<PAGE> 1
'33 ACT FILE NO.333-40455
'40 ACT FILE NO.811-08495
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON SEPTEMBER 3, 1998
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933/X/
POST-EFFECTIVE AMENDMENT NO. 5
AND/OR
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940/X/
AMENDMENT NO. 6
(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] 60 days after filing pursuant to paragraph (a)(1) of Rule 485.
In accordance with Rules 24f-1 and 24f-2 under the Investment Company Act of
1940, upon the effective date of its registration statement, Registrant shall be
deemed to have registered in indefinite amount of securities and will pay
registration fees on later than 90 days after its fiscal year-end.
Title of Securities being Registered: Shares of Beneficial Interest, without par
value.
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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
<TABLE>
<CAPTION>
CROSS REFERENCE SHEET
N-1A ITEM NO. LOCATION
PART A
<S> <C> <C>
Item 1. Cover Page Cover Page
Item 2. Synopsis Summary of Fund Expenses
Item 3. Condensed Financial Information *
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; Net Income and
Distributions
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
*
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 Additional Information
Item 19. Purchase, Redemption and Pricing *
Item 20. Tax Status Additional General Tax Information
Item 21. Underwriters *
Item 22. Calculation of Performance Data Calculating Yield and Total Return;
Nonstandard Returns
Item 23. Financial Statements Financial Statements
</TABLE>
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PROSPECTUS
_____________, 1998
CLASS R SHARES
NATIONWIDE S&P 500 INDEX FUND
FOR INFORMATION AND ASSISTANCE
CALL TOLL FREE 1 (800) 848-0920
Nationwide S&P 500 Index Fund (the "Fund") is a non-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 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 three classes of
shares: Class R, Class Y and Local Fund 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
issued to employee benefit plans qualified under Section 401(a) of the Internal
Revenue Code (the "Code"). The Fund may from time to time use one or more
subadvisers to manage the Fund's portfolios as a part of a multi-manager
structure (see "Investment Management of the Fund").
The Fund's investment objective is to provide investment results that correspond
to the price and yield performance of publicly traded common stocks as
represented by the Standard & Poor's 500 Composite Stock Price Index (the
Index"). The Fund attempts to be fully invested at all times in the stocks that
comprise the Index.
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 __________, 1998
has been filed with the Securities and Exchange Commission. You may obtain a
copy of the Statement of Additional Information or prospectuses for one or more
other classes of the Fund without charge by calling (800) 848-0920, or writing
Nationwide Advisory Services, 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 THE TRUST DATED ___________, 1998,
IS INCORPORATED HEREIN BY REFERENCE.
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SALE OF FUND SHARES
Class R shares of the Fund are sold to life insurance company separate accounts
(the "Accounts") to fund the benefits of variable annuity contracts
("Contracts") issued to employee benefit plans qualified under Section 401(a) of
the Code. The Accounts purchase shares of the Fund in accordance with variable
account allocation instructions received from the owners of the Contracts. The
Fund then uses the proceeds to buy securities for its portfolio. Each Account,
as a shareholder, has an ownership interest in the Fund's investments. The Fund
also offers to buy back (redeem) its shares from the Accounts at any time at net
asset value.
SUMMARY OF EXPENSES
Shareholder Transaction Expenses None
Annual Fund Operating Expenses
(as a percentage of average net assets)
Management Fees .13%
12b-1 Fees .15%
Other Expenses (after waiver)(1) .35%
----
Total Operating Expenses (after waiver)(2) .63%
This summary is provided to assist investors in understanding the various costs
and expenses that an investor in the Class will bear directly or indirectly.
Example:
1 year 3 years
------ -------
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. $ 6 $ 20
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) "Other Expenses" are based upon estimates for the fiscal year ending
October 31, 1999.
(2) Until further written notice to Shareholders, the Adviser has agreed
with the Trust to waive management fees or to reimburse expenses incurred by the
Class to the extent necessary to limit the total expense ratio of the Class R
shares to a maximum of .63% of the average net assets of the Class. Without fee
waivers or expense reimbursements, it is estimated that other expenses and total
operating expenses would be .46% and .74%, respectively.
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FINANCIAL HIGHLIGHTS
Financial highlights are not available for the Class R shares, because the
initial class of Fund shares commenced operations in July 1998.
INVESTMENT OBJECTIVE AND POLICIES
The Fund's investment objective is to provide investment results that correspond
to the price and yield performance of publicly traded common stocks, as
represented by the Standard & Poor's 500 Composite Stock Price Index.***
The Fund attempts to duplicate the investment results of the Index, which is
composed of 500 selected common stocks, most of which are listed on the New York
Stock Exchange. Standard & Poor's ("S&P") chooses the stocks to be included in
the Index based on a number of criteria including industry group
representations, market value, economic sector and operating/financial
condition. The Fund attempts to be fully invested at all times in the stocks
that comprise the Index and stock index futures as described below, and in any
event, at least 80% of the Fund's net assets will be invested in stocks
comprising the Index. Inclusion of a stock in the Index in no way implies an
opinion by S&P as to its attractiveness as an investment. The Fund uses the
Index as the standard performance comparison because it represents approximately
70% of the total market value of all common stocks and is well known to
investors. An investment in the Fund involves risks similar to those of
investing in stocks, i.e., the possibility that stock prices in general will
decline over short or even extended periods of time.
The weightings of stocks in the Index are based on each stock's relative total
market capitalization; that is, its market price per share times the number of
shares outstanding. Because of this weighting, as of July 14, 1998,
approximately 56% of the Index was composed of the 50 largest companies. The
Fund's subadviser generally select stocks for the Fund's portfolio in the order
of their weightings in the Index beginning with the heaviest weighted stocks.
With respect to the Fund's assets invested in the stocks in the Index, the
percentage of such assets invested in each stock is approximately the same as
the percentage it represents in the Index.
No attempt is made to manage the Fund in the traditional sense using economic,
financial and market analysis. The Fund is managed using a computer program to
determine which stocks are to be purchased or sold to replicate the Index to the
extent feasible. From time to time, administrative adjustments may be made in
the Fund's portfolio because of changes in the composition of the Index, but
such changes should be infrequent.
The Fund believes that the indexing approach described above is an effective
method of substantially duplicating percentage changes in the Index. It is a
reasonable expectation that there will be a close correlation between the Fund's
performance and that of the Index in both rising and falling markets. The Fund
will attempt to achieve a correlation between the performance of its portfolio
and that of the Index of at least 0.95, without taking into account expenses. A
correlation of 1.00 would indicate perfect correlation,
- ----------
***"Standard & Poor's", "S&P", "S&P 500", "Standard & Poor's 500", and "500" are
trademarks of The McGraw-Hill Companies, Inc. and have been licensed for use by
the Fund. The Fund is not sponsored, endorsed, sold or promoted by Standard &
Poor's and Standard & Poor's makes no representation regarding the advisability
of investing in the Fund. For further information regarding the trademark
licenses, see the Statement of Additional Information.
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<PAGE> 6
which would be achieved when the Fund's net asset value, including the value of
its dividends and capital gains distributions, increases or decreases in exact
proportion to changes in the Index. The Fund's ability to correlate its
performance with the Index, however may be affected by, among other things,
changes in securities markets, the manner in which the Index is calculated by
S&P and the timing of purchases and redemptions. In the future, the Trust's
Board of Trustees may select another index if such a standard of comparison is
deemed to be more representative of the performance of common stocks.
The Fund's ability to duplicate the performance of the Index also depends to
some extent on the size of the Fund's portfolio and the size of cash flows into
and out of the Fund. Investment changes to accommodate these cash flows are made
to maintain the similarity of the Fund's portfolio to the Index to the maximum
practicable extent.
From time to time to increase its income, the Fund may lend securities from its
portfolio. When the Fund has cash reserves, the Fund may invest in money market
instruments consisting of U.S. government securities (including securities of
the U.S. Government, and its agencies and instrumentalities), time deposits,
certificates of deposit, bankers' acceptances, high-grade commercial paper, and
repurchase agreements. See the Statement of Additional Information for a
description of these instruments. The Fund also may purchase stock index futures
in anticipation of taking a market position when, in the opinion of the Fund's
subadviser, available cash balances do not permit an economically efficient
trade in the cash market. The Fund also may sell (write) stock index futures to
terminate existing positions it may have as a result of its purchases of stock
index futures. See also "INVESTMENT TECHNIQUES, CONSIDERATIONS AND RISK FACTORS"
below.
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 the Funds investment objective.
MANAGEMENT OF THE FUND
Nationwide Advisory Services, Inc. (the "Adviser") provides investment
management evaluation services to the Fund in initially selecting and monitoring
on an ongoing basis the performance of a subadviser to manage the Fund's
portfolio. The Adviser has selected The Dreyfus Corporation to be the subadviser
(the "Subadviser") of the Fund. See "MANAGEMENT OF THE TRUST - INVESTMENT
MANAGEMENT OF THE FUND-THE SUBADVISER" below for further information.
INVESTMENT TECHNIQUES, CONSIDERATIONS AND RISK FACTORS
GENERAL - The Fund's net asset value per share should be expected to fluctuate.
Investors should consider the Fund as a supplement to an overall investment
program and should invest only if they are willing to undertake the risks
involved.
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<PAGE> 7
EQUITY SECURITIES - Equity securities fluctuate in value, often based on factors
unrelated to the value of the issuer of the securities, and such fluctuations
can be pronounced. Changes in the value of the Fund's investments will result in
changes in the value of its shares and thus the Fund's total return to
investors.
FOREIGN SECURITIES - Since the stocks of some foreign issuers are included in
the Index, the Fund's portfolio may contain securities of such foreign issuers
which may subject the Fund to additional investment risks with respect to those
securities that are different in some respects from those incurred by a fund
which invests only in securities of domestic issuers. Such risks include
possible adverse political and economic developments, seizure or nationalization
of foreign deposits or adoption of governmental restrictions which might
adversely affect the payment of principal and interest on the foreign securities
or restrict the payment of principal and interest to investors located outside
the country of the issuer, whether from currency blockage or otherwise.
USE OF DERIVATIVES - The Fund may invest, to a limited extent, in derivatives
("Derivatives"). Derivative instruments are securities or agreements whose value
is based on the value of some underlying asset (e.g., a security or currency) or
the level of a reference index. Options, futures, and options on futures
transactions are considered derivative transactions although the Fund will
primarily purchase stock index futures. In addition the Fund will sell (write)
stock index futures to terminate existing positions it may have as a result of
its purchases of stock index futures. Derivatives generally have investment
characteristics that are based on either forward contracts (under which one
party is obligated to buy and the other party is obligated to sell an underlying
asset at a specific price on a specified date) or option contracts (under which
the holder of the option has the right but not the obligation to buy or sell an
underlying asset at a specified price on or before a specified date).
Consequently, the change in the value of a forward-based derivative generally is
roughly proportional to the change in value of the underlying asset. In
contrast, the buyer of an option-based derivative generally will benefit from
favorable movements in the price of the underlying asset but is not exposed to
the corresponding losses that result from adverse movements in the value of the
underlying asset. The seller of an option-based derivative generally will
receive fees or premiums but generally is exposed to losses resulting from
changes in the value of the underlying asset. Derivative transactions may
include elements of leverage and, accordingly, the fluctuation of the value of
the derivative transaction in relation to the underlying asset may be magnified.
While derivatives can be used effectively in furtherance of the Fund's
investment objective, under certain market conditions, they can increase the
volatility of the Fund's net asset value, can decrease the liquidity of the
Fund's portfolio and make more difficult the accurate pricing of the Fund's
portfolio.
Although the Fund will not be a commodity pool, derivatives subject the Fund to
the rules of the Commodity Futures Trading Commission, which limit the extent to
which the Fund can invest in certain derivatives. The Fund may invest in stock
index futures contracts and related options for hedging purposes without limit,
but it is anticipated that the Fund's investments in stock index futures and
related options and other derivatives will not exceed 20% of the Fund's total
assets. However, the Fund may not invest in such contracts for other purposes if
the sum of the amount of initial margin deposits, other than for bona fide
hedging purposes, exceeds 5% of the liquidation value of the Fund's assets,
after taking into account unrealized profits and unrealized losses on such
contracts.
Derivative instruments may be exchange-traded or traded in over the counter
("OTC") transactions between private parties. OTC transactions are subject to
the credit risk of the counterparty to the instrument and are less liquid than
exchange-traded derivatives since they often can only be closed out with the
other party to the transaction. When required by guidelines of the Securities
and Exchange Commission, the Fund will set aside permissible liquid assets in a
segregated account to secure its obligations under derivative transactions.
Segregated assets cannot be sold or transferred unless equivalent assets are
substituted in their place or it is
5
<PAGE> 8
no longer necessary to segregate them. As a result, there is a possibility that
segregation of a large percentage of the Fund's assets could impede portfolio
management or the Fund's ability to meet redemption requests or other current
obligations. In order to maintain its required cover for a derivative
transaction, the Fund may need to sell portfolio securities at disadvantageous
prices or times, since it may not be possible to liquidate a derivative
position.
The successful use of a derivative transactions by the Fund is dependent upon
the Subadviser's ability to correctly anticipate trends in the underlying asset.
Hedging transactions are subject to risks; if the Subadviser incorrectly
anticipates trends in the underlying asset, the Fund may be in a worse position
than if no hedging had occurred. In addition, there may be imperfect correlation
between the Fund's derivative transaction and the instrument being hedged.
BORROWING MONEY - The Fund is permitted to borrow money only for temporary or
emergency (not leveraging) purposes, in an amount up to 5% of the value of its
total assets (including the amount borrowed) valued at the lesser of cost or
market, less liabilities (not including the amount borrowed) at the time the
borrowing is made.
LENDING PORTFOLIO SECURITIES - the Fund may lend securities from its portfolio
to brokers, dealers and other financial institutions needing to borrow
securities to complete certain transactions. The Fund continues to be entitled
to payments in amounts equal to the interest, dividends or other distributions
payable on the loaned securities which affords the Fund an opportunity to earn
interest on the amount of the loaned and income on the loaned securities'
collateral. Loans of portfolio securities may not exceed 30% of the value of the
Fund's total assets, and the Fund will receive collateral consisting of cash,
U.S. Government securities or irrevocable letters of credit which will be
maintained at all times in an amount equal to at least 100% of the current
market value of the loaned securities. Such loans are terminable by the Fund 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.
NON-DIVERSIFIED STATUS - The classification of the Fund as a "non-diversified"
portfolio means that the proportion of the Fund's assets that may be invested in
the securities of a single issuer is not limited by the Investment Company Act
of 1940 Act, as amended (the "1940 Act"). A "diversified" investment company is
required by the 1940 Act generally, with respect to 75% of its total assets, to
invest not more than 5% of such assets in the securities of a single issuer. The
Fund is not so limited. Since a relatively high percentage of the Fund's assets
may be invested in the securities of a limited number of issuers, some of which
may be within the same economic sector, the Fund's portfolio may be more
sensitive to the changes in market value of a single issuer or sector. However,
to meet Federal tax requirements, at the close of each quarter the Fund may not
have more than 25% of its total assets invested in any one issuer and, with
respect to 50% of total assets, not more than 5% of its total assets invested in
any one issuer. These limitations do not apply to U.S. Government Securities.
6
<PAGE> 9
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. Unless so
required by the Trust's Declaration of Trust or By-Laws or by Ohio law, at any
given time, all of the Trustees may not have been elected by the Shareholders of
the Trust. The Trust will be managed by the Trustees in accordance with the laws
of Ohio governing business trusts. The Trustees, in turn, elect the officers of
the Trust to supervise its day-to-day operations.
INVESTMENT MANAGEMENT OF THE FUND
THE ADVISER - Under the terms of the Investment Advisory Agreement, the Adviser,
which is located at Three Nationwide Plaza, Columbus, Ohio 43215, oversees the
investment of the assets for the Fund and supervises the daily business affairs
of the Fund. Subject to the supervision and direction of the Trustees, the
Adviser also evaluates and monitors the performance of the subadviser. The
Adviser is also authorized to select and place portfolio investments on behalf
of the Fund, however the Adviser does not intend to do so at this time.
The Adviser and the Trust have received from the Securities and Exchange
Commission an exemptive order for the multi-manager structure which allows the
Adviser to hire, replace or terminate subadvisers without the approval of
shareholders; the order also allows the Adviser to revise a subadvisory
agreement without shareholder approval. If a new subadviser is hired, the change
will be communicated to shareholders within 90 days of such changes, and all
changes will be approved by the Trust's Board of Trustees, including a majority
of the Trustees who are not interested persons of the Trust or the Adviser. The
order is intended to facilitate the efficient operation of the Fund and afford
the Trust increased management flexibility.
The Adviser provides to the Fund investment management evaluation services
principally by performing initial due diligence on prospective Subadvisers for
the Fund and thereafter monitoring the performance of the Subadviser through
quantitative and qualitative analysis as well as periodic in-person, telephonic
and written consultations with the Subadviser. The Adviser has responsibility
for communicating performance expectations and evaluations to the Subadviser and
ultimately recommending to the Trust's Board of Trustees whether the
Subadviser's contract should be renewed, modified or terminated; however, the
Adviser does not expect to recommend frequent changes of subadvisers. The
Adviser will regularly provide written reports to the Board of Trustees
regarding the results of its evaluation and monitoring functions. Although the
Adviser will monitor the performance of the Subadviser, there is no certainty
that the Subadviser or the Fund will obtain favorable results at any given time.
The Adviser, 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
the outstanding Class B Common Stock) 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 shareholders. The Fund pays the Adviser a fee at the
annual rate of .13% of the Fund's average daily net assets.
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<PAGE> 10
The Adviser may from time to time waive some or all of its investment advisory
fee or other fees. The waiver of such fees will cause the total return and yield
of the Fund to be higher than they would otherwise be in the absence of such a
waiver.
THE SUBADVISER - Subject to the supervision of the Adviser and the Board of
Trustees, the Subadviser manages the Fund's assets in accordance with the Fund's
investment objective and policies. The Subadviser shall make investment
decisions for the Fund, and in connection with such investment decisions shall
place purchase and sell orders for securities. For the investment management
services it provides to the Fund, the Subadviser receives an annual fee from the
Adviser in the following amounts:
.07% on assets up to $250 million
.06% on assets of $250 million up to $500 million
.05% on assets of $500 million up to $1 billion
.04% on assets of $1 billion and more.
Below is a brief description of the Subadviser.
THE DREYFUS CORPORATION ("DREYFUS"), 200 Park Avenue, New York, N.Y. 10166,
which was formed in 1947 and is registered under the Investment Advisers Act of
1940, serves as subadviser to the Fund pursuant to a Subadvisory Agreement dated
July 23, 1998. Dreyfus is a wholly-owned subsidiary of Mellon Bank, N.A., which
is a wholly-owned subsidiary of Mellon Bank Corporation.
As of March 31, 1998, Dreyfus managed or administered approximately $100 billion
in assets for approximately 1.7 million investor accounts nationwide.
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, Nationwide Advisory Services, Inc. ("NAS") for expenses associated
with distribution of Class R shares. Under the Plan, the Fund pays 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.
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 0.05% on assets up to $1 billion and
0.04% on assets of $1 billion and more.
ADMINISTRATION SERVICES PLAN
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 and Class Y 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
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<PAGE> 11
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 effective _________, 1998, pursuant to which Nationwide
Financial Services Inc. has agreed to provide certain administrative support
services in connection with Class R and Class Y shares held beneficially by its
customers. In consideration for providing administrative support services,
Nationwide Life Insurance Company 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
and Class Y shares held by customers of Nationwide Life Insurance Company or
such other entity.
The Distributor, Nationwide Advisory Services, Inc. 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.
NISI is a wholly owned subsidiary of the Adviser.
INVESTMENT IN FUND SHARES
An insurance company may purchase shares of the Fund using purchase payments
received on Contracts issued by Accounts. These Accounts are funded by shares of
the Fund. Funds of Funds may also purchase shares of the Fund for their
portfolios. There is no sales charge, and all shares are sold at net asset
value. Contract-directed purchases, exchanges and redemptions are handled in
accordance with terms of the Contracts, subject to Fund restrictions contained
herein. Since Contracts may have different provisions with respect to the timing
and method of purchases, exchanges and redemptions, Contract owners should
contract their designated financial intermediary directly for details concerning
contract transactions.
Class R shares are currently sold only to Qualified Plan Variable Account of
Nationwide Life Insurance 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. Initial and subsequent
purchase payments allocated to the Fund are subject to the limits applicable to
the Contracts.
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 from a Fund of Funds or from Nationwide Life Insurance Company or
Nationwide Life and Annuity Company by the Trust's transfer agent, NISI. The net
asset value per share for the Fund is determined once daily, as of the close of
regular trading on the New York Stock Exchange (generally 4:00 P.M. Eastern
Time), on each business day the New York Stock Exchange is open for regular
trading, on such other days as the Board determines and on any other day during
which there is a sufficient degree of trading in the Fund's portfolio securities
that the net asset value
9
<PAGE> 12
of the Fund is materially affected by changes in the value of portfolio
securities. The Trust will not compute net asset value on customary national
business holidays, including the following: Christmas, New Year's Day, Martin
Luther King Jr.'s Birthday, President's Day, Good Friday, Memorial Day,
Independence Day, Labor Day, and Thanksgiving Day. The 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.
In determining net asset value, portfolio securities listed on national
exchanges are valued at the last sales price on the principal exchange. If the
securities are traded only in the over-the-counter market, they are valued at
the last quoted bid price. Other portfolio securities are valued at the quoted
prices obtained from an independent pricing organization which employs a
combination of methods, including among others, the obtaining and comparison of
market valuations from dealers who make markets and deal in such securities and
the comparison of valuations with those of other comparable securities in a
matrix of such securities. The pricing service activities and results are
reviewed by an officer of the Trust. Securities for which market quotations are
not readily available, if any, are valued at fair value in accordance with
procedures adopted by the Board of Trustees. Expenses and fees are accrued
daily.
The Trust may suspend the right of redemption only under the following unusual
circumstances:
o when the New York Stock Exchange is closed (other than weekends and
holidays) or trading is restricted;
o when an emergency exists, making disposal of portfolio securities or
the valuation of net assets not reasonably practicable; or
o during any period when the Securities and Exchange Commission has by
order permitted a suspension of redemption for the protection of
shareholder.
NET INCOME AND DISTRIBUTIONS
Substantially all of the net investment income, if any, of the Fund will be
declared and paid as dividends quarterly. Net realized capital gains, of the
Fund, if any, will be distributed at least annually.
ADDITIONAL INFORMATION
DESCRIPTION OF SHARES - The Declaration of Trust permits the Trustees to issue
an unlimited number of full and fractional shares of beneficial interest of the
Fund and to divide or combine such shares into a greater or lesser number of
shares without thereby changing the proportionate beneficial interests in the
Trust. Shares of the Fund are offered in three separate classes, and you have an
interest only in the shares of the class which you own. Shares of a particular
class are equal in all respects to the other shares of that class. The Trust
reserves the right to create and issue shares of a number of different
portfolios or series. In that case, the shares of each fund would participate
equally in the earnings, dividends, and assets of the particular portfolio or
series, but shares of all funds would vote together in the election of Trustees.
In the event of liquidation of a fund, shares of the same class will share pro
rata in the distribution of the net assets of such fund with all other shares of
that class based on the relative net asset value of each class. All shares are
without par value, and when issued and paid for, are fully paid and
nonassessable by the Trust.
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
10
<PAGE> 13
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. In 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. 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
The Fund may use historical performance in advertisements, sales literature, and
the prospectus. Such figures will include quotations of average annual total
return for the most recent one, five and ten year periods, or the life of the
Fund if less. Average annual total return represents the rate required each year
for an initial investment to equal the redeemable value at the end of the
specific period. Average annual total return reflects reinvestment of all
distributions.
TAX STATUS
The Trust's policy is to cause each fund to qualify as a regulated investment
company and to meet the requirements of Subchapter M of the Internal Revenue
Code (the "Code"). The Fund intends to distribute all, or substantially all, of
its taxable net investment income and capital gains to shareholders; therefore
it is expected that the Fund will not be required to pay any federal income
taxes on its investment income.
Because each portfolio or series of the Trust is treated as a separate entity
for purposes of the regulated investment company provisions of the Code, the
assets, income and distributions of the Fund are considered separately for
purposes of determining whether or not the Fund qualifies as a regulated
investment company. The Fund intends to comply with the diversification
requirements currently imposed by the Internal Revenue Service on separate
accounts of insurance companies as a condition of maintaining the tax-deferred
status of the Contracts. See the Statement of Additional Information for more
specific information.
The tax treatment of payments made by an Account to a Contractholder is
described in the separate account prospectus.
11
<PAGE> 14
CONTENTS
Sale of Fund Shares 2
Summary of Expenses 2
Financial Highlights 3
Investment Objective and Policies 3
Management of the Fund 4
Investment Techniques, Considerations and Risk Factors 4
Management of the Trust 7
Investment in Fund Shares 9
Share Redemption 9
Net Income and Distributions 10
Additional Information 10
Performance Advertising for the Fund 11
Tax Status 11
INVESTMENT ADVISER AND ADMINISTRATOR
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 Peat Marwick 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
12
<PAGE> 15
PROSPECTUS
_____________, 1998
CLASS Y SHARES
NATIONWIDE S&P 500 INDEX FUND
FOR INFORMATION AND ASSISTANCE
CALL TOLL FREE 1 (800) 848-0920
Nationwide S&P 500 Index Fund (the "Fund") is a non-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 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 three classes of
shares: Class R, Class Y and Local Fund Shares. This Prospectus relates only to
the Class Y shares of the Nationwide S&P 500 Index Fund. Class Y shares are sold
to life insurance company separate accounts to fund the benefits of variable
life annuity contracts issued to governmental entities as an investment option
under their deferred compensation plans as defined under Section 457 of the
Internal Revenue Code (the "Code"). The Fund may from time to time use one or
more subadvisers to manage the Fund's portfolio as part of a multi-manager
structure (See "Investment Management of the Fund").
The Fund's investment objective is to provide investment results that correspond
to the price and yield performance of publicly traded common stocks as
represented by the Standard & Poor's 500 Composite Stock Price Index (the
"Index"). The Fund attempts to be fully invested at all times in the stocks that
comprise the Index.
This Prospectus provides you with the basic information you should know before
investing in Class Y shares of the Fund. You should read it and keep it for
future reference. A Statement of Additional Information dated __________, 1998
has been filed with the Securities and Exchange Commission. You may obtain a
copy of the Statement of Additional Information or prospectuses for one or more
other classes of the Fund without charge by calling (800) 848-0920, or writing
Nationwide Advisory Services, 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 THE TRUST DATED __________, 1998, IS
INCORPORATED HEREIN BY REFERENCE.
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<PAGE> 16
SALE OF FUND SHARES
Class Y shares of the Fund are sold to life insurance company separate accounts
(the "Accounts") to fund the benefits of variable annuity contracts
("Contracts") issued to governmental entities as an investment option under
their deferred compensation plans. The Accounts purchase shares of the Fund in
accordance with variable account allocation instructions received from the
owners of the Contracts. The Fund then uses the proceeds to buy securities for
its portfolio. Each Account, as a shareholder, has an ownership interest in the
Fund's investments. The Fund also offers to buy back (redeem) its shares from
the Accounts at any time at net asset value.
SUMMARY OF EXPENSES
Shareholder Transaction Expenses None
Annual Fund Operating Expenses
(as a percentage of average net assets)
Management Fees .13%
12b-1 Fees None
Other Expenses (after waiver)(1) .35%
----
Total Operating Expenses (after waiver)(2) .48%
This summary is provided to assist investors in understanding the various costs
and expenses that an investor in the Class will bear directly or indirectly.
Example:
1 year 3 years
------ -------
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. $ 5 $ 15
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) "Other Expenses" are based upon estimates for the fiscal year ending
October 31, 1999.
(2) Until further written notice to Shareholders, the Adviser has agreed
with the Trust to waive management fees or to reimburse expenses incurred by the
Class to the extent necessary to limit the total expense ratio of the Class Y
shares to a maximum of .48% of the average net assets of the class. Without fee
waivers or expense reimbursements, it is estimated that other expenses and total
operating expenses would be .46% and .59%, respectively.
2
<PAGE> 17
FINANCIAL HIGHLIGHTS
Financial highlights are not available for the Class Y shares, because the
initial class of Fund shares commenced operations in July 1998.
INVESTMENT OBJECTIVE AND POLICIES
The Fund's investment objective is to provide investment results that correspond
to the price and yield performance of publicly traded common stocks, as
represented by the Standard & Poor's 500 Composite Stock Price Index.***
The Fund attempts to duplicate the investment results of the Index, which is
composed of 500 selected common stocks, most of which are listed on the New York
Stock Exchange. Standard & Poor's ("S&P") chooses the stocks to be included in
the Index based on a number of criteria including industry group
representations, market value, economic sector and operating/financial
condition. The Fund attempts to be fully invested at all times in the stocks
that comprise the Index and stock index futures as described below, and in any
event, at least 80% of the Fund's net assets will be invested in stocks
comprising the Index. Inclusion of a stock in the Index in no way implies an
opinion by S&P as to its attractiveness as an investment. The Fund uses the
Index as the standard performance comparison because it represents approximately
70% of the total market value of all common stocks and is well known to
investors. An investment in the Fund involves risks similar to those of
investing in stocks, i.e., the possibility that stock prices in general will
decline over short or even extended periods of time.
The weightings of stocks in the Index are based on each stock's relative total
market capitalization; that is, its market price per share times the number of
shares outstanding. Because of this weighting, as of July 14, 1998,
approximately 56% of the Index was composed of the 50 largest companies. The
Fund's subadviser generally select stocks for the Fund's portfolio in the order
of their weightings in the Index beginning with the heaviest weighted stocks.
With respect to the Fund's assets invested in the stocks in the Index, the
percentage of such assets invested in each stock is approximately the same as
the percentage it represents in the Index.
No attempt is made to manage the Fund in the traditional sense using economic,
financial and market analysis. The Fund is managed using a computer program to
determine which stocks are to be purchased or sold to replicate the Index to the
extent feasible. From time to time, administrative adjustments may be made in
the Fund's portfolio because of changes in the composition of the Index, but
such changes should be infrequent.
The Fund believes that the indexing approach described above is an effective
method of substantially duplicating percentage changes in the Index. It is a
reasonable expectation that there will be a close correlation between the Fund's
performance and that of the Index in both rising and falling markets. The Fund
will attempt to achieve a correlation between the performance of its portfolio
and that of the Index of at least 0.95, without taking into account expenses. A
correlation of 1.00 would indicate perfect correlation,
- ----------
***"Standard & Poor's", "S&P", "S&P 500", "Standard & Poor's 500", and "500" are
trademarks of The McGraw-Hill Companies, Inc. and have been licensed for use by
the Fund. The Fund is not sponsored, endorsed, sold or promoted by Standard &
Poor's and Standard & Poor's makes no representation regarding the advisability
of investing in the Fund. For further information regarding the trademark
licenses, see the Statement of Additional Information.
3
<PAGE> 18
which would be achieved when the Fund's net asset value, including the value of
its dividends and capital gains distributions, increases or decreases in exact
proportion to changes in the Index. The Fund's ability to correlate its
performance with the Index, however may be affected by, among other things,
changes in securities markets, the manner in which the Index is calculated by
S&P and the timing of purchases and redemptions. In the future, the Trust's
Board of Trustees may select another index if such a standard of comparison is
deemed to be more representative of the performance of common stocks.
The Fund's ability to duplicate the performance of the Index also depends to
some extent on the size of the Fund's portfolio and the size of cash flows into
and out of the Fund. Investment changes to accommodate these cash flows are made
to maintain the similarity of the Fund's portfolio to the Index to the maximum
practicable extent.
From time to time to increase its income, the Fund may lend securities from its
portfolio. When the Fund has cash reserves, the Fund may invest in money market
instruments consisting of U.S. government securities (including securities of
the U. S. Government, and its agencies and instrumentalities), time deposits,
certificates of deposit, bankers' acceptances, high-grade commercial paper, and
repurchase agreements. See the Statement of Additional Information for a
description of these instruments. The Fund also may purchase stock index futures
in anticipation of taking a market position when, in the opinion of the Fund's
subadviser, available cash balances do not permit an economically efficient
trade in the cash market. The Fund also may sell (write) stock index futures to
terminate existing positions it may have as a result of its purchases of stock
index futures. See also "INVESTMENT TECHNIQUES, CONSIDERATIONS AND RISK FACTORS"
below.
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 the Funds investment objective.
MANAGEMENT OF THE FUND
Nationwide Advisory Services, Inc. (the "Adviser") provides investment
management evaluation services to the Fund in initially selecting and monitoring
on an ongoing basis the performance of a subadviser to manage the Fund's
portfolio. The Adviser has selected The Dreyfus Corporation to be the subadviser
(the "Subadviser") of the Fund. See "MANAGEMENT OF THE TRUST - INVESTMENT
MANAGEMENT OF THE FUND-THE SUBADVISER" below for further information.
INVESTMENT TECHNIQUES, CONSIDERATIONS AND RISK FACTORS
GENERAL - The Fund's net asset value per share should be expected to fluctuate.
Investors should consider the Fund as a supplement to an overall investment
program and should invest only if they are willing to undertake the risks
involved.
EQUITY SECURITIES - Equity securities fluctuate in value, often based on factors
unrelated to the value of the issuer of the securities, and such fluctuations
can be pronounced. Changes in the value of the Fund's investments will result in
changes in the value of its shares and thus the Fund's total return to
investors.
4
<PAGE> 19
FOREIGN SECURITIES - Since the stocks of some foreign issuers are included in
the Index, the Fund's portfolio may contain securities of such foreign issuers
which may subject the Fund to additional investment risks with respect to those
securities that are different in some respects from those incurred by a fund
which invests only in securities of domestic issuers. Such risks include
possible adverse political and economic developments, seizure or nationalization
of foreign deposits or adoption of governmental restrictions which might
adversely affect the payment of principal and interest on the foreign securities
or restrict the payment of principal and interest to investors located outside
the country of the issuer, whether from currency blockage or otherwise.
USE OF DERIVATIVES - The Fund may invest, to a limited extent, in derivatives
("Derivatives"). Derivative instruments are securities or agreements whose value
is based on the value of some underlying asset (e.g., a security or currency) or
the level of a reference index. Options, futures, and options on futures
transactions are considered derivative transactions although the Fund will
primarily purchase stock index futures. In addition, the Fund will sell (write)
stock index futures to terminate existing positions it may have as a result of
its purchase of stock index futures. Derivatives generally have investment
characteristics that are based on either forward contracts (under which one
party is obligated to buy and the other party is obligated to sell an underlying
asset at a specific price on a specified date) or option contracts (under which
the holder of the option has the right but not the obligation to buy or sell an
underlying asset at a specified price on or before a specified date).
Consequently, the change in the value of a forward-based derivative generally is
roughly proportional to the change in value of the underlying asset. In
contrast, the buyer of an option-based derivative generally will benefit from
favorable movements in the price of the underlying asset but is not exposed to
the corresponding losses that result from adverse movements in the value of the
underlying asset. The seller of an option-based derivative generally will
receive fees or premiums but generally is exposed to losses resulting from
changes in the value of the underlying asset. Derivative transactions may
include elements of leverage and, accordingly, the fluctuation of the value of
the derivative transaction in relation to the underlying asset may be magnified.
While derivatives can be used effectively in furtherance of the Fund's
investment objective, under certain market conditions, they can increase the
volatility of the Fund's net asset value, can decrease the liquidity of the
Fund's portfolio and make more difficult the accurate pricing of the Fund's
portfolio.
Although the Fund will not be a commodity pool, derivatives subject the Fund to
the rules of the Commodity Futures Trading Commission, which limit the extent to
which the Fund can invest in certain derivatives. The Fund may invest in stock
index futures contracts and related options for hedging purposes without limit,
but it is anticipated that the Fund's investments in stock index futures and
related options and other derivatives will not exceed 20% of the Fund's total
assets. However, the Fund may not invest in such contracts for other purposes if
the sum of the amount of initial margin deposits, other than for bona fide
hedging purposes, exceeds 5% of the liquidation value of the Fund's assets,
after taking into account unrealized profits and unrealized losses on such
contracts.
Derivative instruments may be exchange-traded or traded in over the counter
("OTC") transactions between private parties. OTC transactions are subject to
the credit risk of the counterparty to the instrument and are less liquid than
exchange-traded derivatives since they often can only be closed out with the
other party to the transaction. When required by guidelines of the Securities
and Exchange Commission, the Fund will set aside permissible liquid assets in a
segregated account to secure its obligations under derivative transactions.
Segregated assets cannot be sold or transferred unless equivalent assets are
substituted in their place or it is no longer necessary to segregate them. As a
result, there is a possibility that segregation of a large percentage of the
Fund's assets could impede portfolio management or the Fund's ability to meet
redemption requests or other current obligations. In order to maintain its
required cover for a derivative transaction, the Fund may need to sell portfolio
securities at disadvantageous prices or times, since it may not be possible
5
<PAGE> 20
to liquidate a derivative position.
The successful use of a derivative transactions by the Fund is dependent upon
the Subadviser's ability to correctly anticipate trends in the underlying asset.
Hedging transactions are subject to risks; if the Subadviser incorrectly
anticipates trends in the underlying asset, the Fund may be in a worse position
than if no hedging had occurred. In addition, there may be imperfect correlation
between the Fund's derivative transaction and the instrument being hedged.
BORROWING MONEY- The Fund is permitted to borrow money only for temporary or
emergency (not leveraging) purposes, in an amount up to 5% of the value of its
total assets (including the amount borrowed) valued at the lesser of cost or
market, less liabilities (not including the amount borrowed) at the time the
borrowing is made.
LENDING PORTFOLIO SECURITIES - the Fund may lend securities from its portfolio
to brokers, dealers and other financial institutions needing to borrow
securities to complete certain transactions. The Fund continues to be entitled
to payments in amounts equal to the interest, dividends or other distributions
payable on the loaned securities which affords the Fund an opportunity to earn
interest on the amount of the loaned and income on the loaned securities'
collateral. Loans of portfolio securities may not exceed 30% of the value of the
Fund's total assets, and the Fund will receive collateral consisting of cash,
U.S. Government securities or irrevocable letters of credit which will be
maintained at all times in an amount equal to at least 100% of the current
market value of the loaned securities. Such loans are terminable by the Fund 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.
NON-DIVERSIFIED STATUS - The classification of the Fund as a "non-diversified"
portfolio means that the proportion of the Fund's assets that may be invested in
the securities of a single issuer is not limited by the Investment Company Act
of 1940 Act, as amended (the "1940 Act"). A "diversified" investment company is
required by the 1940 Act generally, with respect to 75% of its total assets, to
invest not more than 5% of such assets in the securities of a single issuer. The
Fund is not so limited. Since a relatively high percentage of the Fund's assets
may be invested in the securities of a limited number of issuers, some of which
may be within the same economic sector, the Fund's portfolio may be more
sensitive to the changes in market value of a single issuer or sector. However,
to meet Federal tax requirements, at the close of each quarter the Fund may not
have more than 25% of its total assets invested in any one issuer and, with
respect to 50% of total assets, not more than 5% of its total assets invested in
any one issuer. These limitations do not apply to U.S. Government Securities.
6
<PAGE> 21
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. Unless so
required by the Trust's Declaration of Trust or By-Laws or by Ohio law, at any
given time, all of the Trustees may not have been elected by the Shareholders of
the Trust. The Trust will be managed by the Trustees in accordance with the laws
of Ohio governing business trusts. The Trustees, in turn, elect the officers of
the Trust to supervise its day-to-day operations.
INVESTMENT MANAGEMENT OF THE FUND
THE ADVISER - Under the terms of the Investment Advisory Agreement, the Adviser,
which is located at Three Nationwide Plaza, Columbus, Ohio 43215, oversees the
investment of the assets for the Fund and supervises the daily business affairs
of the Fund. Subject to the supervision and direction of the Trustees, the
Adviser also evaluates and monitors the performance of the subadviser. The
Adviser is also authorized to select and place portfolio investments on behalf
of the Fund, however the Adviser does not intend to do so at this time.
The Adviser and the Trust have received from the Securities and Exchange
Commission an exemptive order for the multi-manager structure which allows the
Adviser to hire, replace or terminate subadvisers without the approval of
shareholders; the order also allows the Adviser to revise a subadvisory
agreement without shareholder approval. If a new subadviser is hired, the change
will be communicated to shareholders within 90 days of such changes, and all
changes will be approved by the Trust's Board of Trustees, including a majority
of the Trustees who are not interested persons of the Trust or the Adviser. The
order is intended to facilitate the efficient operation of the Fund and afford
the Trust increased management flexibility.
The Adviser provides to the Fund investment management evaluation services
principally by performing initial due diligence on prospective Subadvisers for
the Fund and thereafter monitoring the performance of the Subadviser through
quantitative and qualitative analysis as well as periodic in-person, telephonic
and written consultations with the Subadviser. The Adviser has responsibility
for communicating performance expectations and evaluations to the Subadviser and
ultimately recommending to the Trust's Board of Trustees whether the
Subadviser's contract should be renewed, modified or terminated; however, the
Adviser does not expect to recommend frequent changes of subadvisers. The
Adviser will regularly provide written reports to the Board of Trustees
regarding the results of its evaluation and monitoring functions. Although the
Adviser will monitor the performance of the Subadviser, there is no certainty
that the Subadviser or the Fund will obtain favorable results at any given time.
The Adviser, 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
the outstanding Class B Common Stock) 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 the Adviser a fee at
the annual rate of .13% of the Fund's average daily net assets.
7
<PAGE> 22
The Adviser may from time to time waive some or all of its investment advisory
fee or other fees. The waiver of such fees will cause the total return and yield
of the Fund to be higher than they would otherwise be in the absence of such a
waiver.
THE SUBADVISER - Subject to the supervision of the Adviser and the Board of
Trustees, the Subadviser manages the Fund's assets in accordance with the Fund's
investment objective and policies. The Subadviser shall make investment
decisions for the Fund, and in connection with such investment decisions shall
place purchase and sell orders for securities. For the investment management
services it provides to the Fund, the Subadviser receives an annual fee from the
Adviser in the following amounts:
.07% on assets up to $250 million
.06% on assets of $250 million up to $500 million
.05% on assets of $500 million up to $1 billion
.04% on assets of $1 billion and more.
Below is a brief description of the Subadviser.
THE DREYFUS CORPORATION ("DREYFUS"), 200 Park Avenue, New York, N.Y. 10166,
which was formed in 1947 and is registered under the Investment Advisers Act of
1940, serves as subadviser to the Fund pursuant to a Subadvisory Agreement dated
July 23, 1998. Dreyfus is a wholly-owned subsidiary of Mellon Bank, N.A., which
is a wholly-owned subsidiary of Mellon Bank Corporation.
As of March 31, 1998, Dreyfus managed or administered approximately $100 billion
in assets for approximately 1.7 million investor accounts nationwide.
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 0.05% on assets up to $1 billion and
0.04% on assets of $1 billion and more.
ADMINISTRATIVE SERVICES PLAN
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 and Class Y 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 effective _________, 1998, pursuant to which Nationwide
Financial Services Inc. has agreed to provide certain administrative support
services in connection with Class R and Class Y shares held beneficially by
8
<PAGE> 23
its customers. In consideration for providing administrative support services,
Nationwide Life Insurance Company 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
and Class Y shares held by customers of Nationwide Life Insurance Company or
such other entity.
The Distributor, Nationwide Advisory Services, Inc. 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.
NISI is a wholly owned subsidiary of the Adviser.
INVESTMENT IN FUND SHARES
An insurance company may purchase shares of the Fund using purchase payments
received on Contracts issued by Accounts. These Accounts are funded by shares of
the Fund. Funds of Funds may also purchase shares of the Fund for their
portfolios. There is no sales charge, and all shares are sold at net asset
value. Contract-directed purchases, exchanges and redemptions are handled in
accordance with terms of the Contracts, subject to Fund restrictions contained
herein. Since Contracts may have different provisions with respect to the timing
and method of purchases, exchanges and redemptions, Contract owners should
contract their designated financial intermediary directly for details concerning
contract transactions.
Class Y shares are currently sold only to separate accounts of Nationwide Life
Insurance Company to fund the benefits under the Contracts. 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. Initial and subsequent
purchase payments allocated to the Fund are subject to the limits applicable to
the Contracts.
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 from a Fund of Funds or from Nationwide Life Insurance Company or
Nationwide Life and Annuity Company by the Trust's transfer agent, NISI. The net
asset value per share for the Fund is determined once daily, as of the close of
regular trading on the New York Stock Exchange (generally 4:00 P.M. Eastern
Time), on each business day the New York Stock Exchange is open for regular
trading, on such other days as the Board determines and on any other day during
which there is a sufficient degree of trading in the Fund's portfolio securities
that the net asset value of the Fund is materially affected by changes in the
value of portfolio securities. The Trust will not compute net asset value on
customary national business holidays, including the following: Christmas, New
Year's Day, Martin Luther King Jr.'s Birthday, President's Day, Good Friday,
Memorial Day, Independence Day, Labor Day, and Thanksgiving Day. The 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.
In determining net asset value, portfolio securities listed on national
exchanges are valued at the last sales price on the principal exchange. If the
securities are traded only in the over-the-counter market, they are
9
<PAGE> 24
valued at the last quoted bid price. Other portfolio securities are valued at
the quoted prices obtained from an independent pricing organization which
employs a combination of methods, including among others, the obtaining and
comparison of market valuations from dealers who make markets and deal in such
securities and the comparison of valuations with those of other comparable
securities in a matrix of such securities. The pricing service activities and
results are reviewed by an officer of the Trust. Securities for which market
quotations are not readily available, if any, are valued at fair value in
accordance with procedures adopted by the Board of Trustees. Expenses and fees
are accrued daily.
The Trust may suspend the right of redemption only under the following unusual
circumstances:
o when the New York Stock Exchange is closed (other than weekends and
holidays) or trading is restricted;
o when an emergency exists, making disposal of portfolio securities or
the valuation of net assets not reasonably practicable; or
o during any period when the Securities and Exchange Commission has by
order permitted a suspension of redemption for the protection of
shareholder.
NET INCOME AND DISTRIBUTIONS
Substantially all of the net investment income, if any, of the Fund will be
declared and paid as dividends quarterly. Net realized capital gains, of the
Fund, if any, will be distributed at least annually.
ADDITIONAL INFORMATION
DESCRIPTION OF SHARES - The Declaration of Trust permits the Trustees to issue
an unlimited number of full and fractional shares of beneficial interest of the
Fund and to divide or combine such shares into a greater or lesser number of
shares without thereby changing the proportionate beneficial interests in the
Trust. Shares of the Fund are offered in three separate classes, and you have an
interest only in the shares of the class which you own. Shares of a particular
class are equal in all respects to the other shares of that class. The Trust
reserves the right to create and issue shares of a number of different
portfolios or series. In that case, the shares of each fund would participate
equally in the earnings, dividends, and assets of the particular portfolio or
series, but shares of all funds would vote together in the election of Trustees.
In the event of liquidation of a fund , shares of the same class will share in
the distribution of the net assets of such fund with all other shares of that
class based on the relative net asset value of each class. All shares are
without par value, and when issued and paid for, are fully paid and
nonassessable by the Trust.
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. In 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. To the extent that such a meeting is
not required, the Trust does not intend to have an annual or special meeting of
shareholders.
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<PAGE> 25
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
The Fund may use historical performance in advertisements, sales literature, and
the prospectus. Such figures will include quotations of average annual total
return for the most recent one, five and ten year periods, or the life of the
Fund if less. Average annual total return represents the rate required each year
for an initial investment to equal the redeemable value at the end of the
specific period. Average annual total return reflects reinvestment of all
distributions.
TAX STATUS
The Trust's policy is to cause each fund to qualify as a regulated investment
company and to meet the requirements of Subchapter M of the Internal Revenue
Code (the "Code"). The Fund intends to distribute all, or substantially all, of
its taxable net investment income and capital gains to shareholders; therefore
it is expected that the Fund will not be required to pay any federal income
taxes on its investment income.
Because each portfolio or series of the Trust is treated as a separate entity
for purposes of the regulated investment company provisions of the Code, the
assets, income and distributions of the Fund are considered separately for
purposes of determining whether or not the Fund qualifies as a regulated
investment company. The Fund intends to comply with the diversification
requirements currently imposed by the Internal Revenue Service on separate
accounts of insurance companies as a condition of maintaining the tax-deferred
status of the Contracts. See the Statement of Additional Information for more
specific information.
The tax treatment of payments made by an Account to a Contractholder is
described in the separate account prospectus.
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<PAGE> 26
CONTENTS
Sale of Fund Shares 2
Summary of Expenses 2
Financial Highlights 3
Investment Objective and Policies 3
Management of the Fund 4
Investment Techniques, Considerations and Risk Factors 4
Management of the Trust 7
Investment in Fund Shares 9
Share Redemption 9
Net Income and Distributions 10
Additional Information 10
Performance Advertising for the Fund 11
Tax Status 11
INVESTMENT ADVISER AND ADMINISTRATOR
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 Peat Marwick 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
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<PAGE> 27
PART B:
STATEMENT OF ADDITIONAL INFORMATION ____________, 1998
NATIONWIDE INVESTING FOUNDATION III
CLASS R AND Y SHARES
NATIONWIDE S&P 500 INDEX FUND
This Statement of Additional Information is not a prospectus. It
contains information in addition to and more detailed than that set forth in the
prospectuses for the Class R and Class Y shares of the Nationwide S&P 500 Index
Fund and should be read in conjunction with those prospectuses dated
_______________,1998. The prospectuses for all three classes of the S&P 500
Index Fund 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 8
Trustees and Officers of the Trust 10
Investment Advisory and Other Services 12
Brokerage Allocation 18
Calculating Yield and Total Return 18
Nonstandard Returns 18
Additional Information 19
Additional General Tax Information 19
Financial Statement 22
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 Fund's investment
objectives and policies discussed in the Prospectus. The investment objective is
fundamental and may not be changed without shareholder approval. The investment
policy 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.
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 13 months or less issued or
guaranteed as to interest and principal by the U.S. Government, its
agencies, or instrumentalities, or any federally chartered corporation;
-- repurchase agreements;
-- certificates of deposit, time deposits and bankers' acceptances issued
by domestic banks (including their branches located outside the United
States
<PAGE> 28
(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.
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.
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.
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<PAGE> 29
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.
DERIVATIVE INSTRUMENTS. As discussed in the Prospectuses, NAS or a Subadviser
may use a variety of derivative instruments, including options, futures
contracts (sometimes referred to as "futures"), options on futures contracts,
stock index options and forward currency contracts, but primarily stock index
futures, to hedge the Fund's portfolio or for risk management. Derivations are
financial instruments whose value and performance are based on the value and
performance of another security, financial instrument or index.
The use of these instruments is subject to applicable regulations of
the SEC, the several options and futures exchanges upon which they may be
traded, and the Commodity Futures Trading Commission ("CFTC").
Special Risks Of Derivative Instruments. The use of derivative
instruments involves special considerations and risks as described below. Risks
pertaining to particular instruments are described in the sections that follow.
(1) Successful use of most of these instruments depends upon NAS's
ability to predict movements of the overall securities and currency markets,
which requires different skills than predicting changes in the prices of
individual securities. There can be no assurance that any particular strategy
adopted will succeed.
(2) There might be imperfect correlation, or even no correlation,
between price movements of an instrument and price movements of investments
being hedged. For example, if the value of an instrument used in a short hedge
(such as writing a call option, buying a put option, or selling a futures
contract) increased by less than the decline in value of the hedged investment,
the hedge would not be fully successful. Such a lack of correlation might occur
due to factors unrelated to the value of the investments being hedged, such as
speculative or other pressures on the markets in which these instruments are
traded. The effectiveness of hedges using instruments on indices will depend on
the degree of correlation between price movements in the index and price
movements in the investments being hedged, as well as how similar the index is
to the portion of the Fund's assets being hedged in terms of securities
composition.
(3) Hedging strategies, if successful, can reduce the risk of loss by
wholly or partially offsetting the negative effect of unfavorable price
movements in the investments being hedged. However, hedging strategies can also
reduce opportunity for gain by offsetting the positive effect of favorable price
movements in the hedged investments. For example, if the Fund entered into a
short hedge because NAS or the Subadviser projected a decline in the price of a
security in the Fund's portfolio, and the price of that security increased
instead, the gain from that increase might be wholly or partially offset by a
decline in the price of the instrument. Moreover, if the price of the instrument
declined by more than the increase in the price of the security, the Fund could
suffer a loss.
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<PAGE> 30
(4) As described below, the Fund might be required to maintain assets
as "cover," maintain segregated accounts, or make margin payments when it takes
positions in these instruments involving obligations to third parties (i.e.,
instruments other than purchased options). If the Fund were unable to close out
its positions in such instruments, it might be required to continue to maintain
such assets or accounts or make such payments until the position expired or
matured. The requirements might impair the Fund's ability to sell a portfolio
security or make an investment at a time when it would otherwise be favorable to
do so, or require that the Fund sell a portfolio security at a disadvantageous
time. The Fund's ability to close out a position in an instrument prior to
expiration or maturity depends on the existence of a liquid secondary market or,
in the absence of such a market, the ability and willingness of the other party
to the transaction ("counter party") to enter into a transaction closing out the
position. Therefore, there is no assurance that any hedging position can be
closed out at a time and price that is favorable to the Fund.
For a discussion of the Federal income tax treatment of the Fund's
derivative instruments, see "Additional General Tax Information".
Options. The Fund may purchase or write put and call options on
securities and indices, and may purchase options on foreign currencies, and
enter into closing transactions with respect to such options to terminate an
existing position. A call option gives the purchaser the right to buy, and the
writer the obligation to sell, the underlying security at the agreed upon
exercise (or "strike") price during the option period. A put option gives the
purchaser the right to sell, and the writer the obligation to buy, the
underlying security at the strike price during the option period. Purchasers of
options pay an amount, known as a premium, to the option writer in exchange for
the right under the option contract. Option contracts may be written with terms
which would permit the holder of the option to purchase or sell the underlying
security only upon the expiration date of the option. The initial purchase or
sale of an option contract is an "opening transaction". In order to close out an
option position, the Fund may enter into a "closing transaction", the sale or
purchase, as the case may be, of an option contract on the same security with
the same exercise price and expiration date as the option contract originally
opened. The purchase of call options serves as a long hedge, and the purchase of
put options serves as a short hedge. Writing put or call options can enable the
Fund to enhance income by reason of the premiums paid by the purchaser of such
options. Writing call options serves as a limited short hedge because declines
in the value of the hedged investment would be offset to the extent of the
premium received for writing the option. However, if the security appreciates to
a price higher than the exercise price of the call option, it can be expected
that the option will be exercised, and the Fund will be obligated to sell the
security at less than its market value or will be obligated to purchase the
security at a price greater than that at which the security must be sold under
the option. All or a portion of any assets used as cover for OTC options written
by the Fund would be considered illiquid to the extent described under
"Restricted and Illiquid Securities" above. Writing put options serves as a
limited long hedge because increases in the value of the hedged investment would
be offset to the extent of the premium received for writing the option. However,
if the security depreciates to a price lower than the exercise price of the put
option, it can be expected that the put option will be exercised, and the Fund
will be obligated to purchase the security at more than its market value.
The value of an option position will reflect, among other things, the
historical price volatility of the underlying investment, the current market
value of the underlying investment, the time remaining until expiration of the
option, the relationship of the exercise price to the market price of the
underlying investment, and general market conditions. Options that expire
unexercised have no value.
4
<PAGE> 31
Options used by the Fund may include European-style options, which can only be
exercised at expiration. This is in contrast to American-style options which can
be exercised at any time prior to the expiration date of the option.
The Fund may effectively terminate its right or obligation under an
option by entering into a closing transaction. For example, the Fund may
terminate its obligation under a call or put option that it had written by
purchasing an identical call or put option; this is known as a closing purchase
transaction. Conversely, the Fund may terminate a position in a put or call
option it had purchased by writing an identical put or call option; this is
known as a closing sale transaction. Closing transactions permit the Fund to
realize the profit or limit the loss on an option position prior to its exercise
or expiration.
The Fund may purchase or write both OTC options and options traded on
foreign and U.S. exchanges. Exchange-traded options are issued by a clearing
organization affiliated with the exchange on which the option is listed that, in
effect, guarantees completion of every exchange-traded option transaction. OTC
options are contracts between the Fund and the counterparty (usually a
securities dealer or a bank) with no clearing organization guarantee. Thus, when
the Fund purchases or writes an OTC option, it relies on the counter party to
make or take delivery of the underlying investment upon exercise of the option.
Failure by the counter party to do so would result in the loss of any premium
paid by the fund as well as the loss of any expected benefit of the transaction.
The Fund's ability to establish and close out positions in
exchange-listed options depends on the existence of a liquid market. The Fund
intends to purchase or write only those exchange-traded options for which there
appears to be a liquid secondary market. However, there can be no assurance that
such a market will exist at any particular time. Closing transactions can be
made for OTC options only by negotiating directly with the counterparty, or by a
transaction in the secondary market if any such market exists. Although the Fund
will enter into OTC options only with counterparties that are expected to be
capable of entering into closing transactions with the Fund, there is no
assurance that the Fund will in fact be able to close out an OTC option at a
favorable price prior to expiration. In the event of insolvency of the counter
party, the Fund might be unable to close out an OTC option position at any time
prior to its expiration.
If the Fund is unable to effect a closing transaction for an option it
had purchased, it would have to exercise the option to realize any profit. The
inability to enter into a closing purchase transaction for a covered call option
written by the Fund could cause material losses because the Fund would be unable
to sell the investment used as a cover for the written option until the option
expires or is exercised.
Transactions using OTC options expose the Fund to certain risks. To the
extent required by SEC guidelines, the Fund will not enter into any such
transactions unless it owns either (1) an offsetting ("covered") position in
securities, other options, or futures or (2) cash and liquid obligations with a
value sufficient at all times to cover its potential obligations to the extent
not covered as provided in (1) above. The Fund will also set aside cash and/or
appropriate liquid assets in a segregated custodial account if required to do so
by the SEC and CFTC regulations. Assets used as cover or held in a segregated
account cannot be sold while the position in the corresponding option or futures
contract is open, unless they are replaced with similar assets. As a result, the
commitment of a large portion of the Fund's assets to segregated accounts as a
cover could impede portfolio management or the Fund's ability to meet redemption
requests or other current obligations.
5
<PAGE> 32
The Fund may engage in options transactions on indices in much the same
manner as the options on securities discussed above, except that index options
may serve as a hedge against overall fluctuations in the securities markets in
general. Index options (or options on securities indices) are similar in many
respects to options on securities except that an index option gives the holder
the right to receive, upon exercise, cash instead of securities, if the closing
level of the securities index upon which the option is based is greater than, in
the case of a call , or less than, in the case of a put, the exercise price of
the option. Price movements in securities in which the Fund owns or intends to
purchase probably will not correlate perfectly with movements in the level of an
index and, therefore, the Fund bears the risk of a loss on an index option that
is not completely offset by movements in the price of such securities. Because
index options are settled in cash, a call writer cannot determine the amount of
its settlement obligations in advance and, unlike call writing on specific
securities, cannot provide in advance for, or cover, its potential settlement
obligations acquiring and holding the underlying securities. The Fund will be
required to segregate assets and/or provide an initial margin to cover index
options that would require it to pay cash upon exercise.
The writing and purchasing of options is a highly specialized activity
that involves investment techniques and risks different from those associated
with ordinary portfolio securities transactions. Imperfect correlation between
the options and securities markets may detract from the effectiveness of
attempted hedging.
Futures Contracts. The Fund may enter into futures contracts, including
interest rate, index, and currency futures and purchase and write (sell) related
options. The purchase of futures or call options thereon can serve as a long
hedge, and the sale of futures or the purchase of put options thereon can serve
as a short hedge. Writing covered call options on futures contracts can serve as
a limited short hedge, and writing covered put options on futures contracts can
serve as a limited long hedge, using a strategy similar to that used for writing
covered options in securities. The Fund's hedging may include purchases of
futures as an offset against the effect of expected increases in securities
prices or currency exchange rates and sales of futures as an offset against the
effect of expected declines in securities prices or currency exchange rates. The
Fund may write put options on futures contracts while at the same time
purchasing call options on the same futures contracts in order to create
synthetically a long futures contract position. Such options would have the same
strike prices and expiration dates. The Fund will engage in this strategy only
when NAS or a Subadviser believes it is more advantageous to the Fund than is
purchasing the futures contract.
To the extent required by regulatory authorities, the Fund will only
enter into futures contracts that are traded on U.S. or foreign exchanges or
boards of trade approved by the CFTC and are standardized as to maturity date
and underlying financial instrument. These transactions may be entered into for
"bona fide hedging" purposes as defined in CFTC regulations and other
permissible purposes including increasing return and hedging against changes in
the value of portfolio securities due to anticipated changes in interest rates,
currency values and/or market conditions. The ability of the Fund to trade in
futures contracts may be limited by the requirements of the Code applicable to a
regulated investment company.
The Fund will not enter into futures contracts and related options for
other than "bona fide hedging" purposes for which the aggregate initial margin
and premiums required to establish positions exceed 5% of the Fund's net asset
value after taking into account unrealized profits and unrealized losses on any
such contracts it has entered into. There is no overall limit on the percentage
of the
6
<PAGE> 33
Fund's assets that may be at risk with respect to futures activities. Although
techniques other than sales and purchases of futures contracts could be used to
reduce the Fund's exposure to market, currency, or interest rate fluctuations,
the Fund may be able to hedge its exposure more effectively and perhaps at a
lower cost through using futures contracts.
A futures contract provides for the future sale by one party and
purchase by another party of a specified amount of a specific financial
instrument (e.g., debt security) or currency for a specified price at a
designated date, time, and place. An index futures contract is an agreement
pursuant to which the parties agree to take or make delivery of an amount of
cash equal to a specified multiplier times the difference between the value of
the index at the close of the last trading day of the contract and the price at
which the index futures contract was originally written. Transactions costs are
incurred when a futures contract is bought or sold and margin deposits must be
maintained. A futures contract may be satisfied by delivery or purchase, as the
case may be, of the instrument, the currency, or by payment of the change in the
cash value of the index. More commonly, futures contracts are closed out prior
to delivery by entering into an offsetting transaction in a matching futures
contract. Although the value of an index might be a function of the value of
certain specified securities, no physical delivery of those securities is made.
If the offsetting purchase price is less than the original sale price, the Fund
realizes a gain; if it is more, the Fund realizes a loss. Conversely, if the
offsetting sale price is more than the original purchase price, the Fund
realizes a gain; if it is less, the Fund realizes a loss. The transaction costs
must also be included in these calculations. There can be no assurance, however,
that the Fund will be able to enter into an offsetting transaction with respect
to a particular futures contract at a particular time. If the Fund is not able
to enter into an offsetting transaction, the Fund will continue to be required
to maintain the margin deposits on the futures contract.
No price is paid by the Fund upon entering into a futures contract.
Instead, at the inception of a futures contract, the Fund is required to deposit
in a segregated account with its custodian, in the name of the futures broker
through whom the transaction was effected, "initial margin" consisting of cash,
U.S. Government securities or other liquid obligations, in an amount generally
equal to 10% or less of the contract value. Margin must also be deposited when
writing a call or put option on a futures contract, in accordance with
applicable exchange rules. Unlike margin in securities transactions, initial
margin on futures contracts does not represent a borrowing, but rather is in the
nature of a performance bond or good-faith deposit that is returned to the Fund
at the termination of the transaction if all contractual obligations have been
satisfied. Under certain circumstances, such as periods of high volatility, the
Fund may be required by an exchange to increase the level of its initial margin
payment, and initial margin requirements might be increased generally in the
future by regulatory action.
Subsequent "variation margin" payments are made to and from the futures
broker daily as the value of the futures position varies, a process known as
"marking to market." Variation margin does not involve borrowing, but rather
represents a daily settlement of the Fund's obligations to or from a futures
broker. When the Fund purchases an option on a future, the premium paid plus
transaction costs is all that is at risk. In contrast, when the Fund purchases
or sells a futures contract or writes a call or put option thereon, it is
subject to daily variation margin calls that could be substantial in the event
of adverse price movements. If the Fund has insufficient cash to meet daily
variation margin requirements, it might need to sell securities at a time when
such sales are disadvantageous. Purchasers and sellers of futures positions and
options on futures can enter into offsetting closing transactions by selling or
purchasing, respectively, an instrument identical to the instrument held or
written. Positions in futures and options on futures may be
7
<PAGE> 34
closed only on an exchange or board of trade on which they were entered into (or
through a linked exchange). Although the Fund intends to enter into futures
transactions only on exchanges or boards of trade where there appears to be an
active market, there can be no assurance that such a market will exist for a
particular contract at a particular time.
Under certain circumstances, futures exchanges may establish daily
limits on the amount that the price of a future or option on a futures contract
can vary from the previous day's settlement price; once that limit is reached,
no trades may be made that day at a price beyond the limit. Daily price limits
do not limit potential losses because prices could move to the daily limit for
several consecutive days with little or no trading, thereby preventing
liquidation of unfavorable positions.
If the Fund were unable to liquidate a futures or option on a futures
contract position due to the absence of a liquid secondary market or the
imposition of price limits, it could incur substantial losses, because it would
continue to be subject to market risk with respect to the position. In addition,
except in the case of purchased options, the Fund would continue to be required
to make daily variation margin payments and might be required to maintain the
position being hedged by the future or option or to maintain cash or securities
in a segregated account.
Certain characteristics of the futures market might increase the risk
that movements in the prices of futures contracts or options on futures
contracts might not correlate perfectly with movements in the prices of the
investments being hedged. For example, all participants in the futures and
options on futures contracts markets are subject to daily variation margin calls
and might be compelled to liquidate futures or options on futures contracts
positions whose prices are moving unfavorably to avoid being subject to further
calls. These liquidations could increase price volatility of the instruments and
distort the normal price relationship between the futures or options and the
investments being hedged. Also, because initial margin deposit requirements in
the futures markets are less onerous than margin requirements in the securities
markets, there might be increased participation by speculators in the future
markets. This participation also might cause temporary price distortions. In
addition, activities of large traders in both the futures and securities markets
involving arbitrage, "program trading" and other investment strategies might
result in temporary price distortions.
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.
THE FUND:
o 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.
o 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.
o 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
8
<PAGE> 35
estate (including interests therein) or instruments secured by real
estate (including interests therein).
o May not purchase or sell commodities or commodities contracts, except
to the extent disclosed in the current Prospectus of the Fund.
o 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.
o 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. 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.
In addition, the Fund may not purchase securities of one issuer, other than
obligations issued or guaranteed by the U.S. Government, its agencies or
instrumentalities, if at the end of each fiscal quarter, (a) more than 5% of the
Fund's total assets (taken at current value) would be invested in such issuer
(except that up to 50% of the Fund's total assets may be invested without regard
to such 5% limitation), and (b) more than 25% of its total assets (taken at
current value) would be invested in securities of a single issuer. 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 following are the non-fundamental operating policies of the Funds which may
be changed by the Board of Trustees of the Trust without shareholder approval:
The Fund may not:
o 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.
o 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.
o Purchase or otherwise acquire any security if, as a result, more than
15% (10% with respect to the Money Market Fund) of its net assets would
be invested in securities that are illiquid.
o 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.
9
<PAGE> 36
o 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 and their affiliations are:
JOHN C. BRYANT, Trustee*, Age 62
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 57
North Walnut and West College Avenue, Westerville, Ohio
Dr. DeVore is President of Otterbein College.
SUE A. DOODY, Trustee, Age 63
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 70
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 66
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 64
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 42
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 65
10
<PAGE> 37
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 49
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
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
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
Three Nationwide Plaza, Columbus, Ohio
Ms. Davin is Counsel of Druen, Dietrich, Reynolds & Koogler, the Trust's legal
counsel.
+ 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.
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 ending 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-- 15,500
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
</TABLE>
11
<PAGE> 38
<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>
Harold W. Weihl, Trustee 10,000 --0-- --0-- 10,000
David C. Wetmore, Trustee 10,000 --0-- --0-- 15,500
</TABLE>
**The Fund Complex includes Trusts comprised of thirty four investment company
portfolios.
INVESTMENT ADVISORY AND OTHER SERVICES
Under the terms of the Investment Advisory Agreement dated May 9, 1998, NAS
oversees the investment of the assets for the S&P 500 Index Fund. Subject to the
supervision and direction of the Trustees, the Adviser also evaluates and
monitors the performance of the subadviser. The Adviser is also authorized to
select and place portfolio investments on behalf of the Fund, however the
Adviser does not intend to do so at this time.
The Adviser and the Trust have received from the Securities and Exchange
Commission an exemptive order for the multi-manager structure which allows the
Adviser to hire, replace or terminate subadvisers without the approval of
shareholders; the order also allows the Adviser to revise a subadvisory
agreement without shareholder approval. If a new subadviser is hired, the change
will be communicated to shareholders within 90 days of such changes, and all
changes will be approved by the Trust's Board of Trustees, including a majority
of the Trustees who are not interested persons of the Trust or the Adviser. The
order is intended to facilitate the efficient operation of the Fund and afford
the Trust increased management flexibility.
The Adviser provides to the Fund investment management evaluation services
principally by performing initial due diligence on prospective Subadvisers for
the Fund and thereafter monitoring the performance of the Subadviser through
quantitative and qualitative analysis as well as periodic in-person, telephonic
and written consultations with the Subadviser. The Adviser has responsibility
for communicating performance expectations and evaluations to the Subadviser and
ultimately recommending to the Trust's Board of Trustees whether the
Subadviser's contract should be renewed, modified or terminated; however, the
Adviser does not expect to recommend frequent changes of subadvisers. The
Adviser will regularly provide written reports to the Trust's Board of Trustees
regarding the results of its evaluation and monitoring functions. Although the
Adviser will monitor the performance of the Subadvisers, there is no certainty
that the Subadviser or the Fund will obtain favorable results at any given time.
The S&P 500 Index Fund pays the Adviser a fee at the annual rate of .13% of the
Fund's average daily net assets for investment advisory services.
The Adviser may from time to time waive some or all of its investment advisory
fee or other fees. The waiver of such fees will cause the total return and yield
of the Fund to be higher than they would otherwise be in the absence of such a
waiver.
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
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
12
<PAGE> 39
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 the 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.
For services provided under the Investment Management Agreement, NAS receives an
annual fee paid monthly based on average daily net assets of each fund in the
Nationwide Family of Funds according to the following schedule:
<TABLE>
<CAPTION>
FUND ASSETS FEE
<S> <C> <C>
Nationwide Mid Cap Growth Fund, $0 up to $250 million 0.60%
Nationwide Growth Fund, and $250 million up to $1 billion 0.575%
Nationwide Fund $1 billion up to $2 billion 0.55%
$2 billion up to $5 billion 0.525%
$5 Billion and more 0.50%
Nationwide Bond Fund, $0 up to $250 million 0.50%
Nationwide Tax-Free Income Fund, $250 million up to $1 billion 0.475%
Nationwide Long-Term U.S. Government $1 billion up to $2 billion 0.45%
Bond Fund, and Nationwide $2 billion up to $5 billion 0.425%
Intermediate U.S. Government Bond Fund $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%
</TABLE>
13
<PAGE> 40
<TABLE>
<CAPTION>
FUND ASSETS FEE
<S> <C> <C>
Large Cap Value up to $100 million 0.75%
$100 million or more 0.70%
Large Cap Growth up to $150 million 0.80%
$150 million or more 0.70%
Balanced up to $100 million 0.75%
$100 million or more 0.70%
Small Cap up to $100 million 0.95%
$100 million or more 0.80%
International up to $200 million 0.85%
$200 million or more 0.80%
</TABLE>
During the fiscal years ended October 31, 1997, 1996 and 1995, NAS received the
following fees for investment advisory services*:
<TABLE>
<CAPTION>
FISCAL YEARS ENDED OCTOBER 31,
NATIONWIDE FUND 1997 1996 1995
<S> <C> <C> <C>
Mid Cap Growth $63,883 $54,053 $46,886
Growth 3,750,599 3,212,196 2,542,155
Nationwide Fund 5,938,011 4,425,921 3,658,939
Bond 629,068 663,545 635,757
Tax-Free 1,688,233 1,704,966 1,629,584
Long-Term U.S. Government 343,259 414,415 447,894
Intermediate U.S. Government 256,016 255,149 248,765
Money Market** 3,502,716 2,952,726 2,465,549
</TABLE>
* The fees paid to NAS during the fiscal years ended October 31, 1997, 1996, and
1995 were paid by funds that were acquired by NIF III in a reorganization that
occurred on May 9, 1998. As part of the reorganization, NIF III acquired all of
the assets and assumed all of the liabilities of each of the funds in Nationwide
Investing Foundation, Nationwide Investing Foundation II, and Financial Horizons
Investment Trust.
** Net of waivers of $389,150, $328,076 and $273,950 for 1997, 1996 and 1995,
respectively.
The Subadviser - Subject to the supervision of the Adviser and the Trust's Board
of Trustees, The Dreyfus Corporation manages the S&P 500 Index Fund's assets in
accordance with such Fund's investment objective and policies. The Subadviser
shall make investment decisions for the S&P 500 Index Fund, and in connection
with such investment decisions shall place purchase and sell orders for
securities. For the investment management services it provides to the Fund, the
Subadviser receives an annual fee from the Adviser in the following amounts:
.07% on the first $250 million in assets
.06% on the next $250 million in assets
.05% on the next $500 million in assets
.04% over $1 billion in assets.
14
<PAGE> 41
Below is a brief description of the Subadviser.
The Dreyfus Corporation ("Dreyfus"), 200 Park Avenue, New York, N.Y. 10166,
which was formed in 1947 and is registered under the Investment Advisers Act of
1940, serves as subadviser to the Fund pursuant to a Subadvisory Agreement dated
July 23, 1998. Dreyfus is a wholly-owned subsidiary of Mellon Bank, N.A., which
is a wholly-owned subsidiary of Mellon Bank Corporation.
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 each 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 that 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, but may retain all or a portion of the
sales charge imposed upon sales of Shares of each of the Funds.
DISTRIBUTION PLAN
The Fund has adopted a Distribution Plan (the "Plan") under Rule 12b-1 of the
1940 Act 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
not exceeding .15% of the average daily net assets of Class R shares of the
Nationwide S&P 500 Index Fund to NAS. 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.
As required by Rule 12b-1, the Plan was approved by the initial Shareholder of
the Fund and 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 on November 7, 1997 and amended
and approved by the Board of Trustees on May 8, 1998 and _________ 1998. The
Plan may be terminated by vote of a majority of the Independent Trustees, or by
vote of majority of the outstanding shares of the Fund. Any change in the Plan
that would materially increase the distribution cost to the Fund 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 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
15
<PAGE> 42
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
Shareholders.
The Board of Trustees of the Trust believes the Plan is in the best
interest 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 Shares including, but not limited
to, those discussed above.
The Fund has entered into a licensing agreement which authorizes the Fund to use
the trademarks of the McGraw-Hill Companies, Inc. (1)
- ----------
(1)Standard & Poor's 500 and S&P 500(R) are trademarks of The McGraw-Hill
Companies, Inc. The Fund is not sponsored, endorsed, sold or promoted by
Standard & Poor's, a division of The McGraw-Hill Companies, Inc.("S&P"). S&P
makes no representation or warranty, expressed or implied, to the shareholders
of the Fund or any member of the public regarding the advisability of investing
in securities generally or in the Fund particularly or the ability of the S&P
500 Index to track general stock market performance. S&P's only relationship to
the Fund or the Adviser is the licensing of certain trademarks and trade names
of S&P and of the S&P 500 index which is determined, composed and calculated by
S&P without regard to the Fund. S&P has no obligation to take the needs of the
Fund or its shareholders into consideration in determining, composing or
calculating the S&P 500 Index. S&P is not responsible for or has not
participated in the determination of the prices and amount of the Fund shares or
the timing of the issuance or sale of Fund shares or in the determination or
calculation of the equation by which Fund shares are redeemed. S&P has no
obligation or liability in connection with the administration, marketing or
trading of the Fund. S&P does not guarantee the accuracy makes no warranty,
expressed or implied as to the results to be obtained by the Fund, shareholders
of the Fund, or any other person or entity from the use of the S&P 500 Index or
any data included therein. Without limiting any of the foregoing, in no event
shall S&P 500 Index have any liability for any special, punitive, indirect, or
consequential damages, including lost profits even if notified of the
possibility of such damages.
- ----------
16
<PAGE> 43
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 0.05% on assets up to $1 billion 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 and Class Y 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 effective _________, 1998, pursuant to which Nationwide
Financial Services Inc. has agreed to provide certain administrative support
services in connection with Class R and Class Y shares held beneficially by its
customers. In consideration for providing administrative support services,
Nationwide Life Insurance Company 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
and Class Y shares held by customers of Nationwide Life Insurance Company or
such other entity.
Nationwide Investors Services, Inc. ("NISI") is the Transfer and Dividend
Disbursing Agent for all Nationwide Funds. NISI, a wholly-owned subsidiary of
NAS will receive fees for transfer agent services to the Fund in the amount of
.01% annually of average daily net assets of the S&P 500 Index 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 Fund and makes all receipts and disbursements
under a Custody Agreement. Fifth Third performs no managerial or policy making
functions for the Funds.
KPMG Peat Marwick LLP, Two Nationwide Plaza, Columbus, OH 43215, serves as the
independent auditors for the Trust.
