<PAGE> 1
AS FILED DECEMBER 20, 2000
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM N-14
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 |X|
Pre-Effective Amendment No. |_|
Post-Effective Amendment No. |_|
(Check appropriate box or boxes)
NATIONWIDE MUTUAL FUNDS
-----------------------
(Exact Name of Registrant as Specified in Charter)
(484) 530-1300
(Area Code and Telephone Number)
1200 RIVER ROAD
CONSHOHOCKEN, PENNSYLVANIA 19428
--------------------------------
Address of Principal Executive Offices:
(Number, Street, City, State, Zip Code)
DINA A. TANTRA, ESQUIRE
ONE NATIONWIDE PLAZA
COLUMBUS, OHIO 43215
--------------------
Name and Address of Agent for Service:
(Number and Street) (City) (State) (Zip Code)
Copies to:
ERIC E. MILLER, ESQUIRE
STRADLEY, RONON, STEVENS & YOUNG, LLP
2600 ONE COMMERCE SQUARE
PHILADELPHIA, PA 19103-7098
Approximate Date of Proposed Public Offering: AS SOON AS
PRACTICABLE AFTER THIS REGISTRATION STATEMENT BECOMES EFFECTIVE
UNDER THE SECURITIES ACT OF 1933, AS AMENDED.
--------------------------------------------------------------------------------
IT IS PROPOSED THAT THIS FILING WILL BECOME EFFECTIVE ON JANUARY 19, 2001,
PURSUANT TO RULE 488.
TITLE OF THE SECURITIES BEING REGISTERED: SHARES OF BENEFICIAL INTEREST, WITHOUT
PAR VALUE, OF THE NATIONWIDE INTERMEDIATE U.S. GOVERNMENT BOND FUND - CLASS A,
NATIONWIDE INTERMEDIATE U.S. GOVERNMENT BOND FUND - CLASS B AND NATIONWIDE
INTERMEDIATE U.S. GOVERNMENT BOND FUND - CLASS D. NO FILING FEE IS DUE BECAUSE
THE REGISTRANT IS RELYING ON SECTION 24(f) OF THE INVESTMENT COMPANY ACT OF
1940, AS AMENDED.
<PAGE> 2
IMPORTANT NOTICE: PLEASE COMPLETE THE ENCLOSED PROXY BALLOT
AND RETURN IT AS SOON AS POSSIBLE.
NATIONWIDE MUTUAL FUNDS
NATIONWIDE LONG-TERM U.S. GOVERNMENT BOND FUND
NATIONWIDE INTERMEDIATE U.S. GOVERNMENT BOND FUND
1200 RIVER ROAD
CONSHOHOCKEN, PENNSYLVANIA 19428
January __, 2001
Dear Valued Shareholder:
Enclosed is a Notice of a Special Meeting of Shareholders (the
"Meeting") of the Nationwide Long-Term U.S. Government Bond Fund and the
Nationwide Intermediate U.S. Government Bond Fund (each a "Fund," and,
collectively, the "Funds") series of Nationwide Mutual Funds, an Ohio business
trust (the "Trust"). The Meeting is scheduled for February 22, 2001, at 10:30
a.m., Eastern time, at the Jeffers Auditorium, One Nationwide Plaza, Columbus,
Ohio 43215. The accompanying materials describe an important proposal that may
affect the future of your Fund(s), and also contain your proxy statement and
proxy card/voting instruction form. When you provide us with your proxy
card/voting instruction form, it tells us how you wish to vote on the important
issue being presented for your consideration at the Meeting. If you complete and
sign the proxy card/voting instruction form, we'll vote your shares exactly as
you tell us. If you simply sign the proxy/voting instruction form, and do not
provide us with voting instructions, your shares will be voted "FOR" the
proposed Plan of Reorganization (described below). In addition, the persons
designated as proxies will be authorized to vote in their discretion on any
other matters that may properly come before the Meeting. We ask that you review
this document and vote using the enclosed proxy card/voting instruction form. If
shareholders return their proxy cards/voting instruction forms promptly, we may
be able to avoid making additional mailings.
PLEASE TAKE A MOMENT TO FILL OUT, SIGN AND RETURN THE
ENCLOSED PROXY CARD
The Board of Trustees of the Trust unanimously recommends that you
approve a Plan of Reorganization that would result in the various classes of
shares of the Nationwide Long-Term U.S. Government Bond Fund series (the
"Long-Term Fund") of the Trust, in effect, being exchanged for the corresponding
classes of shares of the Nationwide Intermediate U.S. Government Bond Fund
series (the "Intermediate Fund") of the Trust. If the shareholders of both the
Long-Term Fund and the Intermediate Fund approve the proposal, shareholders of
the Long-Term Fund will receive shares of the corresponding class of the
Intermediate Fund equal in value to the shares they own in that class of the
Long-Term Fund immediately prior to the reorganization. After the
reorganization, those shareholders will no longer be shareholders of the
Long-Term Fund, and instead will be shareholders of the Intermediate Fund.
The Board of Trustees is recommending that you approve the Plan of
Reorganization and resulting transaction for the following reasons:
o The shareholders of both the Long-Term and
Intermediate Funds should benefit from the greater
efficiencies that can result from an investment in a
larger fund; and
o Both Funds have identical investment objectives and
are managed very similarly, and the Board of
Trustees and the Funds' investment adviser do not
believe that it is desirable or in the best
interests of shareholders to maintain two
<PAGE> 3
funds that are so similar when demand for U.S.
government bond funds is generally weak.
o Both Funds are managed by Villanova Mutual Fund
Capital Trust.
The proposed transaction is intended to qualify as a tax-free
reorganization under the Internal Revenue Code of 1986, as amended, as further
described in the accompanying Prospectus/Proxy Statement, which means that
shareholders of the Long-Term Fund would not have a taxable gain or loss on the
exchange of their shares.
THE BOARD OF TRUSTEES OF THE TRUST UNANIMOUSLY RECOMMENDS
THAT YOU VOTE IN FAVOR OF THIS PROPOSAL.
|_| To ensure that your vote is counted, indicate your
position on the enclosed proxy card.
|_| Sign and return your card promptly.
|_| If you determine at a later date that you wish to
attend the Meeting, you may revoke your proxy and
vote in person.
If you have any account specific questions, please call the Trust at
1-800-848-0920. If you have any questions relating to the accompanying
Prospectus/Proxy Statement or need assistance voting your shares, please call
our proxy solicitor, Shareholder Communications Corporation, at 1-877-389-8650.
Thank you for your prompt attention to this matter.
Sincerely,
Joseph J. Gasper
Chairman
Nationwide Mutual Funds
<PAGE> 4
PRELIMINARY COPY
NATIONWIDE MUTUAL FUNDS
NATIONWIDE LONG-TERM U.S. GOVERNMENT BOND FUND
NATIONWIDE INTERMEDIATE U.S. GOVERNMENT BOND FUND
1200 RIVER ROAD
CONSHOHOCKEN, PENNSYLVANIA 19428
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
SCHEDULED FOR FEBRUARY 22, 2001
To the Shareholders of the Nationwide Long-Term U.S. Government Bond Fund and
the Nationwide Intermediate U.S. Government Bond Fund:
NOTICE IS HEREBY GIVEN that a Special Meeting of Shareholders (the
"Meeting") of the Nationwide Long-Term U.S. Government Bond Fund (the "Long-Term
Fund") and the Nationwide Intermediate U.S. Government Bond Fund (the
"Intermediate Fund") (each a "Fund," and, collectively, the "Funds"), both
series of Nationwide Mutual Funds, an Ohio business trust (the "Trust"), will be
held at the Jeffers Auditorium, One Nationwide Plaza, Columbus, Ohio 43215, on
February 22, 2001 at 10:30 a.m., Eastern time. The Meeting is being called for
the following purposes:
1. To approve or disapprove a Plan of Reorganization with respect
to the Long-Term Fund and the Intermediate Fund, that provides
for the acquisition by the Intermediate Fund of substantially
all of the assets subject to the liabilities of the Long-Term
Fund in exchange solely for Class A shares, Class B shares and
Class D shares of the Intermediate Fund, followed by the
distribution pro rata of such shares to the shareholders of
the Long-Term Fund holding the corresponding class of shares
of the Long-Term Fund in complete liquidation and dissolution
of the Long-Term Fund.
2. To transact such other business as may properly come before
the Meeting or any adjournment thereof.
The attached Prospectus/Proxy Statement provides more information about
the transaction contemplated by the Plan of Reorganization. A copy of the Plan
of Reorganization is attached as Exhibit A to the Prospectus/Proxy Statement.
Shares of a Fund may be purchased by separate accounts of Nationwide
Life Insurance Company or Nationwide Life and Annuity Insurance Company
(collectively, "Nationwide") to fund benefits payable under certain variable
annuity contracts and variable life insurance policies ("variable contracts").
With respect to such separate accounts, Nationwide hereby solicits and agrees to
vote at the Meeting shares of the Funds which are held by separate accounts in
accordance with instructions timely received from owners of the variable
contracts. With respect to other shareholders, the Trustees of the Trust are
soliciting your votes.
<PAGE> 5
If you are a shareholder of record at the close of business on December
18, 2000, you have the right to direct the persons listed on the enclosed proxy
card regarding how your shares in the Fund(s) should be voted. If you are a
variable contract owner of record at the close of business on December 18, 2000,
you have the right to instruct Nationwide regarding how the Fund shares
attributable to your variable contract should be voted. To assist you, a proxy
card or a proxy card/voting instruction form is enclosed.
By Order of the Board of Trustees,
________________________________
Kevin S. Crossett
Secretary
Nationwide Mutual Funds
January __, 2001
TO SECURE THE LARGEST POSSIBLE REPRESENTATION AND TO
SAVE THE EXPENSE OF FURTHER MAILINGS,
THE BOARD OF TRUSTEES URGES YOU TO COMPLETE, DATE, SIGN, AND RETURN
THE ENCLOSED PROXY CARD OR VOTING INSTRUCTION FORM IN THE ENCLOSED
POSTAGE-PAID RETURN ENVELOPE. IT IS IMPORTANT THAT YOU RETURN YOUR
SIGNED PROXY CARD OR VOTING INSTRUCTION FORM PROMPTLY SO THAT A
QUORUM MAY BE ENSURED.
YOUR VOTE IS VERY IMPORTANT TO US REGARDLESS OF THE NUMBER OF SHARES YOU
OWNED ON THE RECORD DATE.
<PAGE> 6
PROSPECTUS/PROXY STATEMENT
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
COVER PAGE................................................................................................. Cover
SUMMARY ..................................................................................................
What proposal am I voting on?.....................................................................
How will the shareholder voting be handled?.......................................................
When will the Reorganization become effective?....................................................
What will happen to accounts of the Long-Term Fund shareholders after
the Reorganization?......................................................................
What are the general tax consequences of the Reorganization?......................................
COMPARISONS OF SOME IMPORTANT FEATURES.....................................................................
How do the investment objectives, principal strategies and policies of the Funds compare?.........
What are the principal risks of investments in the Funds?.........................................
Who manages the Funds?............................................................................
What are the fees and expenses of each Fund and what might they be after the
Reorganization?..........................................................................
Where can I find more performance and financial information about the Funds?......................
What are other key features of the Funds?.........................................................
REASONS FOR THE REORGANIZATION.............................................................................
INFORMATION ABOUT THE REORGANIZATION.......................................................................
How will the Reorganization be carried out?.......................................................
Who will pay the expenses of the Reorganization?..................................................
What are the tax consequences of the Reorganization?..............................................
What should I know about the shares of the Intermediate Fund?.....................................
What is the capitalization of the Funds, and what might the capitalization be after
the Reorganization?......................................................................
COMPARISON OF INVESTMENT OBJECTIVES, STRATEGIES AND POLICIES...............................................
Are there any significant differences between the investment objectives and principal
strategies of the Funds?.................................................................
How do the types of securities the Funds buy and the investment policies
of the Funds compare?....................................................................
What are the principal risks associated with an investment in the Funds?..........................
How to the fundamental investment restrictions of the Funds compare?..............................
VOTING INFORMATION.........................................................................................
How many votes are necessary to approve the Plan?.................................................
How do I ensure my vote is accurately recorded?...................................................
Can I revoke my proxy?............................................................................
What other matters will be voted upon at the Meeting?.............................................
Who is entitled to vote?..........................................................................
What other solicitations will be made?............................................................
Are there dissenters' rights?.....................................................................
MORE INFORMATION ABOUT THE TRUST...........................................................................
CONTROL PERSONS AND PRINCIPAL HOLDERS OF SHARES............................................................
EXHIBIT TO PROSPECTUS AND PROXY STATEMENT..................................................................
EXHIBIT A - PLAN OF REORGANIZATION................................................................ A-1
EXHIBIT B - PERFORMANCE AND FINANCIAL INFORMATION ABOUT THE FUNDS................................. B-1
NATIONWIDE MUTUAL FUNDS COMBINED PROSPECTUS, DATED MARCH 1, 2000 (ENCLOSED)
</TABLE>
<PAGE> 7
PROSPECTUS/PROXY STATEMENT
DATED JANUARY 19, 2001
ACQUISITION OF SUBSTANTIALLY ALL OF THE ASSETS AND LIABILITIES OF THE
NATIONWIDE LONG-TERM U.S. GOVERNMENT BOND FUND,
A SERIES OF
NATIONWIDE MUTUAL FUNDS
BY AND IN EXCHANGE
FOR
CLASS A SHARES, CLASS B SHARES AND CLASS D SHARES
OF THE
NATIONWIDE INTERMEDIATE U.S. GOVERNMENT BOND FUND,
ALSO A SERIES OF
NATIONWIDE MUTUAL FUNDS
1200 RIVER ROAD
CONSHOHOCKEN, PENNSYLVANIA 19428
1-800-848-0920
This Prospectus/Proxy Statement solicits proxies to be voted at a
Special Meeting of Shareholders (the "Meeting") of the Nationwide Long-Term U.S.
Government Fund (the "Long-Term Fund") and the Nationwide Intermediate U.S.
Government Bond Fund (the "Intermediate Fund"), each a series of Nationwide
Mutual Funds (the "Trust"). The shareholders of each of the Long-Term Fund and
the Intermediate Fund (together, the "Funds") are being asked to approve a Plan
of Reorganization (the "Plan"). If shareholders of both Funds vote to approve
the Plan, substantially all the assets and liabilities of the Long-Term Fund
will be acquired by the Intermediate Fund in exchange for shares of the
Nationwide Intermediate U.S. Government Bond Fund - Class A ("Intermediate Fund
Class A Shares"), Nationwide Intermediate U.S. Government Bond Fund - Class B
("Intermediate Fund Class B Shares") and Nationwide Intermediate U.S. Government
Fund - Class D ("Intermediate Fund Class D Shares"). (The Intermediate Fund
Class A Shares, Intermediate Fund Class B Shares and Intermediate Fund Class D
Shares are, collectively, referred to as the "Intermediate Fund Shares.")
The Meeting will be held at the Jeffers Auditorium, One Nationwide
Plaza, Columbus, Ohio 43215, on February 22, 2001, at 10:30 a.m., Eastern time.
This Prospectus/Proxy Statement is being furnished in connection with the
solicitation of proxies from shareholders of record on December 18, 2000 (the
"Record Date"), by the Board of Trustees on behalf of the Funds, and of voting
instructions by Nationwide Life Insurance Company and Nationwide Life and
Annuity Insurance Company (collectively, "Nationwide") from owners of certain
variable annuity contracts and variable insurance policies (collectively,
"variable contracts") having contract values on the Record Date allocated to a
subaccount of a Nationwide separate account invested in shares of the Funds.
This Prospectus/Proxy Statement and forms of proxy card or proxy card/voting
instructions will be first sent to shareholders of the Funds on or about January
__, 2001.
If shareholders of both Funds vote to approve the Plan, shareholders of
the Long-Term Fund will receive Intermediate Fund Shares as follows:
CURRENT SHARES NEW SHARES
-------------- ----------
Long-Term Fund - Class A Intermediate Fund - Class A
Long-Term Fund - Class B Intermediate Fund - Class B
Long-Term Fund - Class D Intermediate Fund - Class D
<PAGE> 8
(The Long-Term Fund-Class A shares, Long-Term Fund-Class B shares and Long-Term
Fund-Class D shares are, collectively, referred to as the "Long-Term Fund
Shares.") The Intermediate Fund Shares that shareholders of the Long-Term Fund
will receive will be equal in value immediately after the reorganization to the
Long-Term Fund Shares they hold immediately prior to the reorganization as
described in this Prospectus/Proxy Statement. In the event that shareholders of
both Funds vote to approve the Plan, it is currently anticipated that the
reorganization of the Long-Term Fund will occur on or about February __, 2001.
Pursuant to the Plan, the Long-Term Fund will then be liquidated and dissolved.
The management of the Trust is proposing the reorganization because of
the similarity of the Funds' current operations, and the efficiencies and lower
overall expenses of the Intermediate Fund that are expected to result after the
reorganization.
The investment objectives of the Long-Term Fund and the Intermediate
Fund are identical - to seek as high a level of current income as is consistent
with the preservation of capital. Also, the Funds have substantially similar
investment strategies. The primary differences between the Funds' principal
investment strategies relate to: (i) the average weighted maturities of the
Funds' investment portfolios, and (ii) the duration of the Funds' portfolio
securities. Average weighted maturity refers to the average of the maturities of
all debt securities held in a Fund's investment portfolio. Duration is a measure
of the expected life of a debt security on a present value basis, reflecting
both interest and principal payments. Both average weighted maturity and
duration are designed to measure sensitivity to changes in interest rates.
This Prospectus/Proxy Statement contains the information about the
proposed reorganization contemplated by the Plan and about the Intermediate Fund
Shares that will be issued if the Plan is implemented, which holders of the
Long-Term Fund Shares should know before approving the Plan and thereby
investing in the Intermediate Fund Shares. You should retain this
Prospectus/Proxy Statement for future reference. This Prospectus/Proxy Statement
is accompanied by the Nationwide Mutual Funds Combined Prospectus, dated March
1, 2000, as supplemented from time to time, which is incorporated by reference
into this Prospectus/Proxy Statement. Statements of Additional Information for
the Funds, dated September 1, 2000 (relating to the Nationwide Mutual Funds
Combined Prospectus, dated March 1, 2000, as supplemented from time to time)
(File Nos. 333-40455, 811-08495) and January 19, 2001 (relating to this
Prospectus/Proxy Statement), each containing additional information, have been
filed with the U.S. Securities and Exchange Commission (the "SEC"), and are
incorporated herein by reference. You may request copies of the Statements of
Additional Information without charge by calling 1-800-848-0920 or by writing to
the Trust at P.O. Box 1492, Columbus, Ohio 43216-1492.
The Nationwide Mutual Funds Combined Annual Report to Shareholders,
dated October 31, 2000 (the "Annual Report"), relating to the Funds, has also
been filed with the SEC and is incorporated by reference into this
Prospectus/Proxy Statement. You may request a copy of the Annual Report without
charge by contacting the Trust at the phone number or address given above.
THE SECURITIES AND EXCHANGE COMMISSION HAS NOT APPROVED OR DISAPPROVED
THESE SECURITIES, OR PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS/PROXY STATEMENT. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
<PAGE> 9
SUMMARY
This is only a summary of certain information contained in this
Prospectus/Proxy Statement. You should read the more complete information in the
rest of this Prospectus/Proxy Statement, including the Plan (which is attached
as Exhibit A), the performance and financial information about the Funds (which
is attached as Exhibit B) and the Nationwide Mutual Funds Combined Prospectus
relating to the Funds (enclosed).
WHAT PROPOSAL AM I VOTING ON?
You are being asked to consider and approve the Plan that will have the
effect of combining the Long-Term Fund with the Intermediate Fund. At a meeting
held on December 15, 2000, the Board of Trustees of the Trust, on behalf of the
Funds, approved the Plan and determined to recommend that shareholders of the
Long-Term Fund and the Intermediate Fund vote to approve the Plan. If
shareholders of both Funds vote to approve the Plan, substantially all of the
assets and liabilities of the Long-Term Fund will be transferred to the
Intermediate Fund in exchange for Intermediate Fund Shares of equal value. The
Intermediate Fund Shares will then be distributed pro rata to the holders of the
Long-Term Fund Shares, and the Long-Term Fund will be liquidated and dissolved.
(The proposed reorganization contemplated by the Plan is referred to in this
Prospectus/Proxy Statement as the "Reorganization.") As a result of the
Reorganization, shareholders of the Long-Term Fund will become shareholders of
the Intermediate Fund. If you are a shareholder of the Long-Term Fund, this
means that, upon completion of the Reorganization, your shares of the Long-Term
Fund will, in effect, be exchanged for an equal value of the corresponding class
of shares of the Intermediate Fund immediately prior to the Reorganization. If
you were a shareholder of the Intermediate Fund prior to the Reorganization,
your interest in the Intermediate Fund will not be affected by the
Reorganization.
For the reasons set forth in the "Reasons for the Reorganization"
section, the Board of Trustees of the Trust has determined that the
Reorganization is in the best interests of the shareholders of the Long-Term
Fund and the Intermediate Fund. The Board of Trustees of the Trust also
concluded that no dilution in value would result to the shareholders of either
Fund as a result of the Reorganization.
THE BOARD OF TRUSTEES RECOMMENDS
THAT YOU VOTE TO APPROVE THE PLAN
HOW WILL THE SHAREHOLDER VOTING BE HANDLED?
Shareholders who own shares of the Funds at the close of business on
December 18, 2000, will be entitled to notice of and to vote at the Meeting, and
will be entitled to one vote for each full share and a fractional vote for each
fractional share that they hold. With respect to shares of the Funds held
through Nationwide separate accounts, Nationwide will vote the shares of each
Fund at the Meeting in accordance with instructions timely received from persons
entitled to give voting instructions under the variable contracts. 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 instructions are timely received. If a duly executed and dated voting
instruction form is received that does not specify a choice, Nationwide will
consider its timely receipt as an instruction to vote "FOR" the Reorganization.
Variable contract owners may revoke previously submitted voting instructions
given to Nationwide at any time prior to the Meeting by submitting to Nationwide
subsequently dated voting instructions, delivering to Nationwide a written
notice of revocation or otherwise giving notice of revocation at the Meeting, in
all cases prior to the exercise of the authority granted in the voting
instruction form.
1
<PAGE> 10
With respect to shares of the Funds held by shareholders, shares will
be voted in accordance with the instructions contained in the signed and dated
proxy cards. If a duly executed and dated proxy card is received that does not
specify a choice, the shares will be voted "FOR" the Reorganization and in
accordance with the views of management upon any other matters that may come
before the Meeting or adjournment of the Meeting. Shareholders may revoke
previously submitted proxy cards at any time prior to the Meeting by: (i)
submitting to the Trust a subsequently dated proxy card, (ii) delivering to the
Trust a written notice of revocation or (iii) otherwise giving notice of
revocation at the Meeting. In all cases, any action to revoke a proxy must be
taken before the authority granted in the proxy card is exercised. If Shares are
held in an account at a brokerage firm or bank, the shareholder should contact
such brokerage firm or bank to change his or her vote.
To approve the Plan, a majority of the outstanding shares of the
Long-Term Fund and a majority of the outstanding shares of the Intermediate Fund
must be voted in favor of it.
Please vote by proxy as soon as you receive this Prospectus/Proxy
Statement. You may place your vote by completing and signing the enclosed proxy
card or voting by telephone through Shareholder Communications Corporation. If
you vote by either method, your votes will be officially cast at the Meeting by
the persons appointed as proxies.
You can revoke your proxy or change your voting instructions at any
time until the vote is taken at the Meeting. For more details about shareholder
voting, see the "Voting Information" section of this Prospectus/Proxy Statement.
WHEN WILL THE REORGANIZATION BECOME EFFECTIVE?
The Reorganization is currently anticipated to occur on or about
February __, 2001, assuming shareholder and regulatory approval is obtained.
Shortly after the Reorganization has been completed, shareholders of the
Long-Term Fund will receive new account information relating to their new
ownership of Intermediate Fund Shares.
WHAT WILL HAPPEN TO ACCOUNTS OF THE LONG-TERM FUND SHAREHOLDERS AFTER THE
REORGANIZATION?
Upon approval and closing of the Reorganization, the accounts of
shareholders of the Long-Term Fund will automatically be transferred to the
Intermediate Fund. After the Reorganization, shareholders of the Long-Term Fund
will be assigned a new account at the Intermediate Fund, and the Long-Term Fund
shareholder accounts will be closed. This process will occur automatically, with
no action required by shareholders of the Long-Term Fund.
Various types of account servicing features currently available to
Long-Term Fund shareholders, such as systematic purchase and withdrawal plans,
will transfer automatically to the new Intermediate Fund shareholder accounts.
Following the Reorganization, shareholders of the Long-Term Fund will enjoy the
same array of account options as they do presently as shareholders of the
Long-Term Fund.
WHAT ARE THE GENERAL TAX CONSEQUENCES OF THE REORGANIZATION?
It is expected that shareholders of the Long-Term Fund will not
recognize any gain or loss, for federal income tax purposes, as a result of the
exchange of their Long-Term Fund Shares for Intermediate Fund Shares. If you are
a Long-Term Fund shareholder, however, you should consult your tax adviser
regarding the effect, if any, of the Reorganization in light of your individual
circumstances. You also should consult your tax adviser about state and local
tax consequences. For more information about the tax consequences of the
Reorganization, please see the section "Information about the Reorganization -
What are the tax consequences of the Reorganization?"
2
<PAGE> 11
COMPARISON OF SOME IMPORTANT FEATURES
HOW DO THE INVESTMENT OBJECTIVES, PRINCIPAL STRATEGIES AND POLICIES OF THE FUNDS
COMPARE?
The investment objectives of the Long-Term Fund and the Intermediate
Fund are identical: to seek as high a level of current income as is consistent
with the preservation of capital. In attempting to achieve its objective, each
Fund seeks an attractive risk-adjusted total return with an emphasis on current
income. Both the Long-Term Fund and the Intermediate Fund, in seeking to achieve
their goals, invest at least 65% of their respective total assets in U.S.
government and agency bonds, bills and notes. Additionally, both Funds may
invest in mortgage-backed securities. The investment objectives of the Funds are
non-fundamental, which means that the Board of Trustees of the Trust may change
the Funds' investment objectives without shareholder approval.
While the investment policies and strategies of the Long-Term Fund and
the Intermediate Fund are substantially similar, they are not identical. The
principal differences in the primary investment strategies and policies of the
Long-Term Fund and the Intermediate Fund are: (i) the average weighted
maturities of the Funds' investment portfolios, and (ii) the duration of the
Funds' portfolio securities.
The average weighted maturity of a Fund reflects the average of the
stated or effective maturities of the debt securities held in the Fund's
investment portfolio, with each security's maturity being "weighted" according
to the percentage of assets that the security represents. The average weighted
maturities of the Funds are a general measure of the Funds' exposure to changes
in interest rates (i.e., bond prices rise when interest rates fall, and bond
prices fall when interest rates rise). The dollar-weighted average portfolio
maturity of the Long-Term Fund is generally more than seven years, while the
dollar-weighted average portfolio maturity for the Intermediate Fund is three to
seven years. Generally, the longer a Fund's average weighted maturity, the
higher its risk/return potential, because longer-term bonds are generally more
sensitive to interest rate changes than shorter-term bonds. Following the
Reorganization, it is anticipated that the dollar-weighted average portfolio
maturity of the Intermediate Fund will be modified to five to nine years.
Duration is another calculation that seeks to measure the sensitivity
of the Funds' net asset values to changes in interest rates. It is a measure of
the expected life of a debt security on a present value basis, and reflects both
principal and interest payments. Duration takes the length of the time intervals
between the present time and the time that the interest and principal payments
are scheduled or expected to be received, and weights them by the present values
of the cash to be received at each future point in time. It demonstrates how a
1% change in interest rates - whether up or down - will affect the Funds' net
asset values. The Long-Term Fund has a duration similar to that of the Lehman
Brothers Government Bond Long-Term Index, which historically has been nine to
twelve years. The Intermediate Fund's portfolio duration is shorter, typically
in the range of three to six years. So, if the Long-Term Fund has a duration of
nine years, the Fund would be expected to gain 9% in value if interest rates
fall by 1%, and lose 9% in value if interest rates rise by 1%. Following the
Reorganization, it is anticipated that the duration of the Intermediate Fund
will be modified to four to six years.
WHAT ARE THE PRINCIPAL RISKS OF INVESTMENTS IN THE FUNDS?
Investments in the Long-Term Fund and the Intermediate Fund involve
risks common to most mutual funds-the net asset value and total return of each
of the Long-Term Fund and the Intermediate Fund will depend upon changes in the
value of, and income produced by, their portfolio securities. There is no
guarantee against losses (including the loss of principal) resulting from an
investment in the Long-Term Fund or the Intermediate Fund, and no guarantee that
either the Long-Term Fund or the Intermediate Fund will achieve its investment
objective. The Long-Term Fund and the Intermediate Fund
3
<PAGE> 12
are subject to the risk that the Funds' investment adviser may make poor
investment decisions, either regarding market movements or specific securities
issuers. An investment in the Long-Term Fund or the Intermediate Fund is not, by
itself, a complete or balanced investment program.
The Long-Term Fund and the Intermediate Fund are also subject to the
risks presented by investing in fixed income securities. For example, both Funds
are subject to interest rate risk - the risk that rising interest rates will
lower the prices of the fixed income securities held in the Funds' portfolios.
Because of the longer duration of the Long-Term Fund, the shares of the
Long-Term Fund may tend to exhibit more volatility, as a result of changing
interest rates, than shares of the Intermediate Fund. The Long-Term Fund is also
more susceptible to inflation risk than the Intermediate Fund. Inflation risk
causes the value of the fixed income securities held in the Funds' portfolios to
fall as inflation rises.
While the Long-Term Fund and the Intermediate Fund are generally
subject to less credit risk than fixed income funds that invest primarily in
non-U.S. government securities, the Funds are still subject to the risk that an
issuer of a portfolio security that is not backed by the full faith and credit
of the U.S. government held by the Funds may default. In that event, the
Long-Term Fund and/or the Intermediate Fund may not be able to collect interest
and principal on such defaulted issues.
Because both the Long-Term Fund and the Intermediate Fund may invest in
mortgage-backed securities, the Funds also are subject to the risk that the
prepayment of principal on these securities may have a negative impact on the
Funds' investment performance. Additionally, the Funds are subject to extension
risk, which is the risk that anticipated payments on principal may not occur,
typically because of a rise in interest rates. In such circumstances, the
expected maturity of portfolio securities may increase.
For more information about the risks of the Funds, see "What are the
principal risks associated with investments in the Funds?" under the heading
"Comparison of Investment Objectives, Strategies and Policies" in this
Prospectus/Proxy Statement.
WHO MANAGES THE FUNDS?
The management of the business and affairs of the Funds is the
responsibility of the Board of Trustees of the Trust. The Board of Trustees
formulates and reviews the general policies regarding the operation of the
Trust, and directs the officers to perform the daily functions on behalf of the
Funds. The Board of Trustees meets periodically to review the performance,
investment activity and investment practices of the Funds.
The Trust was organized as an Ohio business trust on October 30, 1997,
and it is registered with the SEC. The Trust is authorized to issue an unlimited
number of shares of beneficial interest. Presently, there are thirty-seven
separate series of the Trust, including the Funds. The Funds are diversified,
open-end, registered management investment company series, commonly referred to
as "mutual funds."
Villanova Mutual Fund Capital Trust ("VMF") is the investment adviser
for each Fund, and, as such, manages the assets and makes investment decisions
for both the Long-Term Fund and the Intermediate Fund in accordance with the
policies and procedures established by the Board of Trustees of the Trust.
Mr. Gary Hunt is the portfolio manager for both Funds. Mr. Hunt joined
Nationwide Advisory Services, Inc., predecessor investment adviser to VMF, in
1992 as a securities analyst. Mr. Hunt served as a co-portfolio manager for each
Fund from March 1997 to May 1999. Mr. Hunt assumed primary responsibility for
each Fund's investments in May 1999.
4
<PAGE> 13
VMF, a Delaware business trust organized in 1999, is a wholly owned
subsidiary of Villanova Capital, Inc. ("VCI"), 97% of the common stock of which
in turn is held by Nationwide Financial Services, Inc. ("NFS"). NFS, a holding
company, has two classes of common stock outstanding with different voting
rights, enabling Nationwide Corporation (the holder of all of the outstanding
Class B common stock) to control NFS. Nationwide Corporation is also a holding
company in the Nationwide Insurance Enterprise. All of the common stock of
Nationwide Corporation is held by Nationwide Mutual Insurance Company (95.24%)
and Nationwide Mutual Fire Insurance Company (4.76%), each of which is a mutual
company owned by its policyholders.
Prior to September 1, 1999, Nationwide Advisory Services, Inc. ("NAS")
served as the investment adviser to the Funds. Effective September 1, 1999, the
investment advisory services previously performed for the Funds by NAS were
transferred to VMF, an affiliate of NAS, and an indirect subsidiary of NFS.
There were no changes in the fees charged for investment advisory services
provided to the Funds as a consequence of this transfer.
For the services provided under the Investment Advisory Agreement
between the Trust and VMF, VMF receives an annual fee, paid monthly, based on
the average daily net assets of each Fund, according to the following fee
schedule:
ASSETS OF EACH FUND INVESTMENT ADVISORY FEE
------------------- -----------------------
Up to $250 million 0.50%
$250 million and more, but less than $1 billion 0.475%
$1 billion and more, but less than $2 billion 0.45%
$2 billion and more, but less than $5 billion 0.425%
$5 billion and more 0.40%
For the fiscal year ended October 31, 2000, VMF voluntarily waived a portion of
its fees and reimbursed certain expenses in order to limit the annual fund
operating expenses of the Long-Term Fund and the Intermediate Fund (as
applicable) to: 0.99% of the Class A Shares of the Intermediate Fund, and 1.04%
of the Class A Shares of the Long-Term Fund; 1.64% of the Class B Shares of the
Long-Term Fund; and 0.79% of the Class D Shares of the Long-Term Fund. As a
consequence, after taking into account the applicable waivers and
reimbursements, the total management fees paid by the Funds to VMF for its
advisory services for the fiscal year ended October 31, 2000, expressed as a
percentage of the Funds' average daily net assets, were equal to 0.45% and 0.47%
of the Long-Term Fund and the Intermediate Fund, respectively. VMF has
contractually agreed to continue to so limit the expenses of the Intermediate
Fund, following the Reorganization, for the period from March 1, 2001 through at
least March 1, 2002.
WHAT ARE THE FEES AND EXPENSES OF EACH FUND AND WHAT MIGHT THEY BE AFTER THE
REORGANIZATION?
FEES AND EXPENSES - The following table describes the fees and expenses that you
may pay if you buy and hold shares of the Funds, as well as the pro forma fees
and expenses of the Intermediate Fund after the Reorganization.
5
<PAGE> 14
FEE TABLES FOR
THE LONG-TERM FUND AND THE INTERMEDIATE FUND
A. CLASS A SHARES
<TABLE>
<CAPTION>
Actual Pro forma
--------------------------------------- Intermediate Fund -
Long-Term Fund - Intermediate Class A After
Class A Fund - Class A Reorganization
------- -------------- --------------
<S> <C> <C> <C>
SHAREHOLDER FEES(1)
(fees paid directly from your investment)
Maximum Sales Charge (Load)
Imposed on Purchases......................... 4.50%(2) 4.50%(2) 4.50%(2)
Maximum Deferred Sales Charge (Load)........... None(3) None(3) None(3)
ANNUAL FUND OPERATING EXPENSES
(expenses that are deducted from Fund assets)
Management Fees............................ 0.50% 0.50% 0.50%
Distribution (12b-1) Fees.................. 0.25% 0.25% 0.25%
Other Expenses............................. 0.33% 0.34% 0.30%
Total Annual Fund Operating Expenses....... 1.08%(4) 1.09%(5) 1.05%(6)
Total Waivers of Fund Expenses............. 0.04% 0.10% 0.06%
Total Annual Fund Operating Expenses.......
(After Waivers and Expense Limitations).... 1.04% 0.99% 0.99%
</TABLE>
B. CLASS B SHARES
<TABLE>
<CAPTION>
Actual Pro forma
--------------------------------------- Intermediate Fund
Long-Term Fund - Intermediate - Class B After
Class B Fund - Class B Reorganization
------- -------------- --------------
<S> <C> <C> <C>
SHAREHOLDER FEES(1)
(fees paid directly from your investment)
Maximum Sales Charge (Load)
Imposed on Purchases......................... None None None
Maximum Deferred Sales Charge (Load)........... 5.00%(7) 5.00%(7) 5.00%(7)
ANNUAL FUND OPERATING EXPENSES
(expenses that are deducted from Fund assets)
Management Fees............................ 0.50% 0.50% 0.50%
Distribution (12b-1) Fees.................. 0.85% 0.85% 0.85%
Other Expenses............................. 0.34% 0.28% 0.20%
Total Annual Fund Operating Expenses....... 1.69% 1.63% 1.55%(6)
Total Waivers of Fund 0.05% 0.00% 0.00%
Expenses.................
Total Annual Fund Operating Expenses.......
(After Waivers and Expense Limitations).... 1.64% 1.63% 1.55%
</TABLE>
C. CLASS D SHARES
<TABLE>
<CAPTION>
Actual Pro forma
--------------------------------------- Intermediate Fund
Long-Term Fund - Intermediate - Class D After
Class D Fund - Class D Reorganization
------- -------------- --------------
<S> <C> <C> <C>
SHAREHOLDER FEES(1)
(fees paid directly from your investment)
Maximum Sales Charge (Load)
Imposed on Purchases......................... 4.50%(2) 4.50%(2) 4.50%(2)
Maximum Deferred Sales Charge (Load)........... None None None
</TABLE>
6
<PAGE> 15
<TABLE>
<S> <C> <C> <C>
ANNUAL FUND OPERATING EXPENSES
(expenses that are deducted from Fund assets)
Management Fees................................ 0.50% 0.50% 0.50%
Distribution (12b-1) Fees...................... None None None
Other Expenses................................. 0.34% 0.28% 0.22%
Total Annual Fund Operating Expenses........... 0.84%(4) 0.78%(5) 0.72%(4)
Total Waivers of Fund Expenses................. 0.05% 0.00% 0.00%
Total Annual Fund Operating Expenses...........
(After Waivers and Expertise Limitations)...... 0.79% 0.78% 0.72%
</TABLE>
(1) If you buy and sell shares through a broker or other financial intermediary,
such broker or financial intermediary 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 and Class D shares decreases. For more information,
refer to "Buying, Selling and Exchanging Fund Shares - Buying Shares - Class A
and Class D Sales Charges" in the Nationwide Mutual Funds' Combined Prospectus,
which accompanies this Prospectus/Proxy Statement.
(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) VMF has agreed voluntarily to waive its fees or to reimburse "Other
Expenses" (to the extent necessary) so that Total Annual Fund Operating Expenses
will not exceed 1.04% on Class A Shares, 1.64% on Class B Shares and 0.79% on
Class D Shares, until further written notice. These waivers by VMF, along with
the net expenses the Long-Term Fund actually paid through October 31, 2000,
were: Class A Shares (Total Waivers of Fund Expenses of 0.04%, and Total Annual
Fund Operating Expenses (After Waivers and Expense Limitations) of 1.04%); Class
B Shares (Total Waivers of Fund Expenses of 0.05%, and Total Annual Fund
Operating Expenses (After Waivers and Expense Limitations) of 1.64%); and Class
D Shares (Total Waivers of Fund Expenses of 0.05%, and Total Annual Fund
Operating Expenses (After Waivers and Expense Limitations) of 0.79%). These
voluntary waivers and expense limitations are not reflected in the table above.
(5) VMF has agreed voluntarily to waive its fees or to reimburse "Other
Expenses" (to the extent necessary) so that Total Annual Fund Operating Expenses
would not exceed 0.99% on Class A Shares, 1.64% on Class B Shares and 0.79% on
Class D Shares. These waivers, along with the net expenses of the Intermediate
Fund actually paid through October 31, 2000, were: Class A Shares (Total Waivers
of Fund Expenses of 0.10%, and Total Annual Fund Operating Expenses (After
Waivers and Expense Limitations) of 0.99%). There were no waivers of Fund
Expenses for the Class B and Class D Shares of the Intermediate Fund. Actual
Total Fund Operating Expenses were 1.63% for the Class B Shares and 0.78% for
the Class D Shares. Beginning March 1, 2001, VMF has contractually agreed to
waive a portion of its fees or to reimburse "Other Expenses" (to the extent
necessary) to limit the Intermediate Fund's expenses. Neither the voluntary
waivers and expense limitations through October 31, 2000, nor the contractual
waivers and expense limitations through February 28, 2002, are reflected in the
table above.
(6) Beginning March 1, 2001, VMF has contractually agreed to waive a portion of
its fees or to reimburse "Other Expenses" (excluding taxes, interest, portfolio
transaction expenses and extraordinary expenses) (to the extent necessary) so
that Total Annual Fund Operating Expenses will not exceed 0.99% of Class A
shares, 1.64% of Class B shares, and 0.79% of Class D shares, respectively,
whether the Reorganization is complete or not. Without such adjustments, the
Total Annual Fund Operating Expenses would be 1.05% for Class A shares. Any fee
reduction or expense reimbursement has the effect of increasing the Long-Term
Fund's and the Intermediate Fund's performance for the period during which the
reduction or reimbursement was in effect and may not be recouped at a later
date. There is no assurance that these fee waivers and expense reimbursements
will continue after March 1, 2002.
(7) 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," in the Nationwide Mutual Funds Combined Prospectus, which
accompanies this Prospectus/Proxy Statement.
EXAMPLES
The following Examples are intended to help you compare the cost of
investing in the Fund whose shares you currently own, with the cost of investing
in the Intermediate Fund if the proposed Reorganization is approved. The Example
for each of the Long-Term Fund and the Intermediate Fund, presented separately,
assumes that you invest $10,000 in each Fund for the time periods indicated and
then redeem all of your shares at the end of those periods. Each Pro forma
Intermediate Fund Example assumes that you invest $10,000 in the Intermediate
Fund after the Reorganization. Each Example assumes that your investment has a
5% return each year.
The calculations in the Examples for the Long-Term Fund and the
Intermediate Fund (prior to the Reorganization) assume operating expenses to be
BEFORE WAIVERS AND REIMBURSEMENTS as presented in the preceding Fee Tables. As
described in note 6 to the Fee Table, pursuant to a contractual commitment, a
portion of the operating expenses of the Intermediate Fund will be waived or
reimbursed during the one-year period starting March 1, 2001. The calculations
in the Examples of the expenses for the Pro forma Intermediate Fund (after the
Reorganization), for the first year, assume operating expenses to be AFTER
WAIVERS AND REIMBURSEMENTS during the one-year period after March 1, 2001. The
calculations in the Examples of the expenses for the Pro forma Intermediate Fund
(after the Reorganization), for the 3-, 5-, and 10-year periods assume operating
expenses to be BEFORE WAIVERS AND REIMBURSEMENTS as presented in the preceding
Fee Tables.
<TABLE>
<CAPTION>
Class A Shares 1 Year 3 Years 5 Years 10 Years
-------------- ------ ------- ------- --------
<S> <C> <C> <C> <C>
Long-Term Fund $555 $778 $1,019 $1,708
Intermediate Fund $556 $781 $1,024 $1,719
Pro forma Intermediate Fund (after the $546 $763 $ 998 $1,670
Reorganization)
Class B Shares 1 Year 3 Years 5 Years 10 Years
-------------- ------ ------- ------- --------
Long-Term Fund $672 $833 $1,118 $1,760
Intermediate Fund $666 $814 $1,087 $1,721
Pro forma Intermediate Fund (after the $658 $790 $1,045 $1,648
Reorganization)
Class D Shares 1 Year 3 Years 5 Years 10 Years
-------------- ------ ------- ------- --------
Long-Term Fund $532 $706 $895 $1,440
Intermediate Fund $526 $688 $864 $1,373
Pro forma Intermediate Fund (after the $520 $670 $833 $1,304
Reorganization)
</TABLE>
7
<PAGE> 16
You would pay the following expenses on the same investment if you did
not sell your shares:
<TABLE>
<CAPTION>
Class B Shares 1 Year 3 Years 5 Years 10 Years
-------------- ------ ------- ------- --------
<S> <C> <C> <C> <C>
Long-Term Fund $172 $553 $918 $1,760
Intermediate Fund $166 $514 $887 $1,721
Pro forma Intermediate Fund (after the $158 $490 $845 $1,648
Reorganization)
</TABLE>
THIS IS JUST AN EXAMPLE. IT DOES NOT REPRESENT PAST OR FUTURE EXPENSES
OR RETURNS. Each of the Long-Term Fund and the Intermediate Fund pays its
operating expenses. The effects of these expenses are reflected in the net asset
value and are not directly charged to your account.
The expenses of each of the Long-Term Fund and the Intermediate Fund
are comprised of expenses attributable to each Fund, respectively, as well as
expenses not attributable to any particular series of the Trust that are
allocated among the various series of the Trust.
WHERE CAN I FIND MORE PERFORMANCE AND FINANCIAL INFORMATION ABOUT THE FUNDS?
For the Long-Term Fund and the Intermediate Fund, a discussion of each
Fund's performance during the fiscal year ended October 31, 2000 is contained in
Exhibit B to this Prospectus/Proxy Statement, entitled "Performance and
Financial Information about the Funds." In addition, per share income
information for the past five fiscal years for both Funds is shown in Exhibit B,
under the headings "Financial Highlights." More financial information about the
Long-Term Fund and the Intermediate Fund is contained in the Nationwide Mutual
Funds Combined Annual Report to Shareholders (the "Annual Report"), which is
incorporated by reference into the Statement of Additional Information to this
Prospectus/Proxy Statement. The Annual Report is available upon request. The
Statement of Additional Information relating to this Prospectus/Proxy Statement
also contains more financial and historical performance information about the
Long-Term Fund and the Intermediate Fund.
WHAT ARE OTHER KEY FEATURES OF THE FUNDS?
The Funds use the same service providers for the following services:
Transfer Agency and Custody Services
Nationwide Investors Services, Inc. ("NISI") serves as the transfer
agent and dividend disbursing agent for each Fund. NISI is a wholly-owned
subsidiary of Villanova SA Capital Trust ("VSA"), a wholly-owned subsidiary of
VCI. BISYS Fund Services Ohio, Inc. ("BISYS"), as the sub-transfer agent for
NISI, provides certain transfer agent services for the Funds The Fifth Third
Bank, 38 Fountain Square Plaza, Cincinnati, Ohio 45263, is the custodian for
both Funds and makes all receipts and disbursements for the Funds.
8
<PAGE> 17
Fund Administration Services
VSA provides the various administrative and accounting services,
including daily valuation of the Funds' shares, preparation of financial
statements, tax returns, and regulatory reports, and presentation of quarterly
reports to the Trust's Board of Trustees. BISYS provides certain of these
services through a sub-administration agreement with VSA.
Distribution Services
NAS serves as underwriter for each Fund in the continuous distribution
of its shares. In its capacity as distributor for each Fund's shares, NAS
solicits orders for the sale of shares, advertises and pays the costs of
advertising, office space and the personnel involved in such activities.
Distribution and Service Fees
The Funds have adopted a Distribution Plan (the "12b-1 Plan") under
Rule 12b-1 of the 1940 Act, which permits the Funds to compensate NAS, as the
Funds' distributor, for expenses associated with distributing the Funds' shares
and providing shareholder services. Under the 12b-1 Plan, Class A shares and
Class B shares of the Funds pay NAS amounts not exceeding 0.25% of the average
daily net assets of the Class A shares of each Fund (for both distribution and
shareholder services), and 0.85% of the average daily net assets of the Class B
shares of each Fund (0.10% is for shareholder services).
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 well as
payments to broker-dealers for shareholder services. For more information
regarding the 12b-1 Plan, please see "Distribution Plan" in the current
Statement of Additional Information for the Trust, dated September 1, 2000,
which is incorporated by reference into this Prospectus/Proxy Statement.
Purchases and Redemptions
The Funds are subject to identical sales charge schedules. The maximum
front-end sales charge imposed on purchases of Class A shares and Class D shares
of the Funds is 4.50%, with reduced sales charges for purchases of $50,000 or
more, and no front-end sales charge imposed on purchases of $25 million or more
of the Class D shares of the Funds. The maximum contingent deferred sales charge
("CDSC") imposed on Class B shares of the Funds is 5.00%. This CDSC is reduced,
depending on the number of years that you have owned the Class B shares. Class B
shares are automatically converted to Class A shares after you have held them
for seven years, and the Class B shares to be delivered to the Long-Term Fund
shareholders in the Reorganization will convert to Class A shares on the same
schedule as conversions would have occurred in the absence of the transaction.
Under certain circumstances, employer-sponsored retirement plans investing in
Class A shares without a sales charge (other than those investing in the Funds
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. Shareholders of
the Long-Term Fund will not be charged either a front-end sales charge or a CDSC
in connection with the Reorganization.
Each Fund generally requires a minimum initial investment of $1,000 for
Class A shares and Class B shares, and a minimum initial investment of $250 for
Class D shares. Subsequent investments must generally be in amounts of at least
$25.
9
<PAGE> 18
You may sell (redeem) your shares in either Fund at any time. You may
exchange your shares of either Fund for shares of the same class of any other
retail series of the Trust. Because an exchange is technically a sale and
purchase of shares, an exchange is a taxable transaction.
Shares of each Fund may be redeemed at their respective net asset value
per share (less any applicable CDSC). Additional information and specific
instructions explaining how to buy, sell, and exchange shares of each Fund is
contained in the Nationwide Mutual Funds Combined Prospectus, dated March 1,
2000, as supplemented from time to time, under the heading "Buying, Selling and
Exchanging Fund Shares." The Nationwide Mutual Funds Combined Prospectus, which
accompanies this Prospectus/Proxy Statement and is incorporated by reference,
also lists phone numbers for you to call if you have any questions about your
account. These phone numbers are the same for both Funds.
Dividends and Distributions
Each Fund declares a dividend from its net investment income at the end
of each business day, and such dividends are distributed monthly. On the last
day of each month, all dividends declared during that month are credited to the
accounts of those shareholders. Distributions from capital gains, if any,
generally are declared annually by December 31.
Each Fund automatically reinvests distributions in additional shares of
the same share class of the Fund, unless a shareholder selects a different
option. Specific instructions explaining how to select a different option are
outlined in the enclosed Nationwide Mutual Funds Combined Prospectus, under the
heading "Changing Your Distribution Option."
Distributions from the Funds, whether shareholders receive them in cash
or in additional shares, are generally subject to income tax. Each Fund sends
shareholders a statement in January of the current year that reflects the amount
of ordinary dividends, capital gain distributions and non-taxable distributions
a shareholder received from the Fund in the prior year.
Ordinary dividends and capital gain distributions that shareholders
receive from a Fund, and gains arising from redemptions or exchanges of Fund
shares held by shareholders, may also be subject to state and local taxes. The
holding of Fund shares may also be subject to state and local intangibles taxes.
For more information about the tax implications of investments in the
Funds, see "Distributions and Taxes" in the Nationwide Mutual Funds Combined
Prospectus, which accompanies this Prospectus/Proxy Statement and is
incorporated by reference.
REASONS FOR THE REORGANIZATION
In September 1999, VMF assumed responsibilities as the investment
adviser for the Trust as part of a reorganization of the asset management
activities of Nationwide Financial Services, Inc. Since that time, VMF has been
evaluating the manner in which each series of the Trust is currently being
managed and determining the most attractive areas of the market in which to
invest; as a result, VMF recently recommended to the Trust's Board of Trustees,
and the Board of Trustees agreed, that because the current market demand for
U.S. government bond funds is weak and the two Funds are managed very similarly,
the Funds should be combined to establish a larger fund that has substantially
similar investment policies. As part of its analysis, the Board of Trustees
recognized that a larger fund may be able to realize certain potential cost
savings that could benefit the shareholders of the Funds if the Reorganization
is completed. The Reorganization was also recommended to combine similar funds
in an effort to eliminate duplication of expenses and internal competition.
10
<PAGE> 19
The Plan was presented to the Board of Trustees of the Trust at a
meeting held on December 15, 2000. At the meeting, the Board of Trustees
reviewed the expense ratios of both Funds and the projected expenses of the
combined Funds; the comparative investment performance of the Funds; the
compatibility of the investment objectives, policies, restrictions and
investments of the Funds; and the tax consequences of the Reorganization. The
Board of Trustees also noted that the same portfolio manager manages both Funds,
and that the Funds' portfolio manager also manages a similar series of
Nationwide Separate Account Trust, another registered investment company. During
the course of its deliberations, the Board of Trustees noted that the expenses
of the Reorganization will be borne half by the Funds and half by VMF.
The Board of Trustees concluded that the Reorganization is in the best
interests of the shareholders of the Long-Term Fund and the Intermediate Fund,
and that no dilution of value would result to the shareholders of either Fund
from the Reorganization. The Board of Trustees, including those Trustees who are
not "interested persons" (as defined in the 1940 Act), unanimously approved the
Plan and recommended that shareholders of the Long-Term Fund and the
Intermediate Fund vote to approve the Reorganization.
FOR THE REASONS DISCUSSED ABOVE, THE BOARD OF TRUSTEES
OF THE TRUST, ON BEHALF OF EACH FUND,
UNANIMOUSLY RECOMMENDS THAT YOU VOTE FOR THE PLAN.
If shareholders of both Funds do not approve the Plan, the
Reorganization will not take place, and the Board of Trustees will consider
other possible courses of action for the Long-Term Fund.
INFORMATION ABOUT THE REORGANIZATION
This is only a summary of the Plan. You should read the actual Plan,
which is attached as Exhibit A.
HOW WILL THE REORGANIZATION BE CARRIED OUT?
If shareholders of the Long-Term Fund and the Intermediate Fund approve
the Plan, the Reorganization will be consummated if certain conditions set out
in the Plan are satisfied. These conditions include: the declaration of a
distribution by each Fund, prior to the Valuation Date (described below); the
receipt of an order from the SEC exempting the transaction contemplated by the
Plan from Section 17(a) of the 1940 Act; and receipt of an opinion, in form and
substance reasonably satisfactory to the Trust, to the effect that the
Reorganization is expected to constitute a tax-free reorganization for federal
income tax purposes, as described under "What are the tax consequences of the
Reorganization?" in this Prospectus/Proxy Statement.
The Trust will designate a specific date for the actual Reorganization
to take place. This date is referred to as the closing (the "Closing"), which is
the business day immediately following the Valuation Date, the date on which the
relative value of the Funds and their shares will be measured to determine the
number of Intermediate Fund Shares each Long-Term Fund shareholder is entitled
to receive in the Reorganization.
While Long-Term Fund Shares will continue to be sold up until the date
of the Meeting, if shareholders of the Long-Term Fund and the Intermediate Fund
approve the Plan at the Meeting, shares of the Long-Term Fund will thereafter no
longer be offered for sale, except for the reinvestment of dividend and capital
gain distributions or through established automatic investment plans effected up
to the Valuation Date on behalf of current shareholders. Until the close of
business on the day of the
11
<PAGE> 20
Meeting, you may continue to add to your existing account subject to your
applicable minimum additional investment amount or buy additional shares through
the reinvestment of dividend and capital gain distributions.
If the shareholders of the Long-Term Fund and the Intermediate Fund
approve the Plan, the Long-Term Fund will deliver to the Intermediate Fund
substantially all of its assets, subject to its liabilities, at the Closing, and
shareholders of the Long-Term Fund will receive Intermediate Fund Shares as
follows:
CURRENT SHARES NEW SHARES
-------------- ----------
Long-Term Fund Class A Shares Intermediate Fund Class A Shares
Long-Term Fund Class B Shares Intermediate Fund Class B Shares
Long-Term Fund Class D Shares Intermediate Fund Class D Shares
The stock transfer books of the Long-Term Fund will be permanently closed on the
Valuation Date. The Long-Term Fund will only accept requests for redemption
received in proper form before 4:00 p.m., Eastern time, on the Valuation Date.
Requests received after that time will be considered requests to redeem shares
of the Intermediate Fund.
To the extent permitted by law, the Trust may amend the Plan without
shareholder approval. It may also terminate and abandon the Reorganization at
any time before or, to the extent permitted by law, after the approval by
shareholders of the Long-Term Fund and the Intermediate Fund.
Following the Reorganization, it is expected that the Intermediate Fund
will change its name to Nationwide Government Bond Fund. In addition, as
discussed under "Comparison of Some Important Features" in this Prospectus/Proxy
Statement, it is anticipated that the Intermediate Fund's dollar-weighted
portfolio maturity will be modified to five to nine years, and the Intermediate
Fund's duration will be four to six years.
WHO WILL PAY THE EXPENSES OF THE REORGANIZATION?
The expenses resulting from the Reorganization, including the costs of
the solicitation of proxies, will be paid half by the Funds and half by VMF.
WHAT ARE THE TAX CONSEQUENCES OF THE REORGANIZATION?
The Reorganization is intended to qualify as a tax-free reorganization
for federal income tax purposes under Section 368(a)(1) of the Internal Revenue
Code of 1986, as amended. Based on certain assumptions and representations
received from the Trust, it is the opinion of Stradley, Ronon, Stevens & Young,
LLP, counsel to the Trust, that shareholders of the Long-Term Fund will not
recognize any gain or loss for federal income tax purposes as a result of the
exchange of their Long-Term Fund Shares for Intermediate Fund Shares, and that
neither the Intermediate Fund nor its shareholders will recognize any gain or
loss upon receipt of the assets and liabilities of the Long-Term Fund.
Prior to the Reorganization, the Intermediate Fund does not intend to
distribute to shareholders any undistributed ordinary income or capital gain net
income. Shareholders of the Long-Term Fund who receive Intermediate Fund Shares
as part of the Reorganization could potentially be taxed on this income or gain
in the event it is distributed after the Reorganization.
Shareholders will continue to be responsible for tracking the purchase
cost and holding period of their shares, and should consult their tax advisers
regarding the effect, if any, of the Reorganization in light of their individual
circumstances. Shareholders should also consult their tax advisers as to the
state and local tax consequences of the Reorganization.
WHAT SHOULD I KNOW ABOUT THE SHARES OF INTERMEDIATE FUND?
The Intermediate Fund Class A Shares, Intermediate Fund Class B Shares
and Intermediate Fund Class D Shares will be distributed pro rata to holders of
the Long-Term Fund Class A Shares, Long-Term Fund Class B Shares and Long-Term
Fund Class D Shares, respectively. When issued, each share of the
12
<PAGE> 21
Intermediate Fund, like each share of the Long-Term Fund, will be fully paid and
nonassessable. No personal liability attaches to the ownership of the
Intermediate Fund Shares or the Long-Term Fund Shares. Shares of the
Intermediate Fund will have no preemptive rights and will be transferable upon
the books of the Trust. Each share of the Intermediate Fund, other than the
Intermediate Fund Class B Shares (like the Long-Term Fund Class B Shares), will
have no conversion rights. The Intermediate Fund Shares will be recorded
electronically in each shareholder's account. The Trust will then send a
confirmation to each shareholder. The Trust does not issue share certificates.
WHAT IS THE CAPITALIZATION OF THE FUNDS AND WHAT MIGHT THE CAPITALIZATION BE
AFTER THE REORGANIZATION?
The following table sets forth, as of October 31, 2000, the
capitalization of the Class A shares, the Class B shares and the Class D shares
of the Long-Term Fund and the Intermediate Fund. The table also shows the
projected capitalization of the Intermediate Fund Class A Shares, Intermediate
Fund Class B Shares and Intermediate Fund Class D Shares as adjusted to give
effect to the proposed Reorganization. The capitalization of the Intermediate
Fund and its classes will be different when the Reorganization is consummated.
<TABLE>
<CAPTION>
Intermediate Intermediate Fund
Long-Term Fund Fund - Pro forma
(unaudited) (unaudited) (unaudited)
-------------- ------------ -----------------
<S> <C> <C> <C>
Net assets (millions) (all classes)....... $32,406,294 $111,736,654 $144,142,948
Total shares outstanding (all classes).... 2,948,477 11,169,822 14,407,762
Class A net assets........................ $3,766,724 $54,795,872 $58,562,596
Class A shares outstanding........... 342,859 5,478,873 5,855,545
Class A net asset value per share.... $10.99 $10.00 $10.00
Class B net assets........................ $1,724,199 $1,128,622 $2,852,821
Class B shares outstanding........... 156,925 112,834 285,254
Class B net asset value per share.... $10.99 $10.00 $10.00
Class D net assets........................ $26,915,371 $55,812,160 $82,727,531
Class D shares outstanding........... 2,448,693 5,578,115 8,266,963
Class D net asset value per share.... $10.99 $10.01 $10.01
</TABLE>
COMPARISON OF INVESTMENT OBJECTIVES, STRATEGIES AND POLICIES
This section describes the investment objective and key investment
strategies and policies of the Long-Term Fund and the Intermediate Fund. For a
complete description of the Intermediate Fund's investment policies and risks,
you should read the Nationwide Mutual Funds Combined Prospectus, which
accompanies this Prospectus/Proxy Statement, and is incorporated herein by
reference.
ARE THERE ANY SIGNIFICANT DIFFERENCES BETWEEN THE INVESTMENT OBJECTIVES AND
PRINCIPAL STRATEGIES OF THE FUNDS?
13
<PAGE> 22
The investment objectives of the Long-Term Fund and Intermediate Fund
are identical. Both Funds seek as high a level of current income as is
consistent with the preservation of capital. The investment objective of each
Fund is non-fundamental, and thus, may be changed by the Board of Trustees
without shareholder approval. In attempting to achieve its goal, each Fund seeks
an attractive risk-adjusted total return with an emphasis on current income.
Each Fund attempts to achieve its investment objective by investing at least 65%
of its total assets in U.S. government and agency bonds, bills and notes.
The Funds' portfolio manager employs substantially similar principal
investment strategies in seeking to achieve the Funds' investment goals. To
select investments that fit the Funds' investment objectives, the portfolio
manager uses interest rate expectations, yield-curve analysis, economic
forecasting, market sector analysis and other techniques. In addition, VMF, in
managing the Funds, may look for bonds that VMF believes present good value
(i.e., are undervalued), with the goal of buying the bonds at attractive prices
with the expectation that the bonds will increase in value. However, VMF may
sell a fixed income security held by either Fund to take advantage of more
favorable opportunities.
There are two significant differences in the principal investment
strategies of the Funds, relating to their portfolio maturity and duration
policies. The dollar-weighted average portfolio maturity of the Long-Term Fund
is generally more than seven years, while the Intermediate Fund attempts to
maintain a dollar-weighted average portfolio maturity of three to seven years.
In addition, the Long-Term Fund has a duration similar to that of the Lehman
Brothers Government Bond Long-Term Index, which historically has been nine to
twelve years. The Intermediate Fund's duration is shorter, typically in the
range of three to six years. The Funds' portfolio manager considers the duration
of particular bonds and each Fund's overall portfolio maturity when managing the
Funds' investments. Because of its longer duration, the Long-Term Fund is likely
to exhibit more volatility than the Intermediate Fund.
HOW DO THE TYPES OF SECURITIES THE FUNDS BUY AND THE INVESTMENT POLICIES OF THE
FUNDS COMPARE?
The types of securities that may be purchased by the Funds are
substantially similar. The Funds invest primarily in U.S. government and agency
bonds, bills and notes. The Funds may also purchase mortgage-backed securities
that are issued by U.S. government agencies. In addition, the Funds may invest
in floating and variable rate securities and bank obligations. The Funds may
invest in cash or money market obligations in response to economic, political or
unusual market conditions. The Funds may engage in repurchase agreement
transactions. In addition, the Funds may purchase corporate and municipal bonds
that are investment grade (i.e., rated within the four highest rating categories
by a nationally recognized statistical rating organization) although neither of
these investments will be used as part of the Intermediate Fund's principal
investment strategies. For a more complete description of the types of
securities that the Funds may purchase, the types of transactions that the Funds
may enter into, and the limitations to which the Funds are subject when
purchasing these securities, please refer to the Nationwide Mutual Funds
Combined Prospectus, which accompanies this Prospectus/Proxy Statement, and the
Nationwide Mutual Funds Combined Statement of Additional Information, which is
available upon request.
Each Fund is "diversified," and, as such, 75% of each Fund's total
assets may not be invested in more than 5% of a single issuer's securities, or
be used to purchase 10% or more of the outstanding voting securities of a single
issuer.
WHAT ARE THE PRINCIPAL RISKS ASSOCIATED WITH AN INVESTMENT IN THE FUNDS?
Like all investments, an investment in either Fund involves risk,
including the possible loss of principal. There is no assurance that either Fund
will be able to achieve its investment objective. The achievement of each Fund's
investment objective depends generally upon interest rates and market
14
<PAGE> 23
conditions, and specifically on the portfolio manager's ability to assess
economic conditions and investment opportunities.
The risks of investing in the Funds are comparable to the risks
presented by investments in fixed income securities of similar quality, which
are:
Interest Rate Risk and Inflation Risk
Both Funds are subject to interest rate risk. Interest rate risk is the
risk that increases in interest rates may decrease the value of the fixed income
securities held by the Funds in their portfolios. Usually, the prices of bonds
fall when interest rates increase, and rise when interest rates decrease.
Typically, the longer a bond's maturity, the more sensitive the bond is to price
shifts as a result of changes in interest rates. In addition, the longer a Fund
holds a bond, the greater the chance that interest rate changes will affect the
bond's value.
The Funds are also subject to inflation risk, which affects the value
of fixed-rate investments such as bonds. If a Fund purchases a bond when
inflation and interest rates are low, the value of the bond may fall as
inflation rises and interest rates increase. This could result if investors come
to view bonds with lower interest rates as being less attractive than bonds that
pay higher interest rates.
Credit Risk and Default Risk
Both Funds are subject to credit risk. Credit risk (or default risk) is
the possibility that an issuer of a bond will be unable to make required
interest payments and/or to repay the principal of a security upon maturity. A
change in the credit risk associated with a security may cause a corresponding
change in the security's price, and therefore, a Fund's share price. Since the
Funds primarily purchase debt securities backed by the U.S. government or its
agencies or instrumentalities, there is little credit risk and minimal chance
that the issuers of these obligations will default on the securities.
Prepayment Risk and Extension Risk
The Funds are subject to prepayment and extension risks that are
particular to mortgage-backed and asset-backed securities. The issuers of
mortgage-backed and asset-backed securities may be able to repay principal in
advance, and are especially likely to make prepayments when interest rates fall.
Changes in prepayment rates can make the prices and yields of mortgage-backed
and asset-backed securities volatile. When mortgage-backed and asset-backed
securities are prepaid, the Funds may also fail to recover premiums paid for the
securities, resulting in an unexpected capital loss, and the Funds may have to
reinvest the proceeds from the repayments at lower rates. In addition, rising
interest rates may cause prepayments to occur at slower than expected rates,
thereby effectively lengthening the maturity of the securities and making them
more sensitive to interest rate changes.
Extension risk is the risk that anticipated payments on principal may
not occur, typically because of a rise in interest rates, and the expected
maturity of the securities will increase. During periods of rapidly rising
interest rates, the anticipated maturity of a security may be extended past what
the Funds' portfolio manager anticipated, affecting the maturity and volatility
of the Funds.
HOW DO THE FUNDAMENTAL INVESTMENT RESTRICTIONS OF THE FUNDS COMPARE?
The Funds have adopted identical investment restrictions as fundamental
policies, which cannot be changed without the approval of the majority of the
outstanding voting securities of each Fund. In addition, the Funds are subject
to identical, non-fundamental operating investment policies. While these
15
<PAGE> 24
non-fundamental operating policies may be changed by the Board of Trustees
without shareholder approval, shareholders would be notified about the
implementation of any material changes in the non-fundamental operating
policies.
For more information regarding the Funds' fundamental investment
restrictions and non-fundamental operating policies, please refer to the
Nationwide Mutual Funds Statement of Additional Information, which is
incorporated by reference into this Prospectus/Proxy Statement.
VOTING INFORMATION
HOW MANY VOTES ARE NECESSARY TO APPROVE THE PLAN?
The affirmative vote of the shareholders holding a majority of the
outstanding voting securities of each of the Long-Term Fund and the Intermediate
Fund is necessary to approve the Plan. The vote of the majority of the
outstanding voting securities means the vote of (a) 67% or more of the voting
securities present at such meeting, if the holders of more than 50% of the
outstanding voting securities are present or represented by proxy, or (b) more
than 50% of the shares of that Fund, whichever is less. Each shareholder will be
entitled to one vote for each full share, and a fractional vote for each
fractional share, of the Long-Term Fund and the Intermediate Fund held at the
close of business on December 18, 2000 (the "Record Date"). If sufficient votes
to approve the Plan on behalf of either the Long-Term Fund or the Intermediate
Fund, or on behalf of both Funds, are not received by the date of the Meeting,
the Meeting may be adjourned to permit further solicitations of proxies of the
Long-Term Fund and/or the Intermediate Fund, as necessary.
Under relevant state law and the Trust's governing documents,
abstentions shall be treated as votes present for purposes of determining
whether a quorum exists. Broker non-votes shall not be treated as votes present
for purposes of determining whether a quorum exists. Broker non-votes are shares
for which a broker holding such shares for a beneficial owner has not received
instructions from the beneficial owner and may not exercise discretionary voting
power with respect thereto, although such broker may have been able to vote such
shares on other matters at the Meeting for which it has discretionary authority
or instructions from the beneficial owner. As a result, abstentions and broker
non-votes will have the same effect as a vote against the Plan.
HOW DO I ENSURE MY VOTE IS ACCURATELY RECORDED?
You can vote in any one of the following ways:
o By mail, with the enclosed proxy card.
o In person at the Meeting.
o Through Shareholder Communications Corporation, a
proxy solicitor, by calling toll-free 1-877-389-8650.
A proxy card is, in essence, a ballot. IF YOU SIMPLY SIGN AND DATE THE PROXY BUT
GIVE NO VOTING INSTRUCTIONS, YOUR SHARES WILL BE VOTED "FOR" THE PLAN AND IN
ACCORDANCE WITH THE VIEWS OF MANAGEMENT UPON ANY OTHER MATTERS THAT MAY COME
BEFORE THE MEETING OR ADJOURNMENT OF THE MEETING.
16
<PAGE> 25
CAN I REVOKE MY PROXY?
You may revoke your proxy at any time before it is voted by sending a
written notice to the Trust expressly revoking your proxy, by signing and
forwarding to the Trust a later-dated proxy, or by attending the Meeting and
voting in person.
WHAT OTHER MATTERS WILL BE VOTED UPON AT THE MEETING?
The Board of Trustees does not intend to bring any matters before the
Meeting other than those described in this Prospectus/Proxy Statement. The Board
is not aware of any other matters to be brought before the Meeting. If any other
matter legally comes before the Meeting, proxies which have granted the
designated persons discretion will be voted in accordance with the views of
management.
WHO IS ENTITLED TO VOTE?
Shareholders of record on the Record Date are entitled to one vote for
each share and a proportionate fractional vote for any fraction of a share as to
each issue on which such shareholders are entitled to vote. The following table
sets forth the number of shares of beneficial interest of each class of the
Funds that were outstanding as of the Record Date and are therefore entitled to
vote at the Meeting:
FUND SHARES OUTSTANDING
---- ------------------
Long-Term Fund
Class A _______________________
Class B _______________________
Class D _______________________
TOTAL _______________________
Intermediate Fund
Class A _______________________
Class B _______________________
Class D _______________________
TOTAL _______________________
WHAT OTHER SOLICITATIONS WILL BE MADE?
The Trust will request broker-dealer firms, custodians, nominees and
fiduciaries to forward proxy material to the beneficial owners of the shares of
record. The Trust may reimburse broker-dealer firms, custodians, nominees and
fiduciaries for their reasonable expenses incurred in connection with such proxy
solicitation. In addition to solicitations by mail, officers and employees of
the Trust, without extra pay, may conduct additional solicitations by telephone,
personal interviews and other means. The Trust, on behalf of the Long-Term Fund
and the Intermediate Fund, will engage Shareholder Communications Corporation
("SCC") to assist in soliciting proxies/voting instructions by telephone or
other means. The estimated costs of the proxy solicitation services to be
provided by SCC are $13,000. These costs will be evenly divided between the
Intermediate Fund and VMF.
ARE THERE DISSENTERS' RIGHTS?
Neither shareholders of the Long-Term Fund nor the Intermediate Fund
will be entitled to any "dissenters' rights," because of provisions in the
Trust's Amended Declaration of Trust and because the proposed Reorganization
involves two series of an open-end investment company registered under the
17
<PAGE> 26
1940 Act. Although no dissenters' rights are available, shareholders retain the
right to redeem shares at net asset value until the closing date of the
Reorganization. After the closing date, shareholders may redeem the shares of
the Intermediate Fund, or may exchange the shares of the Intermediate Fund that
the shareholders received for shares of other series of the Trust, subject to
the terms in the prospectus of the fund whose shares are being acquired.
MORE INFORMATION ABOUT THE TRUST
The Long-Term Fund and the Intermediate Fund are separate series of the
Trust, which is an open-end management investment company registered with the
SEC under the 1940 Act. Detailed information about the Trust and each Fund, as
well as the other series of the Trust, is contained in the Nationwide Mutual
Funds Combined Prospectus, dated March 1, 2000, as supplemented from time to
time, which is enclosed with, and considered a part of, this Prospectus/Proxy
Statement. Additional information about the Trust and each Fund is included in
the Nationwide Mutual Funds Combined Statement of Additional Information, dated
September 1, 2000, and the Nationwide Mutual Funds Combined Annual Report to
Shareholders, for the fiscal year ended October 31, 2000. These documents have
been filed with the SEC, and are incorporated by reference into the Statement of
Additional Information relating to this Prospectus/Proxy Statement.
The Trust files proxy materials, reports and other information with the
SEC in accordance with the informational requirements of the Securities Exchange
Act of 1934 and the 1940 Act. These materials can be inspected and copied at:
the SEC's Public Reference Room at 450 Fifth Street NW, Washington, DC 20549,
and at the Regional Office of the SEC located in Chicago at 500 Madison Street,
Suite 1400, Chicago, IL 60661. Also, copies of such material can be obtained
from the SEC's Public Reference Section, Washington, DC 20549-6009 (duplicating
fee required), or from the SEC's Internet address at http://www.sec.gov.
The Trust has noncumulative voting rights. This gives the holders of
more than 50% of the shares voting the ability to elect 100% of the trustees.
The Trust does not routinely hold shareholders' meetings. The Trust is not
required, and does not intend, to hold regular annual meetings of shareholders.
The Trust may hold special or annual shareholder meetings for matters requiring
shareholder approval. Shareholders wishing to submit proposals for consideration
for inclusion in a proxy for the next meeting of shareholders of the Trust (if
any) should send the written proposals to the Trust at Three Nationwide Plaza,
Columbus, Ohio 43216, Attn: Secretary, so that they are received within a
reasonable time before such meeting.
CONTROL PERSONS AND PRINCIPAL HOLDERS OF SHARES
As of the Record Date, to the Trust's knowledge, the following are the
only persons who had or shared voting or investment power over more than 5% of
the outstanding shares of the Funds:
<TABLE>
<CAPTION>
NUMBER OF SHARES PERCENTAGE OF FUND
FUND NAME AND ADDRESS OF SHAREHOLDER BENEFICIALLY OWNED OWNED
---- ------------------------------- ------------------ -----
<S> <C> <C> <C>
Long-Term Fund
Intermediate Fund
</TABLE>
18
<PAGE> 27
As of the Record Date, the officers and Trustees of the Trust, as a
group, owned less than 1% of the outstanding voting shares of the Long-Term
Fund, and owned less than 1% of the outstanding voting shares of the
Intermediate Fund. From time to time, the number of shares of the Long-Term Fund
and the Intermediate Fund held in the "street name" accounts of various
securities dealers for the benefit of their clients or in centralized securities
depositories may exceed 5% of the total shares outstanding.
19
<PAGE> 28
EXHIBIT A
PLAN OF REORGANIZATION
THIS PLAN OF REORGANIZATION (the "Plan"), is adopted by Nationwide
Mutual Funds, a business trust created under the laws of the State of Ohio, with
its principal place of business at 1200 River Road, Conshohocken, Pennsylvania
19428 (the "Trust"), as of this ___ day of _________, 2001, on behalf of two of
the Trust's series, the Nationwide Long-Term U.S. Government Bond Fund (the
"Long-Term Fund") and the Nationwide Intermediate U.S. Government Bond Fund (the
"Intermediate Fund") (collectively, the "Funds").
The reorganization (hereinafter referred to as the "Reorganization")
will consist of (i) the acquisition by the Intermediate Fund of substantially
all of the property, assets and goodwill, subject to the liabilities, of the
Long-Term Fund, in exchange solely for shares of beneficial interest, without
par value, of the Intermediate Fund-Class A (the "Intermediate Fund Class A
Shares"); shares of beneficial interest, without par value, of the Intermediate
Fund-Class B (the "Intermediate Fund Class B Shares"); and shares of beneficial
interest, without par value, of the Intermediate Fund-Class D (the "Intermediate
Fund Class D Shares") (the Intermediate Fund Class A Shares, the Intermediate
Fund Class B Shares and the Intermediate Fund Class D Shares are collectively
referred to as the "Intermediate Fund Shares"); (ii) the distribution of (a) the
Intermediate Fund Class A Shares to the holders of the Long-Term Fund-Class A
shares (the "Long-Term Fund Class A Shares"), (b) the Intermediate Fund Class B
Shares to the holders of the Long-Term Fund-Class B shares (the "Long-Term Fund
Class B Shares"), and (c) the Intermediate Fund Class D Shares to the holders of
the Long-Term Fund-Class D shares (the "Long-Term Fund Class D Shares") (the
Long-Term Fund Class A Shares, the Long-Term Fund Class B Shares and the
Long-Term Fund Class D Shares are collectively referred to as the "Long-Term
Fund Shares"), according to their respective interests in complete liquidation
of the Long-Term Fund; and (iii) the subsequent dissolution of the Long-Term
Fund, as soon as practicable after the closing (as defined in Section 3,
hereinafter called the "Closing"), all upon and subject to the terms and
conditions of this Plan hereinafter set forth.
1. SALE AND TRANSFER OF ASSETS, LIQUIDATION AND DISSOLUTION OF THE
---------------------------------------------------------------
LONG-TERM FUND.
---------------
(a) Subject to the terms and conditions of this Plan, the Trust, on
behalf of the Long-Term Fund, will sell, convey, transfer and deliver to the
Intermediate Fund at the Closing all of the Long-Term Fund's then existing
assets, subject to its liabilities, free and clear of all liens, encumbrances,
and claims whatsoever (other than shareholders' rights of redemption), except
for cash, bank deposits, or cash equivalent securities in an estimated amount
necessary to: (i) subject to Section 9 of this Plan, pay its proportionate costs
and expenses of carrying out this Plan (including, but not limited to, fees of
counsel and accountants, and expenses of its liquidation and dissolution
contemplated hereunder), which costs and expenses shall be established on the
Long-Term Fund's books as liability reserves; (ii) discharge its unpaid
liabilities on its books as of the close of business on the Valuation Date (as
defined in Section 3, hereinafter called the "Valuation Date"), including, but
not limited to, its income dividends and capital gains distributions, if any,
payable for the period prior to, and through, the close of business on the
Valuation Date; and (iii) pay such contingent liabilities as the Board of
Trustees, or its designee, shall reasonably deem to exist against the Long-Term
Fund, if any, at the Valuation Date, for which contingent and other appropriate
liability reserves shall be established on the Long-Term Fund's books
(hereinafter called the "Net Assets"). The Long-Term Fund shall also retain any
and all rights that it may have over and against any person that may have
accrued up to and including the close of business on the Valuation Date.
A-1
<PAGE> 29
(b) Subject to the terms and conditions of this Plan, the Trust, on
behalf of the Intermediate Fund, shall, at the Closing, deliver to the Long-Term
Fund (i) the number of the Intermediate Fund Class A Shares, determined by
dividing the net asset value per share of the Long-Term Fund Class A Shares by
the net asset value per share of the Intermediate Fund Class A Shares, and
multiplying the result thereof by the number of outstanding Long-Term Fund Class
A Shares, as of 4:00 p.m. Eastern time on the Valuation Date; (ii) the number of
the Intermediate Fund Class B Shares, determined by dividing the net asset value
per share of the Long-Term Fund Class B Shares by the net asset value per share
of the Intermediate Fund Class B Shares, and multiplying the result thereof by
the number of outstanding Long-Term Fund Class B Shares, as of 4:00 p.m.,
Eastern time, on the Valuation Date; and (iii) the number of the Intermediate
Fund Class D Shares, determined by dividing the net asset value per share of the
Long-Term Fund Class D Shares by the net asset value per share of the
Intermediate Fund Class D Shares, and multiplying the result thereof by the
number of outstanding Long-Term Fund Class D Shares, as of 4:00 p.m., Eastern
time, on the Valuation Date. All such values shall be determined in the manner
and as of the time set forth in Section 2 hereof.
(c) As part of this Plan, the Trust, as soon as practicable following
the Closing, shall dissolve the Long-Term Fund and distribute pro rata to the
shareholders of record of the Long-Term Fund Shares, as of the close of business
on the Valuation Date, the Intermediate Fund Shares received by the Long-Term
Fund pursuant to this Section 1. Such dissolution and distribution shall be
accomplished by the establishment of accounts on the share records of the
Intermediate Fund of the type and in the amounts due such shareholders based on
their respective holdings as of the close of business on the Valuation Date.
Fractional Intermediate Fund Shares shall be carried to the third decimal place.
2. VALUATION.
----------
(a) The value of the Long-Term Fund Shares' Net Assets to be acquired
by the Intermediate Fund hereunder shall be computed as of 4:00 p.m., Eastern
time, on the Valuation Date, using the valuation procedures set forth in the
Long-Term Fund's currently effective prospectus and statement of additional
information.
(b) The net asset value of a share of beneficial interest of each of
the Long-Term Fund-Class A, Long-Term Fund-Class B and Long-Term Fund-Class D
shall be determined to the nearest full cent as of 4:00 p.m., Eastern time, on
the Valuation Date, using the valuation procedures set forth in the Long-Term
Fund's currently effective prospectus and statement of additional information.
