<PAGE> 1
NATIONWIDE(R) S&P 500 INDEX FUND
(CLASS A, CLASS B AND INSTITUTIONAL CLASS SHARES)
PROSPECTUS 2000
JANUARY 3, 2000
(AS AMENDED APRIL 24, 2000)
As with all mutual funds, the Securities and Exchange Commission has not
approved or disapproved this fund's shares as an investment or determined
whether this prospectus is complete or accurate. To state otherwise is a crime.
[NATIONWIDE(R) FAMILY OF FUNDS LOGO]
<PAGE> 2
TABLE OF CONTENTS
FUND SUMMARY...................................................................2
Objective and Principal Strategies.............................................3
Principal Risks................................................................3
Performance....................................................................4
Fees and Expenses..............................................................5
MORE ABOUT THE FUND............................................................6
Principal Risks and Techniques.................................................6
Non-Principal Techniques.......................................................7
MANAGEMENT.....................................................................8
Investment Adviser.............................................................8
Multi-Manager Structure........................................................8
Subadviser.....................................................................8
BUYING, SELLING AND EXCHANGING FUND SHARES.....................................9
Choosing a Share Class.........................................................9
Buying Shares.................................................................10
Selling Shares................................................................13
Distribution Plan.............................................................15
Distribution and Service Fees.................................................15
Exchanging Shares.............................................................15
DISTRIBUTIONS AND TAXES.......................................................17
Distributions of Income Dividends.............................................17
Distributions of Capital Gains................................................17
Reinvesting Distributions.....................................................17
State and Local Taxes.........................................................17
Selling Fund Shares...........................................................17
Exchanging Fund Shares........................................................17
ADDITIONAL INFORMATION................................................BACK COVER
1
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FUND SUMMARY
This Prospectus provides information about one of the Nationwide Mutual Funds:
Nationwide S&P 500 Index Fund (the Fund). "You" and "your" refer to potential
investors and current shareholders of the Fund.
A QUICK NOTE ABOUT SHARE CLASSES
The Fund has six different share classes, three of which are offered in this
Prospectus -- Class A, Class B and Institutional Class shares. The fees, sales
charges and expenses for each share class are different, but each share class of
the Fund represents an investment in the same assets. Having different share
classes simply lets you choose the cost structure that is right for you.
The fees and expenses for the Fund are set forth below. For more information
about which share class offered by this Prospectus is right for you, see
"Buying, Selling and Exchanging Fund Shares -- Choosing a Share Class" beginning
on page nine.
2
<PAGE> 4
This section summarizes key information about the Fund. Use this summary to
compare the Fund with other mutual funds. More detailed information about the
risks and investment techniques of the Fund can be found in "More About the
Fund" beginning on page six.
OBJECTIVE AND PRINCIPAL STRATEGIES
The Fund seeks 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 S&P 500).(1) The S&P 500
is a market-weighted index composed of
approximately 500 common stocks chosen by
Standard & Poor's based on a number of factors including industry group
representation, market value, economic sector and operating/financial condition.
The investment objective of the Fund may not be changed without shareholder
approval.
A market-weighted index is an index in which the
weighting of each security is based on its market
capitalization. In a market-weighted index, changes in
the price of a company with a large capitalization
affect the level of the index more than changes in the
price of a company with a smaller market
capitalization.
The Fund employs a "passive" management approach, attempting to invest in a
portfolio of assets whose performance is expected to match approximately the
performance of S&P 500. The Fund will be substantially invested in securities in
the S&P 500, and will invest at least 80% of its assets in securities or other
financial instruments in, or correlated with, the S&P 500.
The Fund invests in a statistically selected sample of stocks included in the
S&P 500 and in derivative instruments linked to the S&P 500. The Fund may not
invest in all of the common stocks in the S&P 500, or in the same weightings as
in the S&P 500. Because the Fund seeks to invest in assets whose performance
matches the performance of the S&P 500, it may concentrate more assets in fewer
companies and is considered a non-diversified fund. The Fund chooses investments
so that the market capitalizations, industry weightings and other fundamental
characteristics of the stocks and derivative instruments chosen are similar to
the S&P 500 as a whole. The Fund may also engage in securities lending.
Market capitalization is a common way to measure the
size of a company based on the price of its common
stock; it is simply the number of outstanding shares
of the company multiplied by the current share price.
PRINCIPAL RISKS
Because the value of an investment will fluctuate, there is the risk that a
shareholder will lose money. A shareholder's investment will decline in value if
the value of the Fund's investments decreases.
STOCK MARKET RISK. Stock market risk is the risk that the Fund could lose value
if the individual stocks in which the Fund has invested or the overall stock
market goes down. Individual stocks and the overall stock market may experience
short-term volatility as well as extended periods of decline or little growth.
Individual stocks are affected by factors such as corporate earnings, production
management and sales. Individual stocks may also be affected by the demand for a
particular type of stock, such as growth stocks or the stocks of companies with
a particular market capitalization. The stock market is affected by numerous
factors, including interest rates, the outlook for corporate profits, the health
of national and world economies, national and world social and political events,
and the fluctuations of other stock markets around the world. There is also the
risk that large capitalization companies could fall out of favor and investors
may look to other types of investments.
SELECTION RISK. The Fund is also subject to selection risk, which is the risk
that the Fund's investments, which may not fully replicate the S&P 500, may
perform differently from the securities in S&P 500. The Fund will attempt to be
fully invested at all times and will not hold a significant portion of its
assets in cash. The Fund will generally not attempt to hedge against adverse
market movements. Therefore, the Fund might go down in value more than other
mutual funds in the event of a general market decline. In addition, an index
fund has operating and other expenses while an index does not. As a result,
while the Fund will attempt to track the S&P 500 as closely as possible, it will
tend to underperform the index to some degree over time.
NON-DIVERSIFIED FUND RISK. The Fund is a non-diversified fund, which means that
it may invest more of its assets in fewer companies than if it were a
diversified fund. By concentrating more assets in a smaller number of
investments, the Fund's risk is increased because some investments have a
greater effect on the Fund's performance. This helps the Fund's performance when
its investments are successful, but also hurts the Fund's performance when its
investments are unsuccessful.
- ---------------
(1) "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 (SAI).
3
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Fund Summary
PERFORMANCE
The following bar chart and table present the performance of the Fund. The bar
chart shows the Fund's annual total return. The table shows the Fund's average
annual total return for certain time periods compared to the returns of a
broad-based securities index. The bar chart and table provide some indication of
the risks of investing in the Fund.
Remember, however, that past performance does not guarantee similar results in
the future.
<TABLE>
<CAPTION>
Annual Returns(1) 1/1/99-10/31/99
- ----------------------------------------------------------
<S> <C> <C>
Local Fund Shares 20.08%
Institutional Service Shares 19.79%
Service Shares 19.54%
</TABLE>
<TABLE>
<S> <C> <C>
Best Quarter -- Local Fund Shares: 14.59% 4th qtr of 1999
Worst Quarter -- Local Fund Shares: -6.27% 3rd qtr of 1999
</TABLE>
- ---------------
(1) These returns are for the Fund's Local Fund Shares (which are not offered in
this Prospectus), and the Institutional Service Class and Service Class
Shares (formerly the Class Y and Class R Shares, respectively). The classes
of shares offered by this Prospectus would have had substantially similar
returns because the shares are invested in the same portfolio of securities,
and the annual returns would have only differed to the extent that the
classes do not have the same expenses.
<TABLE>
<CAPTION>
One Since
Average annual returns -- as of December 31, 1999 Year Inception(1)
- -------------------------------------------------------------------------
<S> <C> <C>
Class A Shares(2) 13.16% 15.44%
.........................................................................
Class B Shares(3) 15.08% 17.71%
.........................................................................
Institutional Class Shares(4) 20.08% 20.29%
.........................................................................
Institutional Service Class Shares 19.79% 20.18%
.........................................................................
Service Class Shares 19.54% 19.92%
.........................................................................
Local Fund Shares 20.08% 20.29%
.........................................................................
S&P 500(5) 21.04% 20.86%
</TABLE>
- ---------------
(1) The Fund's Local Fund Shares began operations July 24, 1998; the
Institutional Service Class and Service Class (formerly Class Y and Class R,
respectively) began operations on November 2, 1998.
(2) Performance represents that of Local Fund Shares, which was achieved prior
to the creation of Class A on December 30, 1999, restated to reflect Class A
Shares' maximum sales charge but not its estimated expenses. Had this class
been in existence for the time periods presented, the performance of the
class would have been lower as a result of its additional expenses.
(3) Performance represents that of Local Fund Shares, which was achieved prior
to the creation of Class B on December 30, 1999, restated to reflect Class B
Shares' contingent deferred sales charge but not its estimated expenses. Had
this class been in existence for the time periods presented, the performance
of the class would have been lower as a result of its additional expenses.
(4) Performance represents that of Local Fund Shares, which was achieved prior
to the creation of the Institutional Class on December 30, 1999, and does
not reflect Institutional Class Shares' lower estimated expenses.
(5) The S&P 500 is an unmanaged index of 500 widely held stocks of large U.S.
companies, as described above. These returns do not include the effect of
any sales charges or expenses. If sales charges and expenses were deducted,
the actual return of this Index would be lower.
4
<PAGE> 6
FEES AND EXPENSES
This table describes the fees and expenses that you may pay when buying and
holding shares of the Fund.
<TABLE>
<CAPTION>
Institutional
Shareholder Fees(1) Class A Class B Class
(paid directly from your investment) shares shares shares
- -----------------------------------------------------------------------
<S> <C> <C> <C>
Maximum Sales Charge (Load) imposed 5.75%(2) None None
on purchases (as a percentage of
offering price)
.......................................................................
Maximum Deferred Sales Charge (Load) None(3) 5.00%(4) None
imposed on redemptions (as a
percentage of original purchase
price or sale proceeds, as
applicable)
</TABLE>
<TABLE>
<CAPTION>
Institutional
Annual Fund Operating Expenses Class A Class B Class
(deducted from Fund assets) shares shares shares
- -----------------------------------------------------------------------
<S> <C> <C> <C>
Management Fees 0.13% 0.13% 0.13%
.......................................................................
Distribution and/or Service 0.25% 1.00% None
(12b-1) Fees
.......................................................................
Other Expenses(5) 0.81% 0.66% 0.66%
- -----------------------------------------------------------------------
TOTAL ANNUAL FUND 1.19% 1.79% 0.79%
OPERATING EXPENSES
.......................................................................
Amount of Fee Waivers/ 0.56% 0.56% 0.56%
Expense Reimbursements
- -----------------------------------------------------------------------
CAPPED FUND 0.63% 1.23% 0.23%
OPERATING EXPENSES(5)
</TABLE>
- ---------------
(1) If you buy and sell shares through a broker or other financial intermediary,
they may also charge you a transaction fee.
(2) As the amount of your investment increases, the sales charge imposed on the
purchase of Class A Shares decreases. For more information, see "Buying,
Selling and Exchanging Fund Shares -- Buying Shares -- Class A sales
charges" beginning on page 10.
(3) A contingent deferred sales charge (CDSC) of up to 1% may be imposed on
certain redemptions of Class A shares purchased without a sales charge.
(4) A CDSC ranging from 5% to 1% is charged when you sell Class B shares within
the first six years of purchase. Class B shares are converted to Class A
shares after you have held them for seven years. See "Buying, Selling and
Exchanging Fund Shares -- Selling Shares -- Contingent deferred sales charge
(CDSC) on Class A and Class B shares" on page 13.
(5) At least through October 31, 2001, Villanova Mutual Fund Capital Trust (VMF)
has agreed to waive fees or otherwise reimburse expenses for the Fund so
that the Total Annual Operating Expenses will not exceed the Capped Fund
Operating Expenses listed. This waiver of management fees or reimbursement
of other expenses is subject to a possible reimbursement by the Fund within
five years of commencement of operations if the reimbursement can be
implemented within the annual expense limitation listed in the Capped Fund
Operating Expenses.
EXAMPLE
This example shows what you could pay in expenses over time. You can also use
this example to compare the costs of this Fund with other mutual funds.
The example assumes that you invest $10,000 in the Fund for the time periods
indicated and then sell all of your shares at the end of those periods. It
assumes a 5% return each year and no changes in expenses, but does take into
account the fee waiver/expense reimbursement provisions currently in place for
the Fund for the first year. Although your actual costs may be higher or lower,
based on these assumptions your costs would be:
<TABLE>
<CAPTION>
1 year 3 years 5 years 10 years
- ---------------------------------------------------------------
<S> <C> <C> <C> <C>
Class A Shares $636 $931 $1,192 $1,935
...............................................................
Class B Shares $625 $863 $1,170 $1,872
...............................................................
Institutional Class
Shares $ 24 $252 $ 439 $ 978
</TABLE>
You would pay the following expenses on the same investment if you did not sell
your shares:
<TABLE>
<CAPTION>
1 year 3 years 5 years 10 years
- ---------------------------------------------------------------
<S> <C> <C> <C> <C>
Class B Shares $125 $563 $ 970 $1,872
</TABLE>
5
<PAGE> 7
More About the Fund
This section contains a summary discussion of the general risks of investing in
the Fund. As with any mutual fund, there can be no guarantee that the Fund will
meet its goals or that the Fund's performance will be positive for any period of
time.
PRINCIPAL RISKS AND TECHNIQUES
The Fund may use the principal investment techniques to increase returns,
protect assets or diversity investments. These techniques are subject to certain
risks. For additional information about the Fund's investment strategies and
techniques, see the SAI.
The Fund will not attempt to buy or sell securities based on Fund management's
economic, financial or market analysis, but will instead employ a "passive"
investment approach. This means that the Fund's subadviser will attempt to
invest in a portfolio of assets whose performance is expected to match
approximately the performance of the S&P 500 before deduction of Fund expenses.
The Fund will only buy or sell securities when Fund management believes it is
necessary to do so in order to match the performance of the S&P 500.
Accordingly, it is anticipated that the Fund's portfolio turnover and trading
costs will be lower than "actively" managed funds. However, the Fund has
operating costs and other expenses, while the S&P 500 does not. Therefore, the
Fund will tend to underperform the S&P 500 to some degree over time.
Under normal circumstances, it is anticipated that the Fund's total return over
periods of one year and longer will, after taking into account estimated
expenses incurred by the Fund (as restated for the expenses of the Class B
Shares) be within 189 basis points (a basis point is one one-hundredth of one
percent (0.01%)) of the total return of the S&P 500. There can be no assurance,
however, that this level of correlation will be achieved. In the event that this
correlation is not achieved over time, the Trustees will consider alternative
strategies for the Fund. Information regarding correlation of the Fund's
performance to that of the S&P 500 will be reported in the Fund's annual report.
The S&P 500 is composed of 500 selected common stocks as determined by Standard
& Poor's, most of which are listed on the New York Stock Exchange. The S&P 500
is generally considered broadly representative of the performance of publicly
traded U.S. larger-capitalization stocks, although a small part of the S&P 500
is made up of foreign companies which have a large presence in the U.S. Standard
& Poor's selects a stock for the S&P 500 based on the index's criteria; it does
not evaluate whether any particular stock is an attractive investment. Standard
& Poor's updates the S&P 500 periodically, at which time there may be
substantial changes in the composition of the index (and consequently,
significant turnover in the Fund).
SHORT-TERM INVESTMENTS. The Fund will also invest in short-term money market
instruments as cash reserves to maintain liquidity. These instruments may
include obligations of the U.S. Government, its agencies or instrumentalities,
highly rated bonds or comparable unrated bonds, commercial paper, bank
obligations and repurchase agreements. To the extent the Fund invests in short
term money market instruments, it will generally also invest in options, futures
or other derivatives in order to maintain full exposure to the S&P 500. The Fund
will not invest in options, futures, other derivative instruments or short term
money market instruments in order to lessen the Fund's exposure to common stocks
as a defensive strategy, but will instead use them to attempt to remain fully
invested at all times.
DERIVATIVES RISK. The Fund may invest in derivative instruments, and will
normally invest a substantial portion of its assets in options and futures
contracts linked to the performance of the S&P 500. Derivatives allow the Fund
to increase or decrease its exposure to the S&P 500 quickly and at less cost
than buying or selling stocks. The Fund will invest in options and futures and
other derivative instruments in order to gain market exposure quickly in the
event of subscriptions to purchase shares of the Fund, to maintain liquidity in
the event of redemptions and to keep trading costs low.
The Fund may use the following types of derivative instruments: futures,
forwards and options, options on futures, swaps and indexed securities. Futures
are exchange-traded contracts involving the obligation of the seller to deliver,
and the buyer to receive, certain assets (or a money payment based on the change
in value of certain assets or an index) at a specified time. Forwards are
private contracts involving the obligation of the seller to deliver, and the
buyer to receive, certain assets (or a money payment based on the change in
value of certain assets or an index) at a specified time.
Options are exchange-traded or private contracts involving the right of a holder
to deliver (a put) or receive (a call) certain assets (or a money payment based
on the change in value of certain assets or an index) from another party at a
specified price with a specified time period.
Swaps are private contracts involving the obligation of each party to exchange
specified payments, which may be based on the value of an index or asset, with
the other party at specified times.
6
<PAGE> 8
Indexed securities are debt obligations that return a variable amount of
principal or interest based on the value of an index at a specified time.
Derivatives are volatile and involve significant risks, which may include:
- LEVERAGE RISK. Leverage risk is the risk associated with certain types of
investments or trading strategies (such as borrowing money to increase the
amount of investments) that relatively small market movements may result in
large changes in the value of an investment. Certain investments or trading
strategies that involve leverage can result in losses that greatly exceed
the amount originally invested.
- CREDIT RISK. Credit risk is the risk that the counterparty (the party on the
other side of the transaction) on a derivative transaction will be unable to
honor its financial obligation to the Fund.
- LIQUIDITY RISK. Liquidity risk is the risk that certain securities may be
difficult or impossible to sell at the time that the seller would like or at
the price that the seller believes the security is currently worth.
The Fund may use derivatives for anticipatory hedging. Anticipatory hedging is a
strategy in which the Fund uses a derivative to offset the risk that securities
in which the Fund intends to invest will increase in value before the Fund has
an opportunity to purchase the securities. The Fund will use derivatives for
anticipatory hedging in order to gain exposure efficiently to the S&P 500 in the
event the Fund receives cash inflows.
SECURITIES LENDING. The Fund may lend securities to financial institutions that
provide cash or government securities as collateral. Securities lending involves
the risk that the borrower may fail to return the securities in a timely manner
or at all. As a result, the Fund may lose money and there may be a delay in
recovering the loaned securities. The Fund could also lose money if it does not
recover the securities and the value of the collateral falls. These events could
trigger adverse tax consequences to the Fund.
NON-PRINCIPAL TECHNIQUES
BORROWING AND LEVERAGE. The Fund may borrow for temporary emergency purposes
including to meet redemptions. Borrowing may exaggerate changes in the net asset
value of Fund shares and in the yield on the Fund's portfolio. Borrowing will
cost the Fund interest expense and other fees. The cost of borrowing may reduce
the Fund's return.
Certain securities that the Fund buys may create leverage, including, for
example, options.
SHORT SALES. In connection with the use of derivative instruments, the Fund may
enter into short sales in order to adjust the weightings of particular
securities represented in a derivative to more accurately reflect the
securities' weightings in the S&P 500. In selling a security the Fund does not
own (a short sale), the Fund may borrow the security sold short to make delivery
to the buyer. The Fund must then replace the security it has borrowed. If the
price of a security sold short goes up between the time of the short sale and
the time the Fund must deliver the security to the lender, the Fund will incur a
loss. The Fund must also pay the lender any interest accrued during the period
of the loan.
OTHER INVESTMENTS AND INVESTMENT TECHNIQUES
The SAI contains additional information about the Fund, including the Fund's
other investments and investment techniques. To obtain a copy of the SAI, see
the back cover.
7
<PAGE> 9
MANAGEMENT
INVESTMENT ADVISER
Villanova Mutual Fund Capital Trust (VMF), Three Nationwide Plaza, Columbus,
Ohio 43215, manages the investment of the assets and supervises the daily
business affairs of the Fund. Subject to the supervision and direction of the
Trustees, VMF allocates Fund assets among subadvisers and evaluates and monitors
the performance of subadvisers. VMF is authorized to select and place portfolio
investments on behalf of the Fund; however, VMF does not intend to do so at this
time.
VMF was organized in 1999, and advises mutual funds. As of December 31, 1999,
VMF and its affiliates had approximately $22.5 billion in assets under
management.
The Fund pays VMF a management fee, which, expressed as a percentage of the
Fund's average daily net assets, is 0.13% annually. The total fee payable by the
Fund for the fiscal year ended October 31, 1999, was waived by VMF.
MULTI-MANAGER STRUCTURE
VMF and Nationwide Mutual Funds (the Trust) have received from the Securities
and Exchange Commission an exemptive order for a multi-manager structure that
allows VMF to hire, replace or terminate a subadviser without the approval of
shareholders. The order also allows VMF to revise a subadvisory agreement with
Trustee approval but without shareholder approval. If a new subadviser is hired,
shareholders will receive information about the new subadviser within 90 days of
the change. The order allows the Fund to operate more efficiently and with
greater flexibility.
VMF provides the following oversight and evaluation services to the Fund:
- performing initial due diligence on prospective subadvisers for the Fund
- monitoring the performance of the subadvisers through ongoing analysis, as
well as periodic consultations
- communicating performance expectations and evaluations to the subadvisers
- ultimately recommending to the Board of Trustees whether a subadviser's
contract should be renewed, modified or terminated
VMF does not expect to recommend frequent changes of subadvisers. VMF will
periodically provide written reports to the Board of Trustees regarding the
results of its evaluation and monitoring functions. Although VMF will monitor
the performance of the subadvisers, there is no certainty that any subadviser or
the Fund will obtain favorable results at any given time.
SUBADVISER
Subject to the supervision of VMF and the Trustees, the subadviser manages the
Fund's assets in accordance with the Fund's investment objective and strategies.
The subadviser makes investment decisions for the Fund and, in connection with
such investment decisions, places purchase and sell orders for securities.
Since December 29, 1999, Fund Asset Management, L.P., P.O. Box 9011, Princeton,
New Jersey 08543-9011, has been managing the Fund's investments and has the
responsibility for making all investment decisions for the Fund.
Fund Asset Management is part of the Merrill Lynch Asset Management Group, which
had approximately $557 billion in investment company and other portfolio assets
under management as of December 31, 1999. This amount includes assets managed
for Merrill Lynch affiliates.
Prior to December 29, 1999, The Dreyfus Corporation, a wholly-owned, indirect
subsidiary of Mellon Bank Corporation, served as the Fund's subadviser.
8
<PAGE> 10
BUYING, SELLING AND EXCHANGING FUND SHARES
CHOOSING A SHARE CLASS
As noted in the Fund Summary, the Fund offers six different share classes, three
of which are described in this Prospectus, to give investors different price and
cost options. Class A and Class B shares of the Fund are available to all
investors; Institutional Class shares are available to a limited group of
investors, such as certain affiliated funds of funds.
With Class A shares, you pay a sales charge (known as a front-end sales charge)
when you purchase the shares. With Class B shares, you pay a sales charge (known
as a contingent deferred sales charge or CDSC) if you sell your shares within
six years after purchase. Sales charges are paid to the Fund's distributor,
Nationwide Advisory Services, Inc. (NAS) which either retains them or pays a
selling representative. There is no such charge on Institutional Class shares.
Class A and Class B shares both pay distribution and/or service fees under a
Distribution Plan. These fees are either retained by NAS or paid by NAS to
brokers for distribution and shareholder services. Class A shares also pay
administrative service fees. These fees are paid to brokers and other entities
that provide administrative support services to the beneficial owners of the
shares.
If you want lower annual fund expenses, Class A shares may be right for you,
particularly if you qualify for a reduction or waiver of sales charges. If you
do not want to pay front-end sales charge, and you anticipate holding your
shares for the long term, Class B shares may be more appropriate. NAS reserves
the right to reject an order in excess of $100,000 for Class B shares and an
order for Class B shares for Individual Retirement Accounts (IRA accounts) for
shareholders 70 1/2 years old and older.
When choosing a share class, consider the following:
<TABLE>
<CAPTION>
Class A shares Class B shares
- ----------------------------------------------------------
<S> <C>
Front-end sales charge means No front-end sales charge,
that a portion of your so your full investment
initial investment goes immediately goes toward
toward the sales charge, and buying shares
is not invested
..........................................................
Reductions and waivers of No reductions of the CDSC
the sales charges available available, but waivers
available
..........................................................
Lower expenses than Class B Higher distribution and
shares means higher service fees than Class A
dividends per share shares mean lower dividends
per share
</TABLE>
<TABLE>
<CAPTION>
Class A shares Class B shares
- ----------------------------------------------------------
<S> <C>
Conversion features are not After seven years, Class B
applicable shares convert into Class A
shares, which reduces your
future fund expenses
..........................................................
No sales charges when shares CDSC if shares are sold
are sold back to the Fund* within six years: 5% in the
first year, 4% in the
second, 3% in the third and
fourth years, 2% in the
fifth, and 1% in the sixth
year
</TABLE>
- ---------------
* A CDSC of up to 1% may be charged on certain redemptions of Class A shares
purchased without a sales charge.
For investors who are eligible to purchase Institutional Class shares, the
purchase of Institutional Class shares will be preferable to purchasing Class A
or Class B shares.
WHO CAN BUY INSTITUTIONAL CLASS SHARES
The Institutional Class shares are available for purchase only by the following:
- funds of funds offered by NAS or other affiliates of the Trust (except for
series of Nationwide Asset Allocation Trust)
- tax-exempt employee benefit plans if no third party administrator for the
plan receives compensation from the Fund
- institutional advisory accounts of VMF, or its affiliates and those having
client relationships with an affiliate of VMF, or its affiliates and their
corporate sponsors, as well as subsidiaries and related employee benefit
plans and rollover individual retirement accounts from such institutional
advisory accounts
- a bank, trust company or similar financial institution investing for its own
account or for the account of its trust customers for whom such financial
institution is exercising investment discretion in purchasing Institutional
Class shares, where the investment is not part of a program that requires
payment to the financial institution of a Rule 12b-1 or administrative
service fee
- registered investment advisers investing on behalf of institutions and high
net-worth individuals entrusted to the adviser for investment purposes, if
the adviser is affiliated or associated with a broker or dealer and derives
compensation for its services exclusively from its clients for such advisory
services
9
<PAGE> 11
Buying, Selling and Exchanging Fund Shares
BUYING SHARES
PURCHASE PRICE. The purchase or "offering" price of each share of the Fund is
its "net asset value" (NAV) next determined after the order is received, plus
any applicable sales charge. A separate
NAV is calculated for each class of the
Fund. Generally, the NAV is based on the
market value of the securities owned by
the Fund less its liabilities. The NAV
for a class is determined by dividing the
total market value of the securities
owned by the Fund allocable to such
class, less liabilities allocable to that
class, by the total number of that class'
outstanding shares. NAV is determined at
the close of regular trading on the New
York Stock Exchange (usually 4 p.m.
