EX-99(d)(3)
INVESTMENT ADVISORY AGREEMENT
THIS AGREEMENT is made and entered into as of the [___] day of [_____],
2007 by and between NATIONWIDE MUTUAL FUNDS (the "Trust"), a Delaware statutory
trust, and NATIONWIDE FUND ADVISORS (the "Adviser"), a Delaware statutory trust
registered under the Investment Advisers Act of 1940, as amended (the "Advisers
Act").
W I T N E S S E T H :
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 and to provide, or arrange for the provision of,
other 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. OTHER SERVICES. The Adviser will provide, or
arrange for the provision of, transfer agency, custody, fund administration and
accounting, and legal services (other than counsel to the Trustees who are not
"interested persons" of the Adviser), subject in each case to the approval of
the Board of Trustees. The Adviser will also provide supervisory personnel who
will be responsible for supervising and/or monitoring the performance of a
Fund's service providers in connection with their duties. Such personnel may be
employees of the Adviser or employees of affiliates of the Adviser or of other
organizations.
c. 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.
d. 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.
e. 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.
f. 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.
g. 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.
a. 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.
b. Unless otherwise mutually agreed to by the Trust
and the Adviser, the Adviser will pay the operating costs and expenses of each
class of the Funds (except those described in subsection (c) below, which shall
be paid by the Trust, or other expenses otherwise excluded under the terms of
this Agreement) including (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 fund administration 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 for the
Trust, (5) charges and expenses of legal counsel for the Trust in connection
with legal matters relating to the Trust (excluding any extraordinary fees or
legal fees and costs in contemplation or arising out of litigation to which the
Funds, the officers or Trustees are a party or incurred in anticipation of
becoming a party), (6) compensation and expenses of the Trust's officers and
Trustees who are "interested persons" of the Adviser, (7) industry association
membership dues, (8) insurance and bonding premiums, (9) expenses relating to
the issuance, registration and qualification of the Trust's shares and other
governmental fees, (10) expenses related to printing and delivering
prospectuses, statements of additional information, and shareholder reports and
supplements to any of the aforementioned to existing shareholders,
and (11) expenses incurred in connection with preparing, filing, printing and
mailing shareholder reports, notices, proxy statements, and reports to
government agencies.
c. The Adviser shall not be required to pay any of
the following expenses of the Trust, which instead shall be borne by the Trust:
(1) the compensation and expenses of Trustees of the Trust who are not
"interested persons" of the Adviser, (2) charges and expenses of legal counsel
to the Trustees of the Trust who are not "interested persons" of the Adviser,
(3) expenses incurred in connection with the provision of shareholder services
and distribution services under a Rule 12b-1 plan, (4) fees for administrative
servicing paid in connection with the Trust's Administrative Services Plan, (5)
the cost of securities, commodities and other financial instruments in which the
Trust invests; (6) brokerage commissions and issue and transfer taxes chargeable
to the Trust in connection with securities transactions to which the Trust is a
party, (7) all taxes payable by the Trust to Federal, State or other
governmental entities, (8) the cost of stock certificates representing shares of
the Trust, (9) interest, (10) short sale dividend expenses, and (11) expenses
incurred by the Fund in connection with any merger or reorganization and other
non-routine expenses not incurred in the ordinary course of the Fund's business.
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, 2009 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:
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Name:
Title:
TRUST:
NATIONWIDE MUTUAL FUNDS
By:
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Name:
Title:
EXHIBIT A
INVESTMENT ADVISORY AGREEMENT
BETWEEN
NATIONWIDE FUND ADVISORS AND NATIONWIDE MUTUAL FUNDS
EFFECTIVE _________, 2007
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NATIONWIDE TARGET DESTINATION FUNDS OF THE TRUST ADVISORY FEES
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Nationwide Destination 2010 Fund 0.50% of the Fund's average daily net assets
Nationwide Destination 2015 Fund
Nationwide Destination 2020 Fund
Nationwide Destination 2025 Fund
Nationwide Destination 2030 Fund
Nationwide Destination 2035 Fund
Nationwide Destination 2040 Fund
Nationwide Destination 2045 Fund
Nationwide Destination 2050 Fund
Nationwide Retirement Income Fund
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TRUST:
NATIONWIDE MUTUAL FUNDS
By:
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Name:
Title:
ADVISER:
NATIONWIDE FUND ADVISORS
By:
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Name:
Title:
