Fund and the Trust and the actions of the
Adviser and the Funds in respect thereof.
12. 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 party, 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 Adviser:
Nationwide Fund Advisors
0000 Xxxxx Xxxx
Xxxxxxxxxxxx, Xxxxxxxxxxxx 00000
Attention: Legal Department.
Facsimile: (000) 000-0000
b. If to the Trust:
Nationwide Mutual Funds
0000 Xxxxx Xxxx
Xxxxxxxxxxxx, Xxxxxxxxxxxx 00000
Attention: Legal Department.
Facsimile: (000) 000-0000
13. JURISDICTION. This Agreement shall be governed by and construed to
be 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.
14. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, and all of which shall
together constitute one and the same instrument.
15. CERTAIN DEFINITIONS. For the purposes of this Agreement,
"interested person," "affiliated person," "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.
16. CAPTIONS. The captions herein are included for convenience of
reference only and shall be ignored in the construction or interpretation
hereof.
17. 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.
18. 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 an Agreement and 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.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
the day and year first written above.
ADVISER:
NATIONWIDE FUND ADVISORS
By: /s/ XXXXXX X. XXXXXXX
------------------------
Name: Xxxxxx X. Xxxxxxx
Title: SVP-COO
TRUST:
NATIONWIDE MUTUAL FUNDS
By: /s/ XXXX XXXXX
------------------------
Name: Xxxx Xxxxx
Title: President
EXHIBIT A
INVESTMENT ADVISORY AGREEMENT
BETWEEN
NATIONWIDE FUND ADVISORS AND NATIONWIDE MUTUAL FUNDS
EFFECTIVE MAY 1, 2007
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FUNDS OF THE TRUST ADVISORY FEES
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Nationwide Fund 0.60% on assets up to $250 million
Nationwide Growth Fund 0.575% on assets of $250 million and more
but less than $1 billion
0.55% on assets of $1 billion and more
but less than $2 billion
0.525% on assets of $2 billion and more
but less than $5 billion
0.50% for assets of $5 billion and more
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Nationwide Value Opportunities Fund 0.70% on assets up to $250 million
0.675% on assets of $250 million and more
but less than $1 billion
0.65% on assets of $1 billion and more
but less than $2 billion
0.625% on assets of $2 billion and more
but less than $5 billion
0.60% for assets of $5 billion and more
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Nationwide Mid Cap Growth Leaders Fund 0.80% on assets up to $250 million
0.77% on assets of $250 million and more
but less than $1 billion
0.74% on assets of $1 billion and more
but less than $2 billion
0.71% on assets of $2 billion and more
but less than $5 billion
0.68% for assets of $5 billion and more
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Nationwide Global Technology and 0.88% on assets up to $500 million
Communications Fund1 0.83% on assets of $500 million and more
but less than $2 billion
0.78% for assets of $2 billion and more
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Nationwide Global Health Sciences Fund1 0.90% on assets up to $500 million
0.85% on assets of $500 million and more
but less than $2 billion
0.80% for assets of $2 billion and more
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Nationwide U.S. Growth Leaders Fund2 0.90% on assets up to $500 million
0.80% on the next $1.5 billion in assets
0.75% on assets of $2 billion and more
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Nationwide Leaders Fund1 0.80% on assets up to $500 million
0.70% on assets of $500 million and more
but less than $2 billion
0.65% on assets of $2 billion or more
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FUNDS OF THE TRUST ADVISORY FEES
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Nationwide Micro Cap Equity Fund 1.25% of the Fund's average daily net assets
----------------------------------------------------------- ----------------------------------------------------------
Nationwide Mid Cap Growth Fund 0.75% on assets up to $250 million
0.725% on assets of $250 million and more
but less than $1 billion
0.70% on assets of $1 billion and more
but less than $2 billion
0.675% on assets of $2 billion and more
but less than $5 billion
0.65% for assets of $5 billion and more
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Nationwide Small Cap Leaders Fund 0.95% of the Fund's average daily net assets
----------------------------------------------------------- ---------------------------------------------------------
Nationwide U.S. Growth Leaders Long-Short Fund 1.50% on assets up to $250 million
1.25% on assets of $250 million and more
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Nationwide China Opportunities Fund1 1.25% on assets up to $500 million
1.20% on assets of $500 million and more
but less than $2 billion
1.15% on assets of $2 billion and more
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Nationwide Global Natural Resources Fund1 0.70% on assets up to $500 million
0.65% on assets of $500 million and more
but less than $2 billion
0.60% on assets of $2 billion and more
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Nationwide Optimal Allocations Fund: 0.15% of the Fund's average daily net assets
Growth
----------------------------------------------------------- ---------------------------------------------------------
Nationwide Optimal Allocations Fund: Moderate Growth 0.15% of the Fund's average daily net assets
----------------------------------------------------------- ---------------------------------------------------------