Eastern Time) on each day the Exchange is open for trading.
MINIMUM INVESTMENTS --
CLASS A AND CLASS B SHARES
To open an account
(per Fund) $1,000
......................................................
Through the Automatic Asset
Accumulation plan
(per transaction) $25
......................................................
Additional investments
(per Fund) $100
--------------------------------------------------------------
MINIMUM INVESTMENTS --
INSTITUTIONAL CLASS SHARES
To open an account $50,000
......................................................
Additional investments $5,000
If you purchase Class A or Class B shares through an
account at a broker (other than NAS), different
minimum account requirements may apply. These minimum
investment requirements for Class A shares do not
apply to certain retirement plans. Call 1-800-848-0920
for more information.
The Fund does not calculate NAV on the following days:
- Christmas Day
- New Year's Day
- Martin Luther King, Jr. Day
- Presidents' Day
- Good Friday
- Memorial Day
- Independence Day
- Labor Day
- Thanksgiving Day
- Other days when the New York Stock Exchange is not open.
The Fund reserves the right not to determine an NAV for the Fund when:
- It has not received any orders to purchase, sell or exchange shares
- Changes in the value of the Fund's portfolio do not affect the NAV.
If current prices are not available, or if Villanova SA Capital Trust (VSA), as
the Fund's administrator or its agent, determines a price does not represent
fair value, the Fund's investments may be valued at fair market value in
accordance with procedures adopted by the Board of Trustees of the Trust. To the
extent that the Fund's investments are traded in markets that are open when the
New York Stock Exchange is closed, the value of the Fund's investments may
change on days when shares cannot be purchased or redeemed.
CLASS A SALES CHARGES
The charts below show the Class A sales charges, which decrease as the amount of
your investment increases.
<TABLE>
<CAPTION>
Sales charge
Sales charge as % of
as % of amount
Amount of purchase offering price invested
- ----------------------------------------------------------------
<S> <C> <C>
Less than $50,000 5.75% 6.10%
................................................................
$50,000 to $99,999 4.50 4.71
................................................................
$100,000 to $249,999 3.50 3.63
................................................................
$250,000 to $499,999 2.50 2.56
................................................................
$500,000 to $999,999 2.00 2.04
................................................................
$1 million to $24,999,999 0.50 0.50
................................................................
$25 million or more 0.25 0.25
</TABLE>
10
<PAGE> 12
REDUCTION AND WAIVER OF CLASS A SALES CHARGES
Shareholders can reduce or eliminate Class A shares' initial sales charge
through one or more of the discounts described below:
- Increase the amount of your investment. The table on page 10 shows how the
sales charge decreases as the amount of your investment increases.
- Family Member Discount. Members of your family who live at the same address
can combine investments, possibly reducing the sales charge.
- Lifetime Additional Discount. You can add the value of any of the
Nationwide Mutual Funds Class A shares you already own with the value of the
shares you are purchasing, which may reduce the applicable sales charge.
- Insurance Proceeds or Benefits Discount Privilege. If you use the proceeds
of an insurance policy issued by any member of Nationwide Insurance to
purchase Class A shares, you will pay one-half of the published sales charge
if you make your investment 60 days after receiving the proceeds.
- No sales charge on a repurchase. If you sell shares from your Nationwide
account, we allow you a one-time privilege to reinvest some or all of the
proceeds in shares of the same class. You will not pay a sales charge on
Class A shares that you buy within 30 days of selling Class A shares of an
equal or lesser amount if you have already paid a sales charge. Remember, if
you realize a gain or a loss on your sale of shares, the transaction is
taxable and reinvestment will not affect the amount of capital gains tax
that is due. If you realize a loss on your sale and your reinvest, some or
all of the loss may not be allowed as a tax deduction depending on the
amount you reinvest.
- Letter of Intent Discount. State in writing that during a 13-month period
you or a group of family members who live at the same address will purchase
or hold at least $50,000 in Class A shares and your sales charge will be
based on the total amount you intend to invest. The letter may be backdated
up to 90 days to include previous purchases for determining your sales
charge. Your Letter of Intent is not a binding obligation to buy shares of
the Fund; it is merely a statement of intent. Please call 1-800-848-0920 for
more information.
WAIVER OF CLASS A SALES CHARGES
The Class A sales charges will be waived for the following purchases:
- Any person purchasing through an account with an unaffiliated brokerage firm
that has an agreement with NAS to waive sales charges for those persons;
- Directors, officers, full-time employees, sales representatives and their
employees or any investment advisory clients of a broker-dealer having a
dealer/selling agreement with NAS;
- Any person who pays for the shares with the proceeds of a sale of mutual
fund shares. To qualify, you must have paid an initial sales charge or CDSC
on the shares sold. You must purchase the Class A shares within 60 days of
the sale, and you must request the waiver when you purchase the Class A
shares (NAS may require evidence that you qualify for this waiver);
- Employer-sponsored retirement plans, including pension, profit sharing or
deferred compensation plans which are qualified under sections 401(a),
403(b) or 457 of the Internal Revenue Code;
- Trustees and retired Trustees of Nationwide Mutual Funds (including its
predecessor Trusts);
- Directors, officers, full-time employees, sales representatives and their
employees, and retired directors, officers, employees, and sales
representatives, their spouses, children or immediate relatives (including
mother, father, brothers, sisters, grandparents and grandchildren) and
immediate relatives of deceased employees of any member of Nationwide
Insurance and Nationwide Financial Companies, or any investment advisory
clients of VMF, VSA, NAS and their affiliates;
- Directors, officers, full-time employees, their spouses, children or
immediate relatives and immediate relatives of deceased employees of any
sponsor group which may be affiliated with the Nationwide Insurance and
Nationwide financial companies from time to time (including, but not limited
to, Farmland Insurance Industries, Inc., Maryland Farm Bureau, Inc., Ohio
Farm Bureau Federation, Inc., Pennsylvania Farmers' Association, Ruralite
Services, Inc., and Southern States Cooperative).
Please refer to the SAI for additional information regarding the waiver of Class
A sales charges.
11
<PAGE> 13
Buying, Selling and Exchanging Fund Shares
CONVERSION OF CLASS B SHARES
After you have held your Class B shares for seven years, we will automatically
convert them into Class A shares (without charge), which carry the lower 12b-1
fee. We will also convert any Class B shares that you purchased with reinvested
dividends and other distributions for those shares at that time. Remember,
because the NAV of Class A shares is usually higher than the NAV of Class B
shares, you may receive fewer Class A shares than the number of Class B shares
converted, but the total dollar value will be the same. We do the conversion on
the first business day of the month following the seventh anniversary of the
date of your purchase.