(c) The net asset value of a share of beneficial interest of the
Intermediate Fund-Class A, Intermediate Fund-Class B and Intermediate Fund-Class
D shall be determined to the nearest full cent as of 4:00 p.m., Eastern time, on
the Valuation Date, using the valuation procedures set forth in the Intermediate
Fund's currently effective prospectus and statement of additional information.
3. CLOSING AND VALUATION DATE.
---------------------------
The Valuation Date shall be February __, 2001, or such later date as
determined by the Trust's officers. The Closing shall take place at the
principal offices of the Trust at ____, _.m., Eastern time, on the first
business day following the Valuation Date. The Trust, on behalf of the Long-Term
Fund, shall have provided for delivery as of the Closing those Net Assets of the
Long-Term Fund to be transferred to the account of the Intermediate Fund at the
Trust's custodian, The Fifth Third Bank, 38 Fountain Square Plaza, Cincinnati,
Ohio 45263. Also, the Trust, on behalf of the Long-Term Fund, shall have
prepared and have available at the Closing a list of names and addresses of the
holders of record of the Long-Term Fund Class A Shares, the Long-Term Fund Class
B Shares and the Long-Term Fund Class D Shares, all as of 4:00 p.m., Eastern
time, on the Valuation Date, certified by the Trust's transfer agent to the best
of
A-2
<PAGE> 30
its knowledge and belief. The Trust, on behalf of the Intermediate Fund, shall
have prepared satisfactory evidence that the shares of beneficial interest of
the Intermediate Fund to be delivered to the account of the Long-Term Fund at
said transfer agent have been registered in an account on the books of the
Intermediate Fund in such manner as the officers of the Trust, on behalf of the
Long-Term Fund, shall deem appropriate.
4. FINDINGS OF FACT BY THE TRUST ON BEHALF OF THE INTERMEDIATE FUND.
----------------------------------------------------------------
(a) The Intermediate Fund is a series of the Trust, a business trust
created under the laws of the State of Ohio on October 30, 1997, and is validly
existing under the laws of that State. The Trust is duly registered under the
Investment Company Act of 1940, as amended (the "1940 Act"), as an open-end,
management investment company, such registration is in full force and effect as
of the date hereof and will be in full force and effect as of the Closing, and
all of the Intermediate Fund Shares of the Trust sold were sold pursuant to an
effective registration statement filed under the Securities Act of 1933, as
amended (the "1933 Act"), except for those shares sold pursuant to the private
offering exemption for the purpose of raising the initial capital.
(b) The Trust is authorized to issue an unlimited number of shares of
beneficial interest of the Intermediate Fund, without par value, each
outstanding share (except for those shares sold pursuant to the private offering
exemption for the purpose of raising the initial capital) of which is duly and
validly issued, fully paid, non-assessable, freely transferable and has full
voting rights. The Trust is authorized to offer three classes of shares of the
Intermediate Fund: Intermediate Fund - Class A, Intermediate Fund - Class B and
Intermediate Fund - Class D. An unlimited number of shares of beneficial
interest, without par value, has been allocated and designated to each of the
three classes.
(c) The Trust has the necessary power and authority to conduct the
Intermediate Fund's business as such business is now being conducted.
(d) The Trust, on behalf of the Intermediate Fund, is not a party to or
obligated under any provision of its Amended Declaration of Trust (the
"Declaration of Trust") or Amended By-laws (the "By-laws"), or any contract or
any other commitment or obligation, and is not subject to any order or decree
that would be violated by its execution of or performance under this Plan.
(e) The Trust has elected to treat the Intermediate Fund as a regulated
investment company ("RIC") for federal income tax purposes under Part I of
Subchapter M of the Internal Revenue Code of 1986, as amended (the "Code"), and
the Intermediate Fund has qualified as a RIC for each taxable year since its
inception; consummation of the transactions contemplated by this Plan will not
cause it to fail to be so qualified, and the Intermediate Fund will qualify as a
RIC as of the date of the Closing.
5. FINDINGS OF FACT BY THE TRUST ON BEHALF OF THE LONG-TERM FUND.
--------------------------------------------------------------
(a) The Long-Term Fund is a series of the Trust, a business trust
created under the laws of the State of Ohio on October 30, 1997, and is validly
existing under the laws of that state. The Trust is duly registered under the
1940 Act as an open-end, management investment company, such registration is in
full force and effect as if the date hereof and will be in full force and effect
as of the Closing, and all of the Long-Term Fund Shares of the Trust sold were
sold pursuant to an effective registration statement filed under the 1933 Act,
except for those shares sold pursuant to the private offering exemption for the
purpose of raising the initial capital.
(b) The Trust is authorized to issue an unlimited number of shares of
beneficial interest of the Long-Term Fund, without par value, each outstanding
share (except for those shares sold pursuant to
A-3
<PAGE> 31
the private offering exemption for the purpose of raising the initial capital)
of which is duly and validly issued, fully paid, non-assessable, freely
transferable, and has full voting rights. The Trust is authorized to offer three
classes of shares of the Long-Term Fund: Long-Term Fund-Class A, Long-Term
Fund-Class B and Long-Term Fund-Class D. An unlimited number of shares of
beneficial interest, without par value, has been allocated and designated to
each of the three classes.
(c) The Trust has the necessary power and authority to conduct the
Long-Term Fund's business as such business is now being conducted.
(d) The Trust, on behalf of the Long-Term Fund, is not a party to or
obligated under any provision of the Trust's Declaration of Trust or By-laws, or
any material contract or any other commitment or obligation, and is not subject
to any order or decree, that would be violated by the Trust's execution of or
performance under this Plan.
(e) The Trust has elected to treat the Long-Term Fund as a RIC for
federal income tax purposes under Part I of Subchapter M of the Code, and the
Long-Term Fund has qualified as a RIC for each taxable year since its inception,
consummation of the transactions contemplated by this Plan will not cause it to
fail to be so qualified, and the Long-Term Fund will qualify as a RIC as of the
date of the Closing.
6. FINDINGS OF FACT BY THE TRUST ON BEHALF OF THE FUNDS.
----------------------------------------------------
(a) The Trust will create a statement of assets and liabilities for
each of the Funds that will be prepared as of 4:00 p.m., Eastern time, on the
Valuation Date, for the purpose of determining the number of Intermediate Fund
Shares to be issued pursuant to Section 1 of this Plan, and that will accurately
reflect its Net Assets, in the case of the Long-Term Fund, and its net assets,
in the case of the Intermediate Fund, and outstanding shares of beneficial
interest, as of such date, in conformity with generally accepted accounting
principles applied on a consistent basis.
(b) At the Closing, the Funds will have good and marketable title to
all of the securities and other assets shown on the statement of assets and
liabilities referred to in subparagraph 6(a) above, free and clear of all liens
or encumbrances of any nature whatsoever, except such imperfections of title or
encumbrances as do not materially detract from the value or use of the assets
subject thereto, or materially affect title thereto.
(c) Except as disclosed in the Trust's currently effective prospectus
relating to the Funds, there is no material suit, judicial action, or legal,
administrative or other proceedings or investigations pending or threatened
against either of the Funds.
(d) There are no known actual or proposed deficiency assessments with
respect to any taxes payable by either of the Funds.
(e) The Plan and the performance of the transactions contemplated by
this Plan have been duly and validly authorized by all necessary action of the
Trust's Board of Trustees.
(f) The Trust anticipates that consummation of the transactions
contemplated by this Plan will not cause either of the Funds to fail to conform
to the requirements of Subchapter M of the Code for federal income taxation as a
RIC at the end of each Fund's fiscal year.
(g) The Trust has the necessary power and authority to conduct the
business of the Funds, as such business is now being conducted.
A-4
<PAGE> 32
7. INTENTIONS OF THE TRUST ON BEHALF OF THE FUNDS.
----------------------------------------------
(a) The Trust intends to operate each Fund's respective business, as
presently conducted between the date hereof and the Closing.
(b) The Trust intends that the Intermediate Fund will not acquire the
Long-Term Fund Shares for the purpose of making distributions thereof to anyone
other than the Long-Term Fund's shareholders.
(c) The Trust, on behalf of the Long-Term Fund, intends, if the
transactions contemplated by this Plan are consummated, to liquidate and
dissolve the Long-Term Fund in accordance with this Plan.
(d) The Trust intends that, by the Closing, all of the Funds' Federal
and other tax returns and reports required by law to be filed on or before such
date shall have been filed, and all Federal and other taxes shown as due on said
returns shall have either been paid or adequate liability reserves shall have
been provided for the payment of such taxes.
(e) At the Closing, the Trust, on behalf of the Long-Term Fund, intends
to have available a copy of the shareholder ledger accounts, certified by the
Trust's sub-transfer agent to the best of its knowledge and belief, for all the
shareholders of record of the Long-Term Fund Shares as of 4:00 p.m., Eastern
time, on the Valuation Date who are to become shareholders of the Intermediate
Fund as a result of the transfer of assets that is the subject of the
transactions contemplated by this Plan.
(f) The Trust intends to mail to each shareholder of record of the
Long-Term Fund and the Intermediate Fund entitled to vote at the meeting of
their shareholders at which action on this Plan is to be considered, in
sufficient time to comply with requirements as to notice thereof, a combined
Prospectus/Proxy Statement that complies in all material respects with the
applicable provisions of Section 14(a) of the Securities Exchange Act of 1934,
as amended, and Section 20(a) of the 1940 Act, and the rules and regulations,
respectively, thereunder.
(g) The Trust intends to file with the U.S. Securities and Exchange
Commission (the "SEC") a registration statement on Form N-14 under the 1933 Act
relating to the Intermediate Fund Shares issuable hereunder ("Registration
Statement"), and will use its best efforts to provide that the Registration
Statement becomes effective as promptly as practicable. At the time it becomes
effective, the Registration Statement will (i) comply in all material respects
with the applicable provisions of the 1933 Act, and the rules and regulations
promulgated thereunder; and (ii) not contain any untrue statement of material
fact or omit to state a material fact required to be stated therein or necessary
to make the statements therein not misleading. At the time the Registration
Statement becomes effective, at the time of the meeting of the shareholders of
the Long-Term Fund and the Intermediate Fund, and at the Valuation Date, the
prospectus and statement of additional information included in the Registration
Statement will not contain any untrue statement of a material fact or omit to
state a material fact necessary to make the statements therein, in the light of
the circumstances under which they were made, not misleading.
8. CONDITIONS PRECEDENT TO BE FULFILLED BY THE TRUST ON BEHALF OF THE
------------------------------------------------------------------
FUNDS.
------
The consummation of this Plan hereunder shall be subject to the
following respective conditions:
(a) That: (i) all findings of fact contained herein shall be true and
correct as of the Closing, with the same effect as though made as of and at such
date; (ii) the performance of all obligations required by this Plan to be
performed by the Trust on behalf of the Funds shall occur at or prior to the
A-5
<PAGE> 33
Closing; and (iii) the Trust shall execute a certificate signed by the Secretary
or equivalent officer to the foregoing effect.
(b) That this Plan shall have been adopted and approved by the
appropriate action of the Board of Trustees of the Trust on behalf of each Fund.
(c) That the SEC shall not have issued an unfavorable management report
under Section 25(b) of the 1940 Act or instituted or threatened to institute any
proceeding seeking to enjoin consummation of the Plan under Section 25(c) of the
1940 Act. Further, no other legal, administrative or other proceeding shall have
been instituted or threatened that would materially affect the financial
condition of the Long-Term Fund or the Intermediate Fund or would prohibit the
transactions contemplated hereby.
(d) That this Plan shall have been adopted and approved by the
appropriate action of the shareholders of each of the Long-Term Fund and the
Intermediate Fund at a special meeting of shareholders to be held no later than
February __, 2001, or such other date as the Trust's officers may determine.
(e) That a distribution or distributions shall have been declared for
the Long-Term Fund, prior to the Valuation Date that, together with all previous
distributions, shall have the effect of distributing to the shareholders of the
Long-Term Fund (i) all of its ordinary income and all of its capital gain net
income, if any, for the period from the close of its last fiscal year to 4:00
p.m., Eastern time, on the Valuation Date; and (ii) any undistributed ordinary
income and capital gain net income from any period to the extent not otherwise
declared for distribution. Capital gain net income has the meaning given such
term by Section 1222(c) of the Code.
(f) That there shall be delivered to the Trust an opinion from Messrs.
Stradley, Ronon, Stevens & Young, LLP, counsel to the Trust, to the effect that,
provided the acquisition contemplated hereby is carried out in accordance with
this Plan and based upon certificates of the officers of the Trust with regard
to matters of fact:
(1) The acquisition by the Intermediate Fund of substantially
all the assets of the Long-Term Fund as provided for herein, in exchange for the
Intermediate Fund Shares followed by the distribution by the Long-Term Fund to
its shareholders of Intermediate Fund Shares in complete liquidation of the
Long-Term Fund, will qualify as a reorganization within the meaning of Section
368(a)(1) of the Code, and the Long-Term Fund and the Intermediate Fund will
each be a "party to the reorganization" within the meaning of Section 368(b) of
the Code;
(2) No gain or loss will be recognized by the Long-Term Fund
upon the transfer of substantially all of its assets to the Intermediate Fund in
exchange solely for voting shares of the Intermediate Fund, pursuant to Sections
361(a) and 357(a) of the Code;
(3) No gain or loss will be recognized by the Long-Term Fund
upon the distribution of Intermediate Fund Shares to its shareholders pursuant
to the liquidation of the Long-Term Fund (in pursuance of the Plan) pursuant to
Section 361(c)(1) of the Code;
(4) No gain or loss will be recognized by the Intermediate
Fund upon the receipt of substantially all of the assets of the Long-Term Fund
in exchange solely for voting shares of the Intermediate Fund, pursuant to
Section 1032(a) of the Code;
A-6
<PAGE> 34
(5) The basis of the assets of the Long-Term Fund received by
the Intermediate Fund will be the same as the basis of such assets to the
Long-Term Fund immediately prior to the exchange, pursuant to Section 362(b) of
the Code;
(6) The holding period of the assets of the Long-Term Fund
received by the Intermediate Fund will include the period during which such
assets were held by the Long-Term Fund, pursuant to Section 1223(2) of the Code;
(7) No gain or loss will be recognized to the shareholders of
the Long-Term Fund Shares upon the exchange of their shares in the Long-Term
Fund solely for voting shares of the Intermediate Fund (including fractional
shares to which they may be entitled), pursuant to Section 354(a) of the Code;
(8) The basis of the Intermediate Fund Shares received by the
holders of the Long-Term Fund Shares shall be the same as the basis of the
Long-Term Fund Shares exchanged therefor, pursuant to Section 358(a)(1) of the
Code;
(9) The holding period of the Intermediate Fund Shares
received by holders of the Long-Term Fund Shares (including fractional shares to
which they may be entitled) will include the holding period of the Long-Term
Fund Shares surrendered in exchange therefor, provided that the Long-Term Fund
Shares were held as a capital asset on the date of the exchange, pursuant to
Section 1223(1) of the Code; and
(10) The Intermediate Fund will succeed to and take into
account as of the date of the transfer (as defined in Section 1.381(b)-1(b) of
the regulations issued by the United States Treasury ("Treasury Regulations")),
the items of the Long-Term Fund described in Section 381(c) of the Code subject
to the conditions and limitations specified in Sections 381, 382, 383 and 384 of
the Code and the Treasury Regulations thereunder.
(g) That there shall be delivered to the Trust an opinion, in form and
substance reasonably satisfactory to it, from Messrs. _________________, counsel
to the Trust, to the effect that:
(1) Each Fund is a series of the Trust, a business trust
organized under the laws of the State of Ohio on October 30, 1997, and the Trust
is a validly existing business trust;
(2) The Trust is authorized to issue an unlimited number of
shares of beneficial interest of each Fund, without par value. Each Fund is
further divided into at least three classes of shares, and an unlimited number
of shares of beneficial interest, without par value, has been allocated and
designated to each of the three classes. Assuming that the initial shares of
beneficial interest of a Fund were issued in accordance with the 1940 Act and
the Trust's Declaration of Trust and By-laws of the Trust, and that all other
outstanding shares of the Fund were sold, issued and paid for in accordance with
the terms of the Fund's prospectus in effect at the time of such sales, each
such outstanding share is fully paid, non-assessable, and has full voting
rights;
(3) Each Fund is a diversified series of the Trust, an
open-end investment company of the management type registered as such under the
1940 Act;
A-7
<PAGE> 35
(4) The Intermediate Fund Shares to be issued pursuant to the
terms of this Plan have been duly authorized and, when issued and delivered as
provided in this Plan, will have been validly issued and fully paid and will be
non-assessable; and
(5) The Registration Statement of the Trust on Form N-1A, of
which the prospectus dated March 1, 2000, of the Funds are a part (the
"Prospectus"), is, upon the effective date of this Plan, effective under the
1933 Act, and, to the best knowledge of such counsel, no stop order suspending
the effectiveness of such Registration Statement has been issued, and no
proceedings for such purpose have been instituted or are pending before or
threatened by the SEC under the 1933 Act, and nothing has come to counsel's
attention that causes it to believe that, at the time the Prospectus became
effective, or upon the effective date of this Plan, or at the Closing, such
Prospectus, as supplemented to date in accordance with Rule 497(e) of the 1933
Act (except for the financial statements and other financial and statistical
data included therein, as to which counsel need not express an opinion),
contained any untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary to make the statements therein
not misleading; and such counsel knows of no legal or government proceedings
required to be described in the Prospectus, or of any contract or document of a
character required to be described in the Prospectus that is not described as
required.
In giving the opinions set forth above, this counsel may state that it
is relying on certificates of the officers of the Trust with regard to matters
of fact, and certain certifications and written statements of governmental
officials with respect to the organization of the Trust.
(h) That the Trust's Registration Statement with respect to the
Intermediate Fund Shares to be delivered to the shareholders of the Long-Term
Fund in accordance with this Plan shall have become effective, and no stop order
suspending the effectiveness of the Registration Statement or any amendment or
supplement thereto, shall have been issued prior to the Valuation Date or shall
be in effect at Closing, and no proceedings for the issuance of such an order
shall be pending or threatened on that date.
(i) That the Intermediate Fund Shares to be delivered hereunder shall
be eligible for sale by the Trust with each state commission or agency with
which such eligibility is required in order to permit the Intermediate Fund
Shares lawfully to be delivered to each holder of the Long-Term Fund Shares.
(j) That, at the Closing, there shall be transferred to the
Intermediate Fund, aggregate Net Assets of the Long-Term Fund comprising at
least 90% in fair market value of the total net assets and 70% of the fair
market value of the total gross assets recorded on the books of the Long-Term
Fund on the Valuation Date.
(k) That all required consents of other parties and all other consents,
orders, and permits of federal, state and local regulatory authorities
(including those of the SEC and of state Blue Sky securities authorities,
including any necessary "no-action" positions or exemptive orders from such
federal and state authorities) to permit consummation of the transaction
contemplated hereby shall have been obtained,
A-8
<PAGE> 36
except where failure to obtain any such consent, order, or permit would not
involve a risk of a material adverse effect on the assets or properties of the
Long-Term Fund or the Intermediate Fund.
(l) That there be delivered to the Intermediate Fund on behalf of the
Long-Term Fund information concerning the tax basis of the Long-Term Fund in all
securities transferred to the Intermediate Fund, together with shareholder
information, including the names, addresses, and taxpayer identification numbers
of the shareholders of the Long-Term Fund as of the date of the Closing, the
number of shares held by each shareholder, the dividend reinvestment elections
applicable to each shareholder, and the backup withholding and nonresident alien
withholding certifications, notices or records on file with the Long-Term Fund
with respect to each shareholder.
9. EXPENSES. The expenses of entering into and carrying out the provisions
of this Plan shall be borne one-half by the Funds and one-half by Villanova
Mutual Fund Capital Trust. The expenses borne by the Funds will be determined on
a pro rata basis, according to their net assets.
10. TERMINATION; POSTPONEMENT; WAIVER; ORDER.
-----------------------------------------
(a) Anything contained in this Plan to the contrary notwithstanding,
this Plan may be terminated and the transactions contemplated by the Plan
abandoned at any time (whether before or after approval thereof by the
shareholders of the Long-Term Fund and the Intermediate Fund) prior to the
Closing, or the Closing may be postponed by the Trust by resolution of the Board
of Trustees, if circumstances develop that, in the opinion of the Board, make
proceeding with the Plan inadvisable.
(b) In the event of termination of this Plan pursuant to the provisions
hereof, the same shall become void and have no further effect, and the Trust,
the Long-Term Fund, the Intermediate Fund, the Trust's trustees, officers, or
agents or the shareholders of the Long-Term Fund or the Intermediate Fund shall
not have any liability in respect of this Plan.