17
<PAGE> 44
BROKERAGE ALLOCATION
ALLOCATION OF PORTFOLIO BROKERAGE-- 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 judgment of NAS or the Subadviser, the best 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 no charge
is made by the broker above the negotiated brokerage commissions. The Fund and
NAS believe that these 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'
expense.
In the case of securities traded in the over-the-counter market, the Fund will
normally deal with the market makers for such securities unless better prices
can be obtained through brokers.
CALCULATING YIELD AND TOTAL RETURN
The Fund may from time to time advertise historical performance, subject to Rule
482 under the Securities Act. An investor should keep in mind that any return or
yield quoted represents past performance and is not a guarantee of future
results. The investment return and principal value of investments will fluctuate
so that an investor's shares, when redeemed, may be worth more or less than
their original cost. All performance advertisements shall include average annual
(compound) total return quotations for the most recent one, five, and ten-year
periods (or life if the Fund has been in operation less than one of the
prescribed periods). Average annual (compound) total return represents
redeemable value at the end of the quoted period. It is calculated in a uniform
manner by dividing the ending redeemable value of a hypothetical initial payment
of $1,000 minus the maximum sales charge, for a specified period of time, by the
amount of the initial payment, assuming reinvestment of all dividends and
distributions. In calculating the standard total returns, the current maximum
applicable sales charge is deducted from the initial investment. The one, five,
and ten-year periods are calculated based on periods that end on the last day of
the calendar quarter preceding the date on which an advertisement is submitted
for publication.
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; in addition, sales charge
assumptions will vary. Sales charge percentages decrease as amounts invested
increase as outlined in the prospectus; therefore, returns increase as sales
charges decrease.
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.
18
<PAGE> 45
ADDITIONAL INFORMATION
DESCRIPTION OF SHARES - The Declaration of Trust permits the Trustees to issue
an unlimited number of full and fractional shares of beneficial interest of the
Fund and to divide or combine such shares into a greater or lesser number of
shares without thereby changing the proportionate beneficial interests in the
Trust. Each share of the Fund represents an equal proportionate interest in the
Fund with each other share. The Trust reserves the right to create and issue
shares of a number of different portfolios or series. In that case, the shares
of each fund would participate equally in the earnings, dividends, and assets of
the particular portfolio or series, but shares of all funds would vote together
in the election of Trustees. Upon liquidation of a portfolio or series, its
shareholders are entitled to share pro rata in the net assets of such portfolio
or series available for distribution to shareholders.
VOTING RIGHTS--Shareholders of each class of shares have one vote for each share
held and a proportionate fractional vote for any fractional share held. An
annual or special meeting of shareholders to conduct necessary business is not
required by 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.
In regard to termination, sale of assets, the 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 class
fund affected by the proposal.
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
therefor from shareholders holding not less than 10% of the 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.
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 that 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
mid-term or 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
19
<PAGE> 46
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 each 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 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, and would be
eligible for the dividends received deduction for corporations.
It is expected that each Fund will distribute annually to shareholders
all or substantially all of that 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 that 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. Each Fund will designate
the portion of any distributions which qualify for the 70% dividends received
deduction.
20
<PAGE> 47
The amount so designated may not exceed the amount received by that Fund for its
taxable year that qualifies for the dividends received deduction. Because all of
the Money Market Fund's and each of the Bond 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 such Funds will qualify for the 70%
dividends received deduction.
Foreign taxes may be imposed on the 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 stocks or 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.
Under Section 1256 of the Code, gain or loss realized by the Fund from
certain financial futures and options transactions will be treated as 60%
long-term capital gain or loss and 40% short-term capital gain or loss. Gain or
loss will arise upon exercise or lapse of such futures and options as well as
from closing transactions. In addition, any such futures and options remaining
unexercised at the end of the Fund's taxable year will be treated as sold for
their then fair market value, resulting in additional gain or loss to such Fund
characterized in the manner described above.
Offsetting positions held by the Fund involving certain futures
contracts or options transactions may be considered, for tax purposes, to
constitute "straddles." Straddles are defined to include "offsetting positions"
in actively traded personal property. The tax treatment of straddles is governed
by Sections 1092 and 1258 of the Code, which, in certain circumstances,
overrides or modifies the provisions of Section 1256. As such, all or a portion
of any short or long-term capital gain from certain straddle and/or conversion
transactions may be recharacterized as ordinary income.
If the Fund were treated as entering into straddles by reason of its
engaging in futures or options transactions, such straddles would be
characterized as "mixed straddles" if the futures or options comprising a part
of such straddles were governed by Section 1256 of the Code. The Fund may make
one or more elections with respect to mixed straddles. If no election is made,
to the extent the straddle rules apply to positions established by the Fund,
losses realized by such Fund will be deferred to the extent of unrealized gain
in any offsetting positions. Moreover, as a result of the straddle and
conversion transaction rules, short-term capital losses on straddle positions
may be recharacterized as long-term capital losses and long-term capital gains
may be recharacterized as short-term capital gain or ordinary income.
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, that 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
21
<PAGE> 48
(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 Funds or their
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 prospectuses and this Statement of
Additional Information is based on tax laws and regulations which are in effect
on the date of the prospectuses 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.
FINANCIAL STATEMENTS
Since Class R and Y shares of the Fund will not begin operations until after
November 1, 1998, there are no financial statements for these classes.
22
<PAGE> 49
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.
<PAGE> 50
The Prospectus, as well as the Statement of Additional Information, 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 Money
Market Fund, and the Prospectuses, as well as the Statements of Additional
Information for 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. 5 to the Registration Statement.
<PAGE> 51
PART C
<TABLE>
OTHER INFORMATION
ITEM 24. FINANCIAL STATEMENT AND EXHIBITS
(a) Financial Statements:
<S> <C> <C>
(1) Financial statements and schedules included in the Prospectus
for the Funds (except the S&P 500 Index Fund, 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 S&P 500 Index Fund, 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 Growth Fund of FHIT, Growth Fund of NIF,
Nationwide Fund of NIF, Bond Fund of NIF, Tax-Free Fund of NIF II, Government Bond
Fund of FHIT, U.S. Government Fund of NIF II, and Money Market Fund of NIF are
hereby incorporated by reference to Forms N-30D filed by Financial Horizons
Investment Trust, Nationwide Investing Foundation and Nationwide Investing
Foundation II on January 6, 1998.
(ii) Audited Financials for the Local Fund Shares of the S&P 500 Index Fund previously filed
with the Trust's Registration Statement on January 2, 1998, and is hereby
incorporated by reference.
(b) Exhibits
(1) Amended Declaration of Trust.
(2) Amended Bylaws previously filed with Trust's Registration
Statement on August 7, 1998, and 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) previously filed with Trust's
Registration Statement on August 7, 1998, and hereby
incorporated by reference.
(b) Proposed Investment Advisory Agreement for the Morley
Capital Accumulation previously filed with Trust's
Registration Statement on August 7, 1998, and hereby
incorporated by reference.
(c) Subadvisory Agreements.
(1) Subadvisory Agreement with the Dreyfus Corporation
for S & P 500 Index fund previously filed in the
Trust's original Registration Statement on November
18, 1997, and is hereby incorporated by reference.
(2) Proposed Subadvisory Agreement for 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
previously filed with Trust's Registration Statement
on August 7, 1998, and hereby incorporated by
reference.
(6) (a) Underwriting Agreement (except for the Morley Capital Accumulation Fund)
previously filed with Trust's Registration Statement on August 7, 1998,
and hereby incorporated by reference.
(b) Proposed Underwriting Agreement for the Morley Capital Accumulation
previously filed with Trust's Registration Statement on August 7, 1998,
and hereby incorporated by reference.
(c) Proposed Selected Dealer Agreement for the Morley Capital Accumulation Fund
previously filed with Trust's Registration Statement on August 7, 1998,
and hereby incorporated by reference.
(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 previously filed with Trust's Registration
Statement on August 7, 1998, and hereby incorporated by reference.
(b) Transfer and Dividend Disbursing Agent previously filed with Trust's
Registration Statement on August 7, 1998, and hereby incorporated by
reference.
(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.
</TABLE>
C-1
<PAGE> 52
<TABLE>
<S> <C> <C>
(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) Proposed Administrative Services Plan and Services Agreement.
(10) Opinion of Counsel.
(11) Not applicable.
(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) Proposed Amended Distribution Plan.
(b) Proposed Dealer Agreement for Morley Capital Accumulation Fund (see Exhibit 6(c))
previously filed with Trust's Registration Statement on August 7, 1998,
and hereby incorporated by reference.
(c) Proposed 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) Not Applicable.
(18) Proposed 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.
</TABLE>
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 July 31, 1998
Local
Series Class A Class B Class D No Class Fund Share
------ ------- ------- ------- -------- ----------
<S> <C> <C> <C> <C> <C>
Mid Cap Growth Fund 64 64 758 -- --
Growth Fund 437 374 48,554 -- --
Nationwide Fund 1,866 1,715 65,111 -- --
Bond Fund 57 33 7,589 -- --
Tax-Free Income Fund 23 27 7,893 -- --
Intermediate U.S. Government Bond 20 10 2,023 -- --
Long-Term U.S. Government Bond 13 16 1,791 -- --
Money Market Fund -- -- -- 26,634 --
S&P 500 Index Fund -- -- -- -- 3
Morley Capital Accumulation Fund -- -- -- -- --
Large Cap Value Fund -- -- -- -- --
Large Cap Growth Fund -- -- -- -- --
Balanced Fund -- -- -- -- --
Small Cap Fund -- -- -- -- --
International Fund -- -- -- -- --
</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, 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 DC Variable Account,
Nationwide DCVA II, Nationwide VA Separate Account-A,
Nationwide VA
C-2
<PAGE> 53
Separate Account-B, Nationwide VA Separate Account-C, NACo
Variable Account, 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
Nationwide Financial Institution Distributors Agency, Inc.
Nationwide Global Holdings, Inc.
NEA Valuebuilder Investor Services, Inc.
NEA Valuebuilder Investor Services of Arizona, Inc.
Public Employees Benefit Services Corporation
DIRECTOR AND PRESIDENT
Nationwide Advisory Services, Inc.
Nationwide Investor Services, Inc.
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.
Nationwide Indemnity Company
TRUSTEE AND CHAIRMAN
Nationwide Asset Allocation Trust
Nationwide Separate Account Trust
TRUSTEE AND PRESIDENT
Nationwide Insurance Golf Charities, Inc.
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.
</TABLE>
C-3
<PAGE> 54
<TABLE>
<S> <C>
NEA Valuebuilder Investor Services of Arizona, Inc.
Nationwide Financial Institution
Distributors Agency, Inc.
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
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.
TIG Countrywide Insurance Company
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.
</TABLE>
C-4
<PAGE> 55
<TABLE>
<S> <C>
Companies Agency of Kentucky, Inc.
Companies Agency of New York, Inc.
Companies Agency of Pennsylvania, Inc.
Companies Agency of Phoenix, Inc.
Countrywide Services Corporation
Key Health Plan, Inc.
Wausau (Bermuda) Ltd.
Wausau International Underwriters
VICE PRESIDENT AND ASSISTANT SECRETARY
National Casualty Company
SECRETARY
The Beak and Wire Company
CLERK
NEA Valuebuilder Services Insurance Agency, Inc.
ASSISTANT CLERK
Companies Agency of Massachusetts, Inc.
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
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
American Marine Underwriters, Inc.
</TABLE>
C-5
<PAGE> 56
<TABLE>
<S> <C>
Gates, McDonald and Company
Gates McDonald Health Plus, Inc.
Nationwide Investor Services, Inc.
Public Employees Benefit Services Corporation
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 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.
TIG Countrywide Insurance Company
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
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.
Robert A. Oakley EXECUTIVE VICE PRESIDENT-CHIEF FINANCIAL OFFICER
Nationwide Mutual Insurance Company
Nationwide Mutual Fire Insurance Company
</TABLE>
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<PAGE> 57
<TABLE>
<S> <C>
Nationwide General Insurance Company
Nationwide Property and Casualty Insurance Company
Nationwide Life Insurance Company
Nationwide Life and Annuity Insurance Company
American Marine Underwriters, Inc.
Companies Agency, Inc.
Companies Agency of Alabama, 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.
Public Employees Benefit Services Corporation
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
</TABLE>
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<PAGE> 58
<TABLE>
<S> <C>
DIRECTOR, CHAIRMAN OF THE BOARD
Neckura Holding Company
Neckura Insurance Company
Neckura Life Insurance Company
EXECUTIVE VICE PRESIDENT-CHIEF FINANCIAL OFFICER AND
DIRECTOR
California Cash Management 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
TIG Countrywide Insurance Company
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.
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.
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 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.
</TABLE>
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<PAGE> 59
<TABLE>
<S> <C>
NEA Valuebuilder Investor Services of Wyoming, Inc.
NEA Valuebuilder Services Insurance Agency, Inc.
PEBSCO of Massachusetts Insurance Agency, Inc.
Public Employees Benefit Services Corporation of Alabama
Public Employees Benefit Services Corporation of Arkansas
Public Employees Benefit Services Corporation of Montana
Public Employees Benefit
Services Corporation 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
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 Corporation
Nationwide Insurance Enterprise Foundation
Nationwide Insurance Enterprise Services, Ltd.