HOW TO PLACE YOUR PURCHASE ORDER
If you wish to purchase Class A or Class B shares, you may purchase the shares
using one of the methods described below. Eligible entities wishing to purchase
Institutional Class shares should contact NAS at 1-800-848-0920 for information
regarding such purchases.
BY MAIL -- Complete and mail your application with a check or money order made
payable to; Nationwide Advisory Services, Inc., P.O. Box 1492, Columbus, Ohio
43216-1492. Payment must be made in U.S. dollars only and drawn on a U.S. bank.
NAS will not accept third-party checks.
BY WIRE -- You can request that your bank transmit funds (federal funds) by wire
to the Fund's custodian bank. In order to use this method, you must call NAS by
4 p.m. Eastern Time, and the wire must be received by the custodian bank by the
close of business on the day you placed your order or your order will be
cancelled. You may be liable for any loss to the Fund resulting from the
cancellation. Please note that your bank may charge a fee to wire funds. If you
choose this method to open your account, you must call our toll-free number
before you wire your investment, and you must then complete and fax the
application.
BY TELEPHONE (NAS NOW) -- Call 1-800-637-0012, our automated voice-response
system, 24 hours a day, seven days a week, for easy access to mutual fund
information. You can choose from a menu of choices to conduct transactions and
hear fund price information, mailing and wiring instructions and other mutual
fund information. You must complete the appropriate section of the application
to use NAS NOW to make purchases.
THROUGH AN AUTHORIZED BROKER -- NAS has relationships with certain brokers and
other financial intermediaries who are authorized to accept, or designate
intermediaries to accept, purchase and redemption orders for the Fund. If you
purchase through such a broker, your order will be priced at the NAV next
determined after your broker or its designated intermediary accepts it. Contact
your broker to determine whether it has an established relationship with NAS.
BY ON-LINE ACCESS -- Log on to our website www.nationwidefunds.com 24 hours a
day, seven days a week, for easy access to your mutual fund accounts. Once you
have reached the website, you will be instructed on how to select a password and
perform transactions. You can choose to receive information on all of our funds
as well as your own personal accounts. You may also perform transactions, such
as purchases, redemptions and exchanges. The Fund may terminate the ability to
buy Fund shares on this website at any time, in which case you may continue to
buy shares by mail, wire, telephone or through an authorized broker as described
in this Prospectus.
12
<PAGE> 14
ADDITIONAL SHAREHOLDER SERVICES
Shareholders are entitled to a wide variety of services by contacting:
NAS NOW 1-800-637-0012
Our customized voice-response system, available 24 hours a day, seven days a
week
CUSTOMER SERVICE 1-800-848-0920
Representatives are available to answer questions between 8 a.m. and 5 p.m.
Eastern Time (Monday through Friday, except Thursday in which case
representatives are available between 9:30 a.m. and 5 p.m. Eastern Time).
For additional information on buying shares and shareholder services, call the
customer service number listed above or contact your sales representative.
SELLING SHARES
You can sell -- also known as redeeming -- your shares of the Fund at any time,
subject to certain restrictions described below. The price you will receive when
you sell your shares will be the NAV (less any applicable sales charges) next
determined after NAS receives your
properly completed order to sell in its
offices in Columbus, Ohio. Of course, the
value of the shares you sell may be worth
more or less than their original purchase price depending upon the market value
of the Fund's investments at the time of the sale.
Properly completed orders contain all necessary
paperwork to authorize and complete the transaction.
NAS may require all account holder signatures, updated
account registration and bank account information and,
depending on circumstances, a signature guarantee.
Your order to sell shares can be made in writing, by telephone (if you
authorized telephone transactions on your application) or by on-line access.
Generally, we will pay you for the shares that you sell within three days after
receiving your order to sell. Payment for shares you recently purchased by check
may be delayed until the check clears, which may take up to 10 business days
from the date of your purchase.
RESTRICTIONS ON SALES
You may not be able to sell your shares of the Fund or the Fund may delay paying
you the proceeds from a sale when the New York Stock Exchange is closed (other
than customary weekend and holiday closings) or if trading is restricted or if
an emergency exists.
SIGNATURE GUARANTEE -- CLASS A AND CLASS B SHARES
A signature guarantee is required under the following circumstances:
- if a redemption is over $100,000,
- if your account registration has changed within the last 30 days,
- if the redemption check is made payable to anyone other than the registered
shareholder
- if the proceeds are sent to a bank account not previously designated or
changed within the past 30 days, or
- if the proceeds are mailed to an address other than the address of record.
NAS reserves the right to require a signature guarantee in other circumstances,
without notice.
CONTINGENT DEFERRED SALES CHARGE (CDSC) ON CLASS A AND CLASS B SHARES
You must pay a CDSC if you sell Class B shares within six years of purchase,
unless you are entitled to a waiver. The sales charge applies if your sale
causes the value of Class B shares in your account to fall below the total
amount of all purchases of Class B shares you made during the preceding six
years. The sales charge is applied to your original purchase price, or the
current market value of the shares being sold, whichever is less. The amount of
the sales charge will decrease as illustrated in the following chart:
<TABLE>
<CAPTION>
7 years
Sale within 1 year 2 years 3 years 4 years 5 years 6 years or more
- -----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Sales Charge 5% 4% 3% 3% 2% 1% 0%
</TABLE>
All purchases during the month are grouped together and will be treated as if
made on the last day of the preceding month.
We do not impose a CDSC on Class B shares purchased through reinvested dividends
and distributions. If you sell your Class B shares and reinvest the proceeds in
Class B shares within 30 days, NAS will deposit an amount equal to any CDSC you
paid into your account. We will also waive the CDSC if you sell shares following
the death or disability of a shareholder, provided the sale occurs within one
year of the shareholder's death or a determination of disability, and for
mandatory withdrawals from IRA accounts after age 70 1/2 years. For more
information, see the SAI.
13
<PAGE> 15
Buying, Selling and Exchanging Fund Shares
Under certain circumstances, employer-sponsored retirement plans investing in
Class A shares without a sales charge (other than those investing in the Fund
through variable insurance products) may be charged a CDSC if shares are
redeemed within three years after purchase. The CDSC will be 1% for the first
year, 0.50% for the second year and 0.25% for the third year.
HOW TO PLACE YOUR SALE ORDER
You can request the sale of your Class A or Class B shares in any of the ways
described below. A signature guarantee may be required under certain
circumstances. Please refer to the section on page 13 entitled "Signature
guarantee-Class A and Class B shares". Eligible entities wishing to sell
Institutional Class shares should contact NAS at 1-800-848-0920 for information
regarding such sales.
BY TELEPHONE (NAS NOW) -- Calling 1-800-637-0012 connects you to our automated
voice-response system, available 24 hours a day, seven days a week, for easy
access to
mutual fund information. You can sell
shares and have the check mailed to your
address of record, unless you declined
this option on your application. Only the
following types of accounts can use
NAS NOW to sell shares: Individual, Joint, Transfer on Death, Trust, and Uniform
Gift/Transfer to Minor accounts. You can call 1-800-637-0012 after 7 p.m.