(c) At any time prior to the Closing, any of the terms or conditions of
this Plan may be waived by the Board of Trustees, on behalf of either the
Long-Term Fund or the Intermediate Fund, if, in the judgment of such Board of
Trustees, such action or waiver will not have a material adverse effect on the
benefits intended under this Plan to the shareholders of either the Long-Term
Fund or the Intermediate Fund, on behalf of whom such action is taken.
(d) If any order or orders of the SEC with respect to this Plan shall
be issued prior to the Closing and shall impose any terms or conditions that are
determined by action of the Board of Trustees of the Trust to be acceptable,
such terms and conditions shall be binding as if a part of this Plan, without
further vote or approval of the shareholders of the Long-Term Fund or the
Intermediate Fund, unless such further vote is required by applicable law or
such terms and conditions shall result in a change in the method of computing
the number of the Intermediate Fund Shares to be issued to the Long-Term Fund,
in which event, unless such terms and conditions shall have been included in the
proxy solicitation material furnished to the shareholders of the Long-Term Fund
and the Intermediate Fund prior to the meeting at which the transactions
contemplated by this Plan shall have been approved, this Plan shall not be
consummated and shall terminate unless the Trust shall promptly call a special
meeting of the shareholders of the Long-Term Fund and/or the Intermediate Fund
at which such conditions so imposed shall be submitted for approval.
EFFECTIVE DATE AND DATE OF TRUSTEE ADOPTION, DECEMBER __, 2000
A-9
<PAGE> 37
EXHIBIT B
PERFORMANCE AND FINANCIAL INFORMATION ABOUT THE FUNDS
Set forth below is a discussion of each Fund's performance during the
fiscal year ended October 31, 2000:
LONG-TERM U.S. GOVERNMENT BOND FUND
MANAGEMENT DISCUSSION OF FUND PERFORMANCE
For the 12-month period ended October 31, 2000, the Long-Term Fund
returned 8.28%* versus 11.33% for the Lehman Brothers Government Bond Long Term
Index (the "Lehman Index"), the benchmark index.
After a difficult 1999, bond market investors who remained fully
invested were rewarded for their patience in 2000. Long-term U.S. Treasuries
dropped 40 basis points during the period.
The Long-Term Fund's underperformance versus the Lehman Index was
caused by the shift from an intermediate-term maturity fund to a long-term
maturity fund after the first quarter, when long Treasuries realized their best
returns.
During the period, the Long-Term Fund's top performing sector was U.S.
Treasury bonds. Agency notes and mortgage-backed bonds detracted from
performance, as their spread to Treasuries widened to historic levels. As the
time to maturity is lengthened, non-Treasury issues will experience increased
volatility. For this reason, the Long-Term Fund's portfolio manager believes
allocating a significant portion of the portfolio to U.S. Treasury bonds would
yield the best return results. As of October 31, 2000, approximately 69% of the
Long-Term Fund's portfolio was in this sector.
* Performance of A shares, without sales charge and assumes all distributions
are reinvested.
AVERAGE ANNUAL (COMPOUND) TOTAL RETURN
(For Periods Ended October 31, 2000)
<TABLE>
<CAPTION>
CLASS A* CLASS B* CLASS D
YEARS W/O SC** W/SC(1) W/O SC** W/SC(2) W/O SC** W/SC(1)
------------------ ---------------- ---------------- --------------- ---------------- ---------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
1 8.28% 3.44% 7.63% 2.63% 8.53% 3.67%
------------------ ---------------- ---------------- --------------- ---------------- ---------------- ---------------
5 6.00% 5.03% 5.68% 5.35% 6.12% 5.15%
------------------ ---------------- ---------------- --------------- ---------------- ---------------- ---------------
10 7.83% 7.33% 7.66% 7.66% 7.89% 7.39%
------------------ ---------------- ---------------- --------------- ---------------- ---------------- ---------------
</TABLE>
All figures showing the effect of a sales charge reflect the maximum charge
possible, because it has the most dramatic effect on performance data.
* These returns represent performance achieved prior to the creation of
the class (5/11/98), excluding the effect of the 0.25% (Class A) or
0.85% (Class B) 12B-1 fee. Had Class A or B been in existence for the
time period presented, the long-term fund's performance for such
classes would have been lower as a result of the additional expenses.
** These returns do not reflect the effects of a sales charge.
(1) A 4.50% front-end sales charge was deducted.
(2) A 5.00% contingent deferred sales charge (CDSC) was deducted.
the CDSC declines to 0% after 6 years.
Investment return and principal value will fluctuate, and when redeemed, shares
may be worth more or less than original cost. Past performance is no guarantee
of future results.
B-1
<PAGE> 38
FUND PERFORMANCE - CLASS D SHARES
<TABLE>
<CAPTION>
LB GOVT BOND
FUND MLGMI CPI LONG TERM INDEX
<S> <C> <C> <C> <C>
1990 $10,000 $10,000 $10,000 $10,000
1991 $11,123 $11,464 $10,292 $11,833
1992 $12,341 $12,649 $10,622 $13,208
1993 $13,665 $14,294 $10,914 $16,387
1994 $13,020 $13,676 $11,199 $14,462
1995 $15,192 $15,783 $11,513 $16,368
1996 $15,953 $16,580 $11,858 $19,017
1997 $17,368 $18,016 $12,105 $21,431
1998 $19,299 $20,060 $12,285 $24,870
1999 $18,837 $19,820 $12,599 $23,353
2000 $20,445 $21,405 $13,053 $25,998
</TABLE>
Comparative performance of $10,000 invested in the long-term fund, the Merrill
Lynch Government Master Index (MLGMI),* The Lehman Brothers Government Bond Long
Term Index (LB Govt. Bond Long Term Index)** and the Consumer Price Index
(CPI)*** over a 10-year period ended 10/31/00. Unlike the long-term fund, these
indices do not reflect any fees, expenses or sales charges.
* The MLGMI consists of U.S. Treasury Notes and Bonds with one or more
years remaining to final maturity and at least $1 billion in face value
outstanding, and U.S. agencies with one or more years remaining to final
maturity and at least $100 million in face value outstanding.
** The LB Govt. Bond Long Term Index is a total return index consisting of
dollar denominated debt issues of greater than 10 years.
*** The CPI represents changes in prices of a basket of goods and services
purchased for consumption by urban households.
INTERMEDIATE U.S. GOVERNMENT BOND FUND
MANAGEMENT DISCUSSION OF FUND PERFORMANCE
For the 12-month period ended October 31, 2000, the Intermediate Fund
returned 7.40%* versus 8.00% for the Merrill Lynch Government Master Index (the
"Merrill Index"), the benchmark index.
After a difficult 1999, bond market investors who remained fully
invested were rewarded for their patience in 2000. Intermediate-term interest
rates dropped 16 to 30 basis points during the 12-month period and long-term
interest rates dropped 40 basis points. As a result, U.S. Treasuries were the
best performers. The Intermediate Fund was underweighted in this sector, which
led to its underperformance versus the Merrill Index.
The portfolio's best performers during the period were U.S. Treasuries
with final maturities of 15 years. Holdings of agency notes and mortgage-backed
bonds detracted from performance as their spread to Treasuries widened to
historic levels.
During the 12-months, the Intermediate Fund sold agency notes in favor
of mortgage-backed bonds at substantial yield pickups. As of October 31, 2000,
mortgage-backed bonds made up approximately 49% of the Intermediate Fund's
holdings. In the portfolio manager's opinion, the sector appears quite
attractive, given the current interest rate environment. However, as the
Intermediate Fund moves into 2001, the Fund's portfolio manager anticipates that
the Federal Reserve will ease interest rates. This action would cause the
Intermediate Fund to sell higher coupon mortgage-backed securities
B-2
<PAGE> 39
and purchase intermediate agency and Treasury notes in the five-year sector.
This structure should help the Intermediate Fund to outperform in a
steady-to-falling interest rate environment.
* Performance of A shares, without sales charge and assumes all
distributions are reinvested.
AVERAGE ANNUAL (COMPOUND) TOTAL RETURN
(For Periods Ended October 31, 2000)
<TABLE>
<CAPTION>
CLASS A* CLASS B* CLASS D
YEARS W/O SC** W/SC(1) W/O SC** W/SC(2) W/O SC** W/SC(1)
------------------ ---------------- ---------------- --------------- ---------------- ---------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
1 7.40% 2.53% 6.72% 1.72% 7.73% 2.84%
------------------ ---------------- ---------------- --------------- ---------------- ---------------- ---------------
5 5.80% 4.82% 5.47% 5.15% 5.93% 4.95%
------------------ ---------------- ---------------- --------------- ---------------- ---------------- ---------------
Life 6.28% 5.72% 6.09% 6.09% 6.35% 5.79%
------------------ ---------------- ---------------- --------------- ---------------- ---------------- ---------------
</TABLE>
Life of the Intermediate Fund is since 2/10/92.
All figures showing the effect of a sales charge reflect the maximum charge
possible, because it has the most dramatic effect on performance data.
* These returns represent performance achieved prior to the creation of
the Class (5/11/98), excluding the effect of the 0.25% (Class A) or
0.85% (Class B) 12b-1 FEE. Had Class A or B been in existence for the
time period presented, the intermediate fund's performance for such
classes would have been lower as a result of the additional expenses.
** These returns do not reflect the effects of a sales charge.
(1) A 4.50% front-end sales charge was deducted.
(2) A 5.00% Contingent Deferred Sales Charge (CDSC) was deducted.
The CDSC declines to 0% after 6 years.
Investment return and principal value will fluctuate, and when redeemed, shares
may be worth more or less than original cost. Past performance is no guarantee
of future results.
FUND PERFORMANCE - CLASS D SHARES
FUND MLGMI CPI
2/10/92 $10,000 $10,000 $10,000
1992 $ 9,970 $10,741 $10,268
1993 $10,980 $12,137 $10,550
1994 $10,522 $11,612 $10,825
1995 $12,256 $13,401 $11,130
1996 $12,903 $14,078 $11,463
1997 $14,050 $15,299 $11,702
1998 $15,315 $17,033 $11,875
1999 $15,173 $16,829 $12,180
2000 $16,346 $18,175 $12,618
Comparative performance of $10,000 invested in the Intermediate Fund, The
Merrill Lynch Government Master Index (MLGMI)* and The Consumer Price Index
(CPI)** since the fund's inception (2/10/92) to 10/31/00. Unlike The
Intermediate Fund, these indices do not reflect any fees, expenses or sales
charges.
* The MLGMI consists of U.S. Treasury Notes and Bonds with one or more
years remaining to final maturity and at least $1 billion in face value
outstanding, and U.S. agencies with one or more years remaining to
final maturity and at least $100 million in face value outstanding.
** The CPI represents changes in prices of a basket of goods and services
purchased for consumption by urban households.
B-3
<PAGE> 40
FINANCIAL HIGHLIGHTS - NATIONWIDE LONG-TERM U.S. GOVERNMENT BOND FUND
SELECTED DATA FOR EACH SHARE OF CAPITAL OUTSTANDING
<TABLE>
<CAPTION>
CLASS A SHARES CLASS B SHARES
PERIOD
FROM
YEAR YEAR MAY 11, PERIOD FROM
ENDED ENDED 1998 TO YEAR YEAR MAY 11,
OCTOBER 31, OCTOBER 31, OCTOBER ENDED ENDED 1998 TO
2000 1999 31, OCTOBER 31, OCTOBER 31, OCTOBER 31,
1998(d) 2000 1999 1998(d)
----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE - BEGINNING OF PERIOD $ 10.88 $ 11.77 $ 11.24 $ 10.88 $ 11.76 $ 11.24
------- ------- ------- ------- ------- -------
Investment activities
Net investment income 0.59 0.59 0.28 0.52 0.52 0.25
Net realized and unrealized gain (loss) 0.27 (0.90) 0.53 0.27 (0.89) 0.52
------- ------- ------- ------- ------- -------
Total investment activities 0.86 (0.31) 0.81 0.79 (0.37) 0.77
------- ------- ------- ------- ------- -------
Distributions
Net investment income (0.59) (0.58) (0.28) (0.52) (0.51) (0.25)
Net realized gains (0.16) -- (0.16) -- -- --
------- ------- ------- ------- ------- -------
Total distributions (0.75) (0.58) (0.28) (0.68) (0.51) (0.25)
------- ------- ------- ------- ------- -------
Net increase (decrease) in net asset value 0.11 (0.89) 0.53 0.11 (0.88) 0.52
------- ------- ------- ------- ------- -------
NET ASSET VALUE-END OF PERIOD $ 10.99 $ 10.88 $ 11.77 $ 10.99 $ 10.88 $ 11.76
======= ======= ======= ======= ======= =======
Total Return (excluding sales charges) 8.28% (2.63%) 7.32%(c) 7.63% (3.15%) 6.90%(c)
Ratios/supplemental data
Net assets, at end of period (000) $ 3,767 $ 2,041 $ 201 $ 1,724 $ 1,876 $ 352
Ratio of expenses to average net assets 1.04% 1.04% 1.04%(a) 1.64% 1.64% 1.64%(a)
Ratio of net investment income to average net 5.42% 5.29% 5.09%(a) 4.85% 4.68% 4.52%(a)
assets
Ratio of expenses to average net assets* 1.08% 1.14% 1.28%(a) 1.69% 1.74% 1.90%(a)
Portfolio turnover rate (b) 91.13% 84.33% 51.12%(c) 91.13% 84.33% 51.12%(c)
----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
CLASS D SHARES
YEAR YEAR
ENDED ENDED
OCTOBER OCTOBER PERIOD ENDED
31, 31, OCTOBER 31, YEARS ENDED OCTOBER 31
2000 1999 1998(d) 1997 1996
-----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE - BEGINNING OF PERIOD $ 10.88 $ 11.77 $ 11.19 $ 10.92 $ 11.07
-------- -------- -------- -------- --------
Investment activities
Net investment income 0.61 0.61 0.63 0.66 0.68
Net realized and unrealized gain (loss) 0.27 (0.89) 0.58 0.27 (0.15)
-------- -------- -------- -------- --------
Total investment activities 0.88 (0.28) 1.21 0.93 0.53
-------- -------- -------- -------- --------
Distributions
Net investment income (0.61) (0.61) (0.63) (0.66) (0.68)
Net realized gains (0.16) -- -- -- --
-------- -------- -------- -------- --------
Total distributions (0.77) (0.61) (0.63) (0.66) (0.68)
-------- -------- -------- -------- --------
Net increase (decrease) in net asset value 0.11 (0.89) 0.58 0.27 (0.15)
-------- -------- -------- -------- --------
NET ASSET VALUE - END OF PERIOD $ 10.99 $ 10.88 $ 11.77 $ 11.19 $ 10.92
======== ======= ======== ======== ========
Total Return (excluding sales charges) 8.53% (2.39%) 11.15% 8.84% 5.01%
Ratios/supplemental data
Net assets, at end of period (000) $ 26,915 $ 32,117 $ 40,946 $ 48,549 $ 58,737
Ratio of expenses to average net assets 0.79% 0.79% 0.82% 0.85% 0.84%
Ratio of net investment income to average net assets 5.69% 5.33% 5.55% 6.04% 6.26%
Ratio of expenses to average net assets* 0.84% 0.89% 1.28% 1.60% 1.59%
Portfolio turnover rate (b) 91.13% 84.33% 51.12% 52.10% 21.04%
-----------------------------------------------------------------------------------------------------------------------------
</TABLE>
*Ratios calculated as if no expenses were waived or reimbursed.
(a) Annualized.
(b) Portfolio turnover is calculated on the basis of the Fund as a whole
without distinguishing among the classes of shares.
(c) Not annualized.
(d) Shares first offered to public on May 11, 1998. Upon a Trust
Reorganization on May 11, 1998, the existing shares of the Fund were
renamed Class D.
B-4
<PAGE> 41
FINANCIAL HIGHLIGHTS - NATIONWIDE INTERMEDIATE U.S. GOVERNMENT BOND FUND
SELECTED DATA FOR EACH SHARE OF CAPITAL OUTSTANDING
<TABLE>
<CAPTION>
CLASS A SHARES CLASS B SHARES
PERIOD
FROM
YEAR YEAR MAY 11, PERIOD FROM
ENDED ENDED 1998 TO YEAR YEAR MAY 11,
OCTOBER 31, OCTOBER 31, OCTOBER ENDED ENDED 1998 TO
2000 1999 31, OCTOBER 31, OCTOBER 31, OCTOBER 31,
1998(d) 2000 1999 1998(d)
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE - BEGINNING OF PERIOD $ 9.89 $ 10.56 $ 10.24 $ 9.89 $ 10.55 $ 10.24
-------- -------- ------- ------- ------- -------
Investment activities
Net investment Income 0.57 0.51 0.26 0.51 0.45 0.23
Net realized and unrealized gain (loss) 0.13 (0.62) 0.32 0.13 (0.61) 0.31
-------- -------- ------- ------- ------- -------
Total investment activities 0.70 (0.11) 0.58 0.64 (0.16) 0.54
-------- -------- ------- ------- ------- -------
Distributions
Net investment income (0.57) (0.51) (0.26) (0.51) (0.45) (0.23)
Net realized gains (0.02) (0.05) -- (0.02) (0.05) --
-------- -------- ------- ------- ------- -------
Total distributions (0.59) (0.56) (0.26) (0.53) (0.50) (0.23)
-------- -------- ------- ------- ------- -------
Net increase (decrease) in net asset value 0.11 (0.67) 0.32 0.11 (0.66) 0.31
-------- -------- ------- ------- ------- -------
NET ASSET VALUE-END OF PERIOD $ 10.00 $ 9.89 $ 10.56 $ 10.00 $ 9.89 $ 10.55
======== ======== ======= ======= ======= =======
Total Return (excluding sales charges) 7.40% (1.05%) 5.69%(c) 6.72% (1.57%) 5.29%(c)
Ratios/supplemental data
Net assets, at end of period (000) $ 54,796 $ 49,601 $ 332 $ 1,129 $ 1,148 $ 297
Ratio of expenses to average net assets 0.99% 0.99% 1.04%(a) 1.63% 1.64% 1.64%(a)
Ratio of net investment income to average net 5.84% 5.13% 5.10%(a) 5.19% 4.44% 4.59%(a)
assets
Ratio of expenses to average net assets* 1.09% 1.15% 1.17%(a) 1.63% 1.65% 1.86%(a)
Portfolio turnover rate (b) 107.86% 51.86% 59.52% 107.86% 51.86% 59.52%
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
CLASS D SHARES
YEAR
ENDED YEAR ENDED PERIOD ENDED
OCTOBER 31, OCTOBER 31, OCTOBER 31, YEARS ENDED OCTOBER 31
2000 1999 1998(d) 1997 1996
---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE - BEGINNING OF PERIOD $ 9.89 $ 10.57 $ 10.31 $ 10.04 $ 10.12
-------- -------- -------- -------- --------
Investment activities
Net investment income 0.59 0.53 0.56 0.59 0.59
Net realized and unrealized gain (loss) 0.14 (0.63) 0.34 0.27 (0.08)
-------- -------- -------- -------- --------
Total investment activities 0.73 (0.10) 0.90 0.86 0.51
-------- -------- -------- -------- --------
Distributions
Net investment income (0.59) (0.53) (0.56) (0.59) (0.58)
In excess of net investment income -- -- -- -- (0.01)
Net realized gains (0.02) (0.05) (0.08) -- --
-------- -------- -------- -------- --------
Total distributions (0.61) (0.58) (0.64) (0.59) (0.59)
-------- -------- -------- -------- --------
Net increase (decrease) in net asset value 0.12 (0.68) 0.26 0.27 (0.08)
-------- -------- -------- -------- --------
NET ASSET VALUE - END OF PERIOD $ 10.01 $ 9.89 $ 10.57 $ 10.31 $ 10.04
======== ======== ======== ======== ========
Total Return (excluding sales charges) 7.73% (0.93%) 9.03% 8.86% 5.28%
Ratios/supplemental data
Net assets, at end of period (000) $ 55,812 $ 52,260 $ 50,849 $ 41,328 $ 39,497
Ratio of expenses to average net assets 0.78% 0.79% 0.92% 1.07% 1.06%
Ratio of net investment income to average net 6.03% 5.24% 5.43% 5.85% 5.86%
assets
Ratio of expenses to average net assets* 0.78% 0.81% 1.03% 1.22% 1.21%
Portfolio turnover rate (b) 107.86% 51.86% 59.52% 26.58% 9.30%
---------------------------------------------------------------------------------------------------------------------
</TABLE>
*Ratios calculated as if no expenses were waived or reimbursed.
(a) Annualized.
(b) Portfolio turnover is calculated on the basis of the Fund as a whole
without distinguishing among the classes of shares.
(c) Not annualized.
