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'33 ACT FILE NO.333-40455
'40 ACT FILE NO.811-08495
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JANUARY 5, 1999
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933/X/
POST-EFFECTIVE AMENDMENT NO. 11
AND/OR
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940/X/
AMENDMENT NO. 10
(CHECK APPROPRIATE BOX OR BOXES)
NATIONWIDE INVESTING FOUNDATION III
(EXACT NAME OF REGISTRANT AS SPECIFIED IN CHARTER)
NATIONWIDE MID CAP GROWTH FUND
NATIONWIDE GROWTH FUND
NATIONWIDE FUND
NATIONWIDE S&P 500 INDEX FUND
NATIONWIDE BOND FUND
NATIONWIDE TAX-FREE INCOME FUND
NATIONWIDE LONG-TERM U.S. GOVERNMENT BOND FUND
NATIONWIDE INTERMEDIATE U.S. GOVERNMENT BOND FUND
NATIONWIDE MONEY MARKET FUND
MORLEY CAPITAL ACCUMULATION FUND
PRESTIGE LARGE CAP VALUE FUND
PRESTIGE LARGE CAP GROWTH FUND
PRESTIGE SMALL CAP FUND
PRESTIGE BALANCED FUND
PRESTIGE INTERNATIONAL FUND
THREE NATIONWIDE PLAZA
COLUMBUS, OHIO 43216
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (614) 249-7855
SEND COPIES OF COMMUNICATIONS TO:
MS. ELIZABETH A. DAVIN
DRUEN, DIETRICH, REYNOLDS AND KOOGLER
ONE NATIONWIDE PLAZA
COLUMBUS, OHIO 43215
(NAME AND ADDRESS OF AGENT FOR SERVICE)
It is proposed that this filing will become effective:
[X] Immediately pursuant to paragraph (b) of Rule 485.
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NATIONWIDE INVESTING FOUNDATION III
NATIONWIDE MID CAP GROWTH FUND
NATIONWIDE GROWTH FUND
NATIONWIDE FUND
NATIONWIDE S&P 500 INDEX FUND
NATIONWIDE BOND FUND
NATIONWIDE TAX-FREE INCOME FUND
NATIONWIDE LONG-TERM U.S. GOVERNMENT BOND FUND
NATIONWIDE INTERMEDIATE U.S. GOVERNMENT BOND FUND
NATIONWIDE MONEY MARKET FUND
MORLEY CAPITAL ACCUMULATION FUND
PRESTIGE LARGE CAP VALUE FUND
PRESTIGE LARGE CAP GROWTH FUND
PRESTIGE SMALL CAP FUND
PRESTIGE BALANCED FUND
PRESTIGE INTERNATIONAL FUND
CROSS REFERENCE SHEET
N-1A ITEM NO. LOCATION
PART A
Item 1. Cover Page Cover Page
Item 2. Synopsis Summary of Expenses
Item 3. Condensed Financial Information Financial Highlights
Item 4. General Description of Registrant Investment Objectives and
Policies; Investment
Techniques, Considerations
and Risk Factors
Item 5. Management of the Fund Management of the Trust
Item 6. Capital Stock and Other Securities Additional Information;
Income Dividends and
Capital Gains
Item 7. Purchase of Securities Being Offered Investment in Fund Shares
Item 8. Redemption or Repurchase Share Redemption
Item 9. Pending Legal Proceedings *
PART B
Item 10. Cover Page Cover Page
Item 11. Table of Contents Table of Contents
Item 12. General Information and History General Information and
History
Item 13. Investment Objectives and Policies Additional Information on
Portfolio Instruments and
Investment Policies;
Investment Restrictions
Item 14. Management of Registrant Trustees and Officers of
the Trust
Item 15. Control Persons and Principal Holders of
Securities Major Shareholders
Item 16. Investment Advisory and Other Services Investment Advisory and
Other Services
Item 17. Brokerage Allocation Brokerage Allocation
Item 18. Capital Stock and Other Securities *
Item 19. Purchase, Redemption and Pricing *
Item 20. Tax Status Additional General Tax
Information
Item 21. Underwriters *
Item 22. Calculation of Performance Data Calculating Fund Yield;
Nonstandard Returns
Item 23. Financial Statements Financial Statements
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PART C
Information required to be included in Part C is set forth under the appropriate
item, so numbered, in Part C to this Registration statement.
* Not applicable or negative answer.
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The Prospectus for the Mid Cap Growth Fund, Growth Fund, Fund, Bond Fund,
Tax-Free Income Fund, Long-Term U.S. Government Bond Fund, Intermediate U.S.
Government Bond Fund, and Prime Shares of the Money Market Fund, and the
Prospectuses, as well as the Statements of Additional Information for the Local
Fund Shares and Class R and Class Y shares of the S&P 500 Index Fund, and Morley
Capital Accumulation Fund, and the Prospectus and Statement of Additional
Information for the Large Cap Value Fund, Large Cap Growth Fund, Small Cap Fund,
Balanced Fund and International Fund are incorporated by reference into this
filing of Post-Effective Amendment No. 11 to the Registration Statement.
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PROSPECTUS
JANUARY 5, 1999
CLASS R SHARES
NATIONWIDE MONEY MARKET FUND
FOR INFORMATION AND ASSISTANCE
CALL TOLL FREE 1 (800) 848-0920
Nationwide Money Market Fund (the "Fund") is a diversified portfolio of
Nationwide Investing Foundation III (the "Trust"). The Trust is an open-end
management investment company organized as a business trust under the laws of
the State of Ohio, by a Declaration of Trust dated as of October 30, 1997. The
Trust currently offers shares in fifteen separate portfolios or series,
including the Fund, each with its own investment objective. The Fund offers two
classes of shares: Class R shares and Prime Shares. This Prospectus relates only
to the Class R shares of the Fund. Class R shares are sold to life insurance
company separate accounts to fund the benefits of variable annuity contracts
("Contracts") issued to employee benefit plans qualified under Section 401(a) of
the Internal Revenue Code ("qualified plans") and to programs offered to
qualified plans, as well as to accounts held by the Nationwide Trust Company for
qualified plans.
The Fund's investment objective is to seek as high a level of current income as
is consistent with the preservation of capital and maintenance of liquidity. The
Fund invests in high-quality money market instruments maturing in 397 days or
less (or deemed to have such a maturity under rules of the Securities and
Exchange Commission).
This Prospectus provides you with the basic information you should know before
investing in Class R shares of the Fund. You should read it and keep it for
future reference. A Statement of Additional Information dated January 5, 1999
has been filed with the Securities and Exchange Commission. You may obtain a
copy of the Statement of Additional Information for the Class R shares of the
Fund and/or a prospectus for the Prime Shares of the Fund without charge by
calling (800) 848-0920, or writing Nationwide Advisory Services, Inc., Three
Nationwide Plaza, Columbus, Ohio 43215.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
THE STATEMENT OF ADDITIONAL INFORMATION FOR CLASS R SHARES OF THE FUND DATED
JANUARY 5, 1999, IS INCORPORATED HEREIN BY REFERENCE.
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SUMMARY OF EXPENSES
Shareholder Transaction Expenses None
Annual Fund Operating Expenses
(as a percentage of average net assets)
Management Fees 0.40%
12b-1 Fees (after waiver)(1) 0.00%
Other Expenses(2) 0.35%
-----
Total Operating Expenses 0.75%
=====
This summary is provided to assist investors in understanding the various costs
and expenses that an investor in the Class R shares will bear directly or
indirectly.
Example:
<TABLE>
<CAPTION>
1 year 3 years 5 years 10 years
------ ------- ------- --------
<S> <C> <C> <C> <C>
You would pay the following expenses on a $1,000 investment,
assuming (1) 5% annual return and (2)redemption at the end of
each time period. $ 8 $ 24 $ 42 $ 93
</TABLE>
THE EXAMPLE SET FORTH ABOVE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR
FUTURE EXPENSES. ACTUAL EXPENSES MAY BE GREATER OR LESSER THAN THOSE SHOWN.
For more information on Class expenses, see "MANAGEMENT OF THE TRUST" below.
(1) Class R shares are subject to a 0.15% 12b-1 fee which Nationwide Advisory
Services, Inc. ("NAS") (the "Distributor") has agreed with the Trust to
waive until further written notice to shareholders.
(2) "Other Expenses" are based upon actual expenses of the initial class of
shares of the Fund for the fiscal year ending October 31, 1998 restated to
reflect the different expense structure of the Class R shares of the Fund.
As of January 5, 1999, Class R shares are offered subject to a 0.25%
administrative servicing fee; the administrative servicing fee is not
applicable to the initial class of shares.
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FINANCIAL HIGHLIGHTS
Financial Highlights are not available for the Class R shares since Class R
shares did not commence operations prior to December 31, 1998.
The following Financial Highlights for the Ten Year Period ended October 31,
1998 are for the Fund's initial class of shares. On May 11, 1998, the initial
class of the Fund commenced operations following a reorganization. The Financial
Highlights for the Ten Year Period reflect the operations of the Fund's
predecessor, the Nationwide Investing Foundation - Nationwide Money Market Fund
for the period prior to May 11, 1998. Class R shares of the Fund are subject to
a 0.25% administrative servicing fee; the administrative servicing fee is not
applicable to the initial class of shares. The Class R shares of the Fund are
also subject to a 0.15% 12b-1 fee which NAS has agreed with the Trust to waive
until further written notice to shareholders. The Financial Highlights for the
Ten Year Period ended October 31, 1998 have been audited by KPMG LLP ( formerly
KPMG Peat Marwick LLP), Independent Auditors, whose report thereon, insofar as
they relate to each of the years in the five year period ended October 31, 1998,
together with the financial statements for the Fund for the year ended October
31, 1998, appearing in the Annual Report of the Nationwide Investing Foundation
III are incorporated by reference in the Statement of Additional Information.
The Trust's Statement of Additional Information and the Annual Report, which
contain further information about the Fund's performance, may be obtained free
of charge by calling 1-800-848-0920.
(For a Prime Class share outstanding throughout the period ending)
<TABLE>
<CAPTION>
INCOME & DISTRIBUTIONS RATIOS & SUPPLEMENTAL DATA
Net
Net Asset Div. From Net Asset Invest. Net Invest.
Value - Net Net Invest. Value - Exp. Income Exp. To Income Net Assets at
Beginning Invest. Income End of Total to Avg. to Avg. Avg. Net To Avg. End of Period
Year of Period Income (Loss) Period Return Net Assets Net Assets Assets* Net Assets* (000's)
---- --------- ------ ----------- -------- ------ ---------- ---------- ------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1988 $1.00 $.07 $(.07) $1.00 6.9% .76% 6.71% .76% 6.71% $421,901
1989 1.00 .09 (.09) 1.00 8.9 .74 8.55 .74 8.55 535,292
1990 1.00 .08 (.08) 1.00 8.0 .73 7.67 .73 7.67 600,324
1991 1.00 .06 (.06) 1.00 6.1 .71 5.97 .71 5.97 594,988
1992 1.00 .03 (.03) 1.00 3.5 .71 3.50 .71 3.50 488,998
1993 1.00 .03 (.03) 1.00 2.6 .70 2.57 .73 2.54 418,615
1994 1.00 .03 (.03) 1.00 3.3 .65 3.33 .70 3.28 491,737
1995 1.00 .05 (.05) 1.00 5.5 .62 5.34 .67 5.29 604,711
1996 1.00 .05 (.05) 1.00 5.1 .60 4.93 .65 4.88 729,500
1997 1.00 .05 (.05) 1.00 5.1 .59 4.96 .64 4.91 820,657
1998 1.00 .05 (.05) 1.00 5.2 .59 5.03 .61 5.01 1,048,689
</TABLE>
* Ratios calculated as if no expenses were waived.
INVESTMENT OBJECTIVE AND POLICIES
The Fund seeks as high a level of current income as is consistent with the
preservation of capital and maintenance of liquidity. The Fund invests in
high-quality money market instruments maturing in 397 days or less. Although
principal is not intended to fluctuate, there can be no assurance that the Fund
will be able to maintain a stable net asset value of $1.00 per share.
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The Fund emphasizes a diversified portfolio having a dollar weighted average
maturity of 90 days or less or deemed to have such remaining maturity under
rules of the Securities and Exchange Commission. The Fund's portfolio consists
of high-quality money market instruments with a remaining maturity of 397 days
or less including, but not limited to: securities issued by the U.S. Government
and its agencies and instrumentalities ("U. S. Government Securities"); U.S.
dollar denominated obligations of foreign governments including Canadian
government and provincial obligations; obligations of commercial banks and
savings associations which have assets over $500 million and are members of the
Federal Deposit Insurance Corporation, and the 50 largest foreign banks with
U.S. branches; taxable or partly taxable obligations issued by state, county or
municipal governments; commercial paper rated within the two highest rating
categories by a nationally recognized statistical rating organization ("NRSRO");
corporate obligations and asset-backed securities rated at the time of purchase
within the two highest rating categories assigned by at least two NRSROs; and
repurchase agreements collateralized by any of the above. In addition, the Fund
may invest in variable and floating rate obligations, some of which may have
call features. The Fund may also purchase securities on a when-issued or delayed
delivery basis and securities of other investment companies and may lend
portfolio securities.
See "Investment Techniques, Considerations and Risk Factors" below and
"Additional Information on Portfolio Instruments and Investment Policies" in the
Statement of Additional Information for further information.
There can be no guarantee that the Fund's objective will be achieved. The
investment objective of the Fund is fundamental, and shareholder approval is
required to change it.
INVESTMENT TECHNIQUES, CONSIDERATIONS AND RISK FACTORS
The following is a description of the type of securities that the Fund may
invest in and the risks associated with those types of securities.
U.S. GOVERNMENT SECURITIES--Securities issued by the U.S. Government include
U.S. Treasury obligations, such as Treasury bills, notes, and bonds.
Securities issued by U.S. Government agencies or instrumentalities include,
but are not limited to, obligations of the following:
- - the Federal Housing Administration, Farmers Home Administration, and the
Government National Mortgage Association ("GNMA"), including GNMA
pass-through certificates, whose securities are supported by the full faith
and credit of the United States;
- - the Federal Home Loan Banks.
- - the Federal National Mortgage Association ("FNMA").
- - the Student Loan Marketing Association and Federal Home Loan Mortgage
Corporation ("FHLMC").
- - the Federal Farm Credit banks.
The U.S. Government and its agencies and instrumentalities do not guarantee the
market value of their securities; consequently, the value of such securities
will fluctuate.
STRIPPED TREASURY SECURITIES--The Fund may invest in U.S. Treasury securities
that have been stripped of their unmatured interest coupons (which typically
provide for interest payments semi-annually); interest coupons that have been
stripped from such U.S. Treasury securities; receipts and certificates for such
stripped debt obligations and stripped coupons (collectively, "Stripped Treasury
Securities"). Stripped Treasury Securities may include coupons stripped from
U.S. Treasury bonds, which may be held through the Federal Reserve Bank's
book-entry system called "Separate Trading of Registered Interest and Principal
of Securities" ("STRIPS") or through a program entitled "Coupon Under Book-Entry
Safekeeping" ("CUBES").
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Stripped Treasury Securities are sold at a deep discount because the buyer of
those securities receives only the right to receive a future fixed payment
(representing principal or interest) on the security and does not receive any
rights to periodic interest payments on the security.
ASSET-BACKED SECURITIES--Asset-backed securities represent direct or indirect
participation in, or are secured by and payable from, assets such as motor
vehicle installment sales contracts, other installment loan contracts, home
equity loans, leases of various types of property and receivables from credit
card and other revolving credit arrangements. Payments or distributions of
principal and interest on asset-backed securities may be supported by
non-governmental credit enhancements similar to those utilized in connection
with mortgage-backed securities.
The yield characteristics of asset-backed securities differ from those of
traditional debt obligations. Among the principle differences are that interest
and principal payments are made more frequently on asset-backed securities,
usually monthly, and that principal may be prepaid at any time because the
underlying assets generally may be prepaid at any time. As a result, if the Fund
purchases these securities at a premium, a prepayment rate that is higher than
expected will reduce the yield, while a prepayment that is lower than expected
will have the opposite effect of increasing the yield. Conversely, if the Fund
purchases these securities at a discount, a prepayment rate that is faster than
expected will increase yield, while a prepayment rate that is slower than the
expected will reduce the yield. Accelerated prepayments on securities purchased
by the Fund at a premium also impose a risk of loss of principal because the
premium may not have been fully amortized by the time the principal is prepaid
in full.
REPURCHASE AGREEMENTS--The Fund may engage in repurchase agreement transactions
as long as the underlying securities are of the type that the Fund would be
permitted to purchase directly. Under the terms of a typical repurchase
agreement, the Fund would acquire an underlying security for a relatively short
period (usually not more than one week) subject to an obligation of the seller
to repurchase, and the Fund to resell, the obligation at an agreed upon price
and time, thereby determining the yield during the Fund's holding period. The
Fund will enter into repurchase agreements with member banks of the Federal
Reserve System or certain non-bank dealers. Under each repurchase agreement the
selling institution will be required to maintain the value of the securities
subject to the repurchase agreement at not less than their repurchase price
(including interest). Repurchase agreements could involve certain risks in the
event of default or insolvency of the other party, including possible delays or
restrictions upon the Fund's ability to dispose of the underlying securities.
NAS, acting under the supervision of the Board of Trustees of the Trust, reviews
the creditworthiness of those banks and non-bank dealers with which the Fund
enters into repurchase agreements to evaluate these risks. For additional
information, see "Repurchase Agreements" in the Statement of Additional
Information.
INVESTMENT COMPANIES--As permitted by the Investment Company Act of 1940, as
amended (the "1940 Act"), the Fund may invest up to 10% of its total assets,
calculated at the time of investment, in the securities of other investment
companies. No more than 5% of the Fund's total assets may be invested in the
securities of any one investment company nor may it acquire more than 3% of the
voting securities of any other investment company. The Fund will indirectly bear
its proportionate share of any management fees paid by an investment company in
which it invests in addition to the advisory fee paid by the Fund.
WHEN-ISSUED SECURITIES--The Fund may invest without limitation in securities
purchased on a when-issued or delayed delivery basis. Although the payment and
interest terms of these securities are established at the time the Fund enters
into the commitment, these securities may be delivered and paid for at a future
date, generally within 45 days. Purchasing when-issued securities allows the
Fund to lock in a fixed price or yield on a security it intends to purchase.
However, when the Fund purchases a when-issued security, it immediately assumes
the risk of ownership, including the risk of price fluctuation until the
settlement date.
The greater the Fund's outstanding commitments for these securities, the greater
the exposure to potential fluctuations in the net asset value of the Fund.
Purchasing when-issued securities may involve the additional risk that the yield
available in the market when the delivery occurs may be higher or the market
price lower than that obtained at the time of commitment. Although the Fund may
be able to sell these securities prior to the delivery date, it will purchase
when-issued
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securities for the purpose of actually acquiring the securities, unless after
entering into the commitment a sale appears desirable for investment reasons.
The Fund will set aside liquid assets in a segregated account to secure its
outstanding commitments for when-issued securities.
FLOATING AND VARIABLE RATE OBLIGATIONS--Floating or variable rate obligations
bear interest at rates that are not fixed, but vary with changes in specified
market rates or indices, such as the prime rate, and at specified intervals.
Interest rates on floating rate obligations vary with changes in an underlying
index while interest rates on variable rate obligations change at preset fixed
times. Certain of the floating or variable rate obligations that may be
purchased by the Fund may be callable by the issuer at certain dates during the
term of the obligations. The dates on which they may be called are set at the
time of issuance. The obligations have credit risks like other debt instruments
of the issuer, but because the issuer may call the obligations, the Fund is also
subject to the risk that the rates at which the Fund will be able to reinvest
such assets may be less than the rate paid on the floating or variable rate
obligation. Certain of the floating or variable rate obligations that may be
purchased by the Fund may also carry a demand feature that would permit the
holder to tender them back to the issuer at par value prior to maturity. Such
obligations include variable rate master demand notes, which are unsecured
instruments issued pursuant to an agreement between the issuer and the holder
that permits the indebtedness thereunder to vary and provides for periodic
adjustments in the interest rate. The Fund will limit its purchase of floating
and variable rate obligations to those of the same quality as obligations it is
otherwise allowed to purchase. NAS will monitor on an ongoing basis the ability
of an issuer of a demand instrument to pay principal and interest on demand.
Although there may be no active secondary market with respect to a particular
variable or floating rate obligation purchased by the Fund, the Fund may attempt
to resell the obligation at any time to a third party. The absence of an active
secondary market, however, could make it difficult for the Fund to dispose of a
variable or floating rate obligation in the event the issuer of the obligation
defaulted on its payment obligations, and the Fund could, as a result or for
other reasons, suffer a loss to the extent of the default. Variable or floating
rate obligations may be secured by bank letters of credit.
In the event the interest rate of a variable or floating rate obligation is
established by reference to an index or an interest rate that proves to lag
behind other market interest rates, there is the risk that the market value of
such obligation, on readjustment of its interest rate, will not approximate its
par value or amortized cost, as the case may be. Under such circumstances, the
obligations will be deemed to be inappropriate for, and will be eliminated from,
the Fund's portfolio.
Variable and floating rate obligations for which no readily available market
exists and which are not subject to a demand feature that will permit the Fund
to receive payment of the principal within seven days after demand by that Fund,
will be considered illiquid and therefore, together with other illiquid
securities held by such Fund, investments will not exceed such Fund's
limitations on investments in illiquid securities.
For a further discussion of floating and variable rate obligations, see
"Additional Information on Portfolio Instruments and Investment
Policies--Floating and Variable Rate Instruments" in the Statement of
Additional Information.
CANADIAN AND PROVINCIAL OBLIGATIONS--Generally, these obligations are unsecured,
discounted bills and notes issued in U.S. currency. These obligations have a
final maturity of 270 days or less from date of issue and are exempt from
registration under section 3(a)(3) of Securities Act of 1933, as amended. Canada
Bills constitute direct, unconditional obligations of Her Majesty in right of
Canada and are a direct charge on, and payable out of the Consolidated Revenue
Fund of Canada. Export Development Company and Canadian Wheat Board are crown
corporations and agents of Her Majesty in right of Canada. Provincial
obligations have the full faith and credit of the provincial governments.
LENDING PORTFOLIO SECURITIES--From time to time, the Fund may lend its portfolio
securities to brokers, dealers and other financial institutions who need to
borrow securities to complete certain transactions. In connection with such
loans, the Fund will receive collateral consisting of cash, U.S. Government
Securities or irrevocable letters of credit. Such collateral will be maintained
at all times in an amount equal to at least 100% of the current market value of
the loaned securities. The Fund can increase its income through the investment
of such collateral and continues to be entitled to payments in amounts equal to
the interest, dividends or other distributions payable on the loaned security
and receives interest on the amount
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of the loan. Such loans will be terminable at any time upon specified notice.
The Fund might experience risk of loss if the institution with which it has
engaged in a portfolio loan transaction breaches its agreement with the Fund.
MANAGEMENT OF THE TRUST
TRUSTEES AND OFFICERS
The business and affairs of the Trust are managed under the direction of its
Board of Trustees. The Board of Trustees sets and reviews policies regarding the
operation of the Trust, whereas the officers perform the daily functions of the
Trust.
INVESTMENT MANAGEMENT OF THE FUND
Under the terms of the Investment Advisory Agreement, NAS, Three Nationwide
Plaza, Columbus, Ohio 43215, manages the investment of the assets and supervises
the daily business affairs of the Trust. NAS and its predecessors have managed
investments since 1965, and as of December 31, 1998 had approximately $11
billion in assets under management. NAS, an Ohio corporation, is a wholly owned
subsidiary of Nationwide Life Insurance Company, which is owned by Nationwide
Financial Services, Inc. ("NFS"). NFS, a holding company, has two classes of
common stock outstanding with different voting rights enabling Nationwide
Corporation to control NFS. Nationwide Corporation is also a holding company in
the Nationwide Insurance Enterprise. All of the Common Stock of Nationwide
Corporation is held by Nationwide Mutual Insurance Company (95.3%) and
Nationwide Mutual Fire Insurance Company (4.7%), each of which is a mutual
company owned by its policyholders.
The Fund pays NAS a fee based on average daily net assets of the Fund at the
annual rate of .40% on average net assets up to $1 billion, .38% on average net
assets of $1 billion and more up to $2 billion, .36% of average net assets of $2
billion and more up to $5 billion, and .34% on average net assets of $5 billion
and more.
PORTFOLIO MANAGER: Patricia A. Mynster, Director--Securities Investments is the
portfolio manager of the Nationwide Money Market Fund. In July 1997, Ms. Mynster
began managing the Nationwide Investing Foundation ("NIF") Money Market Fund,
the predecessor of the Nationwide Money Market Fund, and has managed short-term
investments for over 20 years. She received a Bachelor of Arts degree in
Business Administration from Otterbein College. She has held her current
position as Director--Securities Investments for the Nationwide Enterprise since
1991.
FUND ADMINISTRATION
Under the terms of the Fund Administration Agreement, the Adviser also provides
various administrative and accounting services, including daily valuation of the
Fund's shares, preparation of financial statements, tax returns and regulatory
reports. For these services, the Fund pays NAS an annual fee based on the Fund's
average daily net assets in the amount of .07% up to $250 million in assets,
0.05% on the next $750 million of assets, and 0.04% on assets of $1 billion and
more.
DISTRIBUTION PLAN
The Trust has adopted a Distribution Plan (the "Plan") under Rule 12b-1 of the
Investment Company Act of 1940 which permits the Fund to compensate the
Distributor, for expenses associated with distribution of Class R shares. Under
the Plan, the Fund would pay NAS compensation accrued daily and paid monthly at
a maximum rate of .15% of the Class R shares' average daily net assets.
Distribution expenses paid by NAS may include the costs of printing and mailing
prospectuses and sales literature to prospective investors, advertising, and
compensation to sales personnel and broker-dealers. However, NAS has agreed to
waive all of the 12b-1 fee until further written notice.
ADMINISTRATION SERVICES PLAN
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Under the terms of an Administrative Services Plan, the Fund may enter into
Servicing Agreements with entities who agree to provide certain administrative
support services in connection with the Class R shares of the Fund. Such
administrative support services include but are not limited to the following:
establishing and maintaining contractholder accounts, processing purchase and
redemption transactions, arranging for bank wires, performing contract
sub-accounting, answering inquiries regarding the contracts and the Fund,
providing periodic statements showing the account balance for beneficial owners
or for plan participants or insurance company separate accounts, transmitting
proxy statements, periodic reports, updated prospectuses and other
communications to shareholders as necessary and, with respect to meetings of
shareholders, collecting tabulating and forwarding to the Trust executed proxies
and obtaining such other information and performing such other services as may
reasonably be required.
As authorized by the Administrative Services Plan, the Trust has entered into a
Servicing Agreement, pursuant to which Nationwide Investment Services
Corporation has agreed to provide certain administrative support services in
connection with Class R shares held beneficially by its customers. In
consideration for providing administrative support services, Nationwide
Financial Services, Inc. and other entities with which the Trust may enter into
Servicing Agreements, including NAS, will receive a fee, computed at the annual
rate of up to 0.25% of the average daily net assets of the Class R shares held
by customers of Nationwide Life Insurance Company or such other entity.
OTHER SERVICES
The Distributor, NAS is located at Three Nationwide Plaza, Columbus, Ohio 43215.
The Transfer and Dividend Disbursing Agent, Nationwide Investor Services, Inc.
("NISI"), Three Nationwide Plaza, Columbus, Ohio 43215, serves as transfer agent
and dividend disbursing agent for the Trust. The Fund pays NISI a fee for such
services at the annual rate of 0.01% of the Fund's average daily net assets
attributable to the Class R shares. NISI is a wholly owned subsidiary of NAS.
INVESTMENT IN FUND SHARES
Insurance company accounts may purchase Class R shares using purchase payments
received on Contracts issued to qualified plans. Programs offered to qualified
plans through broker-dealers or the Nationwide Trust Company may also purchase
Class R shares of the Fund. There is no sales charge for Class R shares, and all
shares are sold at net asset value. Qualified plan or Contract-directed
purchases, exchanges and redemptions are handled in accordance with terms of the
qualified plans or Contracts, subject to Fund restrictions contained herein.
Since the qualified plans or Contracts may have different provisions with
respect to the timing and method of purchases, exchanges and redemptions,
beneficial owners of the Class R shares should contact their designated
financial intermediary directly for details concerning transactions.
Class R shares are currently sold only to an omnibus account held by Nationwide
Trust Company. The address for this entity is One Nationwide Plaza, Columbus,
Ohio 43215.
All investments in the Fund are credited to the shareholder's account in the
form of full and fractional shares of the Fund (rounded to the nearest 1/1000 of
a share). The Trust does not issue share certificates.
SHARE REDEMPTION
Redemptions are processed on any day on which the Trust is open for business and
are effected at net asset value next determined after the redemption orders are
received by the Trust's transfer agent, NISI. The net asset value per share for
the Fund is determined as of the close of regular trading on the New York Stock
Exchange (usually 4 P.M. Eastern Time), each day that the exchange is open and
on such other days as the Board of Trustees determines and on days in which
there is sufficient trading in portfolio securities of the Fund to materially
affect the net asset value of the Fund. The Trust will not compute net asset
value on customary national business holidays, including the following:
Christmas Day, New Year's Day, Martin Luther King Jr. Day, President's Day, Good
Friday, Memorial Day, Independence Day, Labor Day, and Thanksgiving Day. The net
asset value per share of a class is calculated by adding the value of all
securities and other
8
<PAGE> 13
assets in the Fund's portfolio allocable to such class, Fund, deducting any
liabilities, allocable to such class and any other liabilities charged directly
to that class and dividing by the number of shares outstanding in the class.
In determining the Fund's net asset value, portfolio securities are valued at
amortized cost, which approximates market value, in accordance with Rule 2a-7 of
the 1940 Act. Expenses and fees are accrued daily.
INCOME DIVIDENDS AND CAPITAL GAINS
Substantially all of the net investment income, if any, of the Fund will be
declared daily and paid as dividends monthly in the form of additional Class R
shares of the Fund. In those years in which sales of the Fund's portfolio
securities result in net realized capital gains, these gains will be declared
and caused to be paid to shareholders in December.
TAX STATUS
The Fund intends to qualify for treatment under Subchapter M of the Internal
Revenue Code of 1986, as amended (the "Code") and, therefore, must distribute
all or substantially all net investment income and capital gains to shareholders
annually. In general, if the Fund distributes all of its net investment income,
it is not required to pay any Federal income taxes. In addition to Federal
income tax, if the Fund fails to distribute the required portion of investment
income or capital gains in any year, it will be subject to a non-deductible 4%
excise tax on the amount which it failed to distribute. The Fund intends to make
distributions in sufficient amounts to avoid the imposition of this excise tax.
ADDITIONAL INFORMATION
DESCRIPTION OF SHARES - The Trust presently offers fifteen series of shares of
beneficial interest, without par value, one of which is the Fund. The Fund is
offered in two separate classes: Class R shares and Prime Shares, and you have
an interest in the assets of the Fund. Shares of a particular class are equal in
all respects to the other shares of that class. In the event of liquidation of
the Fund, shares of the same class will share pro rata in the distribution of
the net assets of the Fund with all other shares of that class. All shares are
without par value, and when issued and paid for, are fully paid and
nonassessable by the Trust. Shares may be exchanged or converted as described
above but will have no preference, conversion, exchange or preemptive rights.
VOTING RIGHTS - Shareholders of each class of shares have one vote for each
share held and a proportionate fractional vote for any proportional share held.
An annual or special meeting of shareholders to conduct necessary business is
not required in the Declaration of Trust, the 1940 Act or other authority
except, under certain circumstances, to amend the Declaration of Trust, the
Investment Advisory Agreement, fundamental investment objectives, investment
policies, investment restrictions, to elect and remove Trustees, to reorganize
the Trust or any series or class thereof and to act upon certain other business
matters. With regard to termination, sale of assets, or change of investment
objectives, policies and restrictions or the approval of an Investment Advisory
Agreement, the right to vote is limited to the holders of shares of the
particular fund affected by the proposal. In addition, holders of Class R shares
will vote as a class and not with holders of any other class with respect to any
action regarding the Distribution Plan. To the extent that such a meeting is not
required, the Trust does not intend to have an annual or special meeting of
shareholders.
The Trust has represented to the Commission that the Trustees will call a
special meeting of shareholders for purposes of considering the removal of one
or more Trustees upon written request therefore from shareholders holding not
less than 10% of outstanding votes of the Trust and the Trust will assist in
communicating with other shareholders as required by Section 16(c) of the 1940
Act. At such meeting, a quorum of shareholders (constituting a majority of votes
attributable to all outstanding shares of the Trust), by majority vote, has the
power to remove one or more Trustees.
SHAREHOLDER INQUIRIES - All inquiries regarding the Fund should be directed to
the Trust at the telephone number or address shown on the cover page of this
Prospectus.
PERFORMANCE ADVERTISING FOR THE FUND
9
<PAGE> 14
The Fund may advertise current seven-day yield quotations computed by
determining the net change, exclusive of capital changes, in the value of a
hypothetical pre-existing account having a balance of one share at the beginning
of the base period to obtain a base period return then multiplying the base
period return by (365/7). For proposes of this calculation, the net change in
the account value reflects the value of additional shares purchased with
dividends from the original share, and dividends declared on both the original
share and any such additional shares. The Fund's effective yield represents a
compounding on an annualized basis of the current yield quotations.
The Fund may use historical performance in advertisements, sales literature,
semi-annual and annual reports and the prospectus. Such figures will include
quotations of average annual (compound) total return for the most recent one,
five, and ten year periods (or the life of the Fund if less). Average annual
(compound) total return represents the average annual percentage change in value
of an investment for the specified periods assuming a redemption of the
investment at the end of such periods. It reflects the changes in the share
price and assumes reinvestment of all dividends and distributions at net asset
value. Average annual (compound) total return reflects the effect of maximum
sales charges. Standardized yield and total return quotations will be computed
separately for Class R shares and Prime Shares. Because of differences in the
fees and/or expenses borne by Class R shares and Prime Shares, the net yields
and total returns on each class can be expected, at any given time, to differ
from class to class for the same period.
The Fund may also choose to show nonstandard returns including total return and
simple average total return. Nonstandard returns may or may not reflect
reinvestment of all dividends and capital gains.
Total return represents the cumulative percentage change in the value of an
investment over time, calculated by subtracting the original investment from the
redeemable value and dividing the result by the original amount of the
investment. The simple average total return is calculated by dividing total
return by the number of years in the period, and unlike average annual
(compound) total return, does not reflect compounding.
RANKINGS AND RATINGS IN FINANCIAL PUBLICATIONS
The Fund may report its performance relative to other mutual funds or
investments. The performance comparisons are made to: other mutual funds with
similar objectives; other mutual funds with different objectives; or to other
sectors of the economy. Other investments which the Fund may be compared to
include, but are not limited to: precious metals; real estate; stocks and bonds;
closed-end funds; market indexes; fixed-rate, insured bank CDs, bank money
market deposit accounts and passbook savings; and the Consumer Price Index.
Normally these rankings and ratings are published by independent tracking
services and publications of general interest including, but not limited to:
Lipper Analytical Services, Inc., CDA/Wiesenberger, Morningstar, Donoghue's,
Schabaker Investment Management, Kanon Bloch Carre & Co.; magazines such as
Money, Fortune, Forbes, Kiplinger's Personal Finance Magazine, Smart Money,
Mutual Funds, Worth, Financial World, Consumer Reports, Business Week, Time,
Newsweek, U.S. News and World Report; and other publications such as the Wall
Street Journal, Barron's, Columbus Dispatch, Investor's Business Daily, and
Standard & Poor's Outlook.
YEAR 2000
NAS has developed a plan to address issues related to Year 2000. The problem
relates to many existing computer programs using only two digits to identify a
year in the date field. These programs were designed and developed without
considering the impact of the upcoming change in the century. If not corrected,
many computer applications could fail or create erroneous results by or at the
Year 2000. NAS has been evaluating its exposure to the Year 2000 issue through a
review of all its operating systems as well as dependencies on the systems of
others since 1996. NAS expects all system changes and replacements needed to
achieve Year 2000 compliance to be completed by the end of 1998. Compliance
testing will be completed in the first quarter of 1999.
10
<PAGE> 15
<TABLE>
<CAPTION>
CONTENTS
<S> <C>
Summary of Expenses 2
Financial Highlights 3
Investment Objective and Policies 3
Investment Techniques, Considerations and Risk Factors 4
Management of the Trust 7
Investment in Fund Shares 8
Share Redemption 8
Income Dividends and Capital Gains 9
Tax Status 9
Additional Information 9
Performance Advertising for the Fund 9
Ranking and Ratings in Financial Publications 10
Year 2000 10
</TABLE>
INVESTMENT ADVISER AND UNDERWRITER
Nationwide Advisory Services, Inc.
Three Nationwide Plaza
Columbus, Ohio 43215
TRANSFER AGENT AND DIVIDEND DISBURSING AGENT
Nationwide Investors Services, Inc.
Box 1492
Three Nationwide Plaza
Columbus, Ohio 43216
INDEPENDENT AUDITORS
KPMG LLP
Two Nationwide Plaza
Columbus, Ohio 43215
LEGAL COUNSEL
Druen, Dietrich, Reynolds & Koogler
One Nationwide Plaza
Columbus, Ohio 43215
CUSTODIAN
The Fifth Third Bank
38 Fountain Square Plaza
Cincinnati, Ohio 45263
11
<PAGE> 16
PART B:
STATEMENT OF ADDITIONAL INFORMATION JANUARY 5, 1999
NATIONWIDE INVESTING FOUNDATION III
NATIONWIDE MONEY MARKET FUND (the "Fund") - Class R shares
This Statement of Additional Information is not a prospectus. It
contains information in addition to and more detailed than that set forth in the
prospectus for the Fund and should be read in conjunction with the prospectus
dated January 5, 1999 for the Class R shares of the Fund. The prospectus may be
obtained from Nationwide Advisory Services, Inc. ("NAS"), P.O. Box 1492, Three
Nationwide Plaza, Columbus, Ohio 43216.
Terms not defined in this Statement of Additional Information have the
meanings assigned to them in the Prospectus.
TABLE OF CONTENTS
General Information and History 1
Investment Objectives and Policies 1
Investment Restrictions 7
Trustees and Officers of the Trust 8
Investment Advisory and Other Services 10
Brokerage Allocation 15
Calculation of Net Asset Value of the Fund 15
Calculating Fund Yield 16
Nonstandard Returns 16
Ranking and Rankings in Financial Publications 17
Additional General Tax Information 17
Major Shareholders 19
Financial Statements 19
Appendix 20
GENERAL INFORMATION AND HISTORY
Nationwide Investing Foundation III ("NIF III") is an open-end management
investment company, created under the laws of Ohio by a Declaration of Trust
dated as of October 30, 1997.
INVESTMENT OBJECTIVES AND POLICIES
ADDITIONAL INFORMATION ON PORTFOLIO INSTRUMENTS AND INVESTMENT POLICIES
The following information supplements the discussion of the Funds' investment
objectives and policies discussed in the Prospectus. The investment objective of
the Fund is fundamental and may not be changed without shareholder approval. The
investment policies and types of permitted investments described here may be
changed without approval by the shareholders. There is no guarantee that the
Fund's investment objective will be realized.
DEBT OBLIGATIONS. The Fund may invest in debt obligations. Debt obligations are
subject to the risk of an issuer's inability to meet principal and interest
payments on its obligations ("credit risk") and are subject to price volatility
due to such factors as interest rate sensitivity, market perception of the
creditworthiness of the issuer, and general market liquidity ("market risk").
Lower-rated securities are more likely to react to developments affecting market
and credit risk than are more highly rated securities, which react primarily to
movements in the general level of interest rates.
Ratings as Investment Criteria. High-grade debt obligations are
characterized as such based on their ratings by nationally recognized
statistical
<PAGE> 17
rating organizations ("NRSROs"). In general, the ratings of NRSROs represent the
opinions of these agencies as to the quality of securities that they rate. Such
ratings, however, are relative and subjective, and are not absolute standards of
quality and do not evaluate the market risk of the securities. These ratings are
used by the Fund as initial criteria for the selection of portfolio securities.
Among the factors that will be considered by NAS are the long-term ability of
the issuer to pay principal and interest and general economic trends. The
Appendix to this Statement of Additional Information contains further
information about the rating categories of NRSROs and their significance.
Subsequent to its purchase by the Fund, an issue of securities may
cease to be rated or its rating may be reduced below the minimum required for
purchase by the Fund. In addition, it is possible that an NRSRO might not change
its rating of a particular issue to reflect subsequent events. None of these
events generally will require the sale of such securities, but NAS will consider
such events in determining whether the Fund should continue to hold the
securities. In addition, to the extent that the ratings change as a result of
changes in such NRSROs or their rating systems, or due to a corporate
reorganization, the Fund will attempt to use comparable ratings as standards for
its investments in accordance with its investment objective and policies.
MONEY MARKET INSTRUMENTS. The Fund may invest in certain types of money market
instruments which may include the following types of instruments:
-- obligations with remaining maturities of 397 days or less issued or
guaranteed as to interest and principal by the U.S. Government, its
agencies, or instrumentalities, or any federally chartered corporation, and
obligations of the Canadian government and their provinces, their agencies
and instrumentalities';
-- repurchase agreements;
-- certificates of deposit, time deposits and bankers' acceptances issued
by domestic banks (including their branches located outside the United
States (Eurodollars) and subsidiaries located in Canada), domestic branches
of foreign banks (Yankees dollars), savings and loan associations and
similar institutions;
-- commercial paper, which are short-term unsecured promissory notes issued
by corporations in order to finance their current operations. Generally the
commercial paper will be rated within the top two rating categories by an
NRSRO, or if not rated, is issued and guaranteed as to payment of principal
and interest by companies which at the date of investment have outstanding
debt issue with a high quality rating;
-- adjustable and variable rate instruments including callable notes;
-- short-term (maturing in 397 days or less) corporate obligations rated
within the top two categories by an NRSRO;
-- bank loan participation agreements representing obligations of
corporations and banks having a high quality short-term rating, at the date
of investment, and under which the Fund will look to the creditworthiness
of the lender bank, which is obligated to make payments of principal and
interest on the loan, as well as to creditworthiness of the borrower.
ASSET-BACKED SECURITIES - The Fund may invest in asset-backed securities. The
underlying assets of asset-backed securities include assets such as motor
vehicle installment sales contracts, other installment loan contracts, home
equity loans, leases of various types of property and receivables from credit
card and other revolving credit arrangements. Payments or distributions of
principal and interest
2
<PAGE> 18
on the asset-backed securities may be supported by non-governmental credit
enhancements which may include letters of credit, reserve funds,
overcollateralization, or guarantees by third parties.
REPURCHASE AGREEMENTS. The Fund may enter into repurchase agreements with
certain banks or non-bank dealers. In connection with the purchase of a
repurchase agreement by the Fund, the Fund's custodian, or a subcustodian, will
have custody of, and will hold in a segregated account, securities acquired by
the Fund under a repurchase agreement. Repurchase agreements are contracts under
which the buyer of a security simultaneously commits to resell the security to
the seller at an agreed-upon price and date. Repurchase agreements are
considered by the staff of the Securities and Exchange Commission (the "SEC") to
be loans by the Fund. Repurchase agreements may be entered into with respect to
securities of the type in which the Fund may invest or government securities
regardless of their remaining maturities. The Fund will require that additional
securities be deposited with its custodian if the value of the securities
purchased should decrease below resale price. Repurchase agreements involve
certain risks in the event of default or insolvency by the other party,
including possible delays or restrictions upon the Fund's ability to dispose of
the underlying securities, the risk of a possible decline in the value of the
underlying securities during the period in which the Fund seeks to assert its
rights to the securities, the risk of incurring expenses associated with
asserting those rights and the risk of losing all or part of the income from the
repurchase agreement.
WHEN-ISSUED SECURITIES AND DELAYED-DELIVERY TRANSACTIONS. The Fund may purchase
securities on a "when-issued" or "delayed delivery" basis (i.e., payment or
delivery occurs beyond the normal settlement date at a stated price and yield).
When-issued transactions normally settle within 45 days. The payment obligation
and the interest rate, if applicable, that will be received on when-issued
securities are fixed at the time the Fund enters into the commitment to buy such
securities. Due to fluctuations in the value of securities purchased or sold on
a when-issued or delayed-delivery basis, the yields obtained on or prices of
such securities may be higher or lower than the yields or prices available in
the market on the dates when the investments are actually delivered to the
buyers.
When the Fund agrees to purchase when-issued or delayed-delivery
securities, to the extent required by the SEC, the Fund's custodian will set
aside permissible liquid assets equal to the amount of the commitment in a
segregated account. Normally, the custodian will set aside portfolio securities
to satisfy a purchase commitment, and in such a case the Fund may be required
subsequently to place additional assets in the segregated account in order to
ensure that the value of the account remains equal to the amount of the Fund's
commitment. It may be expected that the Fund's net assets will fluctuate to a
greater degree when it sets aside portfolio securities to cover such purchase
commitments than when it sets aside cash. In addition, because the Fund will set
aside cash or liquid portfolio securities to satisfy its purchase commitments in
the manner described above, such Fund's liquidity and the ability of NAS to
manage it might be affected in the event its commitments to purchase
"when-issued" securities ever exceeded 25% of the value of its total assets.
Under normal market conditions, however, the Fund's commitment to purchase
"when-issued" or "delayed-delivery" securities will not exceed 25% of the value
of its total assets. When the Fund engages in when-issued or delayed-delivery
transactions, it relies on the other party to consummate the trade. Failure of
the seller to do so may result in a Fund incurring a loss or missing an
opportunity to obtain a price considered to be advantageous.
The Fund will engage in "when-issued" or "delayed delivery"
transactions only for the purpose of acquiring portfolio securities consistent
with the Fund's investment objectives and policies and not for investment
leverage.
3
<PAGE> 19
LENDING PORTFOLIO SECURITIES. The Fund may lend its portfolio securities to
brokers, dealers and other financial institutions, provided it receives cash
collateral which at all times is maintained in an amount equal to at least 100%
of the current market value of the securities loaned. By lending its portfolio
securities, the Fund can increase its income through the investment of the cash
collateral. For the purposes of this policy, the Fund considers U.S. Government
securities or letters of credit issued by banks whose securities meet the
standards for investment by the Fund to be the equivalent of cash. From time to
time, the Fund may return to the borrower or a third party which is unaffiliated
with it, and which is acting as a "placing broker," a part of the interest
earned from the investment of collateral received for securities loaned.
The SEC currently requires that the following conditions must be met
whenever portfolio securities are loaned: (1) the Fund must receive from the
borrower at least 100% collateral of the type discussed in the preceding
paragraph; (2) the borrower must increase such collateral whenever the market
value of the securities loaned rises above the level of such collateral; (3) the
Fund must be able to terminate the loan at any time; (4) the Fund must receive
reasonable interest on the loan, as well as any dividends, interest or other
distributions payable on the loaned securities, and any increase in market
value; (5) the Fund may pay only reasonable custodian fees in connection with
the loan; and (6) while any voting rights on the loaned securities may pass to
the borrower, the Trust's Board of Trustees must be able to terminate the loan
and regain the right to vote the securities if a material event adversely
affecting the investment occurs. These conditions may be subject to future
modification. Loan agreements involve certain risks in the event of default or
insolvency of the other party including possible delays or restrictions upon the
Fund's ability to recover the loaned securities or dispose of the collateral for
the loan.
FOREIGN SECURITIES. The Fund may invest in Canadian and Provincial obligations.
Investors in the Fund should recognize that investing in foreign securities
involves certain special considerations which are not typically associated with
investing in domestic securities. Since investments in foreign companies will
frequently involve currencies of foreign countries, and since the Fund may hold
securities and funds in foreign currencies, a Fund may be affected favorably or
unfavorably by changes in currency rates and in exchange control regulations, if
any, and may incur costs in connection with conversions between various
currencies. Fixed commissions on foreign securities exchanges are generally
higher than negotiated commissions on United States exchanges, although the Fund
endeavors to achieve the most favorable net results on its portfolio
transactions. There is generally less government supervision and regulation of
securities exchanges, brokers and listed companies in foreign countries than in
the United States. In addition, with respect to certain foreign countries, there
is the possibility of exchange control restrictions, expropriation or
confiscatory taxation, and political, economic or social instability, which
could affect investments in those countries. Foreign securities, such as those
purchased by the Fund, may be subject to foreign government taxes and higher
custodian fees which could reduce the yield on such securities.
Certain foreign governments levy withholding taxes against interest
income. Although in some countries a portion of these taxes are recoverable, the
non-recovered portion of foreign withholding taxes will reduce the income
received from investments in such countries.
Eurodollar and Yankee Obligations. Eurodollar bank obligations are
dollar-denominated certificates of deposit and time deposits issued outside the
U.S. capital markets by foreign branches of U.S. banks and by foreign banks.
Yankee bank obligations are dollar-denominated obligations issued in the U.S.
capital markets by foreign banks.
4
<PAGE> 20
Eurodollar and Yankee bank obligations are subject to the same risks
that pertain to domestic issues, notably credit risk, market risk and liquidity
risk. Additionally, Eurodollar (and to a limited extent, Yankee) bank
obligations are subject to certain sovereign risks. One such risk is the
possibility that a sovereign country might prevent capital, in the form of
dollars, from flowing across their borders. Other risks include: adverse
political and economic developments; the extent and quality of government
regulation of financial markets and institutions; the imposition of foreign
withholding taxes, and the expropriation or nationalization of foreign issuers.
However, Eurodollar and Yankee bank obligations held in the Fund will undergo
the same credit analysis as domestic issues in which the Fund invests, and will
have at least the same financial strength as the domestic issuers approved for
the Fund.
RESTRICTED, NON-PUBLICLY TRADED AND ILLIQUID SECURITIES. The Fund may not invest
more than 10% of its net assets, in the aggregate, in illiquid securities,
including repurchase agreements which have a maturity of longer than seven days,
time deposits maturing in more than seven days and securities that are illiquid
because of the absence of a readily available market or legal or contractual
restrictions on resale. At this time the Fund does not intend to invest more
than 5% of its net assets in illiquid securities. Repurchase agreements subject
to demand are deemed to have a maturity equal to the notice period.
Historically, illiquid securities have included securities subject to
contractual or legal restrictions on resale because they have not been
registered under the Securities Act of 1933, as amended (the "Securities Act"),
securities which are otherwise not readily marketable and repurchase agreements
having a maturity of longer than seven days. Securities which have not been
registered under the Securities Act are referred to as private placements or
restricted securities and are purchased directly from the issuer or in the
secondary market. Investment companies do not typically hold a significant
amount of these restricted or other illiquid securities because of the potential
for delays on resale and uncertainty in valuation. Limitations on resale may
have an adverse effect on the marketability of portfolio securities, and the
Fund might be unable to dispose of restricted or other illiquid securities
promptly or at reasonable prices and might thereby experience difficulty
satisfying redemptions within seven days. The Fund might also have to register
such restricted securities in order to dispose of them resulting in additional
expense and delay. Adverse market conditions could impede such a public offering
of securities.
In recent years, however, a large institutional market has developed
for certain securities that are not registered under the Securities Act.
Institutional investors depend on an efficient institutional market in which the
unregistered security can be readily resold or on an issuer's ability to honor a
demand for repayment. The fact that there are contractual or legal restrictions
on resale to the general public or to certain institutions may not be indicative
of the liquidity of such investments.
The SEC has adopted Rule 144A under the Securities Act which allows for
a broader institutional trading market for securities otherwise subject to
restriction on resale to the general public. Rule 144A establishes a "safe
harbor" from the registration requirements of the Securities Act for resales of
certain securities to qualified institutional buyers. It is anticipated that the
market for certain restricted securities such as institutional commercial paper
will expand further as a result of this regulation and use of automated systems
for the trading, clearance and settlement of unregistered securities of domestic
and foreign issuers, such as the PORTAL System sponsored by the National
Association of Securities Dealers, Inc.
Any such restricted securities will be considered to be illiquid for
purposes of the Fund's limitations on investments in illiquid securities unless,
pursuant to
5
<PAGE> 21
procedures adopted by the Board of Trustees of the Trust, NAS has determined
such securities to be liquid because such securities are eligible for resale
pursuant to Rule 144A and are readily saleable. To the extent that qualified
institutional buyers may become uninterested in purchasing Rule 144A securities,
the Fund's level of illiquidity may increase.
NAS will monitor the liquidity of restricted securities in the Fund. In
reaching liquidity decisions, NAS may consider the following factors: (A) the
unregistered nature of the security; (B) the frequency of trades and quotes for
the security; (C) the number of dealers wishing to purchase or sell the security
and the number of other potential purchasers; (D) dealer undertakings to make a
market in the security and (E) the nature of the security and the nature of the
marketplace trades (e.g., the time needed to dispose of the security, the method
of soliciting offers and the mechanics of the transfer).
BORROWING. The Fund may borrow money from banks, limited by the Fund's
fundamental investment restriction to 33-1/3% of its total assets (including the
amount borrowed). In addition, the Fund may borrow up to an additional 5% of its
total assets from banks for temporary or emergency purposes. The Fund will not
purchase securities when bank borrowings exceed 5% of the Fund's total assets.
The Fund expects that its borrowings will be on a secured basis. In
such situations, either the custodian will segregate the pledged assets for the
benefit of the lender or arrangements will be made with a suitable subcustodian,
which may include the lender. The Fund has established a line-of-credit ("LOC")
with its custodian by which it may borrow for temporary or emergency purposes.
The Fund intends to use the LOC to meet large or unexpected redemptions that
would otherwise force the Fund to liquidate securities under circumstances which
are unfavorable to the Fund's remaining shareholders.
BANK OBLIGATIONS. Bank obligations that may be purchased by the Fund include
certificates of deposit, banker's acceptances and fixed time deposits. A
certificate of deposit is a short-term negotiable certificate issued by a
commercial bank against funds deposited in the bank and is either
interest-bearing or purchased on a discount basis. A bankers' acceptance is a
short-term draft drawn on a commercial bank by a borrower, usually in connection
with an international commercial transaction. The borrower is liable for payment
as is the bank, which unconditionally guarantees to pay the draft at its face
amount on the maturity date. Fixed time deposits are obligations of branches of
U.S. banks or foreign banks which are payable at a stated maturity date and bear
a fixed rate of interest. Although fixed time deposits do not have a market,
there are no contractual restrictions on the right to transfer a beneficial
interest in the deposit to a third party.
Bank obligations may be general obligations of the parent bank or may
be limited to the issuing branch by the terms of the specific obligations or by
government regulation.
FLOATING AND VARIABLE RATE INSTRUMENTS. The Fund may invest in floating and
variable rate instruments. Certain of the floating or variable rate obligations
that may be purchased by the Fund may carry a demand feature that would permit
the holder to tender them back to the issuer of the instrument or to a third
party at par value prior to maturity. Some of the demand instruments purchased
by the Fund are not traded in a secondary market and derive their liquidity
solely from the ability of the holder to demand repayment from the issuer or
third party providing credit support. If a demand instrument is not traded in a
secondary market, the Fund will nonetheless treat the instrument as "readily
marketable" for the purposes of its investment restriction limiting investments
in illiquid securities unless the demand feature has a notice period of more
than seven days in which case the instrument will be characterized as "not
readily marketable" and therefore illiquid.
6
<PAGE> 22
The Fund's right to obtain payment at par on a demand instrument could
be affected by events occurring between the date the Fund elects to demand
payment and the date payment is due that may affect the ability of the issuer of
the instrument or third party providing credit support to make payment when due,
except when such demand instruments permit same day settlement. To facilitate
settlement, these same day demand instruments may be held in book entry form at
a bank other than the Fund's custodian subject to a subcustodian agreement
approved by the Fund between that bank and the Fund's custodian.
INVESTMENT RESTRICTIONS
The following are fundamental investment restrictions of the Fund which cannot
be changed without the authorization of the majority of the outstanding shares
of the Fund for which a change is proposed.
THE FUND:
- - May not purchase securities of any one issuer, other than obligations
issued or guaranteed by the U.S. Government, its agencies or
instrumentalities, if, immediately after such purchase, more than 5% of
the Fund's total assets would be invested in such issuer or the Fund
would hold more than 10% of the outstanding voting securities of the
issuer, except that 25% or less of the Fund's total assets may be
invested without regard to such limitations. There is no limit to the
percentage of assets that may be invested in U.S. Treasury bills,
notes, or other obligations issued or guaranteed by the U.S.
Government, its agencies or instrumentalities. The Fund will be deemed
to be in compliance with this restriction so long as it is in
compliance with Rule 2a-7 under the 1940 Act, as such Rule may be
amended from time to time.
- - May not borrow money or issue senior securities, except that the Fund
may enter into reverse repurchase agreements and may otherwise borrow
money and issue senior securities as and to the extent permitted by the
1940 Act or any rule, order or interpretation thereunder.
- - May not act as an underwriter of another issuer's securities, except
to the extent that the Fund may be deemed an underwriter within the
meaning of the Securities Act in connection with the purchase and sale
of portfolio securities.
- - May not purchase or sell real estate, except that the Fund may acquire
real estate through ownership of securities or instruments and may
purchase or sell securities issued by entities or investment vehicles
that own or deal in real estate (including interests therein) or
instruments secured by real estate (including interests therein).
- - May not purchase or sell commodities or commodities contracts, except
to the extent disclosed in the current Prospectus of the Fund.
- - May not lend any security or make any other loan, except that the Fund
may purchase or hold debt securities and lend portfolio securities in
accordance with its investment objective and policies, make time
deposits with financial institutions and enter into repurchase
agreements.
- - May not purchase the securities of any issuer if, as a result, 25% or
more than (taken at current value) of the Fund's total assets would be
invested in the securities of issuers, the principal activities of
which are in the same industry. This limitation does not apply to
securities issued by the U.S.
7
<PAGE> 23
Government or its agencies or instrumentalities and obligations issued by
state, county or municipal governments. The following industries are
considered separate industries for purposes of this investment restriction:
electric, natural gas distribution, natural gas pipeline, combined electric
and natural gas, and telephone utilities, captive borrowing conduit,
equipment finance, premium finance, leasing finance, consumer finance and
other finance.
The following are the non-fundamental operating policies of the Fund which may
be changed by the Board of Trustees of the Trust without shareholder approval:
The Fund may not:
- - Sell securities short, unless the Fund owns or has the right to obtain
securities equivalent in kind and amount to the securities sold short or
unless it covers such short sales as required by the current rules and
positions of the SEC or its staff, and provided that short positions in
forward currency contracts, options, futures contracts, options on futures
contracts, or other derivative instruments are not deemed to constitute
selling securities short.
- - Purchase securities on margin, except that the Fund may obtain such
short-term credits as are necessary for the clearance of transactions; and
provided that margin deposits in connection with options, futures
contracts, options on futures contracts, transactions in currencies or
other derivative instruments shall not constitute purchasing securities on
margin.
- - Purchase or otherwise acquire any security if, as a result, more than 10%
of its net assets would be invested in securities that are illiquid.
- - Purchase securities of other investment companies except (a) in connection
with a merger, consolidation, acquisition, reorganization or offer of
exchange, or (b) to the extent permitted by the 1940 Act or any rules or
regulations thereunder or pursuant to any exemptions therefrom.
- - Pledge, mortgage or hypothecate any assets owned by the Fund in excess of
33 1/3% of the Fund's total assets at the time of such pledging, mortgaging
or hypothecating.