Eastern Time to learn the day's closing share price.
CAPITAL GAINS TAXES
If you sell Fund shares for more than you paid for
them, you may have capital gains, which are subject to
federal (and in some cases, state) income tax. For
more information, see "Distributions and
Taxes -- Selling Fund Shares" on page 17.
CUSTOMER SERVICE LINE -- Unless you declined the telephone redemption privilege
on your application you can call and request that a check payable to the
shareholder of record be mailed to the address of record. You can sell shares of
your IRA by telephone if we receive the proper forms. The distribution from an
IRA will be subject to a mandatory 10% federal withholding tax, unless you
inform us in writing not to withhold taxes. For additional information or to
request the forms, please call the customer service line at 1-800-848-0920. The
Fund will use procedures to confirm that telephone instructions are genuine. If
the Fund acts on instructions it reasonably believed were genuine, it will not
be liable for any loss, injury, damage or expense that occurs as a result, and
the Fund will be held harmless for any loss, claims or liability arising from
its compliance with the instructions. NAS may record telephone instructions to
sell shares. The Fund reserves the right to revoke this privilege at any time,
without notice to shareholders, and to request the sale in writing, signed by
all shareholders on the account.
BY BANK WIRE -- NAS can wire the funds directly to your account at a commercial
bank (a voided check must be attached to your application) unless you declined
this option on your application. (This authorization will remain in effect until
you give NAS written notice of its termination.) Your funds will be wired to
your bank on the next business day after your order to sell shares has been
processed. We will deduct a $20 fee from the proceeds of your sale for this
service. Your financial institution may also charge you a fee for receiving the
wire. Funds sent outside the U.S. may be subject to a higher fee.
BY AUTOMATED CLEARING HOUSE (ACH) -- Your funds can be sent to your bank via ACH
on the second business day after your order to sell has been received by NAS.
Funds sent through ACH should reach your bank in two business days. There is no
fee for this service. (This authorization will remain in effect until you give
NAS written notice of its termination.)
BY MAIL OR FAX -- Write a letter to Nationwide Advisory Services, Inc., P.O. Box
1492, Columbus, Ohio 43216-1492 or fax it to 614-249-8705. Please be sure your
letter is signed by all account owners. Be sure to include your account number
and the Fund from which you wish to make a redemption. For a distribution from
an IRA, you must include your date of birth and indicate whether or not you want
NAS to withhold federal income tax from your proceeds. Your sale of shares will
be processed on the date NAS receives your signed letter or fax. If your fax is
received after 4 p.m. Eastern Time, it will be processed the next business day.
NAS reserves the right to require the original document if you fax your letter.
THROUGH AN AUTHORIZED BROKER -- NAS has relationships with certain brokers and
other financial intermediaries who are authorized to accept, or designate
intermediaries to accept, purchase and redemption orders for the Fund. If you
have an account with such a broker, your redemption order will be priced at the
NAV next determined after your order has been accepted by your broker or its
designated intermediary. Your broker or financial intermediary may charge a fee
for this service.
14
<PAGE> 16
BY ON-LINE ACCESS -- Log on to our website www.nationwidefunds.com 24 hours a
day, seven days a week, for easy access to your mutual fund accounts. Once you
have reached the website, you will be instructed on how to select a password and
perform transactions. You can choose to receive information on all of our funds
as well as your own personal accounts. You may also perform transactions, such
as purchases, redemptions and exchanges. The Fund may terminate the ability to
sell Fund shares on this website at any time, in which case you may continue to
sell shares by mail, wire, telephone or through an authorized broker as
described in this Prospectus.
ACCOUNTS WITH LOW BALANCES -- CLASS A AND CLASS B SHARES
We may sell the rest of your shares and close your account if you make a sale
that reduces the value of your account to less than $250. Before the account is
closed, we will give you notice and allow you 90 days to purchase additional
shares to avoid this action. We do this because of the high cost of maintaining
small accounts. This does not apply to Automatic Asset Accumulation accounts.
For additional information on selling your shares, call our customer service
line at 1-800-848-0920 or contact your sales representative.
DISTRIBUTION PLAN
In addition to the sales charges which you may pay for Class A and Class B
shares, the Trust has adopted a Distribution Plan under Rule 12b-1 of the
Investment Company Act, which permits Class A and Class B shares of the Fund to
compensate NAS -- as distributor -- for expenses associated with distributing
the Fund's shares and providing shareholder services.
DISTRIBUTION AND SERVICE FEES
Under the Distribution Plan, Class A and Class B shares of the Fund pay NAS
compensation accrued daily and paid monthly. The Fund shall pay amounts not
exceeding an annual amount of:
<TABLE>
<CAPTION>
CLASS AS A % OF DAILY NET ASSETS
- ----------------------------------------------------------------
<S> <C>
Class A shares 0.25% (distribution or service fee)
................................................................
Class B shares 1.00% (0.25% service fee)
</TABLE>
Because these fees are paid out of the Fund's assets on an ongoing basis, over
time these fees will increase the cost of your investment and may cost you more
than paying other types of sales charges.
EXCHANGING SHARES
You can exchange the shares you own for shares of another fund within Nationwide
Mutual Funds (except the Morley Capital Accumulation Fund) as long as they are
the same
class of shares, both accounts have the
same owner, and your first purchase in
the new fund meets the fund's minimum
investment requirement. For example, you
can exchange Class A shares of one fund
for Class A shares of another, but you
can not exchange
Class A shares for Class B shares.
CAPITAL GAINS TAXES
Exchanging shares is considered a sale and purchase of
shares for federal and state income tax purposes.
Therefore, if the shares you exchange are worth more
than you paid for them, you my have to pay federal
and/or state income taxes. For more information, see
"Distributions and Taxes -- Exchanging Fund Shares" on
page 17.
There is no sales charge for exchanges of Class B shares or Institutional Class
shares. However, if your exchange involves certain Class A shares, you may have
to pay the difference between the sales charges if a higher sales charge
applies. If you exchange Prime Shares of the Nationwide Money Market Fund into
another fund, you must pay the applicable sales charge, unless it has already
been paid. If you exchange Class B shares for Prime Shares of the Nationwide
Money Market Fund, the time you hold the shares in the Money Market Fund will
not be counted for purposes of calculating any CDSC. If you then sell your Prime
Shares of the Money Market Fund, you will pay the sales charge that would have
been charged if the shares had been sold at the time they were exchanged into
the Money Market Fund. If you exchange your Prime Shares of the Money Market
Fund back into Class B shares, the time you hold Class B shares prior to the
exchange will be counted for purposes of calculating the CDSC.