(d) Shares first offered to public on May 11, 1998. Upon a Trust
Reorganization on May 11, 1998, the existing shares of the Fund were
renamed Class D.
B-5
<PAGE> 42
NATIONWIDE MUTUAL FUNDS COMBINED PROSPECTUS
DATED MARCH 1, 2000
The Nationwide Mutual Funds Combined Prospectus, dated March 1, 2000,
as supplemented from time to time, is part of this Prospectus/Proxy Statement
and will be included in the proxy solicitation mailing to shareholders. For
purposes of this EDGAR filing, the above-referenced prospectus is incorporated
herein by reference to the electronic filing made on March 1, 2000.
1
<PAGE> 43
EVERY SHAREHOLDER'S VOTE IS IMPORTANT
PLEASE SIGN, DATE AND RETURN YOUR
PROXY TODAY!
Please fold and detach card at perforation before mailing
PROXY
SPECIAL MEETING OF SHAREHOLDERS
NATIONWIDE MUTUAL FUNDS
NATIONWIDE LONG-TERM U.S. GOVERNMENT BOND FUND
FEBRUARY 22, 2001
The undersigned hereby revokes all previous proxies for his or her shares and
appoints William Baltrus and Bryan Haft, and each of them, proxies of the
undersigned with full power of substitution to vote all shares of the Nationwide
Long-Term U.S. Government Bond Fund series (the "Fund") of Nationwide Mutual
Funds (the "Trust") that the undersigned is entitled to vote at the Special
Meeting of Shareholders, including any adjournments thereof (the "Meeting"), to
be held at the Jeffers Auditorium, One Nationwide Plaza, Columbus, Ohio 43216,
at 10:30 a.m., Eastern time, on February 22, 2001, upon such business as may
properly be brought before the Meeting.
IMPORTANT: PLEASE SEND IN YOUR PROXY TODAY.
YOU ARE URGED TO DATE AND SIGN THIS PROXY AND RETURN IT PROMPTLY. THIS WILL SAVE
THE EXPENSE OF FOLLOW-UP LETTERS TO SHAREHOLDERS WHO HAVE NOT RESPONDED.
NOTE: Please sign exactly as your name
appears on the proxy. If signing for
estates, trusts or corporations, title or
capacity should be stated. If shares are
held jointly, each holder must sign.
_________________________________________
Signature(s)
_________________________________________
Date
IMPORTANT: PLEASE SIGN AND MAIL IN YOUR PROXY...TODAY
(Please see reverse side)
<PAGE> 44
EVERY SHAREHOLDER VOTE IS IMPORTANT
PLEASE SIGN AND PROMPTLY RETURN IN THE ACCOMPANYING ENVELOPE. NO POSTAGE
REQUIRED IF MAILED IN THE U.S.
PLEASE FOLD AND DETACH CARD AT PERFORATION BEFORE MAILING
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES OF THE TRUST. IT WILL
BE VOTED AS SPECIFIED. IF NO SPECIFICATION IS MADE AND THIS PROXY IS SIGNED AND
RETURNED , THIS PROXY SHALL BE VOTED IN FAVOR OF PROPOSAL 1, REGARDING THE
REORGANIZATION OF THE FUND PURSUANT TO THE PLAN OF REORGANIZATION ADOPTED BY THE
TRUSTEES.
THE BOARD OF TRUSTEES RECOMMENDS THAT YOU VOTE IN FAVOR OF PROPOSAL 1
<TABLE>
<S> <C> <C> <C>
1. To approve a Plan of Reorganization adopted by the Nationwide
Mutual Funds (the "Trust"), on behalf of the Nationwide Long-Term FOR AGAINST ABSTAIN
U.S. Government Bond Fund (the "Long-Term Fund") and the
Nationwide Intermediate U.S. Government Bond Fund (the
"Intermediate Fund") series of the Trust , that provides for the
acquisition of substantially all of the assets and assumption of
the liabilities of the Long-Term Fund, in exchange for Class A,
Class B and Class D shares of the Intermediate Fund, the
distribution of such shares to the shareholders of the Long-Term
Fund and the dissolution of the Long-Term Fund.
2. To grant the proxyholders authority to vote upon any other
business that may properly come before the Meeting. GRANT WITHHOLD ABSTAIN
</TABLE>
IMPORTANT: PLEASE SIGN AND MAIL IN YOUR VOTING INSTRUCTION FORM...TODAY
2
<PAGE> 45
EVERY SHAREHOLDER'S VOTE IS IMPORTANT
PLEASE SIGN, DATE AND RETURN YOUR
VOTING INSTRUCTION FORM TODAY!
Please fold and detach card at perforation before mailing
SPECIAL MEETING OF SHAREHOLDERS
NATIONWIDE MUTUAL FUNDS
NATIONWIDE LONG-TERM U.S. GOVERNMENT BOND FUND
FEBRUARY 22, 2001
The undersigned contract owner of a variable annuity or variable life insurance
contract, revoking previous voting instructions, hereby instructs Nationwide
Life Insurance Company or Nationwide Life and Annuity Insurance Company to vote
all shares of the Nationwide Long-Term U.S. Government Bond Fund (the "Fund") of
the Nationwide Mutual Funds (the "Trust") attributable to his or her variable
annuity or variable life insurance contact as of December 18, 2000, at the
Special Meeting of Shareholders of the Fund to be held at the Jeffers
Auditorium, One Nationwide Plaza, Columbus, Ohio 43216, on Thursday, February
22, 2001 at 10:30 a.m., Eastern time, and at any adjournments thereof. These
voting instructions will be used to vote on the proposal described in the Proxy
Statement as specified below.
Receipt of the Notice of the Meeting and the accompanying Proxy Statement is
hereby acknowledged.
NOTE: Please sign exactly as your name appears on this Voting Instruction Form.
When the variable annuity or variable life insurance contract is held by joint
tenants, both should sign. When signing in a fiduciary capacity, such as
executor, administrator, trustee, attorney, guardian, etc., please so indicate.
Corporate and partnership voting instructions should be signed by an authorized
person indicating the person's title.
Date:________________________
_____________________________
_____________________________
Signature(s) (Title(s), if applicable)
IMPORTANT: PLEASE SIGN AND MAIL IN YOUR VOTING INSTRUCTION FORM...TODAY
(Please see reverse side)
<PAGE> 46
THIS VOTING INSTRUCTION FORM IS SOLICITED ON BEHALF OF NATIONWIDE LIFE INSURANCE
COMPANY OR NATIONWIDE LIFE AND ANNUITY INSURANCE COMPANY. IT WILL BE VOTED AS
SPECIFIED. IF NO SPECIFICATION IS MADE AND THIS VOTING INSTRUCTION FORM IS
SIGNED AND RETURNED, THIS VOTING INSTRUCTION FORM SHALL BE VOTED IN FAVOR OF
PROPOSAL 1, REGARDING THE REORGANIZATION OF THE FUND PURSUANT TO THE PLAN OF
REORGANIZATION ADOPTED BY THE TRUSTEES.
THE BOARD OF TRUSTEES RECOMMENDS THAT YOU VOTE IN FAVOR OF PROPOSAL 1
<TABLE>
<S> <C> <C> <C>
1. To approve a Plan of Reorganization adopted by the Nationwide Mutual
Funds (the "Trust"), on behalf of the Nationwide Long-Term U.S. Government FOR AGAINST ABSTAIN
Bond Fund (the "Long-Term Fund") and the Nationwide Intermediate U.S.
Government Bond Fund (the "Intermediate Fund") series of the Trust, that
provides for the acquisition of substantially all of the assets and
assumption of the liabilities of the Long-Term Fund, in exchange for Class A,
Class B and Class D shares of the Intermediate Fund, the distribution of such
shares to the shareholders of the Long-Term Fund and the dissolution of the
Long-Term Fund.
2. To grant the proxyholders authority to vote upon any other business
that may properly come before the Meeting. GRANT WITHHOLD ABSTAIN
</TABLE>
IMPORTANT: PLEASE SIGN AND MAIL IN YOUR VOTING INSTRUCTION FORM...TODAY
2
<PAGE> 47
EVERY SHAREHOLDER'S VOTE IS IMPORTANT
PLEASE SIGN, DATE AND RETURN YOUR
PROXY TODAY!
Please fold and detach card at perforation before mailing
PROXY
SPECIAL MEETING OF SHAREHOLDERS
NATIONWIDE MUTUAL FUNDS
NATIONWIDE INTERMEDIATE U.S. GOVERNMENT BOND FUND
FEBRUARY 22, 2001
The undersigned hereby revokes all previous proxies for his or her shares and
appoints William Baltrus and Bryan Haft, and each of them, proxies of the
undersigned with full power of substitution to vote all shares of the Nationwide
Intermediate U.S. Government Bond Fund series (the "Fund") of Nationwide Mutual
Funds (the "Trust") that the undersigned is entitled to vote at the Special
Meeting of Shareholders, including any adjournments thereof (the "Meeting"), to
be held at the Jeffers Auditorium, One Nationwide Plaza, Columbus, Ohio 43216,
at 10:30 a.m., Eastern time, on February 22, 2001, upon such business as may
properly be brought before the Meeting.
IMPORTANT: PLEASE SEND IN YOUR PROXY TODAY.
YOU ARE URGED TO DATE AND SIGN THIS PROXY AND RETURN IT PROMPTLY. THIS WILL SAVE
THE EXPENSE OF FOLLOW-UP LETTERS TO SHAREHOLDERS WHO HAVE NOT RESPONDED.
NOTE: Please sign exactly as your name
appears on the proxy. If signing for
estates, trusts or corporations, title or
capacity should be stated. If shares are
held jointly, each holder must sign.
_________________________________________
Signature(s)
_________________________________________
Date
IMPORTANT: PLEASE SIGN AND MAIL IN YOUR PROXY...TODAY
(Please see reverse side)
<PAGE> 48
EVERY SHAREHOLDER VOTE IS IMPORTANT
PLEASE SIGN AND PROMPTLY RETURN IN THE ACCOMPANYING ENVELOPE. NO POSTAGE
REQUIRED IF MAILED IN THE U.S.
PLEASE FOLD AND DETACH CARD AT PERFORATION BEFORE MAILING
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES OF THE TRUST. IT WILL
BE VOTED AS SPECIFIED. IF NO SPECIFICATION IS MADE AND THIS PROXY IS SIGNED AND
RETURNED , THIS PROXY SHALL BE VOTED IN FAVOR OF PROPOSAL 1, REGARDING THE
REORGANIZATION OF THE FUND PURSUANT TO THE PLAN OF REORGANIZATION ADOPTED BY THE
TRUSTEES.
THE BOARD OF TRUSTEES RECOMMENDS THAT YOU VOTE IN FAVOR OF PROPOSAL 1
<TABLE>
<S> <C> <C> <C>
1. To approve a Plan of Reorganization adopted by the Nationwide
Mutual Funds (the "Trust"), on behalf of the Nationwide Long-Term FOR AGAINST ABSTAIN
U.S. Government Bond Fund (the "Long-Term Fund") and the
Nationwide Intermediate U.S. Government Bond Fund (the
"Intermediate Fund") series of the Trust, that provides for the
acquisition of substantially all of the assets and assumption of
the liabilities of the Long-Term Fund, in exchange for Class A,
Class B and Class D shares of the Intermediate Fund, the
distribution of such shares to the shareholders of the Long-Term
Fund and the dissolution of the Long-Term Fund.
2. To grant the proxyholders authority to vote upon any other
business that may properly come before the Meeting. GRANT WITHHOLD ABSTAIN
</TABLE>
IMPORTANT: PLEASE SIGN AND MAIL IN YOUR PROXY...TODAY
<PAGE> 49
EVERY SHAREHOLDER'S VOTE IS IMPORTANT
PLEASE SIGN, DATE AND RETURN YOUR
VOTING INSTRUCTION FORM TODAY!
Please fold and detach card at perforation before mailing
SPECIAL MEETING OF SHAREHOLDERS
NATIONWIDE MUTUAL FUNDS
NATIONWIDE INTERMEDIATE U.S. GOVERNMENT BOND FUND
FEBRUARY 22, 2001
The undersigned contract owner of a variable annuity or variable life insurance
contract, revoking previous voting instructions, hereby instructs Nationwide
Life Insurance Company or Nationwide Life and Annuity Insurance Company to vote
all shares of the Nationwide Intermediate U.S. Government Bond Fund (the "Fund")
of the Nationwide Mutual Funds (the "Trust") attributable to his or her variable
annuity or variable life insurance contact as of December 18, 2000, at the
Special Meeting of Shareholders of the Fund to be held at the Jeffers
Auditorium, One Nationwide Plaza, Columbus, Ohio 43216, on Thursday, February
22, 2001 at 10:30 a.m., Eastern time, and at any adjournments thereof. These
voting instructions will be used to vote on the proposal described in the Proxy
Statement as specified below.
Receipt of the Notice of the Meeting and the accompanying Proxy Statement is
hereby acknowledged.
NOTE: Please sign exactly as your name appears on this Voting Instruction Form.
When the variable annuity or variable life insurance contract is held by joint
tenants, both should sign. When signing in a fiduciary capacity, such as
executor, administrator, trustee, attorney, guardian, etc., please so indicate.
Corporate and partnership voting instructions should be signed by an authorized
person indicating the person's title.
Date:________________________
_____________________________
_____________________________
Signature(s) (Title(s), if applicable)
IMPORTANT: PLEASE SIGN AND MAIL IN YOUR VOTING INSTRUCTION FORM...TODAY
(Please see reverse side)
<PAGE> 50
THIS VOTING INSTRUCTION FORM IS SOLICITED ON BEHALF OF NATIONWIDE LIFE INSURANCE
COMPANY OR NATIONWIDE LIFE AND ANNUITY INSURANCE COMPANY. IT WILL BE VOTED AS
SPECIFIED. IF NO SPECIFICATION IS MADE AND THIS VOTING INSTRUCTION FORM IS
SIGNED AND RETURNED, THIS VOTING INSTRUCTION FORM SHALL BE VOTED IN FAVOR OF
PROPOSAL 1, REGARDING THE REORGANIZATION OF THE FUND PURSUANT TO THE PLAN OF
REORGANIZATION ADOPTED BY THE TRUSTEES.
THE BOARD OF TRUSTEES RECOMMENDS THAT YOU VOTE IN FAVOR OF PROPOSAL 1
<TABLE>
<S> <C> <C> <C>
1. To approve a Plan of Reorganization adopted by the Nationwide Mutual
Funds (the "Trust"), on behalf of the Nationwide Long-Term U.S. FOR AGAINST ABSTAIN
Government Bond Fund (the "Long-Term Fund") and the Nationwide
Intermediate U.S. Government Bond Fund (the "Intermediate Fund") series
of the Trust, that provides for the acquisition of substantially all of
the assets and assumption of the liabilities of the Long-Term Fund, in
exchange for Class A, Class B and Class D shares of the Intermediate
Fund, the distribution of such shares to the shareholders of the
Long-Term Fund and the dissolution of the Long-Term Fund.
2. To grant the proxyholders authority to vote upon any other business
that may properly come before the Meeting. GRANT WITHHOLD ABSTAIN
</TABLE>
IMPORTANT: PLEASE SIGN AND MAIL IN YOUR VOTING INSTRUCTION FORM...TODAY
<PAGE> 51
STATEMENT OF ADDITIONAL INFORMATION
FOR
NATIONWIDE MUTUAL FUNDS
DATED JANUARY 19, 2001
ACQUISITION OF SUBSTANTIALLY ALL OF THE ASSETS AND LIABILITIES OF THE
NATIONWIDE LONG-TERM U.S. GOVERNMENT BOND FUND,
A SERIES OF
NATIONWIDE MUTUAL FUNDS
BY AND IN EXCHANGE
FOR
CLASS A SHARES, CLASS B SHARES AND CLASS D SHARES
OF THE
NATIONWIDE INTERMEDIATE U.S. GOVERNMENT BOND FUND,
ALSO A SERIES OF
NATIONWIDE MUTUAL FUNDS
This Statement of Additional Information (SAI) relates specifically to
the proposed delivery of all of the assets of the Long-Term Fund for shares of
beneficial interest of the Intermediate Fund.
This SAI consists of this Cover Page and the following documents. Each
of these documents is enclosed with and is legally considered to be a part of
this SAI:
1. Nationwide Mutual Funds Combined Statement of
Additional Information, dated September 1, 2000.
2. Projected (Pro Forma) after Transaction Financial
Statements.
3. Nationwide Mutual Funds Combined Annual Report to
Shareholders, dated October 31, 2000.
This SAI is not a prospectus; you should read this SAI in conjunction
with the Prospectus/Proxy Statement, dated January 19, 2001, relating to the
above-referenced transaction. You can request a copy of the Prospectus/Proxy
Statement by calling 1-800-848-0920 or by writing to the Trust at P.O. Box 1492,
Columbus, Ohio 43216-1492.
<PAGE> 52
ATTACHMENTS TO SAI
The Nationwide Mutual Funds Combined Statement of Additional
Information, dated September 1, 2000, is part of this SAI and will be provided
to all shareholders requesting this SAI. For purposes of this EDGAR filing, the
above-referenced SAI is incorporated herein by reference to the electronic
filing made on September 7, 2000.
<PAGE> 53
ATTACHMENTS TO SAI
The following are projected (pro forma) financial statements that were
prepared to indicate the anticipated financial information for the Intermediate
Fund following the completion of the Reorganization. They consist of: a Pro
Forma Combining Schedule of Portfolio Investments; a Pro Forma Combining
Statement of Assets and Liabilities; a Pro Forma Combining Statement of
Operations; and notes relating to the combining Statements.
NATIONWIDE LONG-TERM U.S. GOVERNMENT BOND FUND/NATIONWIDE
INTERMEDIATE U.S. GOVERNMENT BOND FUND
PRO FORMA COMBINING SCHEDULE OF PORTFOLIO INVESTMENTS
OCTOBER 31, 2000 (UNAUDITED)
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT MARKET VALUE
NATIONWIDE
NATIONWIDE NATIONWIDE PRO NATIONWIDE INTERMEDIATE PRO
LONG-TERM US US GOVT FORMA LONG-TERM US US GOVT FORMA
GOVT BOND FUND BOND FUND COMBINED GOVT BOND FUND BOND FUND COMBINED
<S> <C> <C> <C> <C> <C> <C>
U.S. TREASURY SECURITIES
U.S. Treasury Notes, Bonds,
Strips
11.25%, 02/15/15 $4,750,000 $4,000,000 $8,750,000 $7,123,518 $5,998,752 $13,122,270
8.125%, 08/15/19 5,000,000 5,000,000 6,176,575 6,176,575
6.25%, 08/15/23 2,000,000 2,000,000 2,063,080 2,063,080
6.88%, 08/15/25 6,000,000 4,000,000 10,000,000 6,682,877 4,455,252 11,138,129
12.00%, 08/15/13 10,000,000 10,000,000 13,678,990 13,678,990
0.00%, 05/15/13 15,000,000 15,000,000 7,130,535 7,130,535
TOTAL U.S. TREASURY SECURITIES 22,046,050 31,263,529 53,309,579
U.S. GOVERNMENT AGENCY SECURITIES
Federal Home Loan Bank,
7.40%, 04/17/17 1,000,000 1,000,000 1,043,044 1,043,044
6.37%, 12/04/17 1,150,000 1,150,000 1,080,868 1,080,868
5.54%, 04/21/03 3,250,000 3,250,000 3,175,982 3,175,982
5.80%, 01/08/04 3,200,000 3,200,000 3,121,795 3,121,795
5.425%, 01/29/04 1,900,000 1,900,000 1,836,000 1,836,000
6.945%, 03/26/07 2,000,000 2,000,000 2,038,272 2,038,272
6.53%, 07/23/07 2,000,000 2,000,000 1,996,262 1,996,262
6.02%, 01/09/08 1,000,000 1,000,000 967,781 967,781
Federal Farm Credit
7.16%, 05/15/06 1,000,000 1,000,000 1,025,575 1,025,575
Federal Home Loan Mortgage Corp.,
5.98%, 12/08/05 3,000,000 3,000,000 2,925,942 2,925,942
6.704%. 01/09/07 2,655,000 2,655,000 2,670,688 2,670,688
Federal National Mortgage Association
6.27%, 12/01/08 1,962,139 1,962,139 1,914,650 1,914,650
6.30%, 05/01/13 1,948,556 1,948,556 1,888,196 1,888,196
5.75%, 09/23/03 1,000,000 1,000,000 978,575 978,578
5.79%, 12/01/03 1,000,000 1,000,000 977,701 977,701
</TABLE>
<PAGE> 54
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT MARKET VALUE
NATIONWIDE
NATIONWIDE NATIONWIDE PRO NATIONWIDE INTERMEDIATE PRO
LONG-TERM US US GOVT FORMA LONG-TERM US US GOVT FORMA
GOVT BOND FUND BOND FUND COMBINED GOVT BOND FUND BOND FUND COMBINED
<S> <C> <C> <C> <C> <C> <C>
TOTAL U.S. GOVERNMENT AGENCY SECURITIES 5,926,758 21,714,576 27,641,334
MORTGAGE-BACKED OBLIGATIONS
Federal Home Loan Mortgage Corp.