TRUSTEES AND OFFICERS
OF THE TRUST
TRUSTEES AND OFFICERS
The principal occupation of the Trustees and Officers during the last five
years, their ages, their addresses and their affiliations are:
JOHN C. BRYANT, Trustee*, Age 63
411 Oak St., Suite 306, Cincinnati, Ohio 45219
Dr. Bryant is Executive Director, Cincinnati Youth Collaborative, a partnership
of business, government, schools and social service agencies to address the
educational needs of students. He was formerly Professor of Education,
Wilmington College.
C. BRENT DEVORE, Trustee, Age 58
North Walnut and West College Avenue, Westerville, Ohio
Dr. DeVore is President of Otterbein College.
SUE A. DOODY, Trustee, Age 64
8
<PAGE> 24
169 East Beck Street, Columbus, Ohio
Ms. Doody is President of Lindey's Restaurant, Columbus, Ohio. She is an active
member of the Greater Columbus Area Chamber of Commerce Board of Trustees.
ROBERT M. DUNCAN, Trustee*, Age 71
1397 Haddon Road, Columbus, Ohio
Mr. Duncan is a member of the Ohio Elections Commission. He was formerly
Secretary to the Board of Trustees of The Ohio State University. Prior to that,
he was Vice President and General Counsel of The Ohio State University.
CHARLES L. FUELLGRAF, JR., Trustee*+, Age 67
600 South Washington Street, Butler, Pennsylvania
Mr. Fuellgraf is Chief Executive Officer of Fuellgraf Electric Company, an
electrical construction and engineering company. He is a Director of the
Nationwide Insurance Companies and associated companies.
THOMAS J. KERR, IV, Trustee*, Age 65
4890 Smoketalk Lane, Westerville, Ohio
Dr. Kerr is President Emeritus of Kendall College. He was formerly President of
Grant Hospital Development Foundation.
DOUGLAS F. KRIDLER, Trustee, Age 43
55 E. State Street, Columbus, Ohio
Mr. Kridler is President of the Columbus Association of Performing Arts.
DIMON R. MCFERSON, Trustee*+, Age 61
One Nationwide Plaza, Columbus, Ohio
Mr. McFerson is President and Chief Executive Officer of the Nationwide
Insurance Enterprise.
NANCY C. THOMAS, Trustee+, Age 64
10835 Georgetown Road, NE, Louisville, Ohio
Ms. Thomas is a farm owner and operator. She is also a Director of the
Nationwide Insurance Companies and associated companies.
HAROLD W. WEIHL, Trustee+, Age 66
14282 King Road, Bowling Green, Ohio
Mr. Weihl is a owner and operator of Weihl Farms. He is also a Director of the
Nationwide Insurance Companies and associated companies.
DAVID C. WETMORE, Trustee, Age 50
11495 Sunset Hills Rd - Suite #210, Reston, Virginia
Mr. Wetmore is the Managing Director of The Updata Capital, a venture capital
firm.
JAMES F. LAIRD, JR., Treasurer, Age 42
Three Nationwide Plaza, Columbus, Ohio
Mr. Laird is Vice President and General Manager of Nationwide Advisory Services,
Inc., the Distributor and Investment Manager.
CHRISTOPHER A. CRAY, Assistant Treasurer, Age 40
Three Nationwide Plaza, Columbus, Ohio
Mr. Cray is Treasurer of Nationwide Advisory Services, Inc., the Distributor and
Investment Manager. Prior to that he was Director - Corporate Accounting of
Nationwide Insurance Enterprise.
ELIZABETH A. DAVIN, Secretary, Age 34
Three Nationwide Plaza, Columbus, Ohio
Ms. Davin is Counsel of Druen, Dietrich, Reynolds & Koogler, the Trust's legal
counsel.
9
<PAGE> 25
+ A Trustee who is an "interested person" of the Trust as defined in the
Investment Company Act.
*Members of the Executive Committee. Mr. McFerson is Chairman. Mr. Fuellgraf is
the Alternate Member. The Executive Committee has the authority to act for the
Board of Trustees except as provided by law and except as specified in the
Trust's Bylaws.
Gasper, Bryant, Doody, DeVore, Duncan, Kerr, Kridler, Wetmore and Woodward are
also Trustees, and Laird, Cray and Davin are also officers of Nationwide
Separate Account Trust and Nationwide Asset Allocation Trust, registered
investment companies in the Nationwide fund complex.
All Trustees and Officers of the Trust own less than 1% of its outstanding
shares.
The Trustees receive fees and reimbursement for expenses of attending
board meetings from the Trust. NAS reimburses the Trust for fees and expenses
paid to Trustees who are interested persons of the Trust. The Compensation Table
below sets forth the total compensation to be paid to the Trustees of the Trust,
before reimbursement, for the fiscal period ended October 31, 1998. In addition,
the table sets forth the total compensation to be paid to the Trustees from all
funds in the Nationwide Fund Complex, including the predecessor investment
companies to the Trust, for the fiscal year ended October 31, 1998. Trust
officers receive no compensation from the Trust in their capacity as officers.
COMPENSATION TABLE
<TABLE>
<CAPTION>
PENSION
RETIREMENT
AGGREGATE BENEFITS ANNUAL TOTAL
COMPENSATION ACCRUED AS BENEFITS COMPENSATION
NAME OF PERSON, FROM PART OF FUND UPON FROM THE FUND
POSITION THE TRUST EXPENSES RETIREMENT COMPLEX**
<S> <C> <C> <C> <C>
John C. Bryant, Trustee $ 10,000 --0-- --0-- $21,000
C. Brent DeVore, Trustee 10,000 --0-- --0-- 12,250
Sue A. Doody, Trustee 10,000 --0-- --0-- 21,000
Robert M Duncan, Trustee 10,000 --0-- --0-- 21,000
Charles L. Fuellgraf, Jr, Trustee 10,000 --0-- --0-- 10,000
Thomas J. Kerr, IV, Trustee 10,000 --0-- --0-- 21,000
Douglas F. Kridler, Trustee 10,000 --0-- --0-- 21,000
Dimon R. McFerson, Trustee --0-- --0-- --0-- --0--
Nancy C. Thomas, Trustee 10,000 --0-- --0-- 10,000
Harold W. Weihl, Trustee 10,000 --0-- --0-- 10,000
David C. Wetmore, Trustee 10,000 --0-- --0-- 12,250
</TABLE>
**The Fund Complex includes three trusts comprised of thirty five investment
company funds or series.
INVESTMENT ADVISORY AND OTHER SERVICES
Under the terms of the Investment Advisory Agreement dated May 9, 1998,
Nationwide Advisory Services, Inc. ("NAS") manages the investment of the assets
of all of the funds in the Trust (the "Funds"), except the Morley Capital
Accumulation Fund, in accordance with the policies and procedures established by
the Trustees.
The Adviser pays the compensation of the Trustees and officers
affiliated with the Adviser. The Adviser also furnishes, at its own expense, all
necessary administrative services, office space, equipment, and clerical
personnel for servicing the investments of the Trust and maintaining its
investment advisory
10
<PAGE> 26
facilities, and executive and supervisory personnel for managing the investments
and effecting the portfolio transactions of the Trust.
The Investment Advisory Agreement also specifically provides that the
Adviser, including its directors, officers, and employees, shall not be liable
for any error of judgment, or mistake of law, or for any loss arising out of any
investment, or for any act or omission in the execution and management of the
Trust, except for willful misfeasance, bad faith, or gross negligence in the
performance of its duties, or by reason of reckless disregard of its obligations
and duties under the Agreement. The Agreement will continue in effect for an
initial period of two years and thereafter shall continue automatically for
successive annual periods provided such continuance is specifically approved at
least annually by the Trustees, or by vote of a majority of the outstanding
voting securities of the Trust, and, in either case, by a majority of the
Trustees who are not parties to the Agreement or interested persons of any such
party. The Agreement terminates automatically in the event of its "assignment",
as defined under the 1940 Act. It may be terminated as to a Fund without penalty
by vote of a majority of the outstanding voting securities of that Fund, or by
either party, on not less than 60 days written notice. The Agreement further
provides that the Adviser may render similar services to others.
The Trust pays the compensation of the Trustees who are not affiliated
with the Adviser and all expenses (other than those assumed by the Adviser),
including governmental fees, interest charges, taxes, membership dues in the
Investment Company Institute allocable to the Trust; fees under the Trust's Fund
Administration Agreement; fees and expenses of independent certified public
accountants, legal counsel, and any transfer agent, registrar, and dividend
disbursing agent of the Trust; expenses of preparing, printing, and mailing
shareholders' reports, notices, proxy statements, and reports to governmental
offices and commissions; expenses connected with the execution, recording, and
settlement of portfolio security transactions, insurance premiums, fees and
expenses of the custodian for all services to the Trust; and expenses of
calculating the net asset value of shares of the Trust, expenses of
shareholders' meetings, and expenses relating to the issuance, registration, and
qualification of shares of the Trust.
NAS, an Ohio corporation, is a wholly owned subsidiary of Nationwide
Life Insurance Company, which is owned by Nationwide Financial Services, Inc.
(NFS). NFS, a holding company, has two classes of common stock outstanding with
different voting rights enabling Nationwide Corporation (the holder of all of
the outstanding Class B common stock) to control NFS. Nationwide Corporation, is
also a holding company in the Nationwide Insurance Enterprise.
For services provided under the Investment Management Agreement, NAS
receives an annual fee paid monthly based on average daily net assets of each
Fund according to the following schedule:
<TABLE>
<CAPTION>
Fund Assets Fee
---- ------ ---
<S> <C> <C>
Nationwide Mid-Cap Growth, Nationwide $0 up to $250 million 0.60%
Growth and Nationwide Fund $250 million up to $1 billion 0.575%
$1 billion up to $2 billion 0.55%
$2 billion up to $5 billion 0.525%
$5 Billion and more 0.50%
</TABLE>
11
<PAGE> 27
<TABLE>
<S> <C> <C>
Nationwide Bond, Nationwide Tax-Free, $0 up to $250 million 0.50%
Nationwide Intermediate U.S. Government $250 million up to $1 billion 0.475%
</TABLE>
<TABLE>
<CAPTION>
Fund Assets Fee
---- ------ ---
<S> <C> <C>
Bond, and Nationwide Long-Term U.S. $1 billion up to $2 billion 0.45%
Government Bond Funds $2 billion up to $5 billion 0.425%
$5 Billion and more 0.40%
Nationwide Money Market Fund $0 up to $1 billion 0.40%
$1 billion up to $2 billion 0.38%
$2 billion up to $5 billion 0.36%
$5 Billion and more 0.34%
Nationwide S&P 500 Index Fund All assets 0.13%
Prestige Large Cap Value Up to $100 million 0.75%
$100 million or more 0.70%
Prestige Large Cap Growth Up to $150 million 0.80%
$150 million or more 0.70%
Prestige Balanced Up to $100 million 0.75%
$100 million or more 0.70%
Prestige Small Cap Up to $100 million 0.95%
$100 million or more 0.80%
Prestige International Up to $100 million 0.85%
$100 million or more 0.80%
</TABLE>
During the fiscal years ended October 31, 1998, 1997 and 1996, NAS
received the following fees from the Money Market Fund for investment advisory
services:
<TABLE>
<CAPTION>
Acquired Years Ended October 31,
Fund Fund* 1998 1997 1996
---- ----- ---- ---- ----
<S> <C> <C> <C>
Mid Cap Growth Growth of FHIT $ 61,706 $ 63,883 $ 54,053
Growth Growth of NIF 4,894,110 3,750,599 3,212,196
Nationwide Fund Nationwide Fund of NIF 9,977,231 5,938,011 4,425,921
Bond Bond of NIF 647,809 629,068 663,545
Tax-Free Income Tax-Free Income of NIF II and
Municipal Bond of FHIT 1,505,626 1,810,070 1,855,962
LT U.S. Govt. Government of FHIT 254,928 343,259 414,415
</TABLE>
12
<PAGE> 28
<TABLE>
<S> <C> <C> <C>
Intermediate U.S. Govt. U.S. Govt. of NIF II 266,473 256,016 255,149
Money Market** Money Market of NIF and
Cash Reserve of FHIT 3,857,898 3,519,727 2,969,392
</TABLE>
* As of May 9, 1998, the Funds acquired all of the assets of one or more series
of Nationwide Investing Foundation ("NIF"), Nationwide Investing Foundation II
("NIF II") and Financial Horizons Investment Trust ("FHIT") (collectively, the
"Acquired Funds"), as described above, in exchange for the assumption of the
stated liabilities of the Acquired Funds and a number of full and fractional
Class D shares of the applicable Fund (the Money Market Fund issued shares
without class designation) having an aggregate net asset value equal to the net
assets of the Acquired Funds as applicable (the "Reorganization").
** Net of waivers prior to the May 9, 1998 reorganization of $221,174, $389,150
and $328,076 for the fiscal year ended October 31, 1998, 1997, and 1996,
respectively.
During the period from July 24, 1998 (date of commencement of operations)
through October 31, 1998, NAS waived advisory fees for the S&P 500 Index Fund in
the amount of $7,315. The Large Cap Value, Large Cap Growth, Balanced, Small Cap
and International funds did not begin operations until November 2, 1998.
DISTRIBUTOR
NAS serves as agent for the Fund in the distribution of its Shares
pursuant to an Underwriting Agreement dated as of May 9, 1998 (the "Underwriting
Agreement"). Unless otherwise terminated, the Underwriting Agreement will
continue in effect until May 9, 2000, and year to year thereafter for successive
annual periods, if, as to the Fund, such continuance is approved at least
annually by (i) the Trust's Board of Trustees or by the vote of a majority of
the outstanding shares of the Fund, and (ii) the vote of a majority of the
Trustees of the Trust who are not parties to the Underwriting Agreement or
interested persons (as defined in the 1940 Act) of any party to the Underwriting
Agreement, cast in person at a meeting called for the purpose of voting on such
approval. The Underwriting Agreement may be terminated in the event of any
assignment, as defined in the 1940 Act.
In its capacity as Distributor, NAS solicits orders for the sale of
Shares, advertises and pays the costs of advertising, office space and the
personnel involved in such activities. NAS receives no compensation under the
Underwriting Agreement with the Trust.
DISTRIBUTION PLAN
The Fund has adopted a Distribution Plan (the "Plan") under Rule 12b-1
of the 1940 Act for the Class R shares which permits the Fund to compensate NAS
as the Fund's Distributor, for expenses associated with distribution of shares.
Although actual distribution expenses may be more or less, under the Plan the
Fund shall pay an annual fee in an amount not exceeding a maximum amount of .15%
of the average net assets of Class R shares of the Fund to NAS. NAS has agreed
with the Trust to waive the .15% 12b-1 fee for Class R shares of the Fund until
further notice to
13
<PAGE> 29
shareholders. Distribution expenses paid by NAS may include the costs of
marketing, printing and mailing prospectuses and sales literature to prospective
investors, advertising, and compensation to sales personnel and broker-dealers.
There were no fees paid by the Fund under the Plan during the fiscal year ended
October 31, 1998, since the class had not yet been offered to the public.
As required by Rule 12b-1, the Plan was approved by the Board of
Trustees, including a majority of the Trustees who are not interested persons of
the Fund and who have no direct or indirect financial interest in the operation
of the Plan (the "Independent Trustees"). The Plan was approved by the Board of
Trustees for the Class R shares on November 6, 1998. The Plan may be terminated
as to the Fund by vote of a majority of the Independent Trustees, or by vote of
majority of the outstanding Class R shares of the Fund. Any change in the Plan
that would materially increase the distribution cost to the Class R shares
requires Shareholder approval. The Trustees review quarterly a written report of
such costs and the purposes for which such costs have been incurred. The Plan
may be amended by the vote of the Trustees including a majority of Independent
Trustees, cast in person at a meeting called for that purpose. For so long as
the Plan is in effect, selection and nomination of those Trustees who are not
interested persons of the Trust shall be committed to the discretion of such
disinterested persons. All agreements with any person relating to the
implementation of the Plan may be terminated at any time on 60 days' written
notice without payment of any penalty, by vote of a majority of the Independent
Trustees or by a vote of the majority of the outstanding Class R shares of the
Fund. The Plan will continue in effect for successive one-year periods, provided
that each such continuance is specifically approved (i) by the vote of a
majority of the Independent Trustees, and (ii) by a vote of a majority of the
entire Board of Trustees cast in person at a meeting called for that purpose.
The Board of Trustees has a duty to request and evaluate such information as may
be reasonably necessary for them to make an informed determination of whether
the Plan should be implemented or continued. In addition the Trustees in
approving the Plan must determine that there is a reasonable likelihood that the
Plan will benefit the Fund and its Class R Shareholders.
The Board of Trustees of the Trust believes the Plan is in the best
interests of the Class R shares of the Fund since it encourages Fund growth and
maintenance of Fund assets. As the Fund grows in size, certain expenses, and
therefore total expenses per Share, may be reduced and overall performance per
Share may be improved.
NAS may enter into, from time to time, Rule 12b-1 Agreements with
selected dealers pursuant to which such dealers will provide certain services in
connection with the distribution of the Fund's Class R Shares including, but not
limited to, those discussed above.
14
<PAGE> 30
OTHER SERVICES FOR THE FUND
Under a separate Fund Administration Agreement dated May 9, 1998, NAS
also provides various administrative and accounting services, including daily
valuation of the Fund's shares and preparation of financial statements, tax
returns and regulatory reports. For these services, the Fund pays NAS an annual
fee in the amount of 0.07% on assets up to $250 million of average daily net
assets, 0.05% on the next $750 million and 0.04% on assets of $1 billion and
more.
Under the terms of an Administrative Services Plan, the Fund may enter into
Servicing Agreements with entities who agree to provide certain administrative
support services in connection with the Class R shares of the Fund. Such
administrative support services include but are not limited to the following:
establishing and maintaining contractholder accounts, processing purchase and
redemption transactions, arranging for bank wires, performing contract
subaccounting, answering inquiries regarding the contracts and the Fund,
providing periodic statements showing the account balance for beneficial owners
or for plan participants or insurance company separate accounts, transmitting
proxy statements, periodic reports, updated prospectuses and other
communications to shareholders as necessary and, with respect to meetings of
shareholders, collecting tabulating and forwarding to the Trust executed proxies
and obtaining such other information and performing such other services as may
reasonably be required.
As authorized by the Administrative Services Plan, the Trust has entered into a
Servicing Agreement, pursuant to which Nationwide Investment Services
Corporation has agreed to provide certain administrative support services in
connection with Class R shares held beneficially by its customers. In
consideration for providing administrative support services, Nationwide
Financial Services, Inc. and other entities with which the Trust may enter into
Servicing Agreements, including NAS, will receive a fee, computed at the annual
rate of up to 0.25% of the average daily net assets of the Class R shares held
by customers of Nationwide Life Insurance Company or such other entity.
Nationwide Investors Services, Inc. ("NISI"), Three Nationwide Plaza, Columbus,
OH 43215, is the Transfer and Dividend Disbursing Agent for the Fund. NISI, a
wholly-owned subsidiary of NAS will receive a fee for transfer agent services at
the annual rate of .01% of the average daily net assets attributable to Class R
shares of the Money Market Fund. Management believes the charges for the
services performed are comparable to fees charged by other companies performing
similar services.
The Fifth Third Bank ("Fifth Third"), 38 Fountain Square Plaza, Cincinnati, OH
45263, is the custodian for the Funds and makes all receipts and disbursements
under a Custody Agreement. Fifth Third performs no managerial or policy making
functions for the Funds.
KPMG LLP, Two Nationwide Plaza, Columbus, OH 43215, serves as the independent
auditors for the Trust.
BROKERAGE ALLOCATION
There is no commitment by NAS to place orders with any particular broker/dealer
or group of broker/dealers. Orders for the purchases and sales of portfolio
securities of the Fund are placed where, in the judgement of NAS, the best
prices and executions can be obtained. None of the Firms with whom orders are
placed are engaged in the sale of shares of the Fund. In allocating orders among
brokers for execution on an agency basis, in addition to price considerations,
the usefulness of the brokers' overall services is also considered. Services
provided by brokerage firms include efficient handling of orders, useful
analyses of corporations, industries and the economy, statistical reports and
other related services for which
15
<PAGE> 31
no charge is made by the broker above the negotiated brokerage commissions. The
Fund and NAS believe that thee services and information, which in many cases
would be otherwise unavailable to NAS, are of significant value to NAS, but it
is not possible to place an exact dollar value thereon. NAS does not believe
that the receipt of such services and information tends to reduce materially
NAS's expense.
In the case of securities traded in the over-the-counter market, the Funds will
normally deal with the market makers for such securities unless better prices
can be obtained through brokers.
As of October 31, 1998, the Fund held investments in securities of its regular
broker-dealers as follows:
<TABLE>
<CAPTION>
Shares or
Security Principal Amount Value
<S> <C> <C>
Bear Stearns $34,000,000 $33,846,053
Goldman Sachs $22,000,000 $21,962,763
Merrill Lynch $33,501,000 $33,372,446
Salomon Brothers $35,000,000 $34,908,652
J.P. Morgan $30,241,000 $30,126,387
</TABLE>
CALCULATION OF NET ASSET VALUE OF THE
FUND
The Fund's net asset value per share is calculated by adding the value
of all securities and other assets of the Fund, deducting its liabilities, and
dividing by the number of shares outstanding.
The value of portfolio securities is determined on the basis of the
amortized cost method of valuation in accordance with Rule 2a-7 of the 1940 Act.
This involves valuing a security at its cost and thereafter assuming a constant
amortization to maturity of any discount or premium, regardless of the impact of
fluctuating interest rates on the market value of the instrument. While this
method provides certainty in valuation, it may result in periods during which
value, as determined by amortized cost, is higher or lower than the price the
Fund would receive if it sold the instrument.
The Trustees have adopted procedures whereby the extent of deviation,
if any, of the current net asset value per share calculated using available
market quotations from the Fund's amortized cost price per share, will be
determined at such intervals as the Trustees deem appropriate and are reasonable
in light of current market conditions. In the event such deviation from the
Fund's amortized cost price per share exceeds 1/2 of 1 percent, the Trustees
will consider appropriate action which might include a revaluation of all or an
appropriate portion of the Money Market Fund's assets based upon current market
factors.
The Trustees, in supervising the Fund's operations and delegating
special responsibilities involving portfolio management to NAS, have undertaken
as a particular responsibility within their overall duty of care owed to the
Fund's shareholders to assure to the extent reasonably practicable, taking into
account current market conditions affecting the Fund's investment objectives,
that the Fund's net asset value per share will not deviate from $1.
16
<PAGE> 32
Pursuant to its objective of maintaining a stable net asset value per
share, the Fund will only purchase investments with a remaining maturity of 397
days or less and will maintain a dollar weighted average portfolio maturity of
90 days or less.
CALCULATING FUND YIELD
Any current Fund yield quotations, subject to Rule 482 under the
Securities Act, shall consist of a seven calendar day historical yield for each
class, carried at least to the nearest hundredth of a percent. The yield shall
be calculated by determining the change, excluding realized and unrealized gains
and losses, in the value of a hypothetical pre-existing account in each class
having a balance of one share at the beginning of the period, dividing the net
change in account value by the value of the account at the beginning of the base
period to obtain the base period return, and multiplying the base period return
by 365/7 (or 366/7 during a leap year). For purposes of this calculation , the
net change in account value reflects the value of additional shares purchased
with dividends declared on both the original share and any such additional
shares. The Fund's effective yield represents an annualization of the current
seven day return with all dividends reinvested. The yields for each class will
differ due to different fees and expenses charged on the class. As of October
30, 1998, the seven day current and effective yields for the Prime Shares of the
Money Market Fund were 4.77% and 4.88%, respectively.
The Fund's yields will fluctuate daily. Actual yields will depend on
factors such as the type of instruments in the Fund's portfolio, portfolio
quality and average maturity, changes in interest rates, and the Fund's
expenses.
Although the Fund determines its yield for each class on the basis of a
seven calendar day period, it may use a different time span on occasion.
There is no assurance that the yields quoted on any given occasion will
remain in effect for any period of time and there is no guarantee that the net
asset values will remain constant. It should be noted that a shareholder's
investment in the Fund is not guaranteed or insured. Yields of other money
market funds may not be comparable if a different base period or another method
of calculation is used.
NONSTANDARD RETURNS
The Fund may also choose to show nonstandard returns including total return, and
simple average total return. Nonstandard returns may or may not reflect
reinvestment of all dividends and capital gains.
Total return represents the cumulative percentage change in the value
of an investment over time, calculated by subtracting the initial investment
from the redeemable value and dividing the result by the amount of the initial
investment. The simple average total return is calculated by dividing total
return by the number of years in the period, and unlike average annual
(compound) total return, does not reflect compounding.
17
<PAGE> 33
RANKINGS AND RATINGS IN FINANCIAL PUBLICATIONS
The Fund may report its performance relative to other mutual funds or
investments. The performance comparisons are made to: other mutual funds with
similar objectives; other mutual funds with different objectives; or to other
sectors of the economy. Other investments which the Fund may be compared to
include, but are not limited to: precious metals: real estate; stocks and bonds;
closed-end funds; market indexes; fixed-rate, insured CDs, bank money market
deposit accounts and passbook savings; and the Consumer Price Index.
Normally these rankings and ratings are published by independent
tracking services and publications of general interest including, but not
limited to: Lipper Analytical Services, Inc., CDA/Wiesenberger, Morningstar,
Donoghue's, Schabaker Investment Management, Kanon Bloch Carre & Co.; magazines
such as Money, Fortune, Forbes, Kiplinger's Personal Finance Magazine, Smart
Money, Mutual Funds, Worth, Financial World, Consumer Reports, Business Week,
Time, Newsweek, U.S. News and World Report; and other publications such as the
Wall Street Journal, Barron's, Columbus Dispatch, Investor's Business Daily, and
Standard & Poor's Outlook.
ADDITIONAL GENERAL TAX INFORMATION
Each of the fifteen Funds of the Trust is treated as a separate entity
for Federal income tax purposes and intends to qualify as a "regulated
investment company" under the Code, for so long as such qualification is in the
best interest of the Fund's shareholders. In order to qualify as a regulated
investment company, the Fund must, among other things: diversify its investments
within certain prescribed limits; and derive at least 90% of its gross income
from dividends, interest, payments with respect to securities loans, and gains
from the sale or other disposition of securities or foreign currencies, or other
income derived with respect to its business of investing in such stock,
securities, or currencies. In addition, to utilize the tax provisions specially
applicable to regulated investment companies, the Fund must distribute to its
shareholders at least 90% of its investment company taxable income for the year.
In general, the Fund's investment company taxable income will be its taxable
income subject to certain adjustments and excluding the excess of any net
long-term capital gain for the taxable year over the net short-term capital
loss, if any, for such year.
A non-deductible 4% excise tax is imposed on regulated investment
companies that do not distribute in each calendar year (regardless of whether
they otherwise have a non-calendar taxable year) an amount equal to 98% of their
ordinary income for the calendar year plus 98% of their capital gain net income
for the one-year period ending on October 31 of such calendar year. The balance
of such income must be distributed during the next calendar year. If
distributions during a calendar year were less than the required amount, the
Fund would be subject to a non-deductible excise tax equal to 4% of the
deficiency.
Although the Fund expects to qualify as a "regulated investment
company" and to be relieved of all or substantially all federal income taxes,
depending upon the extent of its activities in states and localities in which
its offices are maintained, in which its agents or independent contractors are
located, or in which it is otherwise deemed to be conducting business, the Fund
may be subject to the tax
18
<PAGE> 34
laws of such states or localities. In addition, if for any taxable year the Fund
does not qualify for the special tax treatment afforded regulated investment
companies, all of its taxable income will be subject to federal tax at regular
corporate rates (without any deduction for distributions to its shareholders).
In such event, dividend distributions would be taxable to shareholders to the
extent of earnings and profits.
It is expected that the Fund will distribute annually to shareholders
all or substantially all of the Fund's net ordinary income and net realized
capital gains and that such distributed net ordinary income and distributed net
realized capital gains will be taxable income to shareholders for federal income
tax purposes, even if paid in additional shares of the Fund and not in cash.
Distribution by the Fund of the excess of net long-term capital gain
over net short-term capital loss, if any, is taxable to shareholders as
long-term capital gain in the year in which it is received, regardless of how
long the shareholder has held the shares. Such distributions are not eligible
for the dividends-received deduction.
Federal taxable income of individuals is subject to graduated tax rates
of 15%, 28%, 31%, 36% and 39.6%. Further, the effective marginal tax rate may be
in excess of 39.6%, because adjustments reduce or eliminate the benefit of the
personal exemption and itemized deductions for individuals with gross income in
excess of certain threshold amounts.
Long-term capital gains of individuals are subject to a maximum tax
rate of 20% (10% for individuals in the 15% ordinary income tax bracket).
Capital losses may be used to offset capital gains. In addition, individuals may
deduct up to $3,000 of net capital loss each year to offset ordinary income.
Excess net capital loss may be carried forward and deducted in future years. The
holding period for long-term capital gains is more than one year.
Federal taxable income of corporations in excess of $75,000 up to $10
million is subject to a 34% tax rate; however, because the benefit of lower tax
rates on a corporation's taxable income of less than $75,000 is phased out for
corporations with income in excess of $100,000 but lower than $335,000, a
maximum marginal tax rate of 39% may result. Federal taxable income of
corporations in excess of $10 million is subject to a tax rate of 35%. Further,
a corporation's federal taxable income in excess of $15 million is subject to an
additional tax equal to 3% of taxable income over $15 million, but not more than
$100,000.
Capital gains of corporations are subject to tax at the same rates
applicable to ordinary income. Capital losses may be used only to offset capital
gains and excess net capital loss may be carried back three years and forward
five years.
Certain corporations are entitled to a 70% dividends received deduction
for distributions from certain domestic corporations. Because all of the Fund's
net investment income is expected to be derived from earned interest and short
term capital gains, it is anticipated that no distributions from the Fund will
qualify for the 70% dividends received deduction.
Foreign taxes may be imposed on a Fund by foreign countries with
respect to its income from foreign securities. Since less than 50% in value of
the Fund's total assets at the end of its fiscal year are expected to be
invested in securities of foreign corporations, the Fund will not be entitled
under the Code to pass through to its Shareholders their pro rata share of the
foreign taxes paid by that Fund. These taxes will be taken as a deduction by the
Fund.
19
<PAGE> 35
Investment by the Fund in securities issued at a discount or providing
for deferred interest or for payment of interest in the form of additional
obligations could, under special tax rules, affect the amount, timing and
character of distributions to Shareholders. For example, the Fund could be
required to take into account annually a portion of the discount (or deemed
discount) at which such securities were issued and to distribute such portion in
order to maintain its qualification as a regulated investment company. In that
case, the Fund may have to dispose of securities which it might otherwise have
continued to hold in order to generate cash to satisfy these distribution
requirements.
The Fund may be required by federal law to withhold and remit to the
U.S. Treasury 31% of taxable dividends, if any, and capital gain distributions
to any Shareholder, and the proceeds of redemption or the values of any
exchanges of Shares of the Fund, if such Shareholder (1) fails to furnish the
Fund with a correct taxpayer identification number, (2) under-reports dividend
or interest income, or (3) fails to certify to the Fund that he or she is not
subject to such withholding. An individual's taxpayer identification number is
his or her Social Security number.
Information set forth in the Prospectuses and this Statement of
Additional Information which relates to Federal taxation is only a summary of
some of the important Federal tax considerations generally affecting purchasers
of shares of the Funds. No attempt has been made to present a detailed
explanation of the Federal income tax treatment of the Fund or its shareholders
and this discussion is not intended as a substitute for careful tax planning.
Accordingly, potential purchasers of shares of the Fund are urged to consult
their tax advisers with specific reference to their own tax situation. In
addition, the tax discussion in the prospectus and this Statement of Additional
Information is based on tax laws and regulations which are in effect on the date
of the prospectus and this Statement of Additional Information; such laws and
regulations may be changed by legislative or administrative action.
Information as to the federal income tax status of all distributions
will be mailed annually to each shareholder.
MAJOR SHAREHOLDERS
As of January 4, 1999, Nationwide Advisory Services, Inc. directly or indirectly
owned, controlled or held power to vote 100% of the Class R shares of the Fund.
As of January 4, 1999, Nationwide Life Insurance Company and its affiliates
directly or indirectly owned, controlled or held power to vote 49.7% of the
Prime Shares of the Fund.
FINANCIAL STATEMENTS
Since the Money Market Fund did not offer class R shares prior to January 4,
1999, there are no financial results for the class.
The Report of Independent Auditors and Financial Statements of the Funds, which
include the Prime Shares of the Money Market Fund, for the period ended October
31, 1998 are incorporated by reference to the Annual Report. Copies of the
Annual Report are available without charge upon request by writing the Trust or
by calling 1-800-848-0920.
20
<PAGE> 36
APPENDIX A
SHORT-TERM RATINGS
STANDARD & POOR'S COMMERCIAL PAPER RATINGS
A Standard & Poor's commercial paper rating is a current assessment of the
likelihood of timely payment of debt considered short-term in the relevant
market.
Ratings are graded into several categories, ranging from 'A-1' for the
highest quality obligations to 'D' for the lowest. These categories are as
follows:
A-1 This highest category indicates that the degree of safety regarding
timely payment is strong. Those issues determined to possess extremely strong
safety characteristics are denoted with a plus sign (+) designation.
A-2 Capacity for timely payment on issues with this designation is
satisfactory. However, the relative degree of safety is not as high as for
issues designated 'A-1'.
A-3 Issues carrying this designation have adequate capacity for timely
payment. They are, however, more vulnerable to the adverse effects of changes in
circumstances than obligations carrying the higher designations.
B Issues rated 'B' are regarded as having only speculative capacity for
timely payment.
C This rating is assigned to short-term debt obligations with doubtful
capacity for payment.
D Debt rated 'D' is in payment default. the 'D' rating category is used
when interest payments or principal payments are not made on the date due, even
if the applicable grace period has not expired, unless Standard & Poor's
believes that such payments will be made during such grade period.
STANDARD & POOR'S NOTE RATINGS
An S&P note rating reflects the liquidity factors and market-access risks
unique to notes. Notes maturing in three years or less will likely receive a
note rating. Notes maturing beyond three years will most likely receive a
long-term debt rating.
The following criteria will be used in making the assessment:
1. Amortization schedule - the larger the final maturity relative to
other maturities, the more likely the issue is to be treated as a
note.
2. Source of payment - the more the issue depends on the market for its
refinancing, the more likely it is to be considered a note.
Note rating symbols and definitions are as follows:
SP-1 Strong capacity to pay principal and interest. Issues determined to
possess very strong characteristics are given a plus (+) designation.
SP-2 Satisfactory capacity to pay principal and interest, with some
vulnerability to adverse financial and economic changes over the term of the
notes.
SP-3 Speculative capacity to pay principal and interest.
MOODY'S SHORT-TERM RATINGS
21
<PAGE> 37
Moody's short-term debt ratings are opinions on the ability of issuers to
repay punctually senior debt obligations. These obligations have an original
maturity not exceeding one year, unless explicitly noted. Moody's employs the
following three designations, all judged to be investment grade, to indicate the
relative repayment capacity of rated issuers:
Issuers rated Prime-1 (or supporting institutions) have a superior capacity
for repayment of senior short-term debt obligations. Prime-1 repayment capacity
will normally be evidenced by the following characteristics: (I) leading market
positions in well established industries, (II) high rates of return on funds
employed, (III) conservative capitalization structures with moderate reliance on
debt and ample asset protection, (IV) broad margins in earnings coverage of
fixed financial charges and high internal cash generation, and (V) well
established access to a range of financial markets and assured sources of
alternative liquidity.
Issuers rated Prime-2 (or supporting institutions) have a strong capacity
for repayment of short-term promissory obligations. This will normally be
evidenced by many of the characteristics cited above, but to a lesser degree.
Earnings trends and coverage ratios, while sound, will be more subject to
variation. Capitalization characteristics, while still appropriate, may be more
affected by external conditions. Ample alternate liquidity is maintained.
Issuers rated Prime-3 (or supporting institutions) have an acceptable
capacity for repayment of short-term promissory obligations. The effect of
industry characteristics and market composition may be more pronounced.
Variability in earnings and profitability may result in changes in the level of
debt protection measurements and may require relatively high financial leverage.
Adequate alternate liquidity is maintained.
Issuers rated Not Prime do not fall within any of the prime rating
categories.
MOODY'S NOTE RATINGS
MIG 1/VMIG 1 This designation denotes best quality. There is present strong
protection by established cash flows, superior liquidity support or demonstrated
broad based access to the market for refinancing.
MIG 2/VMIG 2 This designation denotes high quality. Margins of protection
are ample although not so large as in the preceding group.
MIG 3/VMIG 3 This designation denotes favorable quality. All security
elements are accounted for but there is lacking the undeniable strength of the
preceding grades. Liquidity and cash flow protection may be narrow and market
access for refinancing is likely to be less well established.
MIG 4/VMIG 4 This designation denotes adequate quality. Protection commonly
regarded as required of an investment security is present and although not
distinctly or predominantly speculative, there is specific risk.
SG This designation denotes speculative quality. Debt instruments in this
category lack margins of protection.
FITCH/IBCA, INC. SHORT-TERM RATINGS
Fitch/IBCA short-term ratings apply to debt obligations that are payable on
demand or have original maturities of generally up to three years, including
commercial paper, certificates of deposit, medium-term notes, and municipal and
investment notes.
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<PAGE> 38
The short-term rating places greater emphasis than a long-term rating on
the existence of liquidity necessary to meet the issuer's obligations in a
timely manner.
F1+ Exceptionally strong credit quality. Issues assigned
this rating are regarded as having the strongest degree of
assurance for timely payment.
F1 Very strong credit quality. Issues assigned this rating
reflect an assurance of timely payment only slightly less in
degree than issues rated 'F1+'.
F2 Good credit quality. Issues assigned this rating have a
satisfactory degree of assurance for timely payment but the margin
of safety is not as great as for issues assigned 'F1+' and 'F1'
ratings.
F3 Fair credit quality. Issues assigned this rating have
characteristics suggesting that the degree of assurance for timely
payment is adequate, however, near-term adverse changes could
cause these securities to be rated below investment grade.
B Speculative. Issues assigned this rating have
characteristics suggesting a minimal degree of assurance for
timely payment and are vulnerable to near-term adverse changes in
financial and economic conditions.
C High default risk. Default is a real possibility.
Capacity for meeting financial commitments is solely reliant upon
a sustained, favorable business and economic environment.
D Default. Issues assigned this rating are in actual or
imminent payment default.
DUFF & PHELPS SHORT-TERM DEBT RATINGS
Duff & Phelps' short-term ratings are consistent with the rating criteria
utilized by money market participants. The ratings apply to all obligations with
maturities under one year, including commercial paper, the uninsured portion of
certificates of deposit, unsecured bank loans, master notes, bankers
acceptances, irrevocable letters of credit, and current maturities of long-term
debt. Asset-backed commercial paper is also rated according to this scale.
Emphasis is placed on liquidity which is defined as not only cash from
operations, but also access to alternative sources of funds including trade
credit, bank lines, and the capital markets. An important consideration is the
level of an obligor's reliance on short-term funds on an ongoing basis.
RATING SCALE DEFINITION
High Grade
D-1+ Highest certainty of timely payment. short-term liquidity,
including internal operating factors and/or access to alternative
sources of funds, is outstanding, and safety is just below
risk-free U.S. Treasury short-term obligations.
D-1 Very high certainty of timely payment. Liquidity factors are
excellent and supported by good fundamental protection factors.
Risk factors are minor.
23
<PAGE> 39
D-1 High certainty of timely payment. Liquidity factors are strong and
supported by good fundamental protection factors. Risk factors are
very small.
Good Grade
D-2 Good certainty of timely payment. Liquidity factors and company
fundamentals are sound. Although ongoing funding needs may enlarge
total financing requirements, access to capital markets is good.
Risk factors are small.
Satisfactory Grade
D-3 Satisfactory liquidity and other protection factors qualify issue
as to investment grade. Risk factors are larger and subject to
more variation. Nevertheless, timely payment is expected.
Non-investment Grade
D-4 Speculative investment characteristics. Liquidity is not
sufficient to insure against disruption in debt service. Operating
factors and market access may be subject to a high degree of
variation.
Default
D-5 Issuer failed to meet scheduled principal and/or interest
payments.
THOMSON'S SHORT-TERM RATINGS
The Thomson Short-Term Ratings apply, unless otherwise noted, to specific
debt instruments of the rated entities with a maturity of one year or less.
Thomson short-term ratings are intended to assess the likelihood of an untimely
or incomplete payments of principal or interest.
TBW-1 the highest category, indicates a very high likelihood that principal
and interest will be paid on a timely basis.
TBW-2 the second highest category, while the degree of safety regarding
timely repayment of principal and interest is strong, the relative degree of
safety is not as high as for issues rated "TBW-1".
TBW-3 the lowest investment-grade category; indicates that while the
obligation is more susceptible to adverse developments (both internal and
external) than those with higher ratings, the capacity to service principal and
interest in a timely fashion is considered adequate.
TBW-4 the lowest rating category; this rating is regarded as non-investment
grade and therefore speculative.
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<PAGE> 40
PART C
OTHER INFORMATION
ITEM 24. FINANCIAL STATEMENT AND EXHIBITS
(a) Financial Statements:
(1) Financial statements and schedules included in the Prospectus
for the Funds (except the Morley Capital Accumulation Fund,
the Prestige Large Cap Value Fund, the Prestige Large Cap
Growth Fund, the Prestige Small Cap Fund, the Prestige
International Fund and the Prestige Balanced Fund) (Part A):
Financial Highlights
(2) Financial statements and schedules included in Part B:
Those schedules required by Item 23 to be included in Part B
have been incorporated therein by reference to the Prospectus
(Part A).
(i) Audited Financials: (except the Morley Capital
Accumulation Fund, the Prestige Large Cap Value
Fund, the Prestige Large Cap Growth Fund, the
Prestige Small Cap Fund, the Prestige
International Fund and the Prestige Balanced
Fund): Audited financial statements for the Mid
Cap Growth Fund, Growth Fund, Nationwide Fund,
Bond Fund, Tax-Free Income Fund, Long Term U.S.
Government Bond Fund, Intermediate U.S. Government
Bond Fund, and Money Market Fund are hereby
incorporated by reference to Form N-30D filed by
Nationwide Investing Foundation III on January 5,
1999.
(ii) Audited Financials for the Local Fund Shares of
S&P 500 Index Fund are hereby incorporated by
reference to Form N-30D filed by Nationwide
Investing Foundation III on December 15, 1998.
(b) Exhibits
(1) Amended Declaration of Trust.
(2) Amended Bylaws previously filed with the Trust's Registration
Statement on August 7, 1998, and is hereby incorporated by
reference.
(3) Not Applicable.
(4) Certificates for shares are not issued. Articles V, VI, VII,
and VIII of the Declaration of Trust, incorporated by
reference to Exhibit (1) hereto, define rights of holders of
shares.
(5) (a) Investment Advisory Agreement (except for the Morley
Capital Accumulation Fund).
(b) Investment Advisory Agreement for the Morley Capital
Accumulation Fund.
(c) Subadvisory Agreements.
(1) Subadvisory Agreement with the Dreyfus Corporation
for S & P 500 Index fund previously file in the
Trust's original Registration Statement on
November 18, 1997, and is hereby incorporated by
reference.
(2) Subadvisory Agreement for the Prestige Large Cap
Value Fund.
(3) Subadvisory Agreement for the Prestige Large Cap
Growth Fund.
(4) Subadvisory Agreement for the Prestige Small Cap
Fund.
(5) Subadvisory Agreement for the Prestige International
Fund.
(6) Subadvisory Agreement for the Prestige Balanced
Fund.
(6) (a) Underwriting Agreement.
(b) Model Dealer Agreement for the Morley Capital
Accumulation Fund.
(7) Not applicable.
(8) (a) Custody Agreement previously filed with the
Trust's original Registration Statement on
November 18, 1997, and is hereby incorporated by
reference.
(9) (a) Fund Administration Agreement.
(b) Transfer and Dividend Disbursing Agent.
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<PAGE> 41
(c) Agreement and Plan of Reorganization between
Nationwide Investing Foundation and the Trust
previously filed with the Trust's Registration
Statement on form N-14 ('33 Act File No.
333-41175) on November 24, 1997, and is hereby
incorporated by reference.
(d) Agreement and Plan of Reorganization between
Nationwide Investing Foundation II and the Trust
Previously filed with the Trust's Registration
Statement on Form N-14 ('33 Act File No.
333-41175) on November 24, 1997, and is hereby
incorporated by reference.
(e) Agreement and Plan of Reorganization between
Financial Horizons Investment Trust and the
Trust previously filed with the Trust's
Registration Statement on Form N-14 ('33 Act
File No. 333-41175) on November 24,1997 and is
hereby incorporated by reference.
(f) Administrative Services Plan and Services
Agreement.
(10) Opinion of Counsel, previously filed on November 5,
1998, and hereby incorporated by reference.
(11) Consent of KPMG LLP, Independent Auditors.
(12) Not applicable.
(13) Purchase Agreement previously filed with Trust's
Registration Statement on January 2, 1998, and
hereby incorporated by reference.
(14) Not applicable.
(15) (a) Amended Distribution Plan.
(b) Dealer Agreement for Morley Capital Accumulation
Fund (see Exhibit 6(b)).
(c) Rule 12b-1 Agreement (except Morley Capital
Accumulation Fund).
(16) Schedule for Computation of Performance Quotations
previously filed with Post-Effective Amendment to
Registration Statement and herein incorporated by
reference.
(17) Financial Data Schedules.
(18) Amended 18f-3 Plan.
(19) Power of Attorney dated November 7, 1997 previously
filed in the Trust's Pre-Effective Amendment and is
hereby incorporated by reference.
ITEM 25. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT
No person is presently controlled by or under common control with
Registrant.
ITEM 26. NUMBER OF HOLDERS OF SECURITIES
<TABLE>
<CAPTION>
Number of Record Holders as of November 30, 1998
No Class Local
Series Class A Class B Class D Designation Fund Shares
------ ------- ------- ------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Mid Cap Growth Fund 152 149 796 -- --
Growth Fund 903 767 74,646 -- --
Nationwide Fund 4,582 4,678 65,095 -- --
Bond Fund 199 198 7,461 -- --
Tax-Free Income Fund 54 66 7,669 -- --
Intermediate U.S. Government Bond 41 57 1,997 -- --
Long-Term U.S. Government Bond 50 74 1,742 -- --
Money Market Fund -- -- -- 25,734 --
Class R Class Y
S&P 500 Index Fund -- -- 4 4 8
Morley Capital Accumulation Fund -- -- -- -- --
Large Cap Value Fund 3 1 -- 4 --
Large Cap Growth Fund 3 1 -- 4 --
Balanced Fund 3 1 -- 4 --
Small Cap Fund 3 1 -- 4 --
International Fund 3 1 -- 4 --
</TABLE>
ITEM 27. INDEMNIFICATION
Indemnification provisions for officers, directors and employees of
Registrant are set forth in Article V, Section 5.2 of the Declaration
of Trust. In addition, Section 1743.13 of the Ohio Revised Code
provides that no liability to third persons for any act, omission or
obligation shall attach to the trustees, officers,
C-2
<PAGE> 42
employees or agents of a business trust organized under Ohio
statutes. The trustees are also covered by an errors and omissions
policy provided by the Trust covering actions taken by the trustees
in their capacity as trustee. See Item 24(b)1 above.
ITEM 28. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER
(a) Nationwide Advisory Services, Inc. (NAS), the investment
adviser of the Trust, also serves as investment adviser to the
Nationwide Separate Account Trust, and Nationwide Asset
Allocation Trust and serves as general distributor to the
Nationwide Multi-Flex Variable Account, Nationwide Variable
Account, Nationwide Variable Account-II, Nationwide Variable
Account-5, Nationwide Variable Account-6, Nationwide Variable
Account-8, Nationwide Variable Account-9, Nationwide VA
Separate Account-A, Nationwide VA Separate Account-B,
Nationwide VA Separate Account-C, Nationwide VLI Separate
Account-2, Nationwide VLI Separate Account-3, Nationwide VL
Separate Account-A, Nationwide VL Separate Account-B,
Nationwide VL Separate Account-C, and Nationwide VL Separate
Account-D, separate accounts of Nationwide Life Insurance
Company, or its subsidiary Nationwide Life and Annuity
Insurance Company, registered as unit investment trusts under
the Investment Company Act of 1940.
<TABLE>
<S> <C>
Joseph J. Gasper Director and President and Chief Operating Officer
---------------------------------------------------
Nationwide Life Insurance Company
Nationwide Life and Annuity Insurance Company
Nationwide Financial Services, Inc.
Director and Chairman of the Board
----------------------------------
Nationwide Investment Services Corporation
Director and Vice Chairman
--------------------------
ALLIED Group Merchant Banking Corporation
ALLIED Life Brokerage Agency, Inc.
ALLIED Life Financial Corporation
ALLIED Life Insurance Company
Nationwide Financial Institution Distributors Agency, Inc.
Nationwide Global Holdings, Inc.
NEA Valuebuilder Investor Services, Inc.
NEA Valuebuilder Investor Services of Arizona, Inc.
Nationwide Retirement Solutions, Inc.
Director and President
----------------------
Nationwide Advisory Services, Inc.
Nationwide Investor Services, Inc.
Nationwide Financial Services (Bermuda) Ltd.
Director
--------
Affiliate Agency, Inc.
Affiliate Agency of Ohio, Inc.
Financial Horizons Distributors Agency of Alabama, Inc.
Financial Horizons Distributors Agency of Ohio, Inc.
Financial Horizons Distributors Agency of Oklahoma, Inc.
Financial Horizons Securities Corporation
Landmark Financial Services of New York, Inc.
Morley Financial Services, Inc.
Nationwide Indemnity Company
Trustee and Chairman
--------------------
Nationwide Asset Allocation Trust
Nationwide Separate Account Trust
Trustee and President
---------------------
</TABLE>
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<PAGE> 43
<TABLE>
<S> <C>
Nationwide Insurance Golf Charities, Inc.
Board of Manager
----------------
Nationwide Insurance Enterprise Services, Ltd.
Dennis W. Click Vice President and Secretary
----------------------------
Nationwide Mutual Insurance Company
Nationwide Mutual Fire Insurance Company
Nationwide Life Insurance Company
Nationwide General Insurance Company
Nationwide Property and Casualty Insurance Company
Nationwide Life and Annuity Insurance Company
Nationwide Financial Services, Inc.
Nationwide Insurance Enterprise Services, Ltd.
Nationwide Properties, Ltd.
Nationwide Realty Investors, Ltd.
NEA Valuebuilder Investor Services, Inc.
NEA Valuebuilder Investor Services of Arizona, Inc.
Nationwide Financial Institution
Distributors Agency, Inc.
AID Finance Services, Inc.
ALLIED General Agency Company
ALLIED Group, Inc.
ALLIED Group Information Systems, Inc.
ALLIED Group Insurance Marketing Company
ALLIED Group Mortgage Company
ALLIED Life Brokerage Agency, Inc.
ALLIED Life Financial Corporation
ALLIED Life Insurance Company
ALLIED Property and Casualty Insurance Company
AMCO Insurance Company
Depositors Insurance Company
Midwest Printing Services, Ltd.
Premier Agency, Inc.
Western Heritage Insurance Company
Colonial County Mutual Insurance Company
California Cash Management Company
Colonial Insurance Company of Wisconsin
Gates McDonald & Company
GatesMcDonald Health Plus Inc.
Nationwide Global Holdings, Inc.
Nationwide Cash Management Company
Nationwide Indemnity Company
Nationwide Community Urban Redevelopment Corporation
Gates, McDonald & Company of Nevada
Gates, McDonald & Company of New York, Inc.
Farmland Mutual Insurance Company
Lone Star General Agency, Inc.
Nationwide Agribusiness Insurance Company
Employers Insurance of Wausau A Mutual Company
Nationwide Advisory Services, Inc.
Nationwide Investors Services, Inc.
Nationwide Corporation
Nationwide Insurance Enterprise Foundation
Nationwide Investment Services Corporation
Scottsdale Indemnity Company
Scottsdale Insurance Company
</TABLE>
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<PAGE> 44
<TABLE>
<S> <C>
Scottsdale Surplus Lines Insurance Company
Wausau Underwriters Insurance Company
Wausau Service Corporation
Wausau Business Insurance Company
Wausau General Insurance Company
Affiliate Agency, Inc.
Affiliate Agency of Ohio, Inc.
Financial Horizons Distributors Agency of Alabama, Inc.
Financial Horizons Distributors Agency of Ohio, Inc.
Financial Horizons Distributors Agency of Oklahoma, Inc.
Financial Horizons Securities Corporation
Landmark Financial Services of New York, Inc.
NEA Valuebuilder Investor Services of Alabama, Inc.
NEA Valuebuilder Investor Services of Montana, Inc.
NEA Valuebuilder Investor Services of Nevada, Inc.
NEA Valuebuilder Investor Services of Ohio, Inc.
NEA Valuebuilder Investor Services of Oklahoma, Inc.
NEA Valuebuilder Investor Services of Wyoming, Inc.
Nationwide Agency, Inc.
Nationwide Health Plans, Inc.
Nationwide Management Systems, Inc.
MRM Investments, Inc.
NWE, Inc.
National Premium and Benefit Administration Company
Nationwide Insurance Company of America
Morley Financial Services, Inc.
Assistant Secretary
-------------------
Pension Associates of Wausau, Inc.
Companies Agency, Inc.
Companies Agency of Alabama, Inc.
Companies Agency Insurance Services of California
Companies Agency of Georgia, Inc.
Companies Agency of Idaho, Inc.
Companies Agency of Kentucky, Inc.
Companies Agency of New York, Inc.
Companies Agency of Pennsylvania, Inc.
Companies Agency of Phoenix, Inc.
Countrywide Services Corporation
Wausau (Bermuda) Ltd.
Wausau International Underwriters
Vice President and Assistant Secretary
--------------------------------------
National Casualty Company
Secretary
---------
The Beak and Wire Company
Vice President and Clerk
------------------------
Healthcare First, Inc.
Clerk
-----
NEA Valuebuilder Services Insurance Agency, Inc.
Assistant Clerk
---------------
Companies Agency of Massachusetts, Inc.
</TABLE>
C-5
<PAGE> 45
<TABLE>
<S> <C>
Dimon R. McFerson Chairman and Chief Executive Officer-Nationwide Insurance Enterprise and Director
----------------------------------------------------------------------------------
Nationwide Mutual Insurance Company
Nationwide Mutual Fire Insurance Company
Nationwide General Insurance Company
Nationwide Property and Casualty Insurance Company
Nationwide Life Insurance Company
Nationwide Life and Annuity Insurance Company
ALLIED Group, Inc.
ALLIED Group Merchant Banking Corporation
ALLIED Life Brokerage Agency, Inc.
ALLIED Life Financial Corporation
ALLIED Life Insurance Company
Colonial Insurance Company of Wisconsin
Farmland Mutual Insurance Company
Nationwide Agribusiness Insurance Company
National Casualty Company
Nationwide Financial Services, Inc.
Nationwide Global Holdings, Inc.
Nationwide Indemnity Company
Nationwide Investment Services Corporation
California Cash Management Company
Nationwide Cash Management Company
Employers Insurance of Wausau A Mutual Company
Scottsdale Indemnity Company
Scottsdale Insurance Company
Scottsdale Surplus Lines Insurance Company
Wausau Service Corporation
Wausau General Insurance Company
Wausau Business Insurance Company
Wausau Underwriters Insurance Company
Chairman and Chief Executive Officer - Nationwide Insurance
-----------------------------------------------------------
Enterprise, President and Director
----------------------------------
Nationwide Corporation
Chairman of the Board, Chairman and Chief Executive
---------------------------------------------------
Officer-Nationwide Insurance Enterprise and Director
----------------------------------------------------
AID Finance Services, Inc.
ALLIED General Agency Company
ALLIED Group Information Systems, Inc.
ALLIED Group Insurance Marketing Company
ALLIED Group Mortgage Company
ALLIED Property and Casualty Insurance Company
Depositors Insurance Company
Midwest Printing Services, Ltd.
Premier Agency, Inc.
Western Heritage Insurance Company
American Marine Underwriters, Inc.
Gates, McDonald and Company
Gates McDonald Health Plus, Inc.
Nationwide Investor Services, Inc.
Nationwide Retirement Solutions, Inc.
Companies Agency, Inc.
Companies Agency of Alabama, Inc.
Companies Agency Insurance Services of California
</TABLE>
C-6
<PAGE> 46
<TABLE>
<S> <C>
Companies Agency of Georgia, Inc.
Companies Agency of Idaho, Inc.
Companies Agency of Kentucky, Inc.
Companies Agency of Massachusetts, Inc.
Companies Agency of New York, Inc.
Companies Agency of Pennsylvania, Inc.
Companies Agency of Phoenix, Inc.
Countrywide Services Corporation
Employers Life Insurance Company of Wausau
Nationwide Advisory Services, Inc.
Nationwide Financial Institution Distributors Agency, Inc.
Nationwide Insurance Enterprise Services, Ltd.
Nationwide Insurance Company of America
Wausau International Underwriters
Wausau Preferred Health Insurance Company
Trustee and Chairman
--------------------
Financial Horizons Investment Trust
Nationwide Investing Foundation
Nationwide Investing Foundation II
Nationwide Investing Foundation III
Chairman of the Board
---------------------
Nationwide Insurance Golf Charities, Inc.
Chairman of the Board and Director
----------------------------------
Lone Star General Agency, Inc.
Nationwide Community Urban Redevelopment Corporation
NEA Valuebuilder Investor Services, Inc.
NEA Valuebuilder Investor Services of Arizona, Inc
Colonial County Mutual Insurance Company
Director
--------
Gates, McDonald & Company of Nevada
Gates, McDonald & Company of New York
Healthcare First, Inc.
Morley Financial Services, Inc.
Nationwide Agency, Inc.
Nationwide Health Plans, Inc.
Nationwide Management Systems, Inc.
Chairman of the Board, Chairman and Chief Executive
---------------------------------------------------
Officer-Nationwide Insurance Enterprise and Trustee
---------------------------------------------------
Nationwide Insurance Enterprise Foundation
Member-Board of Managers, Chairman of the Board,
------------------------------------------------
Chairman and Chief Executive Officer-Nationwide Insurance
---------------------------------------------------------
Enterprise
----------
Nationwide Properties, Ltd.
Nationwide Realty Investors, Ltd.
Nationwide Insurance Enterprise Services, Ltd.
Chairman and Chief Executive Officer-Nationwide Insurance Enterprise
--------------------------------------------------------------------
Nationwide Insurance Company of Florida
</TABLE>
C-7
<PAGE> 47
<TABLE>
<S> <C>
Robert A. Oakley Executive Vice President-Chief Financial Officer
------------------------------------------------
Nationwide Mutual Insurance Company
Nationwide Mutual Fire Insurance Company
Nationwide General Insurance Company
Nationwide Property and Casualty Insurance Company
Nationwide Life Insurance Company
Nationwide Life and Annuity Insurance Company
ALLIED Group. Inc.
ALLIED Life Financial Corporation
American Marine Underwriters, Inc.
Companies Agency, Inc.
Companies Agency of Alabama, Inc.