HOW TO PLACE YOUR EXCHANGE ORDER
You can request an exchange of shares in writing, by fax, by phone or by on-line
access (see "Buying Shares -- How to place your purchase order" on page 12 or
the back cover for
15
<PAGE> 17
Buying, Selling and Exchanging Fund Shares
contact information). If you make your request in writing, please be sure all
account owners sign the letter. Your exchange will processed on the date NAS
receives your signed letter or fax. If your fax is received after 4 p.m. Eastern
Time, it will be processed the next business day. If you fax your request, we
reserve the right to ask for the original. You can automatically request an
exchange 24 hours a day, seven days a week, by calling NAS NOW, our automated
voice-response system, or by logging on to our website. You will have automatic
exchange privileges unless you request not to on your application. The Trust
reserves the right to amend or discontinue these exchange privileges upon 60
days' written notice to shareholders.
EXCESSIVE TRADING
The Fund reserves the right to reject any exchange request it believes will
increase transaction costs, or otherwise adversely affect other shareholders.
Specifically, exchange activity may be limited to 12 exchanges within a one year
period or 1% of the Fund's NAV. The Fund may delay forwarding redemption
proceeds for up to seven days if the investor redeeming shares is engaged in
excessive trading, or if the amount of the redemption request otherwise would be
disruptive to efficient portfolio management, or would adversely affect the
Fund.
16
<PAGE> 18
DISTRIBUTIONS AND TAXES
The following information is provided to help you understand the income and
capital gains you can earn from owning Fund shares, as well as the federal taxes
you may have to pay on this income. For tax advice about your personal tax
situation, please speak with your tax adviser.
DISTRIBUTIONS OF INCOME DIVIDENDS
Every quarter, the Fund distributes any available income dividends to
shareholders. Income dividends are taxable to you as ordinary income for federal
income tax purposes, unless you hold your shares in a qualified tax-deferred
plan or account, or are otherwise not subject to federal income tax. The amount
of income dividends distributed to you will be reported in a Form 1099, which we
will send to you during the tax season each year (unless you hold your shares in
a qualified tax-deferred plan or account or are otherwise not subject to federal
income tax). For corporate shareholders, a portion of each year's distributions
may be eligible for the corporate dividend-received deduction.
DISTRIBUTIONS OF CAPITAL GAINS
If the Fund has net realized capital gains at the end of the calendar year
(meaning the gains from sales of securities exceed any losses from sales), it
will distribute this capital gain to shareholders annually. You must pay federal
income taxes on any capital gains distributed to you, unless you hold your
shares in a qualified tax-deferred plan or account or are otherwise not subject
to federal income tax. On Form 1099, we will report the amount of net short-term
capital gains and net long-term capital gains distributed to you during the
year. Currently, for individuals, long-term capital gains are taxed at a maximum
rate of 20%; short-term capital gains are taxed as ordinary income, such as
interest or dividends. For more information regarding capital gains tax rates,
speak with your tax adviser.
REINVESTING DISTRIBUTIONS
All income and capital gains distributions will be reinvested in shares of the
Fund. You may request a payment in cash in writing if distributions are in
excess of $5. You may be subject to tax on reinvested distributions. If
distribution checks (1) are returned and
marked as "undeliverable" or (2) remain
uncashed for six months, your account
will be changed automatically so that all future distributions are reinvested in
your account. Checks that remain uncashed for six months will be canceled and
the money reinvested in the Fund as of the cancellation date. No interest is
paid during the time the check is outstanding.
CHANGING YOUR DISTRIBUTION OPTION
If you want to change your distribution option, you
must notify us by the record date for a dividend or
distribution in order for it to be effective for that
dividend or distribution.
You may be subject to federal backup withholding at a rate of 31% of each
distribution unless you certify that the taxpayer identification number you gave
us is correct, and that you are not subject to withholding. (We will, however,
withhold taxes if the Internal Revenue Service notifies us that such
certifications are not accurate, or as may otherwise be required under the
Internal Revenue Code.)
STATE AND LOCAL TAXES
Distributions may be subject to state and local taxes, even if not subject to
federal income taxes. State and local tax laws vary; please consult your tax
adviser.
SELLING FUND SHARES
Selling Fund shares for more than you paid for them gives you a capital gain,
which is subject to federal income tax. The amount of the tax depends on how
long you held your shares. For individuals, long-term capital gains are
currently taxed at a maximum rate of 20%; and short-term capital gains are taxed
as ordinary income, such as interest or dividends. Capital gains from your sale
of Fund shares are not reported on Form 1099; you or your tax adviser should
keep track of your purchases, sales, and any resulting gain or loss. If you do
sell Fund shares for a loss, you may be able to use this capital loss to offset
any capital gains you have.
EXCHANGING FUND SHARES
Exchanging your shares of the Fund is considered a sale for income tax purposes.
Therefore, if the shares you exchange are worth more than you paid for them, you
have capital gains, which are subject to the federal income taxes described
above. If you exchange Fund shares for a loss, you may be able to use this
capital loss to offset any capital gains you have.
17
<PAGE> 19
INFORMATION FROM NATIONWIDE
Please read this Prospectus before you invest, and keep it with your records.
The following documents contains additional information about the Fund. To
obtain a document free of charge, contact us at the address or number listed
below.
- - SAI (incorporated by reference into this Prospectus)
- - Annual Report (which contains a discussion of the market conditions and
investment strategies that significantly effect the Fund's performance) (as
available)
- - Semi-Annual Report (as available)
FOR ADDITIONAL INFORMATION CONTACT:
Nationwide Advisory Services, Inc.
P.O. Box 1492
Columbus, OH 43216-1492
(614) 249-8705 (fax)
Nationwide Logo
FOR INFORMATION, ASSISTANCE AND WIRE ORDERS:
1-800-848-0920 (toll free, 8 a.m. - 5 p.m. Eastern Time (Monday through Friday,
except Thursday in which case representatives are available between 9:30 a.m.
and 5 p.m. Eastern Time))
FOR 24-HOUR ACCOUNT ACCESS:
1-800-637-0012 (toll free)
Also, visit the Nationwide Family of Funds' website at www.nationwidefunds.com
INFORMATION FROM THE SECURITIES AND EXCHANGE COMMISSION
You can obtain copies of the Fund's documents from the SEC as follows:
IN PERSON:
Public Reference Room in Washington, D.C. (for their hours of operation, call
1-202-942-8090)
BY MAIL:
Securities and Exchange Commission
Public Reference Section
Washington, D.C. 20549-0102
(The SEC charges a fee to copy any documents.)
ON THE EDGAR DATABASE VIA THE INTERNET:
www.sec.gov
BY ELECTRONIC REQUEST:
[email protected]
INVESTMENT COMPANY ACT FILE NO. 811-08495
NATIONWIDE FAMILY OF FUNDS
THREE NATIONWIDE PLAZA
COLUMBUS, OHIO 43215-2220
HS-1222-4/00
