1
Exhibit 5a
INVESTMENT ADVISORY AGREEMENT
THIS AGREEMENT is made and entered into on this ____ day of ____________,
1998, between NATIONWIDE INVESTING FOUNDATION III (the "Trust"), an Ohio
business trust, and NATIONWIDE ADVISORY SERVICES, INC. (the "Adviser"), an Ohio
corporation registered under the Investment Advisers Act of 1940 (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 (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. (1) 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
Securities and Exchange Commission, 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
2
from time to time (collectively referred to hereinafter as the
"Prospectus") and subject to the directions of the Trust's Board of
Trustees.
(2) 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.
(3) 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.
(4) 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.
(5) 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 Declaration of Trust and
By-Laws 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
2
3
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, to establish and maintain accounts on
behalf of each Fund with, and place orders for the purchase and sale of
assets not allocated to a Subadviser, with or through, such persons,
brokers or dealers ("brokers") as Adviser may select and 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 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 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) to the Adviser an
amount of commission for effecting a Fund 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
3
4
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 and 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
Trust who are "interested persons" (as defined in the ▇▇▇▇ ▇▇▇) 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
4
5
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:
(a) The Adviser is registered as an investment adviser under the
Advisers Act;
(b) The Adviser is a corporation duly organized, validly existing
and in good standing under the laws of the State of Ohio with the power to
own and possess its assets and carry on its business as it is now being
conducted;
(c) 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 directors, 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;
5
6
(d) The Form ADV of the Adviser previously provided to the Trust is
a true and complete copy of the form filed with the SEC 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.
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 wilful 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 wilful
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 _______________, 2000, and thereafter shall continue
automatically for successive annual periods, provided 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 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 ▇▇▇▇ ▇▇▇) 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 by vote of a majority of the outstanding
6
7
voting securities of a Fund, or by the Adviser, in each case, 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 ▇▇▇▇
▇▇▇) 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 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 Advisory Services, Inc.
Three ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇.
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
(b) If to the Trust:
Nationwide Investing Foundation III
Three ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇.
7
8
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
13. Jurisdiction. This Agreement shall be governed by and construed to be
in accordance with substantive laws of the State of Ohio 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, 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.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the
day and year first written above.
ADVISER
NATIONWIDE ADVISORY SERVICES, INC.
By:
---------------------------------------
Name:
Title:
TRUST
NATIONWIDE INVESTING FOUNDATION III
By:
---------------------------------------
Name:
Title:
8
9
EXHIBIT A
NATIONWIDE INVESTING FOUNDATION III
Investment Advisory Agreement
Funds of the Trust Advisory Fees (applicable for each Fund)
------------------ ----------------------------------------
Nationwide Mid Cap Growth Fund 0.60% on assets up to $250 million
Nationwide Growth Fund 0.575% on assets of $250 million and more but
Nationwide Fund 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
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 but
Nationwide Long-Term U.S. less than $1 billion
Government Bond Fund 0.45% on assets of $1 billion and more but
Nationwide Intermediate less than $2 billion
Government Bond Fund 0.425% on assets of $2 billion and more but
less than $5 billion
0.40% for assets of $250 million
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
Nationwide S & P 500 Index Fund 0.13% of average daily net assets
9