Companies Agency of Georgia, Inc.
Companies Agency of Idaho, Inc.
Companies Agency of Kentucky, Inc.
Companies Agency of Massachusetts, Inc.
Companies Agency of New York, Inc.
Companies Agency of Pennsylvania, Inc.
Companies Agency of Phoenix, Inc.
Countrywide Services Corporation
Employers Life Insurance Company of Wausau
National Casualty Company
National Premium and Benefit Administration Company
The Beak and Wire Corporation
Employers Insurance of Wausau A Mutual Company
Farmland Mutual Insurance Company
Nationwide Financial Institution Distributors Agency, Inc.
Lone Star General Agency, Inc.
Nationwide Agribusiness Insurance Company
Nationwide Corporation
Nationwide Financial Services, Inc.
Nationwide Investment Services Corporation
Nationwide Investor Services, Inc.
Nationwide Insurance Enterprise Foundation
Nationwide Properties, Ltd.
Nationwide Realty Investors, Ltd.
NEA Valuebuilder Investor Services, Inc.
NEA Valuebuilder Investor Services of Arizona, Inc.
Colonial County Mutual Insurance Company
Pension Associates of Wausau, Inc.
Nationwide Retirement Solutions, Inc.
Scottsdale Indemnity Company
Scottsdale Insurance Company
Scottsdale Surplus Lines Insurance Company
Wausau Business Insurance Company
Wausau General Insurance Company
Wausau Preferred Health Insurance Company
Wausau Service Corporation
Wausau Underwriters Insurance Company
Director, Chairman of the Board
-------------------------------
Neckura Holding Company
Neckura Insurance Company
Neckura Life Insurance Company
Executive Vice President-Chief Financial Officer and Director
-------------------------------------------------------------
</TABLE>
C-8
<PAGE> 48
<TABLE>
<S> <C>
AID Finance Services, Inc.
ALLIED General Agency Company
ALLIED Group Information Systems, Inc.
ALLIED Group Insurance Marketing Company
ALLIED Group Merchant Banking Corporation
ALLIED Group Mortgage Company
ALLIED Life Brokerage Agency, Inc.
ALLIED Life Insurance Company
ALLIED Property and Casualty Insurance Company
AMCO Insurance Company
Depositors Insurance Company
Midwest Printing Services, Ltd.
Premier Agency, Inc.
Western Heritage Insurance Company
Colonial Insurance Company of Wisconsin
Nationwide Cash Management Company
Nationwide Community Urban Redevelopment Corporation
Nationwide Global Holdings, Inc.
Nationwide Insurance Enterprise Services, Ltd.
MRM Investments, Inc.
Nationwide Advisory Services, Inc.
Nationwide Indemnity Company
Nationwide Insurance Company of America
Executive Vice President
------------------------
Companies Agency Insurance Services of California
Wausau International Underwriters
Director and Vice Chairman
--------------------------
Leben Direkt Insurance Company
Neckura General Insurance Company
Auto Direkt Insurance Company
Director
--------
NWE, Inc.
Gates, McDonald & Company
GatesMcDonald Health Plus Inc.
Healthcare First, Inc.
Morley Financial Services, Inc.
Board of Managers, Executive Vice President-Chief Financial Officer
-------------------------------------------------------------------
Nationwide Insurance Enterprise Services, Ltd.
Susan A. Wolken Senior Vice President - Life Company Operations
-----------------------------------------------
Nationwide Mutual Insurance Company
Nationwide Mutual Fire Insurance Company
Nationwide Property and Casualty Insurance Company
Nationwide Life Insurance Company
Nationwide Life and Annuity Insurance Company
Director
--------
Affiliate Agency, Inc.
Affiliate Agency of Ohio, Inc.
Financial Horizons Distributors Agency of Alabama, Inc.
</TABLE>
C-9
<PAGE> 49
<TABLE>
<S> <C>
Financial Horizons Distributors Agency of Ohio, Inc.
Financial Horizons Distributors Agency of Oklahoma, Inc.
Financial Horizons Securities Corporation
Landmark Financial Services of New York, Inc.
Nationwide Advisory Services, Inc.
Nationwide Investment Services Corporation
NEA Valuebuilder Investor Services, Inc.
NEA Valuebuilder Investor Services of Alabama, Inc.
NEA Valuebuilder Investor Services of Arizona, Inc.
NEA Valuebuilder Investor Services of Montana, Inc.
NEA Valuebuilder Investor Services of Nevada, Inc.
NEA Valuebuilder Investor Services of Ohio, Inc.
NEA Valuebuilder Investor Services of Oklahoma, Inc.
NEA Valuebuilder Investor Services of Wyoming, Inc.
NEA Valuebuilder Services Insurance Agency, Inc.
Nationwide Retirement Solutions, Inc.
Nationwide Retirement Solutions, Inc. of Massachusetts
Nationwide Retirement Solutions, Inc. of Alabama
Nationwide Retirement Solutions, Inc. of Arkansas
Nationwide Retirement Solutions, Inc. of Montana
Nationwide Retirement Solutions, Inc. of New Mexico
Robert J. Woodward, Jr. Executive Vice President-Chief Investment Officer
-------------------------------------------------
Nationwide Mutual Insurance Company
Nationwide Mutual Fire Insurance Company
Nationwide General Insurance Company
Nationwide Property and Casualty Insurance Company
Nationwide Life Insurance Company
Nationwide Life and Annuity Insurance Company
AID Finance Services, Inc.
ALLIED General Agency Company
ALLIED Group, Inc.
ALLIED Group Information Systems, Inc.
ALLIED Group Insurance Marketing Company
ALLIED Group Merchant Banking Corporation
ALLIED Life Brokerage Agency, Inc.
ALLIED Life Financial Corporation
ALLIED Life Insurance Company
ALLIED Property and Casualty Insurance Company
AMCO Insurance Company
Depositors Insurance Company
Midwest Printing Services, Ltd.
Premier Agency, Inc.
Western Heritage Insurance Company
Colonial County Mutual Insurance Company
Colonial Insurance Company of Wisconsin
Employers Insurance of Wausau A Mutual Company
Employers Life Insurance Company of Wausau
Farmland Mutual Insurance Company
Gates, McDonald & Company
GatesMcDonald Health Plus, Inc.
Lone Star General Agency, Inc.
National Casualty Company
Nationwide Financial Services, Inc.
Nationwide Agribusiness Insurance Company
Nationwide Insurance Company of America
</TABLE>
C-10
<PAGE> 50
<TABLE>
<S> <C>
Nationwide Corporation
Nationwide Insurance Enterprise Foundation
Nationwide Insurance Enterprise Services, Ltd.
Nationwide Investment Services Corporation
Pension Associates of Wausau, Inc.
Nationwide Retirement Solutions, Inc.
Scottsdale Indemnity Company
Scottsdale Insurance Company
Scottsdale Surplus Lines Insurance Company
Wausau Business Insurance Company
Wausau General Insurance Company
Wausau Preferred Health Insurance Company
Wausau Service Corporation
Wausau Underwriters Insurance Company
Director
--------
Morley Financial Services, Inc.
Nationwide Global Holdings, Inc.
Nationwide Investors Services, Inc.
Member-Board of Managers and Vice Chairman
------------------------------------------
Nationwide Properties, Ltd.
Nationwide Realty Investors, Ltd.
Director and President
----------------------
California Cash Management Company
MRM Investments, Inc.
Nationwide Cash Management Company
Nationwide Community Urban Redevelopment Corporation
NWE, Inc.
Director, Executive Vice President-Chief Investment Officer
-----------------------------------------------------------
Nationwide Indemnity Company
Nationwide Advisory Services, Inc.
Nationwide Insurance Company of America
Director, Vice Chairman and Executive Vice President-Chief Investment Officer
-----------------------------------------------------------------------------
ALLIED Group Mortgage Company
Trustee and Vice Chairman
-------------------------
Nationwide Asset Allocation Trust
Nationwide Separate Account Trust
James F. Laird, Jr. Vice President and General Manager
----------------------------------
Nationwide Advisory Services, Inc.
Vice President and General Manager and Director
-----------------------------------------------
Nationwide Investors Services, Inc.
Treasurer
---------
Nationwide Investing Foundation
Nationwide Separate Account Trust
Nationwide Investing Foundation II
Financial Horizons Investment Trust
</TABLE>
C-11
<PAGE> 51
<TABLE>
<S> <C>
Nationwide Asset Allocation Trust
Nationwide Investing Foundation III
Christopher A. Cray Treasurer
---------
Nationwide Advisory Services, Inc.
Nationwide Investors Services, Inc.
Assistant Treasurer
-------------------
Nationwide Investing Foundation
Nationwide Separate Account Trust
Nationwide Investing Foundation III
Financial Horizons Investment Trust
Nationwide Asset Allocation Trust
Elizabeth A. Davin Secretary
---------
Nationwide Asset Allocation Trust
Nationwide Separate Account Trust
Nationwide Investing Foundation III
Assistant Secretary
-------------------
Nationwide Advisory Services, Inc.
Nationwide Investing Foundation
Nationwide Investing Foundation II
Nationwide Investors Services, Inc.
David E. Simaitis Secretary
---------
Nationwide Investing Foundation
Nationwide Investing Foundation II
Assistant Secretary
-------------------
Nationwide Advisory Services, Inc.
Nationwide Investors Services, Inc.
W. Sidney Druen Senior Vice President and General Counsel and Assistant Secretary
-----------------------------------------------------------------
Nationwide Mutual Insurance Company
Nationwide Mutual Fire Insurance Company
Nationwide General Insurance Company
Nationwide Property and Casualty Insurance Company
Nationwide Life Insurance Company
Nationwide Life and Annuity Insurance Company
Nationwide Advisory Services, Inc.
Nationwide Investors Services, Inc.
Employers Insurance of Wausau A Mutual Company
Employers Life Insurance Company of Wausau
Wausau Business Insurance Company
Wausau General Insurance Company
Wausau Underwriters Insurance Company
Wausau Preferred Health Insurance Company
Wausau Service Corporation
Senior Vice President and General Counsel
-----------------------------------------
ALLIED Group, Inc.
ALLIED Group Mortgage Company
</TABLE>
C-12
<PAGE> 52
<TABLE>
<S> <C>
ALLIED Life Financial Corporation
Affiliate Agency, Inc.
Affiliate Agency of Ohio, Inc.
American Marine Underwriters, Inc.
The Beak and Wire Corporation
California Cash Management Company
Colonial County Mutual Insurance Company
Colonial Insurance Company of California
Farmland Mutual Insurance Company
Nationwide Agribusiness Insurance Company
Nationwide Financial Services, Inc.
Nationwide Financial Institution Distributors Agency, Inc.
Financial Horizons Distributors Agency of Alabama, Inc.
Financial Horizons Distributors Agency of Ohio, Inc.
Financial Horizons Distributors Agency of Oklahoma, Inc.
Financial Horizons Securities Corporation
Gates, McDonald & Company of Nevada
Gates, McDonald & Company of New York, Inc.
Landmark Financial Services of New York, Inc.
National Casualty Company
Nationwide Agency, Inc.
Nationwide Cash Management Company
Nationwide Corporation
Nationwide Insurance Enterprise Services, Ltd.
Nationwide Investment Services Corporation
Nationwide Health Plans, Inc.
Nationwide Management Systems, Inc.
Nationwide Trust Company, FSB
Companies Agency, Inc.
Companies Agency Insurance Services of California
Companies Agency of Alabama, Inc.
Companies Agency of Georgia, Inc.
Companies Agency of Idaho, Inc.
Companies Agency of Kentucky, Inc.
Companies Agency of Massachusetts, Inc.
Companies Agency of New York, Inc.
Companies Agency of Pennsylvania, Inc.
Companies Agency of Phoenix, Inc.
Countrywide Services Corporation
Lone Star General Agency Inc.
Nationwide Insurance Enterprise Foundation
National Premium and Benefit Administration Company
Nationwide Properties, Ltd.
Nationwide Realty Investors, Ltd.
NEA Valuebuilder Investor Services, Inc.
NEA Valuebuilder Investor Services of Alabama, Inc.
NEA Valuebuilder Investor Services of Arizona, Inc.
NEA Valuebuilder Investor Services of Montana, Inc.
NEA Valuebuilder Investor Services of Nevada, Inc.
NEA Valuebuilder Investor Services of Ohio, Inc.
NEA Valuebuilder Investor Services of Oklahoma, Inc.
NEA Valuebuilder Investor Services of Wyoming, Inc.
NEA Valuebuilder Services Insurance Agency, Inc.
PEBSCO of Massachusetts Insurance Agency, Inc.
Pension Associates of Wausau, Inc.
Nationwide Retirement Solutions, Inc.
Nationwide Retirement Solutions of Alabama
</TABLE>
C-13
<PAGE> 53
<TABLE>
<S> <C>
Nationwide Retirement Solutions of Arkansas
Nationwide Retirement Solutions of Montana
Nationwide Retirement Solutions of New Mexico
Scottsdale Indemnity Company
Scottsdale Insurance Company
Scottsdale Surplus Lines Insurance Company
Wausau International Underwriters
Morley Financial Services, Inc.
Senior Vice President and General Counsel and Director
------------------------------------------------------
AID Finance Services, Inc.
ALLIED General Agency Company
ALLIED Group Information Systems, Inc.
ALLIED Group Insurance Marketing Company
ALLIED Group Merchant Banking Corporation
ALLIED Life Brokerage Agency, Inc.
ALLIED Life Insurance Company
ALLIED Property and Casualty Insurance Company
AMCO Insurance Company
Colonial Insurance Company of Wisconsin
Depositors Insurance Company
Gates,McDonald & Company
GatesMcDonald Health Plus, Inc.
Healthcare First, Inc.
Midwest Printing Services, Ltd.
National Casualty Company
Nationwide Cash Management Company
Premier Agency, Inc.
Western Heritage Insurance Company
Nationwide Community Urban Redevelopment Corporation
Nationwide Indemnity Company
MRM Investments, Inc.
NWE, Inc.
Nationwide Insurance Company of America
Senior Vice President and General Counsel, Assistant
----------------------------------------------------
Secretary and Director
---------------------
Nationwide Global Holdings, Inc.
Assistant Secretary
-------------------
Key Health Plan, Inc.
General Counsel
---------------
Nationwide Insurance Golf Charities, Inc.
Patricia J. Smith Assistant Secretary
-------------------
Nationwide Advisory Services, Inc.
Nationwide Horizons Investment Trust
Nationwide Investing Foundation
Nationwide Investing Foundation II
Nationwide Investing Foundation III
Nationwide Investors Services, Inc.
Nationwide Separate Account Trust
Nationwide Asset Allocation Trust
</TABLE>
C-14
<PAGE> 54
<TABLE>
<S> <C>
Edwin P. McCausland, Jr. Sr. Vice President - Fixed Income Securities
--------------------------------------------
Nationwide Mutual Insurance Company
Nationwide Mutual Fire Insurance Company
Nationwide General Insurance Company
Nationwide Property and Casualty Insurance Company
Nationwide Life Insurance Company
Nationwide Life and Annuity Insurance Company
Nationwide Advisory Services, Inc.
AID Finance Services, Inc.
ALLIED General Agency Company
ALLIED Group, Inc.
ALLIED Group Information Systems, Inc.
ALLIED Group Insurance Marketing Company
ALLIED Group Merchant Banking Corporation
ALLIED Group Mortgage Company
ALLIED Life Brokerage Agency, Inc.
ALLIED Life Financial Corporation
ALLIED Life Insurance Company
ALLIED Property and Casualty Insurance Company
AMCO Insurance Company
Depositors Insurance Company
Midwest Printing Services, Ltd.
Premier Agency, Inc.
Western Heritage Insurance Company
Colonial Insurance Company of Wisconsin
Nationwide Cash Management Company
Nationwide Indemnity Company
Nationwide Insurance Enterprise Foundation
Morley Financial Services, Inc.
Employers Insurance of Wausau A Mutual Company
Employers Life Insurance Company of Wausau
Farmland Mutual Insurance Company
Gates, McDonald & Company
GatesMcDonald Health Plus, Inc.
National Casualty Company
Nationwide Agribusiness Insurance Company
Scottsdale Indemnity Company
Scottsdale Insurance Company
Scottsdale Surplus Lines Insurance Company
Nationwide Insurance Company of America
Wausau Business Insurance Company
Wausau General Insurance Company
Wausau Preferred Health Insurance Company
Wausau Service Corporation
Wausau Underwriters Insurance Company
Assistant Treasurer
-------------------
Financial Horizons Investment Trust
Nationwide Asset Allocation Trust
Nationwide Investing Foundation
Nationwide Investing Foundation II
Nationwide Investing Foundation III
Nationwide Separate Account Trust
Joseph P. Rath Vice President - Product and Market Compliance
----------------------------------------------
Nationwide Mutual Insurance Company
</TABLE>
C-15
<PAGE> 55
<TABLE>
<S> <C>
Nationwide Mutual Fire Insurance Company
Nationwide Property and Casualty Insurance Company
Nationwide Life Insurance Company
Nationwide Life and Annuity Insurance Company
Vice President-Compliance
-------------------------
Nationwide Advisory Services, Inc.
Nationwide Investment Services Corporation
Vice President-Chief Compliance Officer
---------------------------------------
Nationwide Financial Services, Inc.
William G. Goslee Vice President
--------------
Nationwide Advisory Services, Inc.
</TABLE>
Except as otherwise noted, the principal business address of any company with
which any person specified above is connected in the capacity of director,
officer, employee, partner or trustee is One Nationwide Plaza, Columbus, Ohio
43215, except for the following companies:
Farmland Mutual Insurance Company
Nationwide Agribusiness Insurance Company
1963 Bell Avenue
Des Moines, Iowa 50315-1000
Colonial Insurance Company of Wisconsin
5525 Park Center Circle
Dublin, Ohio 43017
Employers Insurance of Wausau A Mutual Company
2000 Westwood Drive
Wausau, Wisconsin 54401-7881
Scottsdale Insurance Company
8877 North Gainey Center Drive
P.O. Box 4110
Scottsdale, Arizona 85261-4110
National Casualty Company
P.O. Box 4110
Scottsdale, Arizona 85261-4110
Lone Star General Agency, Inc.
P.O. Box 14700
Austin, Texas 78761
Auto Direkt Insurance Company
Columbus Insurance Brokerage and Service, GMBH
Leben Direkt Insurance Company
Neckura General Insurance Company
Neckura Holding Company
Neckura Insurance Company
Neckura Life Insurance Company
John E. Fisher Str. 1
61440 Oberursel/Ts.
Germany
C-16
<PAGE> 56
Public Employees Benefit Services Corporation
Two Nationwide Plaza
Columbus, Ohio 43215
Nationwide Advisory Services, Inc.
Nationwide Investors Services, Inc.
Three Nationwide Plaza,
Columbus, Ohio 43215
Morley Financial Services, Inc.
5665 S. W. Meadows Rd. , Suite 400
Lake Oswego, Oregon 97035
(b) UBT serves as investment adviser to the Morley Capital
Accumulation Fund. UBT, a trust company organized under the laws
of the State of Oregon, is a wholly owned subsidiary of
Nationwide Life Insurance Company. UBT conducts a variety of
trust activities.
To the knowledge of the Trust, none of the directors or officers
of UBT, except as set forth below, is or has been at any time
during the past two fiscal years engaged in any other business,
profession, vocation or employment of a substantial nature,
except that certain directors and officers also hold various
positions with and engage in business for Morley Financial
Services, Inc. The directors except as noted below may be
contacted C/O UBT, 5665 SW Meadows Rd., Suite 400, Lake Oswego,
Oregon 97035.
Donald C. Burdick, 434 Ridgeway Road, Lake Oswego, OR 97034 Mr.
Burdick has been an independent consultant and investor for the
past 10 years. Prior to that he was President of Investcorp
Financial Services.
Harold H. Morley, President, CEO and Director of UBT. Mr. Morley
is Chairman and Chief Executive Officer of Morley Financial
Services, Inc.
Joan K. Hall, Senior Vice President, Corporate Secretary,
Financial Officer and Director of UBT. Ms. Hall is Senior Vice
President and Financial Officer of Morley Financial Services.
David Fallow, Executive Vice President of UBT. Mr. Fallow is
President and Chief Investment Officer of Morley Financial
Services, Inc.
(c) Information for the Subadviser of the S&P 500 Index Fund
(1) The Dreyfus Corporation
The Dreyfus Corporation ("Dreyfus") acts as subadviser to
the S&P 500 Index Fund and as adviser or subadviser to a
number of other registered investment companies. The list
required by this Item 28 of officers and directors of
Dreyfus, together with information as to their other
business, profession, vocation or employment of a
substantial nature during the past two fiscal years, is
incorporated by reference to Schedule A and D of Form ADV
filed by Dreyfus (SEC file No. 801-8147).
(d) Information for the Subadviser of the Prestige Large Cap Value
Fund
(1) Brinson Partners, Inc.
Brinson Partners, Inc. ("Brinson") acts as a subadviser to
the Prestige Large Cap Value Fund and as adviser or
subadviser to a number of other registered investment
companies. The list required by this Item 28 of officers and
directors of Brinson, together with information as to their
other business, profession, vocation or employment of a
substantial nature during the past two fiscal years, is
incorporated by reference to Schedule A and D of Form ADV
filed by Brinson (SEC file No. 801-34910.)
C-17
<PAGE> 57
(e) Information for the Subadviser of the Prestige Large Cap
Growth Fund
(1) Goldman Sachs Asset Management
Goldman Sachs Asset Management ("Goldman") acts as a
subadviser to the Large Cap Growth Fund and as adviser
or subadviser to a number of other registered investment
companies. The list required by this Item 28 of officers
and directors of Goldman, together with information as
to their other business, profession, vocation or
employment of a substantial nature during the past two
fiscal years, is incorporated by reference to Schedule A
and D of Form ADV filed by Goldman (SEC file No.
801-16048.)
(f) Information for the Subadviser of the Prestige Balanced Fund
(1) J. P. Morgan Investment Management
J. P. Morgan Investment Management, Inc. ("JPMIM"), a
registered investment adviser, is a wholly owned
subsidiary of J. P. Morgan & Co. Incorporated. JPMIM
manages employee benefit plans for corporations and
unions. JPMIM also provides investment management
services for a broad spectrum of other institutional
investors, including foundations, endowments, sovereign
governments, and insurance companies.
To the knowledge of the Registrant, none of the
directors or executive officers of JPMIM is or has been
in the past two fiscal years engaged in any other
business or profession, vocation or employment of a
substantial nature, except that certain officers and
directors of JPMIM also hold various positions with, and
engage in business for, J.P. Morgan & Co. Incorporated
or Morgan Guaranty Trust Company of New York, a New York
trust company which is also a wholly owned subsidiary of
J. P. Morgan & Co. Incorporated.
(g) Information for the Subadviser of the Prestige Small Cap Fund
(1) Institutional Trust Company
Institutional Trust Company ("ITC") acts as a subadviser
to the Small Cap Fund and as adviser or subadviser to a
number of other registered investment companies. The
list required by this Item 28 of officers and directors
of ITC, together with information as to their other
business, profession, vocation or employment of a
substantial nature during the past two fiscal years, is
incorporated by reference to Schedule A and D of Form
ADV filed by ITC (SEC file No. 801-12389.)
(2) Invesco Management & Research, Inc.
Invesco Management & Research, Inc. ("INVESCO") acts as
a subadviser to the Small Cap Fund and as adviser or
subadviser to a number of other registered investment
companies. The list required by this Item 28 of officers
and directors of INVESCO, together with information as
to their other business, profession, vocation or
employment of a substantial nature during the past two
fiscal years, is incorporated by reference to Schedule A
and D of Form ADV filed by INVESCO (SEC file No.
801-01596.)
(h) Information for the Subadviser of the Prestige International
Fund
(1) Lazard Asset Management
C-18
<PAGE> 58
Lazard Asset Management ("Lazard") acts as subadviser to
the International Fund and as adviser or subadviser to a
number of other registered investment companies as well
as to separate institutional investors.
<TABLE>
<CAPTION>
Name and Address of Company with
which General Member is Connected
Name of General Member other than with Lazard and its affiliates. Capacity
- ---------------------- ------------------------------------------ --------
<S> <C> <C>
Eileen D. Alexanderson None
William Araskog None
F. Harlan Batrus Mutual of America Capital Management Corp. Director
666 Fifth Ave.
New York, New York 10103
Ryan Labs, Inc. Director
350 Albany Street
New York, New York 10280
David G. Braunschvig None
Patrick J. Callahan, Jr. Berry Metal Co. Director
Route 68
Harmony, Pennsylvania 16307
BT Capital Corp. Director
280 Park Avenue
New York, New York 10017
Lee Brass Co. (Prior to 3/1/95) Director
P.O. Box 1229
Anniston, Alabama 36202
Michigan Wheel Corp. Director
1501 Buchanan Avenue
Southwest Grand Rapids, Michigan 49507
Rotation Dynamics Corp. Director
15 Salt Creek Lane
Suite 316
Hinsdale, Illinois 60521
Somerset Technologies, Inc. Director
P.O. Box 791
New Brunswick, New Jersey 08903
GAR Holding Co. (Prior to 4/1/96) Director
600 Union Street
Ashland, Ohio 44905
Michael David-Weill BSN Gervias Danone (Prior to 8/1/96) Director
1260130 Rue Jules Grueade
Levallois-Perret (Hauts de Seinc)
France 92303
</TABLE>
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<PAGE> 59
<TABLE>
<S> <C> <C>
Credit Mobilier Industrial Chairman of the Board
(Prior to 8/1/96)
(SOVAC)
19-21 rue de la Bienfaisance
75008 Paris, France
The Dannon Company, Inc. Director
22-11 38th Avenue
Long Island City, New York 11101
Eurafrance President and Chairman of the Board
12 Avenue Percier
75008 Paris, France
Exor Group Director
19 Avenue Montaigne
75008 Paris, France
Euralux Director
8 Rue Ste-Zithe
2763 Luxembourg
Pist S.P.A. (Prior to 8/1/96) Director
Corso Marconi 10
10125 Torino
Italy
Group Danone Director
7 Rue de Teheran
75008 Paris, France
ITT Industries, Inc. Director
320 Park Avenue
New York, New York 10022
La France S.A. Director
7 & 9 Boulevard Hauggmann
75009 Paris, France
La France-Iard Director
7 & 9 Boulevard Hauggmann
75009 Paris, France
La France-Vic Director
7 & 9 Boulevard Hauggmann
75009 Paris, France
Lazard Brothers & Co., Limited Director
21 Moorfields
London EC2P-2HT
Pearson plc Director
Millbank Tower
London SWI P4Q2
Publicis S.A. Director
133 Champs-Ezlysees
</TABLE>
C-20
<PAGE> 60
<TABLE>
<S> <C> <C>
75008 Paris, France
S.A. de la Rue Imperiale de Lyon Director
49, Rue de la Republique
Lyon (Rhone) 69002 France
John V. Doyle None
Charles R. Dreifus None
Thomas F. Dunn Goldman, Sachs & Co. Senior Portfolio Manager
(Prior to 1/1/96)
65 Broadway Street
New York, New York 10004
Norman Eig The Lazard Funds, Inc. Director, Chairman
30 Rockefeller Plaza
New York, New York 10020
The Emerging World Trust Fund Limited Director
30 Rockefeller Plaza
New York, New York 10020
Lazard Pension Management, Inc. Director
30 Rockefeller Plaza
New York, New York 10020
Richard P. Emerson None
Peter R. Ezersky None
Jonathan F. Foster None
Albert H. Garner None
James S. Gold Smart & Final, Inc. Director
4700 South Boyle Avenue
Los Angeles, California 90058
Jeffrey A. Golman None
Steven J. Golub Mineral Technologies, Inc. Director
405 Lexington Avenue
New York, New York 10174-1901
Herbert W. Gullquist The Lazard Funds, Inc. Director, President
30 Rockefeller Plaza
New York, New York 10020
The Emerging World Trust Fund Limited Director
30 Rockefeller Plaza
New York, New York 10020
Lazard Freres Asset Director, President
Management (Canada), Inc.
</TABLE>
C-21
<PAGE> 61
<TABLE>
<S> <C> <C>
30 Rockefeller Plaza
New York, New York 10020
Lazard Pension Management, Inc. Director, President
30 Rockefeller Plaza
New York, New York 10020
Thomas R. Haack None
J. Ira Harris Manpower, Inc. Director
5301 North Ironwood Road
Milwaukee, Wisconsin 53201
Caremark International, Inc. Director
(Prior to 9/20/96)
2215 Sanders Road
Northbrook, Illinois 60062
Brinker International, Inc. Director
6820 LBJ Freeway
Dallas, Texas 75240
Melvin Heineman Lazard Freres & Co., Ltd. Director
21 Moorsfields
London EC2P 2HT
England
Lazard Pension Management, Inc. Director
(Prior to 1/1/97)
30 Rockefeller Plaza
New York, New York 100200
Kenneth M. Jacobs None
Jonathan H. Kagan Continental Cablevision, Inc. Director
Pilot House
54 Lewis Wharf
Boston, Massachusetts 02110
Firearms Training Systems, Inc. Director
7340 McGinnis Ferry Road
Suwanee, Georgia 301274
La SalleRe Ltd. Director
Cumberland House
One Victoria Street
P.O. HM 1502
Hamilton Hm FX
Bermuda
Patient Education Media, Inc. Director
1271 Avenue of the Americas
New York, New York 10020
Phar-Mor, Inc. (Prior to 1/1/96) Director
20 Federal Plaza West
Youngstown, Ohio 44501
</TABLE>
C-22
<PAGE> 62
<TABLE>
<S> <C> <C>
Tyco Toys, Inc. Director
6000 Midlantic Drive
Mount Laurel, New Jersey 09054
James L. Kempner Lazard Freres & Co. Capital Markets
30 Rockefeller Plaza
New York, New York 10020
William J. Kreisel Morgan Stanley & Co., Inc. Managing Director
(Prior to 12/95)
1221 Avenue of the Americas
New York, New York 10020
Larry A. Kohn Goldman Sachs & Co. Vice President
(Prior to 1/97)
85 Broad Street
New York, New York 10004
Sandra A. Lamb None
Edgar D. Legaspi None
Michael S. Liss Bear Stearns & Co. Senior Portfolio Manager
(Prior to 10/1/95)
245 Park Avenue
New York, New York 10004
William R. Loomis, Jr. Englehard Hanovia, Inc. Director
290 Park Avenue
3rd Floor - West Wing
New York, New York 10017
Minorco S.A. Director
Boite Postal 185
L-2011 Luxembourg
Minorco U.S.A., Inc. Director
30 Rockefeller Plaza
Suite 4212
New York, New York 10112
Terra Industries, Inc. Director
600 4th Street
Sioux City, Iowa 51101
J. Robert Lovejoy Lazard Freres & Co. Capital Markets
30 Rockefeller Plaza
New York, New York 10020
Matthew J. Lustig None
Philippe L. Magistretti None
Damon Mezzacappa Corporate Property Investors Director
30 Rockefeller Plaza
</TABLE>
C-23
<PAGE> 63
<TABLE>
<S> <C> <C>
New York, New York 10020
Christina A. Mohr Loehmann's Holdings, Inc. Director
2500 Halsey Street
Bronx, New York 10461
United Retail Group, Inc. Director
365 West Passaic Street
Rochelle Park, New Jersey 07662
Robert P. Morgenthau Lazard Freres Asset Management Director, Vice President
(Canada, Inc.
30 Rockefeller Plaza
New York, New York 10020
Steven J. Niemczyk None
Hamish W. M. Norton None
Jonathan O'Herron Trigon Energy Corporation Director
1 Water Street
White Plains, New York 10601
James A. Paduano Donovan Data Systems, Inc. Director
666 Fifth Avenue
New York, New York 10019
Pilgrim Electronics, Inc. Director
(Prior to 4/1/95)
60 Beaver Brook Road
Danbury, Connecticut 06810
Secure Products, Inc. Director
17 Maple Street
Summit, New Jersey 07901
Louis Perlmutter None
Robert E. Poll, Jr. None
Lester Pollack Continental Cablevision, Inc. Director
Pilot House
54 Louis Wharf
Boston, Massachusetts 02210
CNA Financial Corp (Prior to 3/1/95) Director
CNA Plaza
Chicago, Illinois 60685
Firearms Training Systems, Inc. Director
7340 McGinnis Ferry Road
Suwannee, Georgia 30174
Kaufman & Broad Home Corp. Director
</TABLE>
C-24
<PAGE> 64
<TABLE>
<S> <C> <C>
11601 Wilshire Boulevard
Los Angeles, California 90025-1748
LaSalle Re Ltd. Director
Cumberland House
One Victoria Street
P.O. HM FX
Bermuda
LaSalle Re Holdings Ltd. Director
Cumberland House
One Victoria Street
P.O. HM FX
Bermuda
Loews Corporation (Prior to 1/1/96) Director
666 Fifth Avenue
New York, New York 10103
Paramount Communications, Inc. Director
(Prior to 3/1/95)
15 Columbus Circle
New York, New York 10023
Parlex Corp. Director
145 Milk Street
Metuen, Massachusetts 01844
Polaroid Corp. Director
549 Technology Square
Cambridge, Massachusetts 02139
SD Holding (Bermuda) Ltd. Director
Hurst Holme
Trott Road
Hamilton HMII
Bermuda
Sphere Drake Acquisitions (U.K.) Ltd. Director
52-54 Leadenhall Street
London EC3A 2BJ
England
Sphere Drake Holding Ltd. Director
52-24 Leadenhall Street
London EC3A 2BJ
England
Sun America Inc. Director
11601 Wilshire Boulevard
Los Angeles, California 90025
Tidewater, Inc. Director
1440 Canal Street
Suite 2100
New Orleans, Louisiana 70112
</TABLE>
C-25
<PAGE> 65
<TABLE>
<S> <C> <C>
Michael J. Price Avidia Systems, Inc. Director
10 Fairfield Blvd.
Wallingford, Connecticut 06492
Steven L. Rattner Falcon Holding Group L.P. Director
10900 Wilshire Boulevard
Los Angeles, California 90024
John R. Reese Owosso Corp. Director
312 West Main Street
Owosso, Michigan 48867
Owosso Gan, Inc. Director
312 West Main Street
Owosso, Michigan 48867
John R. Reinsberg None
Louis G. Rice None
Luis E. Rinaldini Cedar Fair Management Co. Director
(Prior to 3/1/95)
CN 5006 Causeway Drive
Sandusky, Ohio 44870
Bruno M. Roger CAP Gemini Sogeti Director
6, Bid Jean Pain a Grenoble (38005)
France
Carnaud Metal Box Packaging Director
(Prior to 8/1/96)
152, Rue de Courcelles aq Paris 17cme
France
Compagnie De Credit Director
121, Boulevard Haussmann a Paris Seme
France
Compagnie De Saint-Gobain Director
Les Miroirs
18 Avenue d'Alsace
Paris la Defense (92096)
France
Eurafrance Director
12, Avenue Percier a Paris Seme
France
Financiere Et Industrielle Gaz Director
Et. Eaux
3, Rue Jacques Bingen a Paris 17cmc
France
Fonde Partonaires Gestion (F.P.G.) Director
121, Boulevard Hausemann a Paris Seme
France
</TABLE>
C-26
<PAGE> 66
<TABLE>
<S> <C> <C>
Lazard, Burlkin, Euna & Co. Director
(Prior to 1/1/96)
Ulmenstrasse 37-39
60325 Frankfurt am Main
Federal Republic of Germany
Lazard & Co., GmbH Director
Ulmenstrasse 37-39
60325 Frankfurt am Main
Federal Republic of Germany
LVMH-Moet Hennesy Louis Vuitton Director
30, Avenue Roche a Paris Seme
France
Marine-Wendel Director
189, Rue Taitbout a Paris 9cmc
France
Midial (Prior to 11/96) Director
192, Avenue Charles de Gaulle
Neuille S/Sein (92200)
France
Pinault-Printemps-Redoute Director
61, Rue Caumartin
75009 Paris
PSA Finance Holding (Prior to 1/1/96) Director
75, av. de la Grande Armee a Paris 16eme
France
Sidel Director
66, Rue de Miromeanil
75008 Paris
Societe Centrale Puour O'Industrie Director
9, Avenue Roche a Paris 8emc
France
Sociote Financiere Generale Director
Immobilierc (S.F.G.I.)
23, rue de I'Arcaede a Paris 9eme
France
Sofina (Belgique) Director
Rue de Naples, 38-B-1050 Bruzelles
Sogeti S.A. (Prior to 8/1/96) Director
6, bld Jean Pain a Grenoble (38005)
France
Sovac (Prior to 8/1/96) Director
19-21, rue de la Bienfaisance a Paris 8eme
</TABLE>
C-27
<PAGE> 67
<TABLE>
<S> <C> <C>
France
Sovaclux S.A. Director
14 rue Aldrigen - Luxembourg
Thomson S.A.
51 esplanade du General de Gaulle
La Defense 10-92800 Puteaux
France
Thomson CSF Director
51 Eslanade du General de Gaulle
La Defense 10-92800 Puteaux
France
U.A.P. Director
9 place Vendome
75001 Paris
Felix G. Rohatyn Crown Cork & Seal Co., Inc. Director
9300 Ashton Road
Philadelphia, Pennsylvania 19136
General Instrument Corp. Director
161 West Madison St.
Chicago, Illinois 60602
Howmet Turbine Components Corp. Director
(Prior to 1/1/96)
221 West Webster Avenue
Muskegon, Michigan 49440
Pechiney S.A. (Prior to 3/1/95) Director
23 Rue Balzac
75008 Paris, France
Pfizer, Inc. Director
235 East 42nd Street
New York, New York 10017-5755
Michael S. Rome None
Gerald Rosenfeld Case Corporation Director
700 State Street
Racine, Wisconsin 53404
Steven H. Sands None
Peter L. Smith Dixie Yarns, Inc. Director
1100 Watkins Street
Chattanooga, Tennessee 37401
Arthur P. Solomon None
Michael B. Solomon Charming Shoppes, Inc. Director
450 Winks Lane
</TABLE>
C-28
<PAGE> 68
<TABLE>
<S> <C> <C>
Bensalem, Pennsylvania 19020
Edouard M. Stern Mainz Holdings Limited Director
P.O. Boxes 3161
Roadtown Tortola BVI
Penthievre Holdings B.V. Director
Jupiter Straat 158
2130 Ah Hoofdorp Netherlands
John S. Tamagni Western Holdings, Inc. Director
(Prior to 9/20/96)
1491 Tyrell Lane
Boise, Idaho 82706
David L. Tashjian None
J. Mikceoll Thomas First National Bank of Chicago Executive Vice President
(Prior to 1/1/95)
One First National Plaza
Chicago, Illinois 60603
Donald A. Wagner None
Ali E. Wambold The Albert Fisher Group plc Director
Fisher House
61 Thames St.
Windsor, Berkshire S04 IQW
England
Lazard Brothers & Co., Ltd. Director
21 Moorfields
London EC2P 2HT
England
Lazard Burklin, Kuna & Co. Director
(Prior to 3/1/95)
Ulmeastrasse 37039
60325 Frankfurt and Main
Federal Republic of Germany
Lazard Freres & Co., Ltd. Director
21 Moorfields
London EC2P 2HT
England
Lazard S.P.A. Director
Plazza Meda, 3
Milano, Italy 20121
Tomkins PLC Director
East Putney House
84 Upper Richmond Road
London SW15 25T
England UK
</TABLE>
C-29
<PAGE> 69
<TABLE>
<S> <C> <C>
John B. Ward None
Michael A. Wildish None
Kendrick P. Wilson III American Buildings Company Director
State Docks Road
Eufaula, Alabama 36027
Bank United Director
3200 Southwest Freeway
Houston, Texas 77027
ITT Corp. Director
1330 Avenue of the Americas
New York, New York 10019
Meigher Communications, Inc. Director
100 Avenue of the Americas
New York, New York 10013
Alexander E. Zagoreoa Drayton Korea Investment Trust Director
11 Devenshire Square
London EC2M 4YR
The Egypt Trust Director
One Rockefeller Plaza
New York, New York 10020
The Emerging World Trust Fund Limited Director
One Rockefeller Plaza
New York, New York 10020
Fleming Continental European Director
One Rockefeller Plaza
New York, New York 10020
Fleming Continental European Director
Investment Trust
25 Copthall Avenue
London EC2R 7DR
Gartmore Emerging Pacific Director
Investment Trust
Gartmore House
16-18 Monument Street
London EC3R 8AJ
Greek Progress Fund Director
Ergobank
S. Evripidou
40-44, Praxit, Elous
105-61 Athens
Greece
Latin American Investment Trust Director
</TABLE>
C-30
<PAGE> 70
<TABLE>
<S> <C> <C>
Exchange House
Primrose Street
London EC2A 2NY
Merlin Green International Director
Investment Trust
Knightsbridge House
197 Knightsbridge
London SW7 1RB
New Zealand Investment Director
23 Cathedral Yard
Exeter EX1 1HB
Taiwan Opportunities Fund Director
C/O Martin-Currie
20 Castle Terrace
Edinburgh 2H1 2ES
U.K.
World Trust Fund Director
Kredietrust
11 rue Aldringen
Luxembourg 1-2960
</TABLE>
ITEM 29. PRINCIPAL UNDERWRITERS
(a) See Item 28 above.
(b) Nationwide Advisory Services, Inc.
<TABLE>
<CAPTION>
Position with Position
Name Business Address Underwriter with Registrant
---- ---------------- ----------- ---------------
<S> <C> <C> <C>
Dimon R. McFerson One Nationwide Plaza Chairman and CEO Chairman of Board of
Columbus OH 43215 Trustees
Joseph J. Gasper One Nationwide Plaza President and Director Vice Chairman of
Columbus OH 43215 Board of Trustees
Robert A. Oakley One Nationwide Plaza Exec. VP - Chief Financial N/A
Columbus OH 43215 Officer and Director
Robert J. Woodward, Jr. One Nationwide Plaza Exec. VP - Chief Investment Trustee
Columbus OH 43215 Officer and Director
William S. Druen One Nationwide Plaza Sr. VP - General Counsel N/A
Columbus OH 43215 and Assistant Secretary
James F. Laird, Jr. Three Nationwide Plaza VP - General Manager Treasurer
Columbus OH 43215
Edwin P. McCausland One Nationwide Plaza Senior VP - Fixed Income Assistant Treasurer
Columbus OH 43215 Securities
Joseph P. Rath One Nationwide Plaza VP - Compliance N/A
Columbus OH 43215
William G. Goslee One Nationwide Plaza Vice President N/A
Columbus OH 43215
</TABLE>
C-31
<PAGE> 71
<TABLE>
<S> <C> <C> <C>
Christopher A. Cray Three Nationwide Plaza Treasurer Assistant Treasurer
Columbus OH 43215
Susan A. Wolken Three Nationwide Plaza Director N/A
Columbus OH 43215
Dennis W. Click One Nationwide Plaza Vice President and Secretary N/A
Columbus OH 43215
Patricia J. Smith Three Nationwide Plaza Assistant Secretary Assistant Secretary
Columbus OH 43215
Elizabeth A. Davin One Nationwide Plaza Assistant Secretary Assistant Secretary
Columbus OH 43215
</TABLE>
ITEM 30. LOCATION OF ACCOUNTS AND RECORDS
Christopher A. Cray
Nationwide Advisory Services, Inc.
Three Nationwide Plaza
Columbus, OH 43215
ITEM 31. MANAGEMENT SERVICES
Not applicable.
ITEM 32. UNDERTAKINGS
(1) The Trust undertakes to furnish to each person to whom a prospectus is
delivered, a copy of the Trust's Annual Report, upon request and
without charge.
(2) The Trust undertakes to hold a shareholder meeting, if requested to do
so by the shareholders of at least 10% of the Trust's outstanding
shares, to call a meeting of shareholders for the purpose of voting
upon removal of a trustee or trustees and to assist shareholders in
communications with other shareholders as required by Section 16(c) of
the Investment Company Act of 1940.
C-32
<PAGE> 72
SIGNATURES
Pursuant to the requirements of the Securities Act 1933 and the Investment
Company Act of 1940, the Registrant certifies that it meets all of the
requirements for effectiveness of this Registration Statement pursuant to Rule
485(b) under the Securities Act of 1933 and has duly caused this Post-Effective
Amendment No.11 to this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Columbus, and State of
Ohio, on this fifth day of January 1999.
NATIONWIDE INVESTING FOUNDATION III
By: JAMES F. LAIRD, JR.
--------------------------
James F. Laird, Jr., Treasurer
PURSUANT TO THE REQUIREMENT OF THE SECURITIES ACT OF 1933, THIS REGISTRATION
STATEMENT HAS BEEN SIGNED BELOW BY THE FOLLOWING PERSONS IN THE CAPACITIES
INDICATED ON THE FIFTH DAY OF JANUARY 1999.
Signature & Title
- -----------------
Principal Executive Officer
DIMON R. MCFERSON*
- ----------------------------------
Dimon R. McFerson, Trustee and Chairman
Principal Accounting and Financial Officer
JAMES F. LAIRD, JR.
- ----------------------------------
James F. Laird, Jr., Treasurer
JOHN C. BRYANT*
- ----------------------------------
John C. Bryant, Trustee
C. BRENT DEVORE
- ----------------------------------
C. Brent Devore, Trustee
SUE A. DOODY*
- ----------------------------------
Sue A. Doody, Trustee
ROBERT M. DUNCAN*
- ----------------------------------
Robert M. Duncan, Trustee
CHARLES L. FUELLGRAF, JR.*
- ----------------------------------
Charles L. Fuellgraf, Jr., Trustee
THOMAS J. KERR, IV*
- ----------------------------------
Thomas J. Kerr, IV, Trustee
DOUGLAS F. KRIDLER*
- ----------------------------------
Douglas F. Kridler, Trustee
NANCY C. THOMAS*
- ----------------------------------
Nancy C. Thomas, Trustee
HAROLD W. WEIHL*
- ----------------------------------
Harold W. Weihl, Trustee
DAVID C. WETMORE*
----------------------------------
David C. Wetmore, Trustee
*By: JAMES F. LAIRD, JR.
----------------------------------
James F. Laird, Jr., Attorney-In-Fact
C-33
<PAGE> 1
Exhibit (b)(1)
NATIONWIDE INVESTING FOUNDATION III
AMENDED DECLARATION OF TRUST
FOR AN OHIO BUSINESS TRUST
(ESTABLISHED AS OF OCTOBER 30, 1997)
(AMENDED NOVEMBER 6, 1998)
<PAGE> 2
INDEX
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
ARTICLE I - Name, Principal Office, Definitions and Purposes of Trust 1
Section 1.1. Name and Principal Office
Section 1.2. Definitions
Section 1.3. Purposes of Trust
ARTICLE II - Trustees 3
Section 2.1. Initial Trustees
Section 2.2 Number of Trustees
Section 2.3. Election and Term
Section 2.4. Resignation and Removal
Section 2.5. Vacancies
Section 2.6. Delegation of Power to Other Trustees
ARTICLE III - Powers of Trustees 4
Section 3.1. General
Section 3.2. Investments
Section 3.3 Legal Title
Section 3.4. Issuance and Repurchase of Securities
Section 3.5. Borrowing Money; Lending Trust Assets
Section 3.6. Delegation; Committees
Section 3.7. Collection and Payment
Section 3.8. Expenses
Section 3.9. Manner of Acting; Bylaws
Section 3.10. Miscellaneous Powers
Section 3.11. Litigation
ARTICLE IV - Investment Advisor, Distributor,
Administrator and Transfer Agent 9
Section 4.1. Investment Advisor
Section 4.2. Distributor
Section 4.3 Administrator
Section 4.4. Transfer Agent
Section 4.5. Parties to Contract
Section 4.6. Compliance with 1940 Act
ARTICLE V - Limitations of Liability of Shareholders,
Trustees and Others 11
Section 5.1. No Personal Liability of Shareholders, Trustees, etc.
Section 5.2 Mandatory Indemnification
Section 5.3 No Bond Required of Trustees
Section 5.4 No Duty of Investigation; Notice in Trust Instruments, etc.
Section 5.5 Reliance on Experts, etc.
Section 5.6 Indemnification not Exclusive, etc.
Section 5.7 Liability of Series
</TABLE>
i
<PAGE> 3
<TABLE>
<S> <C>
ARTICLE VI - Shares of Beneficial Interest 15
Section 6.1. Beneficial Interest
Section 6.2. Establishment and Designation of Series
Section 6.3 Rights of Shareholders
Section 6.4. Trust Only
Section 6.5 Issuance of Shares
Section 6.6. Register of Shares; Share Certificates
Section 6.7. Transfer of Shares
Section 6.8. Notices
Section 6.9. Treasury Shares
Section 6.10. Investments in Trust
Section 6.11. Series or Class Designation
ARTICLE VII - Redemptions 22
Section 7.1. Redemption of Shares
Section 7.2. Price
Section 7.3. Payment
Section 7.4. Effect of Suspension of Determination of Net Asset Value
Section 7.5. Repurchase by Agreement
Section 7.6. Redemption of Shareholder's Interest
Section 7.7. Reductions in Number of Outstanding Shares Pursuant to Net Asset
Value Formula
Section 7.8. Suspension of Right of Redemption
Section 7.9. Redemption of Shares; Disclosure of Holding
ARTICLE VIII - Determination of Net Asset Value, Net 24
Income and Distributions
Section 8.1. Net Asset Value
Section 8.2. Distribution to Shareholders
Section 8.3. Determination of Net Income
Section 8.4. Power to Modify Foregoing Procedures
ARTICLE IX - Duration; Termination and Trust; Amendment; 25
Mergers, etc.
Section 9.1. Duration
Section 9.2. Termination of Trust
Section 9.3. Amendment Procedure
Section 9.4. Merger, Consolidation and Sale or Disposition of Assets
Section 9.5. Incorporation
Section 9.6. Absence of Dissenters' Rights
ARTICLE X - Shareholders' Voting Powers and Meetings 28
Section 10.1. Voting Powers
Section 10.2. Meetings of Shareholders
Section 10.3. Quorum and Required Vote
Section 10.4. Record Date for Meetings
Section 10.5. Proxies
Section 10.6. Action Without a Meeting
Section 10.7. Inspection of Records
Section 10.8. Additional Provisions
</TABLE>
ii
<PAGE> 4
<TABLE>
<S> <C>
ARTICLE XI - Miscellaneous 31
Section 11.1. Filing
Section 11.2. Governing Law
Section 11.3. Counterparts
Section 11.4. Reliance by Third Parties
Section 11.5. Provisions in Conflict with Law or Regulations
Section 11.6. Index and Heading for Reference Only
</TABLE>
iii
<PAGE> 5
AMENDED DECLARATION OF TRUST
NATIONWIDE INVESTING FOUNDATION
DECLARATION OF TRUST made at Columbus, Ohio as of the 30th day of
October, 1997 and amended as of the September 1, 1998 by the Trustees hereunder,
and by the holders of Shares of beneficial interest to be issued hereunder as
hereinafter provided.
WHEREAS, the Trustees desire to establish a trust for the investment
and reinvestment of funds contributed thereto; and
WHEREAS, the Trustees desire that the beneficial interest in the trust
assets be divided into transferable shares of beneficial interest; and:
WHEREAS, the Trustees have agreed to manage all property coming into
their hands as trustees of an Ohio business trust in accordance with the
provisions of Chapter 1746, Ohio Revised Code, and as hereinafter set forth.
NOW THEREFORE, the Trustees hereby declare that all money and property
contributed to the trust established hereunder shall be held and managed in
trust for the benefit of holders, from time to time, of the shares of beneficial
interest issued hereunder and subject to the provisions hereof.
ARTICLE I
NAME, PRINCIPAL OFFICE, DEFINITIONS AND PURPOSES OF TRUST
SECTION 1.1. NAME AND PRINCIPAL OFFICE. The name of the trust created
hereby is "Nationwide Investing Foundation III" and the Trustees shall conduct
the business of the Trust under that name or any other name as the Trustees may
from time to time determine. The principal office of the Trust is located in
Columbus, Ohio.
SECTION 1.2. DEFINITIONS. Wherever they are used herein, the following
terms have the following respective meanings:
(a) "ADMINISTRATOR" means the party other than the Trust, to the
contract described in Section 4.3 hereof.
(b) "BYLAWS" means the Bylaws referred to in Section 3.9 hereof, as
from time to time amended.
(c) "CLASS" refers to one or more classes or sub-series of Shares
established and designated under or in accordance with the provisions
of Article VI.
(d) The terms "COMMISSION" and "INTERESTED PERSON" shall have the
meanings given them in the 1940 Act. The term "MAJORITY SHAREHOLDER
VOTE" shall refer to the 67% or
1
<PAGE> 6
50% requirement in Section 2(a)(42) of the 1940 Act, whichever may be
applicable and as may be amended, except to the extent that the
Trustees have otherwise defined "Majority Shareholder Vote" in
conjunction with the establishment of any Series of Shares.
(e) "DECLARATION" means this Declaration of Trust as amended from time
to time. Reference in this Declaration of Trust to "DECLARATION",
"HEREOF", "HEREIN" and "HEREUNDER" shall be deemed to refer to this
Declaration rather than the article or section in which such words
appear.
(f) "DISTRIBUTOR" means the party, other than the Trust, to the
contract described in Section 4.2 hereof.
(g) "INVESTMENT ADVISER" means the party, other than the Trust, to the
contract described in Section 4.1 hereof.
(h) The "1940 ACT" means the Investment Company Act of 1940 and the
rules and regulations thereunder, as amended from time to time.
(i) "PERSON" means and includes individuals, corporations,
partnerships, trusts, associations, joint ventures and other entities,
whether or not legal entities, and governments and agencies and
political subdivisions thereof.
(j) "SERIES" refers to a series of Shares established and designated
under or in accordance with the provisions of Article VI.
(k) "SHARE" or "SHARES" means the units of interest into which the
beneficial interest in the Trust shall be divided from time to time,
including the Shares of any Series or Class which may be established by
the Trustees, and includes fractions of Shares as well as whole Shares.
(l) "SHAREHOLDER" means a record owner of outstanding Shares.
(m) "TRANSFER AGENT" means the party, other than the Trust, to the
contract described in Section 4.4 hereof.
(n) The "TRUST" means Nationwide Investing Foundation III and refers to
the Ohio business trust established by this Declaration of Trust, as
amended from time to time.
(o) The "TRUST PROPERTY" means any and all property, real or personal,
tangible or intangible, which is owned or held by or for the account of
the Trust or the Trustees.
(p) The "TRUSTEE" OR "TRUSTEES" means the person or persons who have
signed this Declaration, so long as such person or persons shall
continue in office in accordance with the terms hereof, and all other
persons who may from time to time be duly elected, qualified and
serving as Trustees in accordance with the provisions hereof, and
reference herein to a
2
<PAGE> 7
Trustee or the Trustees shall refer to such person or persons in their
capacity as trustee or trustees hereunder.
SECTION 1.3. PURPOSES OF TRUST. The purposes of the Trust are to
operate as an investment company as defined in the 1940 Act and to engage in any
lawful activity for which business trusts may be formed under Chapter 1746, Ohio
Revised Code.
ARTICLE II
TRUSTEES
SECTION 2.1. INITIAL TRUSTEES. Upon the execution of this Declaration
of Trust or a counterpart hereof or some other writing in which each of the
Trustees accepts such trusteeship and agrees to the provisions hereof, each of
the Trustees listed at the end of this Declaration of Trust shall become the
initial Trustees of the Trust.
SECTION 2.2. NUMBER OF TRUSTEES. The number of Trustees shall be such
number as shall be fixed from time to time by a written instrument signed by a
majority of the Trustees. The Trustees serving as such, whether described in
Section 2.1 above or hereafter becoming a Trustee, may increase or decrease the
number of Trustees to a number other than the number theretofore determined. A
Trustee shall qualify by accepting in writing his election or appointment and
agreeing to be bound by the Declaration of Trust. No decrease in the number of
Trustees shall have the effect of removing any Trustee from office prior to the
expiration of his or her term, but the number of Trustees may be decreased in
conjunction with the removal of a Trustee pursuant to Section 2.4.
SECTION 2.3. ELECTION AND TERM. Except for the Trustees named herein or
appointed to fill vacancies pursuant to Section 2.5 hereof, the Trustees shall
be elected by the Shareholders, who shall vote as a single class and not by
Series and shall vote at such times as the Trustees shall determine that such
election is required by the 1940 Act or is otherwise advisable. There is no
requirement that the Trustees have an annual meeting of the Shareholders. In the
event the Trustees determine to have an annual or special meeting of the
Shareholders at which Trustees will be elected, it shall be held at such time
and place and in such manner as the Bylaws shall provide notwithstanding
anything in this section to the contrary. Except in the event of death,
resignation or removal, each of the Trustees shall hold office until the next
meeting of Shareholders called for the purpose of electing Trustees and until
his successor is elected and qualified to serve as Trustee.
SECTION 2.4. RESIGNATION AND REMOVAL. Any Trustee may resign his trust
(without need for prior or subsequent accounting except to the extent required
by the 1940 Act or under circumstances that would justify the Trustee's removal
for cause and then only if required by the remaining Trustees) by an instrument
in writing signed by him and delivered to the other Trustees or to any officer
of the Trust or at a meeting of the Trustees, and such resignation shall be
effective upon such delivery, or at a later date according to the terms of the
instrument. Any of the Trustees may be removed with or without cause, by the
written action of two-thirds of the number of Trustees prior to such removal or
by Shareholders at any meeting called for that purpose. No Trustee shall be
entitled to any damages on account of such removal. Upon the resignation or
removal of a Trustee, or his otherwise ceasing to be a Trustee, he shall execute
and deliver such documents as the
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remaining Trustees shall require for the purpose of conveying to the Trust or
the remaining Trustees any Trust Property held in the name of the resigning or
removed Trustee. Upon the incapacity or death of any Trustee, his legal
representative shall execute and deliver on his behalf such documents as the
remaining Trustees shall require as provided in the preceding sentence.
SECTION 2.5. VACANCIES. The term of office of a Trustee shall terminate
and a vacancy shall occur in the event of the death, resignation, removal,
bankruptcy, adjudicated incompetence or other incapacity to perform the duties
of the office of a Trustee. No such vacancy shall operate to annul this
Declaration or to revoke any existing agency or contract created or entered into
pursuant to the terms of the Declaration. In the case of an existing vacancy,
including a vacancy existing by reason of an increase in the number of Trustees
as set forth in Section 2.2. hereof, subject to the provisions of Section 16(a)
of the 1940 Act, the remaining Trustees may fill such vacancy by the appointment
of such other person or persons as they in their discretion shall see fit, made
by a written instrument signed by a majority of the remaining Trustees. Any such
appointment shall not become effective, however, until the person named in the
written instrument of appointment shall have accepted in writing such
appointment and agreed in writing to be bound by the terms of the Declaration.
An appointment of a Trustee may be made in anticipation of a vacancy to occur at
a later date by reason of retirement, resignation or increase in the number of
Trustees, provided that such appointment shall not become effective prior to
such retirement, resignation or increase in the number of Trustees. Whenever a
vacancy in the number of Trustees shall occur, until such vacancy is filled as
provided in this Section 2.5., the Trustees in office, regardless of their
number, shall have all the powers granted to the Trustees and shall discharge
all the duties imposed upon the Trustees by the Declaration. A written
instrument certifying the existence of such vacancy signed by a majority of the
Trustees shall be conclusive evidence of the existence of such vacancy.