Nationwide Investment Services Corporation
Pension Associates of Wausau, Inc.
Public Employees Benefit Services
Corporation 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
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.
</TABLE>
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<PAGE> 60
<TABLE>
<S> <C>
DIRECTOR, EXECUTIVE VICE PRESIDENT-CHIEF INVESTMENT OFFICER
Nationwide Indemnity Company
Nationwide Advisory Services, Inc.
TIG Countrywide Insurance Company
TRUSTEE AND VICE CHAIRMAN
Nationwide Asset Allocation Trust
Nationwide Separate Account Trust
James F. Laird, Jr. VICE PRESIDENT AND GENERAL MANAGER AND ACTING TREASURER
Nationwide Advisory Services, Inc.
VICE PRESIDENT AND GENERAL MANAGER AND ACTING TREASURER
AND DIRECTOR
Nationwide Investors Services, Inc.
TREASURER
Nationwide Investing Foundation
Nationwide Separate Account Trust
Nationwide Investing Foundation II
Financial Horizons Investment Trust
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 II
Nationwide Investing Foundation III
Financial Horizons Investment Trust
Nationwide Asset Allocation Trust
David E. Simaitis SECRETARY
Nationwide Horizons Investment Trust
Nationwide Investing Foundation
Nationwide Investing Foundation II
Nationwide Investing Foundation III
ASSISTANT SECRETARY
Nationwide Advisory Services, Inc.
Nationwide Investors Services, Inc.
Nationwide Separate Account Trust
Elizabeth A. Davin SECRETARY
Nationwide Asset Allocation Trust
Nationwide Separate Account Trust
</TABLE>
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<PAGE> 61
<TABLE>
<S> <C>
ASSISTANT SECRETARY
Nationwide Advisory Services, Inc.
Nationwide Horizons Investment Trust
Nationwide Investing Foundation
Nationwide Investing Foundation III
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 Global Holdings, 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
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
Gates, McDonald & Company of Nevada
Gates, McDonald & Company of New York, Inc.
GatesMcDonald Health Plus, Inc.
Landmark Financial Services of New York, Inc.
National Casualty Company
Nationwide Cash Management Company
Nationwide Corporation
Nationwide Insurance Enterprise Services, Ltd.
Nationwide Investment Services Corporation
Companies Agency, Inc.
Companies Agency Insurance Services of California
Companies Agency of Alabama, Inc.
Companies Agency of Georgia, Inc.
</TABLE>
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<PAGE> 62
<TABLE>
<S> <C>
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
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.
Public Employees Benefit Services Corporation
Public Employees Benefit Services Corporation of Alabama
Public Employees Benefit Services Corporation of Arkansas
Public Employees Benefit Services Corporation of Montana
Public Employees Benefit Services Corporation 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
Nationwide Community Urban Redevelopment Corporation
Nationwide Indemnity Company
MRM Investments, Inc.
NWE, Inc.
TIG Countrywide Insurance Company
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
</TABLE>
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<PAGE> 63
<TABLE>
<S> <C>
Peter J. Neckermann VICE PRESIDENT - ECONOMIC AND INVESTMENT SERVICES
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 Indemnity Company
VICE PRESIDENT
Nationwide Advisory Services, Inc.
DIRECTOR
Leben Direkt Insurance Company
Nationwide Investors Services, Inc.
Neckura Holding Company
ASSISTANT TREASURER
Financial Horizons Investment Trust
National Casualty Company
National Premium and Benefit Administration Company
Nationwide Investing Foundation
Nationwide Investing Foundation II
Nationwide Investing Foundation III
Nationwide Separate Account Trust
Nationwide Asset Allocation Trust
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.
California Cash Management Company
Colonial Insurance Company of Wisconsin
Nationwide Cash Management Company
Nationwide Indemnity Company
Nationwide Insurance Enterprise Foundation
Morley Financial Services, Inc.
VICE PRESIDENT - FIXED INCOME SECURITIES
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
TIG Countrywide Insurance Company
Wausau Business Insurance Company
Wausau General Insurance Company
</TABLE>
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<PAGE> 64
<TABLE>
<S> <C>
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
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>
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<PAGE> 65
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
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.
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<PAGE> 66
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.)
(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
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<PAGE> 67
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
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
</TABLE>
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<PAGE> 68
<TABLE>
<S> <C> <C>
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
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
</TABLE>
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<PAGE> 69
<TABLE>
<S> <C> <C>
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
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, Sach & 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
</TABLE>
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<PAGE> 70
<TABLE>
<S> <C> <C>
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.
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
</TABLE>
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<PAGE> 71
<TABLE>
<S> <C> <C>
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
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
</TABLE>
C-21
<PAGE> 72
<TABLE>
<S> <C> <C>
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
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
</TABLE>
C-22
<PAGE> 73
<TABLE>
<S> <C> <C>
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
11601 Wilshire Boulevard
Los Angeles, California 90025-1748
</TABLE>
C-23
<PAGE> 74
<TABLE>
<S> <C> <C>
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
Michael J. Price Avidia Systems, Inc. Director
10 Fairfield Blvd.
Wallingford, Connecticut 06492
</TABLE>
C-24
<PAGE> 75
<TABLE>
<S> <C> <C>
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-25
<PAGE> 76
<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
France
</TABLE>
C-26
<PAGE> 77
<TABLE>
<S> <C> <C>
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
Bensalem, Pennsylvania 19020
</TABLE>
C-27
<PAGE> 78
<TABLE>
<S> <C> <C>
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)
Ulmenstrasse 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
John B. Ward None
</TABLE>
C-28
<PAGE> 79
<TABLE>
<S> <C> <C>
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
Exchange House
Primrose Street
London EC2A 2NY
</TABLE>
C-29
<PAGE> 80
<TABLE>
<S> <C> <C>
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>
C-30
<PAGE> 81
ITEM 29. PRINCIPAL UNDERWRITERS
(a)(1) See Item 28 above.
(a)(2) Portland Investment Services, Inc. is the Distributor
for shares of the Registrant. Portland Investment
Services, Inc. does not act as principal underwriter
for any other investment
company.
(b)(1) 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
Board
Columbus OH 43215 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
Peter J. Neckermann One Nationwide Plaza Vice President Assistant Treasurer
Columbus OH 43215
William G. Goslee One Nationwide Plaza Vice President N/A
Columbus OH 43215
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
David E. Simaitis One Nationwide Plaza Assistant Secretary Secretary
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>
C-31
<PAGE> 82
(b)(2) Set forth below are the names, principal business
addresses and positions of each officer of the Distributor.
<TABLE>
<CAPTION>
NAME AND PRINCIPAL POSITIONS AND OFFICES POSITIONS AND OFFICES
BUSINESS ADDRESS WITH DISTRIBUTOR WITH REGISTRANT
---------------- ---------------- ---------------
<S> <C> <C>
Richard T. Borst President and Director None
2155 Bridle Way
West Linn, OR 97065
Taylor E. Drake Vice President None
5665 SW Meadows
Suite 400
Lake Oswego, OR 97035
Joan K. Hall Secretary None
5665 SW Meadows Rd.
Suite 400
Lake Oswego, OR 97035
Richard Fletcher Treasurer None
5665 SW Meadows Rd.
Suite 400
Lake Oswego, OR 97035
</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> 83
SIGNATURES
Pursuant to the requirements of the Securities Act 1933 and the Investment
Company Act of 1940, the Registrant has duly caused this Post-Effective
Amendment No.3 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 third day of September 1998.
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 THIRD DAY OF SEPTEMBER 1998.
<TABLE>
<CAPTION>
SIGNATURE & TITLE
Principal Executive Officer
<S> <C>
DIMON R. MCFERSON*
- ------------------
Dimon R. McFerson, Trustee and Chairman
Principal Accounting and Financial Officer
JAMES F. LAIRD, JR. DAVID C. WETMORE*
- ------------------- -----------------
James F. Laird, Jr., Treasurer David C. Wetmore, Trustee
JOHN C. BRYANT* *By: JAMES F. LAIRD, JR.
- --------------- -------------------
John C. Bryant, Trustee James F. Laird, Jr., Attorney-In-Fact
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
</TABLE>
C-33
<PAGE> 1
Exhibit 1
NATIONWIDE INVESTING FOUNDATION III
-----------------------------------------
AMENDED DECLARATION OF TRUST
FOR AN OHIO BUSINESS TRUST
(ESTABLISHED AS OF OCTOBER 30, 1997)
(AMENDED SEPTEMBER 1, 1998)
<PAGE> 2
<TABLE>
INDEX
<CAPTION>
PAGE
<S> <C> <C> <C> <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> <C> <C> <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> <C> <C> <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 III
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.
1
<PAGE> 6
(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 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
2
<PAGE> 7
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 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
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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 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.
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
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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 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
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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)
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guarantee indebtedness or contractual obligations of others; (h) determine and
change the fiscal year 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
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registered securities dealers or other qualified distributors to further the
purpose of the distribution or repurchase of the Shares.
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
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(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 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
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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 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
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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
(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.
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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 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.
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<PAGE> 19
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 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 inthe 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 Shares without any class
designation.
15
<PAGE> 20
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 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
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<PAGE> 21
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 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
17
<PAGE> 22
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 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
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<PAGE> 23
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.
(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
19
<PAGE> 24
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 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
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<PAGE> 25
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 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
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<PAGE> 26
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:
<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 Without Class
Designation
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;
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<PAGE> 27
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;
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.
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.
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<PAGE> 28
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.
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.
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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 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.
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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 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
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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:
(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,
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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 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.
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(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.
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
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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.
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
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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 byvote 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.
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
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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.
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.
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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.
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.
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(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
1st day of September, 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 9(f)
ADMINISTRATIVE SERVICES PLAN
----------------------------
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 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 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 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.
1
<PAGE> 2
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
DRUEN, DIETRICH, REYNOLDS & KOOGLER
ATTORNEYS AT LAW
ONE NATIONWIDE PLAZA
COLUMBUS, OHIO 43215-2220
(614) 249-7617
FACSIMILE: (614) 249-2418
BRIAN M. BACON ANGELA R. JETT CHRISTINE A. NESS THERESA R. SCHAEFER
THOMAS E. BARNES LEROY JOHNSTON, III PETER J. OESTERLING* W. JOSEPH SCHLEPPI
ROGER A. CRAIG MARK B. KOOGLER RANDALL L. ORR DAVID E. SIMAITIS
RAE ANN DANKOVIC WALTER R. LEAHY ROBERT M. PARSONS KENT N. SIMMONS
ELIZABETH A. DAVIN GEORGE K. MACKLIN THOMAS J. PRUNTE DINA A. TANTRA
THOMAS W. DIETRICH RANDALL W. MAY ARLENE L. REILLY LEE A. THORNBURY
W. SIDNEY DRUEN M. LINDA MAZZITTI LUCINDA A. REYNOLDS PHILIP W. WHITAKER
JOHN D. GILLESPIE DAVID A. MEYER DANIEL R. RUPP DAVID L. WHITE
JEANNE A. GRIFFIN SANDRA L. NEELY ANNE DANZA SAXON STEVEN L. ZISSER
Practice limited to Nationwide Insurance Companies
and their associated companies
* Practice limited to the State of Pennsylvania
September 3, 1998
VIA EDGAR
- ---------
Nationwide Investing Foundation III
Three Nationwide Plaza, 26th Floor
Columbus, Ohio 43215
Re: Nationwide Investing Foundation III
Post-Effective Amendment No. 5
SEC File Nos. 333-40455, 811-08495
Ladies and Gentlemen:
In connection with the filing of Post-Effective Amendment No. 5 to the
Registration Statement for Nationwide Investing Foundation III (the
"Amendment"), it is our opinion that, upon the effectiveness of the Amendment,
the indefinite number of units of beneficial interest of Class R and Class Y
Shares of the Nationwide S&P 500 Index Fund of the Nationwide Investing
Foundation III, when issued for the consideration described in the Amendment,
will be legally issued, fully paid and nonassessable.
We hereby consent to the filing of this opinion as an exhibit to the Amendment.
Very truly yours,
DRUEN, DIETRICH, REYNOLDS & KOOGLER
/s/ Druen, Dietrich, Reynolds & Koogler
<PAGE> 1
Exhibit 15(a)
DISTRIBUTION PLAN OF NATIONWIDE INVESTING FOUNDATION III
(Effective ________, 1998)
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, 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
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 of such Class A,
Class B, Class R and Local Fund Shares of the Funds or to Portland Investment
Services, Inc. for activities or expenses primarily intended to result in the
sale or servicing of such Class ISC, Class IC and Class IVC Shares of the Morley
Capital Accumulation Fund. Nationwide Advisory Services, Inc. and Portland
Investment Services, Inc. are each 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
2
<PAGE> 3
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 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 Advisroy 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 _____, 1998)
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, 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 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 non-money market series (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
(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
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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 Funds and the S&P 500
Index Fund"), (e) without a front-end load or 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"), (f)
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"), (g) without a front-end load or a CDSC, but providing for a 12b-1 fee
and an administrative services fee (the "Class R Shares of the S&P 500 Index
Fund"), and (h) 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 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
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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 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
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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.
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