Nationwide Optimal Allocations Fund: Moderate 0.15% of the Fund's average daily net assets
----------------------------------------------------------- ---------------------------------------------------------
Nationwide Optimal Allocations Fund: Specialty 0.15% of the Fund's average daily net assets
----------------------------------------------------------- ---------------------------------------------------------
Nationwide Optimal Allocations Fund: Defensive 0.15% of the Fund's average daily net assets
----------------------------------------------------------- ---------------------------------------------------------
NorthPointe Small Cap Value Fund 0.85% of the Fund's average daily net assets
----------------------------------------------------------- ---------------------------------------------------------
NorthPointe Small Cap Growth Fund 0.95% of the Fund's average daily net assets
----------------------------------------------------------- ---------------------------------------------------------
Nationwide Bond Fund 0.50% on assets up to $250 million
Nationwide Tax-Free Income Fund 0.475% on assets of $250 million and more
Nationwide Government Bond Fund but less than $1 billion
0.45% on assets of $1 billion and more
but less than $2 billion
0.425% on assets of $2 billion and more
but less than $5 billion
0.40% for assets of $5 billion and more
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FUNDS OF THE TRUST ADVISORY FEES
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Nationwide Money Market Fund 0.40% on assets up to $1 billion
0.38% on assets of $1 billion and more
but less than $2 billion
0.36% on assets of $2 billion and more
but less than $5 billion
0.34% for assets of $5 billion and more
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Nationwide S&P 500 Index Fund 0.13% on assets up to $1.5 billion
0.12% on assets of $1.5 billion and more
but less than $3 billion
0.11% on assets of $3 billion and more
but less than $4.5 billion
0.10% on assets of $4.5 billion and more
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Nationwide Small Cap Index Fund 0.20% on assets up to $1.5 billion
0.19% on assets of $1.5 billion and more
but less than $3 billion
0.18% on assets of $3 billion and more
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Nationwide Mid Cap Market Index Fund 0.22% on assets up to $1.5 billion
0.21% on assets of $1.5 billion and more
but less than $3 billion
0.20% on assets of $3 billion and more
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Nationwide International Index Fund 0.27% on assets up to $1.5 billion
0.26% on assets of $1.5 billion and more
but less than $3 billion
0.25% on assets of $3 billion and more
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Nationwide Bond Index Fund 0.22% on assets up to $1.5 billion
0.21% on assets of $1.5 billion and more
but less than $3 billion
0.20% on assets of $3 billion and more
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Nationwide Large Cap Value Fund 0.75% on assets up to $100 million
0.70% on assets of $100 million and more
----------------------------------------------------------- ---------------------------------------------------------
Nationwide Small Cap Fund 0.95% on assets up to $100 million
0.80% on assets of $100 million and more
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Nationwide Investor Destinations Aggressive Fund 0.13% of average daily net assets
----------------------------------------------------------- ---------------------------------------------------------
Nationwide Investor Destinations Moderately 0.13% of average daily net assets
Aggressive Fund
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Nationwide Investor Destinations Moderate Fund 0.13% of average daily net assets
----------------------------------------------------------- ---------------------------------------------------------
Nationwide Investor Destinations Moderately 0.13% of average daily net assets
Conservative Fund
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Nationwide Investor Destinations Conservative Fund 0.13% of average daily net assets
----------------------------------------------------------- ---------------------------------------------------------
Nationwide Hedged Core Equity Fund 1.25% of average daily net assets
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FUNDS OF THE TRUST ADVISORY FEES
----------------------------------------------------------- ----------------------------------------------------------
Nationwide Small Cap Growth Opportunities Fund 0.95% on assets up to $500 million
0.85% on assets of $500 million and more
but less than $2 billion
0.80% for assets of $2 billion and more
----------------------------------------------------------- ---------------------------------------------------------
Nationwide Small Cap Value Fund 0.95% on assets up to $500 million
0.85% on assets of $500 million and more
but less than $2 billion
0.80% for assets of $2 billion and more
----------------------------------------------------------- ---------------------------------------------------------
Nationwide Small Cap Core Fund 0.85% on assets up to $500 million
0.75% on assets of $500 million and more
but less than $2 billion
0.70% for assets of $2 billion and more
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Nationwide Market Neutral Fund 1.25% of average daily net assets
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Nationwide Emerging Markets Fund1 1.05% on assets up to $500 million
1.00% on assets of $500 million and more
but less than $2 billion
0.95% for assets of $2 billion and more
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Nationwide International Growth Fund1 0.90% on assets up to $500 million