Notwithstanding the foregoing, to the extent the Trust adopts and
implements a written plan pursuant to Rule 12b-1 under the 1940 Act, and so long
as required by the 1940 Act, the selection and nomination of Trustees who are
"interested persons" of the Trust as defined in the 1940 Act, shall be committed
to the discretion of the Trustees who are not "interested persons," as so
defined.
SECTION 2.6. DELEGATION OF POWER TO OTHER TRUSTEES. Any Trustee may, by
power of attorney, delegate his power for a period not exceeding six (6) months
at any one time to any other Trustee or Trustees; provided that in no case shall
less than two (2) Trustees personally exercise the powers granted to the
Trustees under the Declaration except as herein otherwise expressly provided and
except to the extent that the exercise of such power would be prohibited by the
1940 Act.
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ARTICLE III
POWERS OF TRUSTEES
SECTION 3.1. GENERAL. The Trustees shall have exclusive and absolute
control over the Trust Property and over the business of the Trust to the same
extent as if the Trustees were the sole owners of the Trust Property and
business in their own right, but with such powers of delegation as may be
permitted by the Declaration. The Trustees shall have power to conduct the
business of the Trust and carry on its operations and maintain offices both
within and without the State of Ohio, in any and all states of the United States
of America, in the District of Columbia, and in any and all commonwealths,
territories, dependencies, colonies, possessions, agencies or instrumentalities
of the United States of America and of foreign governments, and to do all such
other things and execute all such instruments as they deem necessary, proper or
desirable in order to promote the interests of the Trust although such things
are not herein specifically mentioned. Any determination as to what is in the
interest of the Trust made by the Trustees in good faith shall be conclusive. In
construing the provisions of the Declaration, the presumption shall be in favor
of a grant of power to the Trustees.
The enumeration of any specific power herein shall not be construed as
limiting the aforesaid power. Such powers of the Trustees may be exercised
without order of or resort to any court.
SECTION 3.2. INVESTMENTS. The Trustees shall have the power to:
(a) Conduct, operate and carry on the business of an investment company
and exercise all the powers necessary and appropriate for the conduct
of such operations;
(b) Invest in, hold for investment, or reinvest in, securities,
including common and preferred stocks; shares of other investment
companies; warrants; bonds; debentures; bills; time notes and all other
evidences of indebtedness; negotiable or non-negotiable instruments;
government securities, including securities of any state, municipality
or other political subdivision, or any governmental or
quasi-governmental agency or instrumentality; and money market
instruments including bank certificates of deposit, finance paper,
commercial paper, bankers' acceptances and all kinds of repurchase
agreements, of any corporation, company, trust, association, firm or
other business organization however established, and of any country,
state, municipality or other political subdivisions, or any
governmental or quasi-governmental agency or instrumentality;
(c) Acquire (by purchase, subscription or otherwise), to hold, to trade
in and deal in, to acquire or write any rights or options to purchase
or sell, to sell or otherwise dispose of, to lend, and to pledge any
such securities and repurchase agreements and forward foreign currency
exchange contracts, to purchase and sell futures contracts on
securities, securities indices and foreign currencies, to purchase or
sell options on such contracts, foreign currency contracts and foreign
currencies and to engage in all types of hedging and risk management
transactions;
(d) Exercise all rights, powers and privileges of ownership or interest
in all securities included in the Trust Property, including the right
to vote thereon and otherwise act with
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respect thereto, to exercise the powers and rights of subscription, and
to do all acts for the preservation, protection, improvements and
enhancement in value of all such securities;
(e) Join with other holders of any securities or debt instruments in
acting through a committee, depository, voting trustee or otherwise,
and in that connection to deposit any security or debt instrument with,
or transfer any security or debt instrument to, any such committee,
depository or trustee, and to delegate to them such power and authority
with relation to any security or debt instrument (whether or not so
deposited or transferred) as the Trustees shall deem proper, and to
agree to pay, and to pay, such committee, depository or trustee as the
Trustees shall deem proper;
(f) Acquire (by purchase, lease or otherwise) and to hold, use,
maintain, develop and dispose of (by sale or otherwise) any property,
real or personal, including cash, and any interest therein;
(g) Act as a distributor of shares and as underwriter of, or broker or
dealer in, securities or other property;
(h) Allocate assets, liabilities and expenses of the Trust to a
particular Series or Class of Shares or to apportion the same among two
or more Series or Classes, provided that any liabilities or expenses
incurred by a particular Series or Class of Shares shall be payable
solely out of the assets of that Series;
(i) Consent to or participate in any plan for the reorganization,
consolidation or merger of any corporation or issuer the security or
debt instrument of which is or was held in the Trust; to consent to any
contract, lease, mortgage, purchase or sale of property by such
corporation or issuer, and to pay calls or subscriptions with respect
to any security or debt instrument held in the Trust;
(j) Aid by further investment any corporation, company, trust,
association or firm, any obligation of or interest in which is included
in the Trust Property or in the affairs of which the Trustees have any
direct or indirect interest; to do all acts and things designed to
protect, preserve, improve or enhance the value of such obligation or
interest; to guarantee or become surety on any or all of the contracts,
stocks, bonds, notes, debentures and other obligations of any such
corporation, company, trust, association or firm; and
(k) In general to carry on any other business in connection with or
incidental to any of the foregoing powers, to do everything necessary,
suitable or proper for the accomplishment of any purpose or the
attainment of any object or the furtherance of any power hereinbefore
set forth, either alone or in association with others, to do every
other act or thing incidental or appurtenant to or growing out of or
connected with the aforesaid business or purposes, objects or powers,
and to engage in any other lawful act or activity in which corporations
organized under Chapter 1701, Ohio Revised Code, may engage.
The foregoing clauses shall be construed both as objects and powers,
and the foregoing enumeration of specific powers shall not be held to limit or
restrict in any manner the general powers of the Trustees.
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The Trustees shall not be limited to investing in obligations maturing
before the possible termination of the Trust, nor shall the Trustees be limited
by any law limiting the investments which may be made by fiduciaries.
SECTION 3.3. LEGAL TITLE. Legal title to all the Trust Property shall
be vested in the Trustees except that the Trustees shall have power to cause
legal title to any Trust Property to be held by or in the name of one or more of
the Trustees, or in the name of the Trust, or in the name of any other Person as
nominee, on such terms as the Trustees may determine, provided that the interest
of the Trust therein is appropriately protected. The right, title and interest
of the Trustees in the Trust Property shall vest automatically in each Person
who may hereafter become a Trustee. Upon the resignation, removal or death of a
Trustee, he shall automatically cease to have any right, title or interest in
any of the Trust Property, and the right, title and interest of such Trustee in
the Trust Property shall vest automatically in the remaining Trustees. Such
vesting and cessation of title shall be effective whether or not conveyancing
documents have been executed and delivered.
SECTION 3.4. ISSUANCE AND REPURCHASE OF SECURITIES. The Trustees shall
have the power to issue, sell, repurchase, redeem, retire, cancel, acquire,
hold, resell, reissue, dispose of, transfer, and otherwise deal in Shares and,
subject to the provisions set forth in Articles VI, VII, VIII, and IX hereof, to
apply to any such repurchase, redemption, retirement, cancellation or
acquisition of Shares any funds or property of the Trust whether capital or
surplus or otherwise, to the full extent now or hereafter permitted by the laws
of the of Ohio governing business corporations.
SECTION 3.5. BORROWING MONEY; LENDING TRUST ASSETS. The Trustees shall
have power to borrow money or otherwise obtain credit to secure the same by
mortgaging, pledging or otherwise subjecting as security the assets of the
Trust, to endorse, guarantee, or undertake the performance of any obligation,
contract or engagement of any other Person and to lend Trust assets.
SECTION 3.6. DELEGATION; COMMITTEES. The Trustees shall have power to
delegate from time to time to such of their number or to officers, employees or
agents of the Trust the doing of such things and the execution of such
instruments either in the name of the Trust or the names of the Trustees or
otherwise as the Trustees may deem expedient, to the extent such delegation is
permitted by the 1940 Act, including without implied limitation the power and
authority to act in the name of the Trust and of the Trustees, to sign documents
and to act as attorney-in-fact for the Trustees.
SECTION 3.7. COLLECTION AND PAYMENT. The Trustees shall have power to
collect all property due to the Trust; to pay all claims, including taxes,
against the Trust Property; to prosecute, defend, compromise or abandon any
claims relating to the Trust Property; to foreclose any security interest
securing any obligations, by virtue of which any property is owed to the Trust;
and to enter into releases, agreements and other instruments.
SECTION 3.8. EXPENSES. The Trustees are authorized to pay or cause to
be paid out of the principal or income of the Trust, or partly out of principal
and partly out of income, and to charge or allocate the same to, between or
among such one or more of the Series or Classes that may be established pursuant
to Article VI, as the Trustees deem fair, all expenses, fees, charges, taxes and
liabilities incurred or arising in connection with the Trust, or in connection
with the management
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thereof, including, but not limited to, the Trustees' compensation and such
expenses and charges for the services of the Trust's officers, employees,
Investment Adviser, Distributor, Administrator, Transfer Agent, auditor, counsel
and such other agents, consultants and independent contractors and such other
expenses and charges as the Trustees may deem necessary or proper to incur.
Without limiting the generality of any other provision hereof, the Trustees
shall be entitled to reasonable compensation from the Trust for their services
as Trustees and may fix the amount of such compensation.
SECTION 3.9. MANNER OF ACTION; BYLAWS. Except as otherwise provided
herein or in the Bylaws or in the 1940 Act, any action to be taken by the
Trustees may be taken by a majority of the Trustees present at a meeting of
Trustees (a quorum being present), including any meeting held by means of a
conference telephone or similar communications equipment by means of which all
persons participating in the meeting can hear each other, or by written consents
of a majority of the Trustees (unless a higher proportion is required by the
1940 Act or other applicable law). The Trustees may adopt Bylaws not
inconsistent with this Declaration to provide for the conduct of the business of
the Trust and may amend or repeal such Bylaws to the extent such power is not
reserved to the Shareholders.
Notwithstanding the foregoing provisions of this Section 3.9 and in
addition to such provisions or any other provision of this Declaration or of the
Bylaws, the Trustees may by resolution appoint a committee consisting of less
than the whole number of Trustees then in office, which committee may be
empowered to act for and bind the Trustees and the Trust, as if the acts of such
committee were the acts of all the Trustees then in office, with respect to the
institution, prosecution, dismissal, settlement, review or investigation of any
action, suit or proceeding which shall be pending or threatened to be brought
before any court, administrative agency or other adjudicatory body.
SECTION 3.10. MISCELLANEOUS POWERS. The Trustees shall have the power
to: (a) employ or contract with such Persons as the Trustees may deem desirable
for the transaction of the business of the Trust; (b) enter into joint ventures,
partnerships and any other combinations or associations; (c) remove Trustees or
fill vacancies in or add to their number, elect and remove such officers and
appoint and terminate such agents or employees as they consider appropriate, any
one or more of the foregoing of whom may be a Trustee, and appoint from their
own number, and terminate, any one or more committee which may exercise some or
all of the power and authority of the Trustees as the Trustees may determine;
(d) purchase, and pay for out of Trust Property, insurance policies insuring the
assets of the Trust and the payment of distributions and principal on its
portfolio investments and insurance policies insuring the Shareholders,
Trustees, officers, employees, agents, investment advisers, distributors,
selected dealers or independent contractors of the Trust against all claims
arising by reason of holding or having held any such position or by reason of
any action taken or omitted by any such Person in such capacity, whether or not
constituting negligence, or whether or not the Trust would have the power to
indemnify such Person against such liability; (e) establish pension,
profit-sharing, Share purchase, and other retirement, incentive and benefit
plans for any Trustees, officers, employees and agents of the Trust; (f) to the
extent permitted by law, indemnify any person with whom the Trust has dealings,
including the Investment Adviser, Distributor, Administrator, Transfer Agent and
selected dealers, to such extent the Trustees shall determine; (g) guarantee
indebtedness or contractual obligations of others; (h) determine and change the
fiscal year
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of the Trust and the method by which its accounts shall be kept; and (i) adopt a
seal for the Trust, but the absence of such seal shall not impair the validity
of any instrument executed on behalf of the Trust.
SECTION 3.11. LITIGATION. The Trustees shall have the power to engage
in and to prosecute, defend, compromise, abandon, or adjust, by arbitration, or
otherwise, any actions, suits, proceedings, disputes, claims, and demands
relating to the Trust, and out of the assets of the Trust to pay or to satisfy
any debts, claims or expenses incurred in connection therewith, including those
of litigation, and such power shall include without limitation the power of the
Trustees or any appropriate committee thereof, in the exercise of their or its
good faith business judgment, to dismiss any action, suit, proceeding, dispute,
claim, or demand, derivative or otherwise, brought by any person, including a
Shareholder in its own name or the name of the Trust, whether or not the Trust
or any of the Trustees may be named individually therein or the subject matter
arises by reason of business for or on behalf of the Trust.
ARTICLE IV
INVESTMENT ADVISER, DISTRIBUTOR, ADMINISTRATOR
AND TRANSFER AGENT
SECTION 4.1. INVESTMENT ADVISER. Subject to a Majority Shareholder Vote
unless such vote is not required pursuant to the 1940 Act or Commission rule or
exemption, the Trustees may, in their discretion, from time to time enter into
one or more investment advisory or management contracts whereby the other party
to such contract shall undertake to furnish the Trust such management,
investment advisory, statistical and research facilities and services,
promotional activities, and such other facilities and services, if any, as the
Trustees shall from time to time consider desirable and all upon such terms and
conditions as the Trustees may, in their discretion, determine. Notwithstanding
any provisions of the Declaration, the Trustees may authorize the Investment
Adviser (subject to such general or specific instructions as the Trustees may
from time to time adopt) to effect purchases, sales, loans or exchanges of
portfolio securities of the Trust on behalf of the Trustees or may authorize any
officer, employee or Trustee to effect such purchases, sales, loans or exchanges
pursuant to recommendations of the Investment Adviser (and all without further
action by the Trustees). Any such purchases, sales, loans and exchanges shall be
deemed to have been authorized by all of the Trustees.
SECTION 4.2. DISTRIBUTOR. The Trustees may, in their discretion, from
time to time enter into a contract, providing for the sale of Shares to the
Trust at not less than the net asset value per Share (as described in Article
VIII hereof), whereby the Trust may either agree to sell the Shares to the other
party to the contract or appoint such other party its sales agent for such
Shares. In either case, the contract shall be on such terms and conditions as
the Trustees may in their discretion determine not inconsistent with the
provisions of this Article IV or the Bylaws; and such contract may also provide
for the repurchase or sale of Shares of the Trust by such other party as
principal or as agent of the Trust and may provide that such other party may
enter into selected dealer agreements with registered securities dealers or
other qualified distributors to further the purpose of the distribution or
repurchase of the Shares.
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SECTION 4.3. ADMINISTRATOR. The Trustees may, in their discretion, from
time to time enter into an administrative services agreement whereby the other
party to such contract shall provide facilities, equipment, and personnel to
carry out certain administrative services for the operation of the business and
affairs of the Trust and each of its separate Series, including the fund
accounting responsibilities with respect to the Trust, the Series and any
Classes. The contract shall have such terms and conditions as the Trustees may,
in their discretion, determine not inconsistent with the Declaration or the
Bylaws. Such services may be provided by one or more Persons.
SECTION 4.4. TRANSFER AGENT. The Trustees may, in their discretion,
from time to time enter into a transfer agency and shareholder service contract
whereby the other party to such contract shall undertake to furnish transfer
agency and shareholder services to the Trust. The contract shall have such terms
and conditions as the Trustees may, in their discretion, determine not
inconsistent with the Declaration or the Bylaws. Such services may be provided
by one or more Persons.
SECTION 4.5. PARTIES TO CONTRACT. Subject to compliance with the
provisions of the 1940 Act, but not withstanding any limitations of present and
future law or custom in regard to delegation of powers by trustees generally,
the Trustees may, at any time and without limiting the generality of their
powers and authority otherwise set forth herein, enter into one or more
exclusive or non-exclusive contracts with any one or more corporations, trusts,
associations, partnerships, limited partnerships, other types of organizations
or individuals ("Contracting Party") to provide for the performance and
assumption of the services, duties and responsibilities to, for or of the Trust
and /or the Trustees as described in Sections 4.1, 4.2, 4.3, and 4.4 above and
to provide for the performance and assumption of such other services, duties and
responsibilities in addition to those set forth above as the Trustees may
determine appropriate (collectively, such services, duties and responsibilities
are referred to as "Services").
The same person may be the Contracting Party for some or all of the
Services and the contracts with respect thereto may contain such terms
interpretive of or in addition to the delineation of the Services for, including
provisions (to the extent consistent with the 1940 Act) relating to the standard
of duty of and the rights to indemnification of the Contacting Party and others,
as the Trustees may determine. Subject to the 1940 Act, nothing herein shall
preclude, prevent or limit the Trust or a Contracting Party from entering into
sub-contractual arrangements for any of the Services.
Subject to the provisions of the 1940 Act, the fact that:
(a) any of the Shareholders, Trustees or officers of the Trust is a
shareholder, director, officer, partner, trustee, employee, manager,
investment adviser, distributor or agent of or for any Contracting
Party, or of or for any parent or affiliate of any Contracting Party or
that the Contracting Party or any parent or affiliate thereof is a
Shareholder or has an interest in the Trust; or
(b) any Contracting Party may have a contract providing for the
rendering of any similar Services to one or more other corporations,
trusts, associations, partnerships, limited partnerships or other
organizations, or has other business or interests shall not affect the
validity of any contract for the performance and assumption of Services
or disqualify any Shareholder, Trustee or officer of the Trust from
voting upon or executing the same or create
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any liability or accountability to the Trust or its Shareholders,
provided in the case of any relationship or interest referred to in the
preceding clause (a) on the part of on the part of any Trustee or
officer of the Trust either (i) the material facts as to such
relationship of interest have been disclosed to or are known by the
Trustees not having any such relationship or interest and the contract
involved is approved in good faith by a majority of such Trustees not
having any such relationship or interest (even though such unrelated or
disinterested Trustees are less than a quorum of all of the Trustees);
or (ii) the material facts as to such relationship or interest and as
to the contract have been disclosed to or are known by the Shareholders
entitled to vote thereon and the contract involved is specifically
approved in good faith by vote of the Shareholders; or (iii) the
specific contract involved is fair to the Trust as of the time it is
authorized, approved or ratified by the Trustees or by the
Shareholders.
SECTION 4.6. COMPLIANCE WITH 1940 ACT. Any contract entered into
pursuant to Sections 4.1 or 4.2 shall be consistent with and subject to the
requirements of Section 15 of the 1940 Act (including any amendment thereof or
other applicable Act of Congress hereafter enacted) with respect to its
continuance in effect, its termination and the method of authorization and
approval of such contract or renewal thereof.
ARTICLE V
LIMITATIONS OF LIABILITY OF SHAREHOLDERS
TRUSTEES AND OTHERS
SECTION 5.1. NO PERSONAL LIABILITY OF SHAREHOLDERS, TRUSTEES, ETC. No
Trustee, officer, employee or agent of the Trust shall be subject to any
personal liability whatsoever to any Person, other than the Trust or its
Shareholders, in connection with Trust Property or the affairs of the Trust,
except that arising from bad faith, willful misfeasance, gross negligence or
reckless disregard for his duty to such Person; and all such Persons shall look
solely to the Trust Property for satisfaction of claims of any nature arising in
connection with the affairs of the Trust.
No Shareholder as such shall be subject to any personal liability
whatsoever to any Person in connection with Trust Property or the acts,
obligations or affairs of the Trust. If any Shareholder or former Shareholder
shall be charged or held personally liable for any obligation or liability of
the Trust solely by reason of being or having been a Shareholder and not because
of such Shareholder's acts or omissions or for some other reason, the Trust
(upon proper and timely request by the Shareholder) shall assume the defense
against such charge and satisfy any judgment or settlement thereon, and the
Shareholder or former Shareholder (or his heirs, executors, administrators or
other legal representatives or in the case of a corporation or other entity, its
corporate or other general successor) shall be entitled out of the assets of the
Trust Property to be held harmless from and indemnified against all loss and
expense arising from such liability.
The exercise by the Trustees of their powers and discretion hereunder
shall be binding upon everyone interested. A Trustee shall be liable for his own
willful misfeasance, bad faith, gross negligence or reckless disregard of the
duties involved in the conduct of the office of Trustee, and for nothing else,
and shall not be liable for errors of judgment or mistakes of fact or law.
Subject
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to the foregoing, (a) the Trustees shall not be responsible or liable in any
event for any neglect or wrongdoing of any officer, agent, employee, consultant,
Investment Adviser, Distributor, Administrator, or Transfer Agent of the Trust,
nor shall any Trustee be responsible for the act or omission of any other
Trustee; and (b) the Trustees may rely on the advice of counsel or experts as
described in Section 5.6 below.
SECTION 5.2. MANDATORY INDEMNIFICATION.
(a) Subject to the exceptions and limitations contained in paragraph
(b) below:
(i) Every person who is, or has been a Trustee or officer of
the Trust shall be indemnified by the Trust against all
liability and against all expenses reasonably incurred or paid
by him in connection with any claim, action, suit or
proceeding in which he becomes involved as a party or
otherwise by virtue of his being or having been a Trustee or
officer and against amounts paid or incurred by him in the
settlement thereof.
(ii) The words "claim", "action", "suit" or "proceeding" shall
apply to all claims, actions, suits or proceedings (civil,
criminal or other, including appeals), actual or threatened;
and the words "liability" and "expenses" shall include,
without limitation, attorneys' fees, costs, judgments, amounts
paid in settlement, fines, penalties and other liabilities.
(b) No indemnification shall be provided hereunder to a Trustee or
officer:
(i) against any liability to the Trust or the Shareholders by
reason of a final adjudication by the court or other body
before which the proceeding was brought that he engaged in
willful misfeasance, bad faith, gross negligence or reckless
disregard of the duties involved in the conduct of his office;
(ii) with respect to any matter as to which he shall have been
finally adjudicated not to have acted in good faith or in the
reasonable belief that his action was in or not opposed to the
best interest of the Trust; or
(iii) in the event of a settlement or other disposition not
involving a final adjudication as provided in paragraphs
(b)(i) or (b)(ii) resulting in a payment by a Trustee or
officer, unless there has been either a determination that
such Trustee or officer did not engage in willful misfeasance,
bad faith, gross negligence or reckless disregard of the
duties involved in the conduct of his office by the court or
other body approving the settlement or other disposition or by
a reasonable determination, based upon a review of readily
available facts (as opposed to a full trial-type inquiry) that
he did not engage in such conduct:
(A) by vote of a majority of the Disinterested
Trustees acting on the matter (provided that a
majority of the Disinterested Trustees then in office
act on the matter); or
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(B) by written opinion of independent legal counsel.
(c) The rights of indemnification herein provided may be insured
against by policies maintained by the Trust, shall be severable, shall
not affect any other rights to which any Trustee or officer may now or
hereafter be entitled, shall continue as to a Person who has ceased to
be such Trustee or officer and shall inure to the benefit of the heirs,
executors and administrators of such Person. Nothing contained herein
shall affect any rights to indemnification to which personnel other
than Trustees and officers may be entitled by contract or otherwise
under law.
(d) Expenses of preparation and presentation of a defense to any claim,
action, suit or proceeding of the character described in paragraph (a)
of this Section 5.2 shall be advanced by the Trust prior to final
disposition thereof upon receipt of an undertaking by or on behalf of
the recipient to repay such amount if it is ultimately determined that
he is not entitled to indemnification under this Section 5.2, provided
that either:
(i) such undertaking is secured by a surety bond or some other
appropriate security or the Trust shall be insured against
losses arising out of any such advances; or
(ii) a majority of the Disinterested Trustees acting on the
matter (provided that a majority of the Disinterested Trustees
then in office act on the matter) or an independent legal
counsel in a written opinion, shall determine, based upon a
review of readily available facts (as opposed to a full
trial-type inquiry), that there is reason to believe that the
recipient ultimately will be found entitled to
indemnification.
As used in this Section 5.2, a "Disinterested Trustee" is one (i) who
is not an "Interested Person" of the Trust (including anyone who has been
exempted from being an "Interested Person" by any rule, regulation or order of
the Commission), and (ii) against whom none of such actions, suits or other
proceedings or another action, suit or other proceeding on the same similar
grounds is then or had been pending.
Agents and employees of the Trust who are not Trustees or officers of
the Trust may be indemnified under the same standards and procedures set forth
in this Section 5.2., in the discretion of the Board.
SECTION 5.4. NO BOND REQUIRED OF TRUSTEES. No Trustee shall be
obligated to give any bond or other security for the performance of any of his
duties hereunder.
SECTION 5.5. NO DUTY OF INVESTIGATION; NOTICE IN TRUST INSTRUMENTS,
ETC. All Persons extending credit to, contracting with or having any claim
against the Trust shall look only to the assets of the Trust for payment under
such credit, contract or claim; and neither the Shareholders nor the Trustees,
nor any of the Trust's officers, employees or agents, whether past, present or
future, shall be personally liable therefor. Every obligation, contract,
instrument, certificate, Share, other security of the Trust or undertaking, and
every other act or thing whatsoever executed in connection with the Trust shall
be conclusively presumed to have been executed or done by the executors
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<PAGE> 18
thereof only in their capacity as Trustees under the Declaration or in their
capacity as officers, employees or agents of the Trust and not personally. Every
written obligation, contract, instrument, certificate, Share, other security of
the Trust or undertaking made or issued by the Trustees or by any officer,
employee or agent may give notice that this Declaration of Trust is on file with
the Secretary of State of Ohio and recite that the same is executed or made by
them not individually, but as Trustee, officer, employee or agent, and that the
obligations of any such instrument are not binding upon any of the them or
Shareholders, individually, but bind only the estate of the applicable Trust,
Series or Class, as set forth in Section 1746.13(A), Ohio Revised Code, and may
contain any further recital which they or he may deem appropriate, but the
omission of such recital shall not operate to bind the Trustees individually.
The Trustees may at all times maintain insurance for the protection of the Trust
Property, its Shareholders, Trustees, officers, employees and agents in such
amount as the Trustees shall deem adequate to cover possible tort liability, and
such other insurance as the Trustees in their sole judgment shall deem
advisable.
SECTION 5.6. RELIANCE ON EXPERTS, ETC. Each Trustee and officer or
employee of the Trust shall, in the performance of his duties, be fully and
completely justified and protected with regard to any act or any failure to act
resulting from reliance in good faith upon the books of account or other records
of the Trust, upon an opinion of counsel, or upon reports made to the Trust by
any of its officers or employees or by the Investment Adviser, the Distributor,
the Administrator, Transfer Agent, selected dealers, accountants, appraisers or
other experts or consultants selected with reasonable care by the Trustees,
officers or employees of the Trust, regardless of whether such counsel or expert
may also be a Trustee.
SECTION 5.7. INDEMNIFICATION NOT EXCLUSIVE, ETC. The right of
indemnification provided by this Article V shall not be exclusive of or affect
any other rights to which any Trustee or officer may be entitled. As used in
this Article V, Trustee or officer shall include such person's heirs, executors
and administrators. Nothing contained in this Article V shall affect any rights
to indemnification to which personnel of the Trust, other than any Trustee or
officer, may be entitled, by contract or otherwise under law, nor the power of
the Trust to purchase and maintain liability insurance on behalf of any such
person.
SECTION 5.8. LIABILITY OF SERIES. Liabilities belonging to any Series
or Class of the Trust, including, without limitation, expenses, fees, charges,
taxes, and liabilities incurred or arising in connection with the management
thereof, shall be paid only from the assets belonging to that Series or Class.
ARTICLE VI
SHARES OF BENEFICIAL INTEREST
SECTION 6.1. BENEFICIAL INTEREST. The interest of the Shareholders
hereunder shall be divided into transferable shares of beneficial interest,
without par value. The number of shares of beneficial interest authorized
hereunder, and the number of Shares of each Series or Class thereof that may be
issued hereunder, is unlimited. The Trustees shall have the exclusive authority
without the requirement of Shareholder authorization or approval to establish
and designate one or more Series of Shares and one or more Classes thereof as
the Trustees deem necessary, appropriate or desirable. Each Share of any Series
shall represent a beneficial interest only in the assets of that
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<PAGE> 19
Series. Subject to the provisions of Section 6.11 hereof, the Trustees may also
authorize the creation of additional Series of Shares (the proceeds of which may
be invested in separate and independent investment portfolios) and additional
Classes of Shares within any Series. All Shares issued hereunder including,
without limitation, Shares issued in connection with a dividend in Shares or a
split of Shares, shall be fully paid and non-assessable.
SECTION 6.2. ESTABLISHMENT AND DESIGNATION OF SERIES. Without limiting
the authority of the Trustees set forth above to establish and designate any
further Series or Class or to classify all or any part of the issued Shares of
any Series to make them part of an existing or newly created Class or to amend
rights and preferences of new or existing Series or Class, including the
following Series, all without Shareholder approval, there are hereby established
and designated, subject to the provisions and rights of this Declaration of
Trust, Series of Shares designated Series A, which shall represent interests in
the Mid Cap Growth Fund, Series B, which shall represent interests in the
Nationwide Growth Fund, Series C, which shall represent interests in the
Nationwide Fund, Series D, which shall represent interests in the Nationwide
Bond Fund, Series E, which shall represent interests in the Nationwide Tax-Free
Income Fund, Series F, which shall represent interests in the Nationwide
Long-Term U.S. Government Bond Fund, Series G, which shall represent interests
in the Nationwide Intermediate U.S. Government Bond Fund (collectively, Series
A-G are the "Nationwide Funds"), Series H, which shall represent interests in
the Nationwide Money Market Fund (the "Money Market Fund"), Series I, which
shall represent interests in the Nationwide S&P 500 Index Fund (the "S&P 500
Index Fund"), Series J, which shall represent interests in the Prestige Small
Cap Fund, Series K, which shall represent interests in the Prestige Balanced
Fund, Series L, which shall represent interests in the Prestige International
Fund, Series M, which shall represent interests in the Prestige Large Cap Value
Fund, Series N, which shall represent interests in the Prestige Large Cap Growth
Fund (collectively, Series J-N are the "Prestige Funds"), and Series O, which
shall represent interests in the Morley Capital Accumulation Fund (the "Morley
Fund"). Each Series of the Nationwide Funds will issue three Classes of Shares
for each current Series of the Nationwide Funds, which Classes shall be known as
Class A, Class B and Class D Shares. Each Series of the Prestige Funds will
issue three Classes of Shares known as Class A, Class B and Class Y Shares. The
Morley Fund will issue three Classes of Shares known as Institutional Service
Class, Institutional Class and Investor Class Shares. The S&P 500 Index Fund
will issue three Classes of Shares known as Local Fund Shares, Class Y Shares
and Class R Shares. The Money Market Fund will issue two classes of Shares known
as Class R and Prime Shares.
SECTION 6.3. RIGHTS OF SHAREHOLDERS. The ownership of the Trust
Property and the property of each Series of the Trust and the right to conduct
any business as described herein are vested exclusively in the Trustees, and the
Shareholders shall have no interest therein other than the beneficial interest
conferred by their Shares, and they shall have no right to call for any
partition or division of any property, profits, rights or interests of the Trust
nor can they be called upon to assume any losses of the Trust or suffer an
assessment of any kind by virtue of their ownership of Shares. Every Shareholder
by virtue of having become a Shareholder shall be held to have expressly
assented and agreed to the terms hereof and to have become a party hereto. The
Shares shall be personal property giving only the rights in the Declaration
specifically set forth. The Shares shall not entitle the holder to preference,
preemptive, appraisal, conversion or exchange rights, except as the Trustees may
determine with respect to any Series or Class of Shares. The death of a
Shareholder during the continuance of the Trust shall not operate to terminate
the Trust nor entitle the
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<PAGE> 20
representative of any deceased Shareholder to an accounting or to take any
action in court or elsewhere against the Trust or the Trustees, but only to the
rights of said decedent under this Declaration of Trust.
SECTION 6.4. TRUST ONLY. It is the intention of the Trustees to create
only the relationship of Trustee and beneficiary between the Trustees and each
Shareholder from time to time. It is not the intention of the Trustees to create
a general partnership, limited partnership, joint stock association,
corporation, bailment or any form of legal relationship other than an Ohio
business trust. Nothing in the Declaration shall be construed to make the
Shareholders, either by themselves or with the Trustees, partners or members of
a joint stock association.
SECTION 6.5. ISSUANCE OF SHARES. The Trustees, in their discretion,
may, from time to time without vote of the Shareholders, issue Shares, in
addition to the then issued and outstanding Shares and Shares held in the
treasury, to such party or parties and for such amount and type of
consideration, including cash or property, at such time or times (including,
without limitation, each business day in accordance with the determination of
net asset value per Share as set forth in Section 8.1 hereof), and on such terms
as the Trustees may deem best, except that only Shares previously contracted to
be sold may be issued during any period when the right of redemption is
suspended, and may in such manner acquire other assets (including the
acquisition of assets subject to, and in connection with the assumption of
liabilities) and businesses. In connection with any issuance of Shares, the
Trustees may issue fractional Shares and reissue and resell full and fractional
Shares held in the treasury. Any outstanding fractional Share of any Series
shall carry proportionately all the rights and obligations of a whole Share of
that Series, including with respect to voting, receipt of dividends and
distributions, redemption of Shares, and liquidation of the Trust. Shares may
also be issued in separate Series or Classes as provided in Section 6.11 hereof.
The Trustees may from time to time divide or combine the Shares into a greater
or lesser number without thereby changing the proportionate beneficial interests
in the Trust. Contributions to the Trust may be accepted for, and Shares shall
be redeemed as, whole Shares and/or 1/1,000ths of a Share or integral multiples
thereof.
SECTION 6.6. REGISTER OF SHARES; SHARE CERTIFICATES. A register will be
kept at the principal office of the Trust or at an office of the Transfer Agent
which shall contain the names and addresses of the Shareholders and the number
of Shares held by them respectively and a record of all transfers thereof. Such
register shall be conclusive as to who are the holders of the Shares and who
shall be entitled to receive dividends or distributions or otherwise to exercise
or enjoy the rights of Shareholders. No Shareholder shall be entitled to receive
payment of any dividend or distribution, nor to have notice given to him as
herein or in the Bylaws provided, until he has given his address to the Transfer
Agent or such other officer or agent of the Trustees as shall keep the said
register for entry thereon. It is not contemplated that certificates will be
issued for the Shares; however, the Trustees, in their discretion, may authorize
the issuance of Share certificates and promulgate appropriate rules and
regulations as to their use.
SECTION 6.7. TRANSFER OF SHARES. Shares shall be transferable on the
records of the Trust only by the record holder thereof or by his agent thereunto
duly authorized in writing, upon delivery to the Trustees or the Transfer Agent
of a duly executed instrument of transfer, together with such evidence of the
genuineness of each such execution and authorization and of other matters as may
reasonably be required. Upon such delivery, the transfer shall be recorded on
the register of the
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<PAGE> 21
Trust. Until such record is made, the Shareholder of record shall be deemed to
be the holder of such Shares for all purposes hereunder and neither the Trustees
nor any Transfer Agent or registrar nor any officer, employee or agent of the
Trust shall be affected by any notice of the proposed transfer.
Any person becoming entitled to any Shares in consequence of the death,
bankruptcy, or incompetence of any Shareholder, or otherwise by operation of
law, shall be recorded on the register of Shares as the holder of such Shares
upon production of the proper evidence thereof to the Trustees or the Transfer
Agent, but until such record is made, the Shareholder of record shall be deemed
to be the holder of such Shares for all purposes hereunder and neither the
Trustees nor any Transfer Agent or registrar nor any officer or agent of the
Trust shall be affected by any notice of such death, bankruptcy or incompetence,
or other operation of law.
SECTION 6.8. NOTICES. Any and all notices to which any Shareholder may
be entitled and any and all communications shall be deemed duly served or given
if mailed, postage prepaid, addressed to any Shareholder of record at his last
known address as recorded on the register of the Trust.
SECTION 6.9. TREASURY SHARES. Shares held in the treasury shall, until
reissued pursuant to Section 6.5, not confer any voting rights on the Trustees,
nor shall such Shares be entitled to any dividends or other distributions
declared with respect to the Shares.
SECTION 6.10. INVESTMENTS IN TRUST. The Trustees may accept investments
in the Trust from such persons and on such terms and for such consideration, not
inconsistent with the provisions of the 1940 Act, as they from time to time
authorize. The Trustees may authorize any Distributor, Custodian, Transfer Agent
or other Person to accept orders for the purchase of Shares that conform to such
authorized terms and to reject any purchase orders for Shares whether or not
conforming to such authorized terms.
SECTION 6.11. SERIES OR CLASS DESIGNATION. The Trustees, in their
discretion, may authorize the issuance of Shares of multiple Series or Classes,
and the different Series or Classes shall be established and designated, and the
variations in the relative rights and preferences as between the different
Series or Classes shall be fixed and determined by the Trustees, provided, that
all Shares shall be identical except that there may be variations so fixed and
determined between different Series as to investment objective, purchase price,
right of redemption and the price, terms and manner of redemption, special and
relative rights as to dividends and on liquidation, conversion rights,
conditions under which the several Series shall have separate voting rights or
no voting rights, and such other matters, as the Trustees deem appropriate. All
references to Shares in the Declaration shall be deemed to be shares of any or
all Series as the context may require.
If the Trustees shall authorize the issuance of Shares of the Trust
with multiple Series or Classes, the following provisions shall be applicable:
(a) The number of authorized shares and the number of shares of each
Series or Class that may be issued shall be unlimited. The Trustees may
classify or reclassify any unissued Shares or any Shares previously
issued and reacquired of any Series or Class into one or more other
Series, or one or more other Classes that may be established and
designated from time to time. The Trustees may hold as treasury shares
(of the same or some other Series or
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<PAGE> 22
Class), reissue for such consideration and on such terms as they may
determine, or cancel any Shares of any Series or Class reacquired by
the Trust at their discretion from time to time.
(b) The power of the Trustees to invest and reinvest the Trust Property
shall be governed by Section 3.2 of this Declaration with respect to
the existing Series or Classes which represents the interests in the
assets of the Trust immediately prior to the establishment of any
additional Series or Classes and the power of the Trustees to invest
and reinvest assets applicable to any such additional Series or Classes
shall be as set forth in the instrument of the Trustees establishing
such Series or Classes which is hereinafter described.
(c) All consideration received by the Trust for the issue or sale of
Shares of a particular Series, together with all assets in which such
consideration is invested or reinvested, all income, earnings, profits
and proceeds thereof, including any proceeds derived from the sale,
exchange or liquidation of such assets, and any funds or payments
derived from any reinvestment of such proceeds in whatever form the
same may be, shall irrevocably belong to that Series for all purposes,
subject only to the rights of creditors of such Series, and shall be so
recorded upon the books of account of the Trust. In the event that
there are any assets, income, earnings, profits, and proceeds thereof,
funds, or payments which are not readily identifiable as belonging to
any particular Series, the Trustees or their delegate shall allocate
them among any one or more of the Series established and designated
from time to time in such manner and on such basis as the Trustees, in
their sole discretion, deem fair and equitable. Each such allocation by
the Trustees shall be conclusive and binding upon the shareholders of
all Series for all purposes. No holder of Shares of any Series shall
have any claim on or right to any assets allocated or belonging to any
other Series.
(d) The assets belonging to each particular Series shall be charged
with the liabilities of the Trust allocated to that Series and all
expenses, costs, charges and reserves attributable to that Series which
are not readily identifiable as belonging to any particular Class, and
any general liabilities, expenses, costs, charges or reserves of the
Trust which are not readily identifiable as belonging to any particular
Series shall be allocated and charged by the Trustees or their delegate
to and among any one or more of the Series, established and designated
from time to time in such manner and on such basis as the Trustees, in
their sole discretion, deem fair and equitable and no Series shall be
liable to any person except for its allocated share. Each allocation of
liabilities, expenses, costs, charges and reserves by the Trustees or
their delegate shall be conclusive and binding upon the Shareholders of
all Series and Classes for all purposes. The Trustees shall have full
discretion, to the extent not inconsistent with the 1940 Act, to
determine which items shall be treated as income and which items as
capital; and each such determination and allocation shall be conclusive
and binding upon the Shareholders. The assets of a particular Series of
the Trust shall, under no circumstances, be charged with liabilities,
expenses, costs, charges and reserves attributable to any other Series
thereof of the Trust. All Persons extending credit to, contracting
with, or having any claim against a particular Series of the Trust
shall look only to the assets of that particular Series for payment of
such credit, contract or claim.
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<PAGE> 23
(e) With respect to any Series, dividends and distributions on Shares
of a particular Series or Class may be paid or credited in such manner
and with such frequency as the Trustees may determine, which may be
daily or otherwise, pursuant to a standing resolution or resolutions
adopted only once or with such frequency as the Trustees may determine,
to the holders of Shares of that Series or Class, from such of the
income and capital gains, accrued or realized, from the assets
belonging to that Series, as the Trustees may determine, after
providing for actual and accrued liabilities belonging to that Series
or Class or after retaining such amounts as the Trustees may deem
desirable to use in the conduct of the Trust's current or future
business requirements. All dividends and distributions on Shares of a
particular Series or Class shall be distributed pro rata to the holders
of that Series or Class in proportion to the number of Shares of that
Series or Class held by such holders at the date and time of record
established for the payment of such dividends or distributions, except
that in connection with any dividend or distribution program or
procedure the Trustees may determine that no dividend or distribution
shall be payable on Shares as to which the Shareholder's purchase order
and/or payment have not been received by the time or times established
by the Trustees under such program or procedure. Such dividends and
distributions may be made in cash or Shares or a combination thereof as
determined by the Trustees or pursuant to any program that the Trustees
may have in effect at the time for the election by each Shareholder of
the mode of the making of such dividend or distribution to that
Shareholder. Any such dividend or distribution paid in Shares will be
paid at the net asset value thereof as determined in accordance with
Section 8.1.
The dividends and distributions of investment income and
capital gains with respect to Shares of a Class shall be in such amount
as may be declared from time to time by the Trustees, and such
dividends and distributions may vary between the Classes to reflect
differing allocations of the expenses of the Trust between the Classes
to such extent and for such purposes as the Trustees may deem
appropriate.
(f) Each Share of a Series of the Trust shall represent a beneficial
interest in the net assets of such Series. Each holder of Shares of a
Series or Class thereof shall be entitled to receive his pro rata Share
of distributions of income and capital gains made with respect to such
Series or Class net of liabilities, expenses, costs, charges and
reserves belonging and allocated to such Series or Class. Upon
redemption of his Shares or indemnification for liabilities incurred by
reason of his being or having been a Shareholder of a Series, such
Shareholder shall be paid solely out of the funds and property of such
Series or Class of the Trust. Upon liquidation or termination of a
Series or Class thereof of the Trust, a Shareholder of such Series or
Class thereof shall be entitled to receive a pro rata Share of the net
assets of such Series based on the net asset value of his Shares. A
Shareholder of a particular Series of the Trust shall not be entitled
to commence or participate in a derivative or class action on behalf of
any other Series or the Shareholders of any other Series of the Trust.
(g) The proceeds of the redemption of a Class B Share (including a
fractional Share), except those purchased through reinvestment of a
dividend or a distribution, shall be reduced by the amount of any
applicable contingent deferred sales charge payable on such redemption
to the distributor of the Class B Shares pursuant to the terms of the
issuance of
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<PAGE> 24
the Shares (to the extent consistent with the 1940 Act, or regulations
or exemptions thereunder), and the Trust shall promptly pay to such
distributor the amount of any such contingent deferred sales charge.
(h)(1) Each Class B Share, other than a Share purchased through the
reinvestment of a dividend or a distribution with respect to the Class
B Share, shall be converted automatically, and without any action or
choice on the part of the holder thereof, into Class A Shares, at the
relative net asset value of each Class, at the time of the calculation
of the net asset value of such Class of Shares on the date that is the
first business day of the month after which the seventh anniversary of
the issuance of such Class B Shares occurs (which for the purpose of
calculating the holding period required for conversion, shall mean (i)
the date on which the issuance of such Class B Shares occurred or (ii)
for Class B Shares obtained through an exchange, the date on which the
issuance of the Class B Shares were exchanged directly, or through a
series of exchanges, for the Trust's Class B Shares (the "Conversion
Date")).
(h)(2) Each Class B Share purchased through the reinvestment of a
dividend or a distribution with respect to the Class B Shares and the
dividends and distributions on such Shares shall be segregated in a
separate sub-account on the share records of the Trust for each of the
holders of record thereof. On any Conversion Date, a number of the
Shares held in the sub-account of the holder of record of the Share or
Shares being converted, calculated in accordance with the next
following sentence, shall be converted automatically, and without any
action of choice on the part of the holder thereof, into Class A Shares
of the same Series. The number of Shares in the holder's sub-account so
conveyed shall bear the same relation to the total number of Shares
maintained in the sub-account on the Conversion Date as the number of
Shares of the holder converted on the Conversion Date pursuant to
subsection (h)(1) hereof bears to the total number of Class B Shares of
the holder on the Conversion Date not purchased through the automatic
reinvestment of dividends or distributions with respect to the Class B
Shares.
(h)(3) The number of Shares of Class A Shares into which a Class B
Share is converted pursuant to subsections (h)(1) and (h)(2) hereof
shall equal the number (including for this purpose fractions of a
Share) obtained by dividing the net asset value per Share of the Class
B Share for purposes of sales and redemptions thereof at the time of
the calculation of the net asset value on the Conversion Date by the
net asset value per Share of the Class A Shares for the purposes of
sales and redemptions thereof at the time of the calculation of the net
asset value on the Conversion Date.
(h)(4) On the Conversion Date, the Class B Shares converted into Class
A Shares will cease to accrue dividends and will no longer be
outstanding and the rights of the holders thereof will cease (except
the right to receive declared but unpaid dividends to the Conversion
Date).
(h)(5) The Trustees shall have full power and authority to adopt such
other terms and conditions concerning the conversion of the Class B
Shares to Class A Shares as they deem appropriate; provided such terms
and conditions are not inconsistent with the terms contained herein and
subject to any restrictions or requirements under the 1940 Act and the
rules, regulations and interpretations thereof promulgated or issued by
the Commission or any
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<PAGE> 25
conditions or limitations contained in an order issued by the
Commission applicable to the Trust.
(i) All Shares of all Series shall have "equal voting rights" as
provided in Section 18(i) of the 1940 Act, except as otherwise
permitted or required by the 1940 Act. The holder of each of the Shares
shall be entitled to one vote for each Share held. The Trustees shall
have full power and authority to call meetings of the Shareholders of a
particular Class or Classes of Shares or of one or more particular
Series of Shares, or otherwise call for the action of such Shareholders
on any particular matter. On each matter submitted to a vote of the
Shareholders, all Shares of all Series shall vote as a single class
("Single Class Voting"), provided, however, that (a) as to any matter
with respect to which a separate vote of any Series is required by the
1940 Act, such requirements as to a separate vote by that Series shall
apply in lieu of Single Class Voting as described above; (b) in the
event that the separate vote requirements referred to in (a) above
apply with respect to one or more Series, then, subject to (c) below,
the Shares of all other Series shall vote as a single class; and (c) as
to any matter which does not affect the interest of a particular
Series, only the holders of Shares of the one or more affected Series
shall be entitled to vote.
(j) Except as otherwise provided in this Article VI, the Trustees shall
have full power and authority to determine the designations,
preferences, privileges, sales charges, purchase prices, assets,
liabilities, expenses, costs, charges and reserves belonging or
allocated thereto, limitations and rights, including without limitation
voting, dividend, distribution and liquidation rights, of each Series
and Class of Shares. Subject to any applicable requirements of the 1940
Act, the Trustees shall have the authority to provide that the Shares
of one Class shall be automatically converted into Shares of another
Class of the same Series or that the holders of Shares of any Series or
Class shall have the right to convert or exchange such Shares into
Shares of one or more other Series or Classes of Shares, all in
accordance with such requirements, conditions and procedures as may be
established by the Trustees.
(k) The establishment and designation of any Series or Class of shares
shall be effective upon the execution by a majority of the then
Trustees of an instrument setting forth such establishment and
designation and the relative rights and preferences of such Series, or
as otherwise provided in such instrument. At any time that there are no
shares outstanding of any particular Series or Class previously
established and designated, the Trustees may, by an instrument executed
by a majority of their number, abolish that Series or Class and the
establishment and designation thereof.
(l) Without limiting the authority of the Trustees set forth above to
establish and designate any further Series or Class or to classify all
or any part of the issued Shares of any Series to make them part of an
existing or newly created Class or to amend rights and preferences of
new or existing Series or Class, including the following as set forth
in the table below, all without Shareholder approval, there are hereby
established and designated, subject to the provisions and rights of
this Declaration of Trust:
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<TABLE>
<CAPTION>
Series Series Name Classes
------ ----------- -------
<S> <C> <C>
A Nationwide Mid Cap Growth Fund A, B, D
B Nationwide Growth Fund A, B, D
C Nationwide Fund A, B, D
D Nationwide Bond Fund A, B, D
E Nationwide Tax-Free Income Fund A, B, D
F Nationwide Long-Term U.S. Government
Bond Fund A, B, D
G Nationwide Intermediate U.S. Government
Bond Fund A, B, D
H Nationwide Money Market Fund R, Prime
I Nationwide S&P 500 Index Fund R, Y, Local Fund
J Prestige Small Cap Fund A, B, Y
K Prestige Balanced Fund A, B, Y
L Prestige International Fund A, B, Y
M Prestige Large Cap Value Fund A, B, Y
N Prestige Large Cap Growth Fund A, B, Y
O Morley Capital Accumulation Fund Institutional Service,
Institutional, Investor
</TABLE>
The Trust offers to eligible investors the option of purchasing shares of its
non-money market series as described in the table below:
Class Class Description
- ----- -----------------
Class A with front-end sales load (which can vary among Series and
which is subject to certain reductions and waivers among
groups of purchasers) and providing for a Rule 12b-1 fee;
Class B without a front-end load, but subject to a contingent deferred
sales charge ("CDSC") (which can vary among series and which
may be subject to certain reductions or waivers among groups
of purchasers) and providing for a Rule 12b-1 fee;
Class D with a front-end load (which can vary among series and which
is subject to certain reductions and waivers among groups of
purchasers), but not providing for a Rule 12b-1 fee;
Class Y without a front-end load or CDSC, but providing for an
administrative services fee;
Local Fund without a front-end load or CDSC, but providing for a Rule
12b-1 fee;
Class R without a front-end load or CDSC, but providing for a Rule
12b-fee, and an administrative services fee;
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<PAGE> 27
Prime without a front-end load or CDSC, and without an
administrative services fee or a Rule 12b-1 fee;
Institutional without a front-end load or CDSC, but providing for a Rule
Service Class 12b-fee, and an administrative services fee and subject to a
redemption fee in certain circumstances;
Investor Class without a front-end load or CDSC, but providing for a Rule
12b-fee, and an administrative services fee and subject to a
redemption fee in certain circumstances;
Institutional without a front-end load or CDSC, but providing for a Rule
Class 12b-fee, and subject to a redemption fee in certain
circumstances.
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ARTICLE VII
REDEMPTIONS
SECTION 7.1. REDEMPTION OF SHARES. All Shares of the Trust shall be
redeemable, at the redemption price determined in the manner set out in this
Declaration. The Trustees shall have full power and authority to vary and change
the right of redemption applicable to the various Series and Classes of Shares.
Redeemed or repurchased Shares may be resold by the Trust.
The Trust shall redeem the Shares at the price determined as
hereinafter set forth, upon the appropriately verified written application of
the record holder thereof (or upon such other form of request as the Trustees
may determine) at such office or agency as may be designated from time to time
for that purpose by the Trustees. The Trustees may from time to time specify
additional conditions, not inconsistent with the 1940 Act, regarding the
redemption of Shares in the Trust's then effective registration statement or
prospectus under the Securities Act of 1933.
SECTION 7.2. PRICE. Shares will be redeemed at their net asset value
determined as set forth in Section 8.1 hereof as of such time as the Trustees
shall have theretofore prescribed by resolution. In the absence of such
resolution, the redemption price of Shares deposited shall be the net asset
value of such Shares next determined as set forth in Section 8.1 hereof after
receipt of such application.
SECTION 7.3. PAYMENT. Payment for such Shares shall be made in cash or
in property out of the assets of the relevant Series of the Trust to the
Shareholder of record at such time and in the manner, not inconsistent with the
1940 Act or other applicable laws, as may be specified from time to time in the
Trust's then effective registration statement or prospectus under the Securities
Act of 1933, subject to the provisions of Section 7.3 hereof. Notwithstanding
the foregoing, the Trust or its delegate may withhold from such redemption
proceeds any amount arising (i) from a liability of the redeeming Shareholder to
the Trust, or (ii) in connection with any federal or state tax withholding
requirements.
SECTION 7.4. EFFECT OF SUSPENSION OF DETERMINATION OF NET ASSET VALUE.
If, pursuant to Section 7.8 hereof, the Trustees shall declare a suspension of
the determination of net asset value with respect to Shares of the Trust or of
any Series or Class thereof, the rights of Shareholders (including those who
shall have applied for redemption pursuant to Section 7.1 hereof but who shall
not yet have received payment) to have Shares redeemed and paid for by the Trust
shall be suspended until the termination of such suspension is declared. Any
record holder who shall have his redemption right so suspended may, during the
period of such suspension, by appropriate written notice of revocation at the
office or agency where application was made, revoke any application for
redemption not honored and withdraw any certificates on deposit. The redemption
price of Shares for which redemption applications have not been revoked shall be
the net asset value of such Shares next determined as set forth in Section 8.1
after the termination of such suspension, and payment shall be made within seven
(7) days after the date upon which the application was made plus the period
after such application during which the determination of net asset value was
suspended.
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SECTION 7.5. REPURCHASE BY AGREEMENT. The Trust may repurchase Shares
directly, or through the Distributor or another agent designated for the
purpose, by agreement with the owner thereof at a price not exceeding the net
asset value per Share determined as of the time when the purchase or contract of
purchase is made or the net asset value as of any time which may be later
determined pursuant to Section 8.1 hereof, provided payment is not made for the
Shares prior to the time as of which such net asset value is determined.
SECTION 7.6. REDEMPTION OF SHAREHOLDER'S INTEREST. The Trust shall have
the right at any time without prior notice to the Shareholder to redeem Shares
of any Shareholder for their then current net asset value per Share if the
aggregate net asset value of such Shares is less than the minimum amount
established by the Trustees from time to time, subject to such terms and
conditions as the Trustees may approve, and subject to the Trust's giving
general notice to all Shareholders of its intention to avail itself of such
right, either by publication in the Trust's prospectus, if any, or by such other
means as the Trustees may determine.
SECTION 7.7. REDUCTIONS IN NUMBER OF OUTSTANDING SHARES PURSUANT TO NET
ASSET VALUE FORMULA. The Trust may also reduce the number of outstanding Shares
pursuant to the provisions of Section 8.2.
SECTION 7.8. SUSPENSION OF RIGHT OF REDEMPTION. The Trust may declare a
suspension of the right of redemption or postpone the date of payment or
redemption for the whole or any part of any period (i) during which the New York
Stock Exchange is closed other than customary weekend and holiday closings; (ii)
during which trading on the New York Stock Exchange is restricted; (iii) during
which an emergency exists as a result of which disposal by the Trust of
securities owned by it is not reasonably practicable or it is not reasonably
practicable for the Trust fairly to determine the value of its net assets; or
(iv) during any other period when the Commission may for the protection of
security holders of the Trust by order permit suspension of the right of
redemption or postponement of the date of payment or redemption; provided that
applicable rules and regulations of the Commission shall govern as to whether
the conditions prescribed in (ii), (iii), or (iv) exist. Such suspension shall
take effect at such time as the Trust shall specify, but not later than the
close of business on the business day next following the declaration of
suspension, and thereafter there shall be no right of redemption or payment on
redemption until the Trust shall declare the suspension at an end, except that
the suspension shall terminate in any event on the first day on which said stock
exchange shall have reopened or the period specified in (ii) or (iii) shall have
expired (as to which, in the absence of an official ruling by the Commission,
the determination of the Trust shall be conclusive). In the case of a suspension
of the right of redemption, a Shareholder may either withdraw his request for
redemption or receive payment based on the net asset value existing after the
termination of the suspension.
SECTION 7.9. REDEMPTION OF SHARES; DISCLOSURE OF HOLDING. If the
Trustees shall, at any time and in good faith, be of the opinion that direct or
indirect ownership of Shares or other securities of the Trust has or may become
concentrated in any Person to an extent which would disqualify the Trust as a
regulated investment company under the Internal Revenue Code, then the Trustees
shall have the power by lot or other means deemed equitable by them (i) to call
for redemption by any such Person of a number, or principal amount, of Shares or
other securities of the Trust sufficient to maintain or bring the direct or
indirect ownership of Shares or other securities of
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the Trust into conformity with the requirements for such qualification; and (ii)
to refuse to transfer or issue Shares or other securities of the Trust to any
Person whose acquisition of the Shares or other securities of the Trust in
question would result in such disqualification. The redemption shall be effected
at the redemption price and in the manner provided in Section 7.1.
The holders of Shares or other securities of the Trust shall upon
demand disclose to the Trustees in writing such information with respect to
direct and indirect ownership of Shares or other securities of the Trust as the
Trustees deem necessary to comply with the provisions of the Internal Revenue
Code, or to comply with the requirements of any other authority.
ARTICLE VIII
DETERMINATION OF NET ASSET VALUE
NET INCOME AND DISTRIBUTIONS
SECTION 8.1. NET ASSET VALUE. For all purposes under this Declaration
of Trust, the net asset value of any Series or Class shall be determined by at
least once on each business day, as of the close of the New York Stock Exchange
or as of such other time or times as the Trustees shall determine.
The value of the assets of any Series of the Trust shall include the
appraisal of the securities allocated to such Series, such appraisal to be on
the basis of the amortized cost of money market securities or market value in
the case of other securities, or, consistent with the rules and regulations of
the Commission, by such other method as shall be deemed to reflect the fair
value thereof, determined in good faith by or under the direction of the
Trustees, together with all the other assets belonging to such Series. From the
total value of said assets, there shall be deducted all indebtedness, interest,
taxes, payable or accrued, including estimated taxes on unrealized book profits,
expenses and management charges accrued to the appraisal date, net income
determined and declared as a distribution and all other items in the nature of
liabilities attributable to such Series which shall be deemed appropriate. The
net asset value per Share of the Shares of any Series shall be the quotient
obtained by dividing the resulting amount by the total number of Shares of that
Series outstanding. The power and duty to make the daily calculations may be
delegated by the Trustees to the Investment Adviser, the Custodian, the Transfer
Agent or such other Person as the Trustees by resolution may determine. The
Trustees may suspend the daily determination of net asset value to the extent
permitted by the 1940 Act.
SECTION 8.2. DISTRIBUTIONS TO SHAREHOLDERS. As described in Section
6.11, the Trustees shall from time to time distribute ratably among the
Shareholders of the Trust or of a Series or a Class thereof such proportion of
the net profits, surplus (including paid-in surplus), capital, or assets held by
the Trustees as they may deem proper. The Trustees may adopt and offer to
Shareholders such dividend reinvestment plans, cash dividend payout plans or
related plans as the Trustees shall deem appropriate.