7.00%, 12/15/12 Series 1560-PN 2,000,000 2,000,000 1,960,480 1,960,480
6.00%, 09/15/18 Series 2054-PS 3,000,000 3,000,000 2,935,320 2,935,320
3.50%, 12/15/21 Series 1629-HA 1,000,000 1,000,000 886,470 886,470
7.50%, 01/15/03 REMIC Series 1462-PT 2,449,302 2,449,302 2,457,703 2,457,703
7.25%, 06/15/07 REMIC Series 1313-G 2,885,767 2,885,767 2,887,037 2,887,037
6.00%, 07/15/14 REMIC Series 2134-PT 4,832,300 4,832,300 4,753,872 4,753,872
6.00%, 12/15/13 REMIC Series 1688-J 5,000,000 5,000,000 4,854,500 4,854,500
Federal National Mortgage Assoc.
6.31%, 01/01/06 POOL #73341 922,082 922,082 902,735 902,735
6.10%, 07/01/08 POOL #380488 973,552 973,552 932,704 932,704
7.42%, 11/01/11 POOL #73731 6,717,652 6,717,652 6,886,853 6,886,853
6.30%, 04/01/14 POOL #381570 1,083,735 1,083,735 1,025,341 1,025,341
6.32%, 04/01/14 POOL #460221 4,805,998 4,805,998 4,645,719 4,645,719
7.05%, 02/01/17 POOL #73847 1,711,133 1,711,133 1,712,980 1,712,980
7.18%, 02/01/17 POOL #73942 2,197,982 2,197,982 2,219,805 2,219,805
6.27%, 12/01/08 POOL #381019 1,962,139 1,962,139 1,914,650 1,914,650
6.50%, 07/25/08 Series 1993-114H 4,000,000 4,000,000 3,973,680 3,973,680
6.50%, 04/25/13 Series 1999-19TD 3,000,000 3,000,000 2,943,390 2,943,390
9.25%, 10/25/18 Series 25-B 128,038 128,038 134,039 134,039
7.00%, 07/25/22 Series G92-42 Z 4,481,139 4,481,139 4,392,970 4,392,970
8.00%, 07/25/02 REMIC Series 92-126 582,685 582,685 584,974 584,974
8.50%, 01/25/20 REMIC Series 7-B 754,918 754,918 773,132 773,132
TOTAL MORTGAGE-BACKED OBLIGATIONS 53,778,354 53,778,354
TOTAL LONG - TERM INVESTMENTS $27,972,808 $106,756,459 $134,729,267
SHORT - TERM INVESTMENTS
REPURCHASE AGREEMENT
Warburg Dillon Read, 6.51% 4,567,000 4,567,000 4,567,000
Matures 11/01/00, Collateralized
by $4,859,000 U.S. Treasury Bond,
5.56%, 08/15/28, Market Value
$4,658,566 (cost $4,567,000)
Warburg Dillon Read, 6.51% 4,249,000 4,249,000 4,249,000
Matures 11/01/00, Collateralized
by $2,969,000 U.S. Treasury Bond,
9.88%, 11/15/15, Market Value
$4,249,381 (cost $4,249,000)
TOTAL SHORT - TERM INVESTMENTS $4,249,000 $4,567,000 8,816,000
TOTAL INVESTMENTS $32,221,808 $111,323,459 $143,545,267
</TABLE>
<PAGE> 55
NATIONWIDE LONG-TERM U.S. GOVERNMENT BOND FUND/
NATIONWIDE INTERMEDIATE U.S. GOVERNMENT BOND FUND
PRO FORMA COMBINING STATEMENT OF ASSETS AND LIABILITIES
FOR THE TWELVE MONTHS ENDED OCTOBER 31, 2000 (UNAUDITED)
<TABLE>
<CAPTION>
NATIONWIDE NATIONWIDE
LONG-TERM US INTERMEDIATE US
GOVERNMENT BOND GOVERNMENT BOND PRO FORMA
FUND FUND COMBINED
-------------------------------------------------------------
<S> <C> <C> <C>
ASSETS:
Investment securities, at value $27,972,808 $106,756,459 $134,729,267
Repurchase Agreements,
at value (cost $4,249,000,
$4,567,000, respectively) 4,249,000 4,567,000 8,816,000
Cash 282 398 680
Other assets 653 3,458 4,111
Receivables:
Interest and dividends 367,621 1,060,197 1,427,818
Fund shares sold - - -
Expense reimbursement - 4,375 4,375
Total Assets 32,590,364 112,391,887 144,982,251
----------- ------------ ------------
LIABILITIES:
Payables:
Dividends 139,587 561,243 700,830
Accrued liabilities:
Investment advisory fees 13,856 47,397 61,253
Fund administration fees 1,940 6,636 8,576
Administrative servicing fees - 10,002 10,002
Transfer agent fees 4,072 - 4,072
Other 24,615 29,955 54,570
Total Liabilities 184,070 655,233 839,303
----------- ------------ ------------
NET ASSETS:
Capital 32,135,848 111,741,746 143,877,594
Accumulated undistributed
(distributions in excess of) net
investment income 252 1,953 2,205
Accumulated net realized loss on
investments (474,842) (1,213,544) (1,688,386)
Net unrealized depreciation of
investments 745,036 1,206,499 1,951,535
Net Assets $32,406,294 $111,736,654 $144,142,948
=========== ============ ============
Shares outstanding:
Class A Shares 342,859 5,478,873 5,855,545
Class B Shares 156,925 112,834 285,254
Class D Shares 2,448,693 5,578,115 8,266,963
Net Assets:
Class A Shares 3,766,724 54,795,872 58,562,596
Class B Shares 1,724,199 1,128,622 2,852,821
Class D Shares 26,915,371 55,812,160 82,727,531
Net Asset Value Per Share:
Class A Shares $10.99 $10.00 $10.00
Class B Shares* $10.99 $10.00 $10.00
Class D Shares $10.99 $10.01 $10.01
Cost of investments $31,476,772 $110,116,960 $141,593,732
=========== ============ ============
</TABLE>
*Redemption price may be reduced by contingent deferred sales charge.
<PAGE> 56
NATIONWIDE LONG-TERM U.S. GOVERNMENT BOND FUND/
NATIONWIDE INTERMEDIATE U.S. GOVERNMENT BOND FUND
PRO FORMA COMBINING STATEMENT OF OPERATIONS
FOR THE TWELVE MONTHS ENDED OCTOBER 31, 2000 (UNAUDITED)
<TABLE>
<CAPTION>
NATIONWIDE NATIONWIDE
LONG-TERM US INTERMEDIATE US PRO FORMA PRO FORMA
GOVT BOND FUND GOVT BOND FUND ADJUSTMENTS COMBINED
-------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
INVESTMENT INCOME $ 2,175,501 $ 7,234,381 $ -- $ 9,409,881
EXPENSES:
Investment advisory fees 167,881 530,376 698,257
Fund administration fees 23,504 74,254 -- 97,758
Administrative servicing fees 1 108,377 -- 108,378
Distribution fees 22,347 142,252 -- 164,599
Custodian fees -- 5,801 (500)(a) 5,301
Shareholders' Reports 9,446 13,235 (2,500)(a) 20,181
Professional fees 6,591 15,768 (5,000)(a) 17,359
Registration and filing fees 29,910 36,662 (25,000(a) 41,572
Transfer agent fees 42,455 30,542 -- 72,997
Trustees' fees and expenses 208 1,656 -- 1,864
Other 2,579 23,112 (1,000)(a) 24,690
------------ ------------ ------------ ------------
Total expenses 304,922 982,035 (34,000) 1,252,957
------------ ------------ ------------ ------------
Less expense
reimbursements/waivers 17,544 32,080 (34,000)(b) 15,624
------------ ------------ ------------ ------------
Net expenses 287,378 949,955 -- 1,237,333
------------ ------------
Net investment income 1,888,123 6,284,426 -- 8,172,549
------------ ------------ ------------ ------------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS:
Net realized gain (loss) on
investments transactions (476,854) (1,215,685) -- (1,692,539)
Change in net unrealized
appreciation/depreciation of:
Investments 1,270,352 2,764,161 -- 4,034,513
Net realized and unrealized
gains on investments 793,498 1,548,476 -- 2,341,974
------------ ------------ ------------ ------------
Net increase in net assets from
operations $ 2,681,621 $ 7,832,902 $ -- $ 10,514,523
============ ============ ============
</TABLE>
(a) Reduction reflects the estimated benefit of combining operations.
(b) Reduction in expenses reimbursed/waived represents estimated benefit of
combining operations.
<PAGE> 57
NATIONWIDE LONG-TERM U.S. GOVERNMENT BOND FUND/NATIONWIDE INTERMEDIATE U.S.
GOVERNMENT BOND FUND
NOTES TO PRO FORMA FINANCIAL STATEMENTS
(UNAUDITED)
1. BASIS OF COMBINATION:
The unaudited Pro Forma Combining Statement of Assets and Liabilities,
Statement of Operations, and Schedule of Portfolio Investments reflect the
accounts of two investment portfolios offered by the Nationwide Mutual Funds
(the "Funds"): Nationwide Long-Term U.S. Government Bond Fund and Nationwide
Intermediate U.S. Government Bond Fund, (collectively, the "Funds" and
individually a "Fund") as if the proposed merger occurred as of and for the
year ended October 31, 2000. These statements have been derived from books and
records utilized in calculating daily net asset value at October 31, 2000.
The Pro Forma Combining Statement of Assets and Liabilities, Statement
of Operations, and Schedule of Portfolio Investments should be read in
conjunction with the historical financial statements of the Funds which have
been incorporated by reference in the Statement of Additional Information.
2. PRO FORMA OPERATIONS:
The Pro Forma Statement of Operations assumes similar rates of gross
investment income for the investments of each Fund. Accordingly, the combined
gross investment income is equal to the sum of each Fund's gross investment
income. Certain expenses have been adjusted to reflect the expected expenses of
the combined entity. The pro forma investment advisory, administration,
administration servicing and distribution fees of the combined Fund and/or the
related waivers are based on the fee schedules in effect for the Funds at the
combined level of average net assets for the twelve months ended October 31,
1000. The Pro Forma Statement of Operations does not include the effect of any
realized gains or losses, or transaction fees incurred in connection with the
realignment of the portfolio.
The pro forma Schedule of Portfolio Investments gives effect to the
proposed merger of such assets as if the merger had occurred at October 31,
2000.
<TABLE>
<CAPTION>
LONG-TERM U.S. INTERMEDIATE U.S.
GOVERNMENT BOND GOVERNMENT BOND
FUND FUND COMBINED
---------------------------------------------------------------------------
<S> <C> <C> <C>
NET ASSETS
Class A Shares $3,766,724 $54,795,872 $58,562,596
Class B Shares $1,724,199 $1,128,622 $2,852,821
Class D Shares $26,915,371 $55,812,160 $82,727,531
SHARES OUTSTANDING
Class A Shares 342,859 5,478,873 5,855,545
Class B Shares 156,925 112,834 285,254
Class D Shares 2,448,693 5,578,115 8,266,963
NAV
Class A Shares $10.99 $10.00 $10.00
Class B Shares $10.99 $10.00 $10.00
Class D Shares $10.99 $10.01 $10.01
</TABLE>
<PAGE> 58
ATTACHMENTS TO SAI
NATIONWIDE MUTUAL FUNDS COMBINED ANNUAL REPORT
TO SHAREHOLDERS, DATED OCTOBER 31, 2000
The Nationwide Mutual Funds Combined Annual Report to Shareholders,
dated October 31, 2000, is part of this SAI and will be provided to all
shareholders requesting this SAI. For purposes of this EDGAR filing, the
above-referenced shareholder report is incorporated herein by reference to the
electronic filing made on [_______________].
<PAGE> 59
NATIONWIDE MUTUAL FUNDS
FILE NOS. 333-40455, 811-08495
FORM N-14
PART C
OTHER INFORMATION
ITEM 15. INDEMNIFICATION
Indemnification provisions for officers, trustees and employees of the
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 trustees in their capacity as
trustee.
ITEM 16. EXHIBITS
The following exhibits are incorporated by reference to the previously
filed document indicated below, except Exhibits 4(A), 12(A), and 14(A):
(1) Copies of the charter of the Nationwide Mutual Funds as now in
effect;
(A) Amended Declaration of Trust previously filed with
the Trust's Registration Statement on January 5,
1999.
(2) Copies of the existing by-laws or corresponding instruments of
the Registrant;
(A) Amended Bylaws previously filed with the Trust's
Registration Statement on August 7, 1998.
(3) Copies of any voting trust agreement affecting more than five
percent of any class of equity securities of the Registrant;
Not Applicable
(4) Copies of the agreement of acquisition, reorganization,
merger, liquidation and any amendments to it;
(A) The Plan of Reorganization is included in this
Registration Statement as Exhibit A to the
Prospectus/Proxy Statement
(5) Copies of all instruments defining the rights of holders of
the securities being registered including, where applicable,
the relevant portion of the articles of incorporation or
by-laws of the Registrant;
C-1
<PAGE> 60
(A) Certificates for shares are not issued. Articles V,
VI, VII and VIII of the Declaration of Trust,
incorporated by reference to Exhibit (1) of the
Trust's Registration Statement filed on January 5,
1999, define the rights of holders of shares.
(6) Copies of all investment advisory contracts relating to the
management of the assets of the Registrant;
(A) Investment Advisory Agreement previously filed with
the Trust's Registration Statement on January 5,
1999.
(B) Amendment to Investment Advisory Agreement previously
filed with the Trust's Registration Statement on
December 29, 1999.
(C) Amended Exhibit A to the Investment Advisory
Agreement previously filed with the Trust's
Registration Statement on December 29, 1999.
(7) Copies of each underwriting or distribution contract between
the Registrant and a principal underwriter, and specimens or
copies of all agreements between principal underwriters and
dealers;
(A) Underwriting Agreement previously filed with the
Trust's Registration Statement on January 5, 1999.
(B) Model Dealer Agreement previously filed with the
Trust's Registration Statement on January 5, 1999.
(8) Copies of all bonus, profit sharing, pension, or other similar
contracts or arrangements wholly or partly for the benefit of
Trustees or officers of the Registrant in their capacity as
such. Furnish a reasonably detailed description of any plan
that is not set forth in a formal document;
Not Applicable
(9) Copies of all custodian agreements and depository contracts
under Section 17(f) of the 1940 Act for securities and similar
investments of the Registrant, including the schedule of
remuneration;
(A) Custody Agreement previously filed with the Trust's
original Registration Statement on November 18, 1997.
(10) Copies of any plan entered into by Registrant pursuant to Rule
12b-1 under the 1940 Act and any agreements with any person
relating to implementation of the plan, and copies of any plan
entered into by Registrant pursuant to Rule 18f-3 under the
1940 Act, any agreement with any person relating to
implementation of the plan, any amendment to the plan, and a
copy of the portion of the minutes of the meeting of the
Registrant's Trustees describing any action taken to revoke
the plan;
(A) Amended Distribution Plan previously filed with the
Trust's Registration Statement on January 5, 1999.
C-2
<PAGE> 61
(B) Dealer Agreement previously filed with the Trust's
Registration Statement on January 5, 1999.
(C) Rule 12b-1 Agreement previously filed with the
Trust's Registration Statement on January 5, 1999.
(D) Amended 18f-3 Plan previously filed with the
Trust's Registration Statement on January 5, 1999.
(11) An opinion and consent of counsel as to the legality of the
securities being registered, indicating whether they will,
when sold, be legally issued, fully paid and nonassessable;
(A) Form of Opinion of Counsel as to legality of shares
being registered is filed herewith as Exhibit No.
EX99.11(A).
(12) An opinion, and consent to their use, of counsel or, in lieu
of an opinion, a copy of the revenue ruling from the Internal
Revenue Service, supporting the tax matters and consequences
to shareholders discussed in the prospectus;
(A) Form of Opinion and Consent of Counsel Supporting Tax
Matters and Consequences to Shareholders is filed
herewith as Exhibit No. EX99.12(A).
(13) Copies of all material contracts of the Registrant not made in
the ordinary course of business which are to be performed in
whole or in part on or after the date of filing the
registration statement;
(A) Purchase Agreement previously filed with the Trust's
Registration Statement on January 2, 1998.
(14) Copies of any other opinions, appraisals, or rulings, and
consents to their use, relied on in preparing the registration
statement and required by Section 7 of the 1933 Act;
(A) Consent of independent auditors is filed herewith as
Exhibit No. EX99.14(A).
(15) All financial statements omitted pursuant to Item 14(a)(1);
Not Applicable
(16) Manually signed copies of any power of attorney pursuant to
which the name of any person has been signed to the
registration statement; and
(A) Power of Attorney dated November 7, 1997, previously
filed with the Trust's Pre-Effective Amendment.
(B) Power of Attorney dated February 9, 2000, previously
filed with the Trust's Registration Statement on
February 10, 2000.
(C) Power of Attorney dated February 9, 2000, previously
filed with the Trust's Registration Statement on
July 31, 2000.
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<PAGE> 62
(17) Any additional exhibits which the registrant may wish to file.
Not Applicable
ITEM 17. UNDERTAKINGS
(a) The undersigned Registrant agrees that prior to any
public reoffering of the securities registered
through the use of a prospectus which is part of this
registration statement by any person or party who is
deemed to be an underwriter within the meaning of
Rule 145(c) of the Securities Act, the reoffering
prospectus will contain the information called for by
the applicable registration form for reofferings by
persons who may be deemed underwriters, in addition
to the information called for by the other items of
the applicable form.
(b) The undersigned Registrant agrees that every
prospectus that is filed under paragraph (1) above
will be filed as part of an amendment to the
registration statement and will not be used until the
amendment is effective, and that, in determining any
liability under the 1933 Act, each post-effective
amendment shall be deemed to be a new registration
statement for the securities offered therein, and the
offering of the securities at that time shall be
deemed to be the initial bona fide offering of them.
C-4
<PAGE> 63
SIGNATURES
As required by the Securities Act of 1933, this registration statement
has been signed on behalf of the Registrant, in the City of Columbus and the
State of Ohio, on the 20th day of December, 2000.
Nationwide Mutual Funds
---------------------------
(Registrant)
By: /s/ Kevin S. Crossett
-------------------------------
Kevin S. Crossett
Secretary
As required by the Securities Act of 1933, this Registration Statement has been
signed below by the following persons in the capacities and on the dates
indicated:
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
*/s/ Charles E. Allen
----------------------------------
Charles E. Allen Trustee December 20, 2000
*/s/ Paula H.J. Cholmondeley
----------------------------------
Paula H.J. Cholmondeley Trustee December 20, 2000
*/s/ C. Brent DeVore
----------------------------------
C. Brent DeVore Trustee December 20, 2000
*/s/ Robert M. Duncan
----------------------------------
Robert M. Duncan Trustee December 20, 2000
*/s/ Joseph J. Gasper
----------------------------------
Joseph J. Gasper Trustee & Chairman December 20, 2000
* /s/ Barbara Hennigar
----------------------------------
Barbara Hennigar Trustee December 20, 2000
*/s/ Paul J. Hondros
----------------------------------
Paul J. Hondros Trustee December 20, 2000
*/s/ Thomas J. Kerr, IV
----------------------------------
Thomas J. Kerr, IV Trustee December 20, 2000
</TABLE>
C-5
<PAGE> 64
<TABLE>
<S> <C> <C>
*/s/ Douglas F. Kridler
----------------------------------
Douglas F. Kridler Trustee December 20, 2000
*/s/ Dimon R. McFerson
----------------------------------
Dimon R. McFerson Trustee December 20, 2000
*/s/ Arden L. Shisler
----------------------------------
Arden L. Shisler Trustee December 20, 2000
*/s/ David C. Wetmore
----------------------------------
David C. Wetmore Trustee December 20, 2000
/s/ Gerard Holland
----------------------------------
Gerald Holland Treasurer December 20, 2000
*By: /s/ Kevin S. Crossett
------------------------
Kevin S. Crossett, pursuant to a Power of Attorney
</TABLE>
C-6
<PAGE> 65
NATIONWIDE MUTUAL FUNDS
REGISTRATION STATEMENT ON FORM N-14
EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION
EX-99.11(A) Form of Opinion of Counsel as to the Legality of Shares
Being Registered
EX-99.12(A) Form of Opinion and Consent of Counsel Supporting Tax
Matters and Consequences to Shareholders
EX-99.14(A) Consent of Auditors, KPMG LLP
C-7