0.85% on assets of $500 million and more
but less than $2 billion
0.80% for assets of $2 billion and more
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Nationwide Worldwide Leaders Fund1 0.90% on assets up to $500 million
0.85% on assets of $500 million and more
but less than $2 billion
0.80% for assets of $2 billion and more
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Nationwide Global Financial Services Fund1 0.90% on assets up to $500 million
0.85% on assets of $500 million and more
but less than $2 billion
0.80% for assets of $2 billion and more
----------------------------------------------------------- ---------------------------------------------------------
Nationwide Global Utilities Fund1 0.70% on assets up to $500 million
0.65% on assets of $500 million and more
but less than $2 billion
0.60% for assets of $2 billion or more
----------------------------------------------------------- ---------------------------------------------------------
Nationwide Short Duration Bond Fund 0.35% on assets up to $500 million
0.34% on assets of $500 million and more
but less than $1 billion
0.325% on assets of $1 billion and more
but less than $3 billion
0.30% on assets of $3 billion and more
but less than $5 billion
0.285% on assets of $5 billion and more
but less than $10 billion
0.275% for assets of $10 billion and more
----------------------------------------------------------- ---------------------------------------------------------
----------------------------------------------------------- ----------------------------------------------------------
FUNDS OF THE TRUST ADVISORY FEES
----------------------------------------------------------- ----------------------------------------------------------
Nationwide Enhanced Income Fund 0.35% on assets up to $500 million
0.34% on assets of $500 million and more
but less than $1 billion
0.325% on assets of $1 billion and more
but less than $3 billion
0.30% on assets of $3 billion and more
but less than $5 billion
0.285% on assets of $5 billion and more
but less than $10 billion
0.275% for assets of $10 billion and more
----------------------------------------------------------- ---------------------------------------------------------
------------
1 Performance Fees for the Nationwide Global Technology and Communications
Fund; Nationwide Global Health Sciences Fund; Nationwide Leaders Fund;
Nationwide China Opportunities Fund; Nationwide Global Natural Resources
Fund; Nationwide Global Financial Services Fund; Nationwide Global
Utilities Fund; Nationwide International Growth Fund; Nationwide Emerging
Markets Fund; and Nationwide Worldwide Leaders Fund.
The base advisory 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.
BENCHMARK INDICES:
-----------------
1. Nationwide Global Technology and Xxxxxxx Xxxxx Technology Composite
Communications Fund Index
2. Nationwide Global Health Sciences Fund Xxxxxxx Sachs Health Care Index
3. Nationwide Leaders Fund S&P 500 Index
4. Nationwide China Opportunities Fund MSCI Xxxxx Xxx Index
5. Nationwide Global Natural Resources Xxxxxxx Sachs Natural Resources
Fund Index
6. Nationwide Emerging Markets Fund MSCI Emerging Markets Index
7. Nationwide International Growth Fund MSCI All Country World Free ex
U.S. Index
8. Nationwide Worldwide Leaders Fund MSCI World Index
9. Nationwide Global Financial Services MSCI World Financial Index
Fund
10. Nationwide Global Utilities Fund 60% MSCI World Telecom Service
Index/40% MSCI World Utilities
Index
------------
2 Performance fee for the Nationwide U.S. Growth Leaders Fund
The base advisory fee listed above is adjusted each quarter, beginning
one year after commencement of operations, depending on the Fund's investment
performance for the 36 months preceding the end of that month, relative to the
investment performance of the Fund's benchmark, the S&P 500 Index. The base fee
is either increased or decreased by the following amounts at each breakpoint,
based on whether the Fund has out- or under-performed the S&P 500 Index by more
or less than 1200 basis points over the preceding rolling 36 month period:
For assets up to $500 million +/- 22 basis points
Next $1.5 billion in assets +/- 18 basis points
Assets of $2 billion and more +/- 16 basis points
The investment performance of the Nationwide U.S. Growth Leaders Fund will be
the sum of: (1) the change in the 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 at the Fund's value in effect at the close of business on
the record date for the payment of such distributions and dividends and the date
on which provision is made for such taxes, after giving effect to such
distribution, dividends and taxes.
S&P 500 Index Performance:
The performance of the S&P 500 Index for a calculation period, expressed as a
percentage of the S&P 500 Index, at the beginning of such period will be the sum
of: (1) the change in the level of the S&P 500 Index during such period; and (2)
the value, as calculated consistent with the S&P 500 Index, of cash
distributions having an ex-dividend date during such period made by those
companies whose securities comprise the S&P 500 Index. For this purpose, cash
distributions on the securities that comprise the S&P 500 Index will be treated
as if they were reinvested in the S&P 500 Index at least as frequently as the
end of each calendar quarter following payment of the dividend.
TRUST:
NATIONWIDE MUTUAL FUNDS
By: /s/ XXXX XXXXX
------------------------------------
Name: Xxxx Xxxxx
Title: President
ADVISER:
NATIONWIDE FUND ADVISORS
By: /s/ XXXXXX X. XXXXXXX
------------------------------------
Name: Xxxxxx Xxxxxxx
Title: SVP-COO
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.