Inasmuch as the computation of net income and gains for Federal income
tax purposes may vary from the computation thereof on the books, the above
provisions shall be interpreted to give the Trustees the power in their
discretion to distribute for any fiscal year as ordinary dividends and
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as capital gains distributions, respectively, additional amounts sufficient to
enable the Trust or the Series to avoid or reduce liability for taxes.
SECTION 8.3. DETERMINATION OF NET INCOME. The term "net income" with
respect to a Series or Class of shares is hereby defined as the gross earnings
of the Series or Class, excluding gains on sales of securities and stock
dividends received, less the expenses of the Trust allocated to the Series or
Class by the Trustees in such manner as they determine to be fair and equitable
or otherwise chargeable to the Series or Class. The expenses shall include (1)
taxes attributable to the income of the Trust exclusive of gains on sales, and
(2) other charges properly deductible for the maintenance and administration of
the Trust; but there shall not be deducted from gross or net income any losses
on securities, realized or unrealized. The Trustees shall otherwise have full
discretion to determine which items shall be treated as income and which items
as capital and their determination shall be binding upon the Shareholders.
SECTION 8.4. POWER TO MODIFY FOREGOING PROCEDURES. Notwithstanding any
of the foregoing provisions of this Article VIII, the Trustees may prescribe, in
their absolute discretion, such other bases and times for determining the per
Share net asset value of the Shares or net income, or the declaration and
payment of dividends and distributions as they may deem necessary or desirable.
Without limiting the generality of the foregoing, the Trustees may establish
additional Series or Classes of Shares in accordance with Section 6.11, and
declare dividends thereon in such manner as they shall determine.
ARTICLE IX
DURATION; TERMINATION OF TRUST
AMENDMENT; MERGERS; ETC.
SECTION 9.1. DURATION. The Trust shall continue without limitation of
time but subject to the provisions of this Article IX.
SECTION 9.2. TERMINATION OF TRUST.
(a) The Trust or any Series or Class of the Trust may be terminated:
(i) by the affirmative vote of the holders of a majority of
the Shares voting at any meeting of Shareholders, or
(ii) by an instrument in writing, without a meeting, signed by
a majority of the Trustees and consented to by the holders of
a majority of Shares outstanding and entitled to vote, or by
such other vote as may be established by the Trustees with
respect to any Series or Class of Shares.
Upon the termination of the Trust or any one or more Series or Class:
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(i) The Trust or the Series or Class, as applicable, shall
carry on no business except for the purpose of winding up its
affairs or the affairs of such Series or Class and that
required by the 1940 Act.
(ii) The Trustees shall proceed to wind up the affairs of the
Trust and/or the Series or Class and all of the powers of the
Trustees under this Declaration shall continue until the
affairs of the Trust or any Series or Class shall have been
wound up, including the power to fulfill or discharge the
contracts of the Trust or the Series of the Trust, collect its
assets, sell, convey, assign, exchange, transfer or otherwise
dispose of all or any part of the remaining Trust Property to
one or more persons at public or private sale for
consideration which may consist in whole or in part of cash,
securities or other property of any kind, discharge or pay its
liabilities, and to do all other acts appropriate to liquidate
its business; provided that any sale, conveyance, assignment,
exchange, transfer or other disposition of all or
substantially all the Trust Property shall require Shareholder
approval in accordance with Section 9.4 hereof.
(iii) After paying or adequately providing for the payment of
all liabilities, and upon receipt of such releases,
indemnities and refunding agreements, as they deem necessary
for their protection, the Trustees may distribute the
remaining Trust Property, in cash or in kind or partly each,
among the Shareholders according to their respective rights.
(b) After termination of the Trust or any Series or Class of the Trust
and distribution to the Shareholders as herein provided, a majority of
the Trustees shall execute and lodge among the records of the Trust an
instrument in writing setting forth the fact of such termination, and
the Trustees shall thereupon be discharged from all further liabilities
and duties hereunder, and the rights and interests of all Shareholders
thereof shall thereupon cease with regard to the Trust, Series or
Class, as applicable.
SECTION 9.3. AMENDMENT PROCEDURE.
(a) All rights granted to the Shareholders under this Declaration are
granted subject to the reservation of the right to amend this
Declaration as provided herein, except that no amendment shall repeal
the limitations on personal liability of any Shareholder or Trustee or
repeal the prohibition of assessment upon the Shareholders without the
express consent of each Shareholder or Trustee involved. Subject to the
foregoing, the Trustees may amend this Declaration without the vote or
consent of Shareholders to designate Series or Classes in accordance
with Sections 6.2 and 6.11 hereof, to change the name of the Trust or
any Series or Class thereof, to supply any omission, to cure, correct
or supplement any ambiguous, defective or inconsistent provision
hereof, or if they deem it necessary to conform this Declaration to the
requirements of applicable federal laws or regulations or the
requirements of the regulated investment company provisions of the
Internal Revenue Code, or to make any other changes in the Declaration
which do not materially adversely affect the rights of Shareholders
hereunder, but the Trustees shall not be liable for failing to do so.
In addition amendment of this Declaration of Trust as it may affect any
one or more Series may
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be effected by vote of the Trustees at any time when the Trust has no
outstanding Shares or Shareholders of such Series.
(b) No amendment may be made under this Section 9.3 which would change
any rights with respect to any Shares of the Trust by reducing the
amount payable thereon upon liquidation of the Trust or by diminishing
or eliminating any voting rights pertaining thereto, except with the
vote or consent of the holders of two-thirds of the Shares outstanding
and entitled to vote, or by such other vote as may be established by
the Trustees with respect to any Series of Shares.
(c) Amendments shall be effective upon the taking of action as provided
in this section or at such later time as shall be specified in the
applicable vote or instrument. A certificate signed by a majority of
the Trustees setting forth an amendment and reciting that it was duly
adopted by the Shareholders or by the Trustees as aforesaid or a copy
of the Declaration, as amended, and executed by a majority of the
Trustees, shall be conclusive evidence of such amendment when lodged
among the records of the Trust.
Notwithstanding any other provision hereof, until such time as a
Registration Statement under the Securities Act of 1933, as amended, covering
the first public offering of securities of the Trust shall become effective, or
at any time there are no longer outstanding any Shares of the Trust, this
Declaration may be terminated or amended in any respect by the affirmative vote
of a majority of the Trustees or by an instrument signed by a majority of the
Trustees.
SECTION 9.4. MERGER, CONSOLIDATION AND SALE OR DISPOSITION OF ASSETS.
The Trustees may sell, convey and transfer the assets of the Trust, or the
assets belonging to one or more or all Series, to another trust, partnership,
association or corporation organized under the laws of any state of the United
States, or to the Trust to be held as assets belonging to one or more Series of
the Trust, in exchange for cash, shares or other securities (including, in the
case of a transfer to another Series of the Trust, Shares of such other Series)
with such transfer being made subject to, or with the assumption by the
transferee, of the liabilities belonging to each Series the assets of which are
so transferred; provided, however, that no assets belonging to the Trust or to
any particular Series shall be so transferred unless the terms of such transfer
shall have first been approved at a meeting called for that purpose by the
affirmative vote of Shareholders holding a majority of the voting power of Trust
or of each Series affected. Following such transfer, the Trustees shall
distribute such cash, shares or other securities (giving due effect to the
assets and liabilities belonging to and any other differences among the various
Series the assets belonging to which have so been transferred) among the
Shareholders of the Series the assets belonging to which have been so
transferred; and if all the assets of the Series or Trust have been so
transferred, the Series or Trust, as the case may be, shall be terminated.
The Trust or any Series thereof may be a party, with one or more
entities (including another Series) to an agreement of merger or consolidation;
provided, however, that any such agreement of merger or consolidation shall be
approved by the Trustees, and by the affirmative vote of Shareholders holding a
majority of the voting power of the Trust or of each Series affected.
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SECTION 9.5. INCORPORATION. With the approval of the holders of a
majority of the Shares outstanding and voting, or by such other vote as may be
established by the Trustees with respect to any Series of Shares (if Shareholder
approval is required), the Trustees may cause to be organized or assist in
organizing a corporation or corporations under the laws of any jurisdiction or
any other trust, partnership, association or other organization to take over all
of the Trust Property or to carry on any business in which the Trust shall
directly or indirectly have any interest, and to sell, convey and transfer the
Trust Property to any such corporation, trust, association or organization in
exchange for the shares or securities thereof and assumption of liabilities of
the Trust or otherwise, and to lend money to, subscribe for the shares or
securities of, and enter into any contracts with any such corporation, trust,
partnership, association or organization in which the Trust holds or is about to
acquire shares or any other interest. The Trustees may also cause a merger or
consolidation between the Trust or any successor thereto and any such
corporation, trust, partnership, association or other organization if and to the
extent permitted by law, as provided under the law then in effect.
SECTION 9.6. ABSENCE OF DISSENTERS' RIGHTS. No shareholder shall be
entitled, as a matter of right, to relief as a dissenting shareholder in respect
of any proposal or action involving the Trust.
ARTICLE X
SHAREHOLDERS' VOTING POWERS AND MEETINGS
SECTION 10.1. VOTING POWERS. The Shareholders shall have power to vote
only (i) for the election of Trustees as provided in Section 2.3 hereof or as
required by Section 16 (a) of the 1940 Act; (ii) with respect to any investment
advisory or management contract as provided in Section 4.1; (iii) with respect
to termination or reorganization of the Trust or any Series or Class as provided
in Section 9.2.; (iv) with respect to any amendment of the Declaration to the
extent and as provided in Section 9.3; (v) with respect to any merger,
consolidation or sale or disposition of assets as provided in Section 9.4; (vi)
with respect to incorporation of the Trust to the extent and as provided in
Section 9.5; (vii) to the same extent as the stockholders of an Ohio business
corporation as to whether or not a court action, proceeding or claim should or
should not be brought or maintained derivatively or as a class action on behalf
of the Trust or the Shareholders; and (viii) with respect to such additional
matters relating to the Trust as may be required by the Declaration, the Bylaws,
the 1940 Act or any registration of the Trust with the Commission (or any
successor agency), or as the Trustees may consider necessary or desirable.
Each whole Share shall be entitled to one vote as to any matter on
which it is entitled to vote and each fractional Share shall be entitled to
proportionate fractional vote, except that Shares held in the treasury of the
Trust shall not be voted, that on matters relating to the Trust and governed by
specific voting requirements in the 1940 Act shall be voted in accordance with
the 1940 Act and that the Trustees may, in conjunction with the establishment of
any Series of Shares, establish conditions under which the several Series shall
have separate voting rights or no voting rights. There shall be no cumulative
voting in the election of Trustees. Until Shares are issued, the Trustees may
exercise all rights of Shareholders and may take any action required by law, the
Declaration or the Bylaws to be taken by Shareholders. The Bylaws may include
further provisions for Shareholder votes and meetings and related matters.
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SECTION 10.2. MEETINGS OF SHAREHOLDERS. A meeting of the Shareholders
shall be held at such times, on such day and at such hour as the Trustees may
from time to time determine, or at the written request of the holder or holders
of ten percent (10%) or more of the total number of Shares then issued and
outstanding of the Trust entitled to vote at such meeting or as required by law.
Any such request shall state the purpose of the proposed meeting.
Written notice of all meetings of the Shareholders, stating the time,
date, place and purpose of the meeting, shall be given by, or at the direction
of, the person calling the meeting to each Shareholder of record entitled to
vote at the meeting at his address as recorded on the register of the Trust,
mailed at least ten (10) days prior to the date named for the meeting. No notice
need be given to any Shareholder who shall have failed to inform the Trust of
his current address or if a written waiver of notice, executed before or after
the meeting by the Shareholder or his attorney thereunto authorized, is filed
with the records of the meeting.
SECTION 10.3. QUORUM AND REQUIRED VOTE. At any meeting of Shareholders,
a quorum for the transaction of business shall consist of a majority represented
in person or by proxy of all votes attributable to the outstanding Shares
(without regard to individual Series or Class) entitled to vote with respect to
a matter; provided, however, that at any meeting at which the only actions to be
taken are actions required by the 1940 Act to be taken by vote of the
Shareholders of an individual Series or Class, a quorum shall consist of a
majority of all votes attributable to the outstanding Shares of such individual
Series or Class entitled to vote thereon, and that at any meeting at which the
only action to be taken shall have been determined by the Board of Trustees to
affect the rights and interests of one or more but not all Series or Classes of
the Trust, a quorum shall consist of a majority of all votes attributable to the
outstanding Shares of the Series or Classes so affected; and provided, further,
that reasonable adjournments of such meeting until a quorum is obtained may be
made by a vote attributable to the Shares present in person or by proxy. In
addition, a meeting may adjourned and postponed for any other reason as
determined by the Trustees.
Except as otherwise provided in the Declaration or as required by the
1940 Act or other applicable law, and subject to applicable quorum requirements,
matters voted on by Shareholders must be approved by the affirmative vote of the
holders of a majority of the Shares voting at any meeting of Shareholders and
Trustees must be elected by a plurality of the Shares voting, or by an
instrument in writing, without a meeting, signed by a majority of the Trustees
and consented to by the holders of a majority of Shares outstanding and entitled
to vote, or by such other vote as may be established by the Trustees with
respect to any Series or Class of Shares, provided that the election of Trustees
(after the election by the initial sole Shareholder) must be approved by the
Shareholders at a meeting of Shareholders.
SECTION 10.4. RECORD DATE FOR MEETINGS. For the purpose of determining
the Shareholders who are entitled to notice of and to vote at any meeting, or to
participate in any distribution, or for the purpose of any other action, the
Trustees may from time to time close the transfer books for such period, not
exceeding thirty (30) days, as the Trustees may determine; or without closing
the transfer books the Trustees may fix a date not more than ninety (90) days
prior to the date of any meeting of Shareholders or distribution or other action
as a record date for the determination of the persons to be treated as
Shareholders of record for such purposes. Only Shareholders of record at the
close of business on the record date will be entitled to notice of and to vote
at any meeting.
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SECTION 10.5. PROXIES. At any meeting of Shareholders, any holder of
Shares entitled to vote thereat may vote by proxy, provided that no proxy shall
be voted at any meeting unless it shall have been placed on file with the
Secretary, or with such other officer or agent of the Trust as the Trustees may
direct, for verification prior to the time at which such vote shall be taken.
Pursuant to a resolution of a majority of the Trustees, proxies may be solicited
in the name of one or more Trustees or one or more of the officers or agents of
the Trust. Only Shareholders of record shall be entitled to vote. Each full
Share shall be entitled to one vote and fractional Shares shall be entitled to a
vote of such fraction. When any share is held jointly by several persons, any
one of them may vote at any meeting in person or by proxy in respect of such
Share, but if more than one of them shall be present at such meeting in person
or by proxy, and such joint owners or their proxies so present disagree as to
any vote to be cast, such vote shall not be received in respect of such Share. A
proxy purporting to be executed by or on behalf of a Shareholder shall be deemed
valid unless challenged at or prior to its exercise, and the burden of proving
invalidity shall rest on the challenger. If the holder of any such Share is a
minor or a person of unsound mind, and subject to guardianship or to the legal
control of any other person as regards the change or management of such Share,
he may vote by his guardian or such other person appointed or having such
control, and such vote may be given in person or by proxy.
To the extent that one or more Series are included as underlying
investment options in variable contracts issued by Nationwide Life Insurance
Company or Nationwide Life and Annuity Insurance Company (collectively,
"Nationwide"), with respect to Shares of such Series held by Nationwide in
connection with those contracts, Nationwide will vote such Shares at any meeting
in accordance with timely instructions received pursuant to the variable
contracts issued by Nationwide. Nationwide will vote shares attributable to
variable contracts as to which no voting instructions are received in proportion
(for, against or abstain) to those for which timely instructions are received.
If voting instructions are received that do not specify a choice, but have been
properly executed Nationwide will consider their timely receipt as an
instruction to vote in favor the proposal to which it relates. In certain
circumstances, Nationwide may have the right to disregard voting instructions
from certain variable contract owners. Variable contract owners may revoke
previously submitted voting instructions given to Nationwide at any time prior
to any meeting by either submitting to Nationwide subsequently dated voting
instructions, delivering to Nationwide a written notice of revocation or
otherwise giving notice of revocation in open meeting, in all cases prior to the
exercise of the authority granted in the proxy.
SECTION 10.6. ACTION WITHOUT A MEETING. Subject to the 1940 Act, any
action which may be taken by Shareholders may be taken without a meeting if a
majority of Shareholders entitled to vote on the matter (or such larger
proportion thereof as shall be required by law, the Declaration or these Bylaws
for approval of such matter) consent to the action in writing and the written
consents are filed with the records of the meetings of Shareholders. Such
consent shall be treated for all purposes as a vote taken at a meeting of
Shareholders.
SECTION 10.7. INSPECTION OF RECORDS. The records of the Trust shall be
open to inspection by Shareholders to the same extent as is permitted
stockholders of an Ohio corporation organized under Chapter 1701, Ohio Revised
Code.
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SECTION 10.8. ADDITIONAL PROVISIONS. The Bylaws may include further
provisions for Shareholders' votes and meetings and related matters not
inconsistent with the provisions hereof.
ARTICLE XI
MISCELLANEOUS
SECTION 11.1. FILING. The original or a copy of this instrument and of
each amendment hereto shall be kept at the office of the Trust where it may be
inspected by any Shareholder. This Declaration, any amendment and the report
required by Section 1746.04, Ohio Revised Code, hereto shall be filed in the
office of the Secretary of the of Ohio and in such other places as may be
required under the laws of Ohio and may also be filed or recorded in such other
places as the Trustees deem appropriate. The Declaration and each amendment
thereto shall be effective upon adoption. A restated Declaration, integrating
into a single instrument all of the provisions of the Declaration which are then
in effect and operative, may be executed from time to time by a majority of the
Trustees and shall, upon filing with the Secretary of the State of Ohio, be
conclusive evidence of all amendments contained herein and may thereafter be
referred to in lieu of the original Declaration and the various amendments
thereto.
SECTION 11.2. GOVERNING LAW. This Declaration is executed by the
Trustees and delivered with reference to the laws of the of Ohio, and the rights
of all parties and the validity and construction of every provision hereof shall
be subject to and construed according to the laws of said State.
SECTION 11.3. COUNTERPARTS. This Declaration may be simultaneously
executed in several counterparts, each of which shall be deemed to be an
original, and such counterparts, together, shall constitute one and the same
instrument, which shall sufficiently be evidenced by any such original
counterpart.
SECTION 11.4. RELIANCE BY THIRD PARTIES. Any certificate executed by an
individual who, according to the records of the Trust appears to be a Trustee
hereunder, certifying to: (a) the number or identity of Trustees or
Shareholders, (b) the due authorization of the execution of any instrument or
writing, (c) the form of any vote passed at a meeting of Trustees or
Shareholders, (d) the fact that the number of Trustees or Shareholders present
at any meeting or executing any written instrument satisfies the requirements of
this Declaration, (e) the form of any Bylaws adopted by or the identity of any
officers elected by the Trustees, or (f) the existence of any fact or facts
which in any manner relate to the affairs of the Trust, shall be conclusive
evidence as to the matters so certified in favor of any Person dealing with the
Trustees and their successors.
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SECTION 11.5. PROVISIONS IN CONFLICT WITH LAW OR REGULATIONS.
(a) The provisions of the Declaration are severable, and if the
Trustees shall determine, with the advice of counsel, that any of such
provisions is in conflict with the 1940 Act, the regulated investment
company provisions of the Internal Revenue Code or with other
applicable laws and regulations, the conflicting provisions shall be
deemed never to have constituted a part of the Declaration; provided,
however, that such determination shall not affect any of the remaining
provisions of the Declaration or render invalid or improper any action
taken or omitted prior to such determination.
(b) If any provision of the Declaration shall be held invalid or
unenforceable in any jurisdiction, such invalidity or unenforceability
shall attach only to such provision in such jurisdiction and shall not
in any manner affect such provision in any other jurisdiction or any
other provision of the Declaration in any jurisdiction.
SECTION 11.6. INDEX AND HEADING FOR REFERENCE ONLY. The Index and
heading preceding the text, articles and sections hereof have been inserted for
convenience and reference only and shall not be construed to affect the meaning,
construction or effect of this Declaration.
IN WITNESS WHEREOF, the undersigned Trustees have hereunto set their hand this
6th day of November, 1998.
- ----------------------------------
Sue A. Doody, Trustee
--------------------------------------
C. Brent DeVore, Trustee
- -----------------------------------
Robert M. Duncan, Trustee
--------------------------------------
- ----------------------------------- Charles L. Fuellgraf, Jr., Trustee
Dimon R. McFerson, Trustee
--------------------------------------
- ----------------------------------- Thomas J. Kerr, IV, Trustee
Nancy C. Thomas, Trustee
- -----------------------------------
Harold W. Weihl, Trustee
- -----------------------------------
David C. Wetmore, Trustee
- -----------------------------------
Douglas F. Kridler, Trustee
- -----------------------------------
John C. Bryant, Trustee
34
<PAGE> 39
Trust Address: Three Nationwide Plaza
26th Floor
Columbus, Ohio 43216
35
<PAGE> 1
Exhibit (5)(a)
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
<PAGE> 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
2
<PAGE> 3
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, 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
3
<PAGE> 4
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 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 1940 Act) 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
<PAGE> 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
<PAGE> 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 1940 Act)
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
6
<PAGE> 7
outstanding 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
1940 Act) 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 Nationwide Plaza, 26th Floor
Columbus, OH 43215
Attention: James F. Laird, Jr.
Facsimile: (614) 249-7424
(b) If to the Trust:
Nationwide Investing Foundation III
Three Nationwide Plaza, 26th Floor
Columbus, OH 43215
Attention: James F. Laird, Jr.
7
<PAGE> 8
Facsimile: (614) 249-7424
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
<PAGE> 9
EXHIBIT A
NATIONWIDE INVESTING FOUNDATION III
Investment Advisory Agreement
Effective November 1, 1998
<TABLE>
<CAPTION>
FUNDS OF THE TRUST ADVISORY FEES
- -------------------------------------------------------------------------------------------
<S> <C>
FOR EACH OF THE NATIONWIDE EQUITY FUNDS
---------------------------------------
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 less
Nationwide Fund 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
- -------------------------------------------------------------------------------------------
FOR THE NATIONWIDE FIXED INCOME FUNDS
-------------------------------------
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 less
Nationwide Long-term U.S. than $1 billion
Government Bond Fund 0.45% on assets of $1 billion and more but less
Nationwide Intermediate U.S. 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 $5 billion and more
- -------------------------------------------------------------------------------------------
FOR THE NATIONWIDE MONEY MARKET FUND
------------------------------------
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
- -------------------------------------------------------------------------------------------
</TABLE>
9
<PAGE> 10
<TABLE>
<S> <C>
Investment Advisory Agreement
Effective November 1, 1998
FUNDS OF THE TRUST ADVISORY FEES
- ------------------ -------------
- -------------------------------------------------------------------------------------------
FOR OTHER FUNDS
Nationwide S&P 500 Index Fund 0.13% of average daily net assets
Prestige Large Cap Value Fund 0.75% on assets up to $100 million
0.70% on assets of $100 million and more
Prestige Large Cap Growth Fund 0.80% on assets up to $150 million
0.70% on assets of $150 million and more
Prestige Small Cap Fund 0.95% on assets up to $100 million
0.80% on assets of $100 million and more
Prestige Balanced Fund 0.75% on assets up to $100 million
0.70% on assets of $100 million and more
Prestige International Fund 0.85% on assets up to $200 million
0.80% on assets of $200 million and more
- -------------------------------------------------------------------------------------------
</TABLE>
NATIONWIDE INVESTING FOUNDATION III
By:
-----------------------------------
James F. Laird, Jr.
Treasurer
NATIONWIDE ADVISORY SERVICES, INC.
By:
-----------------------------------
Christopher A. Cray
Treasurer
10
<PAGE> 1
Exhibit (5)(b)
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 UNION BOND & TRUST COMPANY (the "Adviser"), a trust
company organized under the laws of Oregon.
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 without violation of applicable laws (including the
Glass-Steagall Act) and regulations.
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 from time to time (collectively
referred to hereinafter as the "Prospectus") and subject to
<PAGE> 2
resolutions and directions of the Trust's Board of Trustees. To the
extent that a Fund enters into wrapper agreements as described in the
Prospectus, the Adviser will work with the wrap agreement providers to
furnish the Fund with the monthly crediting rate applicable for the
wrap agreements.
(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
2
<PAGE> 3
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 services to the Fund, 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
3
<PAGE> 4
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 and the Investment Advisers Act of 1940 (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 Adviser's Code of Ethics (which shall comply in
all material respects with Rule 17j-1 under the 1940 Act), as the same
may be amended from time to time. On a quarterly basis, the Adviser
will either (i) certify to the Trust that the Adviser and its Access
Persons have complied with the Adviser's Code of Ethics with respect to
the Fund or (ii) identify any violations which have occurred with
respect to the Fund.
(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 Fund's pro rata share of the compensation and expenses of
the Trustees of Trust who are "interested persons" (as defined in the 1940 Act)
of the Trust and for the compensation and expenses of the officers of the Trust
who are employees of the Adviser.
It is understood that the Trust will pay all of its own expenses,
unless otherwise agreed to by the Trust and the Adviser, 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
4
<PAGE> 5
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) all expenses of shareholders' and Trustees' meetings
and of preparing, printing and distributing prospectuses and reports to
shareholders, (10) 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, (11) insurance and
bonding premiums, (12) association membership dues, (13) bookkeeping and the
costs of calculating the net asset value of shares of the Trust's Funds, and
(14) 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 to waive 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 exempt from registration as an investment
adviser under the Advisers Act;
(b) The Adviser is a trust company duly organized, validly
existing and in good standing under the laws of the State of Oregon
with the power to own and possess its assets and carry on its business
as it is now being conducted;
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<PAGE> 6
(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 or
violation 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.
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 or except a loss resulting from a breach of
fiduciary duty with respect to receipt of compensation for services
provided for under this agreement, 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 or a loss resulting
from a breach of fiduciary duty with respect to receipt of compensation
for services provided for under this agreement.
8. Duration and Termination.
(a) Duration. Unless sooner terminated, this Agreement shall
continue with respect to a Fund 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 the Fund represented at a meeting if holders of more than
50% of the outstanding shares of the Fund are present in person or by
proxy or (b) more than 50% of the outstanding shares of the Fund;
provided that in either event its continuance also is approved by a
majority of
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<PAGE> 7
the Trust's Trustees who are not "interested persons" (as defined in
the 1940 Act) 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, as to a Fund, 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 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
1940 Act) 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 (to the extent 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:
Union Bank & Trust Company
5665 SW Meadow Road, Suite 400
Lake Oswego, Oregon 97035
Attention:
Facsimile:
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<PAGE> 8
(b) If to the Trust:
Nationwide Investing Foundation III
Three Nationwide Plaza, 26th Floor
Columbus, OH 43215
Attention: James F. Laird, Jr.
Facsimile: (614) 249-7424
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.
18. Miscellaneous. This Agreement shall be binding upon and shall
inure to the benefit of the parties hereto and their respective successors.
The Trust is a business trust organized under Chapter 1746, Ohio
Revised Code and under a Declaration of Trust dated as of October 30, 1997, to
which reference is hereby made a copy of which is on file at the office of the
Secretary of State of Ohio, and to any and all amendments thereto so filed or
hereafter filed. The obligations of the Trust entered into in the name of on
behalf thereof by any of the Nationwide Investing Foundation III Trustees,
officers, employees or agents are not made individually, but only in their
capacities with respect to the Trust. Such obligations are not binding upon any
of the Trustees, shareholders, officers, employees, or agents of the Trust
personally, but bind only the assets of the Trust, as set forth in Section
1746.13(A), Ohio Revised Code. All persons dealing with any series of the Shares
of the Trust must look solely to the assets of the Trust belonging to such
series for the enforcement of any claims against the Trust.
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<PAGE> 9
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
the day and year first written above.
ADVISER
UNION BOND & TRUST COMPANY
By:__________________________________
Name:
Title:
TRUST
NATIONWIDE INVESTING FOUNDATION III
By:__________________________________
Name:
Title:
9
<PAGE> 10
EXHIBIT A
NATIONWIDE INVESTING FOUNDATION III
Investment Advisory Agreement
<TABLE>
<CAPTION>
Funds of the Trust Advisory Fees (applicable for each Fund)
- ------------------ ----------------------------------------
<S> <C>
Morley Capital Accumulation Fund 0.35% of the average daily net assets of the Fund
</TABLE>
10
<PAGE> 1
Exhibit (5)(c)(2)
SUBADVISORY AGREEMENT
THIS AGREEMENT is made and entered into on this 2nd day of November,
1998, among Nationwide Investing Foundation III, an Ohio business trust (the
"Trust"), Nationwide Advisory Services, Inc. (the "Adviser"), an Ohio
corporation registered under the Investment Advisers Act of 1940, as amended
(the "Advisers Act"), and Brinson Partners, Inc., a Delaware corporation (the
"Subadviser"), also registered under 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 Adviser has, pursuant to an Advisory Agreement with the
Trust dated as of May 9, 1998 (the "Advisory Agreement") as subsequently amended
November 2, 1998, been retained to act as investment adviser for certain of the
series of the Trust which are listed on Exhibit A to this Agreement (each a
"Fund");
WHEREAS, the Advisory Agreement permits the Adviser to delegate certain
of its duties under the Advisory Agreement to other investment advisers, subject
to the requirements of the 1940 Act; and
WHEREAS, the Adviser desires to retain Subadviser to assist it in the
provision of a continuous investment program for that portion of the Trust's
assets which the Adviser will assign to the Subadviser (the "Subadviser
Assets"), and Subadviser is willing to render such services subject to the terms
and conditions set forth in this Agreement.
NOW, THEREFORE, the parties do mutually agree and promise as follows:
1. Appointment as Subadviser. The Adviser hereby retains the Subadviser
to act as investment adviser for and to manage the Subadviser Assets subject to
the supervision of the Adviser and the Board of Trustees of the Trust and
subject to the terms of this Agreement; and the Subadviser hereby accepts such
employment. In such capacity, the Subadviser shall be responsible for the
investment management of the Subadviser Assets. It is recognized that the
Subadviser and certain of its affiliates now act, and that from time to time
hereafter may act, as investment adviser to one or more other investment
companies and to fiduciary or other managed accounts and that the Adviser and
the Trust have no objection to such activities.
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<PAGE> 2
2. Duties of Subadviser.
(a) Investments. The Subadviser is hereby authorized and
directed and hereby agrees, subject to the stated investment policies
and restrictions of the Funds as set forth in the Funds' 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
Adviser and the Trust's Board of Trustees, to purchase, hold and sell
investments for the Subadviser Assets and to monitor on a continuous
basis the performance of the Subadviser Assets. In providing these
services, the Subadviser will conduct a continual program of
investment, evaluation and, if appropriate, sale and reinvestment of
the Subadviser Assets. The Adviser agrees to provide the Subadviser
with such assistance as may be reasonably requested by the Subadviser
in connection with the Subadviser's activities under this Agreement,
including, without limitation, information concerning the Funds, their
funds available, or to become available, for investment and generally
as to the conditions of the Funds' or Trust's affairs.
(b) Compliance with Applicable Laws and Governing Documents.
In the performance of its duties and obligations under this Agreement,
the Subadviser shall act in conformity with the Trust's Declaration of
Trust and By-Laws and the Prospectus and with the instructions and
directions received in writing from the Adviser or the Trustees of the
Trust and will conform to and comply with the requirements of the 1940
Act, the Internal Revenue Code of 1986, as amended (the "Code"), and
all other applicable federal and state laws and regulations.
Notwithstanding the foregoing, the Adviser shall remain responsible for
ensuring each Fund's overall compliance with the 1940 Act and the Code
and the Subadviser is only obligated to comply with this subsection (b)
with respect to the Subadviser Assets. The Adviser will provide the
Subadviser with a copy of the minutes of the meetings of the Board of
Trustees of the Trust to the extent they may affect the Funds or the
duties of the Subadviser, and with copies of any financial statements
or reports made by the Funds to their shareholders, and any further
materials or information which the Subadviser may reasonably request to
enable it to perform its functions under this Agreement.
The Adviser will also provide the Subadviser with reasonable
advance notice of any change in a Fund's investment objectives,
policies and restrictions as stated in the Prospectus, and the
Subadviser shall, in the performance of its duties and obligations
under this Agreement, manage the Subadviser Assets consistent with such
changes, provided the Subadviser has received prompt notice of the
effectiveness of such changes from the Trust or the Adviser. In
addition to such notice, the Adviser shall provide to the Subadviser a
copy of a modified Prospectus reflecting such changes. The Adviser
acknowledges and agrees that the Prospectus will at all times be in
compliance with all disclosure requirements under all applicable
federal and state laws and regulations relating to the Trust or the
Funds, including, without limitation, the 1940 Act, and the rules and
regulations thereunder, and that
2
<PAGE> 3
the Subadviser shall have no liability in connection therewith, except
as to the accuracy of material information furnished by the Subadviser
to the Trust or to the Adviser specifically for inclusion in the
Prospectus. The Subadviser hereby agrees to provide to the Adviser in a
timely manner such information relating to the Subadviser and its
relationship to, and actions for, the Trust as may be required to be
contained in the Prospectus or in the Trust's registration Statement on
Form N-1A.
(c) Voting of Proxies. The Subadviser shall have the power to
vote, either in person or by proxy, all securities in which the
Subadviser Assets may be invested from time to time, and shall not be
required to seek or take instructions from, the Adviser, the Fund or
the Trust or take any action with respect thereto. If both the
Subadviser and another entity managing assets of a Fund have invested
in the same security, the Subadviser and such other entity will each
have the power to vote its pro rata share of the security.
(d) Agent. Subject to any other written instructions of the
Adviser or the Trust, the Subadviser is hereby appointed the Adviser's
and the Trust's agent and attorney-in-fact for the limited purposes of
executing account documentation, agreements, contracts and other
documents as the Subadviser shall be requested by brokers, dealers,
counterparties and other persons in connection with its management of
the Subadviser Assets. The Subadviser agrees to provide the Adviser and
the Trust with copies of any such agreements executed on behalf of the
Adviser or the Trust.
(e) Brokerage. The Subadviser is authorized, subject to the
supervision of the Adviser and the Trust's Board of Trustees, to
establish and maintain accounts on behalf of the Fund with, and place
orders for the purchase and sale of the Subadviser Assets with or
through, such persons, brokers (including, to the extent permitted by
applicable law, any broker affiliated with the Subadviser) or dealers
("brokers") as the Subadviser may elect and negotiate commissions to be
paid on such transactions. The Subadviser, however, is not required to
obtain the consent of the Adviser or the Trust's Board of Trustees
prior to establishing any such brokerage account. The Subadviser shall
place all orders for the purchase and sale of portfolio investments for
the Funds' account with brokers selected by the Subadviser. In the
selection of such brokers and the placing of such orders, the
Subadviser shall seek to obtain for the Funds 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 the
Funds the most favorable price and execution available, the Subadviser,
bearing in mind the best interests of each Fund at all times, shall
consider all factors it deems relevant, including price, the size of
the transaction, the breadth and nature of the market for the security,
the difficulty of the execution, the amount of the commission, if any,
the timing of the transaction, market prices and trends, the
reputation, experience and financial stability of the broker involved,
and the quality of service rendered by the broker in other
transactions. Subject to such policies as the Trustees may determine,
or as may be mutually agreed to by
3
<PAGE> 4
the Adviser and the Subadviser, the Subadviser 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
Subadviser 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 Subadviser determines in good faith that such commission was
reasonable in relation to the value of the brokerage and research
services provided by such broker or dealer viewed in terms of either
that particular transaction or the overall responsibility of the
Subadviser with respect to the accounts as to which it exercises
investment discretion.
It is recognized that the services provided by such brokers
may be useful to the Subadviser in connection with the Subadviser's
services to other clients. On occasions when the Subadviser deems the
purchase or sale of a security to be in the best interests of a Fund as
well as other clients of the Subadviser, the Subadviser, 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
such event, allocation of securities so sold or purchased, as well as
the expenses incurred in the transaction, will be made by the
Subadviser in the manner the Subadviser considers to be the most
equitable and consistent with its fiduciary obligations to the Funds
and to such other clients. It is recognized that in some cases, this
procedure may adversely affect the price paid or received by the Funds
or the size of the position obtainable for, or disposed of by, the
Funds.
(f) Securities Transactions. The Subadviser and any affiliated
person of the Subadviser will not purchase securities or other
instruments from or sell securities or other instruments to a Fund;
provided, however, the Subadviser and any affiliated person of the
Subadviser 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.
The Subadviser, including its Access Persons (as defined in
subsection (e) of Rule 17j-1 under the 1940 Act), agrees to observe and
comply with Rule 17j-1 and the Subadviser's Code of Ethics (which shall
comply in all material respects with Rule 17j-1), as the same may be
amended from time to time. On a quarterly basis, the Subadviser will
either (i) certify to the Adviser that the Subadviser and its Access
Persons have complied with the Subadviser's Code of Ethics with respect
to the Subadviser Assets or (ii) identify any violations which have
occurred with respect to the Subadviser Assets.
(g) Books and Records. The Subadviser shall maintain separate
detailed records of all matters pertaining to the Subadviser Assets
(the "Funds' Records"), including, without limitation, brokerage and
other records of all securities transactions. The Subadviser
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<PAGE> 5
acknowledges that the Funds' Records are property of the Trust. The
Funds' Records (relating to the Subadviser Assets) shall be available
to the Adviser at any time upon reasonable request during normal
business hours and shall be available for telecopying without delay to
the Adviser during any day that the Fund is open for business.
(h) Information Concerning Subadviser Assets and Subadviser.
From time to time as the Adviser or the Trust may request, the
Subadviser will furnish the requesting party reports on portfolio
transactions and reports on Subadviser Assets held in the portfolio,
all in such detail as the Adviser or the Trust may reasonably request.
The Subadviser will also inform the Adviser in a timely manner of
material changes in portfolio managers responsible for Subadviser
Assets, any changes in the ownership or management of the Subadviser,
or of material changes in the control of the Subadviser. Upon
reasonable request, the Subadviser will make available its officers and
employees to meet with the Trust's Board of Trustees to review the
Subadviser Assets.
The Subadviser will also provide such information or perform
such additional acts as are customarily performed by a subadviser and
may be required for the Trust or the Adviser to comply with their
respective obligations under applicable laws, including without
limitation, the Code, the 1940 Act, the Advisers Act, and the
Securities Act of 1933, as amended (the "Securities Act"), and any rule
or regulation thereunder.
(i) Custody Arrangements. The Subadviser shall on each
business day provide the Adviser and the Trust's custodian such
information as the Adviser and the Trust's custodian may reasonably
request relating to all transactions concerning the Fund Investments.
(j) Historical Performance Information. To the extent agreed
upon by the parties, the Subadviser will provide the Trust with
historical performance information on similarly managed investment
companies or for other accounts to be included in the Prospectus or for
any other uses permitted by applicable law.
3. Independent Contractor. In the performance of its duties hereunder,
the Subadviser is and shall be an independent contractor and unless otherwise
expressly provided herein or otherwise authorized in writing, shall have no
authority to act for or represent the Trust or the Adviser in any way or
otherwise be deemed an agent of the Trust or the Adviser.
4. Expenses. During the term of this Agreement, Subadviser will pay all
expenses incurred by it in connection with its activities under this Agreement
other than the cost of securities, commodities and other investments (including
brokerage commissions and other transaction charges, if any) purchased for the
Funds. The Subadviser shall, at its sole expense, employ or associate itself
with such persons as it believes to be particularly fitted to assist it in the
execution of its duties under this Agreement. The Subadviser shall not be
responsible for the Trust's, the Fund's or Adviser's
5
<PAGE> 6
expenses, which shall include, but not be limited to, organizational and
offering expenses (which include out-of-pocket expenses, but not overhead or
employee costs of the Subadviser); expenses for legal, accounting and auditing
services; taxes and governmental fees; dues and expenses incurred in connection
with membership in investment company organizations; costs of printing and
distributing shareholder reports, proxy materials, prospectuses, stock
certificates and distribution of dividends; charges of the Funds' custodians and
sub-custodians, administrators and sub-administrators, registrars, transfer
agents, dividend disbursing agents and dividend reinvestment plan agents;
payment for portfolio pricing services to a pricing agent, if any; registration
and filing fees of the Securities and Exchange Commission (the "SEC"); expenses
of registering or qualifying securities of the Funds for sale in the various
states; freight and other charges in connection with the shipment of the Funds'
portfolio securities; fees and expenses of non-interested Trustees; salaries of
shareholder relations personnel; costs of shareholders meetings; insurance;
interest; brokerage costs; and litigation and other extraordinary or
non-recurring expenses. The Trust or the Adviser, as the case may be, shall
reimburse the Subadviser for any expenses of the Funds or the Adviser as may be
reasonably incurred by such Subadviser on behalf of the Funds or the Adviser.
The Subadviser shall keep and supply to the Trust and the Adviser reasonable
records of all such expenses.
5. Compensation. For the services provided and the expenses assumed
with respect to the Funds and the Subadviser Assets pursuant to this Agreement,
the Subadviser will be entitled to the fee listed for each Fund on Exhibit A.
Such fees will be computed daily and payable no later than the seventh (7th)
business day following the end of each month, from the Adviser or the Trust,
calculated at an annual rate based on the Subadviser Assets' average daily net
assets.
The method of determining 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 of that Fund as
described in the Funds' 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.
6. Representations and Warranties of Subadviser. The Subadviser
represents and warrants to the Adviser and the Trust as follows:
(a) The Subadviser is registered as an investment adviser
under the Advisers Act;
(b) The Subadviser has filed a notice of exemption pursuant to
Section 4.14 under the Commodity Exchange Act (the "CEA") with the
Commodity Futures Trading Commission (the "CFTC") and the National
Futures Association ("NFA"), or is not required to file such exemption;
6
<PAGE> 7
(c) The Subadviser is a corporation duly organized and validly
existing under the laws of the State of Delaware with the power to own
and possess its assets and carry on its business as it is now being
conducted;
(d) The execution, delivery and performance by the Subadviser
of this Agreement are within the Subadviser's powers and have been duly
authorized by all necessary action on the part of its board of
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
Subadviser for the execution, delivery and performance by the
Subadviser of this Agreement, and the execution, delivery and
performance by the Subadviser of this Agreement do not contravene or
constitute a default under (i) any provision of applicable law, rule or
regulation, (ii) the Subadviser's governing instruments, or (iii) any
agreement, judgment, injunction, order, decree or other instrument
binding upon the Subadviser;
(e) The Form ADV of the Subadviser previously provided to the
Adviser is a true and complete copy of the form as currently 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.
7. Representations and Warranties of Adviser. The Adviser represents
and warrants to the Subadviser as follows:
(a) The Adviser is registered as an investment adviser under
the Advisers Act;
(b) The Adviser has filed a notice of exemption pursuant to
Section 4.14 under the CEA with the CFTC and the National Futures
Association;
(c) The Adviser is a corporation duly organized and validly
existing 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;
(d) The execution, delivery and performance by the Adviser of
this Agreement are within the Adviser's powers and have been duly
authorized by all necessary action on the part of its shareholders 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;
7
<PAGE> 8
(e) The Form ADV of the Adviser previously provided to the
Subadviser 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;
(f) The Adviser acknowledges that it received a copy of the
Subadviser's Form ADV prior to the execution of this Agreement; and
(g) The Adviser and the Trust have duly entered into the
Advisory Agreement pursuant to which the Trust authorized the Adviser
to enter into this Agreement.
8. Representations and Warranties of the Trust. The Trust represents
and warrants to the Adviser and the Subadviser as follows:
(a) The Trust is a business trust duly organized and validly
existing 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;
(b) The Trust is registered as an investment company under the
1940 Act and the Fund's shares are registered under the Securities Act;
and
(c) The execution, delivery and performance by the Trust of
this Agreement are within the Trust's powers and have been duly
authorized by all necessary action on the part of the Trust and its
Board of Trustees, and no action by or in respect of, or filing with,
any governmental body, agency or official is required on the part of
the Trust for the execution, delivery and performance by the Adviser of
this Agreement, and the execution, delivery and performance by the
Trust of this Agreement do not contravene or constitute a default under
(i) any provision of applicable law, rule or regulation, (ii) the
Trust's governing instruments, or (iii) any agreement, judgment,
injunction, order, decree or other instrument binding upon the Trust.
9. Survival of Representations and Warranties; Duty to Update
Information. All representations and warranties made by the Subadviser, the
Adviser and the Trust pursuant to Sections 6, 7 and 8, respectively, shall
survive for the duration of this Agreement and the parties hereto shall promptly
notify each other in writing upon becoming aware that any of the foregoing
representations and warranties are no longer true.
10. Liability and Indemnification.
(a) Liability. The Subadviser shall exercise its best judgment
in rendering the services in accordance with the terms of this
Agreement. In the absence of wilful
8
<PAGE> 9
misfeasance, bad faith or gross negligence on the part of the
Subadviser or a reckless disregard of its duties hereunder, the
Subadviser, each of its affiliates and all respective partners,
officers, directors and employees ("Affiliates") and each person, if
any, who within the meaning of the Securities Act controls the
Subadviser ("Controlling Persons") shall not be liable for any error of
judgment or mistake of law and shall not be subject to any expenses or
liability to the Adviser, the Trust or the Funds or any of the Funds'
shareholders, in connection with the matters to which this Agreement
relates. 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, any of its Affiliates and each of the
Adviser's Controlling Persons, if any, shall not be subject to any
liability to the Subadviser, for any act or omission in the case of, or
connected with, rendering services hereunder or for any losses that may
be sustained in the purchase, holding or sale of Subadviser Assets;
provided, however, that nothing herein shall relieve the Adviser and
the Subadviser from any of their obligations under applicable law,
including, without limitation, the federal and state securities laws
and the CEA.
(b) Indemnification. The Subadviser shall indemnify the
Adviser, the Trust and the Fund, and their respective Affiliates and
Controlling Persons for any liability and expenses, including
reasonable attorneys' fees, which the Adviser, the Trust and the Fund
and their respective Affiliates and Controlling Persons may sustain as
a result of the Subadviser'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 or the CEA. Notwithstanding any other provision in this
Agreement, the Subadviser will indemnify the Adviser, the Trust and the
Fund, and their respective Affiliates and Controlling Persons for any
liability and expenses, including reasonable attorneys' fees, to which
they may be subjected as a result of their reliance upon and use of the
historical performance calculations provided by the Subadviser
concerning the Subadviser's composite account data or historical
performance information on similarly managed investment companies or
accounts, except that the Adviser, the Trust and the Fund, and their
respective Affiliates and Controlling Persons shall not be indemnified
for a loss or expense resulting from their negligence, willful
misconduct or the violation of the 1940 Act or federal or state
securities laws in using such numbers, or for their failure to conduct
reasonable due diligence with respect to such information.
The Adviser shall indemnify the Subadviser, its Affiliates and
its Controlling Persons, for any liability and expenses, including
reasonable 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 or
the CEA, or as a result of any negligence, willful misconduct or the
violation of the 1940 Act or federal or state securities laws on the
part of the Adviser in the reliance upon and/or use of any historical
performance calculations
9
<PAGE> 10
provided by the Subadviser concerning the Subadviser's composite
account data or historical performance information or similarly managed
investment companies.
11. Duration and Termination.
(a) Duration. Unless sooner terminated, this Agreement shall
continue until November 2, 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 vote of the lesser of (a) 67% of the shares of the Funds
represented at a meeting if holders of more than 50% of the outstanding
shares of the Funds are present in person or by proxy or (b) more than
50% of the outstanding shares of the Funds; 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 1940 Act)
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:
(i) By vote of a majority of the Trust's Board of
Trustees, or by vote of a majority of the outstanding voting
securities of the Fund, or by the Adviser, in each case, upon
at least 60 days' written notice to the Subadviser;
(ii) By any party hereto immediately upon written
notice to the other parties in the event of a breach of any
provision of this Agreement by either of the other parties; or
(iii) By the Subadviser upon at least 60 days'
written notice to the Adviser and the Trust.
This Agreement shall not be assigned (as such term is defined in the
1940 Act) and shall terminate automatically in the event of its
assignment or upon the termination of the Advisory Agreement. Upon
termination of this Agreement, the Trust will immediately discontinue
the use of the historical performance information provided by the
Subadviser provided under Section 2(j) hereof.
12. Duties of the Adviser. The Adviser shall continue to have
responsibility for all services to be provided to the Trust pursuant to the
Advisory Agreement and shall oversee and review the Subadviser's performance of
its duties under this Agreement. Nothing contained in this Agreement shall
obligate the Adviser to provide any funding or other support for the purpose of
directly or indirectly promoting investments in the Trust.
10
<PAGE> 11
13. Reference to Subadviser. Neither the Adviser nor any Affiliate or
agent of it shall make reference to or use the name of Subadviser or any of its
Affiliates, or any of their clients, except references concerning the identity
of and services provided by the Subadviser to the Fund, which references shall
not differ in substance from those included in the Prospectus and this
Agreement, in any advertising or promotional materials without the prior
approval of Subadviser, which approval shall not be unreasonably withheld or
delayed. The Adviser hereby agrees to make all reasonable efforts to cause the
Fund and any Affiliate thereof to satisfy the foregoing obligation.
14. Amendment. This Agreement may be amended by mutual consent of the
parties, provided that the terms of any material amendment shall be approved by:
a) the Trust's Board of Trustees or by a vote of a majority of the outstanding
voting securities of the Funds (as required by the 1940 Act) and b) the vote of
a majority of those Trustees of the Trust who are not "interested persons" of
any party to this Agreement cast in person at a meeting called for the purpose
of voting on such approval, if such approval is required by applicable law.
15. Confidentiality. Subject to the duties of the Adviser, the Trust
and the Subadviser to comply with the terms of this Agreement and applicable
law, including any demand of any regulatory or taxing authority having
jurisdiction, the parties hereto shall treat as confidential all information
pertaining to the Fund and the actions of the Subadviser, the Adviser and the
Fund in respect thereof.
16. Notice. Any notice that is required to be given by the parties to
each other under the terms of this Agreement shall be in writing, delivered, or
mailed postpaid to the other parties, or transmitted by facsimile with
acknowledgment of receipt, to the parties at the following addresses or
facsimile numbers, which may from time to time be changed by the parties by
notice to the other party:
(a) If to the Subadviser:
Brinson Partners, Inc.
209 South LaSalle
Chicago, IL 60604-1294
Attention: Kevin Callahan
Facsimile: (313) 220-7199
(b) If to the Adviser:
Nationwide Advisory Services, Inc.
Three Nationwide Plaza, 26th Floor
Columbus, OH 43215
Attention: James F. Laird, Jr.
Facsimile: (614) 249-7424
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<PAGE> 12
(c) If to the Trust:
Nationwide Investing Foundation III
Three Nationwide Plaza, 26th Floor
Columbus, OH 43215
Attention: James F. Laird, Jr.
Facsimile: (614) 249-7424
16. Jurisdiction. This Agreement shall be governed by and construed to
be consistent with the Advisory Agreement and 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.
17. 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.
18. Certain Definitions. For the purposes of this Agreement and except
as otherwise provided herein, "interested person," "affiliated person," and
"assignment" shall have their respective meanings as set forth in the 1940 Act,
subject, however, to such exemptions as may be granted by the SEC.
19. Captions. The captions herein are included for convenience of
reference only and shall be ignored in the construction or interpretation
hereof.
20. 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.
21. Trust and its Trustees. The Trust is a business trust organized
under Chapter 1746, Ohio Revised Code and under a Declaration of Trust dated as
of October 30, 1997, to which reference is hereby made and a copy of which is on
file at the office of the Secretary of State of Ohio, and to any and all
amendments thereto so filed or hereafter filed. The obligations of the Trust
entered into in the name or on behalf thereof by any of Nationwide Investing
Foundation III Trustees, officers, employees or agents are not made
individually, but only in their capacities with respect to the Trust. Such
obligations are not binding upon any of the Trustees, shareholders, officers, or
employees of the Trust personally, but bind only the assets of the Trust, as set
forth in Section 1746.13(A), Ohio Revised Code. All persons dealing with any
series of Shares of the Trust must look solely to the assets of the Trust
belonging to such series for the enforcement of any claims against the Trust.
12
<PAGE> 13
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
the day and year first written above.
TRUST
Nationwide Investing Foundation III
By:
------------------------------
Name: James F. Laird, Jr.
Title: Treasurer
ADVISER
Nationwide Advisory Services, Inc.
By:
------------------------------
Name: Christopher A. Cray
Title: Treasurer
SUBADVISER
Brinson Partners, Inc.
By:
------------------------------
Name: Samuel W. Anderson
Title: Vice President
13
<PAGE> 14
EXHIBIT A
SUBADVISORY AGREEMENT
BETWEEN
NATIONWIDE ADVISORY SERVICES, INC.,
NATIONWIDE INVESTING FOUNDATION III
AND BRINSON PARTNERS, INC.
EFFECTIVE NOVEMBER 2, 1998
<TABLE>
<CAPTION>
Funds of the Trust Advisory Fees
- ------------------ -------------
<S> <C>
Prestige Large Cap Value Fund 0.35% on Subadviser Assets up to $100 million
0.30% for Subadviser Assets of $100 million or more
</TABLE>
14
<PAGE> 1
Exhibit (5)(c)(3)
SUBADVISORY AGREEMENT
THIS AGREEMENT is made and entered into on this 2nd day of November,
1998, among Nationwide Investing Foundation III, an Ohio business trust (the
"Trust"), Nationwide Advisory Services, Inc. (the "Adviser"), an Ohio
corporation registered under the Investment Advisers Act of 1940, as amended
(the "Advisers Act"), and Goldman Sachs Asset Management, a New York limited
partnership (the "Subadviser"), also registered under 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 Adviser has, pursuant to an Advisory Agreement with the
Trust dated as of May 9, 1998 ("Advisory Agreement"), as amended November 2,
1998, been retained to act as investment adviser for certain of the series of
the Trust which are listed on Exhibit A to this Agreement (each a "Fund");
WHEREAS, the Advisory Agreement permits the Adviser to delegate certain
of its duties under the Advisory Agreement to other investment advisers, subject
to the requirements of the 1940 Act; and
WHEREAS, the Adviser desires to retain Subadviser to assist it in the
provision of a continuous investment program for that portion of the Trust's
assets which the Adviser will assign to the Subadviser (the "Subadviser
Assets"), and Subadviser is willing to render such services subject to the terms
and conditions set forth in this Agreement.
NOW, THEREFORE, the parties do mutually agree and promise as follows:
1. Appointment as Subadviser. The Adviser hereby retains the Subadviser
to act as investment adviser for and to manage the Subadviser Assets subject to
the supervision of the Adviser and the Board of Trustees of the Trust and
subject to the terms of this Agreement; and the Subadviser hereby accepts such
employment. In such capacity, the Subadviser shall be responsible for the
investment management of the Subadviser Assets. It is recognized that the
Subadviser and certain of its affiliates now act, and that from time to time
hereafter may act, as investment adviser to one or more other investment
companies and to fiduciary or other managed accounts and that the Adviser and
the Trust have no objection to such activities.
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<PAGE> 2
2. Duties of Subadviser.
(a) Investments. The Subadviser is hereby authorized and
directed and hereby agrees, subject to the stated investment policies
and restrictions of the Funds as set forth in the Funds' 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
Adviser and the Trust's Board of Trustees, to purchase, hold and sell
investments for the Subadviser Assets and to monitor on a continuous
basis the performance of the Subadviser Assets. In providing these
services, the Subadviser will conduct a continual program of
investment, evaluation and, if appropriate, sale and reinvestment of
the Subadviser Assets. The Adviser agrees to provide the Subadviser
with such assistance as may be reasonably requested by the Subadviser
in connection with the Subadviser's activities under this Agreement,
including, without limitation, information concerning the Funds, their
funds available, or to become available, for investment and generally
as to the conditions of the Funds' or Trust's affairs.
(b) Compliance with Applicable Laws and Governing Documents.
In the performance of its duties and obligations under this Agreement,
the Subadviser shall act in conformity with the Trust's Declaration of
Trust and By-Laws and the Prospectus and with the instructions and
directions received in writing from the Adviser or the Trustees of the
Trust and will conform to and comply with the requirements of the 1940
Act, the Internal Revenue Code of 1986, as amended (the "Code"), and
all other applicable federal and state laws and regulations.
Notwithstanding the foregoing, the Adviser shall remain responsible for
ensuring each Fund's overall compliance with the 1940 Act and the Code
and the Subadviser is only obligated to comply with this subsection (b)
with respect to the Subadviser Assets. Adviser shall perform quarterly
and annual tax compliance tests to ensure that the Portfolios are in
compliance with Subchapter M of the Code and Section 817(h) of the
Code. Adviser shall apprise the Subadviser promptly after each quarter
end of any noncompliance with the diversification requirements in such
Code provisions. If so advised, the Subadviser shall take prompt action
to bring the Portfolio(s) back into compliance with such Code
diversification provisions, as directed by the Adviser. The Adviser
will provide the Subadviser with a copy of the minutes of the meetings
of the Board of Trustees of the Trust to the extent they may affect the
Funds or the duties of the Subadviser, and with copies of any financial
statements or reports made by the Funds to their shareholders, and any
further materials or information which the Subadviser may reasonably
request to enable it to perform its functions under this Agreement.
The Adviser will also provide the Subadviser with reasonable
advance notice of any change in a Fund's investment objectives,
policies and restrictions as stated in the Prospectus, and the
Subadviser shall, in the performance of its duties and obligations
under this Agreement, manage the Subadviser Assets consistent with such
changes, provided the Subadviser has received prompt notice of the
effectiveness of such changes, from the Trust
2
<PAGE> 3
or the Adviser. In addition to such notice, the Adviser shall provide
to the Subadviser a copy of a modified Prospectus reflecting such
changes. The Adviser acknowledges and agrees that the Prospectus will
at all times be in compliance with all disclosure requirements under
all applicable federal and state laws and regulations relating to the
Trust or the Funds, including, without limitation, the 1940 Act, and
the rules and regulations thereunder, and that the Subadviser shall
have no liability in connection therewith, except as to the accuracy of
material information furnished by the Subadviser in writing to the
Trust or to the Adviser specifically for inclusion in the Prospectus.
The Subadviser hereby agrees to provide to the Adviser in a timely
manner such information relating to the Subadviser and its relationship
to, and actions for, the Trust as may be required to be contained in
the Prospectus or in the Trust's registration statement on Form N-1A.
(c) Voting of Proxies. The Subadviser, consistent with
Subadviser's standard proxy voting policies, shall have the power to
vote, either in person or by proxy, all securities in which the
Subadviser Assets may be invested from time to time, and shall not be
required to seek or take instructions from, the Adviser, the Fund or
the Trust or take any action with respect thereto. If both the
Subadviser and another entity managing assets of a Fund have invested
in the same security, the Subadviser and such other entity will each
have the power to vote its pro rata share of the security.
(d) Agent. Subject to any other written instructions of the
Adviser or the Trust, the Subadviser is hereby appointed the Adviser's
and the Trust's agent and attorney-in-fact for the limited purposes of
executing account documentation, agreements, contracts and other
documents as the Subadviser shall be requested by brokers, dealers,
counterparties and other persons in connection with its management of
the Subadviser Assets. The Subadviser agrees to provide the Adviser and
the Trust with copies of any such agreements executed on behalf of the
Adviser or the Trust.
(e) Brokerage. The Subadviser is authorized, subject to the
supervision of the Adviser and the Trust's Board of Trustees, to
establish and maintain accounts on behalf of the Fund with, and place
orders for the purchase and sale of the Subadviser Assets with or
through, such persons, brokers (including, to the extent permitted by
applicable law, any broker affiliated with the Subadviser) or dealers
("brokers") as the Subadviser may elect and negotiate commissions to be
paid on such transactions. The Subadviser, however, is not required to
obtain the consent of the Adviser or the Trust's Board of Trustees
prior to establishing any such brokerage account. The Subadviser shall
place all orders for the purchase and sale of portfolio investments for
the Funds' account with brokers selected by the Subadviser. In the
selection of such brokers and the placing of such orders, the
Subadviser shall seek to obtain for the Funds 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 the
Funds the most favorable price and execution available, the Subadviser,
bearing in
3
<PAGE> 4
mind the best interests of each Fund at all times, shall consider all
factors it deems relevant, including price, the size of the
transaction, the breadth and nature of the market for the security, the
difficulty of the execution, the amount of the commission, if any, the
timing of the transaction, market prices and trends, the reputation,
experience and financial stability of the broker involved, and the
quality of service rendered by the broker in other transactions.
Subject to such policies as the Trustees may determine, or as may be
mutually agreed to by the Adviser and the Subadviser, the Subadviser
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 Subadviser 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 Subadviser
determines in good faith that such commission was reasonable in
relation to the value of the brokerage and research services provided
by such broker or dealer viewed in terms of either that particular
transaction or the overall responsibility of the Subadviser with
respect to the accounts as to which it exercises investment discretion.
It is recognized that the services provided by such brokers
may be useful to the Subadviser in connection with the Subadviser's
services to other clients. On occasions when the Subadviser deems the
purchase or sale of a security to be in the best interests of a Fund as
well as other clients of the Subadviser, the Subadviser, 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
such event, allocation of securities so sold or purchased, as well as
the expenses incurred in the transaction, will be made by the
Subadviser in the manner the Subadviser considers to be the most
equitable and consistent with its fiduciary obligations to the Funds
and to such other clients. It is recognized that in some cases, this
procedure may adversely affect the price paid or received by the Funds
or the size of the position obtainable for, or disposed of by, the
Funds.
(f) Securities Transactions. The Subadviser and any affiliated
person of the Subadviser will not purchase securities or other
instruments from or sell securities or other instruments to a Fund;
provided, however, the Subadviser and any affiliated person of the
Subadviser may purchase securities or other instruments from or sell
securities or other instruments to a Fund if such transaction is
permissible, whether by specific rule or otherwise, under applicable
laws and regulations, including, without limitation, the 1940 Act and
the Advisers Act and the rules and regulations promulgated thereunder.
The Subadviser, including its Access Persons (as defined in
subsection (e) of Rule 17j-1 under the 1940 Act), agrees to observe and
comply with Rule 17j-1 and the Subadviser's Code of Ethics (which shall
comply in all material respects with Rule 17j-1), as the same may be
amended from time to time. On a quarterly basis, the Subadviser will
either (i) certify to the Adviser that the Subadviser and its Access
Persons have complied in
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<PAGE> 5
all material respects with the Subadviser's Code of Ethics with respect
to the Subadviser Assets or (ii) identify any material violations which
have occurred with respect to the Subadviser Assets.
(g) Books and Records. Subadviser agrees to maintain, in the
form and for the period required by Rule 31a-2 under the Investment
Company Act of 1940, all records relating to the Subadviser's Assets
required to be maintained by the Trust pursuant to the requirements of
Rule 31a-1(b)(5), (6), (7), (9) and (10) under that Act. Any records
required to be maintained and preserved pursuant to the provisions of
Rule 31a-1 and Rule 31a-2 promulgated under the Investment Company Act
of 1940 which are prepared or maintained by Subadviser on behalf of the
Trust are the property of the Trust and will be surrendered promptly to
the Trust or Adviser on request.
Subadviser agrees that all accounts, books and other records maintained
and preserved by it as required hereby will be subject at any time, and
from time to time, to such reasonable periodic, special and other
examinations by the Securities and Exchange Commission, the Trust's
auditors, the Trust's officers or any representative of the Trust, the
Adviser, or any governmental agency or other instrumentality having
regulatory authority over the Trust.
(h) Information Concerning Subadviser Assets and Subadviser.
From time to time as the Adviser or the Trust may request, the
Subadviser will furnish the requesting party reports on portfolio
transactions and reports on Subadviser Assets held in the portfolio,
all in such detail as the Adviser or the Trust may reasonably request.
The Subadviser will also inform the Adviser in a timely manner of
material changes in portfolio managers responsible for Subadviser
Assets, any changes in the ownership or management of the Subadviser,
or of material changes in the control of the Subadviser. Upon
reasonable request, the Subadviser will periodically make available its
officers and employees to meet with the Trust's Board of Trustees to
review the Subadviser Assets.
The Subadviser will also provide such information or perform
such additional acts as reasonably requested by the Trust or the
Adviser to comply with their respective obligations under applicable
laws, including without limitation, the Code, the 1940 Act, the
Advisers Act, and the Securities Act of 1933, as amended (the
"Securities Act"), and any rule or regulation thereunder.
(i) Custody Arrangements. The Subadviser shall on each
business day provide the Adviser and the Trust's custodian such
information as the Adviser and the Trust's custodian may reasonably
request relating to all transactions concerning the Subadviser Assets.
(j) Historical Performance Information. To the extent agreed
upon by the parties, the Subadviser will provide the Trust with
historical performance information on
5
<PAGE> 6
similarly managed investment companies or for other accounts to be included in
the Prospectus or for any other uses permitted by applicable law.
3. Independent Contractor. In the performance of its duties hereunder,
the Subadviser is and shall be an independent contractor and unless otherwise
expressly provided herein or otherwise authorized in writing, shall have no
authority to act for or represent the Trust or the Adviser in any way or
otherwise be deemed an agent of the Trust or the Adviser.
4. Expenses. During the term of this Agreement, Subadviser will pay all
expenses incurred by it in connection with its activities under this Agreement
other than the cost of securities, commodities and other investments (including
brokerage commissions, taxes and other transaction charges, if any) purchased
for the Funds. The Subadviser shall, at its sole expense, employ or associate
itself with such persons as it believes to be particularly fitted to assist it
in the execution of its duties under this Agreement. The Subadviser shall not be
responsible for the Trust's, the Fund's or Adviser's expenses, which shall
include, but not be limited to, organizational and offering expenses (which
include out-of-pocket expenses, but not overhead or employee costs of the
Subadviser); expenses for legal, accounting and auditing services; taxes and
governmental fees; dues and expenses incurred in connection with membership in
investment company organizations; costs of printing and distributing shareholder
reports, proxy materials, prospectuses, stock certificates and distribution of
dividends; charges of the Funds' custodians and sub-custodians, administrators
and sub-administrators, registrars, transfer agents, dividend disbursing agents
and dividend reinvestment plan agents; payment for portfolio pricing services to
a pricing agent, if any; registration and filing fees of the Securities and
Exchange Commission (the "SEC"); expenses of registering or qualifying
securities of the Funds for sale in the various states; freight and other
charges in connection with the shipment of the Funds' portfolio securities; fees
and expenses of non-interested Trustees; salaries of shareholder relations
personnel; costs of shareholders meetings; insurance; interest; brokerage costs;
and litigation and other extraordinary or non-recurring expenses. The Trust or
the Adviser, as the case may be, shall reimburse the Subadviser for any expenses
of the Funds or the Adviser as may be reasonably incurred by such Subadviser on
behalf of the Funds or the Adviser. The Subadviser shall keep and supply to the
Trust and the Adviser reasonable records of all such expenses.
5. Compensation. For the services provided and the expenses assumed
with respect to the Funds and the Subadviser Assets pursuant to this Agreement,
the Subadviser will be entitled to the fee listed for each Fund on Exhibit A.
Such fees will be computed daily and payable no later than the seventh (7th)
business day following the end of each month, from the Adviser or the Trust,
calculated at an annual rate based on the Subadviser Assets' average daily net
assets.
The method of determining 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 of that Fund as
described in the Funds' Prospectus. If this Agreement shall be effective
6
<PAGE> 7
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.
6. Representations and Warranties of Subadviser. The Subadviser
represents and warrants to the Adviser and the Trust as follows:
(a) The Subadviser is registered as an investment adviser
under the Advisers Act;
(b) The Subadviser is registered as a commodity trading
adviser under the Commodity Exchange Act (the "CEA") with the Commodity
Futures Trading Commission (the "CFTC");
(c) The Subadviser is a limited partnership duly organized and
validly existing under the laws of the State of New York with the power
to own and possess its assets and carry on its business as it is now
being conducted;
(d) The execution, delivery and performance by the Subadviser
of this Agreement are within the Subadviser's powers and have been duly
authorized by all necessary action, and no action by or in respect of,
or filing with, any governmental body, agency or official is required
on the part of the Subadviser for the execution, delivery and
performance by the Subadviser of this Agreement, and the execution,
delivery and performance by the Subadviser of this Agreement do not
contravene or constitute a default under (i) any provision of
applicable law, rule or regulation, (ii) the Subadviser's governing
instruments, or (iii) any agreement, judgment, injunction, order,
decree or other instrument binding upon the Subadviser;
(e) The Form ADV of the Subadviser previously provided to the
Adviser is a true and complete copy of the form as currently 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.
7. Representations and Warranties of Adviser. The Adviser represents
and warrants to the Subadviser as follows:
(a) The Adviser is registered as an investment adviser under
the Advisers Act;
(b) The Adviser has filed a notice of exemption pursuant to
Rule 4.14 under the CEA with the CFTC and the National Futures
Association;
7
<PAGE> 8
(c) The Adviser is a corporation duly organized and validly
existing 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;
(d) The execution, delivery and performance by the Adviser of
this Agreement are within the Adviser's powers and have been duly
authorized by all necessary action on the part of its shareholders 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;
(e) The Form ADV of the Adviser previously provided to the
Subadviser 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;
(f) The Adviser acknowledges that it received a copy of the
Subadviser's Form ADV prior to the execution of this Agreement; and
(g) The Adviser and the Trust have duly entered into the
Advisory Agreement pursuant to which the Trust authorized the Adviser
to enter into this Agreement.
8. Representations and Warranties of the Trust. The Trust represents
and warrants to the Adviser and the Subadviser as follows:
(a) The Trust is a business trust duly organized and validly
existing 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;
(b) The Trust is registered as an investment company under the
1940 Act and the Fund's shares are registered under the Securities Act;
and
(c) The execution, delivery and performance by the Trust of
this Agreement are within the Trust's powers and have been duly
authorized by all necessary action on the part of the Trust and its
Board of Trustees, and no action by or in respect of, or filing with,
any governmental body, agency or official is required on the part of
the Trust for the execution, delivery and performance by the Adviser of
this Agreement, and the execution, delivery and performance by the
Trust of this Agreement do not contravene or constitute a default under
8
<PAGE> 9
(i) any provision of applicable law, rule or regulation, (ii) the
Trust's governing instruments, or (iii) any agreement, judgment,
injunction, order, decree or other instrument binding upon the Trust.
9. Survival of Representations and Warranties; Duty to Update
Information. All representations and warranties made by the Subadviser, the
Adviser and the Trust pursuant to Sections 6, 7 and 8, respectively, shall
survive for the duration of this Agreement and the parties hereto shall promptly
notify each other in writing upon becoming aware that any of the foregoing
representations and warranties are no longer true.
10. Liability and Indemnification.
(a) Liability. The Subadviser shall exercise its best judgment
in rendering the services in accordance with the terms of this
Agreement. In the absence of wilful misfeasance, bad faith or gross
negligence on the part of the Subadviser or a reckless disregard of its
duties hereunder, the Subadviser, each of its affiliates and all
respective partners, officers, directors and employees ("Affiliates")
and each person, if any, who within the meaning of the Securities Act
controls the Subadviser ("Controlling Persons") shall not be liable for
any error of judgment or mistake of law and shall not be subject to any
expenses or liability to the Adviser, the Trust or the Funds or any of
the Funds' shareholders, in connection with the matters to which this
Agreement relates. 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, any of its Affiliates and each of
the Adviser's Controlling Persons, if any, shall not be subject to any
liability to the Subadviser, for any act or omission in the case of, or
connected with, rendering services hereunder or for any losses that may
be sustained in the purchase, holding or sale of Subadviser Assets;
provided, however, that nothing herein shall relieve the Adviser and
the Subadviser from any of their obligations under applicable law,
including, without limitation, the federal and state securities laws
and the CEA.
(b) Indemnification. The Subadviser shall indemnify the
Adviser, the Trust, and the Fund, and their respective Affiliates and
Controlling Persons for any liability and expenses, including
reasonable attorneys' fees, which the Adviser, the Trust, and the Fund,
and their respective Affiliates and Controlling Persons may sustain as
a result of the Subadviser'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 or the CEA. Notwithstanding any other provision in this
Agreement, the Subadviser will indemnify the Adviser, the Trust, and
the Fund, and their respective Affiliates and Controlling Persons for
any liability and expenses, including reasonable attorneys' fees, to
which they may be subjected as a result of their use of the historical
performance calculations provided by the Subadviser concerning the
Subadviser's composite account data or historical performance
information on similarly managed investment
9
<PAGE> 10
companies or accounts to the extent that such information is
inaccurate, except that the Adviser and the Trust and their respective
Affiliates and Controlling Persons shall not be indemnified for a loss
or expense resulting from their misconduct in using such numbers
(including, but not limited to, Advisers altering or modifying such
numbers or using such data in a manner inconsistent with all applicable
law), or for their failure to conduct reasonable due diligence with
respect to such information.
The Adviser shall indemnify the Subadviser, its Affiliates and
its Controlling Persons, for any liability and expenses, including
reasonable 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 or
the CEA, or as a result of any negligence or willful misconduct on the
part of the Adviser in the reliance upon and/or use of any historical
performance calculations provided by the Subadviser concerning the
Subadviser's composite account data or historical performance
information or similarly managed investment companies.
11. Duration and Termination.
(a) Duration. Unless sooner terminated, this Agreement shall
continue until November 2, 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 vote of the lesser of (a) 67% of the shares of the Funds
represented at a meeting if holders of more than 50% of the outstanding
shares of the Funds are present in person or by proxy or (b) more than
50% of the outstanding shares of the Funds; 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 1940 Act)
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:
(i) By vote of a majority of the Trust's Board of
Trustees, or by vote of a majority of the outstanding voting
securities of the Fund, or by the Adviser, in each case, upon
at least 60 days' written notice to the Subadviser;
(ii) By any party hereto immediately upon written
notice to the other parties in the event of a breach of any
provision of this Agreement by either of the other parties; or
(iii) By the Subadviser upon at least 60 days'
written notice to the Adviser and the Trust.
10
<PAGE> 11
This Agreement shall not be assigned (as such term is defined in the
1940 Act) and shall terminate automatically in the event of its assignment or
upon the termination of the Advisory Agreement.
In the event of termination of this Agreement, all compensation due to
Subadviser through the date of termination will be calculated on a pro-rated
basis through the date of termination and paid within fifteen business days of
the date of termination.
12. Duties of the Adviser. The Adviser shall continue to have
responsibility for all services to be provided to the Trust pursuant to the
Advisory Agreement and shall oversee and review the Subadviser's performance of
its duties under this Agreement. Nothing contained in this Agreement shall
obligate the Adviser to provide any funding or other support for the purpose of
directly or indirectly promoting investments in the Trust.
13. Reference to Subadviser. Neither Adviser nor the Trust will publish
or distribute any information, including but not limited to registration
statements, advertising or promotional material, regarding the provision of
investment advisory services by Subadviser pursuant to this Agreement, or use in
advertising, publicity or otherwise the name of Subadviser or any of its
affiliates, or any trade name, trademark, trade device, service mark, symbol or
any abbreviation, contraction or simulation thereof of Subadviser or its
affiliates, without prior written consent of Subadviser. The consent of
Subadviser shall be required but shall not be unreasonably withheld or delayed
by Subadviser. Specifically, Subadviser shall notify Adviser of its approval or
disapproval of such materials within four (4) business days following receipt of
such materials thereof from Adviser. Any disapproval shall indicate Subadviser's
reasons therefore. Any failure by Subadviser to respond within four (4) business
days shall be deemed to constitute a waiver of Subadviser's right to review such
materials; provided, however, that Adviser shall apprise Subadviser of any such
waiver at the time Adviser first uses such material. Notwithstanding the
foregoing, Adviser may distribute information regarding the provision of
investment advisory services by Subadviser to the Trust's Board of Trustees
("Board Materials") without the prior written consent of Subadviser. Adviser
will provide copies of the Board Materials to Subadviser within a reasonable
time following distribution to the Trust's Board of Trustees.
14. Amendment. This Agreement may be amended by mutual consent of the
parties, provided that the terms of any material amendment shall be approved by:
a) the Trust's Board of Trustees or by a vote of a majority of the outstanding
voting securities of the Funds (if required by the 1940 Act) and b) the vote of
a majority of those Trustees of the Trust who are not "interested persons" of
any party to this Agreement cast in person at a meeting called for the purpose
of voting on such approval, if such approval is required by applicable law.
15. Confidentiality. Subject to the duties of the Adviser, the Trust
and the Subadviser to comply with applicable law, including any demand of any
regulatory or taxing authority having
11
<PAGE> 12
jurisdiction, the parties hereto shall treat as confidential all information
pertaining to the Fund and the actions of the Subadviser, the Adviser and the
Fund in respect thereof.
16. Notice. Any notice that is required to be given by the parties to
each other under the terms of this Agreement shall be in writing, delivered, or
mailed postpaid to the other parties, or transmitted by facsimile with
acknowledgment of receipt, to the parties at the following addresses or
facsimile numbers, which may from time to time be changed by the parties by
notice to the other party:
(a) If to the Subadviser:
Goldman Sachs Asset Management
One New York Plaza
New York, NY 10004
Attention: Doug Grip
Facsimile:
(b) If to the Trust:
Nationwide Investing Foundation III
Three Nationwide Plaza, 26th Floor
Columbus, OH 43215
Attention: James F. Laird, Jr.
Facsimile: (614) 249-7424
(c) If to the Adviser:
Nationwide Advisory Services, Inc.
Three Nationwide Plaza, 26th Floor
Columbus, OH 43215
Attention: James F. Laird, Jr.
Facsimile: (614) 249-7424
17. Jurisdiction. This Agreement shall be governed by and construed to
be consistent with the Advisory Agreement and 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.
12
<PAGE> 13
18. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, all of which shall
together constitute one and the same instrument.
19. Certain Definitions. For the purposes of this Agreement and except
as otherwise provided herein, "interested person," "affiliated person," and
"assignment" shall have their respective meanings as set forth in the 1940 Act,
subject, however, to such exemptions as may be granted by the SEC.
20. Captions. The captions herein are included for convenience of
reference only and shall be ignored in the construction or interpretation
hereof.
21. Severability. If any provision of this Agreement shall be held or
made invalid by a court decision or applicable law, the remainder of the
Agreement shall not be affected adversely and shall remain in full force and
effect.
22. Trust and its Trustees. The Trust is a business trust organized
under Chapter 1746, Ohio Revised Code and under a Declaration of Trust dated as
of October 30, 1997, and to which reference is hereby made and a copy of which
is on file at the office of the Secretary of State of Ohio, and to any and all
amendments thereto so filed or hereafter filed. The obligations of the Trust
entered into in the name or on behalf thereof by any of Nationwide Investing
Foundation III Trustees, officers, employees, or agents are not made
individually, but only in their capacities with respect to the Trust. Such
obligations are not binding upon any of the Trustees, shareholders, officers, or
employees of the Trust personally, but bind only the assets of the Trust, as set
forth in Section 1746.13(A), Ohio Revised Code. All persons dealing with any
series of Shares of the Trust must look solely to the assets of the Trust
belonging to such series for the enforcement of any claims against the Trust.
13
<PAGE> 14
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
the day and year first written above.
TRUST
Nationwide Investing Foundation II
By:
-----------------------------------
Name: James F. Laird, Jr.
Title: Treasurer
ADVISER
Nationwide Advisory Services, Inc.
By:
-----------------------------------
Name: Christopher A. Cray
Title: Treasurer
SUBADVISER
Goldman Sachs Asset Management
By:
-----------------------------------
Name:
-----------------------------------
Title:
-----------------------------------
14
<PAGE> 15
EXHIBIT A
SUBADVISORY AGREEMENT
BETWEEN
NATIONWIDE ADVISORY SERVICES, INC.,
NATIONWIDE INVESTING FOUNDATION III
AND GOLDMAN SACHS ASSET MANAGEMENT
EFFECTIVE NOVEMBER 2, 1998
<TABLE>
<CAPTION>
Funds of the Trust Advisory Fees
- ------------------ -------------
<S> <C>
Prestige Large Cap Growth Fund 0.40% on Subadviser Assets up to $150 million
0.30% for Subadviser Assets of $150 million or more
</TABLE>
15
<PAGE> 1
Exhibit (5)(c)(4)
SUBADVISORY AGREEMENT
THIS AGREEMENT is made and entered into on this 9th day of November, 1998,
among Nationwide Investing Foundation III, an Ohio business trust (the "Trust"),
Nationwide Advisory Services, Inc. (the "Adviser"), an Ohio corporation
registered under the Investment Advisers Act of 1940, as amended (the "Advisers
Act"), and INVESCO Management and Research, Inc. (the "Subadviser"), a
Massachusetts corporation registered under 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 Adviser has, pursuant to an Advisory Agreement with the Trust
dated as of May 9, 1998 ("Advisory Agreement") as amended November 2, 1998,
been retained to act as investment adviser for certain of the series of the
Trust which are listed on Exhibit A to this Agreement (each a "Fund");
WHEREAS, the Advisory Agreement permits the Adviser to delegate certain of
its duties under the Advisory Agreement to other investment advisers, subject to
the requirements of the 1940 Act; and
WHEREAS, the Adviser desires to retain Subadviser to assist it in the
provision of a continuous investment program for that portion of the Trust's
assets which the Adviser will assign to the Subadviser (the "Subadviser
Assets"), and Subadviser is willing to render such services subject to the
terms and conditions set forth in this Agreement.
NOW, THEREFORE, the parties do mutually agree and promise as follows:
1. APPOINTMENT AS SUBADVISER. The Adviser hereby retains the Subadviser
to act as investment adviser for and to manage the Subadviser Assets subject to
the supervision of the Adviser and the Board of Trustees of the Trust and
subject to the terms of this Agreement; and the Subadviser hereby accepts such
employment. In such capacity, the Subadviser shall be responsible for the
investment management of the Subadviser Assets. It is recognized that the
Subadviser and certain of its affiliates now act, and that from time to time
hereafter may act, as investment adviser to one or more other investment
companies and to fiduciary or other managed accounts and that the Adviser and
the Trust have no objection to such activities.
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<PAGE> 2
2. Duties of Subadviser.
--------------------
(a) Investments. The Subadviser is hereby authorized and directed and
hereby agrees, subject to the stated investment policies and restrictions of
the Funds as set forth in the Funds' 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 Adviser and the Trust's Board of Trustees, to purchase,
hold and sell investments for the Subadviser Assets and to monitor on a
continuous basis the performance of the Subadviser Assets. In providing these
services, the Subadviser will conduct a continual program of investment,
evaluation and, if appropriate, sale and reinvestment of the Subadviser Assets.
The Adviser agrees to provide the Subadviser with such assistance as may be
reasonably requested by the Subadviser in connection with its activities under
this Agreement, including, without limitation, information concerning the
Fund(s), its funds available, or to become available, for investment and
generally as to the conditions of the Funds' or Trust's affairs.
(b) Compliance with Applicable Laws and Governing Documents. In the
performance of its duties and obligations under this Agreement, the Subadviser
shall act in conformity with the Trust's Declaration of Trust and By-Laws and
the Prospectus and with the instructions and directions received in writing
from the Adviser or the Trustees of the Trust and will conform to and comply
with the requirements of the 1940 Act, the Internal Revenue Code of 1986, as
amended (the "Code"), and all other applicable federal and state laws and
regulations. Notwithstanding the foregoing, the Adviser shall remain
responsible for ensuring each Fund's overall compliance with the 1940 Act and
the Code and the Subadviser is only obligated to comply with this subsection
(b) with respect to the Subadviser Assets. The Adviser will provide the
Subadviser with a copy of the minutes of the meetings of the Board of Trustees
of the Trust to the extent they may affect the Fund(s) or the duties of the
Subadviser, and with copies of any financial statements or reports made by the
Fund(s) to its shareholders, and any further materials or information which the
Subadviser may reasonably request to enable it to perform its functions under
this Agreement.
The Adviser will also provide the Subadviser with reasonable advance
notice of any change in a Fund's investment objectives, policies and
restrictions as stated in the Prospectus, and the Subadviser shall, in the
performance of its duties and obligations under this Agreement, manage the
Subadviser Assets consistent with such changes, provided the Subadviser has
received prompt notice of the effectiveness of such changes from the Trust or
the Adviser. In addition to such notice, the Adviser shall provide to the
Subadviser a copy of a modified Prospectus reflecting such changes. The Adviser
acknowledges and agrees that the Prospectus will at all times be in compliance
with all disclosure requirements under all applicable federal and state laws
and regulations relating to the Trust or the Funds, including, without
limitation, the 1940 Act, and the rules and regulations thereunder, and that
2
<PAGE> 3
the Subadviser shall have no liability in connection therewith, except as to
the accuracy of material information furnished in writing by the Subadviser to
the Trust or to the Adviser specifically for inclusion in the Prospectus. The
Subadviser hereby agrees to provide to the Adviser in a timely manner such
information relating to the Subadviser and its relationship to, and actions
for, the Trust as may be required to be contained in the Prospectus or in the
Trust's registration statement on Form N-1A.
(c) Voting of Proxies. The Subadviser shall have the power to vote,
either in person or by proxy, all securities in which the Subadviser Assets may
be invested from time to time, and shall not be required to seek or take
instructions from the Adviser, the Fund(s) or the Trust or take any action with
respect thereto. If both the Subadviser and another entity managing assets of a
Fund have invested in the same security, the Subadviser and such other entity
will each have the power to vote its pro rata share of the security.
(d) Agent. Subject to any other written instructions of the Adviser or
the Trust, the Subadviser is hereby appointed the Adviser's and the Trust's
agent and attorney-in-fact for the limited purposes of executing account
documentation, agreements, contracts and other documents as the Subadviser
shall be requested by brokers, dealers, counterparties and other persons in
connection with its management of the Subadviser Assets. The Subadviser agrees
to provide the Adviser and the Trust with copies of any such agreements
executed on behalf of the Adviser or the Trust.
(e) Brokerage. The Subadviser is authorized, subject to the supervision
of the Adviser and the Trust's Board of Trustees, to establish and maintain
accounts on behalf of the Fund(s) with, and place orders for the purchase and
sale of the Subadviser Assets with or through, such persons, brokers
(including, to the extent permitted by applicable law, any broker affiliated
with the Subadviser) or dealers ("brokers") as the Subadviser may elect and
negotiate commissions to be paid on such transactions. The Subadviser, however,
is not required to obtain the consent of the Adviser or the Trust's Board of
Trustees prior to establishing any such brokerage account. The Subadviser shall
place all orders for the purchase and sale of portfolio investments for a
Fund's account with brokers selected by the Subadviser. In the selection of
such brokers and the placing of such orders, the Subadviser shall seek to
obtain for 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 Subadviser, bearing in mind the best interests of each Fund at all times,
shall consider all factors it deems relevant, including price, the size of the
transaction, the breadth and nature of the market for the security, the
difficulty of the execution, the amount of the commission, if any, the timing
of the transaction, market prices and trends, the reputation, experience and
financial stability of the broker involved, and the quality of service rendered
by the broker in other transactions. Subject to such policies as the Trustees
may determine, or as may be mutually agreed to by
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<PAGE> 4
the Adviser and the Subadviser, the Subadviser 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 Subadviser 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 Subadviser determines in good faith that such commission
was reasonable in relation to the value of the brokerage and research services
provided by such broker or dealer viewed in terms of either that particular
transaction or the overall responsibility of the Subadviser with respect to the
accounts as to which it exercises investment discretion.
It is recognized that the services provided by such brokers may be useful
to the Subadviser in connection with the Subadviser's services to other clients.
On occasions when the Subadviser deems the purchase or sale of a security to be
in the best interests of a Fund as well as other clients of the Subadviser, the
Subadviser, 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 such event, allocation of securities so sold or purchased, as well
as the expenses incurred in the transaction, will be made by the Subadviser in
the manner the Subadviser considers to be the most equitable and consistent with
its fiduciary obligations to the Funds and to such other clients. It is
recognized that in some cases, this procedure may adversely affect the price
paid or received by a Fund or the size of the position obtainable for, or
disposed of by, a Fund.
(f) Securities Transactions. The Subadviser and any affiliated person of
the Subadviser will not purchase securities or other instruments from or sell
securities or other instruments to a Fund; provided, however, the Subadviser
and any affiliated person of the Subadviser 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.
The Subadviser, including its Access Persons (as defined in subsection (e)
of Rule 17j-1 under the 1940 Act), agrees to observe and comply with Rule 17j-1
and the Subadviser's Code of Ethics (which shall comply in all material
respects with Rule 17j-1), as the same may be amended from time to time. On a
quarterly basis, the Subadviser will either (i) certify to the Adviser that the
Subadviser and its Access Persons have complied with the Subadviser's Code of
Ethics with respect to the Subadviser Assets or (ii) identify any violations
which have occurred with respect to the Subadviser Assets.
(g) Books and Records. The Subadviser shall maintain separate detailed
records of all matters pertaining to the Subadviser Assets (the "Funds'
Records"), including, without limitation, brokerage and other records of all
securities transactions. The Subadviser
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<PAGE> 5
acknowledges that the Funds' Records are property of the Trust. The Funds'
Records (relating to the Subadviser Assets) shall be available to the
Adviser at any time upon reasonable request during normal business hours
and shall be available for telecopying without delay to the Adviser during
any day that a Fund is open for business.
(h) Information Concerning Subadviser Assets and Subadviser. From time
to time as the Adviser or the Trust may request, the Subadviser will
furnish the requesting party reports on portfolio transactions and reports
on Subadviser Assets held in the portfolio, all in such detail as the
Adviser or the Trust may reasonably request. The Subadviser will also
inform the Adviser in a timely manner of material changes in portfolio
managers responsible for Subadviser Assets, any changes in the ownership or
management of the Subadviser, or of material changes in the control of the
Subadviser. Upon reasonable request, the Subadviser will make available its
officers and employees to meet with the Trust's Board of Trustees to review
the Subadviser Assets.
The Subadviser will also provide such information or perform such
additional acts as are customarily performed by a subadviser and may be
required for the Trust or the Adviser to comply with their respective
obligations under applicable laws, including, without limitation, the
Code, the 1940 Act, the Advisers Act, and the Securities Act of 1933, as
amended (the "Securities Act"), and any rule or regulation thereunder.
(i) Custody Arrangements. The Subadviser shall on each business day
provide the Adviser and the Trust's custodian such information as the
Adviser and the Trust's custodian may reasonably request relating to all
transactions concerning the Subadviser Assets.
(j) Historical Performance Information. To the extent agreed upon by
the parties, the Subadviser will provide the Trust with historical
performance information on similarly managed investment companies or for
other accounts to be included in the Prospectus or for any other uses
permitted by applicable law.
3. Independent Contractor. In the performance of its duties hereunder, the
Subadviser is and shall be an independent contractor and unless otherwise
expressly provided herein or otherwise authorized in writing, shall have no
authority to act for or represent the Trust or the Adviser in any way or
otherwise be deemed an agent of the Trust or the Adviser.
4. Expenses. During the term of the Agreement, Subadviser 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 Subadviser shall, at its sole expense, employ or associate itself
with such persons as it believes to be particularly fitted to assist it in the
execution of its duties under this Agreement. The Subadviser shall not be
responsible for the Trust's, a Fund's or Adviser's
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<PAGE> 6
expenses, which shall include, but not be limited to, organizational and
offering expenses (which include out-of-pocket expenses, but not overhead or
employee costs of the Subadviser); expenses for legal, accounting and auditing
services; taxes and governmental fees; dues and expenses incurred in connection
with membership in investment company organizations; costs of printing and
distributing shareholder reports, proxy materials, prospectuses, stock
certificates and distribution of dividends; charges of a Fund's custodians and
sub-custodians, administrators and sub-administrators, registrars, transfer
agents, dividend disbursing agents and dividend reinvestment plan agents;
payment for portfolio pricing services to a pricing agent, if any; registration
and filing fees of the Securities and Exchange Commission (the "SEC"); expenses
of registering or qualifying securities of the Funds for sale in the various
states; freight and other charges in connection with the shipment of the Funds'
portfolio securities; fees and expenses of non-interested Trustees; salaries of
shareholder relations personnel; costs of shareholders meetings; insurance;
interest; brokerage costs; and litigation and other extraordinary or
non-recurring expenses. The Trust or the Adviser, as the case may be, shall
reimburse the Subadviser for any expenses of a Fund or the Adviser as may be
reasonably incurred by the Subadviser on behalf of a Fund or the Adviser. The
Subadviser shall keep and supply to the Trust and the Adviser reasonable
records of all such expenses.
5. Compensation. For the services provided and the expenses assumed with
respect to a Fund and the Subadviser Assets pursuant to this Agreement, the
Subadviser will be entitled to the fee listed for each Fund on Exhibit A. Such
fees will be computed daily and payable no later than the seventh (7th)
business day following the end of each month, from the Adviser or the Trust,
calculated at an annual rate based on the Subadviser Assets' average daily net
assets.
The method of determining 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 of that Fund as
described in the 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.
6. Representations and Warranties of Subadviser. The Subadviser
represents and warrants to the Adviser and the Trust as follows:
(a) The Subadviser is registered as an investment adviser under the
Advisers Act;
(b) The Subadviser has filed a notice of exemption pursuant to Rule
4.14 under the Commodity Exchange Act (the "CEA") with the Commodity
Futures Trading Commission (the "CFTC") and the National Futures
Association ("NFA"), or is not required to file such exemption;
(c) The Subadviser is a corporation duly organized and validly
existing under the laws of the Commonwealth of Massachusetts with the power
to own and possess its assets and carry on its business as it is now being
conducted;
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<PAGE> 7
(d) The execution, delivery and performance by the Subadviser of this
Agreement are within the Subadviser's powers and have been duly authorized
by all necessary action on the part of its board of 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 Subadviser for the execution,
delivery and performance by the Subadviser of this Agreement, and the
execution, delivery and performance by the Subadviser of this Agreement do
not contravene or constitute a default under (i) any provision of
applicable law, rule or regulation, (ii) the Subadviser's governing
instruments, or (iii) any agreement, judgment, injunction, order, decree or
other instrument binding upon the Subadviser;
(e) The Form ADV of the Subadviser previously provided to the Adviser
is a true and complete copy of the form as currently 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. In addition, the Subadviser agrees to promptly
provide the Trust and the Adviser with updates of its Form ADV.
7. Representations and Warranties of Adviser. The Adviser represents and
warrants to the Subadviser as follows:
(a) The Adviser is registered as an investment adviser under the
Advisers Act;
(b) The Adviser has filed a notice of exemption pursuant to Rule 4.14
under the CEA with the CFTC and the National Futures Association;
(c) The Adviser is a corporation duly organized and validly existing
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;
(d) The execution, delivery and performance by the Adviser of this
Agreement are within the Adviser's powers and have been duly authorized by
all necessary action on the part of its shareholders 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;
(e) The Form ADV of the Adviser previously provided to the Subadviser
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
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<PAGE> 8
necessary in order to make the statements made, in light of the
circumstances under which they were made, not misleading;
(f) The Advisor acknowledges that it received a copy of the
Subadviser's Form ADV prior to the execution of this Agreement; and
(g) The Advisor and the Trust have duly entered into the Advisory
Agreement pursuant to which the Trust authorized the Adviser to enter into
this Agreement.
8. Representations and Warranties of the Trust. The Trust represents and
warrants to the Adviser and the Subadviser as follows:
(a) The Trust is a business trust duly organized and validly existing
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;
(b) The Trust is registered as an investment company under the 1940
Act and the Fund's shares are registered under the Securities Act; and
(c) The execution, delivery and performance by the Trust of this
Agreement are within the Trust's powers and have been duly authorized by
all necessary action on the part of the Trust and its Board of Trustees,
and no action by or in respect of, or filing with, any governmental body,
agency or official is required on the part of the Trust for the execution,
delivery and performance by the Adviser of this Agreement, and the
execution, delivery and performance by the Trust of this Agreement do not
contravene or constitute a default under (i) any provision of applicable
law, rule or regulation, (ii) the Trust's governing instruments, or (iii)
any agreement, judgment, injunction, order, decree or other instrument
binding upon the Trust.
9. Survival of Representations and Warranties; Duty to Update Information.
All representations and warranties made by the Subadviser, the Adviser and the
Trust pursuant to Sections 6, 7, and 8 respectively, shall survive for the
duration of this Agreement and the parties hereto shall promptly notify each
other in writing upon becoming aware that any of the foregoing representations
and warranties are no longer true.
10. Liability and Indemnification.
(a) Liability. The Subadviser shall exercise its best judgment in
rendering the services in accordance with the terms of this Agreement. In
the absence of wilful misfeasance, bad faith or gross negligence on the
part of the Subadviser or a reckless disregard of its duties hereunder, the
Subadviser, each of its affiliates and all partners, officers, directors
and employees ("Affiliates") and each person, if any, who within the
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<PAGE> 9
meaning of the Securities Act controls the Subadviser ("Controlling Persons")
shall not be liable for any error of judgment or mistake of law and shall not
be subject to any expenses or liability to the Adviser, the Trust or the Funds
or any of a Fund's shareholders, in connection with the matters to which this
Agreement relates.
(b) Indemnification. The Subadviser shall indemnify the Adviser, the Trust
and the Fund(s), and their respective Affiliates and Controlling Persons for
any liability and expenses, including reasonable attorneys' fees, which the
Adviser, the Trust and the Fund(s), and their respective Affiliates and
Controlling Persons may sustain as a result of the Subadviser's willful
misfeasance, bad faith, gross negligence, reckless disregard of their duties
hereunder or violation of applicable law, including, without limitation, the
federal and state securities laws or the CEA. Notwithstanding any other
provision in this Agreement, the Subadviser will indemnify the Adviser, the
Trust and the Fund(s), and their respective Affiliates and Controlling Persons
for any liability and expenses, including reasonable attorneys' fees, to which
they may be subjected as a result of their reliance upon the historical
performance calculations provided by the Subadviser concerning the Subadviser's
composite account data or historical performance information on similarly
managed investment companies or accounts, except that the Adviser and the Trust
and their respective Affiliates and Controlling Persons shall not be
indemnified for a loss or expense resulting from their negligence or willful
misconduct in using such numbers, or for their failure to conduct reasonable
due diligence with respect to such information.
The Adviser shall indemnify the Subadviser, its Affiliates and its
Controlling Persons, for any liability and expenses, including reasonable
attorneys' fees, howsoever arising from, or in connection with, this Agreement
or the performance of the Subadviser of its duties hereunder, provided,
however, that the Subadviser shall not be indemnified for any liability or
expenses which may be sustained as a result of the Subadviser's willful
misfeasance, bad faith, gross negligence, reckless disregard of its duties
hereunder or violation of applicable law, including, without limitation, the
federal and state securities laws or the CEA.
11. Duration and Termination.
(a) Duration. Unless sooner terminated, this Agreement shall continue
until November 2, 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 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 1940 Act) of any party to this
Agreement, by vote cast in person at a meeting called for the purpose of voting
on such approval.
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(b) Termination. Notwithstanding whatever may be provided herein to
the contrary, this Agreement may be terminated at any time, without payment
of any penalty:
(i) By vote of a majority of the Trust's Board of Trustees, or
by vote of a majority of the outstanding voting securities of a Fund,
or by the Adviser, in each case, upon at least 60 days' written notice
to the Subadviser;
(ii) By any party hereto within two business days of receipt of
written notice to the other parties in the event of a breach of any
provision of this Agreement by any of the other parties; or
(iii) By the Subadviser upon at least 60 days' written notice to
the Adviser and the Trust.
This Agreement shall not be assigned (as such term is defined in the 1940
Act) and shall terminate automatically in the event of its assignment or
upon the termination of the Advisory Agreement.
12. Duties of the Adviser. The Adviser shall continue to have
responsibility for all services to be provided to the Trust pursuant to the
Advisory Agreement and shall oversee and review the Subadviser's performance of
its duties under this Agreement. Nothing contained in this Agreement shall
obligate the Adviser to provide any funding or other support for the purpose of
directly or indirectly promoting investments in the Trust.
13. Reference to Subadviser. Neither the Adviser nor any Affiliate or
agent of it shall make reference to or use the name of Subadviser or any of its
Affiliates, or any of its clients, except references concerning the identity of
and services provided by the Subadviser to the Fund(s), which references shall
not differ in substance from those included in the Prospectus and this
Agreement, in any advertising or promotional materials without the prior
approval of Subadviser, as the case may be, which approval shall not be
unreasonably withheld or delayed. The Adviser hereby agrees to make all
reasonable efforts to cause the Fund(s) and any Affiliate thereof to satisfy
the foregoing obligation.
14. Amendment. This Agreement may be amended by mutual consent of the
parties, provided that the terms of any material amendment shall be approved
by: a) the Trust's Board of Trustees or by a vote of a majority of the
outstanding voting securities of a Fund (as required by the 1940 Act) and b)
the vote of a majority of those Trustees of the Trust who are not "interested
persons" of any party to this Agreement cast in person at a meeting called for
the purpose of voting on such approval, if such approval is required by
applicable law.
15. Confidentiality. Subject to the duties of the Adviser, the Trust and
the Subadviser to comply with applicable law, including any demand of any
regulatory or taxing authority having
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<PAGE> 11
jurisdiction, the parties hereto shall treat as confidential all information
pertaining to the Fund(s) and the actions of the Subadviser, the Adviser and
the Fund(s) in respect thereof.
16. Notice. Any notice that is required to be given by the parties to each
other under the terms of this Agreement shall be in writing, delivered, or
mailed postpaid to the other parties, or transmitted by facsimile with
acknowledgment of receipt, to the parties at the following addresses or
facsimile numbers, which may from time to time be changed by the parties by
notice to the other party:
(a) If to the Subadviser:
INVESCO Management and Research, Inc.
101 Federal Street
Boston, MA 02110
Attention: Robert S. Slotpole
Facsimile: (617) 261-4560
(b) If to the Trust:
Nationwide Investing Foundation III
Three Nationwide Plaza, 26th Floor
Columbus, OH 43215
Attention: James F. Laird, Jr.
Facsimile: (614) 249-7424
(c) If to the Adviser:
Nationwide Advisory Services, Inc.
Three Nationwide Plaza, 26th Floor
Columbus, OH 43215
Attention: James F. Laird, Jr.
Facsimile: (614) 249-7424
17. Jurisdiction. This Agreement shall be governed by and construed to be
consistent with the Advisory Agreement and 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.
18. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, all of which shall
together constitute one and the same instrument.
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<PAGE> 12
19. Certain Definitions. For the purposes of this Agreement and except as
otherwise provided herein, "interested person," "affiliated person," and
"assignment" shall have their respective meanings as set forth in the 1940 Act,
subject, however, to such exemptions as may be granted by the SEC.
20. Captions. The captions herein are included for convenience of
reference only and shall be ignored in the construction or interpretation
hereof.
21. Severability. If any provision of this Agreement shall be held or
made invalid by a court decision or applicable law, the remainder of the
Agreement shall not be affected adversely and shall remain in full force and
effect.
22. Trust and its Trustees. The Trust is a business trust organized under
Chapter 1746, Ohio Revised Code and under a Declaration of Trust dated as of
October 30, 1997, to which reference is hereby made and a copy of which is on
file at the office of the Secretary of State of Ohio, and to any and all
amendments thereto so filed or hereafter filed. The obligations of the Trust
entered into in the name or on behalf thereof by any of Nationwide Investing
Foundation III Trustees, officers, employees, or agents are not made
individually, but only in their capacities with respect to the Trust. Such
obligations are not binding upon any of the Trustees, shareholders, officers,
or employees of the Trust personally, but bind only the assets of the Trust, as
set forth in Section 1746.13(A), Ohio Revised Code. All persons dealing with
any series of Shares of the Trust must look solely to the assets of the Trust
belonging to such series for the enforcement of any claims against the Trust.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the
day and year first written above.
TRUST ADVISER
Nationwide Investing Foundation III Nationwide Advisory Services, Inc.
By:__________________________________ By:_______________________________
Name: James F. Laird, Jr. Name: Christopher A. Cray
Title: Treasurer Title: Treasurer
SUBADVISER
INVESCO Management and Research, Inc.
By: _________________________________
Name:
Title:
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<PAGE> 13
EXHIBIT A
SUBADVISORY AGREEMENT
BETWEEN
NATIONWIDE ADVISORY SERVICES, INC.,
NATIONWIDE INVESTING FOUNDATION III
INVESCO MANAGEMENT AND RESEARCH, INC.
Effective November 9, 1998
Funds of the Trust Advisory Fees
- ------------------ -------------
Prestige Small Cap Fund 0.55% on Subadviser Assets up to $100 million
0.40% for Subadviser Assets of $100 million or more
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<PAGE> 1
Exhibit (5)(c)(5)
SUBADVISORY AGREEMENT
THIS AGREEMENT is made and entered into on this 2nd day of November,
1998, among Nationwide Investing Foundation III, an Ohio business trust (the
"Trust"), Nationwide Advisory Services, Inc. (the "Adviser"), an Ohio
corporation registered under the Investment Advisers Act of 1940, as amended
(the "Advisers Act"), and Lazard Asset Management, a division of Lazard Freres &
Co., LLC, a New York limited liability company (the "Subadviser"), also
registered under 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 Adviser has, pursuant to an Advisory Agreement with the
Trust dated as of May 9, 1998 ("Advisory Agreement") as amended November 2,
1998, been retained to act as investment adviser for certain of the series of
the Trust which are listed on Exhibit A to this Agreement (each a "Fund");
WHEREAS, the Advisory Agreement permits the Adviser to delegate certain
of its duties under the Advisory Agreement to other investment advisers, subject
to the requirements of the 1940 Act; and
WHEREAS, the Adviser desires to retain Subadviser to assist it in the
provision of a continuous investment program for that portion of the Trust's
assets which the Adviser will assign to the Subadviser (the "Subadviser
Assets"), and Subadviser is willing to render such services subject to the terms
and conditions set forth in this Agreement.
NOW, THEREFORE, the parties do mutually agree and promise as follows:
1. Appointment as Subadviser. The Adviser hereby retains the Subadviser
to act as investment adviser for and to manage the Subadviser Assets subject to
the supervision of the Adviser and the Board of Trustees of the Trust and
subject to the terms of this Agreement; and the Subadviser hereby accepts such
employment. In such capacity, the Subadviser shall be responsible for the
investment management of the Subadviser Assets. It is recognized that the
Subadviser and certain of its affiliates now act, and that from time to time
hereafter may act, as investment adviser to one or more other investment
companies and to fiduciary or other managed accounts and that the Adviser and
the Trust have no objection to such activities.
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2. Duties of Subadviser.
(a) Investments. The Subadviser is hereby authorized and
directed and hereby agrees, subject to the stated investment policies
and restrictions of the Funds as set forth in the Funds' 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
Adviser and the Trust's Board of Trustees, to purchase, hold and sell
investments for the Subadviser Assets and to monitor on a continuous
basis the performance of the Subadviser Assets. In providing these
services, the Subadviser will conduct a continual program of
investment, evaluation and, if appropriate, sale and reinvestment of
the Subadviser Assets. The Adviser agrees to provide the Subadviser
with such assistance as may be reasonably requested by the Subadviser
in connection with the Subadviser's activities under this Agreement,
including, without limitation, information concerning the Funds, their
funds available, or to become available, for investment and generally
as to the conditions of the Funds' or Trust's affairs.
(b) Compliance with Applicable Laws and Governing Documents.
In the performance of its duties and obligations under this Agreement,
the Subadviser shall act in conformity with the Trust's Declaration of
Trust and By-Laws and the Prospectus and with the instructions and
directions received in writing from the Adviser or the Trustees of the
Trust and will conform to and comply with the requirements of the 1940
Act, the Internal Revenue Code of 1986, as amended (the "Code"), and
all other applicable federal and state laws and regulations.
Notwithstanding the foregoing, the Adviser shall remain responsible for
ensuring each Fund's overall compliance with the 1940 Act and the Code
and the Subadviser is only obligated to comply with this subsection (b)
with respect to the Subadviser Assets. The Adviser will provide the
Subadviser with a copy of the minutes of the meetings of the Board of
Trustees of the Trust to the extent they may affect the Funds or the
duties of the Subadviser, and with copies of any financial statements
or reports made by the Funds to their shareholders, and any further
materials or information which the Subadviser may reasonably request to
enable it to perform its functions under this Agreement.
The Adviser will also provide the Subadviser with reasonable
advance notice of any change in a Fund's investment objectives,
policies and restrictions as stated in the Prospectus, and the
Subadviser shall, in the performance of its duties and obligations
under this Agreement, manage the Subadviser Assets consistent with such
changes, provided the Subadviser has received prompt notice of the
effectiveness of such changes from the Trust or the Adviser. In
addition to such notice, the Adviser shall provide to the Subadviser a
copy of a modified Prospectus reflecting such changes. The Adviser
acknowledges and agrees that the Prospectus will at all times be in
compliance with all disclosure requirements under all applicable
federal and state laws and regulations relating to the Trust or the
Funds, including, without limitation, the 1940 Act, and the rules and
regulations thereunder, and that
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the Subadviser shall have no liability in connection therewith, except
as to the accuracy of material information furnished by the Subadviser
to the Trust or to the Adviser specifically for inclusion in the
Prospectus. The Subadviser hereby agrees to provide to the Adviser in a
timely manner such information relating to the Subadviser and its
relationship to, and actions for, the Trust as may be required to be
contained in the Prospectus or in the Trust's registration on Form
N-1A.
(c) Voting of Proxies. The Subadviser shall have the power to
vote, either in person or by proxy, all securities in which the
Subadviser Assets may be invested from time to time, and shall not be
required to seek or take instructions from the Adviser, the Fund or the
Trust or take any action with respect thereto. If both the Subadviser
and another entity managing assets of a Fund have invested in the same
security, the Subadviser and such other entity will each have the power
to vote its pro rata share of the security.
(d) Agent. Subject to any other written instructions of the
Adviser or the Trust, the Subadviser is hereby appointed the Adviser's
and the Trust's agent and attorney-in-fact for the limited purposes of
executing account documentation, agreements, contracts and other
documents as the Subadviser shall be requested by brokers, dealers,
counterparties and other persons in connection with its management of
the Subadviser Assets. The Subadviser agrees to provide the Adviser and
the Trust with copies of any such agreements executed on behalf of the
Adviser or the Trust.
(e) Brokerage. The Subadviser is authorized, subject to the
supervision of the Adviser and the Trust's Board of Trustees, to
establish and maintain accounts on behalf of the Fund with, and place
orders for the purchase and sale of the Subadviser Assets with or
through, such persons, brokers (including, to the extent permitted by
applicable law, any broker affiliated with the Subadviser) or dealers
("brokers") as the Subadviser may elect and negotiate commissions to be
paid on such transactions. The Subadviser, however, is not required to
obtain the consent of the Adviser or the Trust's Board of Trustees
prior to establishing any such brokerage account. The Subadviser shall
place all orders for the purchase and sale of portfolio investments for
the Funds' account with brokers selected by the Subadviser. In the
selection of such brokers and the placing of such orders, the
Subadviser shall seek to obtain for the Funds 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 the
Funds the most favorable price and execution available, the Subadviser,
bearing in mind the best interests of each Fund at all times, shall
consider all factors it deems relevant, including price, the size of
the transaction, the breadth and nature of the market for the security,
the difficulty of the execution, the amount of the commission, if any,
the timing of the transaction, market prices and trends, the
reputation, experience and financial stability of the broker involved,
and the quality of service rendered by the broker in other
transactions. Subject to such policies as the Trustees may determine,
or as may be mutually agreed to by
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<PAGE> 4
the Adviser and the Subadviser, the Subadviser 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
Subadviser 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 Subadviser determines in good faith that such commission was
reasonable in relation to the value of the brokerage and research
services provided by such broker or dealer viewed in terms of either
that particular transaction or the overall responsibility of the
Subadviser with respect to the accounts as to which it exercises
investment discretion.
It is recognized that the services provided by such brokers
may be useful to the Subadviser in connection with the Subadviser's
services to other clients. On occasions when the Subadviser deems the
purchase or sale of a security to be in the best interests of a Fund as
well as other clients of the Subadviser, the Subadviser, 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
such event, allocation of securities so sold or purchased, as well as
the expenses incurred in the transaction, will be made by the
Subadviser in the manner the Subadviser considers to be the most
equitable and consistent with its fiduciary obligations to the Funds
and to such other clients. It is recognized that in some cases, this
procedure may adversely affect the price paid or received by the Funds
or the size of the position obtainable for, or disposed of by, the
Funds.
(f) Securities Transactions. The Subadviser and any affiliated
person of the Subadviser will not purchase securities or other
instruments from or sell securities or other instruments to a Fund;
provided, however, the Subadviser and any affiliated person of the
Subadviser 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.
The Subadviser, including its Access Persons (as defined in
subsection (e) of Rule 17j-1 under the 1940 Act), agrees to observe and
comply with Rule 17j-1 and the Subadviser's Code of Ethics (which shall
comply in all material respects with Rule 17j-1), as the same may be
amended from time to time. On a quarterly basis, the Subadviser will
either (i) certify to the Adviser that the Subadviser and its Access
Persons have complied with the Subadviser's Code of Ethics with respect
to the Subadviser Assets or (ii) identify any violations which have
occurred with respect to the Subadviser Assets.
(g) Books and Records. The Subadviser shall maintain separate
detailed records of all matters pertaining to the Subadviser Assets
(the "Funds' Records"), including, without limitation, brokerage and
other records of all securities transactions. The Subadviser
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<PAGE> 5
acknowledges that the Funds' Records are property of the Trust. The
Funds' Records (relating to the Subadviser Assets) shall be available
to the Adviser at any time upon reasonable request during normal
business hours and shall be available for telecopying without delay to
the Adviser during any day that the Fund is open for business.
(h) Information Concerning Subadviser Assets and Subadviser.
From time to time as the Adviser or the Trust may request, the
Subadviser will furnish the requesting party reports on portfolio
transactions and reports on Subadviser Assets held in the portfolio,
all in such detail as the Adviser or the Trust may reasonably request.
The Subadviser will also inform the Adviser in a timely manner of
material changes in portfolio managers responsible for Subadviser
Assets, any changes in the ownership or management of the Subadviser,
or of material changes in the control of the Subadviser. Upon
reasonable request, the Subadviser will make available its officers and
employees to meet with the Trust's Board of Trustees to review the
Subadviser Assets.
The Subadviser will also provide such information or perform
such additional acts as are customarily performed by a subadviser and
may be required for the Trust or the Adviser to comply with their
respective obligations under applicable laws, including, without
limitation, the Code, the 1940 Act, the Advisers Act, and the
Securities Act of 1933, as amended (the "Securities Act"), and any rule
or regulation thereunder.
(i) Custody Arrangements. The Subadviser shall on each
business day provide the Adviser and the Trust's custodian such
information as the Adviser and the Trust's custodian may reasonably
request relating to all transactions concerning the Subadviser Assets.
(j) Historical Performance Information. To the extent agreed
upon by the parties, the Subadviser will provide the Trust with
historical performance information on similarly managed investment
companies or for other accounts to be included in the Prospectus or for
any other uses permitted by applicable law.
3. Independent Contractor. In the performance of its duties
hereunder, the Subadviser is and shall be an independent contractor and unless
otherwise expressly provided herein or otherwise authorized in writing, shall
have no authority to act for or represent the Trust or the Adviser in any way or
otherwise be deemed an agent of the Trust or the Adviser.
4. Expenses. During the term of this Agreement, Subadviser will
pay all expenses incurred by it in connection with its activities under this
Agreement other than the cost of securities, commodities and other investments
(including brokerage commissions and other transaction charges, if any)
purchased for the Funds. The Subadviser shall, at its sole expense, employ or
associate itself with such persons as it believes to be particularly fitted to
assist it in the execution of its duties under this Agreement. The Subadviser
shall not be responsible for the Trust's, the Fund's or Adviser's
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<PAGE> 6
expenses, which shall include, but not be limited to, organizational and
offering expenses (which include out-of-pocket expenses, but not overhead or
employee costs of the Subadviser); expenses for legal, accounting and auditing
services; taxes and governmental fees; dues and expenses incurred in connection
with membership in investment company organizations; costs of printing and
distributing shareholder reports, proxy materials, prospectuses, stock
certificates and distribution of dividends; charges of the Funds' custodians and
sub-custodians, administrators and sub-administrators, registrars, transfer
agents, dividend disbursing agents and dividend reinvestment plan agents;
payment for portfolio pricing services to a pricing agent, if any; registration
and filing fees of the Securities and Exchange Commission (the "SEC"); expenses
of registering or qualifying securities of the Funds for sale in the various
states; freight and other charges in connection with the shipment of the Funds'
portfolio securities; fees and expenses of non-interested Trustees; salaries of
shareholder relations personnel; costs of shareholders meetings; insurance;
interest; brokerage costs; and litigation and other extraordinary or
non-recurring expenses. The Trust or the Adviser, as the case may be, shall
reimburse the Subadviser for any expenses of the Funds or the Adviser as may be
reasonably incurred by such Subadviser on behalf of the Funds or the Adviser.
The Subadviser shall keep and supply to the Trust and the Adviser reasonable
records of all such expenses.
5. Compensation. For the services provided and the expenses
assumed with respect to the Funds and the Subadviser Assets pursuant to this
Agreement, the Subadviser will be entitled to the fee listed for each Fund on
Exhibit A. Such fees will be computed daily and payable no later than the
seventh (7th) business day following the end of each month, from the Adviser or
the Trust, calculated at an annual rate based on the Subadviser Assets' average
daily net assets.
The method of determining 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 of that Fund as
described in the Funds' 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.
6. Representations and Warranties of Subadviser. The Subadviser
represents and warrants to the Adviser and the Trust as follows:
(a) The Subadviser is registered as an investment adviser
under the Advisers Act;
(b) The Subadviser is not required to file a notice of
exemption pursuant to Rule 4.14 under the Commodity Exchange Act (the
"CEA") with the Commodity Futures Trading Commission (the "CFTC") and
the National Futures Association ("NFA") due to current investment
policies, but will file such notice in the event notice becomes so
required;
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<PAGE> 7
(c) The Subadviser is a limited liability company duly
organized and validly existing under the laws of the State of New York
with the power to own and possess its assets and carry on its business
as it is now being conducted;
(d) The execution, delivery and performance by the Subadviser
of this Agreement are within the Subadviser's powers and have been duly
authorized by all necessary action and no action by or in respect of,
or filing with, any governmental body, agency or official is required
on the part of the Subadviser for the execution, delivery and
performance by the Subadviser of this Agreement, and the execution,
delivery and performance by the Subadviser of this Agreement do not
contravene or constitute a default under (i) any provision of
applicable law, rule or regulation, (ii) the Subadviser's governing
instruments, or (iii) any agreement, judgment, injunction, order,
decree or other instrument binding upon the Subadviser;
(e) The Form ADV of the Subadviser previously provided to the
Adviser is a true and complete copy of the form as currently 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.
7. Representations and Warranties of Adviser. The Adviser
represents and warrants to the Subadviser as follows:
(a) The Adviser is registered as an investment adviser under
the Advisers Act;
(b) The Adviser has filed a notice of exemption pursuant to
Section 4.14 under the CEA with the CFTC and the National Futures
Association;
(c) The Adviser is a corporation duly organized and validly
existing 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;
(d) The execution, delivery and performance by the Adviser of
this Agreement are within the Adviser's powers and have been duly
authorized by all necessary action on the part of its shareholders 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;
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<PAGE> 8
(e) The Form ADV of the Adviser previously provided to the
Subadviser 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;
(f) The Adviser acknowledges that it received a copy of the
Subadviser's Form ADV prior to the execution of this Agreement; and
(g) The Adviser and the Trust have duly entered into the
Advisory Agreement pursuant to which the Trust authorized the Adviser
to enter into this Agreement.
8. Representations and Warranties of the Trust. The Trust
represents and warrants to the Adviser and the Subadviser as follows:
(a) The Trust is a business trust duly organized and validly
existing 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;
(b) The Trust is registered as an investment company under the
1940 Act and the Fund's shares are registered under the Securities Act;
and
(c) The execution, delivery and performance by the Trust of
this Agreement are within the Trust's powers and have been duly
authorized by all necessary action on the part of the Trust and its
Board of Trustees, and no action by or in respect of, or filing with,
any governmental body, agency or official is required on the part of
the Trust for the execution, delivery and performance by the Adviser of
this Agreement, and the execution, delivery and performance by the
Trust of this Agreement do not contravene or constitute a default under
(i) any provision of applicable law, rule or regulation, (ii) the
Trust's governing instruments, or (iii) any agreement, judgment,
injunction, order, decree or other instrument binding upon the Trust.
9. Survival of Representations and Warranties; Duty to Update
Information. All representations and warranties made by the Subadviser, the
Adviser and the Trust pursuant to Sections 6, 7 and 8, respectively, shall
survive for the duration of this Agreement and the parties hereto shall promptly
notify each other in writing upon becoming aware that any of the foregoing
representations and warranties are no longer true.
10. Liability and Indemnification.
(a) Liability. The Subadviser shall exercise its best judgment
in rendering the services in accordance with the terms of this
Agreement. In the absence of willful
8
<PAGE> 9
misfeasance, bad faith or gross negligence on the part of the
Subadviser or a reckless disregard of its duties hereunder, the
Subadviser, each of its affiliates and all respective partners,
officers, directors and employees ("Affiliates") and each person, if
any, who within the meaning of the Securities Act controls the
Subadviser ("Controlling Persons") shall not be liable for any error of
judgment or mistake of law and shall not be subject to any expenses or
liability to the Adviser, the Trust or the Funds or any of the Funds'
shareholders, in connection with the matters to which this Agreement
relates. In the absence of willful misfeasance, bad faith or gross
negligence on the part of the Adviser or a reckless disregard of its
duties hereunder, the Adviser, any of its Affiliates and each of the
Adviser's Controlling Persons, if any, shall not be subject to any
liability to the Subadviser, for any act or omission in the case of, or
connected with, rendering services hereunder or for any losses that may
be sustained in the purchase, holding or sale of Subadviser Assets;
provided, however, that nothing herein shall relieve the Adviser and
the Subadviser from any of their obligations under applicable law,
including, without limitation, the federal and state securities laws
and the CEA.
(b) Indemnification. The Subadviser shall indemnify the
Adviser, the Trust, and the Fund, and their respective Affiliates and
Controlling Persons for any liability and expenses, including
reasonable attorneys' fees, which the Adviser, the Trust, and the Fund,
and their respective Affiliates and Controlling Persons may sustain
which are proximately caused by the Subadviser's willful misfeasance,
bad faith, gross negligence, reckless disregard of its duties hereunder
or violation of applicable law, including, without limitation, the
federal and state securities laws or the CEA. Notwithstanding any other
provision in this Agreement, the Subadviser will indemnify the Adviser,
the Trust, and the Fund, and their respective Affiliates and
Controlling Persons for any liability and expenses, including
reasonable attorneys' fees, to which they may be subjected as a result
of their reliance upon and use of the historical performance
calculations provided by the Subadviser concerning the Subadviser's
composite account data or historical performance information on
similarly managed investment companies or accounts, except that the
Adviser, the Trust, and the Fund, and their respective Affiliates and
Controlling Persons shall not be indemnified for a loss or expense
resulting from their negligence or willful misconduct in using such
numbers, or for their failure to conduct reasonable due diligence with
respect to such information.
The Adviser shall indemnify the Subadviser, its Affiliates and
its Controlling Persons, for any liability and expenses, including
reasonable 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 or
the CEA, or as a result of any negligence or willful misconduct on the
part of the Adviser in the reliance upon and/or use of any historical
performance calculations provided by the Subadviser concerning the
Subadviser's composite account data or historical performance
information or similarly managed investment companies.
9
<PAGE> 10
11. Duration and Termination.
(a) Duration. Unless sooner terminated, this Agreement
shall continue until November 2, 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 vote of the lesser of (a) 67% of the shares of the Funds
represented at a meeting if holders of more than 50% of the outstanding
shares of the Funds are present in person or by proxy or (b) more than
50% of the outstanding shares of the Funds; 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 1940 Act)
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:
(i) By vote of a majority of the Trust's Board of
Trustees, or by vote of a majority of the outstanding voting
securities of the Fund, or by the Adviser, in each case, upon
at least 60 days' written notice to the Subadviser;
(ii) By any party hereto immediately upon written
notice to the other parties in the event of a breach of any
provision of this Agreement by either of the other parties; or
(iii) By the Subadviser upon at least 60 days'
written notice to the Adviser and the Trust.
This Agreement shall not be assigned (as such term is defined in the
1940 Act) and shall terminate automatically in the event of its
assignment or upon the termination of the Advisory Agreement.
12. Duties of the Adviser. The Adviser shall continue to have
responsibility for all services to be provided to the Trust pursuant to the
Advisory Agreement and shall oversee and review the Subadviser's performance of
its duties under this Agreement. Nothing contained in this Agreement shall
obligate the Adviser to provide any funding or other support for the purpose of
directly or indirectly promoting investments in the Trust.
13. Reference to Adviser and Subadviser.
(a) Neither the Adviser nor any Affiliate or agent of it
shall make reference to or use the name of Subadviser or any of its
Affiliates, or any of their clients, except references concerning the
identity of and services provided by the Subadviser to the Fund, which
references shall not differ in substance from those included in the
Prospectus and this
10
<PAGE> 11
Agreement, in any advertising or promotional materials without the
prior approval of Subadviser, which approval shall not be unreasonably
withheld or delayed. The Adviser hereby agrees to make all reasonable
efforts to cause the Fund and any Affiliate thereof to satisfy the
foregoing obligation.
(b) Neither the Subadviser nor any Affiliate or agent of
it shall make reference to or use the name of Adviser of any of its
Affiliates, or any of their clients, except references concerning the
identity of, relationship with, and services provided by the Adviser to
the Fund or to the Subadviser, which shall not differ in substance from
those included in the Prospectus and this Agreement, in any advertising
or promotional materials without the prior approval of Subadviser,
which approval shall not be unreasonably withheld or delayed. The
Subadviser hereby agrees to make all reasonable efforts to cause the
Fund and any Affiliate thereof to satisfy the foregoing obligation.
14. Amendment. This Agreement may be amended by mutual consent of
the parties, provided that the terms of any material amendment shall be approved
by: a) the Trust's Board of Trustees or by a vote of a majority of the
outstanding voting securities of the Funds (as required by the 1940 Act) and b)
the vote of a majority of those Trustees of the Trust who are not "interested
persons" of any party to this Agreement cast in person at a meeting called for
the purpose of voting on such approval, if such approval is required by
applicable law.
15. Confidentiality. Subject to the duties of the Adviser, the
Trust and the Subadviser to comply with applicable law, including any demand of
any regulatory or taxing authority having jurisdiction, the parties hereto shall
treat as confidential all information pertaining to the Fund and the actions of
the Subadviser, the Adviser and the Fund in respect thereof.
16. Notice. Any notice that is required to be given by the parties
to each other under the terms of this Agreement shall be in writing, delivered,
or mailed postpaid to the other parties, or transmitted by facsimile with
acknowledgment of receipt, to the parties at the following addresses or
facsimile numbers, which may from time to time be changed by the parties by
notice to the other party:
(a) If to the Subadviser:
Lazard Asset Management
30 Rockefeller Plaza
New York, NY 10112
Attention: Russell Mahland
Facsimile: 212-332-5785
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<PAGE> 12
(b) If to the Trust:
Nationwide Investing Foundation III
Three Nationwide Plaza, 26th Floor
Columbus, OH 43215
Attention: James F. Laird, Jr.
Facsimile: (614) 249-7424
(c) If to the Adviser:
Nationwide Advisory Services, Inc.
Three Nationwide Plaza, 26th Floor
Columbus, OH 43215
Attention: James F. Laird, Jr.
Facsimile: (614) 249-7424
17. Jurisdiction. This Agreement shall be governed by and
construed to be consistent with the Advisory Agreement and 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.
18. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, all of which shall
together constitute one and the same instrument.
19. Certain Definitions. For the purposes of this Agreement and
except as otherwise provided herein, "interested person," "affiliated person,"
and "assignment" shall have their respective meanings as set forth in the 1940
Act, subject, however, to such exemptions as may be granted by the SEC.
20. Captions. The captions herein are included for convenience of
reference only and shall be ignored in the construction or interpretation
hereof.
21. Severability. If any provision of this Agreement shall be held
or made invalid by a court decision or applicable law, the remainder of the
Agreement shall not be affected adversely and shall remain in full force and
effect.
22. Trust and its Trustees. The Trust is a business trust
organized under Chapter 1746, Ohio Revised Code, and under a Declaration of
Trust dated as of October 30, 1997, and to which reference is hereby made and a
copy of which is on file at the office of the Secretary of State of Ohio, and to
any and all amendments thereto so filed or hereafter filed. The obligations of
the Trust
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<PAGE> 13
entered into in the name or on behalf thereof by any of Nationwide Investing
Foundation III Trustees, officers, employees, or agents are not made
individually, but only in their capacities with respect to the Trust. Such
obligations are not binding upon any of the Trustees, shareholders, officers, or
employees of the Trust personally, but bind only the assets of the Trust, as set
forth in Section 1746.13(A), Ohio Revised Code. All persons dealing with any
series of Shares of the Trust must look solely to the assets of the Trust
belonging to such series for the enforcement of any claims against the Trust.
13
<PAGE> 14
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
the day and year first written above.
TRUST
Nationwide Investing Foundation III
By:_______________________________________
Name: James F. Laird, Jr.
Title: Treasurer
ADVISER
Nationwide Advisory Services, Inc.
By:_______________________________________
Name: Christopher A. Cray
Title: Treasurer
SUBADVISER
Lazard Asset Management
By:_______________________________________
Name:_____________________________________
Title:____________________________________
14
<PAGE> 15
EXHIBIT A
SUBADVISORY AGREEMENT
BETWEEN
NATIONWIDE ADVISORY SERVICES, INC.,
NATIONWIDE INVESTING FOUNDATION III
AND LAZARD ASSET MANAGEMENT
EFFECTIVE NOVEMBER 2, 1998
<TABLE>
<CAPTION>
Fund of the Trust Advisory Fees
- ----------------- -------------
<S> <C>
Prestige International Fund 0.45% on Subadviser Assets up to $200 million
0.40% for Subadviser Assets of $200 million or more
</TABLE>
15
<PAGE> 1
Exhibit (5)(c)(6)
SUBADVISORY AGREEMENT
THIS AGREEMENT is made and entered into on this day of , among
Nationwide Investing Foundation III, an Ohio business trust (the "Trust"),
Nationwide Advisory Services, Inc. (the "Adviser"), an Ohio corporation
registered under the Investment Advisers Act of 1940, as amended (the "Advisers
Act"), and J.P. Morgan Investment Management, Inc., a Delaware corporation (the
"Subadviser"), also registered under 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 Adviser has, pursuant to an Advisory Agreement with the
Trust dated as of May 7, 1997 ("Advisory Agreement"), been retained to act as
investment adviser for certain of the series of the Trust which are listed on
Exhibit A to this Agreement (each a "Fund");
WHEREAS, the Advisory Agreement permits the Adviser to delegate certain
of its duties under the Advisory Agreement to other investment advisers, subject
to the requirements of the 1940 Act; and
WHEREAS, the Adviser desires to retain Subadviser to assist it in the
provision of a continuous investment program for that portion of the Trust's
assets which the Adviser will assign to the Subadviser (the "Subadviser
Assets"), and Subadviser is willing to render such services subject to the terms
and conditions set forth in this Agreement.
NOW, THEREFORE, the parties do mutually agree and promise as follows:
1. Appointment as Subadviser. The Adviser hereby retains the Subadviser
to act as investment adviser for and to manage the Subadviser Assets subject to
the supervision of the Adviser and the Board of Trustees of the Trust and
subject to the terms of this Agreement; and the Subadviser hereby accepts such
employment. In such capacity, the Subadviser shall be responsible for the
investment management of the Subadviser Assets. It is recognized that the
Subadviser and certain of its affiliates now act, and that from time to time
hereafter may act, as investment adviser to one or more other investment
companies and to fiduciary or other managed accounts and that the Adviser and
the Trust have no objection to such activities.
2. Duties of Subadviser.
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(a) Investments. The Subadviser is hereby authorized and
directed and hereby agrees, subject to the stated investment policies
and restrictions of the Funds as set forth in the Funds' 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
Adviser and the Trust's Board of Trustees, to purchase, hold and sell
investments for the Subadviser Assets ("Fund Investments") and to
monitor on a continuous basis the performance of the Subadviser Assets.
In providing these services, the Subadviser will conduct a continual
program of investment, evaluation and, if appropriate, sale and
reinvestment of the Subadviser Assets. The Adviser agrees to provide
the Subadviser with such assistance as may be reasonably requested by
the Subadviser in connection with its activities under this Agreement,
including, without limitation, information concerning the Funds, their
funds available, or to become available, for investment and generally
as to the conditions of the Funds' or Trust's affairs.
(b) Compliance with Applicable Laws and Governing Documents.
In the performance of its duties and obligations under this Agreement,
the Subadviser shall act in conformity with the Trust's Declaration of
Trust and By-Laws and the Prospectus and with the instructions and
directions received in writing from the Adviser or the Trustees of the
Trust and will conform to and comply with the requirements of the 1940
Act, the Internal Revenue Code of 1986, as amended (the "Code"), and
all other applicable federal and state laws and regulations.
Notwithstanding the foregoing, the Adviser shall remain responsible for
ensuring each Fund's overall compliance with the 1940 Act and the Code
and the Subadviser is only obligated to comply with this subsection (b)
with respect to the Subadviser Assets. The Adviser will provide the
Subadviser with a copy of the minutes of the meetings of the Board of
Trustees of the Trust to the extent they may affect the Funds or the
duties of the Subadviser, and with copies of any financial statements
or reports made by the Funds to their shareholders, and any further
materials or information which the Subadviser may reasonably request to
enable it to perform its functions under this Agreement.
The Adviser will also provide the Subadviser with reasonable
advance notice of any change in a Fund's investment objectives,
policies and restrictions as stated in the Prospectus, and the
Subadviser shall, in the performance of its duties and obligations
under this Agreement, manage the Subadviser Assets consistent with such
changes, provided the Subadviser has received prompt notice of the
effectiveness of such changes from the Trust or the Adviser. In
addition to such notice, the Adviser shall provide to the Subadviser a
copy of a modified Prospectus reflecting such changes. The Adviser
acknowledges and agrees that the Prospectus will at all times be in
compliance with all disclosure requirements under all applicable
federal and state laws and regulations relating to the Trust or the
Funds, including, without limitation, the 1940 Act, and the rules and
regulations thereunder, and that the Subadviser shall have no liability
in connection therewith, except as to the accuracy of material
information furnished in writing by the Subadviser to the Trust or to
the Adviser
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specifically for inclusion in the Prospectus. The Subadviser hereby
agrees to provide to the Adviser in a timely manner such information
relating to the Subadviser and its relationship to, and actions for,
the Trust as may be required to be contained in the Prospectus or in
the Trust's registration statement on Form N-1A.
(c) Voting of Proxies. The Subadviser shall have the power to
vote, either in person or by proxy, all securities in which the
Subadviser Assets may be invested from time to time, and shall not be
required to seek or take instructions from, the Adviser or the Trust or
take any action with respect thereto. If both the Subadviser and
another entity managing assets of a Fund have invested in the same
security, the Subadviser and such other entity will each have the power
to vote its pro rata share of the security.
(d) Agent. Subject to any other written instructions of the
Adviser or the Trust, the Subadviser is hereby appointed the Adviser's
and the Trust's agent and attorney-in-fact for the limited purposes of
executing account documentation, agreements, contracts and other
documents as the Subadviser shall be requested by brokers, dealers,
counterparties and other persons in connection with its management of
the Subadviser Assets. The Subadviser agrees to provide the Adviser and
the Trust with copies of any such agreements executed on behalf of the
Adviser or the Trust.
(e) Brokerage. The Subadviser is authorized, subject to the
supervision of the Adviser and the Trust's Board of Trustees, to
establish and maintain accounts on behalf of the Fund with, and place
orders for the purchase and sale of the Subadviser Assets with or
through, such persons, brokers (including, to the extent permitted by
applicable law, any broker affiliated with the Subadviser) or dealers
("brokers") as the Subadviser may elect and negotiate commissions to be
paid on such transactions. The Subadviser, however, is not required to
obtain the consent of the Adviser or the Trust's Board of Trustees
prior to establishing any such brokerage account. The Subadviser shall
place all orders for the purchase and sale of portfolio investments for
the Funds' account with brokers selected by the Subadviser. In the
selection of such brokers and the placing of such orders, the
Subadviser shall seek to obtain for the Funds 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 the
Funds the most favorable price and execution available, the Subadviser,
bearing in mind the best interests of each Fund at all times, shall
consider all factors it deems relevant, including price, the size of
the transaction, the breadth and nature of the market for the security,
the difficulty of the execution, the amount of the commission, if any,
the timing of the transaction, market prices and trends, the
reputation, experience and financial stability of the broker involved,
and the quality of service rendered by the broker in other
transactions. Subject to such policies as the Trustees may determine,
or as may be mutually agreed to by the Adviser and the Subadviser, the
Subadviser 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
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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 Subadviser 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 Subadviser
determines in good faith that such commission was reasonable in
relation to the value of the brokerage and research services provided
by such broker or dealer viewed in terms of either that particular
transaction or the overall responsibility of the Subadviser with
respect to the accounts as to which it exercises investment discretion.
It is recognized that the services provided by such brokers
may be useful to the Subadviser in connection with the Subadviser's
services to other clients. On occasions when the Subadviser deems the
purchase or sale of a security to be in the best interests of a Fund as
well as other clients of the Subadviser, the Subadviser, 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
such event, allocation of securities so sold or purchased, as well as
the expenses incurred in the transaction, will be made by the
Subadviser in the manner the Subadviser considers to be the most
equitable and consistent with its fiduciary obligations to the Funds
and to such other clients. It is recognized that in some cases, this
procedure may adversely affect the price paid or received by the Funds
or the size of the position obtainable for, or disposed of by, the
Funds.
(f) Securities Transactions. The Subadviser and any affiliated
person of the Subadviser will not purchase securities or other
instruments from or sell securities or other instruments to a Fund;
provided, however, the Subadviser and any affiliated person of the
Subadviser 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.
The Subadviser, including its Access Persons (as defined in
subsection (e) of Rule 17j- 1 under the 1940 Act), agrees to observe
and comply with Rule 17j-1 and the Subadviser's Code of Ethics (which
shall comply in all material respects with Rule 17j-1), as the same may
be amended from time to time. On a quarterly basis, the Subadviser will
either (i) certify to the Adviser that the Subadviser and its Access
Persons have complied with the Subadviser's Code of Ethics with respect
to the Subadviser Assets or (ii) identify any violations which have
occurred with respect to the Subadviser Assets.
(g) Books and Records. The Subadviser shall maintain separate
detailed records of all matters pertaining to the Subadviser Assets
(the "Funds' Records"), including, without limitation, brokerage and
other records of all securities transactions. The Subadviser
acknowledges that the Funds' Records are property of the Trust. The
Funds' Records (relating to the Subadviser Assets) shall be available
to the Adviser at any time upon
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reasonable request during normal business hours and shall be available
for telecopying without delay to the Adviser during any day that the
Fund is open for business.
(h) Information Concerning Subadviser Assets and Subadviser.
From time to time as the Adviser or the Trust may request, the
Subadviser will furnish the requesting party reports on portfolio
transactions and reports on Subadviser Assets held in the portfolio,
all in such detail as the Adviser or the Trust may reasonably request.
The Subadviser will also inform the Adviser in a timely manner of
material changes in portfolio managers responsible for Subadviser
Assets, any changes in the ownership or management of the Subadviser,
or of material changes in the control of the Subadviser. Upon
reasonable request, the Subadviser will make available its officers and
employees to meet with the Trust's Board of Trustees to review the
Subadviser Assets.
The Subadviser will also provide such information or perform
such additional acts as are customarily performed by a subadviser and
may be required for the Trust or the Adviser to comply with their
respective obligations under applicable laws, including, without
limitation, the Code, the 1940 Act, the Advisers Act, and the
Securities Act of 1933, as amended (the "Securities Act"), and any rule
or regulation thereunder.
(i) Custody Arrangements. The Subadviser shall on each
business day provide the Adviser and the Trust's custodian such
information as the Adviser and the Trust's custodian may reasonably
request relating to all transactions concerning the Subadviser Assets.
(j) Historical Performance Information. To the extent agreed
upon by the parties, the Subadviser will provide the Trust with
historical performance information on similarly managed investment
companies or for other accounts to be included in the Prospectus or for
any other uses permitted by applicable law.
3. Independent Contractor. In the performance of its duties
hereunder, the Subadviser is and shall be an independent contractor and unless
otherwise expressly provided herein or otherwise authorized in writing, shall
have no authority to act for or represent the Trust or the Adviser in any way or
otherwise be deemed an agent of the Trust or the Adviser.
4. Expenses. During the term of this Agreement, Subadviser will
pay all expenses incurred by it in connection with its activities under this
Agreement other than the cost of securities, commodities and other investments
(including brokerage commissions and other transaction charges, if any)
purchased for the Funds. The Subadviser shall, at its sole expense, employ or
associate itself with such persons as it believes to be particularly fitted to
assist it in the execution of its duties under this Agreement. The Subadviser
shall not be responsible for the Trust's, the Fund's or Adviser's expenses,
which shall include, but not be limited to, organizational and offering expenses
(which include out-of-pocket expenses, but not overhead or employee costs of the
Subadviser); expenses
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for legal, accounting and auditing services; taxes and governmental fees; dues
and expenses incurred in connection with membership in investment company
organizations; costs of printing and distributing shareholder reports, proxy
materials, prospectuses, stock certificates and distribution of dividends;
charges of the Funds' custodians and sub-custodians, administrators and
sub-administrators, registrars, transfer agents, dividend disbursing agents and
dividend reinvestment plan agents; payment for portfolio pricing services to a
pricing agent, if any; registration and filing fees of the Securities and
Exchange Commission (the "SEC"); expenses of registering or qualifying
securities of the Funds for sale in the various states; freight and other
charges in connection with the shipment of the Funds' portfolio securities; fees
and expenses of non-interested Trustees; salaries of shareholder relations
personnel; costs of shareholders meetings; insurance; interest; brokerage costs;
and litigation and other extraordinary or non-recurring expenses. The Trust or
the Adviser, as the case may be, shall reimburse the Subadviser for any expenses
of the Funds or the Adviser as may be reasonably incurred by such Subadviser on
behalf of the Funds or the Adviser. The Subadviser shall keep and supply to the
Trust and the Adviser reasonable records of all such expenses.
5. Compensation. For the services provided and the expenses
assumed with respect to the Funds and the Subadviser Assets pursuant to this
Agreement, the Subadviser will be entitled to the fee listed for each Fund on
Exhibit A. Such fees will be computed daily and payable no later than the
seventh (7th) business day following the end of each month, from the Adviser or
the Trust, calculated at an annual rate based on the Subadviser Assets' average
daily net assets.
The method of determining 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 of that Fund as
described in the Funds' 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.
6. Representations and Warranties of Subadviser. The Subadviser
represents and warrants to the Adviser and the Trust as follows:
(a) The Subadviser is registered as an investment adviser
under the Advisers Act;
(b) The Subadviser is registered as a Commodity Trading
Advisor under the Commodity Exchange Act (the "CEA") with the
Commodities Futures Trading Commission (the "CFTC");
(c) The Subadviser is a corporation duly organized and
validly existing under the laws of the State of Delaware with the power
to own and possess its assets and carry on its business as it is now
being conducted;
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(d) The execution, delivery and performance by the Subadviser
of this Agreement are within the Subadviser's powers and have been duly
authorized by all necessary action on the part of its board of
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
Subadviser for the execution, delivery and performance by the
Subadviser of this Agreement, and the execution, delivery and
performance by the Subadviser of this Agreement do not contravene or
constitute a default under (i) any provision of applicable law, rule or
regulation, (ii) the Subadviser's governing instruments, or (iii) any
agreement, judgment, injunction, order, decree or other instrument
binding upon the Subadviser;
(e) The Form ADV of the Subadviser previously provided to the
Adviser is a true and complete copy of the form as currently 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.
7. Representations and Warranties of Adviser. The Adviser
represents and warrants to the Subadviser as follows:
(a) The Adviser is registered as an investment adviser under
the Advisers Act;
(b) The Adviser has filed a notice of exemption pursuant to
Rule 4.14 under the CEA with the CFTC and the NFA or is not required to
file such exemption;
(c) The Adviser is a corporation duly organized and validly
existing 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;
(d) The execution, delivery and performance by the Adviser of
this Agreement are within the Adviser's powers and have been duly
authorized by all necessary action on the part of its shareholders 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;
(e) The Form ADV of the Adviser previously provided to the
Subadviser 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
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necessary in order to make the statements made, in light of the
circumstances under which they were made, not misleading;
(f) The Adviser acknowledges that it received a copy of the
Subadviser's Form ADV prior to the execution of this Agreement; and
(g) The Adviser and the Trust have duly entered into the
Advisory Agreement pursuant to which the Trust authorized the Adviser
to enter into this Agreement.
8. Representations and Warranties of the Trust. The Trust
represents and warrants to the Adviser and the Subadviser as follows:
(a) The Trust is a business trust duly organized and validly
existing 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;
(b) The Trust is registered as an investment company under the
1940 Act and the Fund's shares are registered under the Securities Act;
and
(c) The execution, delivery and performance by the Trust of
this Agreement are within the Trust's powers and have been duly
authorized by all necessary action on the part of the Trust and its
Board of Trustees, and no action by or in respect of, or filing with,
any governmental body, agency or official is required on the part of
the Trust for the execution, delivery and performance by the Adviser of
this Agreement, and the execution, delivery and performance by the
Trust of this Agreement do not contravene or constitute a default under
(i) any provision of applicable law, rule or regulation, (ii) the
Trust's governing instruments, or (iii) any agreement, judgment,
injunction, order, decree or other instrument binding upon the Trust.
9. Survival of Representations and Warranties; Duty to Update
Information. All representations and warranties made by the Subadviser, the
Adviser and the Trust pursuant to Sections 6, 7 and 8, respectively, shall
survive for the duration of this Agreement and the parties hereto shall promptly
notify each other in writing upon becoming aware that any of the foregoing
representations and warranties are no longer true.
10. Liability and Indemnification.
(a) Liability. The Subadviser shall exercise its best judgment
in rendering the services in accordance with the terms of this
Agreement. In the absence of wilful misfeasance, bad faith or gross
negligence on the part of the Subadviser or a reckless disregard of its
duties hereunder, the Subadviser, each of its affiliates and all
respective partners, officers, directors and employees ("Affiliates")
and each person, if any, who within
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the meaning of the Securities Act controls the Subadviser ("Controlling
Persons") shall not be liable for any error of judgment or mistake of
law and shall not be subject to any expenses or liability to the
Adviser, the Trust or the Funds or any of the Funds' shareholders, in
connection with the matters to which this Agreement relates.
(b) Indemnification. The Subadviser shall indemnify the
Adviser and the Trust, and their respective Affiliates and Controlling
Persons for any liability and expenses, including reasonable attorneys'
fees, which the Adviser and the Trust and their respective Affiliates
and Controlling Persons may sustain as a result of the Subadviser'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 or the CEA.
Notwithstanding any other provision in this Agreement, the Subadviser
will indemnify the Adviser and the Trust, and their respective
Affiliates and Controlling Persons for any liability and expenses,
including reasonable attorneys' fees, to which they may be subjected as
a result of their reliance upon and use of the historical performance
calculations provided by the Subadviser concerning the Subadviser's
composite account data or historical performance information on
similarly managed investment companies or accounts, except that the
Adviser and the Trust and their respective Affiliates and Controlling
Persons shall not be indemnified for a loss or expense resulting from
their negligence or willful misconduct in using such numbers, or for
their failure to conduct reasonable due diligence with respect to such
information.
The Adviser shall indemnify the Subadviser, its Affiliates and
its Controlling Persons, for any liability and expenses, including
reasonable attorneys' fees, howsoever arising from, or in connection
with, this Agreement or the performance of the Subadviser of its duties
hereunder, provided, however, that the Subadviser shall not be
indemnified for any liability or expenses which may be sustained as a
result of the Subadviser'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 or the CEA.
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11. Duration and Termination.
(a) Duration. Unless sooner terminated, this Agreement
shall continue until ___________________________________, 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 vote of the lesser of (a) 67% of the
shares of the Funds represented at a meeting if holders of more than
50% of the outstanding shares of the Funds are present in person or by
proxy or (b) more than 50% of the outstanding shares of the Funds;
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 1940 Act) 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:
(i) By vote of a majority of the Trust's Board of
Trustees, or by vote of a majority of the outstanding voting
securities of the Fund, or by the Adviser, in each case, upon
at least 60 days' written notice to the Subadviser;
(ii) By any party hereto immediately upon written
notice to the other parties in the event of a breach of any
provision of this Agreement by either of the other parties; or
(iii) By the Subadviser upon at least 60 days'
written notice to the Adviser and the Trust.
This Agreement shall not be assigned (as such term is defined in the
1940 Act) and shall terminate automatically in the event of its
assignment or upon the termination of the Advisory Agreement.
12. Duties of the Adviser. The Adviser shall continue to have
responsibility for all services to be provided to the Trust pursuant to the
Advisory Agreement and shall oversee and review the Subadviser's performance of
its duties under this Agreement. Nothing contained in this Agreement shall
obligate the Adviser to provide any funding or other support for the purpose of
directly or indirectly promoting investments in the Trust.
13. Reference to Subadviser. Neither the Adviser nor any Affiliate
or agent of it shall make reference to or use the name of Subadviser or any of
its Affiliates, or any of their clients, except references concerning the
identity of and services provided by the Subadviser to the Fund, which
references shall not differ in substance from those included in the Prospectus
and this Agreement, in any advertising or promotional materials without the
prior approval of Subadviser,
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which approval shall not be unreasonably withheld or delayed. The Adviser hereby
agrees to make all reasonable efforts to cause the Fund and any Affiliate
thereof to satisfy the foregoing obligation.
14. Amendment. This Agreement may be amended by mutual consent of
the parties, provided that the terms of any material amendment shall be approved
by: a) the Trust's Board of Trustees or by a vote of a majority of the
outstanding voting securities of the Funds (as required by the 1940 Act) and b)
the vote of a majority of those Trustees of the Trust who are not "interested
persons" of any party to this Agreement cast in person at a meeting called for
the purpose of voting on such approval, if such approval is required by
applicable law.
15. Confidentiality. Subject to the duties of the Adviser, the
Trust and the Subadviser to comply with applicable law, including any demand of
any regulatory or taxing authority having jurisdiction, the parties hereto shall
treat as confidential all information pertaining to the Fund and the actions of
the Subadviser, the Adviser and the Fund in respect thereof.
16. Notice. Any notice that is required to be given by the parties
to each other under the terms of this Agreement shall be in writing, delivered,
or mailed postpaid to the other parties, or transmitted by facsimile with
acknowledgment of receipt, to the parties at the following addresses or
facsimile numbers, which may from time to time be changed by the parties by
notice to the other party:
(a) If to the Subadviser:
J.P. Morgan Investment Management, Inc.
522 Fifth Avenue
New York, New York 10036
Attention: Diane Minardi
Facsimile: 212-837-1063
(b) If to the Adviser:
Nationwide Investing Foundation III
Three Nationwide Plaza, 26th Floor
Columbus, OH 43212
Attention: James F. Laird, Jr.
Facsimile: (614) 249-7424
(c) If to the Trust:
Nationwide Advisory Services, Inc.
Three Nationwide Plaza, 26th Floor
Columbus, OH 43215
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Attention: James F. Laird, Jr.
Facsimile: (614) 249-7424
16. Jurisdiction. This Agreement shall be governed by and construed to
be consistent with the Advisory Agreement and 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.
17. 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.
18. Certain Definitions. For the purposes of this Agreement and except
as otherwise provided herein, "interested person," "affiliated person," and
"assignment" shall have their respective meanings as set forth in the 1940 Act,
subject, however, to such exemptions as may be granted by the SEC.
19. Captions. The captions herein are included for convenience of
reference only and shall be ignored in the construction or interpretation
hereof.
20. 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.
21. Trust and its Trustees. The terms "Nationwide Investing Foundation
III" and the "Trustees of Nationwide Investing Foundation III" refer
respectively to the Trust created and the Trustees, as trustees but not
individually or personally, acting from time to time under a Declaration of
Trust dated as of October 30, 1997, as has been or may be amended from time to
time, and to which reference is hereby made and a copy of which is on file at
the office of the Secretary of State of Ohio and elsewhere as required by law,
and to any and all amendments thereto so filed or hereafter filed. The
obligations of the Trust entered into in the name or on behalf thereof by any of
Nationwide Investing Foundation III Trustees, representatives, or agents are not
made individually, but only in their capacities with respect to Nationwide
Investing Foundation III Trust. Such obligations are not binding upon any of the
Trustees, shareholders, or representatives of the Trust personally, but bind
only the assets of the Trust. All persons dealing with any series of Shares of
the Trust must look solely to the assets of the Trust belonging to such series
for the enforcement of any claims against the Trust.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
the day and year first written above.
TRUST
Nationwide Investing Foundation III
By:____________________________________
Name: James F. Laird, Jr.
Title: Treasurer
ADVISER
Nationwide Advisory Services, Inc.
By:____________________________________
Name: Christopher A. Cray
Title: Treasurer
SUBADVISER
J.P. Morgan Investment Management, Inc.
By:____________________________________
Name: Diane Minardi
Title: Vice President
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EXHIBIT A
SUBADVISORY AGREEMENT
BETWEEN______________
EFFECTIVE__________
Funds of the Trust Advisory Fees
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Exhibit (6)(a)
UNDERWRITING AGREEMENT
BETWEEN
NATIONWIDE INVESTING FOUNDATION III
AND
NATIONWIDE ADVISORY SERVICES, INC.
AGREEMENT, made as of this 9th day of May, 1998, by and between
Nationwide Investing Foundation III, an Ohio business trust (the "Trust"), and
Nationwide Advisory Services, Inc., an Ohio corporation (the "Underwriter").
W I T N E S S E T H:
WHEREAS, the Trust is engaged in business as an open-end management
investment company, as defined in the Investment Company Act of 1940 (the "1940
Act"), and is so registered with the Securities and Exchange Commission (the
"SEC") under the provisions of that Act; and
WHEREAS, it is mutually desired that the Underwriter undertake as agent
of the Trust, the sale and distribution of Shares of each of the investment
portfolios of the Trust which are listed on Schedule A to this Agreement (each a
"Fund");
NOW, THEREFORE, the parties do mutually agree and promise as follows:
1. Appointment as Underwriter. The Trust hereby appoints the
Underwriter their agent for the sale of the Shares covered by the registration
statement for the Trust. As used in this Agreement, the "registration statement"
shall refer to the Trust's current registration on Form N-1A and shall include
the prospectus (Part A), Statement of Additional Information (Part B) and Part
C, and together the current prospectus and Statement of Additional Information
shall be referred to as the "Prospectus." The Trust understands that Underwriter
is now and may in the future be the distributor of the shares of several
investment companies or series (together, "Companies") including Companies
having investment objectives similar to those of the Trust. The Trust agrees
that Distributor's duties to such Companies shall not be deemed in conflict with
its duties to the Trust under this paragraph.
2. Duties of Underwriter. (a) The Underwriter hereby accepts such
appointment as distributor for the sale of the Shares and agrees that it will
use its best efforts to solicit orders for the sale of the Shares and will
undertake such advertising and promotion as it believes reasonable in connection
with such solicitation. The Underwriter shall, at its own expense, finance
appropriate activities which are primarily intended to result in the sale of the
Shares, including, but not limited to, advertising, compensation of
underwriters, dealers and sales personnel, the printing and mailing
<PAGE> 2
of prospectuses to other than current Shareholders, and the printing and mailing
of sales literature.
(b) In its capacity as Underwriter, Underwriter agrees to act
in conformity with the Prospectus and the Trust's Declaration of Trust and
Bylaws and with instructions received from the Trustees of the Trust and shall
conform to and comply with all applicable laws, rules and regulations,
including, without limitation, the 1940 Act, all rules and regulations
promulgated by the SEC thereunder and all rules and regulations adopted by any
securities association registered under the Securities Exchange Act of 1934.
(c) The Underwriter may, and when requested by the Trustees or
their representatives shall, suspend its efforts to effectuate sales of Shares
on behalf of the Trust at any time when in the opinion of the Underwriter or of
the Trustees no sales should be made because of market or other economic
considerations or abnormal circumstances of any kind. The Trust and its Trustees
may withdraw the offering of the Shares (i) at any time with the consent of the
Underwriter, or (ii) without such consent when so required by the provisions of
any statute or of any order, rule or regulation of any governmental body having
jurisdiction. It is mutually understood and agreed that the Underwriter does not
undertake to sell all or any specific portion of the Shares.
(d) The Underwriter agrees on behalf of itself and its
directors, officers and employees to treat confidentially and as proprietary
information of the Trust all records and other information relative to the Trust
and its prior, present or potential Shareholders, and not to use such records
and information for any purpose other than performance of its responsibilities
and duties hereunder, except when requested by the Trust or when requested to
divulge such information by duly constituted authorities, after prior
notification to and approval in writing by the Trust. Such approval shall not be
unreasonably withheld and may not be withheld where the Underwriter may be
exposed to civil or criminal contempt proceedings for failure to comply.
3. Sale and Payment of Shares. (a) The Underwriter shall have the
right to purchase Shares of the Funds at the net asset value in effect at the
time that orders for such Shares are received by the Trust or its authorized
agent and to sell such Shares at the applicable public offering price through
dealers or other persons. The public offering price for the Shares of each Fund
shall equal to the sum of (a) the net asset value per Share next computed for a
Fund by the Trust and (b) any applicable sales charge, all as set forth in the
current Prospectus for the Fund. The net asset value of the Shares shall be
determined in accordance with the provisions of the Trust's Declaration of Trust
and the Prospectus. The Trust shall allow the Underwriter as compensation for
its services the particular sales charge applicable to the Shares sold. The
Underwriter may fix the portion of the distribution charge to be allowed to
dealers and others.
(b) The Underwriter agrees that it will deliver or cause to be
delivered to the Trust or to its authorized agent, as the Trustees may direct,
an amount equal to the net asset value of Shares for which purchase orders have
been placed with and accepted by the Underwriter and shall forward to the Trust
or its authorized agent, as the Trustees may direct, all orders for the purchase
of Shares with reasonable promptness after the receipt and acceptance thereof by
the Underwriter; provided, however, that the Underwriter shall have the sole
right to accept or reject all orders for the purchase
<PAGE> 3
of Shares and will return promptly any rejected order together with the
consideration which accompanied it.
4. Issuance of Shares. The Trust reserves the right to issue,
transfer or sell Shares, which are otherwise subject to a sales charge, at net
asset value (a) in connection with the merger or consolidation of the Trust or
the Fund(s) with any other investment company or the acquisition by the Trust or
the Fund(s) of all or substantially all of the assets or of the outstanding
Shares of any other investment company; (b) in connection with a pro rata
distribution directly to the holders of Shares in the nature of a stock dividend
or split; (c) upon the exercise of subscription rights granted to the holders of
Shares on a pro rata basis; (d) in connection with the issuance of Shares
pursuant to any exchange and reinvestment privileges described in the Prospectus
of a Fund; (e) in a sale to the Trustees, employees, officers and directors of
or salespersons employed by the Underwriter and to officers, directors and
employees of any investment adviser of the Trust; and (f) otherwise in
accordance with the Prospectus of a Fund.
5. The Trust agrees as follows:
(1) to use its best efforts to maintain its registration
as a diversified open-end management investment
company under the 1940 Act, and to comply with all of
the provisions of that Act and of the rules and
regulations thereunder;
(2) to register its Shares under the Securities Act of
1933, and to use its best efforts to maintain such
registration;
(3) to prepare and file such amendments to the
registration statements and Prospectus and other
statements or reports as may be necessary to comply
with the Securities Act of 1933, the 1940 Act, and
the rules and regulations of the SEC;
(4) to furnish the Underwriter with a sufficient number
of Prospectuses to meet the Underwriter's
requirements for use in connection with sales of
Shares, and that the Underwriter will not be required
to use any prospectuses of the Trust which shall not
be in form and content satisfactory to counsel for
the Underwriter; and
(5) at the request of the Underwriter, to take such steps
as may be necessary and feasible to qualify Shares
for sale in each state, territory or dependency of
the United States of America, in the District of
Columbia and in foreign countries, in accordance with
the laws thereof, and to renew or extend any such
qualification; provided, however, that the Trust
shall not be required to qualify Shares or to
maintain the qualification of Shares in any state,
territory, dependency, district or country where they
shall deem such qualification disadvantageous to the
Trust.
6. The Underwriter agrees as follows:
(1) that the Underwriter and its officers or directors
will purchase and keep Shares only for investment
purposes;
(2) that it will not purchase Shares from the
Shareholders except as agent for the Trust;
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<PAGE> 4
(3) that upon the request of the Trust or its
representative it will furnish to the Trust or such
representative any information in its possession
which is pertinent to the preparation of any
registration statement, prospectus or amendment
thereto, or any report required by law or regulation;
and
(4) that neither the Underwriter nor any other person
authorized by it to solicit purchases of Shares shall
give any information or make any representations,
other than those contained in the Registration
Statement or Prospectus or in any supplemental sales
literature authorized by the Trust for use in
connection with the sale of shares.
7. Fees and Expenses. The Trust may pay a distribution fee to the
Underwriter determined in accordance with any applicable Distribution Plan
adopted by the Trustees and approved by the shareholders pursuant to Rule 12b-1
under the 1940 Act.
The Underwriter shall pay expenses for (i) printing and distributing
any prospectus and preparing, printing and distributing any other literature
used by the Underwriter in connection with the offering of the Shares for sale
to the public (except such expenses as may be incurred by the Trust in
connection with the preparation, printing and distribution of any Prospectus,
report or other communication to Shareholders, to the extent that such expenses
are necessarily incurred to effect compliance by the Trust with any Federal or
state law or to enable such distribution to Shareholders), and (ii) expenses of
advertising in connection with such offering. The Trust will pay or cause to be
paid (i) all fees and expenses for the issue and delivery of Shares, and (ii)
all auditing expenses of the Trust.
8. Repurchase of Shares. The Trustees hereby appoint the
Underwriter its agent to repurchase Shares, upon the written request of the
Shareholders, accompanied by the certificate or certificates representing such
Shares (if certificates for such Shares have been issued by the Trust) properly
endorsed for transfer, at the net asset value in effect at the time when the
sale is made.
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<PAGE> 5
9. Indemnification. (a) The Trust agrees to indemnify, defend and
hold the Underwriter, its directors, officers and employees, and any person who
controls the Underwriter within the meaning of Section 15 of the Securities Act
("Underwriter Affiliates") free and harmless from and against any and all
claims, demands, liabilities and expenses (including the cost of investigating
or defending such claims, demands or liabilities and any counsel fees incurred
in connection therewith) which the Underwriter and the Underwriter Affiliates
may incur under the Securities Act or under common law or otherwise, arising out
of or based upon any untrue statement, or alleged untrue statement, of a
material fact contained in any registration statement or any prospectus or
arising out of or based upon any omission, or alleged omission, to state a
material fact required to be stated in either any registration statement or any
prospectus or necessary to make the statements in either thereof not misleading.
Provided, however, that the Trust's agreement to indemnify the Underwriter and
the Underwriter Affiliates shall not be deemed to cover any claims, demands,
liabilities or expenses arising out of any information or representations which
were furnished in writing to the Trust by the Underwriter, or arising out of or
based upon any omission or alleged omission to state a material fact in
connection with the giving of such information required to be stated in such
answers or necessary to make the answers not misleading; and further provided
that the Trust's agreement to indemnify Underwriter and the Underwriter
Affiliates shall not be deemed to cover any liability to the Trust or its
Shareholders to which the Underwriter would otherwise be subject by reason of
willful misfeasance, bad faith or gross negligence in the performance of its
duties, or by reason of the Underwriters reckless disregard of its obligations
and duties under this Agreement.
(b) The Underwriter agrees to indemnify, defend and hold
the Trust, its several officers and Trustees and any person who controls the
Trust within the meaning of Section 15 of the Securities Act ("Trust
Affiliates") free and harmless from and against any and all claims, demands,
liabilities and expenses (including the costs of investigating or defending such
claims, demands or liabilities and any counsel fees incurred in connection
therewith) which the Trust and the Trust Affiliates may incur under the
Securities Act or under common law or otherwise, but only to the extent that
such liability or expense incurred by the Trust or the Trust Affiliates
resulting from such claims or demands, shall arise out of or be based upon any
untrue, or alleged untrue, statement of a material fact contained in information
furnished in writing by the Underwriter to the Trust and used in the answers to
any of the items of the registration statement or in the Prospectus, or shall
arise out of or be based upon any omission, or alleged omission, to state a
material fact in connection with such information furnished in writing by the
Underwriter to the Trust required to be stated in such answers or necessary to
make such information not misleading.
10. Term, Duration and Termination. The term of this Agreement
shall begin as of the date first written above (or, if a particular Fund is not
in existence on that date, the date an amendment to Schedule A to this Agreement
adding the new Fund is executed) and, unless sooner terminated as provided
herein, shall remain in effect for a period of two (2) years from that date.
Thereafter, if not terminated, this Agreement shall continue in effect from year
to year thereafter provided such continuance shall be approved at least annually
by (a) a majority of the Trustees or by the affirmative vote or written approval
of the holders of a majority of the outstanding Shares and (b) a majority of the
Trustees who are not interested persons of the Underwriter, the term "interested
person" having the meaning defined in Section 2(a)(19) of the 1940 Act. This
Agreement is terminable without penalty, on not less than sixty days prior
written notice, by the Trust's Board of Trustees, by vote of a majority of the
outstanding voting securities of the Trust or by the
5
<PAGE> 6
Underwriter. This Agreement will also terminate automatically in the event of
its assignment (as such term is defined in the 1940 Act).
11. Amendment. This Agreement may not be amended or changed in any
manner except by a written agreement executed by both the Trust and the
Underwriter.
12. Jurisdiction. This Agreement shall be governed by and in accordance
with the substantive laws of the State of Ohio without reference to choice of
law principles thereof and in accordance with the 1940 Act. In case of any
conflict, the 1940 Act shall control.
13. Limitation of Liability of the Trustees and Shareholders. It is
understood and is expressly stipulated that this Agreement is executed on behalf
of the Trustees of Nationwide Investing Foundation III as Trustees and not
individually and that the obligations of this Agreement are not binding upon any
of the Trustees or shareholders of the Trust individually but are binding only
upon the assets and property of the Trust.
6
<PAGE> 7
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
NATIONWIDE INVESTING FOUNDATION III
By: ______________________________
Name: ____________________________
Title: ___________________________
NATIONWIDE ADVISORY SERVICES, INC.
By: ______________________________
Name: ____________________________
Title: ___________________________
7
<PAGE> 8
Dated: As of ______________
Amended Schedule A
to the
Underwriting Agreement
between Nationwide Investing Foundation III and
Nationwide Advisory Services, Inc.
Name of Fund
Nationwide Fund
Nationwide Growth Fund
Nationwide Mid Cap Growth Fund
Nationwide Bond Fund
Nationwide Tax-Free Income Fund
Nationwide Long-Term U.S. Government Bond Fund
Nationwide Intermediate U.S. Government Bond Fund
Nationwide Money Market Fund
Nationwide S&P 500 Index Fund
Prestige Large Cap Value Fund
Prestige Large Cap Growth Fund
Prestige Balanced Fund
Prestige Small Cap Fund
Prestige International Fund
Morley Capital Accumulation Fund
NATIONWIDE INVESTING
FOUNDATION III
By:_____________________________________
Name:___________________________________
Title:__________________________________
NATIONWIDE ADVISORY SERVICES,
INC.
By:_____________________________________
Name:___________________________________
Title:__________________________________
8
<PAGE> 1
Exhibit (6)(b)
DEALER AGREEMENT
AGREEMENT, made as of this th day of , 1998, by and between
Nationwide Advisory Services, Inc. ("Distributor") and ("Dealer")
whereby Dealer agrees to participate in the distribution of the shares
("Shares") of the series and classes of Nationwide Investing Foundation III as
are listed on Exhibit A, as may be amended from time to time, (each a "Fund").
Dealer also agrees to provide distribution and shareholder services to the Funds
subject to the following terms and conditions.
1. Dealer Authority. With respect to the distribution and sales of Shares,
Dealer shall have no authority to act as agent of a Fund, Distributor
or any other dealer in any respect in these transactions. All orders
are subject to acceptance by Distributor and become effective only upon
confirmation by Distributor, and are subject to acceptance or rejection
by Distributor or the Fund in its sole discretion. Dealer shall have no
authority to make any representations concerning the Shares of the Fund
except such representations as may be contained in the Fund's current
prospectus, in its then current Statement of Additional Information
(collectively, the prospectuses and Statement of Additional Information
for each Fund are the "Prospectus"), and in such other printed
information as the Fund or Distributor may subsequently prepare or
distribute to Dealer for purposes of selling the Shares, and Dealer
shall have no authority to distribute any other sales material relating
to the Fund or any of its Shares without the prior written approval of
Distributor. Dealer agrees to follow any written guidelines or
standards relating to the sale or distribution of the Shares as may be
provided to Dealer by Distributor, as well as to follow any applicable
rules or regulations affecting the sale or distribution of shares of
investment companies offering multiple classes of shares.
2. Sales and Pricing of Shares. Dealer shall offer and sell Shares only at
their respective public offering prices, or the net asset values if
applicable, in accordance with the terms and conditions of the
Prospectus of the Fund(s) whose Shares Dealer offers. An order for the
purchase of Shares shall be accepted at the time such order is received
by Distributor and at the price next determined unless the order is
otherwise rejected in accordance with section 1 above. In addition,
Distributor will not accept any order from Dealer which is placed on a
conditional basis or subject to any delay or contingency prior to
execution. Dealer shall place orders for Shares only with Distributor,
shall date and time stamp all orders received by Dealer and promptly
shall transmit all orders to Distributor in time for processing at the
price next determined after receipt of the order by Dealer, in
accordance with the Prospectus of the Fund whose Shares are being sold.
Dealer shall confirm the transaction with Dealer's customer at the
price confirmed in writing by the Distributor. In the event of
differences between verbal and written price, confirmations shall be
considered final. Prices of the Shares are computed by the Fund in
accordance with its Prospectus.
3. Services to be Provided by Dealer. Dealer will maintain records of all
sales, redemptions and repurchases of Shares and will furnish the
Distributor with such records on request. Dealer will also distribute
prospectuses and report to its customers in compliance with applicable
<PAGE> 2
legal requirements unless the parties expressly agree that Distributor
will do so on Dealer's behalf.
With respect to shareholder services, Distributor hereby appoints
Dealer to render shareholder services to each of the 12b-1 Funds (as
defined below). Shareholder services may include, but are not limited
to, answering routine client inquiries regarding the 12b-1 Funds;
providing information to shareholders on their investments in the 12b-1
Funds; providing personnel and communication equipment used in
connection therewith; and providing such other services as Distributor
may reasonably request. Dealer shall prepare such quarterly reports for
Distributor as shall reasonably be required by Distributor.
4. Dealer Compensation.
(a) So long as this Agreement is in effect, on purchases from
Distributor of Shares of a Fund sold with a sales charge, Dealer shall
receive a discount from the public offering price (a "Dealer
Concession") at the specified percentages of the public offering price
set forth in those Funds' respective Prospectuses, which are hereby
incorporated herein by reference and which may be modified from time to
time by the Company.
Dealer shall not receive any Dealer Concession with respect to certain
transactions which are exempt from sales charges and will receive the
reduced Dealer Concessions which correspond to the reduced sales
charges applicable to certain types of transactions (e.g., transactions
involving letters of intent or rights of accumulation), as described
more fully in the Prospectus. Dealer shall not share or rebate any
portion of such Dealer Concessions or otherwise grant any concessions,
discounts or other allowances to any person who is not a broker or
dealer actually engaged in the investment banking or securities
business and is not a member in good standing of the National
Association of Securities Dealers, Inc. ("NASD"). Dealer will receive
Dealer Concessions as described above on all purchase transactions in
shareholder accounts (excluding reinvestment of income dividends and
capital gains distributions) for which Dealer is designated as Dealer
of Record except where Distributor determines that any such purchase
was made with the proceeds of a redemption or repurchase of Shares of a
Fund whether or not the transaction constitutes the exercise of the
exchange or conversion privilege.
(b) In addition to the compensation described in Section 4(a) above and
subject to any limitations set forth in the NASD's Rules of Conduct,
including without limitation Rule 2830, Distributor will pay Dealer,
with respect to each of the Funds for which a Distribution Plan
pursuant to Rule 12b-1 of the Investment Company Act of 1940, as
amended (the "1940 Act"), is in place for such Shares and under which a
fee may be paid to broker-dealers for providing distribution or
shareholder services ("12b-1 Funds"), a monthly fee computed at the
annual rate of up to 0.25% of the average aggregate net asset value of
the Shares of such 12b-1 Fund held during the period in accounts for
which Dealer provides services as described in Section 3 above;
provided, however, that any waiver of such fee by Distributor will
apply likewise to
2
<PAGE> 3
Dealer and Distributor is obligated to pay such fee to Dealer only so
long as the Distributor is reimbursed by such 12b-1 Funds for such
fees.
If any Shares sold to Dealer under the terms of this Agreement are
repurchased by the Fund, or are tendered for redemption, within seven
business days after the date of Distributor's confirmation of the
original purchase by Dealer, Dealer shall promptly refund to
Distributor the full Dealer Concession received by Dealer pursuant to
Section 4(a) above.
5. Dealer Authorization. Dealer hereby authorizes Distributor to act as
its agent in connection with all transactions in shareholder accounts
for which Dealer is designated as Dealer of Record. All designations of
Dealer of Record and all authorizations of Distributor to act as
Dealer's agent shall cease upon the termination of this Agreement or
upon the shareholders' instructions to transfer his or her account to
another Dealer of Record.
6. Payment for Shares. Payment for all Fund Shares purchased from
Distributor by Dealer shall be received by Distributor within three
business days after acceptance of Dealer's order. If such payment is
not so received by the Distributor, the Distributor and the Fund(s)
reserve the right, without notice, to immediately cancel the sale, or,
at Distributor's option, to sell the Shares ordered by Dealer back to
the Fund in which latter case, Distributor may hold Dealer responsible
for any loss, including the loss of profit, suffered by Distributor or
by the Fund resulting from Dealer's failure to make payment as
described above.
7. Purchase of Shares. Dealer shall purchase Shares of the Fund only
through Distributor or from Dealer's customers. If Dealer purchases
Shares from Distributor, Dealer agrees that all such purchases shall be
made only to cover orders already received by Dealer from its
customers, or for Dealer's own bona fide investment without a view to
resale. If Dealer purchases Shares from its customers, Dealer agrees to
pay such customers the applicable net asset value per share less any
contingent deferred sales charge that would be applicable if such
Shares were then tendered for redemption in accordance with the
applicable Prospectus ("Repurchase Price").
8. Limitation on Sale of Shares. Dealer shall sell Shares only:
(a) to Dealer's customers at the prices described in section 2
above; or
(b) to Distributor as agent for the Fund at the Repurchase Price.
In such a sale to Distributor, Dealer may act either as
principal for Dealer's own account or as agent for Dealer's
customer. If Dealer acts as principal for its own account in
purchasing Shares for resale to Distributor, Dealer agrees to
pay Dealer's customer not less than nor more than the
Repurchase Price which Dealer received from Distributor. If
Dealer acts as agent for Dealer's customer in selling Shares
to Distributor, Dealer agrees not to charge its customer more
than a fair commission for handling the transaction.
3
<PAGE> 4
9. Dealer's Representations and Warranties. Dealer hereby represents and
warrants to Distributor that:
(a) Dealer is willing and possesses the legal authority to provide
the services contemplated by this Agreement without violation
of applicable laws;
(b) Dealer is and shall remain throughout the term of this
Agreement a member in good standing of the NASD and shall
immediately notify Distributor should it cease to be a member
of the NASD;
(c) Dealer is and shall remain throughout the term of this
Agreement a broker-dealer duly and properly registered and
qualified under all applicable laws, rules and regulations,
including, but not limited to, all state and federal
securities laws, rules and regulations, as may be necessary or
appropriate for Dealer to perform and observe all of its
duties, obligations and covenants set forth or contemplated by
this Agreement;
(d) Dealer shall throughout the term of this Agreement comply with
the requirements of all applicable laws, rules and
regulations, including, but not limited to, federal and state
securities laws, the rules, regulations and orders of the
Securities and Exchange Commission and the NASD, in performing
and observing all of its duties, obligations and covenants set
forth or contemplated by this Agreement;
(e) Dealer shall not withhold placing with Distributor orders
received from Dealer's customers so as to profit from such
withholding;
(f) Dealer shall not offer Shares of any Fund in any state where
such Shares are not qualified for sale under the Blue Sky Laws
and Regulations of such state or where Dealer is not qualified
to act as a dealer, except in appropriate circumstances when
under state laws and regulations the Share or the sales
transactions are exempt from qualification or dealer
registration is not required; and
(g) Dealer shall give Distributor at least 30 days advance written
notice of any event which will cause an assignment of this
Agreement (as defined in the 1940 Act) by Dealer or its
affiliates.
10. Indemnification. Dealer shall indemnify and hold harmless Distributor,
its affiliates and the Fund against any losses, claims, damages,
liabilities or expenses (including reasonable attorneys' fees and
expenses) resulting from (a) any negligence or misfeasance of Dealer or
any of its officers, directors, employees or registered
representatives; or (b) any violation of any law, rule or regulation or
any failure to perform or observe any obligations of Dealer set forth
in this Agreement by Dealer or any of its officers, directors,
employees or registered representatives.
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<PAGE> 5
11. Provision of Sales Material. Distributor shall deliver to Dealer
without charge reasonable quantities of the Fund's Prospectuses with
any supplements thereto currently in effect, copies of current
shareholder reports of the Fund, and sales material issued by
Distributor from time to time.
12. Rule 12b-1 Agreement; Termination. This Agreement is a related
agreement under the Distribution Plan ("Rule 12b-1 Plan"), applicable
for the 12b-1 Funds, as adopted pursuant to Rule 12b-1 under the 1940
Act. This Agreement may be terminated as to the payments made by the
12b-1 Funds under the Rule 12b-1 Plan at any time, without the payment
of any penalty, by the vote of a majority of the members of the Board
of Trustees of Nationwide Investing Foundation III ("NIF III") who are
not interested persons of NIF III and who have no direct or indirect
financial interest in the operation of the Rule 12b-1 Plan or in any
related agreements to the Rule 12b-1 Plan ("Disinterested Trustees") or
by a majority of the outstanding Shares, each with respect to a class
of a 12b-1 Fund, upon delivery of written notice thereof to the parties
to this Agreement.
This Agreement will terminate automatically in the event of its
assignment as defined in the 1940 Act or upon termination of the
Distributer underwriting agreement with the Fund. In addition, either
the Distributor or Dealer may terminate this Agreement upon at least 60
days written notice to the other party.
13. Complete Agreement. This Agreement supersedes and cancels any prior
agreement with respect to the sale of Shares of the Fund and may be
amended at any time and from time to time by written agreement of the
parties hereto.
14. Choice of Law. All sales hereunder are to be made, and title to Shares
shall pass, in Columbus, Ohio. This Agreement is made in the State of
Ohio and shall be interpreted in accordance with the laws of Ohio. Each
party represents that the undersigned has authority to act, and to
execute this Agreement, on behalf of such party.
15. Notices. All communications and notices to Distributor should be sent
to the address below. Any communications or notice to Dealer shall be
duly given if mailed or delivered to Dealer at the address specified by
Dealer below.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed by their officers as of the day and year first written above.
NATIONWIDE ADVISORY SERVICES, INC. DEALER
Three Nationwide Plaza, 26th Floor Address:
Columbus, Ohio 43215 ---------------------------
---------------------------_
5
<PAGE> 6
- ---------------------------------- -------------------------------------
By: By:
6
<PAGE> 1
Exhibit (9)(a)
FUND ADMINISTRATION AGREEMENT
This Fund Administration Agreement is made as of this 9th day of May, 1998,
between Nationwide Investing Foundation III, an Ohio business trust (the
"Trust"), and Nationwide Advisory Services, Inc., an Ohio corporation, (the
"Administrator").
WHEREAS, the Trust is an Ohio business trust, which operates as an open-end
management investment company and is registered under the Investment Company Act
of 1940, as amended (the "Investment Company Act"); and
WHEREAS, the Trust desires to retain the Administrator to provide certain
administrative and fund accounting services described below with respect to
certain of the series of the Trust (the "Funds"), each of which as are now, or
may hereafter be, listed on Exhibit A to this Agreement, and the Administrator
is willing to render such services;
NOW, THEREFORE, in consideration of the premises and mutual covenants set forth
herein, the parties hereto agree as follows:
1. Appointment of Administrator. The Trust hereby appoints the
Administrator as administrator of the Funds on the terms and conditions
set forth in this Agreement; and the Administrator hereby accepts such
appointment and agrees to perform the services and duties set forth in
Section 2 of this Agreement in consideration of the compensation
provided for in Section 4 hereof.
2. Services and Duties. As Administrator, and subject to the supervision
and control of the Trust's Board of Trustees, the Administrator will
provide facilities, equipment, and personnel to carry out the following
administrative and fund accounting services for operation of the
business and affairs of the Trust and each of the Funds covered by this
Agreement:
a. prepare, file, and maintain the Trust's governing documents,
including the Declaration of Trust, the Bylaws, minutes of
meetings of Trustees and shareholders, and proxy statements
for meetings of shareholders;
b. prepare and file on a timely basis with the Securities and
Exchange Commission and the appropriate state securities
authorities the registration statements for the Trust,
relating to the Funds and the Funds' shares, and all
amendments thereto, the Trust's reports pursuant to Investment
Company Act Rule 24f-2, reports to shareholders and regulatory
authorities, including form N-SAR, and prospectuses, proxy
statements, and such other documents as may be necessary or
convenient to enable the Trust to make continuous offering of
the Fund's shares and to conduct its affairs;
c. prepare, negotiate, and administer contracts on behalf of the
Funds with, among others, the Trust's custodian and transfer
agent;
d. supervise the Trust's custodian;
<PAGE> 2
e. calculate performance data of the Funds;
f. prepare and file on a timely basis the Federal and State
income and other tax returns for the Funds;
g. examine and review the operations of the Trust's custodian,
transfer agent and investment adviser and the Funds'
subadvisers, if any, to promote compliance with applicable
state and federal law;
h. coordinate the layout and printing of publicly disseminated
prospectuses and reports;
i. perform internal audit examinations in accordance with
procedures to be adopted by the Administrator and the Trust;
j. assist with the design, development, and operation of the
Funds;
k. provide individuals reasonably acceptable to the Trust's Board
of Trustees for nomination, appointment, or election as
officers of the Trust, who will be responsible for the
management of certain of the Trust's affairs as determined by
the Trust's Board of Trustees;
l. monitor the Trust's compliance with Section 817 and Sections
851 through 855 of the Internal Revenue Code of 1986, as
amended, and the regulations promulgated thereunder, so as to
enable the Trust and each Fund to comply with the
diversification requirements applicable to investments of
variable contracts and for each to maintain its status as a
"regulated investment company;"
m. advise the Trust and its Board of Trustees on matters
concerning the Funds and their affairs;
n. provide the Trust with office space and personnel; and
o. provide the Trust and each Fund with fund accounting services,
including but not limited to the following services:
1) keeping and maintaining the following books and
records of the Trust and each of the Funds pursuant
to Rule 31a-1 under the Investment Company Act,
including:
2
<PAGE> 3
a) journals containing an itemized daily record
of all purchase and sales of securities, all
receipts and disbursements of cash and all
other debit and credits, as required by Rule
31a-1(b)(1);
b) general and auxiliary ledgers reflecting all
asset, liability, reserve, capital, income
and expense accounts, including interest
accrued and interest received, as required
by Rule 31a-1(b)(2)(i);
c) separate ledger accounts required by Rule
31a-1(b)(2)(ii) and (iii); and
d) a monthly trial balance of all ledger
accounts (except shareholder accounts) as
required by Rule 31a-1(b)(8).
2) performing the following accounting services on a
regular basis for each Fund, as may be reasonably
requested by the Trust:
a) calculate the net asset value per share;
b) calculate the dividend and capital gain
distribution, if any;
c) calculate a Fund's yield;
d) reconcile cash movements with the Trust's
custodian;
e) affirm to the Trust's custodian all
portfolio trades and cash movements;
f) verify and reconcile with the Trust's
custodian all daily trade activity;
g) provide such reports as may be required by
the Trust;
h) preparation of the Trust's financial
statements, including oversight of expense
accruals and payments;
(i) calculating the deviation between
marked-to-market and amortized cost
valuations for any money market funds; and
h) such other similar services with respect to
a Fund as may be reasonably requested by the
Trust; and
p. assist in all aspects of the Funds' operations other than
those provided under other specific contracts.
3
<PAGE> 4
The foregoing, along with any additional services that the
Administrator shall agree in writing to perform for the Trust
hereunder, shall hereafter be referred to as "Administrative Services."
In compliance with the requirements of Rule 31a-3 under the Investment
Company Act, the Administrator hereby agrees that all records that it
maintains for the Trust are the property of the Trust and further
agrees to surrender promptly to the Trust any of such records upon the
Trust's request. The Administrator further agrees to preserve for the
periods prescribed by Investment Company Act Rule 31a-2 the records
required to be maintained by Investment Company Act Rule 31a-1.
Administrative Services shall not include any duties, functions, or
services to be performed for the Trust by the Trust's investment
adviser, custodian, or transfer agent pursuant to their agreements with
the Trust.
The Administrator acknowledges the importance of efficient and prompt
transmission of information to the life insurance companies affiliated
with the Administrator ("Nationwide"), the purchaser of Trust shares to
fund the obligations of certain variable annuity contracts. The
Administrator agrees to use its best efforts to meet the deadline for
transmission of pricing information presently set by Nationwide and
such other time deadlines as may be established from time to time in
the future.
When performing Administrative Services to the Trust and for the Funds,
the Administrator will comply with the provisions of the Declaration of
Trust and Bylaws of the Trust, will safeguard and promote the welfare
of the Trust and the Funds, and will comply with the policies that the
Trustees may from time to time reasonably determine, provided that such
policies are not in conflict with this Agreement, the Trust's governing
documents, or any applicable statutes or regulations.
3. Expenses. The Administrator shall be responsible for expenses incurred
in providing all the Administrative Services to the Trust, including
the compensation of the Administrator's employees who serve as officers
of the Trust, except that the Trust shall reimburse the Administrator
for the cost of the pricing services that the Administer utilizes. The
Trust (or the Trust's investment adviser) shall be responsible for all
other expenses of the Trust, including without limitation: (i)
investment advisory and subadvisory fees; (ii) interest and taxes;
(iii) brokerage commissions and other costs in connection with the
purchase or sale of securities and other investment instruments; (iv)
fees and expenses of the Trust's trustees, other than those who are
"interested persons" of the Administrator or investment adviser of the
Trust; (v) legal and audit expenses; (vi) custodian and transfer and
dividend disbursing agent fees and expenses; (vii) fees and expenses
related to the registration and qualification of the Trust and the
Trust's shares for distribution under state and federal securities
laws; (viii) expenses of printing and mailing reports and notices and
proxy material to beneficial shareholders of the Trust; (ix) all other
expenses incidental to holding meetings of the Trust's shareholders,
including proxy solicitations therefor; (x) insurance premiums for
fidelity and other coverage; (xi) association membership dues; (xii)
such nonrecurring or extraordinary expenses as may arise, including
those relating to actions, suits or proceedings to which the
4
<PAGE> 5
Trust is a party and the legal obligation which the Trust may have to
indemnify the Trust's trustees and officers with respect thereto.
4. Compensation. For the Administrative Services provided, the Trust
hereby agrees to pay and the Administrator hereby agrees to accept as
full compensation for its services rendered hereunder the
administrative 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 and will be paid monthly as soon as
practicable after the last day of each month.
In case of termination of this Agreement during any month, the
administrative fee for that month shall be reduced proportionately on
the basis of the number of business days during which it is in effect,
and the fee computed upon the average net assets for the business days
it is so in effect for that month.
5. Responsibility of Administrator.
a. The Administrator shall not be liable for any error of
judgment or mistake of law or for any loss suffered by the
Trust in connection with the matters to which this Agreement
relates, except a loss resulting from willful misfeasance, bad
faith or negligence on its part in the performance of its
duties or from reckless disregard by it of its obligations and
duties under this Agreement. Any person, even though also an
officer, director, partner, employee or agent of the
Administrator, who may be or become an officer or trustee of
the Trust, shall be deemed, when rendering services to the
Trust or acting on any business of the Trust (other than
services or business in connection with the duties of the
Administrator hereunder) in accordance with his
responsibilities to the Trust as such officer or trustee, to
be rendering such services to or acting solely for the Trust
and not as an officer, director, partner, employee or agent or
one under the control or direction of the Administrator even
through paid by the Administrator.
b. The Administrator shall be kept indemnified by the Trust and
be without liability for any action taken or thing done by it
in performing the Administrative Services in accordance with
the above standards; provided, however, that the Trust will
not indemnify the Administrator for the portion of any loss or
claim caused, directly or indirectly, by the negligence,
willful misfeasance or bad faith of the Administrator or by
the Administrator's reckless disregard of its duties and
obligations hereunder. In order that the indemnification
provisions contained in this Section 5 shall apply, however,
it is understood that if in any case the Trust may be asked to
indemnify or save the Administrator harmless, the Trust shall
be fully and promptly advised of all pertinent facts
concerning the situation in question, and it is further
understood that the Administrator will use all reasonable care
to identify and notify the Trust promptly concerning any
situation which presents or appears likely to present the
5
<PAGE> 6
probability of such a claim for indemnification against the
Trust. The Trust shall have the option to defend the
Administrator against any claim which may be the subject of
this indemnification. In the event that the Trust so elects it
will so notify the Administrator and thereupon the Trust shall
take over complete defense of the claim, and the Administrator
shall in such situation initiate no further legal or other
expenses for which it shall seek indemnification under this
Section. The Administrator shall in no case confess any claim
or make any compromise or settlement in any case in which the
Trust will be asked to indemnify the Administrator except with
the Trust's written consent.
6. Duration and Termination.
a. This Agreement shall become effective as of the date first
written above. The Agreement may be terminated at any time,
without payment of any penalty, by either party upon 90 days'
advance written notice to the other party. The Agreement may
also be terminated immediately upon written notice to the
other party in the event of a material breach of any provision
of this Agreement by such other party.
b. Upon the termination of this Agreement, the Trust shall pay to
the Administrator such compensation as may be payable prior to
the effective date of such termination. In the event that the
Trust designates a successor to any of the Administrator's
obligations hereunder, the Administrator shall, at the
direction of the Trust, transfer to such successor all
relevant books, records and other data established or
maintained by the Administrator under the foregoing
provisions.
7. Amendment. No provision of this Agreement may be changed, waived,
discharged or terminated orally, but only by an instrument in writing
signed by the party against which an enforcement of the change, waiver,
discharge or termination is sought.
8. Notices. Notices of any kind to be given to the Trust hereunder by the
Administrator shall be in writing and shall be duly given if delivered
to the Trust and to its investment adviser at the following address:
Nationwide Investing Foundation III
Three Nationwide Plaza
Columbus, Ohio 43215
Attn: James F. Laird, Treasurer
Notices of any kind to be given to the Administrator hereunder by the
Trust shall be in writing and shall be duly given if delivered to the
Administrator at:
Nationwide Advisory Services, Inc.
6
<PAGE> 7
Three Nationwide Plaza
Columbus, Ohio 43215
Attn: James F. Laird, Vice President and General Manager
9. Miscellaneous. The captions in this Agreement are included for
convenience of reference only and in no way define or delimit any of
the provisions hereof or otherwise affect their construction or effect.
If any provision of this Agreement shall be held or made invalid by a
court or regulatory agency decision, statute, rule or otherwise, the
remainder of this Agreement shall not be affected thereby. Subject to
the provisions of Section 5, hereof, this Agreement shall be binding
upon and shall inure to the benefit of the parties hereto and their
respective successors. 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.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed by their officers designated below as of the day and year first above
written.
NATIONWIDE ADVISORY SERVICES, INC.
By:
------------------------------------
Vice President and General Manager
NATIONWIDE INVESTING FOUNDATION III
By:
------------------------------------
7
<PAGE> 8
AMENDED EXHIBIT A
NATIONWIDE INVESTING FOUNDATION III
Fund Administration Agreement
<TABLE>
<CAPTION>
Funds of the Trust Fund Administration Fees
- ------------------ ------------------------
<S> <C>
Nationwide Fund For each of the Nationwide Funds
Nationwide Growth Fund and the Morley Capital Accumulation
Nationwide Mid Cap Growth Fund Fund,
Nationwide Bond Fund 0.07% on assets up to$250 million
Nationwide Tax-Free Income Fund 0.05% on assets of $250 million and
Nationwide Long-Term U.S. Government Bond Fund more but less than $1 billion
Nationwide Intermediate U.S. Government Bond Fund 0.04% on assets of $1 billion and more
Nationwide Money Market Fund (effective October 1, 1998) For the Morley Capital Accumulation
Morley Capital Accumulation Fund Fund, the fee is subject to a $50,000
minimum per year
Nationwide S&P 500 Stock Index Fund For the S&P 500 Index Fund,
0.05% on assets up to $1 billion
0.04% on assets of $1 billion and more
Prestige Large Cap Value Fund (effective November 1, 1998) For each of the Prestige Funds,
Prestige Large Growth Fund (effective November 1, 1998) 0.10% on assets up to $250 million
Prestige Small Cap Fund (effective November 1, 1998) 0.06% on assets of $250 million
Prestige Balanced Fund (effective November 1, 1998) and more but less than $1 billion
Prestige International Fund (effective November 1, 1998) 0.04% on assets of $1 billion and more
(the "Prestige Funds") For each Prestige Fund, the fee is subject
to a $75,000 minimum per year
</TABLE>
8
<PAGE> 1
Exhibit (9)(b)
TRANSFER AND DIVIDEND DISBURSING AGENT AGREEMENT
BETWEEN
NATIONWIDE INVESTING FOUNDATION III
AND
NATIONWIDE INVESTORS SERVICES, INC.
This Transfer and Dividend Disbursing Agent Agreement ("Agreement"),
made this ______ day of __________________, ______, by and between Nationwide
Investing Foundation III, an Ohio business trust, hereinafter called the
("Trust") and Nationwide Investors Services, Inc., an Ohio corporation
hereinafter called the ("Agent").
WITNESSETH:
WHEREAS, the Trust desires to enter into a Transfer and Dividend
Disbursing Agent Agreement with the Agent under which Agent will provide the
services as set forth in detail in this Agreement and the Agent is desirous of
providing such services upon the terms and conditions hereinafter provided; and
WHEREAS, Trust is an open-end management investment company and is or
will be so registered under the Investment Company Act of 1940, as amended, and
has or will have registered its shares for public offering under the Securities
Act of 1933; and
NOW, THEREFORE, in consideration of the mutual covenants and promises
herein contained, it is agreed as follows:
1. The Agent shall act as Transfer Agent for the Trust and in this
capacity, the Agent shall:
a. maintain the current name and address, issuance date, and number
of shares and fractional shares owned by all shareholders of the
Trust;
b. deposit and process all investments on a daily basis;
c. establish new accounts;
d. process and mail redemption checks including Systematic
Withdrawal Plan checks;
e. examine and process all legal changes in share registrations and
transfers of ownership;
<PAGE> 2
f. respond to inquiries from investors and representatives selling
shares of the Trust;
g. prepare and mail confirmation statements.
2. The Agent shall act as the Dividend Disbursing Agent and shall:
a. calculate the shareholders= dividends and capital gains
distributions;
b. prepare and mail dividend and capital gains distribution checks;
c. cause reinvestment of such dividends and capital gains where
required
d. prepare and mail dividend and capital gains distribution
confirmations.
3. The Agent shall also:
a. address and mail semi-annual reports, annual reports and
prospectuses;
b. prepare and mail all necessary reports to investors, State and
Federal authorities, including Federal Form 1099, 1042, and
1042S;
c. issue replacement checks and maintain a "Stop Payment" file;
d. solicit taxpayer identification numbers;
e. provide comprehensive accounting controls and reconciliations of
all cash flow.
4. The Agent agrees to act in good faith in furnishing the services
provided for herein and shall at all times maintain a staff of trained
personnel for the purpose of performing its obligations under the
Agreement. The Agent assumes no responsibility under this Agreement
other than to render the services called for hereunder in good faith.
Anything herein to the contrary notwithstanding, Trust hereby agrees
that while Agent has sole responsibility for performance of its
obligations under this Agreement, any or all duties of Agent may be
performed from time to time by one or more third parties as Agent, in
its discretion, shall select, provided that Trust shall be notified of
all contracts between Agent and such third party or parties and
provided copies thereof upon request.
5. The Agent agrees that in all matters relating to the services to be
performed by it hereunder, it will use its best efforts to act in
conformity with the terms of the Declaration of Trust, Bylaws, Code of
Ethics, Registration Statements and current
<PAGE> 3
Prospectuses of the Trust. Each of the parties agree that in all
matters relating to the performance of this Agreement, it will use its
best efforts to conform to and comply with the requirements of the
Investment Company Act of 1940 and all other applicable Federal, State
or other laws and regulations. Nothing herein contained shall be
deemed to relieve or deprive the Board of Trustees of the Trust of its
responsibility for and control of the conduct of the affairs of the
Trust.
6. The services of the Agent as provided herein are not to be deemed to
be exclusive, and it shall be free to render services of any kind to
any other group, firm, individual or association, and to engage in
other business or activity.
7. This Agreement, including Exhibit A hereto, may be amended at any time
by mutual written consent of the parties.
8. This Agreement may be terminated by either party hereto upon sixty
(60) days written notice given by one to the other, provided that no
such notice of termination given by the Agent to the Trust shall be
effective unless and until a substitute person or entity has been
engaged by the Trust to perform the services required hereunder for
the Trust, or the Trust has certified to the Agent that other
arrangements have been made by it to provide such services.
9. For its services specified above, the Trust shall pay to the Agent
fees as provided in Exhibit A which is attached hereto and made a part
hereof.
IN WITNESS WHEREOF, the parties have caused this Agreement to be signed
by their respective officers thereunto duly authorized and their respective
corporate seals to be hereunto affixed, as of the day and year first above
written.
NATIONWIDE INVESTING FOUNDATION III
Name: James F. Laird, Jr.
Title: Treasurer
NATIONWIDE INVESTORS SERVICES, INC.
Name: Christopher A. Cray
Title: Treasurer
<PAGE> 4
EXHIBIT A
REVISED SCHEDULE OF FEES
Funds of the Trust
Nationwide Mid Cap Growth Fund
Nationwide Growth Fund
Nationwide Fund
(the "Nationwide Equity Funds")
Nationwide Bond Fund
Nationwide Tax-Free Income Fund
Nationwide Long-Term U.S. Government Bond Fund
Nationwide Intermediate U.S. Government Bond Fund
(the "Nationwide Fixed Income Funds")
(collectively, the "Nationwide Funds")
Nationwide Money Market Fund
Nationwide S&P 500 Index Fund
Morley Capital Accumulation Fund
Prestige Large Cap Value Fund
Prestige Large Cap Growth Fund
Prestige Small Cap Fund
Prestige Balanced Fund
Prestige International Fund
(the "Prestige Funds")
For the services specified in the Agreement, the Trust shall pay the Agent the
sum of:
$16.00 per account for Class A, Class B and Class D Shares of the
Nationwide Equity Funds per annum; and Class A and Class B Shares of
the Prestige Funds per annum;
$18.00 per account for Class A, Class B and Class D Shares of the
Nationwide Fixed Income Funds per annum;
$27.00 per account for the Nationwide Money Market Fund;
<PAGE> 5
to be computed monthly, based on the number of accounts as shown on the books of
each class of each Fund at each month-end.
In addition, for the services specified in the Agreement, the Trust shall pay
the Agent an annual fee, computed daily and payable monthly, of 0.01% of average
daily net assets of the Local Fund Shares of the Nationwide S&P 500 Index Fund,
the Class Y Shares of the Prestige Funds and the Institutional Service Class
shares, Institutional Class shares and Investor Class shares of the Morley
Capital Accumulation Fund.
The fees listed above are payable on or before the 10th of each succeeding
month.
In addition, the Trust shall pay the Agent reimbursement for the out-of-pocket
expenses, including postage, telephone, forms, supplies and counsel.
Special extraordinary projects shall be performed by the Agent at rates to be
determined and agreed upon by parties, based on time and effort involved.
Dated as of November 2, 1998.
AGREED TO AND ACCEPTED BY:
NATIONWIDE INVESTING FOUNDATION III
By: _________________________________
Name: James F. Laird, Jr.
Title: Treasurer
NATIONWIDE INVESTORS SERVICES, INC.
By: _________________________________
Name: Christopher A. Cray
Title: Treasurer
<PAGE> 1
Exhibit (9)(f)
ADMINISTRATIVE SERVICES PLAN
(amended as of January ___, 1999)
Section 1. This Administrative Services Plan (the "Plan") constitutes
the administrative services plan for the Class Y Shares of the Prestige Large
Cap Value Fund, Prestige Large Cap Growth Fund, Prestige Small Cap Fund,
Prestige Balanced Fund, Prestige International Fund (the "Prestige Funds"), for
the Class Y and Class R Shares of the Nationwide S&P 500 Index Fund, for the
Class R Shares of the Nationwide Money Market Fund and for the Institutional
Service Class and the Investor Class of the Morley Capital Accumulation Fund
(the "Morley Fund") (collectively, the "Funds"), each a series of Nationwide
Investing Foundation III (the "Trust"), and is adopted upon review and approval
by the Board of Trustees of the Trust.
Section 2. Upon the recommendation of the administrator of the Funds,
any officer of the Trust is authorized to execute and deliver, in the name and
on behalf of the Fund, written agreements in substantially the form attached
hereto as Appendix A or in any other form duly approved by the Board of Trustees
of the Trust ("Servicing Agreements") with financial institutions which are
shareholders of record or which have a servicing relationship ("Service
Organizations") with the beneficial owners of a class of a Fund's shares of
beneficial interest ("Shares"). Such Servicing Agreements shall require the
Service Organizations to provide administrative support services as set forth
therein and as described in a Fund's applicable Prospectus to their customers
who own of record or beneficially Shares. In consideration for providing such
services, a Service Organization will receive a fee, computed daily and paid
monthly in the manner set forth in the Servicing Agreements, at the annual rate
of up to 0.15% of the average daily net asset value of the Institutional
Services Class Shares and Investor Class Shares of the Morley Fund and up to
0.25% of the average daily net asset value of the Class Y Shares of the Prestige
Funds, the Class R Shares of the Nationwide Money Market Fund and the Class Y
and Class R Shares of the Nationwide S&P 500 Index Fund owned of record or
beneficially by such customers. Any bank, trust company, thrift institution,
broker-dealer, insurance company or other financial institution is eligible to
become a Service Organization and to receive fees under this Plan. All expenses
incurred by a Fund with respect to its Shares in connection with the Servicing
Agreements and the implementation of this Plan shall be borne entirely by the
holders of Shares of that Fund.
Section 3. So long as this Plan is in effect, the administrator shall
provide to a Fund's Board of Trustees, and the Trustees shall review, at least
quarterly, a written report of the amounts expended pursuant to this Plan and
the purposes for which such expenditures were made.
Section 4. The Plan shall not take effect with respect to the Shares of
a Fund until it has been approved, together with the form of the Servicing
Agreements, by a vote of a majority of the Trustees who are not "interested
persons" of that Fund (as defined in the Investment Company Act of 1940) and who
have no direct or indirect financial interest in the operation of this Plan or
in any agreements related to this Plan (the "Disinterested Trustees"), cast in
person at a meeting called for the purpose of voting on the Plan or such
Servicing Agreement, provided, however, that the Plan is
1
<PAGE> 2
not implemented prior to the effective date of the post-effective amendment to
a Fund's registration statement describing the Plan and its implementation with
respect to that Fund.
Section 5. Unless sooner terminated, this Plan shall continue until
_____________, 1999, and thereafter, shall continue automatically for successive
annual periods provided such continuance is approved at least annually by a
majority of the Board of Trustees, including a majority of the Disinterested
Trustees.
Section 6. This Plan may be amended at any time with respect to a Fund
by the Board of Trustees, provided that any material amendments of the terms of
this Plan shall become effective only upon the approvals set forth in Section 4.
Section 7. This Plan is terminable at any time with respect to the Fund
by vote of a majority of the Disinterested Trustees.
Section 8. While this Plan is in effect, the selection and nomination
of those Disinterested Trustees shall be committed to the discretion of the
Disinterested Trustees of the Trust.
Section 9. This Plan has been adopted as of _____________, 1998, and
was effective _____________, 1998.
Section 10. The Trust is a business trust organized under Chapter 1746,
Ohio Revised Code and under a Declaration of Trust, to which reference is hereby
made and a copy of which is on file at the office of the Secretary of State of
Ohio as required by law, and to any and all amendments thereto so filed or
hereafter filed. The obligations of a Fund or the Trust entered into in the name
or on behalf thereof by any of the Trustees, officers, employees or agents are
made not individually, but in such capacities, and are not binding upon any of
the Trustees, officers, employees, agents or shareholders as they relate to the
Fund personally, but bind only the assets of the Trust, as set forth in Section
1746.13(A), Ohio Revised Code, and all persons dealing with a Fund must look
solely to the assets of that Fund for the enforcement of any claims against the
Trust.
2
<PAGE> 3
SERVICING AGREEMENT
TO
ADMINISTRATIVE SERVICES PLAN
Ladies and Gentlemen:
We wish to enter into this Servicing Agreement with you concerning the
provision of administrative support services to your customers who may from time
to time be the record or beneficial owners of shares (such shares referred to
herein as the "Shares") of __________________ (the "Fund").
The terms and conditions of this Servicing Agreement are as follows:
Section 1. You agree to provide administrative support services to your
customers who may from time to time own of record or beneficially the Fund's
Shares. Services provided may include some or all of the following: (i)
processing dividend and distribution payments from the Fund on behalf of
customers; (ii) providing periodic statements to your customers showing their
positions in the Shares; (iii) arranging for bank wires; (iv) responding to
routine customer inquiries relating to services performed by you; (v) providing
sub-accounting with respect to the Shares beneficially owned by your customers
or the information necessary for sub-accounting; (vi) if required by law,
forwarding shareholder communications from the Fund (such as proxies,
shareholder reports, annual and semi-annual financial statements and dividend,
distribution and tax notices) to your customers; (vii) forwarding to customers
proxy statements and proxies containing any proposals regarding this Agreement
or the Administrative Services Plan related hereto; (viii) aggregating and
processing purchase, exchange, and redemption requests from customers and
placing net purchase, exchange, and redemption orders for your customers; (ix)
providing customers with a service that invests the assets of their accounts in
the Shares pursuant to specific or pre-authorized instructions; (x) establishing
and maintaining accounts and records relating to transactions in the Shares;
(xi) assisting customers in changing dividend or distribution options, account
designations and addresses; or (xii) other similar services if requested by the
Fund.
Section 2. You will provide such office space and equipment, telephone
facilities and personnel (which may be any part of the space, equipment and
facilities currently used in your business, or any personnel employed by you) as
may be reasonably necessary or beneficial in order to provide the aforementioned
services to customers.
Section 3. Neither you nor any of your officers, employees or agents
are authorized to make any representations concerning the Fund or its Shares
except those contained in our then-current prospectus for such shares, copies of
which will be supplied by the Fund's distributor and/or administrator, to you,
or in such supplemental literature or advertising as may be authorized by the
Fund in writing.
3
<PAGE> 4
Section 4. For all purposes of this Agreement you will be deemed to be
an independent contractor, and will have no authority to act as agent for the
Fund in any matter or in any respect. By your written acceptance of this
Agreement, you agree to and do release, indemnify and hold us harmless from and
against any and all direct or indirect liabilities or losses resulting from
requests, directions, actions or inactions of or by you or your officers,
employees or agents regarding your responsibilities hereunder or the purchase,
redemption, transfer or registration of the Shares by or on behalf of customers.
You and your employees will, upon request, be available during normal business
hours to consult with the Fund or its designees concerning the performance of
your responsibilities under this Agreement.
Section 5. In consideration for the services and facilities provided by
you hereunder, the Fund will pay to you, and you will accept as full payment
therefore, a fee at the annual rate designated in Appendix A of the average
daily net assets of a Fund's Shares owned of record or beneficially by your
customers from time to time for which you provide services hereunder, which fee
will be computed daily and payable monthly. The fee rate stated above may be
prospectively increased or decreased by the Fund, in its sole discretion, at any
time upon notice to you. Further, the Fund may, in its discretion and without
notice, suspend or withdraw the sale of such Shares, including the sale of such
Shares to you for the account of any customer(s).
Section 6. Any person authorized to direct the disposition of monies
paid or payable by the Fund pursuant to this Agreement will provide to the Board
of Trustees of Nationwide Investing Foundation III, and the Trustees will
review, at least quarterly, a written report of the amounts so expended and the
entities to whom such expenditures were made. In addition, you will furnish the
Fund or its designees with such information as the Fund or its designees may
reasonably request (including, without limitation, periodic certifications
confirming the provision to customers of some or all of the services described
herein), and will otherwise cooperate with the Fund and its designees
(including, without limitation, any auditors designed by the Fund), in
connection with the preparation of reports to the Fund's Board of Trustees
concerning this Agreement and the monies paid or payable by the Fund pursuant
hereto, as well as any other reports or filings that may be required by law.
Section 7. We may enter into other similar Servicing Agreements with
any other person or persons without your consent.
Section 8. By your written acceptance of this Agreement, you represent,
warrant and agree that: (i) in no event will any of the services provided by you
hereunder be primarily intended to result in the sale of any shares issued by
the Fund; (ii) the compensation payable to you hereunder, together with any
other compensation you receive from customers for services contemplated by this
Agreement, will to the extent required be disclosed to your customers, and will
not be excessive or unreasonable under the laws and instruments governing your
relationships with your customers; and (iii) if you are subject to the
provisions of the Glass-Steagall Act and other laws governing, among other
things, the conduct of activities by federally chartered and supervised banks
and other affiliated
4
<PAGE> 5
banking organizations, you will perform only those activities which are
consistent with your statutory and regulatory obligations and will act solely as
agent for, upon the order of, and for the account of, your customers.
Section 9. This Agreement will become effective on the date a fully
executed copy of this Agreement is received by the Fund or its designee. This
Agreement may be terminated at any time, without the payment of any penalty with
respect to the Fund by the vote of a majority of the members of the Board of
Trustees and who have no direct or indirect financial interest in the operation
of the Administrative Servicing Plan or in any related agreements to the
Administrative Servicing Plan ("Disinterested Trustees") or by a majority of the
outstanding voting securities of the Fund on not more than sixty (60) days
written notice to the parties to this Agreement.
Section 10. All notices and other communications to either you or the
Fund will be duly given if mailed, telegraphed, telexed or transmitted by
similar telecommunications device to the appropriate address shown given in this
Agreement.
Section 11. This Agreement will be construed in accordance with the
laws of the State of Ohio and is non-assignable by the parties hereto.
Section 12. This Agreement, or form thereof, has been approved by vote
of a majority of (i) the Board of Trustees and (ii) the Disinterested Trustees,
cast in person at a meeting called for the purpose of voting on such approval.
Section 13. The Trust is a business trust organized under Chapter 1746,
Ohio Revised Code and under a Declaration of Trust, to which reference is hereby
made and a copy of which is on file at the office of the Secretary of State of
Ohio as required by law, and to any and all amendments thereto so filed or
hereafter filed. The obligations of a Fund or the Trust entered into in the name
or on behalf thereof by any of the Trustees, officers, employees or agents are
made not individually, but in such capacities, and are not binding upon any of
the Trustees, officers, employees, agents or shareholders as they relate to the
Fund personally, but bind only the assets of the Trust, as set forth in Section
1746.13(A), Ohio Revised Code, and all persons dealing with a Fund must look
solely to the assets of that Fund for the enforcement of any claims against the
Trust.
If you agree to be legally bound by the provisions of this Agreement,
please sign a copy of this letter where indicated below and promptly return it
to the Fund's designee, Nationwide Advisory Services, Inc., Attention: James F.
Laird, Jr., Three Nationwide Plaza, Columbus, Ohio 43215.
Nationwide Advisory Services, Inc., as the Fund's designee, will notify
the Fund concerning any future operational changes pertaining to the Agreement.
Very truly yours, Accepted and Agreed to:
- ---------------------- -------------------------
5
<PAGE> 6
James F. Laird, Jr. Name:
Vice President and General Manager Title:
Nationwide Advisory Services, Inc.
Date:_____________________, 1998 Date:_________________, 1998
6
<PAGE> 7
APPENDIX A
TO SERVICING AGREEMENT FOR ADMINISTRATIVE SERVICING PLAN
Funds of Nationwide Investing Foundation III Administrative Servicing Fees
Prestige Large Cap Value Fund For Class Y shares of each
Prestige Large Cap Growth Fund Prestige Fund:
Prestige Small Cap Fund 0.25% of the average daily
Prestige Balanced Fund net assets of a fund
Prestige International Fund
(collectively, the "Prestige Funds")
Nationwide S&P 500 Index Fund For Class Y and Class R
shares of the Nationwide S&P
500 Index Fund:
0.25% of the average daily net
assets of the Fund
OR
Morley Capital Accumulation Fund For the Institutional Service
"Morley Fund") (the Class and Investor Class
Shares of the Morley Fund:
0.15% of the average daily
net asset of the fund
Signed:__________________________
(Title)
Dated:_____________________, 1998
7
<PAGE> 1
Exhibit 11
INDEPENDENT AUDITORS' CONSENT
The Board of Trustees of
The Nationwide Investing Foundation III:
We consent to use of our report dated December 11, 1998 for the Nationwide
Investing Foundation III as incorporated by reference herein and to the
reference to our firm under the headings "Financial Highlights" in the
Prospectus and "Other Services for all the Fund" in the Statement of Additional
Information included herein.
Columbus, Ohio
December 31, 1998
<PAGE> 1
Exhibit (15)(a)
DISTRIBUTION PLAN OF NATIONWIDE INVESTING FOUNDATION III
(Effective January __, 1999)
Section 1. This Distribution Plan (the "Plan") constitutes the
distribution plan for the Class A and Class B shares of Nationwide Mid Cap
Growth Fund, Nationwide Growth Fund, Nationwide Fund, Nationwide Bond Fund,
Nationwide Tax-Free Income Fund, Nationwide Intermediate U.S. Government Bond
Fund, Nationwide Long-Term U.S. Government Bond Fund, Prestige Large Cap Value
Fund, Prestige Large Cap Growth Fund, Prestige Small Cap Fund, Prestige Balanced
Fund and Prestige International Fund (the "Retail Funds"), for the Class R
Shares and Local Fund Shares of Nationwide S&P 500 Index Fund, for the Class R
Shares of the Nationwide Money Market Fund, and for the Institutional Service
Class ("Class ISC"), the Institutional Class ("Class IC") and the Investor Class
("Class IVC") shares of Morley Capital Accumulation Fund (collectively, the
"Funds"), each a series of Nationwide Investing Foundation III (the "Trust"),
and is adopted pursuant to Rule 12b-1 under the Investment Company Act of 1940,
as amended (the "1940 Act").
Section 2. Subject to the limitations on the payment of asset-based
sales charges set forth in Section 2830 of the Conduct Rules of the National
Association of Securities Dealers, Inc. ("NASD"), the Funds shall pay amounts
not exceeding on an annual basis a maximum amount of:
(a) 25 basis points (.25%) of the average daily net assets of the Class ISC
and Class IVC Shares of the Morley Capital Accumulation Fund and of the
Class A Shares of the Retail Funds, all of which will be a "service
fee"(as described below); and
(b) 100 basis points (1.00%) of the average daily net assets of the Class B
Shares of the Nationwide Mid Cap Growth Fund, Nationwide Growth Fund,
Nationwide Fund, Prestige Large Cap Value Fund, Prestige Large Cap
Growth Fund, Prestige Small Cap Fund, Prestige Balanced Fund and
Prestige International Fund, 75 basis points (.75%) of which will be a
"distribution fee" (as described below) and 25 basis points (.25%) of
which will be a service fee; and
(c) 85 basis points (.85%) of the average daily net assets of the Class B
Shares of the Nationwide Bond Fund, Nationwide Tax-Free Income Fund,
Nationwide Intermediate U.S. Government Bond Fund and Nationwide
Long-Term U.S. Government Bond Fund, 75 basis points (.75%) of which
will be a distribution fee and 10 basis points (.10%) of which will be
considered a service fee; and
(d) 7 basis points (.07%) of the average daily net assets of the Local Fund
Shares of the Nationwide S&P 500 Index Fund; and
(e) 15 basis points (0.15%) of the average daily net assets of the Class R
Shares of the Nationwide S&P 500 Index Fund and the Nationwide Money
Market Fund; and
1
<PAGE> 2
(f) 5 basis points (.05%) of the average daily net assets of the Class IC
Shares of the Morley Capital Accumulation Fund, all of which will be a
service fee.
These fees will be paid to Nationwide Advisory Services, Inc. for activities or
expenses primarily intended to result in the sale or servicing. Nationwide
Advisory Services, Inc. is an "Underwriter." As described above, the following
types of fees may be paid pursuant to the Plan:
(a) a distribution fee for: (i) (a) efforts of an Underwriter expended in
respect of or in furtherance of sales of Class B Shares, and (b) to
enable an Underwriter to make payments to other broker/dealers and
other eligible institutions (each a "Broker/Dealer") for distribution
assistance pursuant to an agreement with the Broker/Dealer; and (ii)
reimbursement of expenses (a) incurred by an Underwriter, and (b)
incurred by a Broker/Dealer pursuant to an agreement in connection with
distribution assistance including, but not limited to, the
reimbursement of expenses relating to printing and distributing
advertising and sales literature and reports to shareholders for use in
connection with the sales of Class B Shares, processing purchase,
exchange and redemption requests from customers and placing orders with
an Underwriter or the Funds' transfer agent, and personnel and
communication equipment used in servicing shareholder accounts and
prospective shareholder inquiries; and
(b) a service fee, if applicable and not otherwise covered under an
administrative services plan and/or agreement, for: (i) (a) efforts of
an Underwriter expended in servicing shareholders and (b) to enable an
Underwriter to make payments to a Broker/Dealer for shareholder
services pursuant to an agreement with the Broker/Dealer; and (ii)
reimbursement of expenses (a) incurred by an Underwriter, and (b)
incurred by a Broker/Dealer pursuant to an agreement in connection with
shareholder service including, but not limited to personal, continuing
services to investors. For purposes of the Plan, a Broker/Dealer may
include any of an Underwriter's affiliates or subsidiaries. A service
fee will be considered as such pursuant to Section 2830(b)(9) of the
Conduct Rules of the NASD.
Section 3. This Plan shall not take effect until it has been approved
by a vote of at least a majority (as defined in the 1940 Act) of the outstanding
voting securities of each of the Funds, if adopted after any public offering of
such shares, and by the vote of the Board of Trustees of the Trust, as described
in Section 4 of the Plan.
Section 4. This Plan shall not take effect with respect to a class of a
Fund until it has been approved, together with any related agreements, by votes
of the majority of both (a) the Board of Trustees of the Trust and (b) those
Trustees of the Trust who are not "interested persons" (as defined in the 1940
Act) of the Trust and who have no direct or indirect financial interest in the
operation of this Plan or any agreements related to this Plan (the "Rule 12b-1
Trustees"), cast in person at a meeting called for the purpose of voting on this
Plan or such agreements.
Section 5. Unless sooner terminated pursuant to Section 7 or 8, this
Plan shall continue in
2
<PAGE> 3
effect with respect to the class of a Fund for a period of one year from the
date it takes effect with respect to such class and thereafter shall continue in
effect so long as such continuance is specifically approved at least annually in
the manner provided for approval of this Plan in Section 4.
Section 6. Any person authorized to direct the disposition of monies
paid or payable by a Fund pursuant to this Plan or any related agreement shall
provide to the Trustee's Board and the Board shall review at least quarterly a
written report of the amounts so expended and the purposes for which such
expenditures were made.
Section 7. This Plan may be terminated as to a class of a Fund at any
time by vote of a majority of the Rule 12b-1 Trustees, or by vote of a majority
of the outstanding affected class of such Fund.
Section 8. Any agreement with any person relating to the implementation
of this Plan shall be in writing, and shall provide:
A. That such agreement may be terminated at any time with respect
to a Class, without payment of any penalty, by vote of a
majority of the Rule 12b-1 Trustees or by a vote of a majority
of the outstanding Class Shares of the Fund on not more than
60 days written notice to any other party to the agreement;
and
B. That such agreement shall terminate automatically in the event
of its assignment.
Section 9. This Plan may not be amended to increase materially the
amount of distribution expenses of a Fund provided for in Section 2 hereof,
unless such amendment is approved in the manner provided in Section 3 hereof. No
material amendment to this Plan shall be made unless approved in the manner
provided for approval of this Plan in Section 4 hereof.
Section 10. The provisions of the Plan are severable for each class of
shares of the Funds and any action required hereunder must be taken separately
for each class covered hereby.
3
<PAGE> 1
Exhibit (15)(c)
RULE 12b-1 AGREEMENT
NATIONWIDE INVESTING FOUNDATION III
This Agreement is made as of this _____ day of _____________, 1998,
between Nationwide Advisory Services, Inc. ("Distributor"), the Distributor of
the ___________________________ Shares ("Shares") of the _______________________
Fund (the"Fund"), a series of Nationwide Investing Foundation III, an Ohio
business trust (the "Trust") and ________________________________ ("Dealer"). In
consideration of the mutual covenants hereinafter contained, it is hereby agreed
by and between the parties hereto as follows:
1. Distributor hereby appoints Dealer to render distribution services
to the Fund and its shareholders. Distribution and shareholder services may
include, but are not limited to, distributing prospectuses to persons other than
Shareholders of the Shares; maintaining shareholder relations; answering
inquiries regarding the Fund; providing personnel and communication equipment
used in connection therewith; and providing such other services as the Trust, on
behalf of the Fund, or Distributor may reasonably request. Dealer represents
that it is willing and possesses legal authority to provide the services
contemplated by this Agreement without violation of applicable laws (including
the Securities Exchange Act of 1934 and applicable state securities laws) and
regulations. Any advertising and sales literature to be printed or distributed
by Dealer in connection with the sale of Shares may not be distributed or
otherwise used except upon prior written approval by Distributor unless such
literature was provided to Dealer by Distributor in its final form.
2. Distributor shall not be liable to Dealer and Dealer shall not be
liable to Distributor except for acts or failures to act which constitute lack
of good faith or gross negligence and for obligations expressly assumed by
either party hereunder. Nothing contained in this Agreement is intended to
operate as a waiver by Distributor or by Dealer of compliance with any
applicable federal or state law, rule, or regulation and the rules and
regulations promulgated by the National Association of Securities Dealers, Inc.
3. Dealer will indemnify Distributor and hold it harmless from any
claims or assertions relating to the lawfulness of Dealer's participation in
this Agreement and the transactions contemplated hereby or relating to any
activities of any persons or entities affiliated with Dealer performed in
connection with the discharge of its responsibilities under this Agreement. If
any such claims are asserted, Distributor shall have the right to manage its own
defense, including the selection and engagement of legal counsel of its
choosing, and all costs of such defense shall be borne by Dealer.
4. Distributor will pay such fees as are set forth in Exhibit A hereto
to Dealer.
5. Dealer shall prepare such quarterly reports for Distributor as shall
reasonably be requested by Distributor.
6. For purposes of this Agreement, Dealer will be deemed to be an
independent contractor, and in no transaction shall Dealer have any authority
whatever to act as Distributor's agent or as agent for the Fund or the Trust.
1
<PAGE> 2
7. No person is authorized to make any representations concerning the
Fund, the Trust or the Shares except those contained in the current prospectus
of the Fund and any such information as may be officially designated as
information supplemental to the prospectus.
8. This Agreement is a related agreement under the Trust's Distribution
Plan (the "Plan") and is effective as of the date first written above.
9. This Agreement may be terminated by either party upon at least ten
days' prior written notice. This Agreement also may be terminated at any time as
to the Shares of the Fund, without the payment of any penalty by the vote of a
majority of the members of the Board of Trustees of the Trust who are not
interested persons of the Trust and have no direct or indirect financial
interest in the operation of the Plan or in any related agreements to the Plan
("Disinterested Trustee") or by a majority of the outstanding Shares of the Fund
on not more than sixty (60) days' written notice to the parties to this
Agreement.
10. This Agreement will terminate automatically in the event of its
assignment as defined in the Investment Company Act of 1940, or upon the
termination of the Distribution Agreement between the Trust and Distributor.
-----------------------------------
Dated: Dealer
By:
Authorized Signature
Title
-------------------------------------
Dated:
Nationwide Advisory Services, Inc.
By:
Authorized Signature
Title
2
<PAGE> 3
___________________________ FUND
EXHIBIT A TO RULE 12b-1 AGREEMENT WITH
NATIONWIDE ADVISORY SERVICES, INC.
With respect to the Shares of the ______________________________ Fund,
Distributor will pay to Dealer a monthly fee computed at the annual rate of
_____% of the average aggregate net asset value of the Shares held during the
period in the accounts for which Dealer provides services under the Rule 12b-1
Agreement.
For the monthly period in which the Rule 12b-1 Agreement becomes
effective or terminates, there shall be an appropriate proration on the basis of
the number of days that the Rule 12b-1 Agreement is in effect during the period.
<PAGE> 1
Exhibit (18)
RULE 18f-3 PLAN
(Effective January _____, 1999)
WHEREAS, Nationwide Investing Foundation III, an Ohio business trust (the
"Trust"), is an open-end management investment company registered under the
Investment Company Act of 1940, as amended (the "1940 Act");
WHEREAS, Nationwide Advisory Services, Inc. ("NAS"), an Ohio corporation, serves
as investment adviser and underwriter for the Trust for Nationwide Mid Cap
Growth Fund, Nationwide Growth Fund, Nationwide Fund, Nationwide Bond Fund,
Nationwide Tax-Free Income Fund, Nationwide Intermediate U.S. Government Bond
Fund, Nationwide Long-Term U.S. Government Bond Fund, Prestige Large Cap Value
Fund, Prestige Large Cap Growth Fund, Prestige Small Cap Fund, Prestige Balanced
Fund and Prestige International Fund ("collectively, the "Funds") and the
Nationwide S&P 500 Index Fund (the "S&P 500 Index Fund");
WHEREAS, Union Bond & Trust Company ("UBT"), an Oregon corporation, serves as
investment adviser and Portland Investment Services, Inc. ("Portland"), an
Oregon corporation, serves as underwriter for the Morley Capital Accumulation
Fund (the "Morley Fund");
WHEREAS, the Trust has adopted a Distribution Plan ("12b-1 Plan") under Rule
12b-1 of the 1940 Act providing for: (1) in the case of Class A shares of the
Funds, and of Institutional Service Class ("Class ISC") and the Investor Class
("Class IVC") shares of the Morley Fund, fees of not more than 0.25% per annum
of average net assets, (2) in the case of Class B shares of the Funds, fees of
not more than 1.00% per annum of average net assets, of which 0.25% per annum of
average net assets is considered a service fee, (3) in the case of the
Institutional Class ("Class IC") shares of the Morley Fund, fees of not more
than 0.05% per annum of average net assets, (4) in the case of Class R shares of
the S&P 500 Index Fund and the Money Market Fund, fees of not more than 0.15%
per annum of average net assets, and (5) in the case of Local Fund Shares of the
S&P 500 Index Fund, fees of not more than 0.07% per annum of average net assets;
WHEREAS, the Trust has adopted an Administrative Services Plan providing for:
(1) in the case of Class ISC and Class IVC Shares of the Morley Fund, fees of
not more than 0.15% per annum of average net assets, and (2) in the case of
Class Y Shares of the Funds, the Class R Shares of the Money Market Fund and
Class Y and Class R shares of the S&P 500 Index Fund, fees of not more than
0.25% per annum of average net assets;
WHEREAS, The Trust has established a Multiple Class Distribution System enabling
the Trust, as described in its prospectuses, to offer eligible investors the
option of purchasing shares of its series with the following features (not all
series offer each option):
(a) with a front-end sales load (which can vary among series and which
is subject to certain reductions and waivers among groups of
purchasers) and providing for a 12b-1 fee
1
<PAGE> 2
(the "Class A shares of the Funds");
(b) without a front-end load, but subject to a contingent deferred
sales charge ("CDSC") (which can vary among series and which may be
subject to certain reductions or waivers among groups of purchasers)
and providing for a 12b-1 fee (the "Class B shares of the Funds");
(c) with a front-end load (which can vary among series and which is
subject to certain reductions and waivers among groups of purchasers),
but not providing for a 12b-1 fee (the "Class D shares of the Funds");
(d) without a front-end load or CDSC, but providing for an
administrative services fee (the "Class Y shares of the Prestige
Advisor Series and the S&P 500 Index Fund");
(e) without a front-end load or CDSC, but providing for a 12b-1 fee and
an administrative services fee and an asset-based transfer agency fee
(the "Class R Shares of the Money Market Fund and the S&P 500 Index
Fund");
(f) without a front-end load or a CDSC, but providing for a 12b-1 fee,
an administrative services fee, and subject to a redemption fee in
certain circumstances (the "Class ISC and Class IVC shares of the
Morley Fund");
(g) without a front-end load or a CDSC, but providing for a 12b-1 fee
and subject to a redemption fee in certain circumstances (the "Class IC
shares of the Morley Fund");
(h) without a front-end load, CDSC, 12b-1 fee or administrative
services fee, but with an account-based transfer agency fee (the "Prime
shares of the Money Market Fund"); and
(i) without a front-end load or a CDSC, but providing for a 12b-1 fee
(the "Local Fund shares of the S&P 500 Index Fund");
WHEREAS, Rule 18f-3 under the 1940 Act permits an open-end management investment
company to issue multiple classes of voting stock representing interests in the
same portfolio notwithstanding Sections 18 (f) (1) and 18 (i) under the 1940 Act
if, among other things, such investment company adopts a written plan setting
forth the separate arrangements and expense allocation of each class and any
related conversion features or exchange privileges;
NOW, THEREFORE, the Trust, wishing to be governed by Rule 18f-3 under the 1940
Act, hereby adopts this Rule 18f-3 Plan as follows:
1. Each class of shares of a non-money market fund series will represent
interests in the same portfolio of investments of such series of the Trust, and
be identical in all respects to each other
2
<PAGE> 3
class of that series, except as set forth below. The only differences among the
various classes of shares of the non-money market fund series of the Trust will
relate solely to (a) different distribution or service fee payments associated
with any Rule 12b-1 Plan for a particular class of shares and any other costs
relating to implementing or amending such Plan (including obtaining shareholder
approval of such Plan or any amendment thereto), which will be borne solely by
shareholders of such class; and (b) different administrative service fees
associated with any Administrative Services Plan; (c) different Class Expenses,
which will be limited to the following expenses as determined by the Trustees to
be attributable to a specific class of shares: (i) transfer agency fees
identified as being attributable to a specific class; (ii) printing and postage
expenses related to preparing and distributing materials such as shareholder
reports, prospectuses, and proxy statements to current shareholders of a
specific class; (iii) Blue Sky notification and/or filing fees incurred by a
class of shares; (iv) SEC registration fees incurred by a class; (v) expenses of
administrative personnel and services as required to support the shareholders of
a specific class; (vi) litigation or other legal expenses and audit or other
accounting expenses relating solely to one class; (vii) Trustee's fees or
expenses incurred as a result of issues relating to one class; (viii)
shareholder meeting costs that relate to a specific class; (ix) wrapper fees,
premiums and expenses related to wrapper agreements for the Morley Fund; (d) the
voting rights related to any 12b-1 Plan affecting a specific class of shares or
related to any other matter submitted to shareholders in which the interests of
a Class differ from the interests of any other Class; (e) conversion features;
(f) exchange privileges; and (g) class names or designations. Any additional
incremental expenses not specifically identified above that are subsequently
identified and determined to be properly applied to one class of shares of a
series of the Trust shall be so applied upon approval by a majority of the
Trustees of the Trust, including a majority of the Trustees who are not
interested persons of the Trust.
2. Under the Multiple Class Distribution System, certain expenses may be
attributable to the Trust, but not to a particular series or class thereof. All
such expenses will be allocated among series based upon the relative aggregate
net assets of such series. Expenses that are attributable to a particular
series, but not to a particular class thereof, and income, realized gains and
losses, and unrealized appreciation and depreciation will be borne by each class
of such series on the basis of the total shares outstanding of the classes if
such series does not pay daily dividends and if the series does pay daily
dividends on the basis of the Settled Shares Method (as described in Rule 18f-3
(c) (iii)). Notwithstanding the foregoing, the principal underwriter, the
investment adviser or other provider of services to the Trust may waive or
reimburse the expenses of a specific class or classes to the extent permitted
under Rule 18f-3 under the 1940 Act and pursuant to any applicable ruling,
procedure or regulation of the Internal Revenue Service.
A class of shares may be permitted to bear expenses that are directly
attributable to such class including: (a) any distribution/service fees
associated with any Rule 12b-1 plan for a particular class and any other costs
relating to implementing or amending such Plan (including obtaining shareholder
approval of such plan or any amendment thereto); (b) any administrative services
fees associated with any administrative services plan for a particular class and
any other costs
3
<PAGE> 4
relating to implementing or amending such plan (including obtaining shareholder
approval of such plan or any amendment thereto) attributable to such class; and
(c) any Class Expenses determined by the Trustees to be attributable to such
class.
3. Class B Shares of the Funds, other than Shares purchased through reinvestment
of a dividend or a distribution with respect to the Class B Shares of the Funds,
shall automatically convert to Class A Shares of the Funds on the date that is
the first business day of the month after which the Class B Shares of the Funds
were outstanding for seven years. Such conversion will be on the basis of the
relative net asset values of each class. After the conversion, such Shares will
have all of the characteristics and rights of Class A Shares of the Funds.
Shares purchased through the reinvestment of a dividend or a distribution with
respect to the Class B Shares of the Funds will be converted to Class A Shares
of the Funds in the same proportion as the number of the shareholder's Class B
Shares of the Funds converting to Class A Shares of the Funds bears to the
shareholder's total Class B Shares of the Funds not acquired through dividends
and distributions.
4. To the extent exchanges are permitted, shares of any class of the Trust will
be exchangeable with shares of the same class of another series of the Trust, or
with money market fund shares of the Trust as described in the applicable
prospectus. Exchanges will comply with all applicable provisions of Rule 11a-3
under the 1940 Act.
5. Dividends paid by a series of the Trust as to each class of its shares, to
the extent any dividends are paid, will be calculated in the same manner, at the
same time, on the same day, and will be in the same amount, except that any
distribution/service fees, administrative services fees, and Class Expenses
allocated to a class will be borne exclusively by that class.
6. Any distribution arrangement of the Trust, including distribution fees and
front-end and deferred sales loads, will comply with Section 2830 of the Conduct
Rules of the National Association of Securities Dealers, Inc.
7. The initial adoption of, and all material amendments, to this 18f-3 Plan must
be approved by a majority of the members of the Trust's Trustees, including a
majority of the Board members who are not interested persons of the Trust.
8. Prior to the initial adoption of, and any material amendments to, this 18f-3
Plan, the Trust's Trustees shall request and evaluate, and any agreement
relating to a class arrangement shall require the parties thereto to furnish,
such information as may be reasonably necessary to evaluate the 18f-3 Plan.
4
<TABLE> <S> <C>
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<NAME> NATIONWIDE INVESTING FOUNDATION III
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<NAME> NATIONWIDE MID CAP GROWTH FUND CLASS A
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<CURRENCY> U.S. DOLLARS
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<PERIOD-TYPE> OTHER
<FISCAL-YEAR-END> OCT-31-1998
<PERIOD-START> MAY-09-1998
<PERIOD-END> OCT-31-1998
<EXCHANGE-RATE> 1
<INVESTMENTS-AT-COST> 7162259
<INVESTMENTS-AT-VALUE> 9542987
<RECEIVABLES> 26782
<ASSETS-OTHER> 9464
<OTHER-ITEMS-ASSETS> 13789
<TOTAL-ASSETS> 9593022
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 14738
<TOTAL-LIABILITIES> 14738
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 7068988
<SHARES-COMMON-STOCK> 17262
<SHARES-COMMON-PRIOR> 0
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<ACCUMULATED-NET-GAINS> 128568
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